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How to Dispute Mistakes On Your Credit Report
Woman noticing mistakes on her credit report

There are several obvious reasons to give a hoot about your credit score, and very few reasons you should ignore it. After all, you'll need a good credit score and a solid credit history if you ever plan to purchase a home or take out an auto loan. A bad credit score can even come back to bite you if you want to rent an apartment or apply for certain jobs.

But your score isn't the only detail you need to pay attention to. You also need to keep an eye on your credit report — the document that lists your formal credit history including any accounts you have open, balances due, and payments you've made. 

Your report and your score are intricately intertwined. If bad information gets on your credit report due to fraud or misreporting, this can easily cause your credit score to nosedive. Likewise, a clear credit report with nothing but true (and positive) information can help your credit score reach greater heights.

That's why, every single year, you should get a free copy of your credit report from all three credit reporting agencies — Experian, Equifax, and TransUnion. Fortunately, this part is easy to accomplish via AnnualCreditReport.com.

How to dispute information on your credit report

Once you have a copy of your credit report from all three bureaus, you'll want to look over all the details to make sure they're correct. Incorrect information you might notice on your report may include: 

  • Errors regarding your name or personal information
     
  • Accounts that aren't even yours
     
  • Accounts belonging to someone with a name that is similar to yours
     
  • Closed accounts that are reported as open
     
  • Incorrectly reported late payments
     
  • Accounts listed more than once
     
  • Incorrect balances on accounts
     
  • Incorrect credit limits on accounts

Thanks to the Fair Credit Reporting Act (FCRA), both the credit bureau and whoever is providing them with information are responsible for correcting misinformation on your credit report. This means that, if a specific retailer or bank is reporting an account that isn't yours or an incorrect balance, both the credit bureau and the retailer or bank have to work together to make things right.

If you find an error, here are the steps you should take right away:

Inform the credit bureau with the incorrect information of the mistake

The first step you should take is informing the credit reporting agency of their error, keeping in mind that it's possible not all the credit bureaus will have the same information. You should let them know about the mistake in writing, taking special care to list important details about the mistake with proper documentation. The Federal Trade Commission (FTC) even offers a sample letter you can use if you need help. 

Note that credit bureaus usually have 30 days to investigate your claim and they are required to get back to you with a response. They are also required to forward the information you sent them to the provider who shared the information with them in the first place. 

Inform whoever provided the information of the mistake

You'll also want to provide the company reporting the incorrect information with copies of any documentation that prove an error has occurred. Make sure to include all details required to prove your claim along with copies of documentation that backs you up. The FTC offers another sample dispute letter you can use for this instance. 

Watch for your credit report to be updated

Generally speaking, credit reporting agencies are required to inform you in writing of the results of your case. They are also legally required to give you another free copy of your credit report if your dispute caused a permanent change. 

You also have the option to ask the credit bureau to send notices of any corrections to anyone who has requested your credit report within the last six months. You can even have an updated copy sent to anyone who has asked for a modified version of your credit report for reasons regarding employment. 

Caring about your credit

While the steps above may sound tedious, it's crucial to understand the damage incorrect information on your credit report can do. If you have inaccurate late payments on your report, for example, you could see your credit score plummet through no fault of your own. And if there are accounts on your credit report that aren't even yours, that could signify a much larger problem, such as outright identity theft.

Fortunately, the small amount of time required to dispute an item on your credit report really can pay off in a big way. After all, any negative information you manage to get wiped clean should immediately stop dragging your score down. 

However, you should also note that you'll only be able to get false negative information removed from your credit reports. Any damaging information that's true will have to linger on your report until enough time has passed. Generally speaking, negative information and reporting can remain on your credit report for up to seven years and bankruptcy can stay on your report for 10 years.

The bottom line

Errors happen all the time, and they may never be uncovered if you don't find them yourself. In addition to staying on top of your credit reports, it can help to sign up for a free service that gives you updates on new accounts in your name or fluctuations in your credit score. CreditKarma.com and CreditSesame.com are two that offer a similar free service with these features, so they are both worth checking out. 

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If bad information gets on your credit report due to fraud or misreporting, this can easily cause your credit score to nosedive. That’s why we’ve got the tips to help you dispute mistakes on your credit report. | #personalfinance #creditreport #debtmanagement






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The 8 Most Eye-Opening Money Attractions in the...
Wall Street bull in New York City

Some of my most memorable vacations have centered around money — and didn't require spending much of it at all. I had my photo taken next to a $1 million stack of bills at Binion's on a recent trip to Las Vegas. Another memorable experience was visiting the Bureau of Engraving and Printing in Washington, D.C. to see millions of dollars of being printed on the production floor.

If you get excited about money, check out these unique attractions across the U.S.

1. U.S. Mint

See the coin manufacturing process up close by taking a free tour at the Philadelphia and Denver facilities of the U.S. Mint. Learn about the process of minting coins from the design to the striking of coins. You'll be able to see how billions of coins are produced each year, and learn the history of coin-making. (See also: Where Are They Now? The Forgotten Dollar Bills (and Coins))

2. Binion's Gambling Hall and Hotel

Get a free souvenir photo of yourself standing next to $1 million in cash at Binion's Gambling Hall and Hotel in Las Vegas. Stop by to have your photo taken and come back about an hour later to pick up your free printed copy. It's pretty incredible to see that much cash up close.

3. U.S. Treasury

The main building of U.S. Treasury is the third oldest building in Washington, D.C. and has been renovated to preserve its impressive Greek Revival architecture. Some historical highlights at the U.S. Treasury include the offices of Salmon P. Chase, Secretary of the Treasury during the Civil War, and the offices used by President Andrew Johnson following Abraham Lincoln's assassination. The stately marble Cash Room has been restored to appear as it was at Ulysses S. Grant's inaugural reception in 1869. You can tour all of these sites by setting up a reservation ahead of your visit.

4. Wall Street

If your travels take you to New York City, check out the attractions of Wall Street, an area of New York City that has been focused on finance for over 200 years. Highlights include:

  • New York Stock Exchange: On the corner of Wall Street and Broad Street
  • Federal Hall National Memorial: On the corner of Wall Street and Broad Street
  • Museum of American Finance: Located at 48 Wall Street

You can take self-guided tours on foot, or there are other tour options available for free or under $40. (See also: 6 Confidence-Inspiring Facts About the Stock Market)

5. Chicago Board of Trade

Visit the home of the trading floors of the Chicago Board of Trade and the Chicago Mercantile Exchange to see traders at work in the pits as they buy and sell commodities. The Chicago Board of Trade building was once the tallest building in Chicago. Although it has been eclipsed by other taller buildings, it remains an Art Deco historic landmark with a glass observation deck with views of the skyline. Tours last an hour, and cost $20 per person.

6. Bureau of Engraving and Printing

If you want to see where money comes from, this is the stop for you! Learn about the production process for paper currency and watch millions of dollars being printed on the floor of the production facility at the Bureau of Engraving and Printing in Washington, D.C. The tour includes an introductory film and stops along the steps of the production process that results in legal tender. Admission is free, but a ticket is required. (See also: 10 Must-See Museums in the U.S.)

7. New York Fed Gold Vault

Unfortunately the bullion vault at Fort Knox is closed to visitors, but there is a place you can see tons of gold — literally. The gold vault at the New York Federal Reserve Bank houses approximately 508,000 gold bars, weighing in at 6,350 tons. Tour the gold vault for free and learn about the Federal Reserve System as you tour the Federal Reserve Bank.

8. Federal Reserve Bank of Cleveland

Visit the Learning Center and Money Museum at the Federal Reserve Bank of Cleveland for interactive exhibits and activities. Try your hand at bartering, see if you can correctly identify counterfeit bills, and even try making your own currency. Take a look inside the impressive building that houses the Cleveland Fed and learn how central banks operate. Admission and tours are free.

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If you get excited about money, check out these unique money attractions across the U.S. From the US Mint, to The Charging bull on Wall street, the New York Fed Gold Vault and more, these are the 8 tourism attractions that will get you thinking about you personal finances! | #personalfinance #USAtravel #moneymatters






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Someone Took Out a Loan in Your Name. Now What?
Distraught woman paying her bills at home

Identity theft wears many different faces. From credit cards to student loans, thieves can open different forms of credit in your name and just like that, destroy your credit history and financial standing.

If this happens to you, getting the situation fixed can be difficult and time-consuming. But you can set things right.

If someone took out a loan in your name, it's important to take action right away to prevent further damage to your credit. Follow these steps to protect yourself and get rid of the fraudulent accounts.

1. File a police report

The first thing you should do is file a police report with your local police department. You might be able to do this online. In many cases, you will be required to submit a police report documenting the theft in order for lenders to remove the fraudulent loans from your account. (See also: 9 Signs Your Identity Was Stolen)

2. Contact the lender

If someone took out a loan or opened a credit card in your name, contact the lender or credit card company directly to notify them of the fraudulent account and to have it removed from your credit report. For credit cards and even personal loans, the problem can usually be resolved quickly.

When it comes to student loans, identity theft can have huge consequences for the victim. Failure to pay a student loan can result in wage garnishment, a suspended license, or the government seizing your tax refund — so it's critical that you cut any fraudulent activity off at the pass and get the loans discharged quickly.

In general, you'll need to contact the lender who issued the student loan and provide them with a police report. The lender will also ask you to complete an identity theft report. While your application for discharge is under review, you aren't held responsible for payments.

If you have private student loans, the process is similar. Each lender has their own process for handling student loan identity theft. However, you typically will be asked to submit a police report as proof, and the lender will do an investigation.

3. Notify the school, if necessary

If someone took out student loans in your name, contact the school the thief used to take out the loans. Call their financial aid or registrar's office and explain that a student there took out loans under your name. They can flag the account in their system and prevent someone from taking out any more loans with your information. (See also: How to Protect Your Child From Identity Theft)

4. Dispute the errors with the credit bureaus

When you find evidence of fraudulent activity, you need to dispute the errors with each of the three credit reporting agencies: Experian, Equifax, and TransUnion. You should contact each one and submit evidence, such as your police report or a letter from the lender acknowledging the occurrence of identity theft. Once the credit reporting bureau has that information, they can remove the accounts from your credit history.

If your credit score took a hit due to thieves defaulting on your loans, getting them removed can help improve your score. It can take weeks or even months for your score to fully recover, but it will eventually be restored to its previous level. (See also: Don't Panic: Do This If Your Identity Gets Stolen)

5. Place a fraud alert or freeze on your credit report

As soon as you find out you're the victim of a fraudulent loan, place a fraud alert on your credit report with one of the three credit reporting agencies. You can do so online:

When you place a fraud alert on your account, potential creditors or lenders will receive a notification when they run your credit. The alert prompts them to take additional steps to verify your identity before issuing a loan or form of credit in your name. (See also: How to Get a Free Fraud Alert on Your Credit Report)

In some cases, it might be a good idea to freeze your credit. With a credit freeze, creditors cannot view your credit report or issue you new credit unless you remove the freeze.

6. Check your credit report regularly

Finally, check your credit report regularly to ensure no new accounts are opened in your name. You can request a free report from each of the three credit reporting agencies once a year at AnnualCreditReport.com. You can stagger the reports so you take out one every four months, helping you keep a close eye on account activity throughout the year. (See also: How to Read a Credit Report)

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Someone Took Out a Loan in Your Name. Now What?






