5 Ways to Save on Extracurriculars for Your Kids

Extracurricular activities are great for children. They help kids learn new things and perfect their skills. They provide opportunities to bond with peers and a constructive use of time. They look great on college and scholarship applications.

But all that enrichment comes at a cost. And these nonessential additions to the household budget can be expensive to keep up with — especially when you have multiple children with multiple interests.

Huntington Bank and Communities in Schools’ 2019 Backpack Index estimates extracurricular fees average about $150 for elementary students, $250 for middle school students and $350 for high school students. Of course, there are parents who spend much more.

If the cost of after-school activities concerns you, consider these ways to make them more affordable.

5 Ways to Save on Extracurriculars This School Year

These money-saving tips will help you keep the kids happy without upsetting your finances.

1. Turn to Government or Nonprofit Programs

Before signing your kids up for private music lessons or a traveling sports league, check to see if there are similar offerings located at or sponsored by your local:

  • School
  • Church
  • Library system
  • YMCA
  • Boys and Girls Club
  • Police Athletic League
  • Girl Scouts/Boy Scouts
  • United Way
  • Salvation Army
  • City or county parks and recreation department
  • Community college

2. Ask About Discounts

Be thrifty and save where you can by asking the activity provider about discounts. Is there a trial period where your kid can take a class or two for free before signing up for the season? Can you get a discounted rate for being a returning participant, enrolling more than one child or recommending another family to sign up?

Some programs offer a reduced rate if you register before a certain date, if you sign up for a package of sessions or if you volunteer to coach. Others offer scholarships or set their prices on a sliding scale based on income. You might want to ask if the organization will allow you to set up a payment plan rather than requiring all the money upfront.

Pro Tip

Check discount sites like Groupon or Living Social for current deals on activities.

3. Reduce the Other Costs of After-School Activities

The cost to enroll your child in an activity is rarely the only expense you’ll encounter. Equipment, supplies, uniforms, fundraisers, travel and performance tickets can greatly increase your investment.

Find ways to lower these additional costs whenever possible. Arrange a carpool with team members. Buy secondhand equipment and attire. Limit the family members who attend smaller performances throughout the year, and save up so everyone can attend the major show at the end of the season.

4. DIY Your Extracurriculars

Your kid can get the benefits of participating in an activity without it being a formal program that you pay for. Consider your children’s interests and figure out how to pursue them on an individual scale.

If your kid is into music, hit up YouTube for free tutorials. There are tons of cooking blogs with detailed recipes for those who want to master baking. Your library may provide free access to software to learn a foreign language.

Tap into your network of family, friends and neighbors to expose your child to different pursuits. Commit to teaching their kids about a skill you’ve mastered in exchange. For example, your friend could teach your kids how to play the guitar while you give their kids cooking lessons.

It might be a bigger investment in time, but you can save a lot of money by creating your own means of developing your child’s interests.

5. Talk to Your Kids About Making Sacrifices

There may be times where you simply have to say no to your kid’s request to enroll in another extracurricular activity. If you don’t have the funds and you’d have to charge expenses on a credit card, you should reevaluate things.

Parents never want to put financial stress on their kids, but it’s okay to be up-front about the limitations of your budget. This might mean having your kids choose one sport to commit to rather than two, or asking if they prefer dance lessons over vacationing at the beach next summer.

If you have teenagers, get them to contribute to their extracurricular expenses with money from babysitting, mowing lawns or a part-time job. Depending on the activity, you can challenge your child to turn their hobby into an entrepreneurial pursuit — like selling handmade bracelets at local festivals or giving piano lessons to younger kids.

Not only will this help your teens afford the extracurriculars they want, you’ll also be teaching them a valuable lesson about personal finance that’ll hopefully carry on into adulthood.

Nicole Dow is a senior writer at The Penny Hoarder. She’s a parent who’s always looking for ways to save money.

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Source: thepennyhoarder.com

How to Afford Everything that Comes with Homeownership

Homeownership is the American dream, right? We spend years — sometimes decades — saving up enough money for a down payment for our first home and mark it as a major milestone in our lives.

But sorry to rain on your parade — just the down payment isn’t enough.

Sure, you’ll get the keys and have takeout on top of a box marked “front hall closet” on your first night, but then what? You need to fill it. You need to protect it. And you definitely need to be saving up for all the leaks, breaks and “oh, sugars!” that come with that property deed.

So How Much Do You Need?

If you’re starting from scratch, the interior designer rule of thumb is to spend between 10% and 50% of the home’s value on new furniture, appliances and decor. A totally empty $300,000 house might run up a $30,000 bill. It might be less if appliances are included, you’re bringing furniture with you, or you’re a good thrifter. It could cost more if you have expensive taste.

The average homeowners insurance in the US on that same $300,000 home is about $1,200 per year. It’s higher in places like Texas and Florida (hello, hurricane season) and lower out west in Utah and Idaho. Natural catastrophes, the cost of rebuilding your home and even your credit score can affect the cost of your premium.

As for emergency savings, the rule of thumb is three to six months’ worth of living expenses — definitely on the higher end, if you’re a homeowner. Realtor.com suggests 1 to 3% of your home value, so $3,000 to $9,000 stashed away for when your dog decides to eat through a wall.

It sounds like a lot. And make no mistake; it’s definitely a big part of your home-owning investment — but it’s attainable with the right knowledge and savings tools. Here are a few ways to boost your savings and lower your home-owning costs.

1. Make Your Sure Credit Score is in Tip-Top Shape

You probably remember this from when you were buying your home — the better your credit score, the better your mortgage’s interest rate. The same is true for homeowners insurance and credit card interest rates (this is important to think about if you open a store card to spread out furniture payments).

The good news? A free website called Credit Sesame makes it easy to put your credit score on track to reach your goals and keep your loan payments low. We even talked to one guy, James Cooper, of Atlanta, who used Credit Sesame to raise his credit score nearly 300 points in six months.*** He says they showed him exactly what to do — he was even able to open his first credit card.

What could adding 300 points to your score mean for your goals? It could easily save you thousands of dollars over the life of a car loan or mortgage.

