Tag Archive Insurance

ByCurtis Watts

2020 Business and Life Review

Welcome to my 2020 Business and Life Review!

Usually, I separate my travel and business annual review content into two separate blog posts, but this year I’ve decided to combine it into one.

2020 was a different kind of year, and I’m sure nearly everyone would agree with that statement.

It was a tough year for a lot of people, and I completely understand.

I feel very grateful for the life that I get to live, but it was a hard year for me as well. I lost two important family members in my life, my grandma as well as my dog who was my best friend for almost 14 years.

 

Family

I wasn’t sure if I wanted to include this section in this life update, as I’m also talking about travel and business, and honestly, it just seems odd to have it all in one.

I went back and forth so many times, and I’m still unsure of it.

But, it just doesn’t seem right to me to not include it, as this is all a part of my life.

Good and bad things happen, and will happen throughout a person’s lifetime.

I do feel guilty writing about the passings of two of my favorites, and at the same time also writing about business and travel. Anyways…

Me and my grandma around 4 years ago.

My grandma passed away in the summer of 2020. She passed away at the age of 97.

I spent a lot of time growing up with my grandma, as she watched us everyday after school when we were kids and lived in Chicago.

She lived in the building just behind us, so I saw her all the time.

She didn’t speak much English (and I don’t speak Korean), although she took daily/weekly English classes even in her old age so that she could at least make hand gestures and talk to us as best as she could.

I remember as a kid, she would make me plain ramen (with no seasoning!) and I was always so confused as to why she would throw the seasoning packet away and make it taste bland. But I couldn’t tell her easily because I didn’t know how to tell her in Korean. After months of eating noodles in plain water, I figured out how to tell her. She thought it was weird that I liked watery noodles but she made it because she thought I liked it, haha. That is a story that always makes me laugh.

She was also a world traveler, and went to so many amazing places.

Also the kindest woman ever, and she was so great to us. I will forever miss her.

– – – – – – – – – – – – – – – – – – – – – – – – – – – –

 

This picture was taken about one week before she passed away.

My favorite girl passed away – Sailor. My best friend, the sweetest sweetie pie, the best adventure buddy, passed away in December of 2020.

We adopted Sailor when she was just two months old. I had just turned 18 about a week earlier, and just graduated from high school. Wes and I were moving in together (we were crazy kids), and decided to adopt a puppy that a friend was trying to find a home for.

Shortly after, I found out that my dad had brain and lung cancer, and that he did not have much time left. Sailor was there through all of the tears and sadness (I leaned heavily on her), and always brought me joy.

She has climbed some of the tallest mountains in the U.S., sailed to many islands, and been to some of the most scenic spots around.

It was very sudden, and before she could get to a vet (the vet was actually on her way to the boat). The vet thinks it may have been a fast moving cancer, as she didn’t show signs of it when she was just at the vet shortly before.

I’m still processing what this means as she was such a huge and beautiful part of my life for the past almost 14 years.

I am heartbroken and miss her so much. I was dreading this time for awhile, as I knew she was getting older, and it’s been much harder than I could have ever imagined.

Now, I’m not really sure how to transition to the next section, but below I will be switching to my travel and business review for 2020.

Like it was for nearly everyone – 2020 was a weird year, full of highs and lows.

 

Hanging out during lockdown on the boat in Puerto Rico.

Travel in 2020

2020 started with us in the Exumas in the Bahamas. We have spent a decent amount of time in the Bahamas the past couple of years on our boat, and it’s an amazing place to be, especially on a boat!

We then sailed to the Dominican Republic in February and spent around a month. We saw whales, went up the only cable car in the Caribbean (and it goes up around 2,500 feet!), rented a car and drove around the country, and more.

Then, we sailed to Puerto Rico in March. Shortly after we arrived, the lockdown started, and it was very strict. It has loosened since, but the first several months they had some of the strictest rules in the world. You could only grocery shop on certain days according to your license plate, you weren’t allowed to go outside (not even to let your dog use the bathroom), and more.

We had planned on hopping down the island chain and spending hurricane season in Grenada, but everything changed.

We stayed in Puerto Rico for around 3 months, pondering our next move.