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5 Things to Know Before Adding Someone to the Deed
Learning things before adding someone to a deed

Sharing is caring — at least that's what has been drilled into our minds. And for the most part, it's true.

However, if you're contemplating making the ultimate step in sharing — adding someone to the deed on your home — it's a good idea to consider the consequences. It's important to understand that when you add someone to your deed, you are entitling them to the same "bundle of rights" — control, enjoyment, possession, exclusion and disposition — that you have as a property owner. Before adding a loved one to your deed, it's important that you speak to an estate attorney and your mortgage lender to ensure you understand your rights, and to determine if this is the right move for you.

Here are five things you should consider before adding someone to your deed.

1. You can't take it back

When you add someone to the deed, all or a portion of your ownership is transferred to that person. Once it's done, you can't take it back unless the person you've added provides consent to be removed from the deed. He or she can take out a loan on the property, tear it down, or even sell their share of the property. And in some cases, there's nothing you can do about it.

Even if you transfer only a portion of your interest in the property, that person will have full control of their portion and may be able to force a sale of the property. If you want to refinance or sell your home, you must get permission from the individual you've added. This can lead to time consuming and costly legal battles that can tie up the property for years. Make sure you fully understand the implications and consequences before you sign on the dotted line.

2. You need permission from the lender

The law doesn't forbid adding people to a deed on a home with an outstanding mortgage. Mortgage lenders are familiar and frequently work with deed changes and transfers. Most lenders incorporate a loan "due-on-sale clause," which gives them the ability to call in the loan if the deed is transferred or if the home is sold. When you "deed" your home to someone, you've effectively transferred part ownership, which could activate the "due-on-sale" clause.

It is imperative that you understand the rules governing your particular situation. And you should obtain permission from your mortgage lender before adding someone to the deed. (See also: Why You Should Call Your Mortgage Lender Every Year)

3. Exposure to additional liability

Let's say you decide to add your brother to the deed. If he fails to pay taxes and incurs a tax lien, has problems with creditors, or goes through a nasty divorce, the IRS, his creditors, or his ex-spouse can lay claim to your home, or at least to his portion. In that situation, the entity owed can place a lien on your property and attempt to force a sale to collect the debt or tie up the property and prevent you from selling.

Adding someone to the deed of your home can also generate income tax liabilities when the residence is sold in the future.

4. IRS gift taxes may apply

When you add someone to your deed, the IRS sees it as a gift. That person becomes subject to IRS regulations concerning gifts. As of 2018, the IRS allowable gift limit is $15,000 annually, per person. Gifts that exceed this amount are subject to the gift tax.

The important take away here is that you should ensure you consult a tax attorney or Certified Public Accountant (CPA) before you add someone to your deed to ensure that you understand all of the implications and don't run into any surprises down the road. Your good intentions can be costly if not accompanied by due diligence. (See also: 4 Things You Need to Know About Gift Tax)

5. It can get complicated

There are so many hidden risks and pitfalls to adding someone to the deed. Remember, you become a joint owner rather than the exclusive owner. This change can impact your eligibility to sell or refinance. And for older homeowners near retirement age, transferring assets can adversely affect Medicaid eligibility.

Another thing to consider is that adding someone to the deed does not make them responsible for the debt. Unless the original loan agreement is modified, you are still solely responsible for repayment and the other person has ownership rights.

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If you’re contemplating adding someone to the deed on your home, you will be entitling them to the same "bundle of rights" — control, enjoyment, possession, exclusion and disposition — that you have as a property owner. These are 5 things you should consider | #housingtips #mortgage #deed #realestate






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5 Ways Gig Economy Workers Can Save for Retirement
Man saving for retirement in the gig economy

We are in the midst of a major economic shift. While workers in the past could expect to keep a stable job with a traditional employer for decades, workers of today have found they must either cobble together a career from a variety of gigs, or supplement a lackluster salary from a traditional job by doing freelance work in their spare time.

Though you can make a living (and possibly even a good one) in the gig economy, this kind of work does leave gig workers vulnerable in one very important way: retirement planning.

Without the backing of an employer-sponsored retirement account, many gig workers are not saving enough for their golden years. According to a recent report by Betterment, seven out of 10 full-time gig workers say they are unprepared to maintain their current lifestyle during retirement, while three out of 10 say they don't regularly set aside any money for retirement.

So what's a gig worker to do if they don't want to be driving for Uber and taking TaskRabbit jobs into their 70s and 80s? Here are five things you can do to save for retirement as a member of the gig economy. (See also: 15 Lucrative Side Hustles for City Dwellers)

1. Take stock of what you have

Many people don't have a clear idea of how much money they have. And it's impossible to plan your retirement if you don't know where you are today. So any retirement savings should start with a look at what you already have in the accounts in your name.

Add up how much is in your checking and savings accounts, any neglected retirement accounts you may have picked up from previous traditional jobs, cash on hand if your gig work relies on cash tips, or any other financial accounts. The sum total could add up to more than you realize if you haven't recently taken stock of where you are.

Even if you truly have nothing more than pocket lint and a couple quarters to your name, it's better to know where you are than proceed without a clear picture of your financial reality. (See also: These 13 Numbers Are Crucial to Understanding Your Finances)

2. Open an IRA

If you don't already have a retirement account that you can contribute to, then you need to set one up ASAP. You can't save for retirement if you don't have an account to put money in.

IRAs are specifically created for individual investors and you can easily get started with one online. If you have money from a 401(k) to roll over, you have more options available to you, as some IRAs have a minimum investment amount (typically $1,000). If you have less than that to open your account, you may want to choose a Roth IRA, since those often have no minimums.

The difference between the traditional IRA and the Roth IRA is how taxes are levied. With a traditional IRA, you can fund the account with pre-tax income. In other words, every dollar you put in an IRA is a dollar you do not have to claim as income. However, you will have to pay ordinary income tax on your IRA distributions once you reach retirement. Roth IRAs are funded with money that has already been taxed, so you can take distributions tax-free in retirement.

Many gig workers choose a Roth IRA because their current tax burden is low. If you anticipate earning more over the course of your career, using a Roth IRA for retirement investments can protect you from the taxman in retirement.

Whether you choose a Roth or a traditional IRA, the contribution limit per year, as of 2018, is $5,500 for workers under 50, and $6,500 for anyone who is 50+.

3. Avoid the bite of investment fees

While no investor wants to lose portfolio growth to fees, it's especially important for gig workers to choose asset allocations that will minimize investment fees. That's because gig workers are likely to have less money to invest, so every dollar needs to be working hard for them.

Investing in index funds is one good way to make sure investment fees don't suck the life out of your retirement account. Index funds are mutual funds that are constructed to mimic a specific market index, like the S&P 500. Since there is no portfolio manager who is choosing investments, there is no management fee for index funds. (See also: How to Start Investing With Just $100)

4. Embrace automation

One of the toughest challenges of being a gig worker is the fact that your income is variable — which makes it very difficult to plan on contributing the same amount each month. This is where technology comes in.

To start, set up an automatic transfer of an amount of money you will not miss. Whether you can spare $50 per week or $5 per month, having a small amount of money quietly moving into your IRA gives you a little cushion that you don't have to think about.

From there, consider using a savings app to handle retirement savings for you. For instance, Digit will analyze your checking account's inflow and outflow, and will determine an amount that is safe to save without triggering an overdraft, and automatically move that amount into a savings account. You can then transfer your Digit savings into your retirement account.

5. Invest found money

An excellent way to make sure you're maxing out your contributions each year is to change your view of "found money." For instance, if you receive a birthday check from your grandmother, only spend half of it and put the rest in your retirement account. Similarly, if you receive a tax refund (which is a little less likely if you're a gig worker paying quarterly estimated taxes), send at least half of the refund toward your retirement.

Any gig workers who often receive cash can also make their own rules about the cash they receive. For instance, you could decide that every $5 bill you get has to go into retirement savings. That will help you change your view of the money and give you a way to boost your retirement savings.

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Though you can make a living (and possibly even a good one) in the gig economy, what's a gig worker to do if they don't want to be driving for Uber and taking TaskRabbit jobs into their 70s and 80s? Here are five things you can do to save for retirement as a member of the gig economy. | #careerandincome #careertips #retirement #budgeting






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5 Renovations That Don't Increase Your Resale...
Couple renovating their home

The first major home renovation my husband and I ever undertook was insulating the walls of a 1921 Craftsman bungalow we shared in Columbus, Ohio. This project made the house a great deal more comfortable in the winter and the summer, since the existing insulation was the least expensive option available in the 1920s — making it completely inadequate for maintaining heat in the winter or coolness in the summer.

Unfortunately, despite the undeniable improvement to our comfort, we found that our new insulation did nothing for our resale value. Even though we had put nearly $5,000 worth of work and materials into this renovation, we didn't see that money and effort reflected in our sale price when we had to move several years later.

Not all renovations are going to increase your resale value. That doesn't necessarily mean you should forgo working on your home if you won't see the value when it's time to sell. For instance, I would definitely insulate that house again, even knowing that the money is only going to improve my comfort. 

But there are some home renovation projects that you just can't expect to recoup your investment on. Knowing that, you should consider how long you intend to live in your house and whether you're renovating just to increase your home's value before jumping into any of these home improvement projects.

1. Invisible improvements

Insulating our bungalow was the kind of invisible improvement that had to be done, but didn't appear to change the house. Unlike "sexier" improvements like updating a kitchen or bath, or even putting on a new roof, invisible improvements don't change the look of the house. These are things like re-grading the yard to keep water from getting into the basement, updating the HVAC system, tuck-pointing bricks and chimneys, and replacing gutters.

While these improvements often have to be done to protect your house, the downside is that you may not recoup the cost of these improvements when it comes time to sell. It can be helpful to think of these renovation expenses as a way of protecting your home's current value, rather than as a way to increase your future resale value.

2. Swimming pool

While homeowners in Arizona, Florida, Hawaii, and Southern California may find that having a swimming pool is a big selling point for their homes, this isn't going to be the case nationwide. According to HomeAdvisor, the average cost to install a pool is over $27,000. That doesn't include the annual maintenance costs, ranging between $500 and $4,000. It's these maintenance costs, plus the work that homeowners will have to either do themselves or contract out in order to keep their pool sparkling clean that will turn off many potential buyers. Add in the additional insurance requirements that homeowners with pools will need to purchase, and it should be clear why many prospective buyers would rather not invest in a home that comes with a pool.

This is why you should only commit to the cost of installing a pool if you truly want to use it yourself and expect to stay in your home for at least five years. Otherwise, it might make more sense to invest in a membership to your local pool. 

3. Bathroom and kitchen upgrades

Remodeling your bathroom and/or kitchen is an excellent way to increase your home's value, right? Yes and no. While replacing dingy tiling and updating old appliances will definitely help your home shine for potential buyers, there's such a thing as going overboard with your bathroom or kitchen upgrades.

