Biden’s Tax Plan Could Make ‘Marriage Penalty’ Worse

Getting married is likely one of the biggest life decisions you will make, and while it may seem like an easy one, it could just have gotten a little more complicated. In addition to the obvious selection and reflection of a life with a future spouse, and all the family, friends and other things that come with it, there may now be a new consideration to add to the mix: Uncle Sam.  That’s because the so-called “marriage penalty” may have just gotten larger for high-earning dual-income households. 

Under the recently released so-called “Green Book,” which contains the Department of Treasury’s tax-related proposal for the Biden administration, is a proposal to increase the top marginal income tax rate from the current 37% to 39.6%.  This is similar to previous tax increase proposals by President Biden.  Specifically, the Green Book provides that the increase, as applied to taxable year 2022, will impact those with taxable income over $509,300 for married individuals filing jointly and $452,700 for unmarried individuals.  However, because of the way our tax system and tax brackets work, some married couples who each earn under $452,700 would be subject to a higher tax, as compared to their single counterparts earning the same amount. In this instance, being unmarried and single is better — for tax purposes anyway.  

Married vs. Single: Do the Tax Math

The reason for this dichotomy is because we have different tax brackets for single filers and married filers. Assume you have a couple (not married) each making $452,699. These taxpayers would not have reached the highest bracket for an unmarried individual per the Green Book proposal.  Each individual would be taxed at the 35% bracket, resulting in approximately $132,989 in federal income taxes using this year’s tax bracket for single filers (or a total of $265,978 combined for both individuals).

 If instead this couple decides to marry, they will now have a combined income of $905,398, putting them in the highest tax bracket (39.6%) as married filing jointly. This translates to an estimated $284,412 in federal income tax, which is $18,434 more in taxes (or about 6.9%) than compared to a situation if they were single, according to a projected tax rate schedule we created based on the available federal income tax information.

There is another option for married couples: the filing status of “Married Filing Separately.” In this situation, the couple may file as “single” for tax purposes but must use the “Married Filing Separately” rate table, which for the vast majority of situations, when you do the math, does not yield a better result.

The Effect, Going Forward

If the changes, as currently proposed, pass, I am anticipating a lot of tax planning around filing status and income threshold management.  Accountants will be very busy with detailed analyses and projections to evaluate the optimal filing status for married couples, and where certain deductions or planning opportunities would be more beneficial if applied to one spouse over the other.

In extreme cases, could this factor into one’s marital decision?  While I certainly hope that we do not make life decisions around taxes, the reality is that taxes hit the bottom line, and that impact is real. 

No one has a crystal ball as to what will happen, but let’s hope that in the end, this doesn’t become an unforeseen factor in the increasing divorce rate we have already seen since the start of the pandemic.  Let’s hope for marital bliss, not marital dismiss.

As part of the Wilmington Trust and M&T Emerald Advisory Services® team, Alvina is responsible for wealth planning, strategic advice, and thought leadership development for Wilmington Trust’s Wealth Management division.
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This article is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service. It is not designed or intended to provide financial, tax, legal, investment, accounting or other professional advice since such advice always requires consideration of individual circumstances. Note that tax, estate planning, investing and financial strategies require consideration for suitability of the individual, business or investor, and there is no assurance that any strategy will be successful.

Chief Wealth Strategist, Wilmington Trust

Alvina Lo is responsible for strategic wealth planning at Wilmington Trust, part of M&T Bank. Alvina’s prior experience includes roles at Citi Private Bank, Credit Suisse Private Wealth and as a practicing attorney at Milbank, Tweed, Hadley & McCloy, LLC. She holds a B.S. in civil engineering from the University of Virginia and a JD from the University of Pennsylvania.  She is a published author, frequent lecturer and has been quoted in major outlets such as “The New York Times.”

Source: kiplinger.com

5 Ways to Get Amazon Prime for Free

Amazon Prime member holding packages
alphaspirit.it / Shutterstock.com

Shopping on Amazon can be convenient, especially if you are still spending more time at home amid the coronavirus pandemic. You can get anything from frozen pizza to light bulbs delivered to your door at the click of a button.

An Amazon Prime membership is even more convenient. Perks include not just faster shipping but also access to free e-books, music, file storage and more, as we detail in “These Are the 9 Best Benefits of Amazon Prime.”

While the convenience is great, the cost of membership may give you pause. In 2018, the online retailer raised the price of an annual Prime membership from $99 to $119 per year. For monthly subscribers, the cost went from $10.99 to $12.99 per month.

If you want to pay less but still enjoy the convenience of Amazon Prime, there are a few ways to get a free membership.

1. Get a free trial

If you want to try Amazon Prime to see if it’s worth paying for a membership, sign up for a free 30-day trial.

This is an option for people who are new to Prime as well as people who were Prime members in the past but have not been a member in the past 12 months. Just remember to cancel the trial before the 30 days is up if you decide you don’t want to pay for a membership.

Keep in mind that you can’t use a checking account or prepaid credit card to sign up for your trial: Your Amazon account must have a credit card.

However, you can use different email addresses to get multiple free trials, at least according to a 2018 Vice report. Again, remember to cancel each trial before it ends to avoid being charged for a membership.

If you’re a college student, you can sign up for a free Prime Student trial, which lasts six months. A Prime Student membership also costs less than a regular Prime membership if you decide to continue after your trial ends — $6.49 per month.

2. Use free Amazon gift cards

If you keep your Amazon membership after the free trial ends, consider paying for it with Amazon gift cards. There are various ways to get them for free. Check out the options in “8 Ways to Get Amazon Gift Cards for Free.”

3. Use credit card rewards

If you have a cash-back credit card, you could use your accumulated cash back to pay for a Prime membership — which kind of feels like you are getting Prime for free.

If you sign up for the Amazon Prime Rewards Visa Signature card, you will earn 5% cash back on purchases at Amazon and Whole Foods Market, and 1% or 2% everywhere else. If you spend $2,400 in a year at the 5% rate, you will earn $120 cash back — enough to cover the cost of a one-year annual membership.

If you’re in the market for a new card, stop by Money Talks News’ Solutions Center and use the free credit card comparison tool.

4. Switch cellphone plans

Looking to switch cellphone carriers? Some wireless providers offer Amazon Prime as a perk for signing up for select plans.

For example, Metro by T-Mobile gives customers Amazon Prime for free with select plans.

For more help finding the right plan for you, check out Money Talks News’ free cellphone and wireless plan comparison tool.

5. Share an account using Amazon Household

If someone in your household has an Amazon Prime membership, you can ask them to share it with you via Amazon Household.

Each of you keeps your own Amazon account, but the two accounts are linked, giving you access to select Prime benefits. They include:

  • Prime Shipping
  • Prime Video
  • Prime Reading
  • Amazon Photos
  • First Reads
  • Audible Channels
  • Prime Now
  • Other discounts and exclusives

Keep in mind that using the Amazon Household feature means sharing payment methods.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

Can You Use Food Stamps Online?

The food stamp program in the U.S. has made it possible for millions of Americans dealing with economic hardship to feed their families each day.

While food stamps, now officially called SNAP benefits, can help families save money on food, it hasn’t always been the most convenient way to shop for groceries. In the past, food stamp recipients needed to physically go into a store to shop for and pay for their groceries using a special (EBT) payment card.

As a result of the coronavirus pandemic, however, the United States Department of Agriculture (USDA) has expanded an online purchasing pilot program that allows SNAP recipients to purchase groceries online then arrange for pickup or delivery. The program is now available at certain retailers in most states.

Read on to learn where and how you can use food stamps to buy groceries online.

What Are Food Stamps?

“Food stamps” is an older, but still commonly used term to describe SNAP or the Supplemental Nutrition Assistance Program.

SNAP is designed to provide nutritional assistance to low-income families, as well as the elderly, disabled, and people who have filed for unemployment. SNAP is a federal program administered by the USDA’s Food and Nutrition Service, which has a network of local offices.

While SNAP doesn’t cover all the items you might pick up at the supermarket, it can significantly cut your grocery bill.

USDA national map .

Each state has its own application form. If your state’s form is not on the web yet, you can contact your local SNAP office to request a paper form.

What Stores Accept Food Stamps Online?

Thanks to the expedited expansion of an online purchasing pilot program run by the USDA’s Food and Nutrition Service, households receiving SNAP benefits in any of the 47 participating states (along with the District of Columbia) can now use EBT to pay for groceries online from select retailers.

Alaska, Louisiana, and Montana are not currently enrolled in the pilot. And, not every retailer in participating states supports EBT payments.

If a retailer is enrolled in SNAP’s online program, people on food stamps can select foods eligible for EBT benefits online and then arrange for in-store or curbside pickup. In some cases, it may be possible to have your groceries delivered. If the retailer charges a delivery fee, however, you cannot use your benefits to cover that fee.

While Amazon and Walmart are among the best known retailers for online EBT shopping, the number of stores accepting EBT card payment online is continuing to expand, and now even includes some “specialty” stores like Trader Joe’s.

FreshDirect, an online grocery delivery service, now delivers for free to SNAP participants in some zip codes in the New York metropolitan area.

And, Instacart, a grocery delivery service, is currently partnering with many local stores in the U.S. to offer SNAP EBT benefits. The latest version of the Instacart app should display whether your local store offers EBT SNAP.

Which retailers (and which specific locations) participate in the online SNAP program will vary from one state to another, so it’s a wise idea to check which options are available in your area.

Here are some of the retailers that are now accepting food stamps for online shopping (for either delivery or pickup):

• Walmart

• Amazon

• Aldi

• Food Lion

• Publix

• FreshDirect

• BJ’S Wholesale Club

• Kroger

• ShopRite

• Fred Meyer

• Safeway

• Albertsons

• Vons

• Hy-Vee

How to Use Food Stamps to Buy Groceries Online

The rules for using food stamps online will vary by retailer. For example, when shopping on Amazon, you can add your SNAP EBT card, shop for groceries, and when you check out, you enter your EBT PIN to pay for eligible purchases.

For Walmart, you can order groceries online or through the store’s grocery mobile app. You first need to sign into your Pickup & Delivery account and then select Payment Methods.

cash management account, you can track your weekly food spending right in the dashboard of the app. You can also earn competitive interest on your money, and won’t pay any account or monthly fees.

Learn how SoFi Money can help you manage your spending and saving today.

Photo credit: iStock/Yana Tatevosian


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25 Home Gym Decor Ideas for Your Apartment

Who needs a gym? Save some money with these apartment workout space ideas.

Working out in an apartment is tricky. While some complexes have shared fitness centers, you may not always want to leave the house to do your fitness routine. And on the other hand, trying to have some form of a gym inside your apartment is difficult and limiting when you’re renting. However, there are still plenty of home gym decor ideas that will make your workout space both beautiful and functional — even in an apartment.

Here are some ideas you can incorporate into your home gym decor.

1. Dual-function loft

home gym decor ideas

Photo source: Fitness Design Group

When you’ve got only one large space to work with rather than separate rooms, you may not want to dedicate it only to either a sitting room or a gym. Here, Fitness Design Group made sure there could be both by making a distinct separation between the function of each area.

2. Spin office

home gym decor ideas

Photo source: Love to Know

There’s no need to choose between having a home gym or an office — put them in the same space! You can even create a small separation between the two like Love to Know shares — placing a mat underneath your office area and a separate one for your workout area divides the room based on function.

3. Work(out) from home

working out from home.

Due to the recent pandemic, many people are working (and working out) from home. Working from home brings its own set of challenges, but avoiding the gym doesn’t need to become a hassle. A little side gym, connected to a home office, creates a seamless transition from work to workout at any point in the day, making your home office a functional place before, during and after work.

4. Bright and airy home gym

home gym decor ideas

Photo source: On Design Interiors

No matter the location or size of your home gym, there’s no reason for it to feel dark and dingy. These bright floors and light walls, brought to life by On Design Interiors, make this small space feel large and spacious. Not to mention how simple and chic the design is — it’s not over-the-top and creates a calming environment for exercising after a long, stressful day.

5. Mirrored weight room

home gym decor ideas

This simple, yet effective, basement setup shows just what you can do in a small space. This weight room isn’t very big, but a full wall of mirrors gives the illusion that it’s double the size. Even if you’re in a studio apartment, simply adding a large mirror on the wall near where you practice yoga or do a small-space workout routine will help it feel bigger.

6. Home office with modern wall designs

home gym decor ideas

Gyms don’t need to look boring, especially if it’s part of the place where you live. And it doesn’t take a lot to make your home gym look modern and appealing! Simple wall tiles or decals can quickly upgrade your gym without compromising its functionality. Even in a rental like an apartment, you can use peel-and-stick tiles and wall decor that can easily be removed without damaging the walls.

7. Jungle gym

home gym decor ideas

Photo source: Devon Grace Interiors

Adults aren’t the only ones that need to get their exercise in! Kids living in an apartment may feel a little limited at times without a full private yard to play in, so Devon Grace Interiors added a place for the kids to get their energy out.

The light-colored wood of the jungle gym doesn’t draw too much attention and keeps things muted, while still being a fun place for kids to play.

8. Sleek modern luxury home gym

home gym decor ideas

Making your home gym feel luxurious and modern is a simple matter of color and lighting. Adding a couple of backlit mirrors and incorporating metallics are what the Infinity Design Studio recommends.

9. Traditional CrossFit

home gym decor ideas

Photo source: DNLUD

This home gym by DNLUD is about as close as you can get to a typical CrossFit gym. For some, feeling like they’re at a gym rather than at home helps them get their minds into their workout. The mirrors are black gym mat flooring really gives it an out-of-home feeling.

10. Modern rustic home gym

home gym decor ideas

Photo source: Gambrick

Gambrick didn’t want to detract too much from the natural landscape and kept this in mind when they designed this gym for a modern rustic cabin-stile home in the mountains of Colorado. The deep oranges give just enough color while maintaining the integrity of the outdoors—no matter where you live, your apartment doesn’t have to feel separated from its surroundings.

11. DIY basement upgrade

home gym decor ideas

There are easy ways that anyone can upgrade their basement into a functioning gym. A little peel-and-stick wallpaper, mirrors and foam puzzle flooring turned a dark basement into a bright little workout space that can easily be removed if needed.

12. Spare bedroom fitness renovation

home gym decor ideas

An extra bedroom is already a luxury that not everyone has and instead of turning it into a seldom-used guest room, put it to better use. Light flooring and white walls with natural wood hanging hooks to keep equipment off the floor keep this room looking chic and clean—great for when you’re in a small apartment with not much room to spare.

13. Disguised cycle home gym

home gym decor ideas

You may only need one piece of equipment to get a full-body workout in. A stationary bike is perfect for requiring only a small corner—and that corner might be right in your kitchen! One Instagrammer disguised her bike in her kitchen area by placing a pretty painting and plants around it to blend it into the area.

14. Space-saving yoga grid

home gym decor ideas

When you don’t have room for a full yoga studio, a wall might be all you have. Higashi Fushimi recommends that it’s time to make your storage grid look good—like it’s an intentional part of your apartment’s design, with blended metal rods that both look good and function like any other storage.

15. Vertical storage in your home gym

home gym decor ideas

Choosing equipment and storage racks that work vertically rather than horizontally can keep your gym equipment from taking up too much space in your apartment. Lela of Organized-ish utilizes pegboards for small equipment storage and choose a multi-function vertical workout setup that only takes up a few feet of space in the corner.

16. Aesthetically-pleasing home gym equipment

home gym decor ideas

No need for your gym equipment existing as an eyesore. In fact, it is a beautiful addition to the main area of your apartment. See how Sunny Circle Studio chose wooden multi-use wall bars to provide function and design for a high-end vibe.

17. Upgraded garage

home gym decor ideas

If you’re lucky enough to have access to a garage, you can turn it into a chic and stylish workout room. Celebrity trainer Erin Oprea has even done it herself — add some peel-and-stick wallpaper and affordable vinyl flooring that mimics wood, and you’ve pretty much given yourself a whole new space!

18. Dual-function, hidden equipment home gym

home gym decor ideas

A coffee table that converts into a bench press, a lamp that doubles as a dumbbell and even a foam roller vase that looks and works both like exercise equipment and living room items. Swedish storage company 24Storage invented pieces of workout equipment that aren’t stored in the traditional manner — they’re functioning pieces of your living room! See what fits best in your living room.

19. Balcony home gym

home gym decor ideas

Get some fresh air by exercising on your balcony. Put your bike, treadmill or other machines outside so it doesn’t take up your indoor space. See how Merrick’s Art did with their balcony.

20. Home yoga studio

home gym decor ideas

Turn any open floor space into a yoga area. Keep storage baskets, like Manduka suggests, for your mat and other equipment nearby so when it’s not in use, you can keep your items out of the way.

21. Funky and fun home gym

home gym decor ideas

Don’t just hide your home gym — turn it into the main attraction! Decorilla emphasizes that having fun patterns and colors can both give you energy and help you relax — which is what your workout space should do.