Since we live on a boat, we had to figure something out, as hurricane season was approaching and we are not allowed to stay in the “Hurricane Box” during hurricane season because of our boat insurance policy.

So, we had two options, sail to Grenada or sail to the U.S. The sail to Grenada would have been about 3 days.

We decided to sail to the U.S. as we weren’t sure what the state of the world would be like, especially after being in such a strict lockdown for 3 months in Puerto Rico. Plus, we wanted to be outside of the Hurricane Box, and if you’re going north then that means heading all the way back to the U.S. Also, we had a lot of boat work that we needed to get done, so going to Annapolis seemed like an easy choice.

It was a 1,300 nautical mile sail and took us 9 days. It was our longest passage, and it was just me, Wes, and our two dogs. Our highest speed was 14.5 knots, and we hit 12 and 13 quite often. We caught fish, saw a submarine, dealt with Tropical Storm Bertha, and more. Our dogs did amazingly well on the passage, and it was a wonderful time.

We spent several months in Annapolis, Maryland for hurricane season and got a ton of work done on SV Paradise, including a major electrical refit. We can now run everything off of our lithium batteries and our solar, including running the watermaker, our washer/dryer, water heater, and more. Since I know I’ll be asked, the company we used for our electrical refit was Marine Electric Systems in Annapolis, and I highly recommend them.

Hurricane season ended in November, and then we’re required by insurance to head south to avoid winter weather on our boat. We did some offshore hops and we’re now in sunny Florida!

We’re not sure what we’ll be doing in 2021, but decisions have to be made eventually because hurricane season comes every year. We have a few ideas but I won’t be sharing anything just yet – you’ll just have to wait and see! 🙂

Fortunately, we’re fairly off-grid and self-sufficient on SV Paradise, so we can safely live on our boat, even in a time like this.

Note: If you want to follow my travels and life more, please follow me on Instagram. 

 

2020 Business Year In Review

2020 was definitely a weird year for businesses.

Many businesses failed, while many others thrived. Working from home and/or starting your own small business is now at an all-time high as well.

I am very grateful for the business that I get to run, and I am excited to grow it well into the future.

While I no longer disclose exact income numbers due to privacy reasons (and so that I, as well as others, don’t feel the need to “keep up” with others), income was at a good level in 2020.

Here’s what my income has looked like in the past:

  • In 2013, my business income totaled $116,519. This was the year that I quit my job to blog full-time.
  • In 2014, it totaled $163,929. This was my first full year of being self-employed with no day job.
  • In 2015, I made $320,888. I think this was the year where I fired all of my freelance clients and started just working on my blog. This helped me to grow my income significantly because I was FOCUSED!
  • In 2016, I made $979,321. This is the year where I created my first product (Making Sense of Affiliate Marketing).
  • In 2017, I earned $1,536,732.
  • In 2018, I earned over $1,500,000 (I stopped disclosing exact numbers in 2018).

It’s crazy to think that I have now been blogging for over nine years. What started as a fun little blog with no goals (I was even anonymous!), has turned into a great business for me.

If you want to start a blog of your own, I have a free How To Start a Blog Course.

2020 was a weird year, as we all know.

Even though I had a ton more free time due to lockdowns, I didn’t get as much work done as I had hoped. My mind was all over the place a lot of the time, which led to me wasting a lot of time.

But, I have heard that was normal for a lot of people for 2020. So, if you experienced the same – do not feel bad about yourself!

I didn’t take part in many interviews, didn’t release any new projects, and I was barely on social media. I really don’t know what I spent so much of my time on, to be honest.

Luckily, around 2019, I slowed down significantly when it came to working, and it helped tremendously. I wasn’t feeling burned out or anything with Making Sense of Cents. But, I knew that I needed to be more mindful of how I use my time online. I no longer want to be hooked to my laptop and phone for both personal and business social media browsing/blogging.

And, after several years of blogging full-time and spending 100+ hour weeks on my blog, it’s been nice to relax and focus on other areas of my life.

I will be completely honest – income did not grow in 2020 over 2019 – but it was still a great amount.

Thankfully, all of the hard work that I’ve put in over the past several years has paid off.