Specifically, if you add granite countertops, custom-made cabinets, stainless steel appliances, and ceramic tiles to your kitchen and bathroom, but the rest of the home is still an ordinary suburban home, potential buyers will see the house as a work-in-progress, rather than a home that feels move-in ready. Over-improving the bath and kitchen could make buyers think that it's not worth the effort to try to get the rest of the house to match. (See also: 9 Home Improvements You Should Always Negotiate)

4. Built-in high-end electronics

We may all dream of living in a George Jetson house — where every possible electronic need you have is already built in — but committing to this kind of renovation may hurt your resale value. 

There are a couple of reasons for this. First, while your personal movie theater (with remote-controlled state-of-the-art projector) may be exactly what you want from your home, a potential buyer may just see a room that will need to be torn out and remodeled as soon as they move in. Plus, technology advances at a breakneck speed, so your cutting-edge electronics will soon look as dated as shag carpeting and harvest gold refrigerators.

If you need or want built-in high-end electronics in your home, make sure you're installing them for your own pleasure and comfort, because it's unlikely a buyer will appreciate them too.

5. Extravagant landscaping

Making improvements to your landscaping requires a gentle touch. On the one hand, landscaping is often touted as an important aspect of curb appeal, and making sure your yard and garden look attractive and welcoming is certainly a great way to draw in potential buyers. 

On the other hand, an elaborate landscaping remodel can turn off buyers. Those with black thumbs might look at your vast flowering garden with sculpted shrubs and pond and decide they are not up for the challenge of keeping it up, and those who do love to garden might not like your vision and want to start over.

If recreating the gardens of Versailles is how you make your house feel like a home, then there's nothing wrong with investing in this kind of renovation. But make sure you're doing this kind of work for yourself, and not because you hope to make back the money you spent once you're ready to sell. (See also: 14 Ways to Make Your Yard Look Awesome for Under $100)

Renovate for the right reasons

While many experts focus on resale value as the deciding factor on whether to take on a home improvement project, the important thing to remember is that you live in your house now. Deciding which home renovations to work on based on what someone else might like is the way madness lies.

When you make improvements to your home, make sure you take your own comfort, your plans for living in the home, and the potential resale value into consideration. They all matter.






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How to Protect Yourself From Credit Card Theft
protecting yourself from credit card theft

Last fall, I received an email that appeared to be from my web host. The email claimed that there was a problem with my payment information and asked me to update it. I clicked on the link in the email and entered my credit card number, thinking that a recent change I'd made to my site must have caused a problem.

The next morning, I logged onto my credit card account to find two large unauthorized purchases. A scammer had successfully phished my payment information from me.

This failure of security is pretty embarrassing for a personal finance writer. I know better than to click through an email link claiming to be from my bank, credit card lender, or other financial institution. But because the email came from a source that wasn't specifically financial (and because I was thinking about the changes I had made to my website just the day before), I let myself get played.

Thankfully, because I check my credit card balance daily, the scammers didn't get away with it. However, it's better to be proactive about avoiding credit card theft so you're not stuck with the cleanup, which took me several months to complete.

Here's how you can protect yourself from credit card theft. 

Protecting your physical credit card

Stealing your physical credit or debit card is in some respects the easiest way for a scammer to get their hands on your sweet, sweet money. With the actual card in hand, a scammer has all the information they need to make fraudulent purchases: the credit card number, expiration date, and the security code on the back.

That means keeping your physical cards safe is one of the best ways to protect yourself from credit card theft. Don't carry more cards than you intend to use. Having every card you own in a bulging wallet makes it more likely someone could steal one when you're not paying attention and you may not realize it's gone if you have multiple cards.

Another common place where you might be separated from your card is at a restaurant. After you've paid your bill, it can be easy to forget if you've put away your card (especially if you've been enjoying adult beverages). So make it a habit to confirm that you have your card before you leave a restaurant.

If you do find yourself missing a credit or debit card, make sure you call your bank immediately to report it lost or stolen. The faster you move to lock down the card, the less likely the scammers will be able to make fraudulent charges. Make sure you have your bank's phone number written down somewhere so you're able to contact them quickly if your card is stolen or lost. (See also: Don't Panic: Do This If Your Identity Gets Stolen)

Recognizing card skimmers

Credit card thieves also go high-tech to get your information. Credit card skimmers are small devices placed on a legitimate spot for a card scanner, such as on a gas pump or ATM. 

When you scan your card to pay, the skimmer device captures all the information stored in your card's magnetic stripe. In some cases, when there's a skimmer placed on an ATM, there's also a tiny camera set up to record you entering your PIN so the fraudster has all the info they need to access your account.

The good news is that it's possible to detect a card skimmer in the wild. Gas stations and ATMs are the most common places where you'll see skimmer devices. Generally, these devices will often stick out past the panel rather than sit flush with it, as the legitimate credit card scanner is supposed to. Other red flags to look for are scanners that seem to jiggle or move slightly instead of being firmly affixed, or a pin pad that appears thicker than normal. All of these can potentially indicate a skimmer is in place. 

If you find something that looks hinky, go to a different gas station or ATM. Better safe than sorry. (See also: 18 Surprising Ways Your Identity Can Be Stolen)

Protecting your credit card numbers at home

Your home is another place thieves will go searching for your sensitive information. To start, you likely receive credit card offers, the cards themselves, and your statements in the mail. While mail theft is relatively rare (it's a federal crime, after all), it's still a good idea to make sure you collect your mail daily and put a hold on it when you go out of town.

Once you get your card-related paperwork in the house, however, you still may be vulnerable. Because credit card scammers are not above a little dumpster diving to get their hands on your credit card number. This is why it's a good idea to shred any paperwork with your credit card number and other identifying information on it before you throw it away.

Finally, protecting your credit cards at home also means being wary about whom you share information with over the phone. Unless you've initiated a phone call of your own volition — not because you're calling someone who left a voicemail — you should never share your credit card numbers over the phone. Scammers will pose as customer service agents from your financial institution or a merchant you frequent to get your payment information. To be sure, you can hang up and call the institution yourself using the main phone number.

Keeping your cards safe online

You should never provide your credit card information via a link in an email purporting to be from your financial institution or a merchant. Scammers are able to make their fake emails and websites look legitimate, which was exactly the reason I fell victim to this fraud.

But even with my momentary lapse in judgment about being asked for my payment information from my "web host," there were other warning signs that I could've heeded if I had been paying attention. 

The first is the actual email address. These fake emails will often have a legitimate looking display name, which is the only thing you might see in your email. However, if you hover over or click on the display name, you can see the actual email address that sent you the message. Illegitimate addresses do not follow the same email address format you'll see from the legitimate company.

In addition to that, looking at the URL that showed up when I clicked the link could've told me something weird was going on. Any legitimate site that needs your financial information will have a secure URL to accept your payment. Secure URLs start with https:// (rather than http://) and feature a lock icon in the browser bar. If these elements are missing, then you should not enter your credit card information. (See also: 3 Ways Millennials Can Avoid Financial Fraud)

Daily practices that keep you safe

In addition to these precautions, you can also protect your credit cards with the everyday choices you make. For instance, using strong, unique passwords for all of your online financial services, from shopping to banking, can help you prevent theft. Keeping those strong passwords safe — that is, not written down on a post-it note on your laptop — will also help protect your financial information.

Regularly going over your credit card and banking statements can also help ensure that you're the only one making purchases with your credit cards. It was this daily habit of mine that made sure my scammers didn't actually receive the computer they tried to purchase with my credit card. The fact that I check my balance daily meant I was able to shut down the fraudulent sale before they received the goods, even though I fell down on the job of protecting my credit card information. 

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It’s better to be proactive about avoiding credit card theft so you're not stuck with the cleanup. Here's how you can protect yourself from credit card theft. | #Creditcard #creditcardtheft #personalfinances






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16 Small Steps You Can Take Now to Improve Your...
Pretty brunette with moneybox in hands

You have all kinds of financial goals you want to achieve, but where should you begin? There are so many different aspects of money management that it can be difficult to find a starting point when trying to achieve financial success. If you're feeling lost and overwhelmed, take a deep breath. Progress can be made in tiny, manageable steps. Here's are 16 small things you can do right now to improve your overall financial health. (See also: These 13 Numbers Are Crucial to Understanding Your Finances)

1. Create a household budget

The biggest step toward effective money management is making a household budget. You first need to figure out exactly how much money comes in each month. Once you have that number, organize your budget in order of financial priorities: essential living expenses, contributions to retirement savings, repaying debt, and any entertainment or lifestyle costs. Having a clear picture of exactly how much is coming in and going out every month is key to reaching your financial goals.

2. Calculate your net worth

Simply put, your net worth is the total of your assets minus your debts and liabilities. You're left with a positive or negative number. If the number is positive, you're on the up and up. If the number is negative — which is especially common for young people just starting out — you'll need to keep chipping away at debt.

Remember that certain assets, like your home, count on both sides of the ledger. While you may have mortgage debt, it is secured by the resale value of your home. (See also: 10 Ways to Increase Your Net Worth This Year)

3. Review your credit reports

Your credit history determines your creditworthiness, including the interest rates you pay on loans and credit cards. It can also affect your employment opportunities and living options. Every 12 months, you can check your credit report from each of the three major credit bureaus (Experian, TransUnion, and Equifax) for free at annualcreditreport.com. It may also be a good idea to request one report from one bureau every four months, so you can keep an eye on your credit throughout the year without paying for it.

Regularly checking your credit report will help you stay on top of every account in your name and can alert you to fraudulent activity.

4. Check your credit score

Your FICO score can range from 300-850. The higher the score, the better. Keep in mind that two of the most important factors that go into making up your credit score are your payment history, specifically negative information, and how much debt you're carrying: the type of debts, and how much available credit you have at any given time. (See also: How to Boost Your Credit Score in Just 30 Days)

5. Set a monthly savings amount

Transferring a set amount of money to a savings account at the same time you pay your other monthly bills helps ensure that you're regularly and intentionally saving money for the future. Waiting to see if you have any money left over after paying for all your other discretionary lifestyle expenses can lead to uneven amounts or no savings at all.

6. Make minimum payments on all debts

The first step to maintaining a good credit standing is to avoid making late payments. Build your minimum debt reduction payments into your budget. Then, look for any extra money you can put toward paying down debt principal. (See also: The Fastest Way to Pay Off $10,000 in Credit Card Debt)

7. Increase your retirement saving rate by 1 percent

Your retirement savings and saving rate are the most important determinants of your overall financial success. Strive to save 15 percent of your income for most of your career for retirement, and that includes any employer match you may receive. If you're not saving that amount yet, plan ahead for ways you can reach that goal. For example, increase your saving rate every time you get a bonus or raise.

8. Open an IRA

An IRA is an easy and accessible retirement savings vehicle that anyone with earned income can access (although you can't contribute to a traditional IRA past age 70½). Unlike an employer-sponsored account, like a 401(k), an IRA gives you access to unlimited investment choices and is not attached to any particular employer. (See also: Stop Believing These 5 Myths About IRAs)

9. Update your account beneficiaries

Certain assets, like retirement accounts and insurance policies, have their own beneficiary designations and will be distributed based on who you have listed on those documents — not necessarily according to your estate planning documents. Review these every year and whenever you have a major life event, like a marriage.

10. Review your employer benefits

The monetary value of your employment includes your salary in addition to any other employer-provided benefits. Consider these extras part of your wealth-building tools and review them on a yearly basis. For example, a Flexible Spending Arrangement (FSA) can help pay for current health care expenses through your employer and a Health Savings Account (HSA) can help you pay for medical expenses now and in retirement. (See also: 8 Myths About Health Savings Accounts — Debunked!)

11. Review your W-4

The W-4 form you filled out when you first started your job dictates how much your employer withholds for taxes — and you can make changes to it. If you get a refund at tax time, adjusting your tax withholdings can be an easy way to increase your take-home pay. Also, remember to review this form when you have a major life event, like a marriage or after the birth of a child. (See also: Are You Withholding the Right Amount of Taxes from Your Paycheck?)

12. Ponder your need for life insurance

In general, if someone is dependent upon your income, then you may need a life insurance policy. When determining how much insurance you need, consider protecting assets and paying off all outstanding debts, as well as retirement and college costs. (See also: 15 Surprising Insurance Policies You Might Need)

13. Check your FDIC insurance coverage

First, make sure that the banking institutions you use are FDIC insured. For credit unions, you'll want to confirm it's a National Credit Union Administration (NCUA) federally-covered institution. Federal deposit insurance protects up to $250,000 of your deposits for each type of bank account you have. To determine your account coverage at a single bank or various banks, visit FDIC.gov.

14. Check your Social Security statements

Set up an online account at SSA.gov to confirm your work and income history and to get an idea of what types of benefits, if any, you're entitled to — including retirement and disability.

15. Set one financial goal to achieve it by the end of the year

An important part of financial success is recognizing where you need to focus your energy in terms of certain financial goals, like having a fully funded emergency account, for example.

If you're overwhelmed by trying to simultaneously work on reaching all of your goals, pick one that you can focus on and achieve it by the end of the year. Examples include paying off a credit card, contributing to an IRA, or saving $500.

16. Take a one-month spending break

Unfortunately, you can never take a break from paying your bills, but you do have complete control over how you spend your discretionary income. And that may be the only way to make some progress toward some of your savings goals. Try trimming some of your lifestyle expenses for just one month to cushion your checking or savings account. You could start by bringing your own lunch to work every day or meal-planning for the week to keep your grocery bill lower and forgo eating out. (See also: How a Simple "Do Not Buy" List Keeps Money in Your Pocket)

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With the new year here, it’s time to take control of your financial goals. From creating a household budget, to calculating your net worth, or setting a monthly savings amount, we’ve got 16 small steps you can take to improve your finances. | #personalfinance #moneymatters #budgeting






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How to Stay Calm During a Market Fluctuation
Woman staying calm during market fluctuation

The last few weeks, I've been covering my eyes before I look at my investments, and only peeking through my fingers — as if I'm facing Freddy Kruger rather than a series of numbers. It doesn't help that the financial headlines are full of frightening potential futures: a possible recession, trade wars, and potential market corrections. 

It's enough to make me want to take all of my money out of my investments and put it somewhere safe, like my mattress.

But no matter how overwhelming a market fluctuation may be, I also know that pulling my money out of the market is the worst thing I could do when my portfolio is trending downward. That's because the only way to guarantee that momentary losses become permanent is to sell. 

Of course, knowing that you should stay the course is a lot easier said than done. If you're tempted to cut your losses when you hear gloom-and-doom financial predictions, it's especially important to learn how to keep your cool. Here are some ways you can stay calm when the market is scary.

Remember that it's okay to hide

Hiding your head in the sand gets a lot of flak, but there are times when it really is the best course of action. That's because of a cognitive bias that prompts us to take action in response to fear. We feel as though doing anything, even if it is counterproductive, is preferable to sitting around doing nothing. But listening to the action bias is the reason why people sell when the market is at its lowest and buy when it's at its highest. They're afraid of doing nothing.

Since it's nearly impossible to overcome the voice in our heads shouting at us to "Do something!" when the market is falling, the easier method of overcoming the action bias is to simply ignore your portfolio.

Of course, that doesn't mean you should never check on your holdings. However, obsessively consuming financial news and checking your portfolio on a daily basis will lead you to making fear-based (or greed-based) decisions, rather than following your rational investing strategy. 

Instead, plan to check how your investments are doing on a regular schedule — either every month or every quarter. This will give you the information you need to keep your asset allocation balanced and make necessary changes, without falling victim to the action bias. (See also: 5 Ways to Invest Like a Pro — No Financial Adviser Required)

Take comfort in history

Although the phrase "past performance is no guarantee of future results" is all but tattooed on the foreheads of every stock market analyst and financial planner, there is good reason to look at the past performance of the market as a whole. If you study the long-term trends and overall historical returns, you'll see that markets inevitably trend upwards.

Knowing that the market will recover does not make the short-term losses and volatility any more fun to live through, but it is easier to put any momentary losses you're experiencing in context. Savvy investors who didn't panic through the market corrections of 2000 and 2008 saw their portfolios recover over time. As stressful as any decline may be, trusting in a solid investment plan and the long-term historical trends of the market can help you stay the course and feel confident that you and your money will get to the other side. (See also: How to Prepare Your Money for the Coming Economic Slowdown)

Make a volatility plan

One of the reasons why we tend to overreact to volatility is because we forget that it's a natural part of financial markets. Market downturns are normal, and we should expect to live through several of them in a long investing career. However, we often expect that markets will only go up. With that kind of expectation, even a minor dip can feel overwhelming.

A good way to counteract those expectations (and the resulting fear when they're not met) is to create a plan for what you'll do during a downturn.

Your volatility plan could be as simple as committing to your head-in-the-sand strategy for downturns. Knowing ahead of time that you'll reduce your portfolio check-ins when things are looking grim can help you stick to that plan.

Your plan can also be proactive, rather than just reactive. Since you know that market downturns are normal and natural, decide ahead of time how you'll incorporate these fluctuations into your investing strategy. You might decide to purchase more investments during a downturn, rather than see it as something to fear. (See also: 7 Easy Ways to Build an Emergency Fund From $0)

Don't panic

Human beings are not wired to be rational investors, which is why we tend to be so bad at it. Our emotions can get the better of our rational strategies, especially when we're feeling afraid. But selling your investments because of market volatility and scary headlines is using a permanent solution for a temporary problem.

Think through how to respond to frightening market changes before they happen. Then you know that you already have a plan to fall back on, and you're less likely to simply react out of fear.

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The Pros and Cons of Refinancing an Auto Loan
Woman refinancing her auto loan

Over the last decade, the rising cost of new and used cars have driven up the amount of the average car loan. To make up for this, auto lenders have started offering longer car loans that let consumers borrow more with a lower monthly payment.

The State of the Automotive Finance Market from Experian states the average new car payment worked out to $554 during Q1 of 2019 while the average used car came with a monthly payment of $391. Worse, the average new car loan worked out to $32,187 while the average used car loan was $20,137. Meanwhile, the average loan term was more than 68 months for new cars and almost 65 months for used. 

It's never fun owing money on your car, but borrowing too much (or borrowing money for too long) can leave you wishing you had a different auto loan. This is especially true if your loan has a high interest rate because you had shaky credit when you applied.

If you're on the fence about refinancing your auto loan, it helps to know how this move could help you or hurt you. Here's everything you need to know. 

Pro: You could secure a lower monthly payment

Depending on the details of your initial loan, it's possible refinancing your car loan could secure a lower monthly payment you can more easily afford. This can be important if you're struggling to keep up with your payment as it stands, or if you just need more wiggle room in your monthly budget.

With a lower monthly payment, it might be easier to stay on top of your living expenses and other bills. And if you plan to keep your car for the long haul, you may not mind extending your repayment timeline in order to lower your payment each month. (See also: Cutting Your Car Payment Is Easier Than You Think)

Con: You may extend your repayment timeline

Getting a lower monthly payment can be a boon for your finances, but don't forget you'll likely be stuck paying on your car loan for months or years longer than you would have otherwise. And this can create unintended financial consequences later down the road. 

This is especially true if you're extending the loan on a used car that's already several years old. You could be stuck making payments on an older vehicle that breaks down and requires pricey repairs. This could be a double whammy for your finances later — even though refinancing saves you money on the front end. 

Pro: You could get a much lower interest rate

Another potential advantage of refinancing is the fact you might be able to qualify for a lower interest rate. If that's the case, refinancing your auto loan could save you hundreds — or even thousands — over the life of your loan. 

Imagine your current auto loan balance is at $15,000 and you have a 19 percent APR and 48 months left on your loan. From this point forward, you would pay an additional $6,528 in interest before your loan is paid off in four years.

If your credit score has improved, however, you might qualify for a new auto loan with a better rate. By refinancing into a new 48-month car loan at 9 percent APR, for example, you could reduce your future interest costs by more than half to just $2,917 while lowering your monthly payment in the process. 

Con: You might pay more interest over the life of your loan

Before you take steps to refinance your auto loan, make sure you run the numbers with an auto loan calculator so you can compare your total interest costs. Securing a lower interest rate or lower monthly payment may be a better deal in the short term, but you may wind up paying more interest on your loan due to a lengthier timeline.

Pro: Tap into any equity you have

Refinancing your auto loan can also help you tap into any equity you have in your car. This can be a lifesaver if you need money for emergencies or simply want to consolidate debt at a lower interest rate.

Just remember that, as highlighted above, refinancing could mean more interest paid over time — even if you get a lower rate. 

Cons: Refinancing isn't free

Finally, don't forget that refinancing your car loan typically comes with fees. These fees will vary depending on the auto lender you work with, but they can include an application fee, an origination fee, and an auto lien transfer fee.

Also, make sure to check that your initial car loan doesn't charge any prepayment penalties that will come into play if you refinance your loan. 

Should you refinance your car loan?

Only you can decide if refinancing your car loan makes sense. It's possible switching to a new loan could save you money on interest and/or leave you with a lower monthly payment, but it's also possible a new loan will leave you paying more interest and more fees over time.

Make sure you run the numbers before you move forward, but only after comparing auto refinancing offers from at least three different lenders. By comparing multiple lenders, you'll improve your chances of ending up with a new auto loan that will leave you better off. 

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How to Make Better Financial Decisions
Woman learning how to make better financial decisions

A key financial decision people struggle to make is how to allocate savings for multiple financial goals. Do you save for several goals at the same time or fund them one-by-one in a series of steps? Basically, there are two ways to approach financial goal-setting:

Concurrently: Saving for two or more financial goals at the same time.

Sequentially: Saving for one financial goal at a time in a series of steps.

Each method has its pros and cons. Here's how to decide which method is best for you.

Sequential goal-setting

Pros

You can focus intensely on one goal at a time and feel a sense of completion when each goal is achieved. It's also simpler to set up and manage single-goal savings than plans for multiple goals. You only need to set up and manage one account.

Cons

Compound interest is not retroactive. If it takes up to a decade to get around to long-term savings goals (e.g., funding a retirement savings plan), that's time that interest is not earned.

Concurrent goal-setting

Pros

Compound interest is not delayed on savings for goals that come later in life. The earlier money is set aside, the longer it can grow. Based on the Rule of 72, you can double a sum of money in nine years with an 8 percent average return. The earliest years of savings toward long-term goals are the most powerful ones.

Cons

Funding multiple financial goals is more complex than single-tasking. Income needs to be earmarked separately for each goal and often placed in different accounts. In addition, it will probably take longer to complete any one goal because savings is being placed in multiple locations.

