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February 4, 2021

IRA: #RealMoneyTalk, What Is That?

By Renee Powell in Credit 101, Financial Planning, Retirement Tag bonds, Buy, Career, Checking Account, earnings, experience, Fees, Financial Planning, Financial Wize, FinancialWize, Grow, historical, invest, Investing, investment, money, paycheck, planning, Retirement, retirement savings, Saving, savings, Savings Account, tax, thankful, Vs., will

Some of us know it as I.R.A while others pronounce it âeye-ruh.â No matter if youâre team âI-R-Aâ or team âeye-ruhâ, you should definitely know what it means!Â

These letters stand for Individual Retirement Account.Â

Donât roll your eyes! I know âretirementâ sounds like something you should only worry about when youâre much older, but I promise, youâll be thankful you learned all about this. Itâll help you learn a couple tips on smart tax moves and ultimately help out your future self!Â

You probably have a bank account where you put your money, right? So this is still relevant to you! Now, the question is: how much is the money sitting in your account growing each year? If youâre lucky, the answer is somewhere around 2% in the year 2020 (for a high yield savings account). But most people donât have that. Most people have a checking account that doesnât pay them any interest at all or a traditional savings account that offers an average of 0.09% in interest per year. That may not sound like a big difference – 2% versus .09% – but trust me: IT IS!Â

The BreakdownÂ

After 10 years of saving $100 every month (or $50 from each biweekly paycheck), a bank account with .09% interest rate or annual percentage rate (also called APR) will have a total of $12,059.56, while a high yield savings account growing at a 2% APR will have a total of $13,402.46. Thatâs a difference of over $1,000 of FREE MONEY! And, whatâs even more eye-opening is that the longer you invest and the more the interest compounds, the bigger the effect. So over a 40 year period of time, which is a typical American working career, the difference is more than $25,000!

What does any of this have to do with that Individual Retirement Account I mentioned earlier? Patience, weâre getting there!

When it comes to money, growth is key. How much can you grow your money in a year? In 10 years? In your working career? With a bank, your money is safe and protected, but it doesnât really grow that much. Thatâs where the stock market comes in! Itâs a good idea to put the money you may need for an emergency into a bank account for easy and guaranteed access, but also consider putting at least 5% of your earnings into an investment account for long term goals such as retirement.Â

For example, a 401k through your job allows you to invest your money in the stock market. If you donât have access to a 401k through your job, then you can open up an Individual Retirement Account (IRA) that also allows you to invest your money in the stock market. Similarly, a pension plan (if you can even get one of those in the 21st century!) also invests your money in the stock market.Â

So why do all of these fancy accounts put our hard-earned money in the stock market? The answer is: over the long term, (not just one year, but over many, many years) the stock market has a history of providing higher rates of return, thereby growing peopleâs money much faster than any bank!Â

When your job doesnât offer any workplace retirement benefits, then you can open an Individual Retirement Account on your own. Let me break down the basics for you:

Who: You!Â

What: Opening an IRA

Where: At a brokerage firm of your choice

When: Anytime you want

Why: Because your money can grow more in an IRA than it would in the bank over the long run

Now, letâs talk about the âhow.â First, choose whether you want to pay taxes on the money youâll be investing when you file your taxes next or if youâd rather pay them in the future when you file taxes for the year you took the money out. That will determine whether you open a Roth IRA or a traditional IRA.

Roth IRA vs. Traditional IRA

Roth IRA: Investment account that lets you put money away for your retirement. Money invested here is after taxes have been paid, so you donât have to worry about paying taxes ever again. Also, any profits you earn over time will never be taxed, and thatâs a BIG deal! Available only if you earn under a certain income level.Â

Traditional IRA: Investment account that lets you put money away for retirement, but claim a tax break on the amount invested when you file your taxes. Since you get a tax break now, when you take the money out in the future youâll have to pay taxes on your invested dollars and the profits earned. Available no matter what income level you fall under.Â Â

People who earn too much money for a Roth IRA tend to choose a traditional IRA (the limits for how much you can earn to have a Roth IRA changes every year.) Also, people who predict that they will earn less money in the future (at retirement) also like to choose a Traditional IRA because they like the idea of paying less in taxes as a result of being in a lower tax bracket.Â

Once youâve chosen the IRA type that you prefer, youâre ready to choose a brokerage firm. Choosing a brokerage firm is similar to choosing a bank. Make sure that you know what the fees are, what the customer service experience is like, what account types they offer, and what in-person versus web-based services or platforms they have. You can call them up or go online and create your account. Heads up: Youâll have to link the investment account (the IRA) to your bank account so that you can transfer money and begin to invest in the account you created.Â

What Do I Put Into My IRA?

Now, the toughest question of them all: What investments do I invest the dollars within my IRA into? The short answer is that it really depends on what your goals are. If youâre not trying to retire anytime soon, then you can afford to be risky. You can have mostly stocks and little to no bonds in the IRA. If you plan on retiring very soon, youâll want to make sure you have most of your money in more secure investments that donât change unpredictably in the market, such as bonds. The general rule of thumb when it comes to deciding how much to put in stocks versus bonds looks like this:Â

120 – your age = percentage of investment that should be stocks

So for example, A 30-year-old in 2020 should have 90% stocks in their IRA and 10% in bonds because 120 – 30 = 90.Â

Keep in mind that this can vary if youâre comfortable being more aggressive (more stocks) or more conservative (more bonds) with your investments. Itâs simply a good rule of thumb to get you started.Â

One final analogy to help you remember how this works, and then youâre on your way! The brokerage firm is kind of like your bank. Itâs where you open the account and do business. Your IRA is like the type of account you open at that bank. It has rules you need to follow and the rules change each year, so do your research. (When can you touch the money? How much money are you allowed to invest per year? Are there income limits on this account?) If you break the rules, then you may pay fees or maybe even penalty taxes. So make sure you understand the rules!Â

Stocks, bonds, mutual funds and ETFâs are what your dollars can buy and are held within the account. Finally, the annual rate of return is like your APR. While at the bank, the rate of growth or APR is offered to you upfront, thatâs not really possible with an IRA or any other investment account because the stock market is highly unpredictable. But remember, historical data shows that it averages much more growth than bank accounts do over the long run, so donât be afraid to put money aside for the long term if you can afford to.

Now, off you go! Youâre ready to open that IRA if you donât already have one!Â

The post IRA: #RealMoneyTalk, What Is That? appeared first on MintLife Blog.

Source: mint.intuit.com

February 4, 2021

Why Set Impossible Goals for 2021? [The Ultimate New Yearâs Savings Hack]

By Renee Powell in Early Career Tag Budget, Budgeting, Buy, Buying, college, Early Career, earnings, experience, Financial Goals, Financial Wize, FinancialWize, Home, How To, invest, Investing, journey, Life, Lifestyle, money, Saving, savings, School, Side Hustle

In the 1980s, self-driving cars and smartphones without antennas were only things youâd see in movies â unimaginable futuristic goals. Now, these âimpossibleâ inventions are part of peopleâs everyday lives. These innovative ideas were thought to be outlandish years ago until creators like Elon Musk and IBMâs team put their impossible goals to the test.

Impossible goals are things you want to achieve that seem out of the ordinary â ones that feel as if you may never reach them, even in your wildest dreams. These goals could be turning your dream side hustle into a full-time job or building your savings from zero in the next year to buy your dream home.

While the end result seems unreachable, a mix of motivation, determination, and hard work can get you further than you think. To see the strategic process of setting and achieving your biggest life goals, keep reading our jump to our infographic below.

Whatâs an Impossible Goal?

An impossible goal is a goal you think you could never achieve. Becoming a millionaire, buying your dream home, or starting a business may be your life goal, but one too big that you never set out to achieve. Instead, you may stick to your current routine and believe you should live life in the comfort zone.

Becoming a millionaire usually requires investing time, confidence, and a lot of hard work â things that may challenge you. But when you think about the highest achievers, most of them had to put in the effort and believe in themselves when nobody else did.

Flashback to 1995 when nobody believed in the âinternet storeâ that came to be Amazon. While that was considered impossible years ago, Amazonâs now made over $280 billion dollars.

In other words, when you make your impossible goals a priority, you may be pleasantly surprised by your progress. We share how to set hard financial goals, why you should set them, and how these goals could transform your financial portfolio this year.

Impossible Goals Set by the Rich and Famous

4 Reasons to Reach for the âImpossibleâ

Impossible goals challenge you to shift your way of thinking â getting comfortable out of the safety zone. They help fine-tune your focus for daunting tasks youâre willing to put in the time and work for. Whether youâre looking to become a millionaire, buy your dream house, or pay down your debts, hereâs why you should set goals for things you think you could never achieve.

1. You May Be Pleasantly Surprised

Everything seems impossible until you do it. When youâre in elementary school, maybe you thought getting a four-year college degree would be out of reach. Regardless, you put in the time and hard work to become a college grad years later. The same goes for your potential goal to write a book. You may think itâs hopeless to write a few hundred pages in the next year, but you may find it attainable once you hit the halfway point.

2. You Check Off Micro-Goals Along the Way

Itâs hard to set your goals too low when youâre trying to reach for the stars. In the past, you may have set small goals like being more mindful with your money. While mindfulness practices are extremely beneficial for your budget, you may need more of a push to save for your dream home. By setting impossible goals, you may find it easier to reach your savings goal this year. You may have no idea how to do it, but your goal is to figure it out. Side hustles, a new job, or starting a business are all potential starting points.

3. It May Not Be as Hard as You Think

It can be uncomfortable to try something for the first time, so to avoid the doubts of reaching your goals, create a strategic plan. Download and print out our printable to breakdown each impossible goal. Start with your big goals and break them down into mini-goals. For example, if you want to start an online ecommerce store, researching the perfect website platform is a good starting point.

4. What Do You Have to Lose?

If you already live a comfortable life, you may only have experiences to gain and nothing to lose. When embarking on this journey, check in with yourself every month. Note all the lessons you learned and how far youâve come. You most likely will face failures, but youâll be failing forward rather than backwards. Your first ecommerce product launch may not have gone smoothly, but you may know how to improve for the next time around.

Impossible Goals Roadmap

Impossible Goals Download Button

How To Set Impossible Budgeting Goals in 6 Steps

If your impossible goal is related to finances, your mindfulness, time, and dedication will be required to put you on a path towards your dream life. To get started, follow our step-by-step guide below.

Step 1: Map Out Your Dream Lifestyle

Get out a journal and map out your dream life. Some starter questions may be:
Do you want to afford that house youâve always dreamt about?
Do you want to have a certain amount of money in your savings?
Are you hoping to turn your side hustle into a full-time job?
What do you find yourself daydreaming about?

Track all these daydreams in a notebook and curate the perfect action plan to achieve each goal.

Step 2: Outline Micro-goals to Reach Your Financial Goals

Now, list out mini-goals to achieve your desires. Start with the big âunachievableâ goal and break it down into medium and small goals, then assign each mini-goal a due date. For example, saving $10,000 this year may take more than your current monthly earnings. To achieve this, you may create passive income streams. If that side hustle is to start a money-making blog, you may need to research steps to successfully launch your website.

Step 3: Believe and Act Like Your Future Self

Think of yourself as the future self you want to be. You may picture yourself with a certain home, financial portfolio, and lifestyle, but your current actions may not reflect your future self. Your future self may invest, but your current self is too intimidated to start. To act like your future self, consider doing the research and finding low-risk investments that suit you and your budget.

Step 4: If You Fail, Learn from Your Mistakes

When working towards your dream life, you may hit roadblocks and experience failures. As Oprah explains it, âthere is no such thing as failure. Failure is just life trying to move us in another direction.â While failure may happen, youâre able to learn from it and pivot. Every mistake you make, analyze it in your journal. Note what worked, what didnât, and what you want to do better tomorrow to surpass this roadblock.

Step 5: Track Your Results Consistently

Host monthly meetings with yourself to see how far youâve come. Consider creating a goal tracking system that suits you best. That may include checking your budgeting goals off in our app month after month. Find a system that works for you and note your growth at the end of each month. If youâre putting in the time and hard work, youâll get closer to your goals in no time.

Step 6: Be Patient With Your Budget Goals

Throughout this journey, practice patience. Setting goals may be exciting and motivating, but when youâre faced with failures, you may feel hints of disappointment. To avoid a failure slump, be patient and open to learn from your mistakes. If you didnât make what you wanted from your side hustle the first year, youâre that much closer than you were last year.

Why set your sights on hard goals? Everything feels out of reach until you do it. All it takes is motivation and determination to achieve the impossible. To boost your lifestyle, budget, and drive this New Year, consider setting goals that feel out of reach. Keep reading to see why these goals may be perfect for you. Why Set Impossible Goals for 2021? [The Ultimate New Yearâs Savings Hack] appeared first on MintLife Blog.

Source: mint.intuit.com

February 4, 2021

3 Ways to Change Your Relationship with Money

By Renee Powell in Apartment Hunting Tag debt, earnings, Financial Wize, FinancialWize, Get Out of Debt, Investing, Loans, money, savings, Savings Account, savings accounts, Spending, sponsored post, student loans

Most people have a love-hate relationship with money. When youâve got cash to spend, you feel fantastic. You can do whatever you want, go wherever you like, and thereâs no worries in your mind. However, when your cash flow starts to dwindle, your entire outlook suddenly goes sour. The high of having cash can mean that you even end up spending it too quickly, so you end up putting yourself in a more difficult situation long-term. Changing your relationship with cash can be one of the first steps to ensuring that you have more of it in your future. If you can take a more positive approach to the way you handle your finances, youâll be less likely to end up in debt. So, how can you change your relationship with money?

Do Your Research

Most people struggle with their financial freedom because they donât actively pay attention to the way that theyâre spending money. You sign up for essential things like gas and electric and continue paying the same bill for months without checking whether you could be getting a better deal elsewhere. Actually doing your research and making sure that youâre not missing out on opportunities to save will ensure that you can discover some quick wins for your cash flow. You could even find that you can get out of debt a lot faster and make a huge difference to your savings account by refinancing your existing student loans and similar debts into a loan with a private lender. One small change can make a big difference.Â

Automate Your Savings

Do you find it hard to stop yourself from spending every penny you earn each month? Youâre not alone. A lot of people who have a difficult relationship with money discover that itâs difficult for them to just have cash sitting in their bank accounts. Thatâs why itâs so important to find an easier way to convince yourself to save. One good option is to open a separate savings account where you can transfer a portion of your earnings every month. You can automate this process by setting up a direct debit to ensure that the cash leaves your account at the same time that you get your wages each month. This means that the next time you check your bank balance, you wonât be tempted to save the cash that should be going to savings.Â

Educate Yourself

Finally, stop avoiding the opportunity to learn more about money and how it works. Most of us feel so uncomfortable talking about cash that we barely even look at our bank statements. However, only by examining your spending habits can you determine where the best options are for you to make some significant changes. Be willing to develop a better knowledge of how money works, and how youâre using it. Itâs also helpful to learn everything you can about things that can make you more money long-term, like investing in stocks and shares, or setting up savings accounts with extra interest.

3 Ways to Change Your Relationship with Money is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

February 4, 2021

Here Are The Best Student Loans of 2021

By Renee Powell in Apartment Hunting, Debt, Student Loans Tag college, Credit, Credit Cards, Credit Score, debt, earnings, Education, Family, Fees, Financial Wize, FinancialWize, Home, Interest Rates, Life, Loans, money, Personal Loan, Popular, Products, refinance, Rewards, rewards credit cards, Save Money, School, student loans

The best student loans can help you earn a college degree that will lead to higher earnings later in life. They also come with low interest rates and reasonable fees (or no fees), which will make it easier to keep costs down while youâre in school and once youâre in repayment mode.

For most people, federal student loans are the best deal. With federal student loans, you can qualify for low fixed interest rates and federal protections like deferment, forbearance, and income-driven repayment plans. To find out how much you can borrow with federal student loans, you should fill out a FAFSA form. Doing so can also help you determine if you qualify for any additional student aid, and if so, how much.

While federal student loans are usually the best deal for borrowers, many students need to turn to private student loans at some point during their college careers. This is often the case when federal student loan limits have been exhausted, or when federal student loans are no longer an option due to other circumstances. We’re providing the top 8 options, at least according to us, as well as a guide to help you get the best rate.

Apply now with our top pick: College Ave

Most Important Factors When Applying for Student Loans

Start with a federal loan. Fill out a FAFSA form prior to applying for a private loan to make sure youâre getting all the benefits you can.
Compare loans across multiple lenders. Consider using a comparison company like Credible to do so.
Always read the fine print. Fees arenât always boasted on the front of a lenderâs website, so take time to learn about what youâre getting into.
Start paying as soon as you can to avoid getting crushed by compound interest.

Best Private Student Loans of 2021

Fortunately, there are many private student loan options that come with low interest rates and fair terms. The best student loans of 2021 come from the following private lenders and loan comparison companies:

Best for Flexibility

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Best Loan Comparison

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Best for Low Rates and Fees

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Best for No Fees

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Best Student Loans from a Major Bank

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Best Student Loans with No Cosigner Required

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Best for Fair Credit

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Best for Comprehensive Comparisons

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#1: College Ave â Best for Flexibility

College Ave offers private student loans for undergraduate and graduate students as well as parents who want to take out loans to help their kids get through college. Variable APRs as low as 3.70% are available for undergraduate students, but you can also opt for a fixed rate as low as 4.72% if you have excellent credit. College Ave offers some of the most flexible repayment options available today, letting you choose from interest-only payments, flat payments, and deferred payments depending on your needs. College Ave even lets you fill out your entire student loan application online, and they offer an array of helpful tools that can help you figure out how much you can afford to borrow, what your monthly payment will be, and more.

Qualify in Just 3 Minutes with College Ave

#2: Credible â Best Loan Comparison

Credible doesnât offer its own student loans; instead, it serves as a loan aggregator and comparison site. This means that, when you check out student loans on Credible, you have the benefit of comparing multiple loan options in one place. Not only is this convenient, but comparing rates and terms is the best way to ensure you get a good deal. Credible even lets you get prequalified without a hard inquiry on your credit report, and you can see loan offers from up to nine student lenders at a time. Fixed interest rates start as low as 4.40% for borrowers with excellent credit, and variable rates start at 3.17% APR with autopay.

Compare Dozens of Rates at Once with Credible

#3: Sallie Mae â Best for Low Rates and Fees

Sallie Mae offers its own selection of private student loans for undergraduate students, graduate students, and parents. Interest rates offered can be surprisingly low, starting at 2.87% APR for variable rate loans and 4.74% for fixed-rate loans. Sallie Mae student loans also come without an origination fee or prepayment fees, as well as rate reductions for students who set up autopay. You can choose to start repaying your student loans while youâre in school or wait until you graduate as well. Overall, Sallie Mae offers some of the best âdealsâ for private student loans, and you can even complete the entire loan process online.

Get Access to Chegg Study FREE with Sallie Mae

#4: Discover â Best for No Fees

While Discover is well known for their excellent rewards credit cards and personal loan offerings, they also offer high-quality student loans with low rates and fees. Not only do Discover student loans come with low variable rates that start at 3.75%, but you wonât pay an application fee, an origination fee, or late fees. Discover student loans are available for undergraduate students, graduate students, professional students, and other lifelong learners. You can even earn rewards for having a 3.0 GPA or better when you apply for your loan, and Discover offers access to U.S. based student loan specialists who can answer all your questions before you apply.

Apply for a Loan with Discover

#5: Citizens Bank â Best Student Loans from a Major Bank

Citizens Bank offers their own flexible student loans for undergraduate students, graduate students, and parent borrowers. Students can borrow with or without a cosigner and multi-year approval is available. With multi-year approval you can apply for student funding one time and secure several years of college funding at once. This saves you from additional paperwork and subsequent hard inquiries on your credit report. Citizens Bank student loans come with variable rates as low as 2.83% APR for students with excellent credit, and you can make full payments or interest-only payments while youâre in school or wait until you graduate to begin repaying your loan. Also keep in mind that, like others on this list, Citizens Bank lets you apply for their student loans online and from the comfort of your home.

#6: Ascent â Best Student Loans with No Cosigner Required

Ascent is another popular lender that offers private student loans to undergraduate and graduate students. Variable interest rates start at 3.31% whether you have a cosigner or not, and there are no application fees required to apply for a student loan either way. Terms are available for 5 to 15 years, and Ascent even offers cash rewards for student borrowers who graduate and meet certain terms. Also note that Ascent lets you earn money for each friend you refer who takes out a new student loan or refinances an existing loan.

Get a Loan in Minutes with Ascent

#7: Earnest â Best for Fair Credit

Earnest is another online lender that offers reasonable student loans for undergraduate and graduate students who need to borrow money for school. They also offer a free application process, a 9-month grace period after graduation, no origination fees or prepayment fees, and a .25% rate discount when you set up autopay. Earnest even lets you skip a payment once per year without a penalty, and there are no late payment fees. Variable rates start as low as 3.35%, and you may be able to qualify for a loan from Earnest with only âfairâ credit. For their student loan refinancing products, for example, you need a minimum credit score of 650 to apply.

Learn Your Rate in Minutes with Earnest

#8: LendKey â Best for Comprehensive Comparisons

LendKey is an online lending marketplace that lets you compare student loan options across a broad range of loan providers, including credit unions. LendKey loans come with no application fees and variable APRs as low as 4.05%. They also have excellent reviews on Trustpilot and an easy application process that makes applying for a student loan online a breeze. You can apply for a loan from LendKey as an individual, but itâs possible youâll get better rates with a cosigner on board. Either way, LendKey lets you see and compare a wide range of loan offers in one place and with only one application submitted.

Pay Zero Application Fees with LendKey!

How to Get the Best Student Loans

The lenders above offer some of the best student loans available today, but thereâs more to getting a good loan than just choosing the right student loan company. The following tips can ensure you save money on your education and escape college with the smallest student loan burden possible.

Consider Federal Student Loans First

Like we mentioned already, federal student loans are almost always the best deal for borrowers who can qualify. Not only do federal loans come with low fixed interest rates, but they come with borrower protections like deferment and forbearance. Federal student loans also let you qualify for income-driven repayment plans like Pay As You Earn (PAYE) and Income Based Repayment (IBR) as well as Public Service Loan Forgiveness (PSLF).

Compare Multiple Lenders

If you have exhausted federal student loans and need to take out a private student loan, the best step you can take is comparing loans across multiple lenders. Some may be able to offer you a lower interest rate based on your credit score or available cosigner, and some lenders may offer payment plans that meet your needs better. If you only want to fill out a loan application once, it can make sense to compare multiple loan offers with a service like Credible.

Improve Your Credit Score

Private student loans are notoriously difficult to qualify for when your credit score is less than stellar or you donât have a cosigner. With that in mind, you may want to spend some time improving your credit score before you apply. Since your payment history and the amounts you owe in relation to your credit limits are the two most important factors that make up your FICO score, make sure youâre paying all your bills early or on time and try to pay down debt to improve your credit utilization. Most experts say a utilization rate of 30% or less will help you achieve the highest credit score possible with other factors considered.

Check Your Credit Score for Free with Experian

Get a Quality Cosigner

If your credit score isnât at least âvery good,â or 740 or higher, you may want to see about getting a cosigner for your private student loan. A parent, family member, or close family friend who has excellent credit can help you qualify for a student loan with the best rates and terms available today. Just remember that your cosigner will be liable for your loan just as you are, meaning they will have to repay your loan if you default. With that in mind, you should only lean on a cosignerâs help if you plan to repay your loan amount in full.

Consider Variable and Fixed Interest Rates

While private student loans offer insanely low rates for borrowers with good credit, their variable rates tend to be lower. This is why you should always take the time to compare variable and fixed rates across multiple lenders to find the best deal. If you believe you can pay your student loans off in a few short years, a variable interest rate may help you save money. If you need a decade or longer to pay your student loans off, on the other hand, a low fixed interest rate may provide you with more peace of mind.

Check for Discounts

As you compare student loan providers, make sure to check for discounts that might apply to your situation. Many private student loan companies offer discounts if you set your loan up on automatic payments, for example. Some also offer discounts or rewards for good grades or for referring friends. It’s possible you could qualify for other discounts as well depending on the provider, but you’ll never know unless you check.

Beware of Fees

While the interest rate on your student loan plays a huge role in your long-term loan costs, donât forget to check for additional fees. Some student loan companies charge application fees or prepayment penalties if you pay your loan off early, for example. Others charge origination fees that tack on a few additional percentage points to your loan amount right off the bat. If you can find a student loan with a low interest rate and no additional fees, youâll be much better off. Since loan fees may not be prominently advertised on student loan provider websites, however, keep in mind that you may need to dig into their fine print to find them.

Make Payments While Youâre in School

Finally, no matter which loan you end up with, it makes a lot of sense to make payments while youâre still in school if you’re earning any kind of income. Even if you make interest-only payments while you attend college part-time or full-time, you can save yourself from paying thousands of dollars in additional interest payments later in life. Remember that compound interest can be a blessing or a curse. If you can keep interest at bay by making payments while youâre in school, you can squash compound interest and keep your loan balances from growing. If you let compound interest run its course, on the other hand, you may wind up owing more than you borrowed in the first place by the time you graduate school and start repayment.

What to Watch Out For

A private student loan may be exactly what you need in order to finish your degree and move up to the working world, but there are plenty of âgotchasâ to be aware of. Consider all these factors as you apply for a new private student loan or refinance existing loans you have with a private lender.

Interest that accrues while youâre in school: Remember that subsidized loans may not accrue interest until you graduate from college and enter repayment mode, but that unsubsidized loans typically start accruing interest right away. Since private student loans are unsubsidized, youâll need to be especially careful about ballooning interest and long-term loan costs.
Getting a cosigner: Make sure you only apply for a private student loan with a cosigner if youâre entirely sure you can repay your loan over the long haul. If you fail to keep up with your end of the bargain, you could destroy trust with that person and their credit score in one fell swoop.
Youâll lose out on some protections: Also remember that private student loans come with fewer protections than federal student loans. You wonât have the option for income-driven repayment plans with private loans, nor will you be able to qualify for federal deferment or forbearance. For this reason, private student loans are best for students who are confident in their ability to repay their loans on their chosen timeline.

In Summary: The Best Student Loans

Company	Best Of…
College Ave	Best for Flexibility
Credible	Best for Loan Comparison
Sallie Mae	Best for Low Rates and Fees
Discover	Best for No Fees
Citizens Bank	Best Student Loans from a Major Bank
Ascent	Best Student Loans with No Cosigner Required
Earnest	Best for Fair Credit
LendKey	Best for Comprehensive Comparisons

The post Here Are The Best Student Loans of 2021 appeared first on Good Financial CentsÂ®.

Source: goodfinancialcents.com

February 4, 2021

How Does Cash Back Work?

By Renee Powell in Cash Back, Credit Cards Tag american express, Cash Back, cash back credit cards, Credit, credit card, credit card rewards, Credit Cards, Credit Score, earnings, Family, Financial Wize, FinancialWize, investment, Life, money, Products, Purchase, Rewards, Rewards Cards, rewards credit cards, Saving

How Does Cash Back Work?