Within two minutes, Credit Sesame will give you access to your credit score, any debt-carrying accounts and a handful of personalized tips to improve your score. You’ll even be able to spot any errors holding you back (one in five reports have one).

Make sure your plans don’t get sidelined by bad credit. Sign up for free (it only takes about 90 seconds) and see how much you could improve your score.

2. See if You’re Wasting $690/Year on Homeowners Insurance

You’re probably wasting money right now. And it’s probably on something you’d never expect — your homeowners insurance policy.

This isn’t something you actively think about — you just know you’re required to have it.

The problem is, you’re paying too much. Luckily, an insurance company called Policygenius makes it easy to find out how much you’re overpaying. It finds you cheaper policies and special discounts in minutes.

In fact, it saves users an average of $690 a year — or $57.50 a month. It’ll even help you break up with your old insurance company. (You’re allowed to cancel your policy at any time, and your company should issue you a refund.)

And just because you’re saving money doesn’t mean you’re skimping on coverage. Policygenius will make sure you have what you need.

Just answer a few questions about your home to see how much money you’re wasting.

3. Cut Your Other Bills to Save For More Furniture

Furnishing a house is expensive. You don’t even realize how much money you’ll need until you start pricing it all out at the store — a couch, a coffee table, a few lamps, a bookshelf, a couple side tables, an armchair or two, things to put on your bookshelf and on the wall… and that’s just in your living room!

One easy way to come up with this money is by cutting your costs and saving the difference. For example, when was the last time you checked car insurance rates?

You should shop your options every six months or so — it could save you some serious money.

A website called Insure.com makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and it’ll show you your options.

Using Insure.com, people have saved an average of $489 a year.

Yup. That could be $500 towards a dining room set just for taking a few minutes to look at your options.

4. Have a Safe Place to Save Your Emergency Fund — and Grow it 16x Faster

You’ve probably heard the best way to grow your money is to stick it in a savings account and leave it there for, well, ever. That’s bad advice when it comes to building and protecting an emergency fund.

You should be looking for a place to safely stash it away — but still earn money. Under your mattress or in a safe will get you nothing. And a typical savings account won’t do you much better. (Ahem, 0.06% is nothing these days.)

But a debit card called Aspiration lets you earn up to 16 times the average interest on the money in your account. That’s 16x more helpful when you need $9,000 earmarked for future, inevitable, home repairs.

Not too shabby!

Enter your email address here to get a free Aspiration Spend and Save account. After you confirm your email, securely link your bank account so they can start helping you get extra cash. Your money is FDIC insured and they use a military-grade encryption which is nerd talk for “this is totally safe.”

Kari Faber is a staff writer at The Penny Hoarder and a homeowner who has used these tips to save money herself. 

***Like Cooper, 60% of Credit Sesame members see an increase in their credit score; 50% see at least a 10-point increase, and 20% see at least a 50-point increase after 180 days.

Credit Sesame does not guarantee any of these results, and some may even see a decrease in their credit score. Any score improvement is the result of many factors, including paying bills on time, keeping credit balances low, avoiding unnecessary inquiries, appropriate financial planning and developing better credit habits.

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Source: thepennyhoarder.com

Why Do I Have So Many Different Credit Scores?

The credit score: a deceptively simple three-digit number that can dictate or impact your financial life in a variety of meaningful ways, from being able to rent a home or open a utility account to whether or not you are approved for a credit card or which mortgage rate you qualify for. Given their importance in the American financial system, it makes sense that understanding and improving your credit score is a goal for many. But it’s easy to get intimidated or disheartened by what can seem like wide discrepancies or inexplicable changes in that score. What drives this? Let’s dig in a little to break down differences in your credit scores and why they exist.  

NO ONE CORRECT SCORE

First, crucially: contrary to what many believe, there is no ONE, individual correct credit score for an individual. Everyone has a variety of different scores at any given time, given the many different factors that make up your various scores. Let’s break down the different components that can affect your credit score, the credit bureau data, the credit scoring model and version, and how your score gets updated.

The credit bureau data being utilized

Behind every credit score is a credit report, a set of historical data on your past credit and lending activity. This includes credit accounts (both open and closed), your payment history for each, and any negative marks, which could include late or missed payments, collections, or charged-off and closed accounts.  The three main providers of credit reports in the US are Experian, Equifax, and TransUnion. 

While many customers may see their credit reports looking quite similar across the three bureaus, they can differ. If past lenders have sent your application, account, or payment data to only one or two of the three main bureaus, that data may differ in a way that could meaningfully impact your score.

You can access your TransUnion credit report for free on Mint, as well as being entitled to one free credit report per bureau per year via www.annualcreditreport.com

The credit score model

A credit score model applies an algorithm to the underlying credit report data, resulting in that famous three-digit score. There are two main credit score models currently widely available in the US: FICO and VantageScore. We’ll dig into the major differences below in just a minute!

The model version

Adding to the complexity, both major model providers have different versions of their scoring models, which can significantly impact the score output! 

FICO offers different models for mortgage, auto, and credit decisions. For the credit versions, which lenders are likely to use for products like credit cards and personal loans, the most recent model version is FICO Score 9.

VantageScore recently rolled out VantageScore 4.0, following its successful 3.0 model.

The dates of recent updates

Lastly, the date(s) on which your lenders send updates to the credit bureaus, as well as the dates on which your score is refreshed, can impact your score temporarily. A credit score, at least for now, is a point-in-time snapshot of your credit risk versus a real-time update. 

Generally, lenders send an update with your outstanding balance and updated payment record to the credit bureaus about once every ~30 days. Imagine you do a bunch of holiday shopping one day and nearly max out your credit card, and the next day your lender updates the bureaus with your high balance. Your next credit score update may drop due to higher utilization, even if you paid it off a few days later. Not to worry: this should be resolved with the next update after your balance is paid off. 

Additionally, the date your credit score is updated will impact whether or not recently received updates have yet to be factored into your score.

In summary: your score can fluctuate, sometimes significantly depending on your available credit and your balances/outstanding debt at the point in time that updates are sent to the lender. Making multiple payments per month, especially after large purchases, can help reduce these swings.