Research findings

Working with Wise Bread to recruit respondents, I conducted a study of financial goal-setting decisions with four colleagues that was recently published in the Journal of Personal Finance. The target audience was young adults with 69 percent of the sample under age 45. Four key financial decisions were explored: financial goals, homeownership, retirement planning, and student loans.

Results indicated that many respondents were sequencing financial priorities, instead of funding them simultaneously, and delaying homeownership and retirement savings. Three-word phrases like “once I have…,", “after I [action],” and “as soon as…,” were noted frequently, indicating a hesitancy to fund certain financial goals until achieving others.

The top three financial goals reported by 1,538 respondents were saving for something, buying something, and reducing debt. About a third (32 percent) of the sample had outstanding student loan balances at the time of data collection and student loan debt had a major impact on respondents’ financial decisions. About three-quarters of the sample said loan debt affected both housing choices and retirement savings.

Actionable steps

Based on the findings from the study mentioned above, here are five ways to make better financial decisions.

1. Consider concurrent financial planning

Rethink the practice of completing financial goals one at a time. Concurrent goal-setting will maximize the awesome power of compound interest and prevent the frequently-reported survey result of having the completion date for one goal determine the start date to save for others.

2. Increase positive financial actions

Do more of anything positive that you're already doing to better your personal finances. For example, if you're saving 3 percent of your income in a SEP-IRA (if self-employed) or 401(k) or 403(b) employer retirement savings plan, decide to increase savings to 4 percent or 5 percent.

3. Decrease negative financial habits

Decide to stop (or at least reduce) costly actions that are counterproductive to building financial security. Everyone has their own culprits. Key criteria for consideration are potential cost savings, health impacts, and personal enjoyment.

4. Save something for retirement

Almost 40 percent of the respondents were saving nothing for retirement, which is sobering. The actions that people take (or do not take) today affect their future selves. Any savings is better than no savings and even modest amounts like $100 a month add up over time.

5. Run some financial calculations

Use an online calculator to set financial goals and make plans to achieve them. Planning increases people’s sense of control over their finances and motivation to save. Useful tools are available from FINRA and Practical Money Skills.

What's the best way to save money for financial goals? It depends. In the end, the most important thing is that you're taking positive action. Weigh the pros and cons of concurrent and sequential goal-setting strategies and personal preferences, and follow a regular savings strategy that works for you. Every small step matters!

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5 Things Keeping You From a Life of Financial...
Couple worried about paying bills

Financial independence can mean different things to everyone. A 2013 survey from Capital One 360 found that 44 percent of American adults feel that financial independence means not having any debt, 26 percent said it means having an emergency savings fund, and 10 percent link financial independence with being able to retire early.

I define financial independence as the time in life when my assets produce enough income to cover a comfortable lifestyle. At that point, working a day job will be optional.

But what about the rest of America? How would you define financial independence? If freedom from debt is what you're seeking, here are five areas that could be holding you back.

1. Not having clear, financial goals

If you're not planning for financial independence, chances are you won't reach it. The future is full of unknowns, but having an idea of when you'd like to achieve financial freedom should be your first step.

Do you want to retire before you turn 65? Do you want to travel the world with your spouse once you reach early retirement? Both goals will require a significant amount of cash stashed away, so it's important to start saving ASAP to make those dreams come true. (See also: 15 Secrets of People Who Retire Early)

2. Not saving enough

It's important to identify how much you're currently saving, and how much you need to save in order to retire when you want to, or reach another major financial goal. Using a calculator like Networthify can help you play with various money-saving scenarios and make realistic projections about retirement.

Another way to make saving money easier is to automate it. Setting up an automatic weekly or monthly transfer from your checking account into your savings account will take the extra task off your already full plate. Even if it's as little as $5 a week, it's enough to start building that nest egg. (See also: 5 MicroSaving Tools to Help You Start Saving Now)

3. Not paying off consumer debt

If you're carrying a credit card balance each month, financing cars, or just paying the minimum on your student loans, compound interest is working against you. Creating an aggressive plan to pay off debt quickly should be a number one priority for anyone who is serious about achieving financial independence. Otherwise, your money is working for your creditors, not you.

If you prefer to tackle credit card debt first, there are several debt management methods you can try, including the Debt Snowball Method and the Debt Avalanche Method. The Debt Snowball Method has you paying off the card with the smallest balance first, working your way up to the card with the largest balance. The Debt Avalanche Method is similar, but here you would pay more than the monthly minimum on the card with the highest interest rate first, working towards paying off the card with the lowest interest rate. Both are highly effective methods, and choosing one really just depends on your preference.

4. Giving into lifestyle creep

A high income does not automatically make you wealthy. As you move up in your career, the temptation to upgrade your lifestyle to match your income will be ever-present. After all, you work hard, so why not reward yourself with the latest gadgets and toys?

However, if you continue to spend and live modestly, you can put more money away for travel or retirement with every pay raise you earn. Financial freedom will be just around the corner if you resist that temptation to upgrade your home, car, and electronics to match your income bracket. (See also: 9 Ways to Reverse Lifestyle Creep)

5. Being driven by FOMO

Fear Of Missing Out, aka FOMO, is the modern version of keeping up with the Joneses. Except now you have access to the Joneses' social media platforms, and they go on all kinds of fun adventures. Social media is a great tool for keeping in touch, but it can also make you want to spend all your money on lavish vacations, clothes, spa treatments, and other extravagent things. Resist that urge. And block the Joneses on social media if needed. (See also: Are You Letting FOMO Ruin Your Finances?)

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Should You Use a Personal Loan or a Home Equity...
Couple dreaming of a home remodel

The costs of remodeling your home can add up quickly, and they can even be exorbitant, depending on the project you take on. According to Remodeling Magazine's 2019 Cost vs. Value study, a minor kitchen remodel would set you back $22,507 this year, replacing a roof with asphalt shingles costs an average of $22,636, and homeowners paid $47,427 on average for a mid-range bathroom addition.

The fact that remodeling can be so pricey means not everyone has the cash to pay in full. In many cases, homeowners have to borrow the money they need for a project, and most of the time they use a personal loan or a home equity loan. Here's how to decide which option is best for your own remodeling project. 

Pros of home equity loans

When you own a home, it's easy to automatically assume a home equity loan would serve your needs best — and you could be right. Home equity loans let you borrow against the value in your home and use it as collateral. 

Low and fixed interest rates

These secured loans tend to come with low interest rates and fair terms. Most home equity loans last for 10 to 30 years, making it easy to tailor your loan to your needs and monthly budget. Home equity loans also come with fixed interest rates, fixed monthly payments, and fixed repayment timelines, so they're easy to plan for. 

Easy application process

You can also compare and apply for home equity loans online and from the comfort of your home, although you may need an appraisal and other steps completed before you can move forward. 

Tax benefits

As a final upside, you may be able to write off the interest you pay on your home equity loan, provided you itemize. While you can't deduct home equity interest if you use your home equity loan proceeds for personal expenses, the interest is still deductible if you use your loan proceeds to "buy, build, or substantially improve" your home, notes the IRS. (See also: Home Equity Loan or Heloc: Which is Right For You?)

Cons

There aren't a lot of downsides when it comes to home equity loans, but there are a few issues to be aware of. 

You might not qualify

Depending on how much equity you have in your home, you may not even qualify for this type of loan. According to the Federal Trade Commission (FTC), you can typically only borrow up to 85 percent of your home's value across a first mortgage and home equity loan. This means that, if your home is worth $200,000, you could only borrow up to $170,000 across a first mortgage and home equity loan. 

The possibility of foreclosure

Second, the fact that you're putting your home up as collateral means you could lose your property to foreclosure if you stop paying your home equity loan bills. 

Pros of personal loans

Personal loans are popular for home remodels for a few reasons.

Fixed payments and interest rates

Like home equity loans, they come with fixed monthly payments and a fixed interest rate that will never change.

Your home is not collateral

Since personal loans don't require you to put up your home as collateral, the amount you can borrow isn't tied to your home equity. For that reason, they can be a good option if you don't have a ton of equity in your home but still need to borrow money. 

Less red tape

A final reason to consider a personal loan is that there aren't quite as many hoops to jump through when you apply. You don't have to prove the value of your home, for example, and there's typically a lot less paperwork involved. 

Cons

While personal loans might be easier to manage and apply for, there are still a couple major downsides. 

You can't deduct the interest

One issue with using a personal loan for a home remodeling project is that you cannot deduct the interest on your loan on your taxes no matter what. 

Higher interest rates

Personal loans may come with slightly higher interest rates than home equity loans since these loans are unsecured. 

Which option is right for you?

At the end of the day, home equity loans and personal loans can both work well for your home remodeling project. They both have fixed interest rates and fixed monthly payments you can easily plan for, and either option could let you borrow enough money to bring your remodeling project to fruition. 

Still, there are plenty of factors to consider before you decide. For example:

  • How much equity do you have in your home?
  • Do you want to put your home up as collateral?
  • How much do you need to borrow?

Also, make sure you consider any fees involved in both home equity loans and personal loans. Many lenders offer products that come with no origination fees, application fees, or hidden fees, but those typically only go to consumers with good or excellent credit. (See also: 5 Personal Loan Fees You Should Never, Ever Pay)

Fortunately, it's easy to compare home equity loan and personal loan terms online. Some websites like LendingTree even let you compare multiple loan options in one place. 

No matter what you do, take the time to compare all your loan options in terms of their fees, interest rates, and repayment timelines, along with the monthly payment you'll need to commit to. With enough research, you could have your big project up and running in no time.

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Remodelling your home can be an expensive and pricey venture. If you need to borrow the money for the project, we’ve got the tips to help you choose between a personal loan or a home equity loan, and which is the best option for you. | #rennovations #homeloan #debtadvice






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How the Sandwich Generation Can Protect Their...
Woman part of the sandwich generation

For those who are caring for their aging parents and raising kids at the same time, it can often seem like there's never enough time, money, or energy to provide for all the family members who need you. In particular, handling finances when two different generations are relying on you can feel like an impossible balancing act — not to mention an exercise in feeling guilty no matter what you do.

But being the caregiver sandwiched between two generations makes it even more important for you to prioritize your own financial needs, especially when it comes to retirement planning. By protecting your retirement during this difficult season of your life, you'll be in a better place to remain independent as you age, launch your kids into a more secure adulthood, and offer ongoing support to your parents.

Sound impossible? It's not. Here's how you can protect your retirement if you're a member of the sandwich generation.

Retirement savings comes first

Retirement savings should get priority ahead of putting money into your kids' college funds. You know that already. Your kids can take on loans for college, but there are no loans available to pay for your retirement.

The more difficult decision is prioritizing retirement savings ahead of paying for long-term care for your parents. That can feel like a heartless choice, but it is a necessary one to keep from passing money problems from one generation to the next. Forgoing your retirement savings during your 40s and 50s means you'll miss out on long-term growth and the benefits of compound interest. By making sure that you continue to set aside money for retirement, you can make sure your kids won't feel financially squeezed as you get older.

Instead of personally bankrolling your parents' care, use their assets for as long as they last. That will not only allow you to make the best use of programs like Medicaid (which requires long-term care recipients to have exhausted their own assets before it kicks in), but it will also protect your future.