Editorial Note: This content is not provided by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the authorâs alone, and have not been reviewed, approved or otherwise endorsed by the issuer.

Credit card companies typically offer a plethora of rewards options for their cardholders to take advantage of. But cash back has long been a favorite of many, as it gives you the chance to earn cold, hard money for making everyday purchases. If youâre confused about how cash back works, read on for a full explanation.

How Cash Back Works

At its core, cash back refers to a predetermined percentage of a purchase you make being returned to you as cash rewards. Cash back rates typically range between 1% and 5%, though there are some outliers to be mindful of. Credit card issuers will usually clearly label what types of purchases earn what level of cash back. But like anything in the credit card industry, you must read the fine print.

This is mainly because all purchases and cash back rewards are governed by merchant category codes, or MCCs. Credit card companies ultimately determine these designations, with Mastercard, Visa, American Express and Discover calling the shots. Some common codes are ârestaurant,â âdepartment store,â âairlineâ and âentertainment,â among others. So if you earn 5% bonus cash back at restaurants and you go to Burger King â which has a restaurant MCC â youâll get that 5% back.

But what these limiting MCCs sometimes donât take into account are businesses that could fit into more than one category. Included in this group are hotels, superstores like Walmart, tourist attractions like museums and other multi-faceted establishments. In turn, you could lose out on cash back if youâre confused about which category a purchase you made falls into.

As an example, letâs say your family orders room service while on vacation in The Bahamas. You pay with your credit card thinking youâll get the advertised 3% cash back on dining. When your credit card statement comes in the mail, however, youâve only received the base 1% earnings. This is because the MCC of your hotel is just that, a hotel, which leaves your credit card issuer blind to what you really bought.

Unfortunately situations like these often offer very little recourse, as your cardâs issuer has no ability to change these codes. In fact, only the major credit companies can change their own code selections.

New cardholders will often receive cash back promotions and bonuses. These offers can either be recurring â monthly, quarterly, yearly, etc. â or simply for just one period of time, usually at the beginning of your accountâs life. Hypothetically, a recurring bonus might look like this: âEarn 3% cash back at supermarkets and wholesale clubs, up to $1,500 in purchases each quarter.â On the other hand, a one-time promotion might allow for 5% cash back on airfare purchases made during the first three months youâre a cardholder.

Depending on your card, cash back may be capped or it could expire after a period of time. While some cards feature both an earnings limit and expiration dates, others may have no restrictions. All cash back cards have their own, unique system surrounding them. So itâs important to refer to your documentation whenever you have a particular question.

Using Your Cash Back Earnings

How Does Cash Back Work?

The vast majority of cash back credit cards offer variations of the same choices for redeeming rewards. Most often, youâll see statement credits, checks, bank account deposits, gift cards and charitable donations available to you.

Statement credit â Instead of receiving your cash back in-hand, you can apply it to your upcoming monthly bill, saving you money in the process.
Check â As one of the more direct ways of redeeming cash back, checks allow you to basically do whatever you want with its value.
Bank deposits â Eligible accounts usually include checking accounts, savings accounts or investment accounts.
Gift cards â With this option, you can convert cash back into retail credit at a store or website at which you want to shop.
Donations â Many card issuers have open relations with charities. These partnerships open the door for you to aid your favorite causes with real money.

Itâs by far the easiest to redeem cash back through your card issuerâs website that it provides. Here youâll not only see your rewards status, you will also know every possible redemption you could make. If youâd rather talk to a real person, most companies still have rewards phone lines you can call, as well.

Those whoâd rather not have to worry about where their rewards currently stand will find that a redemption threshold might be helpful. Not all cards offer this feature. But if yours does, set a threshold at which your cash back is automatically redeemed in any manner you desire. Additionally, some cards require you to attain a certain amount of cash back before redeeming is possible.

Cash Back With Each Major Credit Card Company

what is cash back

There are tons of different cash back cards, depending on your credit score you may be eligible for some but not others. While itâs impossible to give universal specifics for each credit card company, below weâve provided overviews of some of the most popular cash back cards.

Citi Double Cash Card (Mastercard)

Cash Back Rate: 1% at the time of purchase, 1% when you pay them off

Limit or Expiration: No limit; Expires if no eligible purchases are made for 12 months

Redemption Options: As a check, statement credit or gift card

The âdouble cashâ nature of the Citi Double Cash Card means you effectively earn cash back twice: first when you make the initial purchase and again when you pay your credit card bill. The 12-month expiration is fairly standard and the lack of limits on how much cash back you can earn is generous. Statement credits, checks and gift cards are three of the most common redemption choices, so itâs no surprise to see them offered here.

Bank of AmericaÂ® Cash Rewards credit card (Mastercard)

Cash Back Rate: 3% in the category of your choice, 2% on purchases at grocery stores and wholesale clubs, 1% on other purchases

Limit or Expiration: Cash back on choice category, grocery stores and wholesale club purchases is limited on up to $2,500 in combined purchases each quarter; No expiration dates

Redemption Options: Once you have $25 or more, you can redeem as a statement credit, a check or a deposit to an eligible Bank of AmericaÂ® or Merrill LynchÂ® account

Take note of the combined $2,500 quarterly limit on 3% and 2% cash back in category of choice and at grocery stores and wholesale clubs, respectively. The Bank of AmericaÂ® Cash Rewards credit card also requires cardholders to have a minimum of $25 in earned cash back before they can redeem.

Blue Cash Everyday American Express Card
(American Express)

Cash Back Rate: 3% on U.S. supermarket purchases, 2% on U.S. gas stations and select U.S. department store purchases, 1% on other purchases

Limit or Expiration: 3% rate at U.S. supermarkets is limited to $6,000 a year in purchases then drops to 1%; No expiration dates

Redemption Options: After earning at least $25, redeem as a statement credit in $25 increments; Gift cards and merchandise redemptions from time to time

Amex offers some of the strongest rewards cards around, and the Blue Cash Everyday American Express Card is no exception. It does come with some limits; namely the 3% cash back rate on U.S. grocery store purchases is capped at $6,000 in purchases a year. At that time, cardholders earn 1% in cash back on groceries.

Discover itÂ® Card
(Discover)

Cash Back Rate: 5% in rotating categories like gas station, supermarket, restaurant, Amazon.com and wholesale club purchases, 1% on other purchases; Full cash back match at the end of your first year

Limit or Expiration: $1,500 cap on purchases that earn the 5% rate each quarter; No expiration dates

Redemption Options: Statement credits, deposits to a bank account, gift cards and eCertificates, pay with cash back at select merchants and charitable donations

Discover cards offer great first-year cash back matches and distinctive cash back categories. These traits are on full display with the Discover itÂ® Card. This includes 5% cash back on purchases ranging from dining to Amazon.com. However, there are limits for this rate and you have to opt in to categories each quarter to qualify. This card also offers five redemption options â the most on this list.

Tips to Maximize Cash Back Potential and Minimize Credit Risk

Cash back is one of the most prolific perks that the modern credit card market has to offer. But itâs important that you donât overspend outside of your means just for the sake of rewards. Because many cash back cards come with higher annual percentage rates (APRs), this could force you into large, unsustainable interest payments.
Whenever possible, swipe your card for purchases in bonus categories. Not all cards have these to offer, but most do. So make sure you know which cards in your wallet offer bonuses at places like gas stations and supermarkets.
Know what types of redemptions â statement credits, bank account deposits, gift cards etc. â work best for you. This will drastically narrow down your card options, making the decision process much simpler.

Photo Credit: Â©iStock.com/4Ã6, Â©iStock.com/Pgiam, Â©iStock.com/Ridofranz

Advertiser Disclosure: The card offers that appear on this site are from companies from which SmartAsset.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). SmartAsset.com does not include all card companies or all card offers available in the marketplace.

The post How Does Cash Back Work? appeared first on SmartAsset Blog.

Source: smartasset.com

February 3, 2021

How to redeem cash back

By Renee Powell in Apartment Communities, Cash Back Tag american express, ATM, Banking, Budget, Cash Back, Checking Account, Credit, Credit Cards, Credit Score, Direct Deposit, earnings, Fees, financial habits, Financial Wize, FinancialWize, How To, journey, money, News, Products, Purchase, Rewards, savings, Savings Account, Shopping, Spending, Travel

Surveys consistently show that no credit card reward is more popular than cold, hard cash. Indeed, cash back cards came out well ahead of other types of rewards cards in a recent CreditCards.com survey, which found that close to half of U.S. adults own a cash back credit card.

And for good reason: Instead of having to decipher a complex redemption scheme, you can opt for a simple, straightforward reward and use it in the way that fits you best.

Here we take a look at some of the most common types of cash back redemption, along with some of the restrictions you may encounter when redeeming your rewards.

How cash back cards work

Cash back cards come in a variety of flavors, but they all fundamentally work the same way: As you make purchases with your card, you earn cash rewards at a set rate. There are three major types of cash back cards.

Flat-rate cash back cards offer the same percentage of cash back for all purchases, usually between 1% and 2%.
Bonus category cash back cards typically reward some purchases, like groceries or dining, at a higher rate, while rewarding general purchases at 1%.
Rotating bonus category cash back cards have dynamic bonus categories that automatically change or allow you to select a different bonus category after a certain length of time.

See related:Â What is cash back?

Ways to redeem cash back

Depending on your card and issuer, you may have a variety of choices in how you redeem your cash back rewards. Some issuers even allow you to set up an automatic redemption, meaning your redemption would automatically initiate after a set number of days or after you earn a certain amount in rewards.

The most common ways to redeem cash back are:

A statement credit
A direct deposit to a bank account
A check
Gift cards
Merchandise

Redeeming cash back as a statement credit

One of the most common ways to redeem cash back is as aÂ statement credit. A statement credit is money credited to your account that reduces your card balance. For example, if you were to spend $1,000 with a card that offers 1.5% cash back on every purchase, youâd earn $15 in cash back rewards; and if you were to redeem this cash back as a statement credit, your balance would decrease by $15 to $985.

Blue Cash PreferredÂ® Card from American Express, for example, requires you to have earned $25 in cash back before you can redeem as a statement credit.

TheÂ Chase Freedom UnlimitedÂ®card lets you redeem rewards as a statement credit in any amount, anytime.

Once youâve met your cardâs redemption requirements, you can simply choose a statement credit as your preferred cash back redemption.

Redeeming cash back as a check or direct deposit

A slightly smaller number of credit card rewards programs let you redeem your rewards for âtrueâ cash back in the form of a check or direct deposit to your bank account. Claiming your cash back in this way gives you a bit more leeway since you can save or spend your rewards however you like instead of having them âlockedâ into a particular card account.

As with statement credits, the requirements for requesting a check vary from card to card, with some issuers requiring you to have earned a minimum amount of cash back before you can request a check and others imposing relatively few restrictions.

Direct deposits tend to be a bit trickier across the board, especially if you donât already have a banking relationship with your credit card issuer.

TheÂ Bank of AmericaÂ® Cash Rewards credit card, for example, will only let you redeem cash back as direct deposit if you have a checking or savings account with Bank of America.
TheÂ CitiÂ® Double Cash Card lets you redeem your cash back as a direct deposit only if you have a linked Citi account or a checking account from which youâve paid a Citi credit card bill at least twice. While the Double Cash card requires you to have earned at least $25 in cash back to redeem as a statement credit, thereâs no minimum to redeem as a direct deposit.

Wells Fargo Cash Wise VisaÂ® cardÂ lets you claim your cash back via an ATM (in $20 increments only) if you have a Wells Fargo Bank account.

Automatic cash back redemption

Along with manually requesting a statement credit, check or direct deposit, a number of cards allow you to set up automatic cash back redemption. If your card allows automatic redemption, your cash back is generally distributed at set times or after youâve earned a certain amount.

TheÂ Capital One Quicksilver Cash Rewards Credit Card and, for example, allow you to schedule automatic cash back redemption via statement credit or check at a set time once per year or once youâve reached a cash back earnings threshold ($25, $50, $100, $200, $500 or $1,500).
Even some cards designed for credit-builders, like theÂ Credit One Bank American ExpressÂ® Card, allow automatic redemption as a statement credit, offering those looking to improve their financial habits a âset-it-and-forget-itâ cash back savings tool that will periodically knock off a chunk of their credit card balance.

Travel, gift cards and merchandise on an issuerâs online portal

Most credit card issuers also give you the option of redeeming your cash back through a rewards portal for online shopping or as gift cards to select department stores, restaurants, video streaming services and more.

TheÂ Discover itÂ® Cash Backcard, for example, lets you redeem your cash back for gift cards from shopping partners once youâve earned $5 in cash back (gift cards range from $5 to $200, in increments of $5).
TheÂ Amazon Prime Rewards Visa Signature card*lets you redeem your points for purchases on Amazon.com, as a statement credit or deposit, or for gift cards and travel â all at a rate of 1 cent per point.

Having the option to use your rewards for travel allows you to enjoy the benefits of travel rewards with a cash back card and is especially common among cash back cards that use points or allow you toÂ choose between cash back and points.

The Chase Freedom Unlimited is a great example. You can earn unlimited cash back at a rate of 5% cash back on every purchase, which translates to 1.5 points per dollar if redeemed for travel in theÂ Chase Ultimate Rewards portal.
Similarly, the Citi Double Cash Card lets you transfer your cash back toÂ Citi ThankYou Rewards and redeem for travel rewards, as well as gift cards, merchandise and other purchases through the Pay with Points program.

Cash back redemption options on popular rewards cards

As you can see, cash back redemption options vary considerably from issuer to issuer and card to card. Hereâs a closer look at how cash back redemption breaks down with some of the most popular cash back credit cards.

Card	Redeem as a statement credit?	Redeem as a check?	Redeem as a direct deposit?
Blue Cash PreferredÂ® Card from American Express	Yes (once youâve earned $25 in cash back)	No	No
Bank of AmericaÂ® Cash Rewards credit card	Yes (once youâve earned $25 in cash back)	Yes (once youâve earned $25 in cash back)	Yes (into a Bank of America checking or savings account, once youâve earned $25 in cash back)
Capital One Quicksilver Cash Rewards Credit Card	Yes, anytime	Yes, anytime	No
Chase Freedom UnlimitedÂ®	Yes, anytime	Yes, anytime	Yes
CitiÂ® Double Cash Card	Yes (once youâve earned $25 in cash back)	Yes (once youâve earned $25 in cash back)	Yes (to a linked Citi savings or checking account or to a checking account from which youâve paid your Citi credit card bill at least twice)
Discover itÂ® Cash Back	Yes, anytime	No	Yes

Best cash back redemption options

With all those options for redeeming for cash, which one is best?

The key point to consider is whether your rewards lose any value when redeemed in a certain way. You want to make sure you are getting the most value back, so be careful if you redeem for merchandise, which can be worth less than rewards redeemed for straight cash.

That said, unless your issuer offers a bonus for claiming your rewards as a statement credit instead of âtrueâ cash back, you should simply stick to whichever option is most convenient.

One drawback to cash rewards is they often donât feel like actual rewards because they get swept up into your ongoing finances. If that bothers you, you might consider taking note of how much you are receiving in cash rewards, then rewarding yourself by spending that amount on something you want, so that you feel like youâre getting a reward.

Either way, thatâs the best aspect of cash back rewards: Itâs your decision.

Choosing the best cash back credit card for you

Your redemption options are just one consideration when choosing a credit card. Consider these factors:

Bonus categories

When shopping around for cash back cards, find the card that will work the hardest for you, not the other way around. In other words, a cash back rate of 5% at restaurants is great, but not if you rarely eat out. Bottom line: Find a credit card that matches the largest portions of your budget.

Also, be honest about how much thought you want to give to your credit card. If you prefer a âset and forgetâ approach, a flat-rate card is a better choice than a rotating bonus category card.

Annual fees

With so many great no annual fee cards, you might wonder why you would ever get a card with an annual fee. But often, the rewards rates are so much better that it actually makes sense to get the card with the annual fee. For example, comparing the Blue Cash EverydayÂ® Card from American Express and the Blue Cash PreferredÂ® Card from American Express, we found that consumers who spend more than $3,200 annually at U.S. supermarkets ($267 per month) were actually better off with Blue Cash Preferred, which has a $95 annual fee.

From redemption options to bonus categories, each cash back card is designed for a different type of consumer. If you havenât found your perfect match yet, try our CardMatchâ¢ tool, which can deliver personalized credit card offers in seconds with no impact on your credit score.

All information about the Capital One Savor Cash Rewards Credit Card and the Amazon Prime Rewards Visa Signature Card has been collected independently by CreditCards.com. The issuers did not provide the content, nor are they responsible for its accuracy.

Source: creditcards.com

February 3, 2021

A Step-by-Step Guide to Prepare Your Budget for a Layoff

By Renee Powell in Budgeting, Photography Guides Tag Automatic Transfer, Back To School, Banking, Budget, Budgeting, Budgeting Basics, car, Career, Career & Education, Career Tips, debt, Debt Repayment, Direct Deposit, earnings, Emergency Fund, Enhancing Your Budget, experience, Extra Money, Financial Plan, Financial Wize, FinancialWize, financing, government, health, Health Insurance, Home, How To, Insurance, Life, Lifestyle, money, Online Savings Account, paycheck, planning, Retirement, Salary, Saving, savings, Savings Account, Savings Strategies, School, Security, Side Hustle, Spending, unemployment, Work Life

What would you do if you were laid off from your job today? This question isn’t meant to make you want to hide under your desk, but to encourage you to evaluate your circumstances. What would happen to your financial situation if you suddenly didn’t have an income to rely on?

While it’s not exactly fun to plan ahead for life’s hardshipsâsay, your car breaking down or losing a jobâdoing so can help you stay afloat financially and avoid taking on debt to remedy an already tense situation.

What can you do to prepare your budget for a layoff? These four steps will help you prepare your budget for a layoff and survive a layoff financially:

1. Put some of your paycheck into savings

In order to prepare your budget for a layoff, one of the best things you can do is learn to live on less when you have your typical paychecks coming in. Living paycheck to paycheck is a reality for many, and a habit many promise to break once they earn more. If you can afford it, consider trying to live off only a portion of your paycheck. That way, you can always depend on having extra money to fall back on in the event of a hardship, like a layoff.

One way to save for an unexpected job loss is to put some of every paycheck into your savings account.

Jill Caponera, a consumer savings expert at coupon platform Promocodes.com, suggests paying yourself firstâputting some of each paycheck into savings before you spend any of itâin order to save for an unexpected job loss.

“Put money directly into your savings account the moment you get paid so that you’re never in a position where you’re strapped during a true financial emergency,” Caponera says. Try scheduling an automatic recurring transfer from checking to savings that hits after each payday, or create a direct deposit to savings from each paycheck through your employer.

If living on less isn’t feasible for you right now, start small and focus on taking baby steps to prepare your budget for a layoff. You could start with a money savings challenge and a more attainable goal, like living off of 97 percent of your paycheck and saving the remaining 3 percent. This means that if your take-home pay is $4,000 a month, your goal is to put 3 percent, or $120, into savings monthly and then limit your bills and spending to $3,880. As you get accustomed to that amount, gradually increase the percentage of your paycheck you save each period. Some budgeting experts suggest saving at least 20 percent of your income and living off of the other 80 percent.

If you devote even a small percentage of your paycheck to savings before the bills and discretionary expenses roll in, saving will eventually become habit. You’ll get used to budgeting only with your post-savings take-home pay, and you won’t miss the savings portion of your paycheck.

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âPut money directly into your savings account the moment you get paid so that you’re never in a position where you’re strapped during a true financial emergency.”

– Jill Caponera, consumer savings expert at Promocodes.com

2. Save 3 to 6 months of expenses in an emergency fund

Once you’ve gotten used to regularly saving a portion of your income, you can save for an unexpected job loss by building up a solid emergency fund over timeâespecially if you are using an online savings account with a high interest rate. An emergency fund is a dedicated savings account that you only touch in the event of financial hardship, such as a medical emergency or job loss.

Sunny skies are the right time to save for a rainy day.

Start an emergency fund with no minimum balance.

Start Saving

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Discover Bank, Member FDIC

Christian Stewart, founder of financial coaching site Do Better Financial, recommends having an emergency fund of three to six months of expenses to help you survive a layoff financially.

“The goal is to make sure all your bases are covered, meaning you can pay the bills and proceed with a relatively normal life until you find another job,” Stewart says. She notes the actual amount of money you need to save for an unexpected job loss will vary based on your lifestyle, employment industry and willingness to relocate, since this can dictate how long it could take to find another job.

To build an emergency fund and save for an unexpected job loss, Stewart recommends starting a zero-based budget. This form of budgeting gives every dollar you earn a job, such as paying a bill, funding your emergency account or financing fun and discretionary expenses. In addition to making your emergency fund a priority, this budgeting strategy helps you identify exactly how much you spend within each budget category each month. You can then find areas of careless spendingâperhaps an unused subscription serviceâwhere you could stand to cut back. You could redistribute those dollars to your emergency fund.

Having an emergency fund in place can help you survive a layoff financially.

“In the event of a layoff, you will have a clear line of sight to regular areas of your spending that can be cut if it takes longer to find a new job,” Stewart says.

After you’re comfortable with the size of your emergency fund and feel like you can survive a layoff financially, you can use any extra savings for a different financial goal, such as saving for retirement or a down payment on a car or home.

3. Find income from a side hustle

Another way to survive a layoff financially is to have a side gig in place. Contrary to what some believe, side hustles do not have to take up an onerous amount of your time. There are actually many side hustles you can do while working full time, such as freelancing in your current field, driving for a rideshare app or tutoring.

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Not only do side jobs create extra cash flow to devote toward savings or debt repayment when you have a full-time job, they also give you an added layer of security to help you save for an unexpected job loss. You might not be able to replace your full-time earnings with your music lesson business, but it can provide you with some predictable cash flow while you interview for a new position.

You could even turn your side hustle into a full-time job if you have a passion project you’ve been wanting to turn into a career. Alternatively, your side hustle turned full-time gig could help maintain your income stream if you plan to take additional time off after a layoffâif you decide to go back to school or make a move to a new industry, for example.

4. Know where to turn for assistance

Being laid off can be a traumatic experience, and if it does happen, it is important to know where to turn and how to make decisions that aren’t rooted in fear or emotion.

“Sit down with a level-headed friend, spouse and/or counselor to process your new financial reality,” Stewart of Do Better Financial says. “If you’re receiving a compensation package, do yourself a favor and work out beforehand where the money will be spent and how long you need it to last.”

Speaking of work benefits, make sure you utilize all of the benefits possible before your layoff goes into full effect, such as getting an annual physical through your health insurance plan.

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âSit down with a level-headed friend, spouse and/or counselor to process your new financial reality. If you’re receiving a compensation package, do yourself a favor and work out beforehand where the money will be spent and how long you need it to last.”

– Christian Stewart, founder of Do Better Financial

“If you’ve been laid off, or are expecting an upcoming layoff, you should immediately contact your state’s unemployment office to set up your account and start receiving your compensation,” consumer savings expert Caponera says. “While these benefits won’t pay as much as your full-time salary, these funds will certainly help to cover your monthly bills and living expenses while you continue to look for work.”

Each state has different benefits and paperwork requirements, so make sure you’re using your state’s government website to learn more and to survive a layoff financially.

Prepare your budget for a layoff

Facing a layoff can be emotionally and financially draining, especially if you don’t see it coming. The most important thing is to start planning ahead, and prepare your budget for a layoff before it happens.

The post A Step-by-Step Guide to Prepare Your Budget for a Layoff appeared first on Discover Bank – Banking Topics Blog.

Source: discover.com

February 3, 2021

The Average Salary of a Pilot

By Renee Powell in Photography Guides Tag average salary of a pilot, Career, Credit, earnings, Education, experience, Financial Advisor, Financial Goals, Financial Wize, FinancialWize, flight, Florida, Grow, Home, Managing Your Money, money, pilot, Salary, Saving, School

The Average Salary of a Pilot

The job of an airline pilot has a certain glamour to it. However, unconventional working hours and plenty of time away from home can be a recipe for stress and burnout. This could be why airline and commercial pilots are compensated fairly well, earning a median annual salary of $115,670. That one number doesnât tell the whole story, though, as it varies depending on whom you fly for and where youâre based.

The Average Salary of a Pilot

According to the Bureau of Labor Statistics (BLS), the median salary of the group the BLS calls airline and commercial pilots was $115,670 per year in May 2018. The BLS also tracks the job outlook for the careers it studies, measuring how many jobs the career will add between 2016 and 2026. The BLS job outlook for Airline and Commercial Pilots is 4%, which is about as fast as the average across all careers. According to the BLS, the U.S. will add 4,400 airline and commercial pilots between 2016 and 2026.

Where Pilots Earn the Most

The Average Salary of a Pilot

When it comes to tracking state- and city-level earnings data, the BLS looks at commercial pilots and âairline pilots, copilots and flight engineersâ separately. Letâs take a look at where commercial pilots earn the most.

The mean annual wage for commercial pilots is $96,530 per year. According to BLS data, the top-paying state for commercial pilots is Georgia, where commercial pilots earn a mean annual wage of $130,760. Other high-paying states for commercial pilots are Connecticut, New York, Florida and Maryland. The top-paying metro area for commercial pilots is Hilton Head Island-Bluffton-Beaufort, SC, where the annual mean wage for commercial pilots is $128,600. Other high-paying metro areas for commercial pilots are Savannah, GA; Seattle-Tacoma-Bellevue, WA; Bakersfield, CA; Fayetteville-Springdale-Rogers, AR-MO and Spartanburg, SC.

Now letâs take a look at where airline pilots, copilots, and flight engineers earn the most. The top-paying state in this field is Washington, with a mean annual wage of $237,150. Other high-paying states for this profession are Michigan, Nevada, Oregon and California. Of the metro areas for which the BLS has data, the top-paying metro area for airline pilots, copilots and flight engineers is San Francisco-Oakland-Hayward, CA, with a mean annual wage of $247,120. Other high-paying metro areas for this field are Seattle-Tacoma-Bellevue, WA; Las Vegas-Henderson-Paradise, NV; Denver-Aurora-Lakewood, CO; Tampa-St. Petersburg-Clearwater, FL and Chicago-Naperville-Elgin, IL-IN-WI.

Becoming a Pilot

Typically, itâs easier to become a commercial pilot than an airline pilot. Because of this, many airline pilots start their career as commercial pilots. To be a pilot of any kind, youâll need to have a commercial pilotâs license from the Federal Aviation Administration (FAA). To be an airline pilot, youâll need an additional document known as a Airline Transport Pilot (ATP) certificate. This is also issued by the FAA.

In terms of education, you will need a high school diploma and a commercial pilotâs license to become a commercial pilot. To become an airline pilot, you will likely need a bachelorâs degree, although it can be in any subject.

The typical path to becoming a commercial pilot is to complete an FAA-certified flight training program. These are held both at independent flight schools and through colleges and universities. Once youâve assembled enough flying hours, you can get a job as a commercial pilot.

Regional and major airlines typically require significantly more flight experience for new hires. This is another reason why many people start out as commercial pilots and then move on to working for an airline. According to the BLS, many commercial pilot jobs require a minimum of 500 flying hours, whereas entry-level airline jobs require somewhere around 1,500.

Bottom Line

The Average Salary of a Pilot

Have you ever flown out of an airport and wondered what it would be like to be a pilot? With an average annual salary of $102,520, pilots earn a good living. Not just anyone can become a pilot, however. Commercial pilots must earn a commercial pilot certificate, while airline pilots, copilots and flight engineers must earn the Federal Air Transport certificate and rating for the specific aircraft type they fly. Being a pilot is also a dangerous job, so itâs not surprising that pilotsâ compensation is high.

Tips for Saving Responsibly

The median pilot salary is enough to live comfortably in most areas of the country, but itâs still important to make sure youâre saving some of that money for emergencies and retirement.
A financial advisor can be a big help in managing your money and choosing smart investments that grow your nest egg. Finding the right financial advisor that fits your needs doesnât have to be hard. SmartAssetâs free tool matches you with financial advisors in your area in 5 minutes. If youâre ready to be matched with local advisors that will help you achieve your financial goals, get started now.

The post The Average Salary of a Pilot appeared first on SmartAsset Blog.

Source: smartasset.com

February 3, 2021

Prenup vs Postnup: What is the Difference?

By Renee Powell in Auto Rental Guides, Money Tag ATM, Budget, Budgeting & Goals, earnings, Emergency Fund, Family, Fees, Financial Wize, FinancialWize, How To, InvestY, InvestZ, Main, money, property, Purchase, real estate, Save Money, Spending, SpendSLR, Vs., Wealth

couple on couch with laptop

Theyâre certainly not as romantic to discuss as your dream house or your honeymoon, but prenups and postnups can be a financial lifesaver in the event your marriage does come to an end.

Both prenups and postnups are about figuring out who gets what if you and your spouse get divorced.

But these two types of agreements have some important distinctions, and circumstances may make one better suited to your relationship than the other.

Here are some key things it can be helpful to understand about prenups vs. postnups, plus how to decide if you and your significant other might benefit from getting one.

What is a Prenup?

Short for âprenuptial agreement,â a prenup is a legally binding document set up before a couple gets married â hence the âpreâ suffix.

These contracts typically list each partyâs assets, including property and wealth, as well as any debts either soon-to-be-spouse might carry.

It then details how these assets will be divided in case the marriage comes to an end, either through a divorce or the death of a spouse.

Who Needs a Prenup?

Prenups may also be known as “antenuptial agreements” or “premarital agreements,â but the bottom line is, theyâre contracts drafted before vows are made.

Couples who are getting married for the first time and are bringing little to no assets into the marriage may not need to bother with drawing up a prenup.

However, a prenup can be particularly useful if one spouse is coming into the marriage with children from a previous partnership, or if one partner has a large inheritance or a significant estate, or is expecting to receive a large inheritance or distribution from a family trust.

debt the other spouse brought into the marriage.

What is a Postnup?

A postnup, or postnuptial agreement, is almost identical to a prenup â except that itâs drafted after a marriage has been established.

They may not be as well known as prenups, but postnups have grown increasingly common in recent years, with nearly all 50 U.S. states now allowing them.

A postup may be created soon after the wedding, if the couple meant to do so but simply didnât get around to it before the big day, or well afterwards, especially if some significant financial change has taken place in the family.

Either way, a postnup, much like a prenup, does the job of outlining exactly how assets will be allocated if the partnership comes to an end.

Who Needs a Postnup?

Along with being drafted whole cloth, a postnup can be used to amend an existing prenuptial agreement if there have been big changes that mean the initial contract is now outdated.

And although itâs not fun to think about, if a couple feels theyâll soon be facing divorce, a postnup can help simplify one important part of the process before the rest of the legal proceedings take place.

A postnup, like a prenup, can help separate out assets that would otherwise be considered shared, âmarital property,â which can be important if one partner obtains an inheritance, trust, piece of real estate, or other possession they want to maintain full ownership over.

Postnups can also be part of a renewed effort for a couple to commit to a marriage that may be facing some obstacles and challenges.

Prenup vs. Postnup: Which is Right for Your Relationship?

While it may be a difficult conversation to face with your fiance or spouse, creating a prenup or postnup can be an important step to help you avoid both headache and heartache later on.

If you donât make a pre- or post-nup, your stateâs laws determine who owns the assets that you acquire in your marriage, as well as what happens to that property in the event of divorce or death. State law may also determine what happens to some of the assets you owned before marriage.

While almost any couple can benefit from a frank discussion of who gets what in the worst-case scenario, here are the situations in which you might specifically want to consider a prenup vs. postnup.

Prenup:

•   If one or both partners have existing children from a previous partnership, to whom they want to lay out specific inheritances in case of death.
•   If one partner has a larger estate or net worth (i.e., if one spouse is significantly wealthier than the other).
•   If one or both partners want to protect earnings made and possessions acquired during the marriage from âshared ownership.â

Postnup:

•   If you intended to create a prenup but ran out of time or otherwise didnât do so before the wedding.
•   If significant financial changes have made it necessary to change an existing prenup or draft a new postnup.
•   If divorce is looking likely or inevitable, and the couple wishes to streamline the process of dividing marital assets before undergoing the rest of the process.

In all cases, prenuptial and postnuptial agreements can help simplify the division of assets in the case of either death or divorceâand in either of those extremely emotionally charged scenarios, every little bit of simplification can help.

However, prenups are sometimes considered more straightforward, since theyâre made before assets are combined to become marital property.

Prenups may be more likely to be enforceable than postnups should one partner attempt to dispute it after a divorce.

How to Get a Prenup or Postnup

For a prenup or postnup agreement to be considered valid by judge, it must be clear, legally sound and fair.

Couples looking to save money may be able to use a template to create a prenup or postnup themselves.

It may still be a good idea, however, for each partner to at least have separate attorneys review the document before either one signs.

If your estate is more complex, you may want to consider hiring an attorney to draft the agreement.

Either way, having an attorney review the document will help protect your interests and also help ensure that a judge will deem the agreement is valid.

Reducing the Odds Youâll Ever Need to Use that Prenup or Postnup

While creating a prenup or postnup can be a smart move for even the most hopeful and romantic of couples, the ideal scenario is a happily-ever-after that leaves those contracts to gather dust.

Fighting about money is one of the top causes of strife among couples, and one of the main reasons married couples land in divorce court.

retirement account, can help partners feel empowered and able to focus on other important relationship goals.

Financial transparency, starting before and/or early in marriage, can also help mitigate marital tension over money.

To achieve more transparency, some couples may want to consider opening up a joint bank account, either after they tie the knot or before if they are living together and sharing household expenses.

While there are pros and cons to having a shared account, merging at least some of your money can help make it easier to track spending and stick to a household budget, while also fostering openness and teamwork.

For couples whoâd rather not share every penny (or explain every purchase), having two separate accounts along with one joint account can be a good solution that helps keep money from becoming a source of tension in a marriage.

The Takeaway

Prenuptial and postnuptial agreements are both legal documents that address what will happen to marital assets if a married couple divorces or one of them dies.

A prenup is drafted before marriage, while a postnup can be drafted soon after or many years into marriage.

Both agreements can make divorce or the death of a partner significantly less traumatic.

These agreements can be particularly useful if one spouse has children from a previous marriage, has significant assets, and/or expects to receive a large inheritance or distribution from a family trust during the marriage.

It can be helpful to use an attorney to draw up or look over one of these agreements to make sure itâs legally sound.

For couples who are ready to integrate their finances, SoFi MoneyÂ® makes it easy to create a joint account that gives couples shared access to their money.

Prefer to keep some (or all) of your finances separate? The SoFi Money app makes splitting bills and expenses easy by allowing you to send money directly from the app. If your partner is also a member of SoFi Money, he or she will get the money instantly.

Learn more about SoFi Money today.

SoFi MoneyÂ®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC . Neither SoFi nor its affiliates is a bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFiâs ATM policies are subject to change at our discretion at any time.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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The post Prenup vs Postnup: What is the Difference? appeared first on SoFi.

Source: sofi.com

January 13, 2021

7 Pros and Cons of Investing in a 401(k) Retirement Plan at Work

By Renee Powell in Estate Planning Tag car, earnings, Fees, Financial Wize, FinancialWize, Home, Investing, investment, money, paycheck, Retirement, savings, Security, tax

A 401(k) retirement plan is one of the most powerful savings vehicles on the planet. If you’re fortunate enough to work for a company that offers one (or its sister for non-profits, a 403(b)), it’s a valuable benefit that you should take advantage of.

But many people ignore their retirement plan at work because they don’t understand the rules, which may seem confusing at first. Or they worry about what happens to their account after they leave the company or mistakenly believe you must be an investing expert to use a retirement plan.

Let's talk about seven primary pros and cons of using a 401(k). You’ll learn some lesser-known benefits and get tips to save quickly so you have plenty of money when you’re ready to kick back and enjoy retirement.

What is a 401(k) retirement plan?

Traditional retirement accounts give you an immediate benefit by making contributions on a pre-tax basis.