22. Black on black home gym

home gym decor ideas

Having an all-black gym may not feel as light and airy as one with brighter colors, but it can change your mood when you workout. It may help you get more serious, which is beneficial when you’re doing a heavyweight routine or really want to push your limits — which is why Vogue highlights it in a luxury spread.

23. Walking desk as a home gym

home gym decor ideas

Make your work time (and space) the same as your workout! MyMove shows that a treadmill or stationary bike that allows you to use your computer at the same time will save you both time and space as a home workout alternative.

24. Bright home gym yoga space

home gym decor ideas

Use bright colors and neutrals for a calming yoga session. Stick with natural tones and materials, as LDA Architecture & Interiors recommends, and you’ll be feeling calm and serene every time you practice.

25. Neon home gym

home gym decor ideas

Give your workout space an edge with neon lighting. You can either do it all around the room and frame certain pieces, such as mirrors, with neon lights. Or you can add a motivational quote in the form of a neon sign to keep yourself going!

Functional and tasteful

Your home gym doesn’t have to look run-down or ugly. And you don’t need to get rid of it altogether, either! Using these home gym decor ideas, you can create a space that’s both beautiful and functional.

Source: rent.com

25 Best Kirkland Products You Should Buy at Costco

Costco has aggressively turned on its head the notion that a store brand is a notch below a national brand. How? By using its coast-to-coast strength to strong-arm suppliers to put quality as well as value into its Kirkland Signature offerings. A quarter of Costco’s annual sales now reportedly come from its Kirkland product lines, which first hit store shelves in 1995.

It’s no surprise. Costco continually upped its array of Kirkland Signature products, currently numbering 364 individual items, according to Costco’s website. Wary of store-branded items? Don’t be with Kirkland Signature. Many, if not all, are manufactured by top national and regional companies, including Duracell, which makes Kirkland Signature batteries, one of our recommendations.

On some Kirkland Signature products, don’t be surprised to see the name-brand manufacturer’s name co-branded with the Kirkland Signature, including the renowned Stearns & Foster on a Kirkland Signature by Stearns and Foster mattress (starting at $1,049.99), and nationally known Ocean Spray on the Kirkland Signature Cranberry Premium juice.

You’ll find the Kirkland Signature logo on everything from coffee to chicken stock, and golf balls to cheese wheels. We took a closer look at several Kirkland products getting accolades from customers and critics. You should check them out, too.

1 of 25

Kirkland Signature Organic Animal Crackers

Animal crackers lined up on a table in front of a young boy's mouth Animal crackers lined up on a table in front of a young boy's mouth

Whether you’re feeding your children or your own inner child, Kirkland Signature Organic Animal Crackers are off the leash. The sweet snacks, in case you forgot, are in the shape of bite-size animals. Kirkland organic animal crackers come in a 64-ounce barrel, priced at $9.99, or about 16 cents per ounce. Walmart was selling a 24-ounce barrel of Stauffer Biscuit Co. (non-organic) animal crackers for $3.98, or about 17 cents per ounce. 

If you’re not a Costco member, you can order the same barrel of animal crackers on Amazon.com, but you’ll pay nearly double: $15.98, or about 25 cents per ounce. Shipping is free for Prime members.

2 of 25

Kirkland Signature Bacon

Close-Up Of Bacon Slices In Barbecue GrillClose-Up Of Bacon Slices In Barbecue Grill

If everything is better with bacon, as the saying goes, then everything is super better with Kirkland Signature Bacon. The product-testing pros at Consumer Reports put bacon to the test and deemed Costco’s store-brand regular sliced bacon the top dog – make that the top pig. Testers raved about the taste, “noting its crispiness and balance of fat and meat flavors.”

They also raved about its price: Kirkland bacon typically sells for $1.50 less per pound than name-brand competitors. The Kirkland Signature sliced bacon comes in a pack of four one-pound individually wrapped packages for $18.99.

3 of 25

Kirkland Signature Batteries

The tops of a collection of AA batteriesThe tops of a collection of AA batteries

With back-to-school shopping revving up and, ahem, the holiday shopping season not that far away, you’re going to need more power for all those energy-sucking gadgets. Kirkland Signature batteries can keep all those electronic toys and devices charged up at bargain prices. A 48-pack of Kirkland Signature AA batteries — made by Duracell — is $13.99 (down from $15.99 in November 2020), or about 29 cents per battery. BONUS: The day I was there, Kirkland batteries were on sale for $4 off, making this packet of AA batteries $9.99, or 20 cents per battery.

Stepping into name-brand batteries will cost you more at Costco (and much, more at other places). A 40-pack of Duracell CopperTop AA batteries is $17.99, for example, or more than 44 cents per battery. (Costco often puts Duracell batteries on sale, however, so check the flyer or shelf tag if you must have a name brand.)

Meanwhile, Walmart was selling 24-packs of Energizer AA batteries for $16.24, or 68 cents per battery.

4 of 25

Kirkland Signature Cashews

Roasted cashews in a small bowl and on a tabletopRoasted cashews in a small bowl and on a tabletop

Costco knows nuts, and its Kirkland Signature Whole Cashews are a prime example. That’s not just this nut speaking.

“Costco’s nuts are always super-fresh and high-quality,” raves food and cooking website TheKitchn.com. “Unless you’re a big-time baker, 2- and 3-pound packages of nuts might seem like a daunting purchase, but don’t forget that they freeze beautifully.”

A 2.5-pound container of Kirkland Signature whole fancy cashews goes for $14.99, or $5.99 per pound, a good savings over the going rate for 2-pound, 1-ounce containers of Planters whole cashews at Walmart. They were selling for $18.98 per container, or about $9.49 per pound.

5 of 25

Kirkland Signature Cheese Wheel

Grocer with cheese wheel, partial viewGrocer with cheese wheel, partial view

Excessive, yes, but there’s an odd appeal to having your own 72-pound wheel o’ cheese. Costco knows this and complies. The Kirkland Signature Whole Wheel Parmigiano Reggiano can be yours for $949.99  or $13.99 per pound (up fifty bucks from 2019, when it was $899.99, or $12.50 a pound). I’ve had a piece of said wheel and it’s exceptional.

That per-pound price is a bargain, by the way, compared to Wegmans Italian Classics Parmigiano Reggiano Cheese sold at the regional Wegmans supermarkets, where chunks were going for $20.99 a pound (in various size chunks). But alas, the question inevitably arises: What do you do with a whole wheel of Parmigiano Reggiano? One answer: Pasta – lots and lots of pasta. And some foodie sites note if properly stored, the aged cheese can last for many months, and some say it can be frozen.

6 of 25

Kirkland Signature Chicken Stock

chicken soup with noodles in a white bowl on wood background in rustic style chicken soup with noodles in a white bowl on wood background in rustic style

For home chefs who do a lot of cooking, Kirkland Signature Organic Chicken Stock is a winner in taste and price. But be warned: You’re bulk-buying an entire case of chicken stock.

Still, it’s a good investment. Stock has a long shelf life, and the six quart-size boxes of organic chicken stock you’ll get at Costco cost just $10.99, or about $1.83 per quart. At Walmart, a single quart-size box of Swanson  chicken stock was selling for $2.72; however, it is not organic.

7 of 25

Kirkland Signature Coffee Pods

Opened and unopened coffee podsOpened and unopened coffee pods

If K-cups for the Keurig brand of coffeemakers help power you through your day, Costco has something for you to brew. Its lineup of boxes of Kirkland Signature K-cups include boxes of 120 medium roast pods for $34.99, or about 29 cents a pod.

You don’t have to go far to price-compare. Costco sells other brands, including a box of 72 Dunkin Donuts original blend medium roast coffee pods for $36.99. That comes out to 51 cents a pod.

Not a podster? Costco features a whole lineup of Kirkland Signature ground and whole-bean coffee, plus those of competitors. 

8 of 25

Kirkland Signature Diced Tomatoes

Top view of an opened can of diced tomatoes on a tableTop view of an opened can of diced tomatoes on a table

There’s a lot of cooking going on in our house, even by me. We go through a lot of tomatoes, and turn to Costco for help. In my opinion, Costco’s Kirkland Signature organic diced tomatoes — in boxes of eight 14.5-ounce cans — are the best. Each can is packed densely with tomatoes, whereas other, national brands are more watery. Each box sells for $5.99, or about 75 cents per can (and the price hasn’t changed in years). At Walmart, similar-size cans of its store brand Great Value organic petite diced tomatoes sell for $1.08.

9 of 25

Kirkland Signature Dishwasher Pods

Two dishwasher podsTwo dishwasher pods

If you run the dishwasher a lot, costs mount for those convenient dishwasher soap pods, especially if you’re buying name-brand detergent. You don’t have to.

Kirkland Signature Premium Dishwasher Pacs get the job done at a fraction of the price of national brands. You’ll pay $9.99 for 115 pods, or less than 9 cents per load. Costco also stocks packages of Cascade Complete Action pods for $15.99 for 90 pods, or more than 18 cents per load, twice the cost of the Kirkland brand. In recent testing by Consumer Reports, Kirkland’s pods bested all competitors including name-brand pods from Cascade and Finish.

10 of 25

Kirkland Signature Organic Brown Eggs

Brown eggs in an egg cartonBrown eggs in an egg carton

We go through a lot of eggs in our home, and the 24-pack of Kirkland Signature Organic Brown Eggs are always on the shopping list. They’ve been consistently good, and they come in at the right price: $6.29 for the 24-pack. That’s 29 cents per egg.

By comparison, a carton of 18 Walmart Marketside large organic  was $5.74, or 32 cents per egg.

11 of 25

Kirkland Signature Energy Shots

A man drinks an energy shotA man drinks an energy shot

Sometimes you need a little liquid encouragement to get through your busy days. Not that. This: Costco sells 48-count packages of 2-ounce Kirkland Signature Energy Shots for $34.99, or about 73 cents per shot. The day I was there an $8-off coupon discounted that price to $26.99, or 56 cents per shot.

By contrast, a single 1.93 ounce shot of 5-Hour Energy was selling for $2.78 at Walmart.

12 of 25

Kirkland Signature Food Wrap

Plastic food wrap wrapped around a dish with foodPlastic food wrap wrapped around a dish with food

Popularly known as “Saran wrap,” Costco can’t call its food wrap by that name because SC Johnson owns the trademarked Saran brand. By any name, however, the Kirkland Signature version is a winner on quality and price.

And here’s one where Costco’s Kirkland Signature co-brands with a national brand, Stretch-Tite. A single 3,000 square foot roll of Kirkland Signature Stretch-Tite Plastic Food Wrap sells for just $13.49, or about a half a cent per square foot. That’s 3,000 square feet of plastic wrap. At Walmart, a 225-square-foot roll of Reynolds Kitchens plastic food wrap was selling for $2.98, or about 1 cent per square foot.

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Kirkland Signature Gasoline

Cars being fueled at a Costco Gas Station in OregonCars being fueled at a Costco Gas Station in Oregon

Not every Costco has a gas station adjacent to it, but the club locations that do have them see steady, and strong, business. What gives? The savings. A Costco in central Virginia was selling regular Kirkland Signature Gasoline for roughly 9% less than nearby national brand stations. Sure, the difference is a few pennies per gallon, but on a fill-up you might save $3 or more – not bad if you’re heading to Costco anyway.

Factor in how valuable your time is, though. Even on a weekday afternoon, at least 7 vehicles were waiting in line, sometimes for 20 minutes or longer, to get to Costco’s gas pumps. That’s a lot of idling.

And one pro tip, fellow Costco gas guzzlers: Costco’s hoses are extra long, meaning you don’t have to drive up to the pumps on the side of the car where your gas tank door is located. If you’re close enough to the pump, the hose will reach either side. Many people waste precious minutes waiting to pull up to the “right” side of the pump.

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Kirkland Signature Golf Gear

Gloved hand removing a golf club from a golf bagGloved hand removing a golf club from a golf bag

When Costo released its Kirkland Signature golf balls in 2016, they were an immediate sensation, highly lauded by pros and amateurs alike. They also quickly sold out, as they were compared to the highly lauded Titleist Pro V1. 

They’re back. You can pick up a 24-pack of Kirkland Signature V2.0 Performance three-piece golf balls for $24.99. Costco-branded golf balls typically retail for 60% less than a Titleist.

But wait. There’s more: The equally lauded Kirkland Signature KS1 Putter is on Costco shelves for $139.99. Need a bit more in your bag? A Kirkland Signature 3-piece golf wedge set is $159.99.

While you’re at it, pick up a four-pack of Kirkland Signature golf gloves — sizes vary — for $19.99.

We can’t guarantee this Kirkland Signature will improve your game, but we can guarantee you’ll save a few bucks.

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Kirkland Signature Honey

Image of honey dripping from a spoonImage of honey dripping from a spoon

Costco is sweet on its Kirkland Signature brand of 100% U.S. raw, unfiltered honey in 3 pound jars. The price goes down easy: $8.99, or about 19 cents per ounce.  A 12-ounce jar of Walmart’s Great Value raw, unfiltered honey was $3.38, or 28.2 cents per ounce. 

 

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Kirkland Signature Italian Sparkling Water

Sparkling water and lemon on office wooden desk table.Sparkling water and lemon on office wooden desk table.

If you like your Italian mineral water sparkling, you might often turn to the classic San Pellegrino. Costco knows that. It stacks cases of its Kirkland Signature Italian Sparkling Mineral Water near cases of Pellegrino. I detected no taste difference, but there certainly was a price difference.

A case of 24 16.9-ounce bottles of Kirkland Signature Italian sparkling water was selling for $12.99 (same price as 2019), while a similar size case of Pellegrino sparkling water was $17.99 ($1 more a case at Costco than 2019).

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Kirkland Signature Laundry Detergent

Close-up Of A Person's Hand Pouring Detergent In LidClose-up Of A Person's Hand Pouring Detergent In Lid

So … it does all come out in the wash.

Costco tapped its Kirkland Signature brand to help do the laundry, and less expensively than national brands, some stacked and stocked near the KS brand.

For comparison’s sake, we spotted the Kirkland Signature UltraClean Premium liquid laundry detergent in 194-ounce jugs selling for $15.99 and yes, the packaging does look strikingly like Tide’s signature colors. UltraClean comes in at 8 cents per ounce.

Nearby, stacks and stacks of 150-ounce jugs of Tide Advance Power laundry detergent challenged UltraClean. But Tide Advance was selling for $19.99, or 13 cents per ounce. 

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Kirkland Signature Olive Oil

Feta salad with red bell peppers, tomatoes and olive oil Feta salad with red bell peppers, tomatoes and olive oil

Costco’s olive oil rises to the top, notes the University of California, Davis, which conducted a chemical and sensory study of olive oils. Kirkland Signature Organic Extra Virgin Olive Oil was one of only a few imported oils that met international and U.S. standards for extra virgin olive oil. The many brands that fell short in the testing were diluted with cheaper oils and exhibited problems with quality and flavor.

What’s also nice is the price. A 2-liter bottle of Kirkland Signature EVOO was $11.99, or about 17 cents per ounce. News flash: You can skip the Costco membership and get this same 2-liter bottle of Kirkland Signature EVOO on… wait for it: Walmart.com Um-hmmm. But it will set you back $34.24, nearly three times the cost at Costco.

Walmart does have its own branded EVOO. Its Great Value organic extra virgin olive oil is $9.86 for a 51-ounce jar, or about 19 cents per fluid ounce, and we’re not sure if it’s received accolades.

Note, too, the Kirkland Signature name is on a wide lineup of other cooking oils, including coconut, canola and corn.

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Kirkland Signature Organic Peanut Butter

Child eating peanut butter from the jar using a spoonChild eating peanut butter from the jar using a spoon

When my wife finally weaned me off creamy (and delicious) Jif peanut butter and into the world of peanut butter made without sugar (just peanuts; maybe some salt), my snacking world changed.

Our go-to brand had been Smucker’s organic creamy peanut butter, but after diving into Kirkland Signature Organic Peanut Butter, that, too, has changed. It’s just as good as Smucker’s, maybe even better, and there’s no arguing with the price. You can get two 28-ounce jars of Kirkland peanut butter for around $10, or 18 cents per ounce, while just one 16-ounce jar of Smucker’s costs $4.48 at Walmart, or 28 cents per ounce.

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Kirkland Signature Rotisserie Chicken

Dozens of whole chickens being roasted in an industrial broilerDozens of whole chickens being roasted in an industrial broiler

The Costco I go to in Virginia’s Shenandoah Valley must roast hundreds of chickens a day in its giant rotisserie oven, which is constantly getting loaded and off-loaded by the white-coated chicken changers. These Kirkland Signature Rotisserie Chickens are always tasty, and what’s not sold is repurposed in other Costco fresh foods made onsite. You can find some of that leftover poultry in Costco’s Kirkland Signature chicken noodle soup and packages of shredded chicken, great for creating a variety of your own dishes at home (and it freezes well).

The best part: Costco has consistently kept the price of each roasted chicken at $4.99, likely looked at as a loss leader. At a nearby Walmart, a lone rotisserie chicken was selling for $7.67 with nary a rotisserie in sight.

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Kirkland Signature Toilet Paper

A package of Kirkland toilet paperA package of Kirkland toilet paper

No one longs for the darker days of the pandemic, hunting down toilet paper anywhere you could. Some retailers, Costco included, limited how many packets you could buy. And most of what Costco sells in that department are 30-packs.

TP shortages seem to be a thing of the past. And not that it’s anybody’s business, but our house is Team Costco when it comes to TP. Kirkland Signature 2-ply bath tissue is a steal. Thirty high-quality rolls sell for just $16.99, a price Costco didn’t up during the pandemic. That price has been steady for years.

Facial tissue is another story. One shopping expert we consulted knocked the quality of Costco’s Kirkland Signature facial tissue, earning it a spot on our list of the worst things to buy at warehouse clubs.

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Kirkland Signature Organic Tortilla Chips

Tortilla chips and salsa on a tableTortilla chips and salsa on a table

This one is fairly new on our Kirkland Signature amazing lineup of snacks: 40-ounce (2.5 pounds) bags of Kirkland Signature organic tortilla chips. At about $5 a bag, or 12 cents per ounce, the price is right and the chips are tasty and durable enough to stand up to my amazing salsa-with-a-burn  (made with Kirkland organic diced tomatoes, naturally). Compare that to a 7.5-ounce bag of Simply Doritos Organic White Cheddar Tortilla Chips at Walmart. They sell for $2.98, or 40 cents per ounce.

Or if you crave the Kirkland Signature chips and you’re not a Costco member, you can buy a 40-ounce bag on Walmart.com … for $22.20.

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Kirkland Signature Vitamin Water

Bottles of vitamin waterBottles of vitamin water

Yes, bottles of the fruit-flavored, no-calorie and mineral-rich Kirkland Signature Vita Rain Zero are strikingly similar to Glaceau Vitaminwater Zero, but I dare you to find any difference in taste. There is a difference in price, which is significant to me; I drink a lot of this stuff.

Costco tabbed Kirkland’s 24-count variety pack of 20-ounce Vita Rain Zero bottles at $9.99, or about 42 cents per bottle. Walmart was selling Coca-Cola-owned Vitaminwater Zero Sugar Rise, electrolyte-enhanced water with vitamins for $4.98 for a six pack (these are 16.9-ounce bottles), or about 83 cents per bottle.

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Kirkland Signature Vodka

A drink being make with vodkaA drink being make with vodka

Wine snobs are already familiar with Kirkland Signature wines (more on those later), but spirits snobs might still be in the dark about Costco’s store-brand booze. Costco isn’t allowed to sell liquor in all of its stores; many states limit the warehouse club to beer and wine. But some states do give the green light to Costco selling liquor, and its vodka is a hands-down winner, rave spirits experts including Bon Appetit.

I first stumbled upon Kirkland Signature Vodka while shopping at a Costco on Florida’s Gulf Coast. Not that I’m so into vodka, but I do know good from bad. Kirkland’s vodka ranks up there with my fav, Tito’s Handmade Vodka, and it costs less.

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Kirkland Signature Wine

Two glasses of wine and a bottle on a table in sunlight.Two glasses of wine and a bottle on a table in sunlight.

Costco is the biggest seller of wine in the U.S., with estimated annual wine sales of $1.8 billion, and the warehouse club’s Kirkland Signature wines are a big reason behind the booming demand. As Annette Alvarez-Peters, who heads Costco’s wine-buying team, told Wine Spectator, “The Costco consumer is very loyal to the [Kirkland Signature] brand. They will always give the item a shot.” And why not? Wine rating websites typically give Kirkland Signature wines high scores in the mid-to-upper 80s out of 100.

One hint for picking especially good Kirkland Signature wines: When you see the Costco brand on the front label, turn the bottle around. You just might find the name of the source winery on the back label. That can tell you a lot about the experience of the wine maker and the quality of the grapes. Alternatively, read reviews online. This Costco-centric wine blog, for one, has taste-tested plenty of Kirkland Signature wines. In my own taste-testing of whites I found a nice Kirkland Signature Cabernet Sauvignon and a Kirkland Sonoma County Chardonnay for $7.99 each. These are big boys, too,1.5 liter bottles, not the typical 750 milliliters for mass retailers’ house wines, including Walmart, with its private label wines called Winemakers Selection, selling for about $5 to $12.99 per bottle, or Aldi, with its Winking Owl varieties, including chardonnay, pinot grigio, shiraz, zinfandel, merlot and cabernet sauvignon, selling for $2.95 a bottle.

Source: kiplinger.com

11 Foods That Can Keep for Years

Woman shopping for groceries
Prostock-studio / Shutterstock.com

If you hadn’t previously thought about how you would build up a food supply for an emergency, the coronavirus pandemic probably made you consider it.

What kinds of foods are best to keep in the pantry and freezer in case of a natural disaster, zombie apocalypse or pandemic that drags on for more than a couple of weeks?

Start with the following options. These foods can last for years before going bad.

1. Oats

This prolific cereal grain and staple of many American breakfast tables can last up to 30 years, according to the Utah State University Extension.

Store oats in airtight containers in a cool, dark, dry place. To maximize shelf life, use oxygen absorber packets.

2. White rice

Also known as polished rice, white rice has a shelf life of 25 to 30 years when properly stored. That’s why we included it in “20 Things That Are Actually Worth Stockpiling.”

The best temperature for storing this grain is 40 degrees Fahrenheit or lower. The best container is one that is sealed and oxygen-free.

3. Popcorn

Unpopped kernels can last two years, according to the Institute of Agriculture and Natural Resources at the University of Nebraska-Lincoln. Best storage is at room temperature.

4. Dark chocolate

Dark chocolate lasts up to two years if properly stored, according to Harvard’s T.H. Chan School of Public Health.

It should be stored in a tightly sealed containers and at a temperature of 65 to 70 degrees. Keep it in a dry location as well. Do not refrigerate it, because the sugar can rise to the surface and give the chocolate a whitish appearance.

5. Honey

Winnie-the-Pooh’s favorite can remain stable indefinitely, according to the National Honey Board. However, a two-year shelf life is standard.

The trade group explains:

“Honey stored in sealed containers can remain stable for decades and even centuries! However, honey is susceptible to physical and chemical changes during storage; it tends to darken and lose its aroma and flavor or crystallize. These are temperature-dependent processes, making the shelf life of honey difficult to define.”

6. Powdered milk

According to the U.S. Department of Agriculture’s FoodKeeper storage guide, powdered milk can last three to five years — but keeps only three months once the package has been opened.

For best storage, keep at cool temperatures in a dark location.

7. Dried beans

Dried beans and lentils have a shelf life of up to 30 years or more when stored properly, according to the Utah State University Extension. However, for best color and flavor, they should be used within 12 months.

The best method of storage is in No. 10 cans or Mylar-type bags with the oxygen removed, and keep the beans at a colder temperature.

8. Certain cheeses

Low-moisture, hard cheese can last from 10 months to several years, reports Dairy Foods Magazine. For example, the typical shelf life for Parmesan is up to five years, and that of aged cheddar is up to 10 years.

The Food Network has a handy how-to on best practices for cheese storage.

9. Canned foods

Generally, commercially canned foods that are canned in liquid should maintain their best quality until their expiration date, which is usually two to five years from the manufacture date, according to the Utah State University Extension.

Note that unopened home-canned foods have a shorter shelf life — one year — and should be used before two years. The USU Extension explains:

“Commercially canned foods are superior to home canned for food storage. Commercial canners can closely control quality and safety to produce the best product.”

When buying canned foods, avoid cans that are:

  • Rusted
  • Dented
  • Scratched
  • Bulging

10. Frozen foods

That succotash that’s been in your freezer for years might not taste amazing, but it’s perfectly safe and likely still nutritious — assuming your freezer has been kept at zero degrees Fahrenheit or colder.

According to the U.S. Department of Agriculture, foods frozen at that temperature remain safe almost indefinitely, and freezer storage has little to no effect on food nutrient value. Quality is a different matter, but the USDA has a handy storage chart showing how long different frozen foods maintain their quality.

The USDA recommends storing frozen food in packaging that keeps air out.

11. Sugar

How long does the sweet stuff last? Domino Sugar says:

“Sugar, properly stored, has an indefinite shelf life because it does not support microbial growth.”

However, Domino adds that sugar is best when used within three years of purchase. Powdered sugar is best when used within two years of purchase.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

How Important Is APY for a Savings Account? | The Simple Dollar

Even at a time when many Americans are simultaneously not saving money and saving more money than ever, savings accounts remain a valuable place to safely store your money. With FDIC insurance, your balance isn’t at risk, and you can withdraw it as needed. 

The drawback, however, is the relatively low interest rates as the Federal Reserve cut rates in March 2020 in response to the COVID-19 pandemic.

Most people know that when a bank offers you an APY on a savings account, it’s talking about interest rates. In general, the higher the interest rate, the better. However, APY is subtly different from the interest rates you may be familiar with, and that difference can cost you if you’re not aware of it. 

Let’s take a closer look at what exactly APY is, how it affects your savings account, and what that means for you in terms of depositing and withdrawing money.

In this article

What is APY?

APY is short for annual percentage yield, and it describes the percentage of your balance you would earn if you left the money sitting in that account for a full year, untouched. This includes any interest earned later in the year on interest accumulated earlier in the year.

APR, on the other hand, is short for annual percentage rate, and that’s the actual annual interest rate offered on your savings account. It does not include any interest earned later in the year on interest accumulated earlier in the year.

Knowing the difference is critical, and it’s all about understanding compounding.

Different savings accounts pay out interest at different times throughout the year. Some pay out interest once per quarter, while others do it once per month. 

When interest is paid out, the bank calculates the average balance of your account during that time span, then uses that number to determine how much interest to pay you. It uses a fraction of your APR that matches the fraction of the year that it’s paying out for.

APR and APY would be exactly the same if banks paid out interest once a year, but when they pay it out more frequently, the interest you earn in, say, the first quarter begins to earn interest itself in later quarters.

So, let’s say that your bank pays out a 1.2% APR on your savings account, but they compound monthly. That means that each month, it pays out 1.2%/12, or 0.1% of your average balance for the month. If that average balance is $10,000, it pays you $10.

The next step is where APR and APY begin to diverge. The next month, if you left the account alone, you have an average balance of $10,010 in there. Again, the bank pays out 0.1% of your average balance, but that now means you accumulate $10.01 in interest — 0.1% of $10,010. Now, your balance is $10,020.01. The next month, the bank pays $10.02 in interest, changing your balance to $10,030.03. This keeps repeating until you wind up with a balance, at the end of the year, of $10,120.66.

For this account, which offers a 1.2% APR and compounds monthly, you would be quoted the APY instead, and that’s 1.2066% (likely rounded to 1.21%). In other words, the APY is just a bit higher than the APR, and the difference gets bigger when the APR is higher and when interest is paid out more frequently (monthly is better than quarterly, for example, and produces a bigger gap between APY and APR).

The important thing to remember is that to get the full APY savings, you have to leave your money there untouched for the full year. If you pulled your money out after two months, with a balance of $10,020.01, your annual rate of return on that money would only be 1.2006%, not the 1.21% you’d get over the course of a full year. You only get the full APY value if you leave your money alone for a full year.

Why is APY so important? 

There are two big reasons why it’s so important to understand APY.

First, APY indicates what your annual rate of return would be if you left the money alone for a full year. You only get your full APY if you leave the money completely alone — interest included — for a full calendar year. You can withdraw it earlier, but your rate of return on that money will be lower because you didn’t allow for the time needed for your interest earnings to fully grow. This tends to be a small difference when interest rates are as low as they are now, but it can make a big difference in times with higher interest rates.

Even with that catch, APY is the preferred number banks like to quote you because it’s a little higher than APR and thus looks better. In other words, APY is the number you should use to compare the interest rates on various savings accounts, and it’s the most important number if you’re simply using a savings account to hold a lump of cash for a while until you need to withdraw it.

Where can I get the best APY?

Let’s take a snapshot look at the current APY offerings from several of our top savings account picks. In general, the best savings account rates are found with online banks, so it’s worthwhile to know the basics of online banking before choosing one.

*Rates accurate as of July 2021.

If your goal with a savings account is to simply deposit a sum of money, let it sit until you need it, then withdraw it, with minimal transactions or other needs, then APY is the most important factor in a savings account. 

Thus, for simply putting aside a windfall for the future, Varo is currently on of  the best high-yield savings accounts. This will change over time as interest rates change, however.

If you’re looking for a more full-featured bank, want a checking account and strong customer service features, APY becomes a less essential factor, particularly when interest rates are low. This is because banks change their interest rates somewhat regularly, and because the amount you’ll earn is usually relatively small compared to other banking fees and potential inconveniences due to poor customer service. 

For a good all-around bank with strong interest rates, I recommend Ally Bank. Its mix of great customer service, strong online banking tools, and a wide ATM network make it a great choice as a primary bank, and its interest rates are competitive, too. 

Re-evaluating your banking options is a great end-of-the-year financial task, even if you decide to stick with your current bank.

It’s also worth asking if putting money in a savings account is the best option, particularly while interest rates are low. Savings accounts are perfect vehicles for emergency funds, but you may want to consider other financial options if you have a large windfall on your hands. Consider paying down debt instead of saving or investing for retirement.

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

Recessions: 10 Facts You Must Know

It’s official. The Pandemic Recession that began in February 2020 ended in April of last year, according to the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), which is the arbiter of these things.

Although it was the shortest downturn in U.S. history, the economy is still recovering from the nearly 21 million jobs that were lost during the slump.

And it continues to haunt us in other ways. After all, a recession is the scariest creature in the average investor’s closet of anxieties. There’s little wonder why. People fear recessions because they can mean lower home prices, lower stock prices – and, of course, unemloyment.

Any number of things can cause, or exacerbate, a recession: an exogenous shock, such as the COVID-19 crisis or the Arab oil embargo of 1973; soaring interest rates; or ill-conceived legislation, such as the Smoot-Hawley Tariff Act of 1930.

Recessions are parts of the warp and woof of a dynamic economy, albeit unpleasant ones. And if you’re prepared for the next recession, there will be plenty of opportunities when that downturn ends. Thus, the more you know about recessions, the better. Here are 10 must-know facts about recessions.

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Why Are They Called ‘Recessions’?

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Because calling them “depressions” is too scary. No, really.

After the Great Depression – a term once considered milder than “panic” or “crisis” – the term “depression” for an economic downturn seemed particularly terrifying. Economists began to use the term “recession” instead.

Currently, “depression” is used to mean an extremely sharp and intractable recession, but there is no formal definition of the term in economics. The Pandemic Recession included levels of unemployment not seen since before WWII. And the 2007-09 recession certainly had uncomfortable similarities to the Great Depression, in that it involved a financial crisis, extremely high unemployment, and falling prices for goods and services. Economists now call it the Great Recession.

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What Constitutes an Official Recession?

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Someone has to be the official arbiter of recessions and recoveries, and the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER) is that someone.

Although two quarters of consecutive GDP contraction is the standard shorthand for a recession, the NBER actually uses many indicators to determine the start and end of a recession.

In fact, GDP is not the committee’s favorite indicator: It prefers indicators of domestic production and employment instead. Other signs of recession include declines in real (inflation-adjusted) manufacturing and wholesale-retail trade sales and industrial production. Prolonged declines in production, employment, real income and other indicators also contribute to the NBER’s recession call.

In the case of the Pandemic Recession, NBER says: “The committee has determined that a trough in monthly economic activity occurred in the US economy in April 2020. The previous peak in economic activity occurred in February 2020. The recession lasted two months, which makes it the shortest US recession on record.”

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How Long Do Recessions Typically Last?

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The average length of recessions going all the way back to 1857 is less than 17.5 months. Recessions actually have been shorter and less severe since the days of the Buchanan administration. The long-term average includes the 1873 recession – a kidney stone of a downturn that lasted 65 months. It also includes the Great Depression, which lasted 43 months.

If we look at the period since World War II, recessions have become less harsh, lasting an average of 11.1 months. In part, that’s because bank failures no longer mean that you lose your life savings, thanks to the Federal Deposit Insurance Corporation, and because the Federal Reserve has gotten (somewhat) better at managing the country’s money supply.

The longest post-WWII recession was the Great Recession, which began December 2007 and ended in June 2009, a total of 18 months. Conversely, the two-month Pandemic Recession helped nudge the average length of recession down a notch. 

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How Often Do Recessions Happen?

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Again, since 1857, a recession has occurred, on average, about every three-and-a-quarter years. It used to be the government felt that letting recessions burn themselves out was the best solution for everyone concerned.

Since World War II, we’ve gone an average of 58.4 months between recessions, or nearly five years. The last economic expansion, starting at the end of the Great Recession, lasted 128 months. By that measure, we were overdue for an economic retraction when the Pandemic Recession hit.

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When Was the Harshest Recession?

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The recession of 1873 was actually known as the Great Depression until the 1929 recession rolled in.

The recession started with a financial panic in 1873 with the failure of Jay Cooke & Company, a major bank. The event caused a chain reaction of bank failures across the country and the collapse of a bubble in railroad stocks. The New York Stock Exchange shut down for 10 days in response. The recession lasted until 1877.

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What’s the Worst Effect of a Recession?

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An old economist joke is that a recession is when someone else loses their job, and a depression is when you lose your job. (Very few economists have transitioned to stand-up comedy.)

Your job is your main source of income, and that’s why it’s important to have a few months’ salary in cash as an emergency fund – especially since jobs are increasingly hard to come by in a recession.

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When Is the Best Time to Buy Stocks in a Recession?

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Historically, the best time to buy stocks is when the NBER announces the start of a recession. It takes the bureau at least six months to determine if a recession has started; occasionally, it takes longer. The average post-WWII recession lasts 11.1 months. Often, by the time the bureau has figured out the start of the recession, it’s close to the end. Many times, investors anticipate the beginning of a recovery long before the NBER does, and stocks begin to rise around the time of the actual economic turnaround.

For instance, the Great Recession was officially announced on Dec. 1, 2008 – a full year after it had started. The recession ended in June 2009; the bear market ended three months earlier, on March 6, 2009. The ensuing bull market lasted more than a decade.

In the most recent case, the NBER called the end of the Pandemic Recession on July 19, 2021, or 15 months after it ended. Meanwhile, the S&P 500 gained 50% from April 30, 2020 to July 14, 2021.

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What’s the Best Thing to Do With Your Money During a Recession?

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Pay off your credit card debt. Here’s why: Paying off a credit card that charges 18% interest is the rough equivalent of getting an 18% return on your investment, and you’re not going to get that from most other investments during a recession.

That said, bond prices typically rise in value during a recession – provided the recession isn’t sparked by rising interest rates.

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What Is the Best Early Warning Sign of a Recession?

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More than the stock market, consumer confidence or the index of leading economic indicators, an inverted yield curve has been a solid predictor of economic downturns.

An inverted yield curve is when short-term government securities, such as the three-month Treasury bill, yield more than the 10-year Treasury bond. This indicates that bond traders expect weaker growth in the future. The U.S. curve has inverted before each recession in the past 50 years, with just one false signal.

This indicator worked for the Pandemic Recession too. The yield curve inverted multiple times in 2019 and early 2020. On March 3, the three-month T-bill yielded 1.13%, and the 10-year T-note yielded 1.1%. (To make matters a bit more complicated, some economists prefer using the two-year T-note yield instead of the three-month T-bill.) The index of leading economic indicators is a composite of 10 indicators – including the stock market and consumer confidence – and is useful for those who want a broader view of the economic picture.

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Does the Federal Reserve Cause Recessions?

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Officially, the Fed never wants to start a recession, because part of its dual mandate is to keep the economy strong. Unfortunately, the other part of the Fed’s dual mandate is to keep inflation low. The main cure for soaring inflation is higher interest rates, which slows the economy. In 1981, the Fed hiked interest rates so high that three-month T-bills yielded more than 15%. Those rates put the brakes on the economy and ended inflation – at the price of a short but sharp recession.

Source: kiplinger.com

SoFi 2021 Mid-Year Outlook: The Calm After the Storm

As we close out the first half of 2021 and embark on the second, the best way I can characterize what I see coming is the calm after the storm. Don’t get me wrong: everyday will not be calm. But compared to what we’ve been through and the strength we’ve seen in the aftermath, I’m hopeful that the rest of this year will be marked with steady economic progress, careful transitions by policymakers, and markets that can adapt to a new environment.

Calm Waters

At the start of the year, when the COVID-19 vaccine was just rolling out, it was difficult for many investors to believe in a solid, sustainable, and robust recovery. Since then, not only have many economic indicators exceeded expectations, but they’ve exhibited historic strength.

For instance, two-thirds of the jobs lost during the economic shutdown, about 14.7 million, have been added back. The unemployment rate has fallen from a peak of almost 15% during the crisis down to 5.8%. The Federal Reserve estimates that unemployment will fall to 4.7% by the end of 2021. Although we’re dealing with a stubborn number of unfilled job openings, it’s encouraging and a relief to see businesses creating jobs and planning to add even more in the second half of the year.

Unemployment and Job Openings

Sources: Clearnomics, Bureau of Labor Statistics

There is further evidence that business activity in many sectors has accelerated. The ISM Manufacturing Index is at its highest level since the early 1980s. Air travel has come back strongly as leisure travel saw a burst of activity and business travel has slowly resumed. Restaurant dining is going through a revival across the country as restrictions are fully lifted. Companies in all sectors, large and small, appear to be roaring back.

All told, US GDP is expected to have returned to its pre-pandemic level in the second quarter, which is six months ahead of the timeline we originally thought. The pent-up demand came out strong as consumers started spending on goods and services that were restricted for so long. The result has been undoubtedly positive for economic activity, but the swift rise in demand put a strain on supply chains and drove higher inflation readings, which I’ll cover in a later section.

I expect the positive economic momentum to continue through the second half of the year and into 2022. However, the year-over-year comparisons will become more difficult as the crisis periods fall further into the rearview. In order to maintain forward momentum in markets, the economy and businesses will need to generate new organic growth.

Rising Market Tides

Financial markets have been resilient during the first half of the year despite concerns such as rising rates and elevated valuations. And although broad stock indices have posted double-digit gains YTD, they feel hard-won when compared to last year’s impressive burst off the market bottom.

Surprisingly, the largest peak-to-trough decline this year has only been 4%, which is far less than the 30-year annual average peak-to-trough decline of 14.2%. While the market stumbled a time or two, it bounced back quickly to reach new highs. In fact, at the time of this writing the S&P 500 has posted 32 new all-time highs in 2021 alone.

Risk appetite continues to persevere, as demonstrated by the demand for a wide range of assets including technology stocks, cyclical sectors, small-caps, cryptocurrencies, SPACs, IPOs, and NFTs-to name a few. Tides are turning under the surface as market leadership has broadened out and rotated among sectors and styles (i.e., growth and value). While tech reigned supreme last year, cyclical sectors such as energy, industrials, real estate, materials, and financials have benefited from increased economic activity and the expectation of stronger growth ahead.

Investors remain resilient even as broad market valuations hover near record highs. The forward 12-month price-to-earnings (P/E) ratio is around 21x, compared to a 10-year average of 16.3x. The Shiller cyclically adjusted P/E ratio, at 37x, is also at its highest point in 20 years.

While some have compared the current market valuations to the dot com bubble, a key difference in this cycle is that corporate earnings are recovering just as rapidly as the economy. If all goes well in second quarter earnings season, S&P 500 earnings-per-share will exceed pre-pandemic levels. As earnings rise, valuation measures such as P/E ratios should naturally compress and start to look more reasonable. Sometimes bubbles can slowly deflate rather than burst.

S&P 500 Earnings Per Share

Sources: Clearnomics, Refinitiv

Which Direction to Steer the Ship

Markets are a forward looking indicator, meaning they trade on expectations more than events, and expectations have been moving higher for some time. While I expect economic growth to come in strong for the rest of the year, I worry that high expectations have already been reflected in the market and it will take a lot to impress investors in the second half. Measures such as Citi’s Economic Surprise Index have plummeted as lofty expectations actually came to fruition and were no longer a huge positive “surprise”. This could make it difficult for markets to find solid direction as we move through the rest of summer and await the Federal Reserve’s message in fall.

I am optimistic that markets can produce positive results in the second half as we transition away from perpetual policy support and back to focusing on the strength of company fundamentals (such as the quality of its financial statements, competitive position, valuation, and future growth potential).

Part of that fundamental story revolves around the forward progress in earnings. I believe the strong earnings momentum in large-cap cyclical sectors (energy, industrials, and materials) offers attractive opportunities through the end of the year. I also think industry groups such as travel and entertainment can continue to benefit from increased activity both here and abroad. This is not to suggest that sectors not mentioned above (such as technology or communications) are poised to post negative results, but simply that in this phase of the recovery, I view the opportunity set as having broadened out considerably to include more of the value-oriented sectors. Lastly on the domestic front, there is strong earnings momentum in small-cap stocks that bodes well for their leadership carrying forward through the third and fourth quarters.

While US stocks have done well this year, it’s important to note that the recovery is a global story and international markets may not be far behind. Regions like Europe may soon play catch-up as they recover from lockdowns and international travel resumes. Furthermore, the European Central Bank recently raised its growth and inflation forecasts, and key interest rates such as the German 10-year Bund have risen, possibly indicating stronger investor risk appetite.

Choppy Crypto Waters

As a newer asset class, some cryptocurrencies have garnered significant attention from individual and institutional investors alike, particularly due to their returns over the last year. Likewise, the swift and dramatic swings in price of those coins have also been a hot topic. As the US Dollar faces downward pressure from inflation expectations and large budget and current account deficits, interest in crypto assets is likely to remain strong. However, investors must keep in mind the potential volatility that comes along with them and ensure their risk tolerance can cope with the twists and turns.

Bitcoin and the Stock Market

Sources: Clearnomics, Bloomberg

Inflation Simmer Reaching a Boil?

Perhaps the biggest point of contention among investors this year has been the surge in inflation. After being subdued for decades, many are wrestling with the idea of higher prices and what they could mean for consumers and markets alike. The jury is also still out on whether these high inflation numbers are here to stay or will be “transitory,” as the Federal Reserve expects. So far, rising prices have been the result of three forces.

Consumer Price Index

Sources: Clearnomics, Bureau of Labor Statistics

First, as pent-up demand was released back into the economy, prices of goods and services moved quickly upward and reflected the surge in activity. But when we measure inflation, we do it on a year-over-year basis, meaning the increase in prices for Spring 2021 is compared to the depressed prices from Spring 2020, which exaggerates the data and makes them seem quite large. This is referred to as “base effect”-comparing current readings to an unusually low base.

Second, supply and demand disruptions have caused price pressures in various areas. For example, supply-chain issues that resulted from factory shutdowns have limited the availability of semiconductors, which in turn affects the prices and availability of everything from consumer electronics to cars. Another example is the mass migration to the suburbs that occurred and pushed up the prices of new and existing homes and drove strong demand in home furnishings—all of which have contributed to inflationary pressures. As economic activity picks up around the globe, commodity prices are surging as well, pushing up the costs of many consumer goods.

The first two factors – base effects and supply and demand – could very well end up being transitory as the simple passage of time may iron out the wrinkles. That said, it’s the third factor that could drive longer-term inflation: fiscal and monetary stimulus. So far, over $5 trillion has been spent or proposed on a variety of pandemic and economic stimulus measures. The Fed also continues to buy $120 billion of bonds per month, increasing its balance sheet and pumping liquidity into the system. Although there seems to be some discussion about tapering those purchases, it’s still only in the conversation phase.

Turning the Titanic

In addition to supporting maximum employment, managing inflation is a central mandate of the Federal Reserve. And just like investors, this is a problem that the Fed has not had to deal with in decades. So much so that the Fed changed its approach last year to target an average inflation rate over a longer period, rather than put too much weight on any one reading.

At the moment, Fed officials have indicated that they are happy to wait and see, although we did get a sliver of appetite for moving the rate hike cycle forward in the last meeting. I expect the Fed to be extremely cautious in making changes to its policy and to be even more cautious in how they signal their intentions to investors. Of course, this won’t stop markets from scrutinizing the Fed’s every word, but it does give us a better chance at avoiding another “taper tantrum” like the one we saw in 2013.

Federal Reserve Balance Sheet

Sources: Clearnomics, Federal Reserve

As it stands today, market expectations and Fed guidance indicate a tapering of bond purchases beginning in 2022 and a rate hike (or two) in 2023. The exact timing is uncertain and with each new release of the dot plot, I expect the chances of a sooner rate hike to increase. Specifically, if economic data, particularly labor market data, continue to show strength, I believe a rate hike would be likely in 2022.

Although that could put pressure on high growth stocks and cause wobbles in the market if and when the Fed’s narrative changes, the reality is that most investors should neither fight the Fed nor fear the Fed. If tapering and tightening begin for the right reasons–i.e., because the economy is strong and inflation is persistent–financial assets can still perform well. It’s about the speed and method of changing policy, not the change itself. Markets have risen during rate hiking cycles in the past, and they can again. I view the prospect of tighter policy as a change investors will need to digest, but one that indicates our economy is on the right path.

Conclusion

Returning to normal rarely means returning to the exact same normal. Even as the economy recovers and bounces back, it will be different than it was before. There will be different drivers of growth, new policies for markets to navigate, and transitions for businesses to make. That said, I am optimistic about the resilience of the US economy and hopeful that markets can enjoy a pleasantly calm second half.

Photo credit: iStock/atakan


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How Rising Inflation Affects Mortgage Interest Rates

Rising inflation can shrink purchasing power as prices of goods and services increase. This, in turn, can affect interest rates and the cost of borrowing. While the inflation rate doesn’t have a direct impact on mortgage rates, the two do tend to move in tandem.

What does that mean for homebuyers looking for a home loan and for homeowners who want to refinance a mortgage? Simply that as inflation rises, mortgage rates may follow suit.

Understanding the difference between the inflation rate and interest rates, and what affects mortgage rates for different types of home loans, matters in terms of timing.

Inflation Rate vs. Interest Rates

Inflation is defined as a general increase in the overall price of goods and services over time.

The Federal Reserve, the central bank of the United States, tracks inflation rates and inflation trends using several key metrics, including the Consumer Price Index, to determine how to direct monetary policy.

What to Learn from Historical Mortgage Rate Fluctuations

Inflation Trends for 2021 and Beyond

As of May 2021, the U.S. inflation rate had hit 5% as measured by the Consumer Price Index, representing the largest 12-month increase since 2008 and moving well beyond the 2% target inflation rate the Federal Reserve aims for.

While prices for consumer goods and services were up across the board, the biggest increase overall was in the energy category.

Rising inflation rates in 2021 are thought to be driven by a combination of things, including:

• A reopening economy

• Increased demand for goods and services

• Shortages in supply of goods and services

The coronavirus pandemic saw many people cut back on spending in 2020, leading to a surplus of savings. State reopenings have spurred a wave of “revenge spending” among consumers.

Although the demand for goods and services is up, supply chain disruptions and worker shortages are making it difficult for companies to meet consumer needs. This has resulted in steadily rising inflation.

Fed Chair Jerome Powell said in June 2021 that he anticipates a continued rise in the U.S. inflation rate in 2021. This is projected to be followed by an eventual dropoff and return to lower inflation rates in 2022.

In the meantime, the Fed has discussed the possibility of an interest rate increase, though there are no firm plans to do so yet. Some Fed bank presidents, though, have forecast an initial rate increase in 2022.

Recommended: 7 Factors that Cause Inflation – Historic Examples Included

Is Now a Good Time for a Mortgage or Refi?

It’s clear that there’s a link between inflation rates and mortgage rates. But what does all of this mean for homebuyers or homeowners?

It simply means that if you’re interested in buying a home it could make sense to do so sooner rather than later. Despite the economic upheaval in 2020 and the rise in inflation that’s happening now, mortgage rates have still held near historic lows. If the Fed decides to pursue an interest rate hike, that could have a trickle-down effect and lead to higher mortgage rates.

good mortgage rate, especially as home values increase.

The higher home values go, the more important a low-interest rate becomes, as the rate can directly affect how much home you’re able to afford.

The same is true if you already own a home and you’re considering refinancing an existing mortgage. With refinancing, the math gets a bit trickier.

You might want to determine your break-even point when the money you save on interest charges catches up to what you spend on closing costs for a refi loan.

To find the break-even point on a refi, divide the total loan costs by the monthly savings. If refinancing fees total $3,000 and you’ll save $250 a month, that’s 3,000 divided by 250, or 12. That means it’ll take 12 months to recoup the cost of refinancing.

If you refinance to a shorter-term, your savings can multiply beyond the break-even point.

If your current mortgage rate is above refinancing rates, it could make sense to shop around for refinancing options.

Keep in mind, of course, that the actual rate you pay for a purchase loan or refinance loan can also depend on things like your credit score, income, and debt-to-income ratio.

Recommended: How to Refinance Your Mortgage – Step-By-Step Guide 

The Takeaway

Inflation appears to be here to stay, at least for the near term. Understanding what affects mortgage rates and the relationship between the inflation rate vs. interest rates matters from a savings perspective.

Buying a home or refinancing when mortgage rates are lower could add up to a substantial cost difference over the life of your loan.

SoFi offers fixed-rate home loans and mortgage refinancing. Now might be a good time to find the best loan for your needs and budget.

It’s easy to check your rate with SoFi.

Photo credit: iStock/Max Zolotukhin


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Source: sofi.com