In case you are new to this blog, the main areas I earn a living from include:

  • Affiliate Marketing – This is the largest chunk of my income.
  • Sponsored Partnerships
  • Courses – Making Sense of Affiliate Marketing Course and Making Sense of Sponsored Posts
  • Display Advertising – I use Adthrive. Another great option is Mediavine.

Three articles that I recommend reading:

  • How I Successfully Built A $1,000,000+ Blog
  • How I’ve Made Over $1,000,000 From My First Course Without a Big Launch
  • 10+ Of The Best Free Blogging Resources

Thank you to all of my readers for being here with me on this journey! I’m so glad that I can share everything with you.

 

Anchored in Puerto Rico.

Affiliate marketing results in 2020.

Affiliate income was at a great level this past year.

Not much changed from the previous year, and everything is fairly passive when it comes to affiliate marketing income on Making Sense of Cents.

I am hoping to start ranking for more blog posts through SEO, which will hopefully increase my affiliate income further and grow my audience on Making Sense of Cents.

The areas that I am working on to improve my affiliate income include:

  • Planning out 2021 for affiliate offers. I’m not really much of a big planner, so this is something I’m always working on. This will help to keep me organized and better prepared.
  • Learning about SEO and applying techniques to my blog. This past guest post has made me super interested in taking SEO seriously – The exact template that helped my site earn $95,000 in affiliate income last year.
  • Continuing to improve and build a high-quality funnel. I want to have a high-quality funnel where I continue to give valuable information to my readers, and keep them happy for the times when I may not have the greatest wifi.
  • Continuing to grow the reach of Making Sense of Cents. Traffic has been a little stuck lately, and I want to change that! I want to see what I can do to grow the traffic, as that will help me to reach new readers.
  • Analyzing popular blog posts to see how they can be improved for the future.
  • Seeking out new affiliate products to promote, and seeing what else my audience is interested in.

If you want to learn more about affiliate marketing, I recommend getting the free guide 10 Easy Tips To Increase Your Affiliate Income. With this time-saving cheat sheet, you’ll learn how to make affiliate income from your blog. These tips will help you to rapidly improve your results and increase your blogging income in no time.

 

Sponsored partnership results in 2020.

Sponsored partnerships were great in the first few months of 2020. But, when the world’s events hit in March, things slowed down drastically. This is because companies were waiting to see how everything would play out.

But, in the summer of 2020, it all picked up like crazy.

I had so many offers in my email inbox that I actually had to turn good offers down.

I believe that 2021 will be a great year for sponsored partnerships, and I already have many lined up for the year.

Plus, the first few months of each year are usually the best for me, as that’s when advertisers tend to be looking for a lot of bloggers.

You can learn more about sponsored partnerships in my free guide 8 Easy Tips To Make Money From Sponsored Posts On Your Blog.

 

Hiking in Puerto Rico (before the lockdown).

Goals for 2021.

I’m hoping that 2021 will be the year of growth for both myself and Making Sense of Cents.

After taking much of 2019 off, and a lot of 2020, I’m ready to get back to it for 2021.

My goals for 2021:

  1. Grow Making Sense of Cents. I’d like to grow in terms of readers and income, and there are two main things that I plan on doing in order to help with that (see #2 and #3 below)
  2. Get featured in the media more. I’m currently taking a course on this subject and I’ll be sharing more information on it soon! In the meantime, you can sign up for the freebie –  2021 Publicity Calendar – This contains 179 story ideas, dates, and hooks to help you create endless media attention and buzz! If you want to get featured in magazines and popular websites, this is something that you will definitely want to sign up for.
  3. See growth from SEO. I took an SEO course that I really enjoyed, and ever since then I have been soaking up all of the SEO knowledge that I can. I am hoping that 2021 is the year of explosive growth from SEO for Making Sense of Cents. The free course I recommend taking is The SEO Starter Pack (FREE Video Training).
  4. Get at least three months ahead on Making Sense of Cents posts. I’m currently around 3 months ahead in content, and I’d like to continue the streak that I am on.
  5. Be more present. My main goal in 2021 (just like with previous years) is to be more present.
  6. Read 5 books. I have only read one book lately that wasn’t work or sailing/boat-educational related. I would like to get back to reading books that have nothing to do with trying to learn something, haha.
  7. