Those ubiquitous checklists of âdorm room essentialsâ for college freshmen are filled with items that will be ditched by the end of first semester.
Some parents âgo to the store and grab a list like they did when their kids were in elementary and high school and just go straight down the list,â says Lisa Heffernan, mother of three sons and a college-shopping veteran. Or they buy things they only wish their students will use (looking at you, cleaning products).
You can safely skip about 70% of things on those lists, estimates Asha Dornfest, the author of Parent Hacks and mother of a rising college sophomore whoâs home for the summer.
What Not to Buy or Bring
Freshmen really need just two things, says Heffernan, co-founder of the blog Grown and Flown: a good mattress topper and a laptop.
Here are seven items you can skip:
Printer. Donât waste desk space or, worse, store it under the bed; printers are plentiful on campus.
TV. Students may watch on laptops or on TVs in common areas or in someone elseâs room. Bonus: Your teen gets out and meets others.
Speakers. Small spaces donât require powerful speakers; earphones may be a good idea and respectful of roommates.
Car. Some colleges bar freshmen from having cars on campus or limit their parking. You also may save on insurance by keeping the car at home.
Luggage. If you bring it, you must store it. Heffernan suggests collapsible blue Ikea storage bags with zippers.
Toiletries to last until May. Bulk buying may save money, but you need storage space.
Duplicates of anything provided by the college, such as a lamp, wastebasket, desk chair or dresser.
Items left behind when students pack for the summer are telling. Luke Jones, director of housing and residence life at Boise State University, sees unopened food â a lot of ramen and candy â and stuffed animals and mirrors.
Jones says many students regret bringing high school T-shirts and memorabilia and some of their clothes (dorm closets typically are tiny).
What Can You Buy, Then?
Before you shop, find out what the college forbids (candles, space heaters, electric blankets and halogen lights are common). Have your student check with assigned roommates about appliances (whoâs bringing a fridge or microwave?) and color scheme if they want to set one. Know the dimensions of the room and the size of the bed. And most of all, know your budget. Not everything has to be brand new.
Ten things â besides the all-important mattress topper and laptop â that many students consider dorm room essentials include:
One or two fitted sheets in the correct bed size, plus pillowcases. Heffernan says most students donât use top sheets.
Comforter or duvet with washable cover.
Towels in a distinctive pattern or light enough for labeling with laundry marker, plus shower sandals.
Power cord with surge protector and USB ports.
Basic first aid kit.
Easy-to-use storage. If itâs a lot of work to get something out, your student wonât, Heffernan says.
Cleaning wipes. Students might not touch products that require multiple steps, but they might use wipes, according to Heffernan.
Reading pillow with back support for studying in bed.
Area rug. Floors are often hard and cold.
Comfort items. Dornfest says it could be a blanket or a picture of the dog â something from home that will make the space a bit more personal.
Afraid youâll forget something important? You might, Heffernan says. But chances are, you or your student can order it online and get it delivered. Consider doing this with some items simply to avoid the hassle of bringing them yourself, and remember that âdorm necessitiesâ often go on sale once school starts.
Do a Reality Check
If you or your student still want to replicate the rooms youâve seen on Instagram and Pinterest, think about how the room will actually be used.
Once your son or daughter moves in, the room will never look like that again. Opt for sturdy items and be realistic. Will throw pillows make the place look more homey and inviting, or will they be tossed on the floor until parentsâ weekend?
Dornfest, a co-host of the Edit Your Life podcast, offers a compelling reason not to make things too comfortable. âA freshman needs to be encouraged to get out of the dorm room,â she says. âAnything that pulls you into campus life can be good.â
Sheâs not advocating a monk-like environment, but rather one that encourages breaking out of routines. College should be a time to try new things and meet people from different backgrounds. Dornfest advises making the bed as comfortable as possible and keeping a few reminders of home. The ideal dorm room is more launch pad than cocoon.
More from Nerdwallet
Budgeting for College Students
How to Build Credit at 18
How to Choose a Student Credit Card
The article 7 Things College Freshmen Donât Need â and 10 They Do originally appeared on NerdWallet.
How long does it take to buy a house? The answer is: it depends. You can buy a house in a matter of weeks or it can take you anywhere from 4 to 6 months. The question is how ready are you? It can take a long time, and that’s just learning about various mortgage options or improving your credit score.
So understanding the various factors involved in buying a house can give you an estimate of how long it will take you to buy the house
Check out now: 5 Signs You Are Not Ready To Buy A House
How long does it take to buy a house? A step-by-step guide.
It can take a homebuyer a few weeks to several months to complete the home buying process. But when determining how long it will take you to buy a house, you first have to find out if you will be pre-approved for a mortgage. There is no sense of shopping for a house to then realize you can’t afford it.
If you are interested inÂ comparing the best mortgage rates through LendingTree click here. Itâs completely free.
I. How long does it take to get a pre-approved mortgage letter in order to buy a house?
If you’re serious about buying a house, it’s important to get pre-approved for a mortgage. So when it’s time to make an offer, the seller will know you’re serious. If you don’t have one handy, the seller will likely move to the next buyer.
Getting pre-approved for a mortgage in order to buy a house can take longer. That is because you have to make sure your financial situation is in shape. For example, your income-to-debt ratio, your down payment, and your credit score must be good. That’s exactly what a mortgage lender will look at.
Even when these things are in order, shopping and comparing mortgage rates and fees can take several weeks.
Let’s take a look on how long it will take you to get these things in shape before buying a house.
Click here to compare mortgage rates through LendingTree. Itâs completely FREE.
A. How good is your credit score?
A low credit score can make buying a house take longer, because it can take months to a year to improve a bad credit score.
A conventional loan will usually require a 640+ credit score.
In fact, your credit score is the number 1 item mortgage lenders look at to decide whether to offer you a mortgage. And if it is not where it’s supposed to be, you might get rejected.
Luckily for you there are other ways to get a loan with much lower credit score: FHA loans.
FHA loans only require a credit score of 580 with 3.5% down payment. You may get qualified with a 500 credit score, but you’ll have to come with a 10% down payment.
So before you get into the fun part of shopping for a mortgage or visiting homes, it’s best to know what your credit score is and take steps to improve it.
You can get a free credit score at Credit Sesame.
B. Fix errors on your credit report.
Fixing errors on your credit report in order to get pre-approved for a loan in order to buy a house can take 30 days.
According to Transunion, “most investigations are completed within 2 weeks, but some may take up 30 days.”
Again, we recommend you get a free credit report at Credit Sesame. A credit report will give you a detail analysis of your credit history, how much debt you owe, and how creditworthy you are, etc. If there are any errors or inaccuracies, fix them immediately so there’s no surprise when you’re actually applying for a mortgage.
The best way to do that is by filing a Transunion dispute or Equifax dispute.
C. Do you have a down payment for the house?
How long it will take you to buy a house will also depend on whether or not you already have money saved up for a down payment.
Unless you’re going to buy the house with outright cash, you’ll need a down payment. And saving for a down payment can take a long time. Depending on your income and expenses, saving for a down payment on a house can take years.
Assuming, for example, you want to buy a house that will cost you $450,000, and you’re using a conventional loan to finance the house. With a 20% down payment, you will need to come up with $90,000.
Let’s say again, because of other monthly expenses, you can only save $1500 a month for the down payment.
You see how long it will take you to save for a down payment to buy the house? 5 years. And that doesn’t even take into account other upfront costs of buying a house, such as closing cost.
While it’s possible to get a mortgage with a down payment as low as 3.5% of the home purchase price, it’s advisable to put at least 20% down. The reason is because you will avoid paying private mortgage insurance (PMI), which protects the lenders in case you default on your mortgage.
Home buyers with a down payment below 20% are usually charged with PMI.
Another reason for a larger down payment is that it reduces the cost of the mortgage, grows equity much faster, and saves you on interest over the life of the loan.
As you can see, it can take you as much as 5 years from the time you’re thinking about buying the house to the time you’re actually ready to start the process.
But once you have taken care the things above, buying a house can go a lot faster.
II. How long does it take to find a real estate agent?
Average time: 1 day to a month
Once you have been pre-approved for a mortgage, the next step is to find an experienced real estate agent. Finding a good real estate agent can take a day to a month. Websites such as Zillow and Redfin list real estate agents you can use.
III. Shopping for a home.
Average time: a few weeks to a few months
With the help of a real estate agent and your own due diligence, finding a home can can go faster or take longer depending on available homes, the season and your desired location.
But experts say on average it can take a minimum of three weeks to a few months.
IV. Making an offer, negotiation, and inspection.
Average time: 1 to 10 days
Once you have found the home of your dream, the next step is to make an offer. You and the seller can go back and forth negotiating the price.
Once your offer has been accepted, you and the seller sign something called a purchase agreement. Then, the next step is to hire a professional to inspect the home for defects. Depending on your state, a home inspection must be completed within 10 days. And if the inspection finds some defects in the house, that could delay the process.
V. How long does it take to close on a house?
Average time: 30 to 45 days.
Once the inspection is done, your lender will need to officially approve you for the loan. And depending on the lender, it can also affect how long it takes to buy a house. You may need to provide additional documents. But the lender will need to assess the home for its value. And depending on the program (whether it’s conventional loan or FHA loan) it can take anywhere from 30 to 45 days to close on a home.
When asking yourself this question: “how long does it take to buy a house?” The answer is : it depends. If you have your credit score, your down payment, your other finances under control, you can buy your house in two months or less. But if you have to save for a down payment, fix errors on your credit report, raise your credit score, the whole home buying process can take years.
Click here to compare mortgage rates through LendingTree. Itâs completely FREE
Still wondering how long it takes to buy a house? Read the following articles:
5 Signs You’re Not Ready To Buy A House
10 First Time Home Buyer Mistakes To Avoid
3 Signs You’re Not Ready to Refinance Your Mortgage
The Biggest Mistakes Millennials Make When Buying a House
7 Signs You’re Ready To Buy A House
Work with the Right Financial Advisor
You can talk to aÂ financial advisorÂ who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc). So, find one who meets your needs withÂ SmartAssetâs free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals,Â get started now.
The post How Long Does It Take To Buy A House? appeared first on GrowthRapidly.
I no longer have any retirement savings because I cashed it all out to pay my debt. We also sold our home and moved into an apartment just as the pandemic was hitting. With the sale of our house, the fact that my husband is working overtime, and the stimulus money, we've saved nearly $10,000 and should have more by the end of the year. My primary question is, what should we do with it?
Right now, I have our extra money in a low-interest bank savings [account], and I'm considering moving it to a high-yield savings [account] as our emergency fund. Is that a good idea? For additional money we save, I intend to use it as a down payment on a new house. However, should I be investing in Roth IRAs instead? What is the best option?
Thanks Megan and Bianca for your questions. I'll answer them and give you a three-step plan to prioritize your extra money and make your finances more secure. No matter if you're a good saver or you get a cash windfall from a tax refund, an inheritance, or the sale of a home, extra money should never be squandered.
What to do with extra cash
Maybe you're like Magen and have extra cash that could be working harder for you, but you're not sure what to do with it. You may even be paralyzed and do nothing because you have a deep-seated fear of making a big mistake with your cash.
In some cases, having your money sit idle is precisely the right financial move. But it depends on whether or not you've accomplished three fundamental financial goals, which we'll cover.
To know the right way to manage extra cash, you need to step back and take a holistic view of your entire financial life.
To know the right way to manage extra cash, you need to step back and take a holistic view of your entire financial life. Consider what you're doing right and where you're vulnerable.
Try using a three-pronged approach that I call the PIP plan, which stands for:
Prepare for the unexpected
Invest for the future
Pay off high-interest debt
Let's examine each one to understand how to use the PIP (prepare, invest, and pay off) approach for your situation.
How to prepare for the unexpected
The first fundamental goal you should have is to prepare for the unexpected. As you know, life is full of surprises. Some of them bring happiness, but there's an infinite number of devastating events that could hurt you financially.
In an instant, you could get fired from your job, experience a natural disaster, get a severe illness, or lose a spouse. If 2020 has taught us anything, it's that we have to be as mentally, physically, and financially prepared as possible for what may be around the corner.
While no amount of money can reverse a tragedy, having safety nets can protect your finances. That makes coping with a tragedy easier.
Getting equipped for the unexpected is an ongoing challenge. Your approach should change over time because it depends on your income, debt, number of dependents, and breadwinners in a family.
While no amount of money can reverse a tragedy, having safety nets—such as an emergency fund and various types of insurance—can protect your finances. That makes coping with a tragedy easier.
Everyone should accumulate an emergency fund equal to at least three to six months' worth of their living expenses. For instance, if you spend $3,000 a month on essentials—such as housing, utilities, food, and debt payments—make a goal to keep at least $9,000 in an FDIC-insured bank savings account.
While keeping that much in savings may sound boring, the goal for an emergency fund is safety, not growth. The idea is to have immediate access to your cash when you need it. That's why I don't recommend investing your emergency money unless you have more than a six-month reserve.
The goal for an emergency fund is safety, not growth.
If you don't have enough saved, aim to bridge the gap over a reasonable period. For instance, you could save one half of your target over two years or one third over three years. You can put your goal on autopilot by creating an automatic monthly transfer from your checking into your savings account.
Megan mentioned using high-yield savings, which can be a good option because it pays a bit more interest for large balances. However, the higher rate typically comes with limitations, such as applying only to a threshold balance, so be sure to understand the account terms.
Insurance protects your finances
Another critical aspect of preparing for the unexpected is having enough of the right kinds of insurance. Here are some policies you may need:
Auto insurance if you drive your own or someone else's vehicle
Homeowners insurance, which is typically required when you have a mortgage
Renters insurance if you rent a home or apartment
Health insurance, which pays a portion of your medical bills
Disability insurance replaces a percentage of income if you get sick or injured and can no longer work
Life insurance if you have dependents or debt co-signers who would suffer financial hardship if you died
RELATED: How to Create Foolproof Safety Nets
How to invest for your future
Once you get as prepared as possible for the unexpected by building an emergency fund and getting the right kinds of insurance, the next goal I mentioned is investing for retirement. That’s the “I” in PIP, right behind prepare for the unexpected.
Investments can go down in value—you should never invest money you can’t live without.
While many people use the terms saving and investing interchangeably, they’re not the same. Let’s clarify the difference between investing and saving so you can think strategically about them:
Saving is for the money you expect to spend within the next few years and don’t want to risk losing it. In other words, you save money that you want to keep 100% safe because you know you’ll need it or because you could need it. While it won’t earn much interest, you’ll be able to tap it in an instant.
Investing is for the money you expect to spend in the future, such as in five or more years. Purchasing an investment means you’re exposing money to some amount of risk to make it grow. Investments can go down in value; therefore, you should never invest money you can’t live without.
In general, I recommend that you invest through a qualified retirement account, such as a workplace plan or an IRA, which come with tax benefits to boost your growth. My recommendation is to contribute no less than 10% to 15% of your pre-tax income for retirement.
Magen mentioned Roth IRAs, and it may be a good option for her to rebuild her retirement savings. For 2020, you can contribute up to $6,000, or $7,000 if you’re over age 50, to a traditional or a Roth IRA. You typically must have income to qualify for an IRA. However, if you’re married and file taxes jointly, a non-working spouse can max out an IRA based on household income.
For workplace retirement plans, such as a 401(k), you can contribute up to $19,500, or $26,000 if you’re over 50 for 2020. Some employers match a certain percent of contributions, which turbocharges your account. That’s why it’s wise to invest enough to max out any free retirement matching at work. If your employer kicks in matching funds, you can exceed the annual contribution limits that I mentioned.