Now that you understand why it’s possible to have a large variety of credit scores at once, let’s dig into the differences between the main models. 

WHAT IS THE VANTAGESCORE MODEL?

The VantageScore model was founded in 2006 in partnership between the three major credit bureaus, with the goal of introducing competition to the credit score market and expanding access to credit for consumers underserved by traditional credit models.  While the new VantageScore 4.0 just rolled out, Mint, Credit Karma, and many other companies are providing millions of consumers with access to their free TransUnion 3.0 credit score.

The main factors in your VantageScore 3.0 credit score are:

  • Payment history: about 40%
  • Credit age and mix: about 21%
  • Credit utilization: about 20%
  • Balances: about 11%
  • Recent credit applications: about 5%
  • Available credit: about 3%

DIFFERENCES FROM FICO

There are many similarities between the VantageScore and FICO scoring models. Both score consumers on a 300-850 scale, and both place the highest importance on payment history and credit utilization as the strongest predictors of credit risk. 

In general, FICO credit models group your credit report data into five categories, with the following weight:

  • Payment history (35%)
  • Amounts owed (30%)
  • Length of credit history (15%)
  • New credit (10%)
  • Credit mix (10%)

While the components of both credit scoring models are similar, the weighting differs slightly, along with some other aspects of the score. Those with limited credit history may find that they don’t have a FICO score, but do have a VantageScore: while FICO requires six months of credit history to establish a score, a VantageScore may be generated with as little as one month of data.

For those who have accounts formerly in collections that have been paid off in full, VantageScore will prove more forgiving: VantageScore ignores paid off accounts in collections in the computed credit score, unlike most versions of the FICO scoring models. The newest model, FICO 9, will similarly be ignoring those paid-off accounts.

SUMMARY

While credit scores – and, specifically, the numerous different scores you may encounter – can be confusing, they are an incredibly helpful tool to understand your own financial health and indicators that may play a role in determining whether you will be granted access to new credit from a lender. As securing credit can play a major role in significant life goals for many people, whether buying a car, a home, or financing education, it’s important to understand your score and how you can improve it. To see your score on Mint and receive personalized insights take a look here!  

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Source: mint.intuit.com

7 Tips for a Back-to-School Budget That Doesn’t Break the Bank

Back-to-school season comes around the same time every year, but like the holidays, it has a tendency to sneak up on parents — and their bank accounts. 

Last year, the National Retail Federation estimated that parents would spend a record average of $789.49 doing back-to-school shopping for children in elementary, middle or high school and about $1,059.20 shopping for college-aged kids. That’s a lot of money for pencils and glue (and Macbooks).

If you don’t want to get hit off guard with hundreds of dollars in expenses, you’ve got to plan ahead and be a smart shopper. Here are seven strategies for reining in your back-to-school budget.

7 Tips to Keep Your Back-to-School Budget on Track

These seven tips on creating a back-to-school budget can make shopping a little more bearable.

1. Total Up Everything You Need

Start with the list of requested school supplies provided by your child’s teacher or school district. Take inventory of what supplies you already have at home. Go through your kid’s dressers and closets to see what clothes and shoes they can still fit into before going out to buy a new wardrobe.

When creating your list, don’t forget the costs that aren’t obvious. For example, do you need to stock up on masks and hand sanitizer? Will you need to buy uniforms or equipment for sports or other after-school activities? Will your child need a physical before heading back to school?

2. Establish Your Spending Limit

It’s important to create a spending limit you’re comfortable with and that covers the basics. Going school shopping without a budget will only set you up for overspending.

Once you have your shopping list together, you can start pricing items, even if you don’t plan on actually buying anything until closer to the start of the upcoming school year. Create your budget based on regular retail prices rather than current sales. Overestimating your expenses will give you a little wiggle room when it’s actually time to shop.

After you’ve totaled up how much you expect to spend, do you have enough money? If not, you’ll have to adjust. 

3. Pad Your Back-to-School Shopping Budget

Earning extra money can always provide a little financial stress relief. That holds true for back-to-school season. 

Ask your employer about picking up extra shifts or working overtime. Find a temporary side gig, like dog walking, delivering groceries or doing odd jobs via TaskRabbit.

If you have older children, you could have them chip in on a portion of their school expenses — especially if they’re asking for pricey, name-brand clothing and school supplies. 

Talk to your teens about school shopping expectations. Have them share some of the cost of items that don’t fall within your budget.

4. Create a Sinking Fund For School Supplies

A sinking fund is a pool of money that you add to over time to break a large expense into more affordable chunks.

Let’s say you’ve estimated you’ll spend $600 for the back-to-school season, and you get paid three times before school starts. Each payday, you should set aside $200 in your sinking fund to cover the upcoming expenses.

If you take money from your existing savings to start the sinking fund now, you can take out less each paycheck.

Setting up a direct deposit or automatic transfer will help you save money in your sinking fund without even thinking about it.

5. Implement Challenges to Save Money

Saving money can be difficult, especially when you don’t have much time. Saving challenges can help you put aside more money than you’d think.

If you shop using cash, challenge yourself to save a certain denomination whenever it hits your wallet. Perhaps you save all the $5 bills you get as change. 

If you typically pay for things with a debit card, your money-saving challenge could involve rounding up each purchase to the nearest $5 increment and putting that difference toward your school expense savings.

Or try a no-spend challenge. Implement a 30-day freeze on discretionary spending so you have more money to pay for school supplies and related gear.

6. Be a Smart Shopper

Between now and the start of school, you’ll encounter enough sales promotions that it’d be foolish to pay full retail price for anything.

In addition to taking advantage of great deals, here are some other smart back-to-school shopping strategies to keep in mind:

The older your children get, the more opinionated they’ll probably be about what they want for the new school year. Talk to your kids about the cost of their school supplies and ask what is most important to them. 

After identifying a couple select splurge items, find ways to get everything else for less. It’s a great way to teach your kids about how to budget.

7. Figure Out Which Expenses You Can Delay

You don’t always have to buy everything in time for the first day.

Your kids may not need new clothes right away, especially if the weather is still warm and they don’t have to wear fall clothes yet. 

If you can, hold off a few weeks or more on buying the “fun” supplies, like new backpacks and lunchboxes. Retailers often will have great discounts after the back-to-school rush has died down and they are trying to get rid of that merchandise.

Nicole Dow is a senior writer at The Penny Hoarder.

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Source: thepennyhoarder.com

Where to Find Cheap or Free Tutoring for Your Kids

Whether your kid is struggling to read or to understand advanced calculus, some additional one-on-one instruction can make a world of difference. That’s why parents hire tutors — to boost their kids’ academic progress beyond the constraints of the school day.

But finding the funds to pay a tutor can be tough for a family on a budget. Costs vary, but it’s not unheard of to spend between $40 and $80 … per hour. And if your child is really struggling, chances are you’re going to need way more than one hour.

Here are some alternative ways to get educational assistance, even free tutoring, without breaking the bank.

6 Low-Cost or Free Tutoring Options

1. Get Extra Help With an Online Tutor

Online tutors don’t need a brick-and-mortar building, and they eliminate the need for anyone to commute. Everything is accessible with the click of a mouse. Your screen is your virtual whiteboard.

Some free or low-cost online tutoring websites include:

  • Khan Academy — a nonprofit organization that provides a wide range of free lessons to students all over the world.
  • Learn to Be — a Los Angeles-based nonprofit organization that provides free one-on-one tutoring to K-12 students in underserved communities.
  • Chegg Study — a 24/7 tutoring service for high school and college students where you pay $14.95 a month for expert homework help from a variety of subjects including math, science, engineering and business.
  • Free Tutoring Center — a student-run service that provides free one-on-one tutoring to elementary and middle schoolers from economically disadvantaged backgrounds.
  • UPchieve — a free online tutoring app where volunteer tutors provide academic help in various math and science subjects. This service also offers free college counseling.
  • Varsity Tutors — an education platform that offers free large group classes and free learning tools for self-study. For more individualized help, Varsity Tutors charges for one-on-one tutoring and small group classes.
  • Outschool — an online learning platform that has a variety of classes for kids ages 3 to 18. Filter your class search by price to find offerings for $9 or less.

2. Browse Your Library’s Offerings

If you’re only using your library card to check out books, you’re likely missing out on all the neat opportunities your library has to offer. Some tutoring companies like Tutor.com and Brainfuse partner directly with public libraries to provide free online tutoring to students.

Ask your librarian about what your local branch offers. Outside of partnering with an online service, your library might host free or low-cost test prep or homework help. Your librarian might also know of students or teachers who offer affordable tutoring. At the very least, you can get pointed in the direction of helpful reference books and research materials related to your child’s topic of study.

3. Go Back to School

Sometimes the best place to get help is directly from your child’s teacher. He or she already knows your child’s unique challenges and learning style and is invested in seeing your kid improve.

Schedule a parent/teacher meeting to ask about opportunities for extra instruction. The teacher may be free to help your child during a study hall period, and you can bypass paying for a Saturday afternoon tutoring session.

Also, ask if there’s a peer tutoring program at school where older students or students excelling in a particular subject volunteer to aid those who need extra help.

Consider that the help may come from outside your kid’s individual school. National Honor Society members at the local high school might have an outreach program that would benefit your struggling middle schooler. Community colleges sometimes have academic resources available for high school students at low or no cost.

4. Be Selective About After-School Programs

Until kids are old enough to go home to an empty house, working parents often turn to after-school programs and extracurriculars. While karate practice and dance lessons sound fun, your kid won’t be working on math equations or language arts.

You can save money by choosing an after-school program that includes tutoring services. The Boys and Girls Club and the YMCA are two national youth nonprofits that often provide help with homework or studying for tests.

5. Call on Your Community for One-on-One Tutoring

Don’t underestimate the power of your social circle. Your friends or coworkers may know of organizations in your city that provide free or low-cost tutoring.

Ask the parents of your kids’ friends for recommendations on affordable tutors. An older sibling of your child’s best friend might be a math whiz. You may be able to barter with a classmate’s mom, exchanging tutoring sessions for free babysitting.

6. Give Into Screen Time on YouTube

Now this last one isn’t quite tutoring in the traditional sense, but you can turn to YouTube for almost anything these days — including K-12 subject matter. In most cases, you’ll be able to access instructional videos at no cost.

Has physics or chemistry got your kid down? Check out these YouTube science channels. This list of YouTube history channels may help students master the details of major world events.

The video-sharing platform just might get your kids to see their worst subject in a new light and find learning — dare I say it? — fun.

Nicole Dow is a senior writer at The Penny Hoarder.

Source: thepennyhoarder.com

People Say to Give Up These 4 Things and Retire Early — They’re Wrong

If you’re not already rich, the race to early retirement can feel like it’s marred by sacrifice. Give up this, give up that — like the only way to retire before 65 is if you suffer now.

Sure, you want to be able to enjoy early retirement, and that means having enough money saved to do so. But you also want to live your life now in a way that brings you joy.

A study from annuity.com found that people would be willing to sacrifice several of life’s greatest conveniences to be able to achieve FIRE (financial independence, retire early):

The study shows that 20% of people would forgo having children, 27% would live without a pet and 28% would give up dining out just to have their retirement party a decade or two earlier. Some people would even move into a tiny home or sell their car!

But we know there are better ways. You don’t have to give up the things you love just to retire when you’d like to. Here are a few things people suggest giving up to accelerate their retirement timeline — and why we think you shouldn’t.

1. What They Say: ‘Give Up Your Vehicle’

Between car payments, insurance and repairs, having a car can be a big expense. And people eyeing early retirement do tend toward a minimalist lifestyle, so getting rid of your vehicle can be a tempting expense to cut.

But unless you live in a city that’s bikeable or has great public transportation, you’re going to need your own way to get from point A to point B. So instead of selling or letting your lease run out, here are a few tips to cut your car expenses down:

  • Buy a used car. Even though the average interest rate to finance a used car is higher than a new car or leasing one, financially you can save thousands of dollars over the course of a few years.
  • Cut your car insurance costs. By checking quotes every six months, you can save an average of $489 a year on your insurance payments. A website called Insure.com makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and it’ll show you your options.

2. What They Say: ‘Give Up Online Shopping’

Online shopping can be an account drainer — it’s so easy to put things into your cart, click a few buttons and wait for your package to arrive a few days later. And if your aim is to save a lot of money over the next decade or two, online shopping can be a major roadblock.

But here’s the thing — you can still shop online. You just need to be smart about it: Never overpay, and get cash rewards.

That’s exactly what this free service does for you.

Just add it to your browser for free*, and before you check out, it’ll check other websites, including Walmart, eBay and others to see if your item is available for cheaper. Plus, you can get coupon codes, set up price-drop alerts and even see the item’s price history.

Let’s say you’re shopping for a new TV, and you assume you’ve found the best price. Here’s when you’ll get a pop-up letting you know if that exact TV is available elsewhere for cheaper. If there are any available coupon codes, they’ll also automatically be applied to your order.

In the last year, this has saved people $160 million.

You can get started in just a few clicks to see if you’re overpaying online.

3. What They Say: ‘Give Up Dining Out’

While the world was in quarantine, we learned to be more self-reliant in the kitchen, and many of us saw a significant drop in our dining-out expenditures (take-out, maybe not so much). So it’s understandable that 28% of people say they’d give it up entirely to reach their early retirement goals.

But for the other 72% who love going to restaurants and ordering delivery, financial independence isn’t off the table. There are just some strategic moves to make so you can keep supporting your favorite local spots and give your family a break from all the dishes.

First, look for discounts: You can find them on Groupon or with a AAA discount. You can even buy discounted gift cards on websites like Restaurant.com. If you have kids, check out restaurants that let them eat free on certain days of the week.

Next, make sure you’re getting cash back every time you go out to eat (or swipe your debit card in general).

If you’re not using Aspiration’s debit card, you’re missing out on extra cash. And who doesn’t want extra cash right now?

Yep. A debit card called Aspiration gives you up to a 5% back every time you swipe.

Need to buy groceries? Extra cash.

Need to fill up the tank? Bam. Even more extra cash.

You were going to buy these things anyway — why not get this extra money in the process?

Enter your email address here, and link your bank account to see how much extra cash you can get with your free Aspiration account. And don’t worry. Your money is FDIC insured and under a military-grade encryption. That’s nerd talk for “this is totally safe.”

4. What They Say: ‘Give Up More Living Space’

The tiny home — or small space — lifestyle has become increasingly popular among the retire-early crowd. It’s cheaper to own, likely includes no mortgage and is less expensive to upkeep, as well.

In fact, 17% of people surveyed said they would live in a space smaller than 700 square feet, if it meant they could retire early. For a single person that may be fine, but for couples or families — it might just not be enough.

Instead, you could keep the space you love and find ways to save money and make money with it:

Stop overpaying $690 on homeowners insurance

Luckily, an insurance company called Policygenius makes it easy to find out how much you’re overpaying. It finds you cheaper policies and special discounts in minutes.

In fact, it saves users an average of $690 a year — or $57.50 a month. It’ll even help you break up with your old insurance company. (You’re allowed to cancel your policy at any time, and your company should issue you a refund.)

And just because you’re saving money doesn’t mean you’re skimping on coverage. Policygenius will make sure you have what you need.

Just answer a few questions about your home to see how much money you’re wasting.

Make up to $300 a month from your empty garage

Extra rooms in your house don’t need to be left empty. You can rent out unused storage space — your shed, or your garage — to your neighbors who need it. A website and app called Neighbor can help you earn up to $300 a month, on your terms. Use this calculator to see how much your available storage space is worth.

Kari Faber is a staff writer at The Penny Hoarder.

*Capital One Shopping compensates us when you get the extension using the links provided.

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Source: thepennyhoarder.com

Can Missing Just One Payment Affect Your Credit Score?

By now you’ve probably begun, or perhaps even finished, your Christmas shopping.

And while December is a month filled with countless distractions one thing remains crystal clear, which is that you cannot forsake your obligations to lenders just because you’re distracted.

I just returned from a trial in Pennsylvania where one of the parties made countless excuses for why he couldn’t pay one of his loans on time and was constantly 30 to 60 days late.

The excuses ranged from falling down and hurting his knees to his dog being exposed to chemicals in his home.

And while everyone is sympathetic to the external pressures of life, due dates are never to be forsaken and lenders don’t care about your excuses.

Great Myths of Credit Scoring

One of the great myths of credit scoring is that minor late payments can’t hurt your scores if you quickly catch the account back up.

This is true BUT only if your late payment is isolated AND historical, meaning the account isn’t CURRENTLY delinquent.

In the world of credit scoring there are two categories of derogatory information; minor and major. The dividing line between the two categories is very clean.

Historical delinquencies that have not gone 90 days past due or worse are considered minor derogatory items. Everything else is considered a major derogatory item.

So, to be clear, minor would include only historical 30 and 60-day delinquencies.

Major would include defaults, any record of being 90 days late or worse, repossessions, tax liens, judgments, collections, foreclosures, bankruptcy, settlements, and accounts that are currently delinquent.

The influence on your credit scores is drastically different between a minor and major derogatory item.

Delinquency Vs. Major Derogatory Item

Using the only FICO credit score estimation tool in existence, I simulated the difference in scores between people who have never been delinquent on anything versus those who are currently delinquent, but not in default.

For those who are currently 30 days delinquent their scores were considerably lower, normally around 35-50 points in my simulations.

For those who were currently 60 days delinquent (but not in default) their scores were always over 100 points lower that those who have never missed a payment.

This is where the confusion begins because neither a 30 day or 60 day delinquency is considered a “major” derogatory item yet their influence on a consumer’s score is significant, which seems counterintuitive until you get a better explanation.

Scoring systems, like FICO and VantageScore, are designed to predict the likelihood that you’ll go 90 days delinquent soon after you apply for credit.

By being currently delinquent, even just 30 or 60 days, you’re making the credit score’s job easy because you’re currently proving that you’re willing to be past due on credit obligations, thus the drastic score drop.

There’s something else to keep in mind, and this isn’t a secret in my world although it’s not well known by consumers.

When you’ve got a “30 day late” on your credit report that means you’re actually at least 30 days late on the obligation.

Lenders are not permitted to report late payments to the credit bureaus until the borrower has gone a full 30 days past the due date.

So, if you’re a week or two behind on your loan payments those won’t ever be reflected on your credit reports, although you’ll likely have to pay late fees.

In fact, a 30 day late on a credit report actually means you’re 30-59 days late on the obligation. A 60 day late on a credit report actually means you’re 60-89 days late on the obligation, and so forth and so on.

Point being, even if an account is showing on the credit report as just being 30 days late it’s possible that it’s actually 40, 50 or almost 60 days late.

This is another reason credit scoring systems are so harsh on consumer’s who have currently delinquent accounts on their credit reports.

What’s the possible harm?

You may be thinking, “well, if I just catch up on the payment and I avoided going 90 days past due (major derogatory) then my score will recover.”

You’re exactly right, although you’re not going to fully recover your score but it will bounce back quite nicely.

However, this still doesn’t prevent significant downside to being currently past due.

Lenders only update your credit reports once a month. That means if you have an account that is showing up as being currently past due it will be that way for a full month.

And, that means your credit scores will likely be lower, and maybe considerably lower, for 30 days straight.

Many credit card and line of credit creditors pull your credit scores every month to determine if they still want to do business with you.

That practice is called “Account Management” or “Account Maintenance.”

Just look at your own credit reports and you’ll likely see a long list of inquiries that fall into those two categories.

If one of your creditors pulls your credit score during their account management process and sees that it has dropped due to the currently late account, they’ll likely react by closing your account, lowering your limits, or raising your interest rates.

John Ulzheimer is the Credit Expert at CreditSesame.com, and a credit blogger at SmartCredit.com, Mint.com, and the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit. You can follow John on Twitter here.

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Varo vs. Chime: Which Online Bank Is Best?

Tired of looking for a branch or navigating a clunky app when you need to manage your bank account?

For anyone who’s ready to walk away from traditional branch banks, an industry of online challenger banks has blown up over the past decade. Technology companies have swooped in to respond to the need for more mobility, better apps and lower fees.

Varo and Chime, two of the top players in the online banking space, compete for customers with no-fee bank accounts and high-yield savings you can set up and manage from your smartphone.

Which is a better fit for you? See how they compare:

Varo vs. Chime Comparison

Varo (previously Varo Money) and Chime each offer checking and savings accounts through user-friendly mobile apps and online banking. Here’s how we rated each company.

Chime and Varo offer most of the same account options aimed at simplifying banking and savings for anyone who’s ready to say goodbye to traditional banks.

  Varo Chime
Checking Account A A-
Savings Account A+ B
Convenience B+ A-
Mobile Banking A B
Small Business Banking n/a n/a
Fees $2.50 + third-party fees for out-of-network ATMs; up to $5.95 retailer fee for over-the-counter deposit or withdrawal $2.50 + third-party fees for out-of-network ATMs; up to $5.95 retailer fee for over-the-counter deposit; $2.50 + up to $5.95 retailer fee for over-the-counter withdrawal
Average Grade A B+
Full Review Varo Bank Review Chime Bank Review

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Chime Overview

Chime is the leader in online banking, offering a no-frills account with features meant to simplify your money management and help you reach savings goals.

Chime Features and Fees

Chime offers fee-free online spending and saving accounts. It includes built-in automatic saving features, SpotMe fee-free overdraft protection, access to two fee-free ATM networks and more.

Chime is known for fee-free services, so you won’t pay for much. You’ll just pay a $2.50 out-of-network ATM fee, plus any fee charged by the ATM operator. And you could pay up to $4.95 to withdraw or deposit cash through your debit card at a Green Dot retail location.

Chime Bank Review

Is Chime right for you? Read our full Chime review to learn more about its features and see what it has to offer.

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Varo Overview

As of July 2020, Varo is the first banking app to gain approval for a full bank charter in the U.S. That means it’s its own bank, unlike other banking apps, which provide technology and work with national banks to provide the financial services and accounts behind the scenes.

It hasn’t yet taken full advantage of its status to offer a full suite of financial services, but it does offer services beyond its original stripped-down checking and savings account, including a forthcoming credit builder program and small cash advance loans.

Is Varo a good bank? Read our full review to learn more about its features and decide whether it’s a good fit for you.

Varo Features and Fees

Varo offers an online, app-based checking and savings account with built-in automatic savings tools, optional overdraft protection called Varo Advance, access to a network of fee-free ATMs and more. It also offers cash advance loans and is developing a credit builder program called Varo Believe for qualifying customers.

Nearly all Varo features are fee free. You’ll just pay $2.50 to Varo to use an out-of-network ATM, plus third-party ATM fees. And you could pay a third-party fee up to $4.95 to the retailer if you deposit or withdraw cash over-the-counter at a Green Dot location. If you use Varo Advance, you’ll pay a fee between $0 and $5, depending on how much cash you draw.

Varo Bank Review

Is Varo a good bank? Read our full Varo review to learn more about its features and decide whether it’s a good fit for you.

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More Details: Chime and Varo Bank Account Features

Both accounts offer these features:

Fee-Free Checking and Savings Accounts

Both Chime and Varo include a debit account (a.k.a. checking) and optional savings account, both with no monthly fees.

Automatic Savings Tools

Both accounts include simple ways to automatically build your savings account by setting rules to move money from checking to savings when you get paid and when you shop.

High-Yield Savings

Both savings accounts offer higher-than-average APY on your savings account balance.

Chime offers 0.50% APY on savings with no minimum balance requirement.

Varo offers 0.20% APY on savings to any customers, and you can earn 3.00% APY in a given month if you receive at least $1,000 in direct deposits, maintain a minimum balance of $5,000 and keep both of your accounts above a $0 balance during that month.

Early Direct Deposit

As with many online banks, both accounts make your paycheck available up to two days early if you get paid through direct deposit. The money is available in your account as soon as your employer processes payroll, which could be up to two days before the scheduled payday.

Overdraft Protection

Through Chime’s SpotMe overdraft protection program, the company will spot you up to $20 with no fee as long as your account has at least $500 per month in direct deposits. That limit can go up to $200 based on your account activity.

Through Varo Advance, you can add instant overdraft protection through the app with a small cash advance loan of $20, $50, $75 or $100, for a fee of $0, $3, $4 or $5, respectively.

Cash Deposits

With both Varo and Chime, you can deposit money into your bank account at more than 60,000 retail locations with Green Dot, which is a function many online banks don’t allow.

Bill Pay

With either account, you can pay bills through ACH transfer by giving companies your bank account and routing numbers, or mail a paper check.

Secure Deposits

Both companies provide FDIC-insured accounts up to $250,000 (the typical amount for any bank account). Chime partners with The Bancorp Bank and Stride Bank, N.A., and Varo Money is backed by its own Varo Bank.

Instant Money Transfer

With both Chime and Varo, you can send money instantly with no fees to others who use the same app. Varo Bank also works with Zelle for money transfers to folks who use other banks, though it admits the connection isn’t always reliable (and is working to fix that).

Second-Chance Banking

Neither company uses ChexSystems, which many traditional financial institutions use to determine your eligibility for a bank account, so a bad banking history won’t necessarily disqualify you for these accounts. Neither company checks your credit report for a banking account or credit builder card, either.

A woman with a yellow blouse and red book bag uses an ATM machine.
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Free ATM Withdrawals

A Chime account gives you access to 38,000 fee-free ATMs in the United States through the MoneyPass and Visa Plus Alliance networks. Varo’s account connects you to more than 55,000 fee-free Allpoint ATMs in the U.S.

Live Customer Support

Talk to a real person from either company via chat in the app, email or on the phone seven days a week.

Reach Chime customer service via email at [email protected], or by phone at 844-244-6363 during business hours: Monday through Friday 6 a.m. to 10 p.m. Central, and Saturday and Sunday 7 a.m. to 9 p.m.

Reach Varo customer service via email at [email protected], or by phone at 800-827-6526 during call center hours: Monday through Friday 8 a.m. to 9 p.m. Eastern, and Saturday and Sunday 11 a.m. to 7 p.m.

Push Notifications

Stay on top of your Varo account balance with optional notifications anytime money moves in or out of your account. Chime gives you the option to receive  a push notification when a direct deposit hits.

Credit Building Programs

Both companies offer a new, secure way to build credit.

Chime’s Credit Builder Visa credit card is a secured credit card with no annual fee, no credit check to apply and no minimum required deposit (an unusual feature for a secured card). It works like a debit card that lets you build credit.

Through the program, Chime members can move money into their Credit Builder account to back the card, make purchases with the card and have the balance automatically paid off from their Credit Builder account. Chime reports activity to credit bureaus, so the card is a less risky way to build or rebuild your credit.

Varo’s forthcoming Varo Believe program is nearly identical, backing a secured credit card with a dedicated amount of your choice from your Varo Bank account.

What They Don’t Offer

Neither platform offers these features:

  • Joint accounts or additional authorized debit card users.
  • Other financial products, like personal loans, auto loans and mortgages.
  • Refinancing.
  • Small business banking services.
  • Paper checks (though you can use bill pay to have the banks send checks for you,

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A woman peaks up from a book.
Getty Images

Which Is Better: Varo or Chime?

Chime and Varo bank account features are nearly identical, with details that could sway you one way or the other.

Checking

Varo Bank Account: A

Chime Spending Account: A-

Both banks offer a fee-free checking account for deposits and spending. In both cases, you’ll automatically apply for this account when you set up your account in the app (or online). You can fund it through direct deposit or transferring money from an external bank account.

Both Chime and Varo eschew traditional banking fees, including monthly maintenance fees, minimum balance fees and overdraft fees.

Both accounts let you get your paycheck up to two days early compared with a traditional bank, because they release the funds as soon as your employer initiates the deposit.

Both accounts come with a Visa debit card you can use for transactions anywhere Visa is accepted, and for ATM withdrawals. Both are also connected to the Green Dot network, so you can deposit or withdraw cash at retail locations around the U.S.

Overdraft Protection

Both Chime and Varo charge no overdraft fees and offer optional overdraft protection — but eligibility and details vary.

  • Chime SpotMe: Chime will spot you for an overdraft up to $200 and take it out of your next deposit. To be eligible, you just have to receive $500 in direct deposits every month.
  • Varo Advance: You can opt into overdraft protection as you need it with Varo Advance, a small paycheck advance you select instantly through the app. Choose an advance of $20, $50, $75 or $100, and pay a fee of $0, $3, $4 or $5, respectively. You’ll choose an automatic repayment date anytime between 15 and 30 days of the advance. To qualify, you have to have at least $1,000 in direct deposits within the past 31 days.

Savings

Varo Savings Account: A+

Chime Savings Account: B

Both Varo and Chime offer optional savings accounts that facilitate automatic savings and yield competitive interest rates.

Funding the Account

You can only fund a Chime Savings account by transferring money from your Chime Spending account — not through direct deposit or an external bank account. To add money from another source, you must first deposit it into your Spending account, then make an instant transfer.

You can deposit money into a Varo Savings account from your Varo Bank account in the app or directly from an external account through ACH transfer.

Savings Account Interest Rates

Both Chime and Varo savings yield interest at an annual percentage yield (APY) above the 0.06% national average for savings accounts reported by the FDIC.

Chime Savings offers a 0.50%% APY with no additional requirements.

Varo Savings offers a 0.20% APY with no requirements. You can earn up to 3.00% APY on balances up to $10,000 by receiving at least direct deposits of at least $1,000, maintaining a minimum $5,000 balance and keeping both your Bank and Savings accounts above $0 for the month.

Automatic Savings

Chime and Varo each let you select one or both of two savings “rules” that automatically move money into your savings account. Varo’s options are slightly broader than Chime’s.

  • Chime: Save when you get paid by transferring 10% of any direct deposit of $500 or more into savings. Save when you spend by rounding up Chime debit card transactions to the nearest dollar and depositing the digital change into savings.
  • Varo: Save Your Pay lets you set a percentage of your direct deposits to automatically transfer to savings. Save Your Change rounds up every transaction from your Varo Bank account — including debit card purchases, bill payments and transfers — to the next dollar and deposits the difference into your savings account.

Convenience

Varo: B+

Chime: A-

All online-only banks are convenient relative to traditional branch banks, unless you prefer face-to-face service from bank tellers at a brick-and-mortar bank.

Each bank’s mobile app lets you manage your account 24/7, including mobile check deposit and money transfers, and live customer service agents are available if you need questions answered.

Varo and Chime accounts offer features many online banks don’t, including cash deposits via Green Dot, early paycheck access and flexible overdraft protection.

Mobile Banking

Varo App: A

Chime App: B

Chime and Varo both offer mobile banking apps that are more user-friendly and easier to navigate than what you’ll get for most traditional bank accounts. However, both are pretty simplistic, lacking the budgeting tools you’d find in a lot of mobile apps.

In both apps, you can:

  • View and manage your accounts.
  • Transfer money between savings and checking, to and from external accounts, and to other customers of the same bank.
  • Deposit checks using your smartphone camera.
  • Locate in-network ATMS.
  • Freeze your debit cards.
  • Manage overdraft protection.
  • Contact customer support (via chat or email).

Push Notifications

Both apps give you the option to stay on top of your bank account balance by receiving a push notification every time money moves in or out of your account — via deposit or withdrawal, debit card purchase, or over-the-counter or ATM cash withdrawal. Chime also sends daily account balance alerts.

Small Business Banking

Neither Varo nor Chime offer small business banking accounts or products and services.

Account Fees

Both companies tout fee-free banking that eliminates many of the costs associated with traditional banks — largely because they don’t bear the expense of running brick-and-mortar locations.

You’ll pay no maintenance fees, overdraft fees or foreign transaction fees, and you can avoid ATM fees by using in-network ATMs.

With both banks, you’ll just pay for:

Out-of-network ATM: $2.50 for using an out-of-network ATM, plus any fee the ATM owner charges.

Cash deposit: You’ll pay a retailer fee up to $5.95 to deposit cash via Green Dot.

OTC cash withdrawal: You’ll pay a retailer fee up to $5.95 for a cash withdrawal via Green Dot. Chime also charges a $2.50 fee for over-the-counter withdrawal, while Varo does not.

Varo Advance: You’ll pay between $0 and $5 to use overdraft protection with Varo, while Chime’s SpotMe overdraft protection is free.

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How They Differ: Choosing the Right Bank for You

Overall, Chime and Varo offer similar banking products that will likely appeal to the same types of banking customers — but each has slight differences that might appeal to certain customers.

Who Should Join Either Bank?

You might prefer either account over traditional banks if:

  • You prefer the easy access and mobility of online banking.
  • You regularly run your account balance close to $0 or live paycheck to paycheck.
  • You’re often paid through direct deposit — you could benefit from an early payday!
  • You’re often paid in cash but want an online bank account.
  • You want an easy way to save money automatically.
  • You want a flexible and secure way to build credit without the risk of accruing debt.

A traditional bank or credit union is probably a better fit if you want to manage your checking, savings, loans, credit cards and investment accounts all in one place.

Who Should Join Varo?

Varo is better than Chime if:

  • You want to build an emergency fund. Varo’s Save Your Pay rule lets you set aside any percentage of your paychecks you want, so you can set it above Chime’s 10% Save When You Get Paid rule to help you reach your savings goals faster.
  • You want to make the most of your savings. Varo offers six times Chime’s interest rate on savings for qualifying account holders, though the rate comes with balance requirements.
  • You live in the Mountain states. Although services in general tend to be limited in this region, Allpoint’s ATM network has a little more coverage than both MoneyPass and Visa Plus Alliance in Montana, Idaho, Wyoming, Colorado, Utah and Nevada.

Who Should Join Chime?

Chime is better than Varo if:

  • You run on a tight budget. Chime provides overdraft protection with just $500 in monthly direct deposits compared to Varo’s $1,000-deposit requirement. It covers you up to $200 compared to Varo’s $100 and doesn’t charge a fee for the service.

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FAQs

Are Chime and Varo the same?

Chime and Varo are distinct companies operating online banking apps, but they each offer similar services.

Is Varo Bank a good bank?

Varo Money is a reputable and popular banking app backed by FDIC-insured accounts through Varo Bank. The mobile bank is a good option for anyone who likes online banking and has simple banking needs that don’t require all financial services to live under one roof.

Is Varo an actual bank?

Yes, Varo Bank, N.A. received approval for a U.S. bank charter in July 2020 and is an FDIC member. Varo Bank is a wholly-owned subsidiary of the financial technology company Varo Money, Inc., which operates the Varo Money banking app.

Which bank is better: Current or Chime?

Current is an online bank account that offers many of the same features as Chime and other neo bank competitors. Current stands out for offering “savings pods,” which help you save toward specific goals, and separate accounts for teens; but it charges fees to access those unique features.

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Bottom Line

You can sign up for either Varo or Chime by downloading their mobile apps or visiting their websites.

Neither account requires a minimum opening deposit, but you can connect an external bank account to transfer money in right away or set up direct deposit to fund your account when you get paid.

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Our Bank Review Methodology

The Penny Hoarder’s editorial team considers more than 25 factors in its bank account reviews, including fees, minimum daily balance requirements, APYs, overdraft charges, ATM access, number of physical locations, customer service support access and mobile features.

To determine how we weigh each factor, The Penny Hoarder surveyed 1,500 people to find out what banking features matter most to you.

For example, we give top grades to banks that have low fees because our survey showed that this is the No. 1 thing you look for in a bank. Because more than 70% of you said you visited a physical bank branch last year, we consider the number of brick-and-mortar locations. But more than one-third of you use mobile apps for more than 75% of your banking, so digital features are also considered carefully.

Ratings are assigned across the following categories:

  • Personal checking accounts
  • Personal savings accounts
  • Small-business banking
  • Convenience
  • Mobile banking

Credit card and loan products are not currently considered.

Dana Sitar (@danasitar) has been writing and editing since 2011, covering personal finance, careers and digital media.

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Source: thepennyhoarder.com