Communication is key

Part of the stress of being in the sandwich generation is feeling like the financial burdens of two generations (as well as your own) are resting entirely on your shoulders. You feel like you'll be letting down the vulnerable people you love if you can't do it all. But the truth is that you can't do it all. And you shouldn't expect that of yourself, nor should your family expect it of you. So communicating with your loved ones about what they can expect can help you draw important boundaries around what you're able to offer them.

This conversation will be somewhat simpler with your children. You can let them know what kind of financial help they can expect from you for college and beyond, and simply leave it at that.

The conversation is a little tougher with your parents, in part because you need to ask them about nitty-gritty details about their finances. Whether or not money is a taboo subject in your family, it can be tough for your parents to let you in on important financial conversations — to them it feels like they were changing your diapers only a few short years ago.

Being in the loop on what your parents have saved, where it is, what plans they have for the future, and who they trust as their financial adviser, will help protect their money and yours. You'll be better able to make decisions for them in case of an emergency, and being included in financial decisions means you can help protect them from scams. (See also: 5 Money Strategies for the Sandwich Generation)

Insurance is a necessity

Having adequate disability insurance in place is an important fail-safe for any worker, but it's especially important for those who are caring for aging parents and young children. The Council for Disability Awareness reports that nearly one in four workers will be out of work for at least a year because of a disabling condition. With parents and children counting on your income, even a short-term disability could spell disaster, and force you to dip into your retirement savings to keep things going. Making sure you have sufficient disability income insurance coverage can help make sure you protect your family and your retirement if you become disabled.

Life insurance is another area where you don't want to skimp. With two generations counting on you, it's important to have enough life insurance to make sure your family will be okay if something happens to you. This is true even if you're a full-time unpaid caregiver for either your parents or your children, since your family will need to pay for the care you provide even if they aren't counting on your income.

It's also a good idea to talk to your parents about life insurance for them, if they're able to qualify. For aging parents who know they will draw down their assets for long-term care, a life insurance policy can be a savvy way to ensure they leave some kind of inheritance. If your parents are anxious about their ability to leave an inheritance, a life insurance policy can help to relieve that money stress and potentially make it emotionally easier for them to draw down their own assets.

Become a Social Security and Medicare expert

Spending time reading up on Social Security, Medicare, and other programs can help you to make better financial decisions for your parents and yourself. There are a number of misconceptions, myths, and misunderstandings masquerading as facts about these programs, and knowing exactly what your parents (and eventually you) will be entitled to can help make sure you don't leave money on the table or make decisions based on bad information.

The eligibility questionnaires at benefits.gov can help you determine what benefits are available and whether your parents qualify. In addition, it's a good idea to sign up for a my Social Security account for yourself. This site will provide you with personalized estimates of future benefits based on your lifetime earnings, which can better help you prepare for your own retirement.

Don't be afraid to ask for help

Caring for children and parents at the same time is exhausting. Don't compound the problem by thinking you have to make financial decisions all by yourself. Consider interviewing and hiring a financial adviser to help you make sense of the tough choices. He or she can help you figure out the best way to preserve your assets, help your parents enjoy their twilight years with dignity, and plan for your children's future.

Even if a traditional financial adviser isn't in the cards for you, don't forget that you can ask for help among your extended family and network of friends. There's no need to pretend that juggling it all is easy. Family can potentially offer financial or caregiving support. Knowledgeable friends can steer you toward the best resources to help you make decisions. Relying on your network means you're less likely to burn out and make disordered financial decisions. (See also: 9 Simple Acts of Self-Care for the Sandwich Generation)

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Are you part of the sandwich generation? When you are a caregiver to children as well as aging parents, it can seem like theres not enough time, money or energy to provide for all the family members. Here are the tips and ideas on how you can protect your retirement finances. | #sandwichgeneration #personalfinance #moneymatters






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How a Credit Card Can Actually Help You Get Out...
Couple using credit card to get out of debt

If you have high-interest credit card debt, you may believe another credit card is the last thing you need. Another card would only leave you with more open credit after all, and that just means more temptation to spend and rack up even more debt.

But a certain type of credit card debt could help your situation — if you use it the right way. This type of card is a balance transfer card.

How balance transfer cards work

Each balance transfer credit card has its own unique introductory offer you can use to your advantage. Most offer 0% APR from 12 to 21 months, meaning you won't pay interest on transferred balances during that time. However, some balance transfer cards charge a balance transfer fee that typically works out to 3% or 5% of the balance you transfer over.

To illustrate, let's imagine for a moment that you have $10,000 in credit card debt at 19% APR and you're currently making a payment of 5% of your balance, or $500 per month. At this rate, it would take 25 months to pay off your debt, and you would fork over $2,120 in interest over that time.

Now, let's say you apply for a balance transfer card that gives you 0% APR for 21 months in exchange for a 5% balance transfer fee. Once you transferred your entire balance over and added in the fee, you would start repayment owing $10,500 ($10,000 plus a $500 balance transfer fee).

However, the fact that you're not paying interest means you could continue paying $500 per month and pay off your entire balance with zero interest in 21 months. In other words, your balance transfer card could shave four months off your repayment timeline and save you $2,120 in interest. (See also: Here's What a Balance Transfer Does to Your Credit)

Tips for a successful balance transfer

The example above shows why balance transfer cards are so popular. Sure, some of them charge balance transfer fees, but having 0% APR for anywhere from 12 to 21 months can help you get out of debt faster, and lead to thousands of dollars in savings.

According to estimates from Experian, Americans conduct $35 to $40 billion in balance transfer activity each year. This is good news for consumers who are taking advantage, but it's also troublesome since many people get stuck in a situation where they're transferring the same debts to new balance transfer cards every few years.

If your goal is using a balance transfer credit card to get out of debt and stay out of debt, you'll want to set yourself up for success. Here's how you can do that.

Compare offers

Because balance transfer cards each have their own introductory offers, you need to check out more than one. Ideally, you'll settle on a balance transfer credit card that grants you 0% APR for as long as you need to pay down all (or most) of your debt.

Other factors to consider with balance transfer cards include any fees they charge, consumer perks and protections, and rewards programs. However, beware of signing up for balance transfer cards with rewards programs if you worry they'll entice you to spend. The goal with a balance transfer card is paying down debt — not racking up more.

Look for cards that don't charge a balance transfer fee

Keep your eye out for balance transfer cards that don't charge a fee. While most charge a fee to transfer balances upfront, there are several that skip over this fee for balances transferred in the first 60 days. Avoiding this fee will normally save you 3% to 5% of your balance amount, which can help you start paying down your balances right away.

Stop using credit cards

No matter what you do, stop using credit cards once you've transferred your balances to a card that offers zero interest for a limited time. You won't want to use your new balance transfer card for purchases since the goal is paying off your debt, but you should also steer clear of using other credit cards since you could easily rack up more debt and eliminate any progress you've made.

While you're in debt-repayment mode, you should stick to a cash budget or use your debit card instead of credit. That way, you won't "accidentally" rack up new credit card balances you can't afford to repay.

Create a debt repayment plan

Finally, don't forget to create some sort of debt payoff plan for how you'll pay down debt during your card's introductory offer. You should estimate how much you can afford to pay each month and figure out how much debt you'll ultimately pay off if you stay on track. If you can manage to pay off your entire debt over your card's 0% APR offer with a specific payment amount, you should determine if that figure is possible with your monthly income and expenses. And using a good debt repayment calculator can help a lot.

You may also want to look for ways to cut your spending and bills so you can throw more money toward your credit card's balance each month. Start with the low-hanging fruit in your budget — things like grocery spending and dining out, entertainment spending, or regular trips to your favorite department store. Also consider uninstalling any apps on your phone that regularly cause you to spend money, whether it's Instacart, DoorDash, or Amazon. Make spending money more difficult and you're more likely to save over time. And those savings can be allocated toward your debts until they're paid off.

The bottom line

Another credit card may seem like the last thing you could possibly need if you're in debt, but a balance transfer card could help you save money with the right mindset. Consider a 0% Intro APR credit card to pay down debt faster, but don't forget that you'll have to change your spending if you want to get out — and stay out — of debt.

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If you have high-interest credit card debt, you may not think another credit card is a good idea. But there’s a certain type of card that can help you payoff your debt, and that’s a balance transfer card. Check out our tips and ideas on how to get rid of debt with it! | #creditcard #debtadvice #moneytips






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9 Smart Home-Buying Tips From Real Estate Experts
Learning home-buying tips from real estate experts

There are right ways and wrong ways to buy a home. The latter of which will cost you a lot of unnecessary money, stress, and frustration. Use best practices, however — as offered by real estate experts below — and you'll walk away a winner with a smile on your face and cash still in your bank account.

1. Research agents before choosing one

Selecting the right real estate agent can make all the difference when it comes to finding your dream home and negotiating the best price. Carlos Miramontez, vice president of mortgage lending at a California credit union, offers a few pointers on narrowing down the agent pool.

"Doing your research upfront can help you make a wise decision and choose a well-qualified real estate agent who's right for your needs," he writes on the company blog. "Remember that you're creating a business relationship. It's important that you work well together, as it could be several months before the entire buying or selling process is complete. Enjoy a cup a coffee with a few agents before you make the decision on which partner is right for you."

There also are specific questions you should be asking your agent, such as:

  • How often will you send me listings?
     
  • Will you show me homes when I'm available (e.g., after work or on the weekends)?
     
  • How long have you worked in real estate?
     
  • What type of property do you specialize in (e.g., condos, single-family, or town homes)?
     
  • Have you worked with other clients in my desired area and price range?

2. Search social media for local real estate groups

Social media is a great resource for connecting with real estate agents in an unfamiliar area, says Brady Hanna, president of Mill Creek Home Buyers in Kansas City, who has been buying, renting, and flipping houses for over a decade.

"Search on Facebook for real estate groups in your local area," he says. "You will be surprised to find that there will probably be 10 or more. Join all of them, including investor and wholesaler groups. Then post across all of these groups that you are looking to buy a house in ABC area, what your criteria is, and if they have any off-market properties to send your way, and include your email address. You would be amazed at how many people will send you off-market properties using this technique. I have bought six properties in the last few months just from local Facebook groups." (See also: 5 Things Your Real Estate Agent Wishes You Knew)

3. Add a personal touch when there are multiple offers

How do you stand out in a pool of potential buyers? Send a personal note to the seller with a creative story about yourself, why you're the best buyer for the house, and your plan to make it a home.

"If you talk about your family in the letter, you will pull at the heartstrings of the seller and have a much better chance of being selected if you have a similar offer than another buyer," Hanna says. "I have experienced this personally when selling houses and every time I picked the buyer that wrote the personal note when I had multiple similar offers."(See also: 4 Times a Handwritten Letter Can Save You Big Bucks)

4. Don't automatically settle on city living

Life in the city is attractive and convenient for a lot of people, especially if you're the type that likes to have necessities within walking distance. But even though life's essentials are easily accessible, the financial picture over time may rob you of a certain quality of life.

"Be sure to check out properties in the 'burbs and take the cost and time of your commute into consideration," suggests Shane Lee, data analyst for RealtyHop. "While the city life is always amazing, you might find a way better deal in the burbs. You can even find a fixer upper and make it your dream house with the money you save on the purchase."

5. Run through all costs before starting the home-buying process

Most first-time home-buyers concentrate on the down payment — the largest of all the out-of-pocket expenses — but there are plenty of other fees required for a property purchase that you should be aware of before starting the process.

"Budget for down payment, closing costs, and other costs as early as possible," Lee advises. "In addition to the 20 percent down payment (some lenders require less), origination fees are usually between 2 and 5 percent of the total loan amount, and it is crucial that you start saving early on, so you have enough cash to cover all mortgage-related payments, legal fees, as well as broker's commission by the time you are ready to close the deal."

Don't forget about the often-overlooked hidden costs that'll pop up before you know it, like property taxes, insurance premiums, and any Homeowners Association (HOA) dues. Taxes and HOA dues vary, so be sure to ask for details. Obtain an insurance premium estimate from your insurance agent.

It's important to figure all this out before committing to a property to ensure you can afford the entire scope of fees associated with it.

6. Investigate the HOA to make sure you're compatible

Homeowners Associations can be great for many communities because they provide a set of standards to ensure that all residents are living in a place that values beautification and resale value. On the other hand, some folks find the HOA to be too involved, and the decisions of the board may not always be best for everyone. (See also: What You Need to Know About Homeowners' Associations)

Robert Nordlund, founder and CEO of Association Reserves, explains.

"'Location' is certainly one of the most influential factors in the value of a real estate transaction, but when it comes to buying a home in one of the 350,000 association-governed communities (AGCs) in the United States, home-buyers face two additional circumstances," he says. "First, getting a good value on the front end will be influenced by largely unpublicized financial factors unique to that AGC. Second, the long-term fate of their investment will be permanently hitched to the decisions or whims of a group of volunteer board members. The vetting process is not complicated, but it does take time and should be completed before any offer is on the table."

To help you find the right HOA for you, consider these tips:

  • Attend a board meeting.
     
  • If the association is professionally managed, meet with the manager.
     
  • Check the association's annual budget and make sure it's accurate and balanced.
     
  • Ask for a copy of the Reserve Study and take the time to understand it.
     
  • Check the curb appeal closely in daylight and in the evening.
     
  • Make note of any obvious deferred maintenance.
     
  • Ask about the history of special assessments.
     
  • Evaluate the transparency of the board and manager.
     
  • Read the association's rules and standards.

7. Buy a home below your means

Real estate expert, Julie Gurner, makes a case for spending the least amount possible on a home that meets your needs and makes you happy — even when you have plenty more to spend on it.

"While your friends might struggle to pay for something at the top of their budget, shoot for a home that is 75 percent or less of what you're approved for to be able to save more effectively for retirement, emergency repairs, travel, and generally enjoy your life far more without the fiscal burden," she says.

How can you do that? Look for the most outdated home in the most desirable neighborhood.

"Look for a home where the style is outdated — it might need a new kitchen, there's likely old wallpaper or carpets — but it's well tended to and all the bones are solid," Gurner adds. "With time and a bit of effort, the ugliest home on the block can almost always become your dream home. With so many people expecting move-in-ready homes, the outdated homes are often overlooked gems that can save you a fortune and put you in a position to build sweat equity from day one."

8. Invest remotely in high-yielding real estate markets

For home-buyers in New York City, San Francisco, Los Angeles, and many other coastal markets, purchasing affordable single-family rental (SFR) homes out-of-state is a great way to get started buying real estate and building long-term wealth.

"Buyers in these coastal areas can find higher yields and lower median home prices than they can in their own backyards," says Zach Evanish, who leads sales efforts at investment-property resource Roofstock. "Some prime examples include Memphis, Cleveland, Indianapolis, Atlanta, Dallas, Phoenix, Pittsburgh, and other metros across the Southeast, Midwest, and Southwest. Buying SFRs remotely can also be a stepping stone to amassing an investment real estate empire with ample positive monthly cash flow, and to eventually buying an owner-occupied home in one's own hometown, thanks to this stable stream of monthly rental income."

9. Ask for reductions after inspection

One of my own personal tactics for saving money on the homes I've purchased is taking advantage of an inspection that reveals interior or exterior issues. If the seller is in a depressed market or needs to sell quickly because of other circumstances, you have a great chance of making post-inspection deals.

"Home sellers often describe their property's condition as much better than it is. A good inspection often reveals unanticipated defects," explains Lucas Machado, president of House Heroes, a real estate investment company. "Don't be afraid to ask for a reduction. Buyers sometimes hesitate to request a lower price due to fear of losing the house. In reality, sellers give plenty of reductions upon request — even tens of thousands below the initial offer. There is no downside to asking — and you can still proceed if they say no."

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5 Money Moves to Make Before You Turn 40
Woman making money moves before turning 40

Turning the big 4-0 is a perfect time to reflect on how far you've come in life, the milestones you've surpassed, and the relationships you've built. But for some people — especially those who don't have their financial ducks in a row — it's a time when panic sets in. 

After all, turning 40 can make you painfully aware that time is running out to fix any financial mistakes you've made in the past. At the same time, you need to get serious about your money if you want to enjoy your golden years without financial stress. That's why financial advisers suggest a handful of money moves everyone should make before their 40th birthday.

1. Deal with consumer debt

Ryan Inman, a financial planner for doctors, says it's crucial to create a plan to deal with consumer debt well before your 40th birthday. That's especially true when it comes to high interest credit card debt. With the average credit card interest rate now over 17%, this type of debt can be difficult to pay off — and a big drain on your budget each month. 

If your goal is paying off debt, there are multiple approaches to consider. You can attack it the old-fashioned way and pay as much as you can each month, or even try the debt snowball or debt avalanche methods. You can even apply for a balance transfer credit card that lets you secure 0% APR for up to 21 months. 

Ideally, you should strive to have no debt other than your mortgage at this point in your life, says Inman.

While this may seem like a lofty goal, not having to make interest payments toward consumer debt will make it a lot easier to save more for retirement and play catch up on your investments if you're already behind.

2. Maximize your retirement savings

It's easy to think maxing out your retirement savings isn't necessary when you're young, but when your 40s hit, you become keenly aware of just how much more your nest egg needs to grow. 

Financial planner Benjamin Brandt, who hosts a retirement podcast called Retirement Starts Today Radio, says he suggests anyone approaching 40 start maxing out their retirement savings. Remember that you'll set your contributions up through payroll out of your pre-tax income, so it's not as costly as it may seem. Also note that contributing the max to retirement will reduce your taxable income, which could mean a smaller income tax bill this year. 

If you can't contribute the max, Brandt says to try to contribute more than you are now and inch your goal up slightly every year until you get there. 

Brandon Renfro, an assistant professor of finance and financial planner in Hallsville, Texas, says that, at the very least, you should make sure you're getting the full employer match on your retirement plan. An employer match is the amount of money your employer might match when you save for retirement yourself. For example, your employer might agree to contribute up to 6% of your income each year as a match, but you have to contribute 6% to get the full amount. 

Remember that your employer match is free money for the taking, and you should take advantage of any help you can get toward retirement savings as you approach your 40s.

3. Automate your finances

Certified Public Accountant Riley Adams, who also writes at Young and the Invested, says that your 40s are a good time to try to automate your investments if you haven't already. With more automation and money moving on its own, you're less likely to spend money on stuff you don't need or end up in a situation where you're inflating your lifestyle as your income grows.

"To protect yourself from yourself, learn to establish automated financial transactions to handle your money moves each paycheck," he says. "Doing so takes the hassle out of your hands and also puts your money to better use." 

For example, you could set up an automatic bank transfer so a specific amount of money is transferred to a high-yield savings account every month. Or, you can set up automatic deposits into a brokerage account. Boosting your retirement savings in a workplace account can also be considered automation since the money is taken out of your paycheck automatically and invested on your behalf. (See also: 5 Ways to Automate Your Finances)

4. Purchase insurance based on your future finances

Financial planner Brenton Harrison of Henderson Financial Group says that, by your 40th birthday, you should also have your insurance needs squared away. However, you should strive to think of your insurance needs in future tense. 

"It's tempting to determine your needs based on your current income and net worth," he says. "But for many people, their 40s are their peak earning years, meaning that the insurance needs you have before 40 might not be enough as your career progresses." 

Harrison suggests sitting down and thinking about where you'd like to go in your career and where you plan to be financially in 10 years. From there, buy insurance based on that financial picture. 

"If you know you can and will achieve a certain level of success, don't wait until you've reached it to start planning," he says. 

While the types of insurance you'll need vary depending on your situation, think beyond the basics like homeowner's and auto insurance. For example, you may want to buy an umbrella insurance policy that extends your coverage limits in certain cases.

Also, make sure to get proper life insurance coverage," says financial planner Luis Rosa. 

"If you have a family or are planning on having one in the near future, it is crucial to make sure that they are protected," he says. And you're much more likely to qualify for the coverage you need at a price you can afford when you're in your 40s (or before) and still relatively healthy.

5. Build an emergency fund

If you've struggled with your finances over the years and dealt with credit card debt multiple times, chances are good it's because you don't have an emergency fund. While any amount saved is better than nothing, most experts suggest keeping a separate fund for emergency expenses or job loss that's stocked with three to six months of expenses or more.

You never know what kind of roadblocks life will throw your way, but you'll be prepared for almost anything if you have savings set aside. And if you can't save six months of expenses, it's still best to start somewhere — even if you can only squirrel away a few thousand dollars.

Put your savings in an interest-bearing account and keep adding to it, and you'll eventually get there.

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How to Pay Off These 4 Types of Debt
Woman paying off four types of debt

Getting and staying out of debt is tough. Many people try and fail, or they succeed only to become ensnared the vicious cycle over and over again. Eliminating debt takes lots of grit and determination, and strategically attacking your debt will save you time, energy, and money.

Before you get started, you should know that each type of debt requires a slightly different strategy. Here's how to tackle different types of debt, and get rid of it once and for all.

Credit card debt

The best way to attack credit card debt is by using the debt snowball. With this method, you begin by attacking the smallest debt while paying the minimum on everything else. Once one debt is paid, you take all the money you were paying on the first card and apply it to the second biggest balance. Rinse and repeat.

You may be tempted to attack them based on interest rate, which is also known as the debt avalanche. And that will work. However, you must keep in mind that debt is more mental than it is logical. You probably didn't use a ton of logic to get into debt. And logic won't inspire you to get out of debt. The debt snowball approach allows you to get quick wins by conquering smaller debts before taking on the larger ones, which require more time and patience. Winning becomes a contagious habit that helps you build momentum.

You also may want to contact your credit card companies and request that they lower your interest rate. Some will and some won't, but it doesn't hurt to ask. (See also: 2-Minute Guide: How to Use Balance Transfers to Pay Off Credit Card Debt)

Car and personal loans

Auto and personal loans are a little different from credit card debt. However, they follow the same principle for repayment. First, make sure you understand the repayment terms and then contact the lender and ask them to reduce your interest rate.

In addition to using the debt snowball, a great repayment strategy for this type of debt is to call the lending agency and set up bi-weekly payments instead of paying monthly. The minimum payment doesn't change, you just make 26 payments a year versus 12. This lowers the total amount of interest you will pay over the life of the loan. When you pay more than the minimum payment, you'll slash months — even years — off the total repayment time.

Student loans

Despite how it may feel, paying off student loans is possible. You just need some discipline, patience, and a plan. For most folks, student loan debt is one of the most significant debts owed — second only to a mortgage.

The first thing you want to do is determine the total amount owed. You can do this by visiting the National Student Loan Data System or contacting your lender. From there, visit the Federal Student Loan Website to see if your loans can be consolidated, if your interest rate can be lowered, and if you qualify for any loan forgiveness programs. The Department of Education offers eight different repayment plans that may be able to assist you if you're considered low income or have special circumstances. They also provide repayment calculators and a host of other information and resources that can assist you in repaying your loans quicker.

Once you know the total amount owed, and have found a repayment plan that works for you, it's time to get busy. You want to throw ever extra dollar you have at this debt and make multiple payments a month, if possible.

Mortgage

The term "mortgage," translated from old French, literally means "death pledge." How fitting. There are several schools of thought on whether you should pay off your home early. For some people paying it off early makes sense, for others it doesn't. If you do want to knock the mortgage off your debt list, there are a few things you can do to expedite repayment.

Make bi-weekly payments

By simply splitting your monthly mortgage payment into equal parts where it's paid every two weeks, you can shave years of payments off a 30-year mortgage. If you pay more than the minimum, you expedite the process even more. You'll have to make arrangements with the lending institution to set up a bi-weekly payment plan and ensure that the extra money is applied directly to the principal.

Making one additional mortgage payment a year

This impacts the mortgage the same way making bi-weekly payments does. It's just done in one lump sum instead of over the course of a year. When you make the extra payment, you must specify that you would like it applied directly to the principal.

Make lump sum payments periodically

If you don't feel you have the ability to make bi-weekly payments or make one large additional mortgage payment, you can still pay extra on the mortgage as you are able. Paying an extra hundred dollars a few times a year will drastically speed up the repayment process. Every little bit helps.

Refinance from a 30-year fixed to a 15-year fixed

This may not make sense for everyone, but it is worth considering. By the time you're ready to begin aggressively paying off your home, you will have eliminated all other debt. You can afford to pay more. And your credit score will have gotten better and will allow you to refinance at a much lower interest rate. This strategy can cut the repayment time down by more than half.

But first, create an emergency fund

The quickest way to derail your debt repayment efforts is to have an unexpected expense. And you will have plenty. Establishing an emergency fund before you begin paying down debt is one of the keys to success. Having a few thousand dollars set aside just for emergencies will keep you on track, keep you from incurring new debt and do wonders for your psyche.

If you do have an emergency and have to use some of the money, you simply pause your debt repayment plan to replace what you spent. Use the extra funds you were applying to your debt to replenish your emergency fund. Once it's restocked, you go back to attacking the debt. (See also: Where to Find Emergency Funds When You Don't Have an Emergency Fund)

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Do you have credit card debt? Car or Personal loans? Student loans? A mortgage? Want to know how to pay off your debt? We’ve got the best tips and advice to help you pay off your debt quickly and you can save money in the long run! | #debtadvice #financetips #personalfinance #moneymatters






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Why You Should Use a Personal Loan to Pay Down...
Woman happy to be paying down debt

The average American with credit card debt carries a balance of approximately $6,354, according to USA Today. But the news is even worse in some states like Alaska, New Mexico, and Louisiana, according to an analysis of credit card debt from creditcards.com. Consumers in these three states carried an average of $10,685, $8,323, and $8,110 in credit card debt, respectively, as of 2017.

This is unfortunate, but it's not completely unexpected. It's easy to lean too hard on a credit card when you face a job loss or a loss in income, and high interest rates don't help matters much. The average credit card today carries an APR of well over 17%. With so much interest charged on revolving credit card debt, it's difficult to make a dent in the principal of your balance. This often leaves people languishing in debt for years, and even racking up more debt over time.

Consumers use many strategies to get out of debt, one of which involves applying for balance transfer cards. With a balance transfer card, you qualify for 0% APR for a limited time — usually 12 to 21 months. However, you're normally required to pay a balance transfer fee of 3% or 5% of your balance, and the introductory offer won't last forever.

Some people use balance transfer cards to successfully pay down debt at 0% APR, but others simply make the minimum payments and never make real progress against their debts. Those consumers usually end up exactly where they started once their card's introductory offer ends — with plenty of debt and a crushing APR.

There may be a better, more predictable way out of debt, however, and it involves a personal loan. (See also: 5 Times Personal Loans May Be Better than Credit Cards)

How a personal loan can help you climb out of debt

Applying for a new loan to work your way out of debt may go against the grain of common sense, but there are plenty of reasons a personal loan can work. For starters, personal loans come with low fixed interest rates that never change — even as low as 4.9% APR for consumers with good credit. Second, personal loans have fixed repayment schedules that tell you exactly when you'll become debt-free.

Because personal loans have fixed rates and fixed repayment terms, you also have a fixed monthly payment that stays the same. This is much different from the way credit cards work since your payment will change based on your APR and how much you owe.

With a personal loan to pay down debt, you know exactly what you're getting into. You know how much you'll need to pay each month, when your loan will be paid off, and what your interest rate will be the entire time. The best part is, a personal loan is not a line of credit you can borrow against. So once you use your loan proceeds to pay off and consolidate your credit card bills, you won't have the option to use your loan to rack up more debt. (See also: 10 Things You Need to Know Before Taking Out a Personal Loan)

How to do it the right way

If your goal is getting out of debt this year, a personal loan could be exactly what you need. But you'll be in the best position to help yourself if you go about repayment the right way.

Compare personal loan offers

Personal loans are offered by large financial institutions like banks and credit unions as well as several online lenders. Because there are so many options to get a personal loan, your first step is shopping around to compare offers in terms of their interest rates and fees.

The best personal loans come without an origination fee, any application fees, or hidden fees. If you want to shop around among multiple lenders in one place, you can also check out LendingTree. This website lets you fill out a single loan application and get offers from multiple banks and lenders in one place. (See also: 5 Personal Loan Fees You Should Never, Ever Pay)

Find your best match now with this handy comparison tool. Select the type of loan you’re looking for, the amount, your credit rating and state, to see the best options available for you.

Create a spending plan

Once you've shopped for a personal loan, you'll have an idea of your new monthly payment. At that point, it's crucial to create a monthly budget or spending plan to ensure you can stay on top of your new loan.

Sit down with your bank statements and figure out exactly how much you earn and how much you owe, including your new personal loan, housing costs, and other bills. From there, you should look for ways to reduce your spending. That may mean dining out less often, cutting cable for a while, or going on a spending freeze. Whatever you do, make sure you have a grasp on how much you can afford to spend each month while keeping up with all your expenses.

Stop using credit cards

Finally, don't forget that you have to stop using credit cards! The importance of this step cannot be overstated.

Paying off your credit card debt with a personal loan can put you in a precarious position where you're tempted to start using credit cards again. But if you start using credit, you'll likely rack up even more debt balances you'll have to pay off.

Your best bet is putting your credit cards away for safekeeping and sticking to cash or debit instead. To get out of debt — and stay out of debt — you must learn to live within your means. Not using credit cards is the only way to ensure you're living a lifestyle you can actually afford.

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Should You Pay Your Kids For Good Grades?
Mother paying daughter for good grades

In a recent attempt to get our kids to consume some vegetables, we offered them the bribe — I mean, incentive — of a brand-new toy if they each ate a carrot with dinner every night for several weeks. After the carrot challenge ended and the boys were delighted with their new toys, we faced the problem of both kids declaring that they would never eat another carrot again as long as they lived. So much for fostering an appreciation for carrots.

This is the central paradox of incentivizing good behavior. You may be able to get your children to do what you want them to for a short time, but will it ultimately result in changed habits? 

Here's what you need to know about paying your kids for good grades, so you can decide the best way to encourage them to succeed. 

Cash incentives may work

One of the most compelling arguments for paying kids for good grades is that it's how the world of work is structured. Most adults wouldn't go to work every day without getting paid, and they are incentivized to improve their performance by the promise of bonuses, raises, and other perks. So it does seem reasonable to offer kids compensation for their hard work at school.

In fact, research has found that this kind of incentive can actually work to improve student performance and test scores. According to Education Week, Roland Fryer, an economist at Harvard University, conducted a series of experiments in the mid-2000s in which he paid $6 million to over 18,000 low-income students in several U.S. cities to incentivize them to improve their test scores. However, the results indicated that when offering cash for school performance, the important thing to focus on is rewarding something students feel like they have control over. 

That means using money (or other incentives) to motivate inputs, such as number of hours spent studying, rather than outputs, such as grades or test scores. Students may want to improve their performance, but not know how to budge the needle. Rewarding them for their effort will be much more effective in encouraging better outcomes than rewarding them for a specific grade. (See also: 5 Money Moves Every Single Parent Should Make)

Tread carefully with multiple kids

If parents do decide to offer financial incentives to their kids, another potential landmine can be knowing how to handle more than one child in the family. If one kid is a born scholar and another struggles with learning disabilities or behavioral issues, rewarding the first for what they're already good at and giving nothing to the second will not end well. The student you most want to motivate will learn to hate and resent school.

On the other hand, it can be tough to offer a sliding scale of payment for each kid. The high-achiever might resent that their struggling sibling gets the same money for worse grades or test scores. Making it clear that you're rewarding effort rather than results is the best way to make sure you don't discourage the very behavior you're trying to encourage.

Incentives can backfire

While paying kids to improve their grades can result in better studying habits and improved scores, it may not effectively encourage them to engage with school. Studies have shown that rewards incentivize students to do the minimum necessary to receive their prize, after which point they lose interest. This was the exact problem my family encountered with our carrot-eating challenge, as the incentive was the only reason the kids were eating their vegetables, and they were not interested in trying to find a way to like eating carrots.

This is unsurprising when you think of all the disengaged workers who only show up and do the bare minimum to keep from getting fired. Without the intrinsic engagement with the work, whether that's learning literature and history, or filing TPS reports, payment for this kind of work becomes the only thing the recipient cares about.

In addition, likening school to work by offering cash incentives can also backfire. That's because schools can't fire underperforming students the same way an employer can fire a lackluster worker. Nor do schools have access to any of the other negative consequences an employer can use to improve an employee's poor performance. With a carrot and no stick, students will both get a false sense of what work life will look like, and feel more comfortable simply opting out of incentives, since there are no negative consequences for bad grades that they haven't already felt.

Instilling a love of learning in disengaged students is not an easy task, as any teacher can tell you. But paying them is no way to create that enjoyment for school. A better way to help kids engage with their studies is to encourage their interests and show how school relates to the subjects they are most passionate about. This may take more effort than simply handing out the dollar bills come report card time, but it will have better outcomes for encouraging a love of learning. (See also: 7 Parenting Mistakes Everyone Makes But No One Talks About)

Should you pay for good grades?

Bribery as a parenting tactic is not going away anytime soon. It's effective in the short term, and sometimes Mom and Dad simply need to get their kids to do something. However, paying kids is not always the best way to encourage them to engage with their school work. 

If you're considering paying your kids for their school work, make sure all of your kids understand what they can each do to earn their rewards, use the payments to incentivize behavior they have control over, and continue working to help them see the joys of learning. 






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Articles last updated at Mar 28, 2024 05:25:53am.
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