RELATED: A 5-Point Checklist for How to Invest Money Wisely
How to pay off high-interest debt
Once you're working on the first two parts of my PIP plan by preparing for the unexpected and investing for the future, you're in a perfect position also to pay off high-interest debt, the final "P."
Always tackle your high-interest debts before any other debts because they cost you the most. They usually include credit cards, car loans, personal loans, and payday loans with double-digit interest rates. Remember that when you pay off a credit card that charges 18%, that's just like earning 18% on an investment after taxes—pretty impressive!
Remember that when you pay off a credit card that charges 18%, that's just like earning 18% on an investment after taxes—pretty impressive!
Typical low-interest loans include student loans, mortgages, and home equity lines of credit. These types of debt also come with tax breaks for some of the interest you pay, making them cost even less. So, don't even think about paying them down before implementing your PIP plan.
Getting back to Bianca's situation, she didn't mention having emergency savings or regularly investing for retirement. I recommend using her upcoming cash windfall to set these up before paying off a low-rate student loan.
Let's say Bianca sets aside enough for her emergency fund, purchases any missing insurance, and still has cash left over. She could use some or all of it to pay down her auto loan. Since the auto loan probably has a higher interest rate than her student loan and doesn't come with any tax advantages, it's wise to pay it down first.
Once you've put your PIP plan into motion, you can work on other goals, such as saving for a house, vacation, college, or any other dream you have.
Questions to ask when you have extra money
Here are five questions to ask yourself when you have a cash windfall or accumulate savings and aren’t sure what to do with it.
1. Do I have emergency savings?
Having some emergency money is critical for a healthy financial life because no one can predict the future. You might have a considerable unexpected expense or lose income.
Without emergency money to fall back on, you're living on the edge, financially speaking. So never turn down the opportunity to build a cash reserve before spending money on anything else.
2. Do I contribute to a retirement account at work?
Getting a windfall could be the ticket to getting started with a retirement plan or increasing contributions. It's wise to invest at least 10% to 15% of your gross income for retirement.
Investing in a workplace retirement plan is an excellent way to set aside small amounts of money regularly. You'll build wealth for the future, cut your taxes, and maybe even get some employer matching.
3. Do I have an IRA?
Don't have a job with a retirement plan? Not a problem. If you (or a spouse when you file taxes jointly) have some amount of earned income, you can contribute to a traditional or a Roth IRA. Even if you contribute to a retirement plan at work, you can still max out an IRA in the same year—which is a great way to use a cash windfall.
4. Do I have high-interest debt?
If you have expensive debt, such as credit cards or payday loans, paying them down is the next best way to spend extra money. Take the opportunity to use a windfall to get rid of high-interest debt and stay out of debt in the future.
5. Do I have other financial goals?
After you’ve built up your emergency fund, have money flowing into tax-advantaged retirement accounts, and are whittling down high-interest debt, start thinking about other financial goals. Do you want to buy a house? Go to graduate school? Send your kids to college?
How to manage a cash windfall
Review your financial situation at least once a year to make sure you’re still on track.
When it comes to managing extra money, always consider the big picture of your financial life and choose strategies that follow my PIP plan in order: prepare for the unexpected, invest for the future, and pay off high-interest debt.
Review your situation at least once a year to make sure you’re still on track. As your life changes, you may need more or less emergency money or insurance coverage.
When your income increases, take the opportunity to bump up your retirement contribution—even increasing it one percent per year can make a huge difference.
And here's another important quick and dirty tip: when you make more money, don't let your cost of living increase as well. If you earn more but maintain or even decrease your expenses, you'll be able to reach your financial goals faster.
This year youâre finally ready to buy your home. But where to start? Where itâs your first time or youâre an experience home buyer, all the mortgage options out there can be overwhelming.
If youâre on the hunt for a mortgage, you might want to consider a conventional loan. But there are a ton of different types of conventional loans, so which is the right one for you? Weâre here to break down conventional loans so you can decide if itâs the right choice for you.
What Is a Conventional Loan?
A conventional loanâalso called a conventional mortgageâis one that’s not guaranteed in part or fully by the government. Conventional loans are offered by private lenders and may be secured by Freddie Mac or Fannie Mac. And while those might sound like government entities, theyâre actually government-sponsored entities. We know itâs confusingâbut stick with us. Weâll break it down for you.
Conventional Loan vs. FHA Loan
Now that you know what a conventional loan is, you might be wondering about FHA loans. And whatâs the differencebetween the two? An FHA loan is backed by the government. So if you don’t make your payments, the lender can recoup some of its losses. Because of that, FHA loans come with less rigorous credit requirements than most conventional loans do.
Types of Conventional Loans
Conventional loans come in a wide range of types. Here are the more common ones:
Conforming mortgage loans. These are loans that meet the standards of Freddie Mac or Fannie May. One of the major requirements is that the loan isn’t more than a certain amount. The agencies announceÂ conforming loan limits annually. In most locations, it’s $510,400 for 2020, with allowances for up to $765,600 in high-cost areas.
Jumbo mortgage loans. These are mortgages that exceed conforming loan limits. Typically, you need higher credit scores and income to be approved for these bigger loans.
Subprime conventional loans. These mortgages may be available for those who don’t quite meet credit and financial requirements for a conforming mortgage loan. To make up for the greater risk, lenders may charge higher interest or fees.
Within every category of loan there are options, including fixed or variable interest and terms. You will need to decide, for example, if you want to pay your mortgage off overÂ 15 years or 30 years. The former comes withÂ cost savings related to interest while the latter offers a lower monthly payment.
Advantages of Conventional Loans
If you have good credit, conventional loans may offer you the best deal depending on what currentÂ interest rates are. This is especially true if you can afford toÂ put 20% downâthen you can avoid paying for private mortgage insurance in many cases.
Conventional loans can be more flexible than FHA or other government-backed loans. Lenders who offer these loans don’t have to follow specific government guidelines, which means they may be able to work with borrowers who don’t fit those requirements. They can also provide mortgages for properties that are more expensive.
Disadvantages of Conventional Loans
Conventional loans generally come with a higher bar for approval. That’s because they’re not guaranteed, and the lender is taking on all of the risk. You may need a higher credit score and stronger debt-to-income ratio to qualify for these loans.
While you can get a conventional loan with a relatively low down payment, you usually won’t get the best interest rate and will have to pay private mortgage insurance (PMI). Conventional loans typically work better for those who can put a decent amount down.
Conventional Loan Requirements
Requirements for conventional loans vary by lender, but you typically need to demonstrate credit-worthiness and the ability to make your payment every month. Here are some things that conventional mortgage loan lenders might look at:
Your credit score. In many cases, the bottom cut-off for conventional loan approvals is a credit score of 620. Though depending on other factors, such as the amount of the mortgage and your income, you may need a higher score to qualify.
Your credit history. Mortgage lenders may look more in-depth at your credit than other lenders, and you may be asked to clear up old accounts or negative items before final approval.
Your income and debt. The lender wants to ensure thatÂ you’re able to pay the required monthly amount. Theyâll look at how much you make, as well as how much debt you already haveâtheÂ ratio of your debt to your income. If your debt is already taking up a large chunk of your income every month, you’re less likely to be able to pay a mortgage and less likely to get approved.
The value of the home. Typically, banks won’t approve a loan that’s for more than the value of the home in question. You usually have to get a property appraised before a mortgage can be finalized for this reason.
Shop for a Conventional Mortgage Loan Online
Start your mortgage journey by ensuring your credit is in order. You can get your credit report free at AnnualCreditReport.com. If you want to see some of the same credit scores mortgage companies are likely to check, consider signing up for ExtraCredit, which provides access to 28 of your FICOÂ®Scores from different models.
Next, you may want to get pre-approved for a mortgage. This can help you understand what your buying power might be and what type of interest rate you might qualify for. Itâll also show sellers that you’re a serious buyer.
Finally, start searching for a mortgage that’s right for you online. Check out rates and potential mortgage options right here on Credit.com.
The post What is a Conventional Loan? appeared first on Credit.com.
Also known as burial or funeral insurance, final expense life insurance is a variant of whole life insurance designed to cover a single expense after the policyholder passes away. Often aimed at seniors, these insurance policies have reasonable monthly premiums but generally pay much smaller death benefits than term life insurance policies.
What is Final Expense Life Insurance?
Final expense life insurance is a whole life insurance policy that releases a lump sum when the policyholder dies. It charges a fixed monthly premium and generally offers a simplified sign up process, with few complications, fast decisions, and no medical exams.
Policyholders use final expense life insurance to protect their loved ones after their death. Itâs often taken in lieu of a traditional whole life policy or term like policy, with the former not available to seniors and the latter proving very costly and limited.Â
Policyholders can add a beneficiary to their final expense life insurance policy to ensure that the money goes to this individual when they die. They can also arrange for the money to be paid in monthly or yearly installments, although considering the purpose of this policy is to cover âfinalâ expenses that may arise or remain after death, itâs often best to release it as a lump sum.
Who Can Benefit from Final Expense Life Insurance?
You can benefit from a final expense life insurance if you:
Donât have a whole life or term-life policy
Have sizeable debts
Are worried about funeral costs
Think about what will happen when you die. Itâs a morbid thought to have, but itâs important to see things from your familyâs perspective.
Can they afford to provide you with an honorable send-off; can they afford to clear your debts? Will your death impact them financially or will you leave them with enough cash and assets to cover necessary expenses?
Your loved ones need time to grieve, to mourn your loss. They shouldnât have to worry about financial issues, as that will just make a bad situation worse.
What is Final Expense Life Insurance Used For?
You can use final expense life insurance to cover any costs that your loved ones would otherwise be required to pay. The most common uses for this type of life insurance include:
The average funeral costs close to $10,000, and those costs are rising. Itâs one of the five biggest expenses that the average American will incur during their lifetime, and unlike a wedding, car or home, itâs not something you can simply avoid by going without, nor is it something you can delay until you have more money.
If you die, your loved ones will need to cover these costs quickly and completely, and while you might want them to cut costs and avoid spending too much, they will want to ensure that you have the best possible send-off.Â
The only way to guarantee that you have a good funeral and they donât bankrupt themselves is to cover the costs before you die.
Final expense life insurance can be paid directly to your loved ones or to the funeral home. In the case of the latter, you can plan your funeral yourself, choosing products and services based on the value of the death benefit that will eventually be paid to the home.
Of course, you canât be sure that the funeral home will honor all of your requests or even still be operating by the time you pass, so unless you donât have anyone who can arrange your funeral, we recommend paying the death benefit directly to your beneficiaries.
You are predicted to spend over a quarter of a million dollars on healthcare during your lifetime, most of which will occur in the final decade of your life. Thatâs a huge sum of money to spend on anything, and itâs a terrifying prospect to think that this money could be passed onto your loved ones.
In most instances, your loved ones wonât be responsible for your debt, but there are exceptions. Whatâs more, all medical debt charged during the final months of your life will be at the head of the queue to take money from your estate when you die. If that debt strips your assets bare, it means your loved ones wonât get anything and may struggle to cover their own debts and expenses.
With final expense life insurance, you can use a death benefit to repay those medical bills and remove the burden of responsibility from your loved ones.
Unsecured debt is often at the back of the queue when it comes to taking money from your estate. However, if you live in a community property state or your partner cosigned on the debt, they will be responsible for it.
You also have to think about mortgage and auto debt. These loans can pass onto your heirs, who will then be tasked with continuing the repayments if they want to keep the assets. If they donât have the money, they could lose those assets, and this is where a final expense life insurance benefit can help.Â
Frequently Asked Questions about Final Expense Life Insurance
Still got a few questions about final expense life insurance and its many nuances? We have answered some of the most frequently asked questions below to lend a helping hand.
How Much Does It Cost?
Final expense life insurance varies depending on your age, sex, weight, smoking status, and whether or not you have any preexisting medical conditions. Generally speaking, a woman between the age of 50 and 55 can expect to pay between $30 and $40, while a man of the same age will be charged between $40 and $50.
This cost increases as you age and while you can still apply when you hit 80, you can expect premiums as high as $200 a month, or $2,400 a year.Â
Why Does it Cost So Much?
The costs are higher than term-life insurance because the risks are greater. Unlike term-life insurance, the term will not expire, which means the odds of the recipient receiving the death benefit are higher.Â
Of course, there is still a chance that they will fail to meet their payment obligations, at which point the policy will void, but such instances are rare for this particular type of insurance.
Does it Expire?
Your final expense life insurance policy will remain active for as long as you make your insurance premiums. It will not expire like a term-life insurance policy, but you will lose it if you stop making payments while you are still alive.
Does the Money Have to be Used for Funeral Costs?
Not at all. The insurance company doesnât care what the money is used for as it doesnât impact their bottom line. There is also nothing preventing your loved ones from pocketing the cash and burning your body in the garden, if thatâs what they choose to do.
We donât mean to sound bleak, but the point is, there are no restrictions or limits and your loved ones are only bound by your word and their promise, so if you want the money to be used for a specific purpose, make sure you get everything in writing lest they forget.
How Much is the Death Benefit?
Final expense life insurance typically pays around $20,000 and is always less than $50,000. Itâs a small sum when compared to many term-life insurance policies, but thatâs because it serves a specific purpose and is not designed to clear mortgages or cover one or more family members for the rest of their life.
Is There a Medical Exam?
Because the payout is less than $50,000, a medical exam is rarely required. You will be asked some basic health questions and you need to be honest during this process, but in most cases, you will not be required to undergo a medical exam.
Final Expense Life Insurance: What You Need to Know is a post from Pocket Your Dollars.
I love making things automatic. Whether it is bill-paying, direct deposit, prescription renewals, or investing, making things automatic makes life easier, and that is where our Betterment investing review comes in.
When it comes to retirement planning, an overwhelming number of online tools and websites promise to help you create a dynamic and profitable portfolio while minimizing fees.
This growing list of services includes robo-advisors, a class of financial websites that offer to manage your portfolio with minimal in-person interaction and a heavy reliance on the latest investing tools and software.
One of the most popular robo-advisors by far is Betterment. Conceptualized by its founders in 2008, Betterment has since grown to help its customers invest billions of dollars of their hard-earned dollars. This is an investment platform that puts your investing on cruise control, and even allows you to make money watching TV! You can open an account with no money at all, and get the benefit of professional, low-cost investment management that enables you to invest in thousands of securities with as little as a few hundred dollars.
It hasnât been easy. With other competitors like Wealthfront and Personal Capital always a few steps behind them, Betterment has struggled to find a way to stand out. Even with the competition, Betterment has emerged as one of the top online brokerage accounts and continues to grow its market share.
Open an account
0.25% to 0.40% annual management fee, depending on the plan
No trade, transfer or rebalancing fees
No minimum balance
Hands-off investing tailored to your goals and risk preference
Betterment is an online, automated investment manager that uses advanced algorithms and software to find the perfect investment strategy for your portfolio and individual needs.
The main difference between investing your money with a traditional financial advisor and Betterment is that there is minimal human interaction. Unless you email or call in, your communication with an individual advisor will be very minimal.
But, there is some good news to counteract the lack of individual service. Because of lower operating costs, Betterment is able to charge lower fees than traditional financial advisors. This can be huge for individuals who want to take a hands-off approach to their retirement accounts, yet donât want to pay top dollar for access to a top-tier financial advisor in their area.
Using complex investment software, Betterment allocates your investment portfolio based on your individual circumstances, investment time horizon, and thirst for risk.
In the meantime, they keep fees at a minimum by using ETFs (exchange-traded fund) that let you have a diversified portfolio, like mutual funds, but are tradeable much like stocks.
Since ETFs come with very low expense ratios, Betterment is able to pass those savings along to the consumer. Although the program already manages over $16 billion for their clients, they are still growing at a rapid pace.
Because the service is able and willing to deal with investors at all stages of wealth accumulation, it has become a go-to for both experienced and novice investors with various investing goals.
Further, Bettermentâs portfolio strategy isnât geared just for retirement savings; the service can also improve your returns on dollars you invest for short-term and medium-term goals like saving for college, taking an annual vacation, or building up a cash reserve.
How Betterment Works
Like post other robo-advisors, Betterment provides complete, automated investment management of your portfolio. When you sign up for the service, youâll complete a questionnaire that will determine your risk tolerance, investment goals, and time horizon. From that information, Betterment determines your portfolio will be designed as conservatives, aggressive, or some level in between.
Over time however, Betterment may adjust your portfolio to become gradually more conservative. For example, as you move closer to retirement, your asset allocation will be gradually shifted more heavily in favor of safe investments, like bonds.
Your portfolio will be constructed of exchange traded funds (ETFs), which are low-cost investment funds designed to track the performance of an underlying index. In this way, Betterment attempts to match the performance of the underlying indexes, rather than to outperform them. For this reason, investing with Betterment â and most other robo-advisors â is considered to be passive investing. (Active investing involves frequent trading of stocks and other securities in an attempt to outperform the market.)
Betterment also uses allocations based on broad investment categories. There are three in total:
Safety Net â These are funds allocated for near-term needs, such as an emergency fund.
Retirement â This will naturally be your long-term investment account and held in tax-sheltered IRAs.
General Investing â This allocation is dedicated to intermediate goals, maybe saving for the down payment on a house or even for your childrenâs education.
Given that each of the three broad goals has a different time horizon, the specific portfolio allocation in each will be a little bit different. For example, the Safety Net will be invested in cash type accounts for safety and liquidity.
Betterment Advantages And Disadvantages
Thereâs no minimum investment required.
The low annual fee of 0.25% on the Digital plan can allow you to have a $20,000 account managed for just $50 per year, or a $100,000 account for just $250.
Tax-loss harvesting is available at all taxable accounts.
Betterment Premium provides unlimited access to certified financial planners, providing a service similar to traditional investment advisors, but at a fraction of the cost.
The No-fee Checking and Cash Reserve give you cash management options to go with your investing activities.
Betterment offers several portfolio options, including Smart Beta, Socially Responsible Investing, and the BlackRock Targeted Income Portfolio.
The use of value funds also adds the potential for your investment accounts to outperform the general market, since value stocks tend to be underpriced relative to their competitors.
Flexible Portfolio will give you some control over your investment allocations, which is a feature absent from most robo-advisors.
Bettermentâs annual advisory fee is on the low end of the robo-advisor range. But there are some robo-advisors charging no fees at all.
Betterment doesnât offer alternative investments. These include natural resources and real estate, which are offered by some of their competitors.
External account syncing is available only with Betterment Premium.
The Betterment Investment Methodology
Like most other robo-advisors, Betterment manages your investment account using Modern Portfolio Theory, or MPT. The theory emphasizes proper allocations into various asset classes over individual security selection.
Your portfolio is divided between six stock asset allocations and eight bond asset allocations. Each allocation is represented by a single ETF thatâs tied to an index specific to that asset class. The single ETF will provide exposure to scores or even hundreds of securities in each asset class. That means collectively your investment will be spread across thousands of securities in the US and internationally.
The six stock asset allocations are as follows:
US Total Stock Market
US Value Stocks â Large Cap
US Value Stocks â Mid Cap
US Value Stocks â Small Cap
International Developed Market Stocks
International Emerging Markets Stocks
The eight bond asset allocations are as follows:
US High Quality Bonds
US Municipal Bonds (will be held in taxable investment accounts only)
US Inflation-Protected Bonds
US High-Yield Corporate Bonds
US Short-Term Treasury Bonds
US Short-Term Investment Grade Bonds
International Developed Market Bonds
International Emerging Markets Bonds
Since Betterment offers tax-loss harvesting with taxable investment accounts, most asset classes will have two or three very similar ETFs. This will enable Betterment to sell a losing position in one ETF to reduce capital gains in winning asset classes. Alternative ETFs are then purchased to replace the sold funds to maintain the target asset allocations in your account.
Tax-loss harvesting is becoming an increasingly popular investment strategy because it effectively defers capital gains taxes into future years. Itâs available only for taxable accounts, since tax-sheltered accounts have no immediate tax consequences.
How Betterment Compares
Here’s how Betterment compares to the previously mentioned companies, Wealthfront and Personal Capital.
Minimum Initial Investment
0.25% on Digital; 0.40% on Premium (account balance over $100k)
0.25% on all account balances
0.89% on most account balances; reduced fee on balances > $1 million
On Premium Plan only
Yes, on all taxable accounts
Yes, on all taxable accounts
Yes, on all taxable accounts
Yes, on Premium Plan only
Betterment Accounts and Options
For the first few years of Bettermentâs existence they offered a single investment account serving as a one-size-fits-all plan. But thatâs all changed. They still offer basic investment accounts, but they now give you a choice of multiple investment options.
This is Bettermentâs basic investment plan. There is no minimum initial investment required, nor is there a minimum ongoing balance requirement. Betterment charges a single fee of 0.25% on all account balances.
You can also add any other portfolio variations, except the Goldman Sachs Smart Beta portfolio, which has a $100,000 minimum account balance requirement.
Betterment Premium works similar to the Digital plan, but it delivers a higher level of service. The plan provides external account synching, giving Betterment a high altitude view of you your entire financial situation. External investment accounts can help in enabling Betterment to better coordinate your portfolio allocations with assets held in outside accounts. They can also make recommendations out to better manage those external accounts.
And perhaps the biggest advantage of the Premium plan is that it comes with unlimited access to Bettermentâs certified financial planners. In this way, Betterment is competing more directly with traditional investment advisors, but doing it with a robo-advisor component.
Youâll need a minimum of $100,000 to invest in the Premium plan, and the annual advisory fee is 0.40%. Thatâs just a fraction of the usual 1% to 2% typically charged by traditional investment advisory services.
Betterment Cash Reserve
The account pays a variable interest rate, currently set at 0.40% APY. Betterment doesnât actually hold these funds directly, but rather invest them through participating program banks.
Thereâs no fee for this account, and you can move money as often as you want. And for those with very high cash balances, the account is FDIC insured for up to $1 million through the program banks.
Betterment Socially Responsible Investing (SRI)
SRI portfolios are becoming increasingly popular in the robo-advisor space. It involves investing in companies that meet certain standards for social, environmental, and governance guidelines. Betterment indicates that the ETFs they use in their SRI portfolio have produced a 42% increase in their social responsibility scores.
SRI portfolios work with both the Digital and Premium plans, using a similar investment methodology. But they make certain modifications, holding ETFs based on SRI in place of the ETFs used in non-SRI portfolios.
SRI portfolios do not require a minimum balance and charge no additional fees. And like their Digital and Premium plans, taxable SRI investment accounts take advantage of tax-loss harvesting.
Betterment Flexible Portfolios
The key word in the name is âflexibleâ because the main feature is adding personal options to your portfolio allocations.
This is done by adjusting the individual asset class weights in your portfolio. For example, if you have a 7% allocation in emerging markets, you may choose to increase it to 10% if you believe that sector is likely to outperform others. But you can also decrease the allocation if it makes you feel uncomfortable.
Betterment Tax-Coordinated Portfolio
This is less of a formal portfolio and more of an investment strategy. It must be used in combination with a taxable investment account and a tax-sheltered retirement account. Betterment will then allocate investments based on their tax impact.
For example, income generating assets â that produce high dividend and interest income â are held in a tax-sheltered account. Investments likely to generate long-term capital gains are held in a taxable investment account, since you will be able to take advantage of lower long-term capital gains tax rates.
Goldman Sachs Smart Beta
This option is for more sophisticated investors, and requires a minimum account balance of $100,000. And since it is a high risk/high reward type of investing, it also requires a higher risk tolerance.
Betterment uses the same basic investment strategy as they do in other portfolios. But itâs an actively managed portfolio that will be adjusted in an attempt to outperform the general market. Securities will be bought and sold within the portfolio and can include either individual securities or Smart Beta ETFs.
The portfolio has many variations, including a wide range of allocations. Stocks are chosen based on four qualities: good value, strong momentum, high quality, and low volatility.
And like other portfolio variations Betterment offers, there is no additional fee for this option.
BlackRock Target Income Portfolio
Betterment recognizes that some investors are more interested in income than growth. This will particularly apply to retirees. The BlackRock Target Income Portfolio invests in portfolios based on your risk tolerance. This can mean low, moderate, high, or even aggressive.
Those categories may seem unusual for an income generating portfolio. But while the portfolio attempts to minimize risk of principal, it also recognizes that some investors are willing to add risk to their portfolio in exchange for higher returns.
A low-risk portfolio may have a higher allocation in US Treasury securities. An aggressive portfolio may center primarily on high-yield corporate bonds or even emerging-market bonds that have higher interest rates due to greater risk.
Betterment No-fee Checking
Provided by Betterment Financial LLC in partnership with NBKC Bank, this is a true no-fee checking account. Not only are there no monthly maintenance fees, but there are also no overdraft or other fees. Theyâll even reimburse all ATM fees and foreign transaction fees you incur. And thereâs not even a minimum balance requirement.
Youâll be provided with a Betterment Visa Debit Card with tap-to-pay technology, that you can use anywhere Visa is accepted. All account balances are FDIC insured for up to $250,000. And as you might expect from a company on the technological cutting edge, you can deposit checks into the account using your smartphone.
Check out our full Betterment checking review.
Betterment Key Features
Minimum initial investment: Betterment requires no funds to open an account. But you can begin funding your account with monthly deposits, like $100 per month. This method will make it easier to use dollar-cost averaging to gradually move into your portfolio positions.
Available account types: Joint and individual taxable investment accounts, as well as traditional, Roth, rollover and SEP IRAs. Betterment can also accommodate trusts and nonprofit accounts.
Portfolio rebalancing: Comes with all account types. Your portfolio will be rebalanced when your asset allocations significantly depart from their targets.
Automatic dividend reinvestment: Betterment will reinvest dividends received in your portfolio according to your target asset allocations.
Betterment Mobile App: You can access your Betterment account on your smartphone. The app is available for both iOS and Android devices.
Customer contact: Available by phone and email, Monday through Friday, from 9:00 am to 8:00 pm, Eastern time.
Account protection: All Betterment accounts are protected by SIPC insurance for up to $500,000 in cash and securities, including up to $250,000 in cash. SIPC covers losses due to broker failure, not those caused by market value declines.
Financial Advice packages: Betterment offers one-hour phone conferences with live financial advisors on various personal financial topics. Five topics are covered:
Getting Started package: This package gives new users the professional vote of confidence they need as a professional will assess their account setup. $199
Financial Checkup package: This package takes it a step further, providing the customer with a professional opinion on their portfolio and financial circumstances. $299
College Planning package: As its name implies, this package helps parents who are investing with the goal of paying for their childrenâs college education in the next 5-18 years. $299
Marriage Planning package: Merging finances can be tricky, so Betterment created this plan to help engaged couples and newlyweds to succeed as they unite their lives and assets. $299
Retirement Planning package: Your investment goals and strategies change as you near retirement. This particular package helps keep you on target to meet them. $299
Retirement Savings Calculator: Robo-advisors are popular choices for retirement accounts. For this reason, Betterment offers the Calculator to help you project your retirement needs. By entering basic information in the calculator (it will sync external accounts if you have a Premium account â including employer-sponsored retirement plans) it will let you know if you are on track to meet your goals or if you need to make adjustments.
How To Sign Up For A Betterment Account
The Betterment sign up process is one of the most user-friendly out there for any brokerage. It comes with easy-to-follow instructions and as streamlined registration process which users can navigate through in a matter of minutes.
First get the process started by clicking the button below.
Sign up for a Betterment Account
After the initial sign up process, users can expect a simple transaction as they transfer funds into the account, much like moving money from a checking to savings account.
When you begin the sign-up process, youâll be given a choice of four different investment goals:
I chose âInvest for retirementâ. It will ask your current age, your annual income, then give you a choice of accounts to use. That includes a traditional, Roth, or SEP IRA, or even an individual taxable account. I selected a traditional IRA.
Based on a 30-year-old with a $100,000 income, Betterment return the following recommendation:
You even have the option to have the specific asset allocations listed. After clicking âContinueâ, youâll be asked to provide your email address and create a password. Youâll then be taken to the application, which will ask for general information, including your name, address, phone number, and how you heard about Betterment.
Once your account has been set up, you can fund it immediately, by connecting your bank account, or by setting up recurring deposits.
You can also set up other accounts, such as âManage spending with Checkingâ or âInvest for a long-term goalâ.
Why You Should Open An Account With Betterment
While nearly anyone who invests could benefit from the online portfolio management and advising, this service is definitely geared to certain types of investors. In most cases, Betterment will work best for:
Hands-off investors who have some investing knowledge â Since it takes care of the heavy lifting for you, it works best for investors who want to take a hands-off approach to their investment portfolio. Passive investors can let Betterment handle the logistics while using online account management to keep a close eye on their accounts.
Novice investors who need help â Beginning investors who are just learning the ropes can turn to Betterment for online portfolio management with low fees. The many online tools and user-friendly interface make it easy for beginners to get a grasp on basic financial concepts and investing strategies.
Robo-advisors are growing in popularity and could easily replace in-person advisors in the near future. With lower fees and advanced software that can maximize results, online investing is certainly gaining an edge.
Whether Betterment is right for you depends on your individual needs and investing goals. If youâre a hands-off investor who wants to grow your retirement funds without paying a lot of fees, then Betterment might be ideal. Additionally, beginning investors can benefit handsomely from the online tools and investing education offered through the Betterment website.
If you think Betterment investing might be exactly what your portfolio needs, sign up for a new account today.
However, if you determine that you would be better served by a more hands-on approach, check out the other online brokerage account options. Being a certified financial planner, I have had a chance to work with several of these platforms and have done the following reviews:
Motif Investing Review
Lending Club Review
Ally Invest Review
The post Betterment Investing Review: Make Investing Automatic appeared first on Good Financial CentsÂ®.
Paying yourself first is a budgeting strategy that suggests individuals should contribute to a retirement account, emergency fund, savings account, or other savings vehicle before spending their paycheck on anything else.
The pay yourself first method is a pretty simple concept to understand, but actually applying to your own finances can become a little more complex. To help our Minters put this plan into practice, weâre breaking it down step-by-step and revealing some of the advantages and drawbacks of paying yourself first.
If you already have a solid grasp on the topic, use the links below to navigate throughout the post, or read all the way through for the full picture.
What does it mean to pay yourself first?
Advantages of the pay yourself first method
Drawbacks of the pay yourself first method
How to Pay Yourself First
1. Evaluate your monthly income + expenses
2. Identify your savings goals + commit
3. Review + reevaluate
What does it mean to pay yourself first?
Pay yourself first definition: The pay yourself first method, also known as reverse budgeting, is a savings strategy that says individuals should save a portion of their paycheck before spending any other money on bills, groceries, or discretionary items.The amount saved is typically predetermined as part of a larger savings goal, and is often funneled into retirement funds and/or savings accounts.
Many financial experts and individual consumers who subscribe to this method choose to have funds automatically redirected into their elected savings account(s).Â
For example, if you want to put $200 of every paycheck toward your 401k, you could set up an automatic contribution rather than physically transfer funds each pay period. For many savvy savers, this makes it easier to commit to a monthly goal, because the amount never actually reaches your checking account, but is rather allocated directly toward your savings.
Note: There are several options you can employ to make the pay yourself first strategy work for your finances. If you prefer to make the transfers on your own instead of automatically, thatâs totally okay! This budgeting style is really all about consistency â contributing a set amount each month to your retirement plan or savings account can really pay off over time.
Advantages of the pay yourself first method
Like any financial decision youâll make in your lifetime, youâll want to consider the pros and cons of subscribing to the pay yourself first philosophy.
The primary benefit of setting aside savings first, is building the amount you have saved over time. This strategy forces you to live within, or below your means â so long as you donât start swiping your credit card recklessly instead.
Here are a few other potential benefits you could reap if you employ the pay yourself first strategy:
You can save up for big purchases, like a home, car, or dream vacation. Or, put your hard-earned dollars toward an emergency fund, personal savings, or retirement.
Contributing to accounts that earn compound interest allows your money to continue growing the longer you leave it untouched.
Many retirement funds and other savings options are considered âtax-advantaged.â This means that your dollars may be exempted from tax, or in the case of IRAs and 401ks, tax-deferred; so youâll pay taxes later on when you make a withdrawal.
Drawbacks of the pay yourself first method
In addition to the positive aspects a pay yourself first budget may offer, there are some potential drawbacks that could ensue under certain circumstances. Put simply, the strategy simply does not work for everyone. As you learn about the pay yourself first method, consider how it fits into the context of your personal finances.
Here are a few examples where paying yourself first may not work to your benefit:
Without following careful money management advice, you may find yourself scraping for change to make ends meet. Before you commit to a monthly savings goal, use a budgeting calculator to determine how much money you can reasonably afford to save each month.
While prioritizing your savings can help you boost the balance in your savings account, it may be worth paying down debt first. Because interest compounds over time, waiting to pay off a credit card or a student loan, for example, means that youâll pay more interest the longer there is an outstanding balance.
As you consider the various strategies you can use to build your savings, remember to take a close look at the potential pros and cons you may encounter. There are plenty of saving styles you can leverage, so donât count yourself out if this one isnât the best fit for you. For more help creating a budget and savings plan that meets your needs, check out how Mint can help!
How to Pay Yourself First
Now that you know what it means to pay yourself first, and have had a moment to consider the potential benefits and drawbacks, letâs take a look at how this strategy actually plays out, step-by-step.
1. Evaluate your monthly income + expensesÂ
Before you decide on the amount you want to save each month, take a look at both your fixed and variable expenses. Your fixed expenses are those costs that stay consistent month over month, like your rent or mortgage payments, student loan bill, and health insurance, for example.Â
Your variable expenses, on the other hand, arenât always the same amount each time, and sometimes you donât incur them at all. Entertainment costs, vehicle maintenance, and groceries are all examples of variable costs, and so, their price tag may vary from one month to the next â just do your best to estimate these.
Once you can project your monthly expenses, subtract the amount from your monthly income to see whatâs leftover. Depending on your savings and greater financial goals, you can tweak some of your spending to free up more cash.Â Â
2. Identify your savings goals + commit
Now that you have a better understanding of your income and expenses, you can set some savings goals!
If youâre not sure where to start, consider the 50/30/20 rule.
The rule says…
50% of your budget should go toward essential expenses such as housing, food, utilities, an minimum debt payments
30% should be reserved for wants and lifestyle expenses
20% should be funneled into your savings and any extra debt payments
If you donât want to crunch the numbers on your own, try out our 50/30/20 calculator and weâll do the heavy lifting for you!
In addition to setting forth a savings target, youâll also want to think about where you want your reserved cash to live, and hopefully, grow. If you want to save up for retirement, a 401k or an IRA might make sense, whereas traditional savings accounts might work better for those wanting to save up funds for a shorter length of time.
3. Review + reevaluateÂ
Whether youâre using the pay yourself first method or another savings strategy, itâs important to remember that your budget should never be static. As life changes, your finances follow. A better salary or a reduction in your living expenses could present more opportunities to save, while a pay cut or recently incurred expense could have the opposite effect.
To keep your budget optimized and up to date, take the time to review and reevaluate it on a regular basis, and when significant changes arise.Â
The pay yourself first budgeting style can be a favorable way to boost the balance in your savings account,Â retirement fund, or other savings goal. However, budgeters should reflect on their unique financial situation to assess whether this strategy suits them. In most circumstances, it would be in your best interest to pay down debt before you start making monthly contributions to your savings.
If you subscribe to the pay yourself first philosophy, follow these three steps:
Evaluate your monthly income + expensesÂ
Identify your savings goals + commit
Review + reevaluate
Need some extra guidance to find the right budget for your lifestyle? Mint gives you a data-driven perspective, helps you launch and track savings objectives, and empowers you to actualize your greater financial goals.
The post How to Pay Yourself First appeared first on MintLife Blog.
Chipotle is kicking off the new year with a nationwide hiring blitz.
With hundreds of new restaurants in the works, the fast-casual Mexican food chain plans to fill 15,000 new openings, according to the hiring announcement.
To make headway on those recruitment efforts, all Chipotle locations are holding a âCoast to Coastâ career event Jan. 14. On-site interviews are taking place from 8 a.m. to 10 a.m. and 2 p.m. to 5 p.m. local time.
As a safety precaution, outdoor and curbside interview accommodations are available.
âPlease bring a mask and follow all safety protocols while youâre in the restaurant,â the company said.
To participate in the hiring event, you must fill out a brief application and select an available interview time slot at your local Chipotle. Do not show up without requesting an interview.
Compared to the overall restaurant industry, Chipotle has fared well throughout the pandemic. The company hired 10,000 new workers in July as it added new locations and built drive-thru windows at many existing locations. In November, Chipotle unveiled its first ever âdigitalâ restaurant in New York to experiment with only providing drive-thru and pick-up orders.
Job Openings at Chipotle
Chipotleâs recruitment spree is focused on hiring new restaurant team members, which primarily consist of line cooks, food preppers, and cashiers. These positions are entry level.
According to job listings on the companyâs career board, the main crew-member requirement is that you must be at least 16 years old to apply. All training is provided.
Chipotle doesnât have a company-wide minimum wage. On average, crew members earn about $10 to $11 an hour (or local minimum wage if higher) according to thousands of self-reported wages on Glassdoor.
To entice new workers, the burrito chain has been experimenting with new perks and benefits available to all employees, part- and full-time:
Medical, dental and vision insurance.
401(k) retirement plan after one year of employment.
One free meal per shift.
100% tuition coverage for select degrees and universities through a partnership with Guild Education.
Tuition reimbursement of up to $5,250 for schools and degrees outside that partnership.
Paid time off including parental leave.
English as a second language training.
If Chipotle meets its hiring goals, the companyâs workforce is set to exceed 100,000.
Check out these other employers that offer health insurance and cover college costs for part-time employees.
Adam Hardy is a staff writer at The Penny Hoarder. He covers the gig economy, remote work and other unique ways to make money. Read his âlatest articles here, or say hi on Twitter @hardyjournalism.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Coronavirus hasnât entirely ended life as we knew it, but itâs certainly caused changes, some of which are likely to be with us for a very long time.
For some the coronavirus is literally a matter of life and death, and it raises an important question: how does coronavirus affect life insurance?
No one likes to think about the possibility of losing their life, or that of a loved one to this virus, but for over 150,000 families here in the US, it has turned out to be a reality.
Letâs examine the impact it may have on your existing policies, and perhaps more importantly, how it may affect applications for new life insurance coverage.
How Does Coronavirus Affect Life Insurance You Already Have?
Thereâs good news if you already have a life insurance policy in place. Generally speaking, the insurance company will pay a death benefit even if you die from the coronavirus. With few exceptions, life insurance policies will pay for any cause of death once the policy is in force. There are very few exceptions to this rule, such as acts of war or terrorism. Pandemics are not a known exception.
If youâre feeling at all uncomfortable about how the coronavirus might impact your existing life insurance policies, contact the company for clarification. Alternatively, review your life insurance policy paying particular attention to the exclusions. If thereâs nothing that looks like death due to a pandemic, you should be good to go.
But once the policy is in place, there are only a few reasons why the insurance company can deny a claim:
Non-payment of premiums â if you exceed the grace period for the payment, which is generally 30 or 31 days, your policy will lapse. But even if it does, you may still be able to apply for reinstatement. However, after a lapse, you wonât be covered until payment is made.
Providing false information on an application â if you fail to disclose certain health conditions that result in your death, the company can deny payment for insurance fraud. For example, if youâre a smoker, but check non-smoker on the application, payment of the death benefit can be denied if smoking is determined to be a contributing cause of death.
Death within the first two years the policy is in force â often referred to as the period of contestability, the insurance company can investigate the specific causes of death for any reason within the first two years. If itâs determined that death was caused by a pre-existing condition, the claim can be denied.
None of these are a serious factor when it comes to the coronavirus, unless you tested positive for the virus prior to application, and didnât disclose it. But since the coronavirus can strike suddenly, it shouldnât interfere with your death benefits if it occurs once your policy is already in force.
How Does Coronavirus Affect Life Insurance Youâre Applying For?
This is just a guess on my part, but I think people may be giving more thought to buying life insurance now they may have at any time in the past. The coronavirus has turned out to be a real threat to both life and health, which makes it natural to consider the worst.
But whatever you do, donât let your fear of the unknown keep you from applying for coverage. Though you may be wishing you bought a policy, or taken additional coverage, before the virus hit, now is still the very best time to apply. And thatâs not a sales pitch!
No matter whatâs going on in the world, the best time to apply for life insurance is always now. Thatâs because youâre younger and likely healthier right now than youâll ever be again. Both conditions are major advantages when it comes to buying life insurance. If you delay applying, youâll pay a higher premium by applying later when youâre a little bit older. But if you develop a serious health condition between now and then, not only will your premium be higher, but you may even be denied for coverage completely.
Donât let fears of the coronavirus get in your way. If you believe you need life insurance, or more of it, apply now.
That said, the impact of the coronavirus on new applications for life insurance is more significant than it is for existing policies.
The deaths of more than 100,000 people in the US is naturally having an effect on claims being paid by life insurance companies. While thereâs been no significant across-the-board change in how most life insurance companies evaluate new applications, the situation is evolving rapidly. Exactly how that will play out going forward is anyoneâs guess at the moment.
What to Expect When Applying for Life Insurance in the Age of the Coronavirus
If youâre under 60 and in good or excellent health, and not currently showing signs of the virus, the likelihood of being approved for life insurance is as good as itâs ever been. You can make an application, and not concern yourself with the virus.
That said, it may be more difficult to get life insurance if you have any conditions determined to put you at risk for the coronavirus, as determined by the Centers for Disease Control (CDC).
Ages 65 and older.
Obesity, defined as a body mass index of 40 or greater.
Certain health conditions, including asthma, chronic kidney disease and being treated by dialysis, lung disease, diabetes, hemoglobin disorders, immunocompromised, liver disease, and serious heart conditions.
People in nursing homes or long-term care facilities.
Now to be fair, each of the above conditions would require special consideration even apart from the coronavirus. But since theyâre known coronavirus risk factors, the impact of each has become more important in the life insurance application process.
If any of these conditions apply to you, the best strategy is to work with insurance companies that already specialize in those categories.
There are insurance companies that take a more favorable view of people with any of the following conditions:
Certain lung diseases, including Asthma
Certain heart conditions
More Specific Application Factors
But even with insurance companies that specialize in providing coverage for people with certain health conditions, some have introduced new restrictions in light of the coronavirus.
For example, if you have a significant health condition and youâre over 65, you may find fewer companies willing to provide coverage.
The insurance company may also check your records for previous coronavirus episodes or exposures. Expect additional testing to determine if youâre currently infected. Most likely, the application process will be delayed until the condition clears, unless it has resulted in long-term complications.
Travel is another factor being closely examined. The CDC maintains an updated list of travel recommendations by country. If youâve recently traveled to a high-risk country, or you plan to do so in the near future, you may be considered at higher risk for the coronavirus. How each insurance company handles this situation will vary. But your application may be delayed until youâve completed a recommended quarantine period.
Other Financial Areas to Consider that May be Affected
Since the coronavirus is still very much active in the US and around the world, financial considerations are in a constant state of flux. If youâre concerned at all about the impact of the virus on other insurance types, you should contact your providers for more information.
Other insurance policies that my warrant special consideration are:
Employer-sponsored life insurance. Thereâs not much to worry about here, since these are group plans. Your acceptance is guaranteed upon employment. The policy will almost certainly pay the death benefit, even if your cause of death is related to the virus.
Health insurance. Thereâs been no media coverage of health insurance companies refusing to pay medical claims resulting from the coronavirus. But if youâre concerned, contact your health insurance company for clarification.
Action Steps to Take in the Age of the Coronavirus
Many have been gripped by fear in the face of the coronavirus, which is mostly a fear of the unknown. But the best way to overcome fear is through positive action.
I recommend the following:
1. Be proactive about your health.
Since there is a connection between poor health and the virus, commit to improving your health. Maintain a proper diet, get regular exercise, and follow the CDC coronavirus guidelines on how to protect yourself.
2. If you need life insurance, buy it now.
Donât wait for a bout with the virus to take this step. It’s important for a number of reasons and the consequences of not having it can be severe. Compare the best life insurance companies to get started.
3. Consider no medical exam life insurance.
If you donât have the virus, and you want to do a policy as quickly as possible, no medical exam life insurance will be a way to get coverage almost immediately.
4. Look for the lowest cost life insurance providers.
Low cost means you can buy a larger policy. With the uncertainty caused by the coronavirus, having enough life insurance is almost as important as having a policy at all. Look into cheap term life insurance to learn more about what you can afford.
5. Keep a healthy credit score.
Did you know that your credit score is a factor in setting the premium on your life insurance policy? If so, you have one more reason to maintain a healthy credit score. One of the best ways to do it is by regularly monitoring your credit and credit score. There are plenty of services available to help you monitor your credit.
6. Make paying your life insurance premiums a priority
This action step rates a special discussion. When times get tough, and money is in short supply, people often cancel or reduce their insurance coverage. That includes life insurance. But that can be a major mistake in the middle of a pandemic. The coronavirus means that maintaining your current life insurance policies must be a high priority.
The virus and the uncertainty itâs generating in the economy and the job market are making finances less stable than theyâve been in years. Youâll need to be intentional about maintaining financial buffers.
7. Start an emergency fund.
If you donât already have one place, start building one today. If you already have one up and running, make a plan to increase it regularly.
You should also do what you can to maximize the interest youâre earning on your emergency fund. You should park your fund in a high-interest savings account, some of which are paying interest thatâs more than 20 times the national bank average.
8. Get Better Control of Your Debts
In another direction, be purposeful about paying down your debt. Lower debt levels translate into lower monthly payments, and that improves your cash flow.
If you donât have the funds to pay down your debts, there are ways you can make them more manageable.
For example, if you have high-interest credit card debt, there are balance transfer credit cards that provide a 0% introductory APR for up to 21 months. By eliminating the interest for that length of time, youâll be able to dedicate more of each payment toward principal reduction.
Still another strategy for lowering your debts is to do a debt consolidation using a low interest personal loan. Personal loans are unsecured loans that have a fixed interest rate and monthly payment, as well as a specific loan term. You can consolidate several loans and credit cards into a single personal loan for up to $40,000, with interest rates starting as low as 5.99%.
Related: The Best Life Insurance Companies
Weâve covered a lot of ground in this article. But thatâs because the coronavirus comes close to being an all-encompassing crisis. Itâs been said the coronavirus is both a health crisis and an economic crisis at the same time. It requires strategies on multiple fronts, including protecting your health, your finances, and your familyâs finances when youâre no longer around to provide for them.
Thatâs where life insurance comes into the picture. The basic process hasnât changed much from the coronavirus, at least not up to this point. But thatâs why itâs so important to apply for coverage now, before major changes are put into effect.
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