A 401(k) is a type of retirement plan that can be offered by an employer. And if you’re self-employed with no employees, you can have a similar account called a solo 401(k). These accounts allow you to contribute a portion of your paycheck or self-employment income and choose various savings and investment options such as CDs, stock funds, bond funds, and money market funds, to accelerate your account growth.

Traditional retirement accounts give you an immediate benefit by making contributions on a pre-tax basis, which reduces your annual taxable income and your tax liability. You defer paying income tax on contributions and account earnings until you take withdrawals in the future.

Roth retirement accounts require you to pay tax upfront on your contributions. However, your future withdrawals of contributions and investment earnings are entirely tax-free. A Roth 401(k) or 403(b) is similar to a Roth IRA; however, unlike a Roth IRA there isn’t an income limit to qualify. That means even high earners can participate in a Roth at work and reap the benefits.

RELATED: How the COVID-19 CARES Act Affects Your Retirement

Pros of investing in a 401(k) retirement plan at work

When I was in my 20s and started my first job that offered a 401(k), I didn’t enroll in it. I was nervous about having investments with an employer because I didn’t understand what would happen if I left the company, or it went out of business.

I want to put your mind at ease about using a 401(k) because there are many more advantages than disadvantages.

I want to put your mind at ease about using a 401(k) because there are many more advantages than disadvantages. Here are four primary pros for using a retirement plan at work.

1. Having federal legal protection

Qualified workplace retirement plans are protected by the Employee Retirement Income Security Act of 1974 (ERISA), a federal law. It sets minimum standards for employers that offer retirement plans, and the administrators who manage them.

ERISA offers workplace retirement plans a powerful but lesser-known benefit—protection from creditors.

ERISA was enacted to protect your and your beneficiaries’ interests in workplace retirement plans. Here are some of the protections they give you:

Disclosure of important facts about your plan features and funding
A claims and appeals process to get your benefits from a plan
Right to sue for benefits and breaches of fiduciary duty if the plan is mismanaged
Payment of certain benefits if you lose your job or a plan gets terminated

Additionally, ERISA offers workplace retirement plans a powerful but lesser-known benefit—protection from creditors. Let’s say you have money in a qualified account but lose your job and can’t pay your car loan. If the car lender gets a judgment against you, they can attempt to get repayment from you in various ways, but not by tapping your 401(k) or 403(b). There are exceptions when an ERISA plan is at risk, such as when you owe federal tax debts, criminal penalties, or an ex-spouse under a Qualified Domestic Relations Order.

When you leave an employer, you have the option to take your vested retirement funds with you. You can do a tax-free rollover to a new employer's retirement plan or into your own IRA. However, be aware that depending on your home state, assets in an IRA may not have the same legal protections as a workplace plan.

RELATED: 5 Options for Your Retirement Account When Leaving a Job

2. Getting matching funds

Many employers that offer a retirement plan also pay matching contributions. Those are additional funds that boost your account value.

Always set your 401(k) contributions to maximize an employer’s match so you never leave easy money on the table.

For example, your company might match 100% of what you contribute to your retirement plan up to 3% of your income. If you earn $50,000 per year and contribute 3% or $1,500, your employer would also contribute $1,500 on your behalf. You’d have $3,000 in total contributions and receive a 100% return on your $1,500 investment, which is fantastic!

Always set your 401(k) contributions to maximize an employer’s match, so you never leave easy money on the table.

3. Having a high annual contribution limit

Once you contribute enough to take advantage of any 401(k) matching, consider setting your sights higher by raising your savings rate every year. For 2021, the allowable limit remains $19,500, or $26,000 if you’re over age 50. A good rule of thumb is to save at least 10% to 15% of your gross income for retirement.

Most retirement plans have an automatic escalation feature that kicks up your contribution percentage at the beginning of each year. You might set it to increase your contributions by 1% per year until you reach 15%. That’s a simple way to set yourself up for a happy and secure retirement.

4. Getting free investing advice

After you enroll in a workplace retirement plan, you must choose from a menu of savings and investment options. Most plan providers are major brokerages (such as Fidelity or Vanguard) and have helpful resources, such as online assessments and free advisors. Take advantage of the opportunity to get customized advice for choosing the best investments for your financial situation, age, and risk tolerance.

In general, the more time you have until retirement, or the higher your risk tolerance, the more stock funds you should own. Likewise, having less time or a low tolerance for risk means you should own more conservative and stable investments, such as bonds or money market funds.

RELATED: A Beginner's Guide to Investing in Stocks

Cons of investing in a 401(k) retirement plan at work

While there are terrific advantages of investing in a retirement plan at work, here are three cons to consider.

1. You may have limited investment options

Compared to other types of retirement accounts, such as an IRA, or a taxable brokerage account, your 401(k) or 403 (b) may have fewer investment options. You won’t find any exotic choices, just basic asset classes, including stock, bond, and cash funds.

However, having a limited investment menu streamlines your investment choices and minimizes complexity.

2. You may have higher account fees

Due to the administrative responsibilities required by employer-sponsored retirement plans, they may charge high fees. And as a plan participant, you have little control over the fees you must pay.

One way to keep your workplace retirement account fees as low as possible is selecting low-cost index funds or exchange-traded funds (ETFs) when possible.

3. You must pay fees on early withdrawals

One of the inherent disadvantages of putting money in a retirement account is that you’re typically penalized 10% for early withdrawals before the official retirement age of 59½. Plus, you typically can’t tap a 401(k) or 403(b) unless you have a qualifying hardship. That discourages participants from tapping accounts, so they keep growing.

The takeaway is that you should only contribute funds to a retirement account that you won’t need for everyday living expenses. If you avoid expensive early withdrawals, the advantages of using a workplace retirement account far outweigh the downsides.

Source: quickanddirtytips.com

Tag earnings

The BreakdownÂ

Roth IRA vs. Traditional IRA

What Do I Put Into My IRA?

Whatâs an Impossible Goal?

4 Reasons to Reach for the âImpossibleâ

1. You May Be Pleasantly Surprised

2. You Check Off Micro-Goals Along the Way

3. It May Not Be as Hard as You Think

4. What Do You Have to Lose?

How To Set Impossible Budgeting Goals in 6 Steps

Step 1: Map Out Your Dream Lifestyle

Step 2: Outline Micro-goals to Reach Your Financial Goals

Step 3: Believe and Act Like Your Future Self

Step 4: If You Fail, Learn from Your Mistakes

Step 5: Track Your Results Consistently

Step 6: Be Patient With Your Budget Goals

Do Your Research

Automate Your Savings

Educate Yourself

Most Important Factors When Applying for Student Loans

Best Private Student Loans of 2021

#1: College Ave â Best for Flexibility

#2: Credible â Best Loan Comparison

#3: Sallie Mae â Best for Low Rates and Fees

#4: Discover â Best for No Fees

#5: Citizens Bank â Best Student Loans from a Major Bank

#6: Ascent â Best Student Loans with No Cosigner Required

#7: Earnest â Best for Fair Credit

#8: LendKey â Best for Comprehensive Comparisons

How to Get the Best Student Loans

Consider Federal Student Loans First

Compare Multiple Lenders

Improve Your Credit Score

Get a Quality Cosigner

Consider Variable and Fixed Interest Rates

Check for Discounts

Beware of Fees

Make Payments While Youâre in School

What to Watch Out For

In Summary: The Best Student Loans

How cash back cards work

Ways to redeem cash back

Redeeming cash back as a statement credit

Redeeming cash back as a check or direct deposit

Automatic cash back redemption

Travel, gift cards and merchandise on an issuerâs online portal

Cash back redemption options on popular rewards cards

Best cash back redemption options

Choosing the best cash back credit card for you

Bonus categories

Annual fees

1. Put some of your paycheck into savings

2. Save 3 to 6 months of expenses in an emergency fund

3. Find income from a side hustle

4. Know where to turn for assistance

Prepare your budget for a layoff

What is a Prenup?

Who Needs a Prenup?

What is a Postnup?

Who Needs a Postnup?

Prenup vs. Postnup: Which is Right for Your Relationship?

How to Get a Prenup or Postnup

Reducing the Odds Youâll Ever Need to Use that Prenup or Postnup

The Takeaway

What is a 401(k) retirement plan?

Pros of investing in a 401(k) retirement plan at work

1. Having federal legal protection

2. Getting matching funds

3. Having a high annual contribution limit

4. Getting free investing advice

Cons of investing in a 401(k) retirement plan at work

1. You may have limited investment options

2. You may have higher account fees

3. You must pay fees on early withdrawals

Whatâs an Impossible Goal?

4 Reasons to Reach for the âImpossibleâ

#1: College Ave â Best for Flexibility

#2: Credible â Best Loan Comparison

#3: Sallie Mae â Best for Low Rates and Fees

#4: Discover â Best for No Fees

#5: Citizens Bank â Best Student Loans from a Major Bank

#6: Ascent â Best Student Loans with No Cosigner Required

#7: Earnest â Best for Fair Credit

#8: LendKey â Best for Comprehensive Comparisons

Make Payments While Youâre in School

Travel, gift cards and merchandise on an issuerâs online portal

Reducing the Odds Youâll Ever Need to Use that Prenup or Postnup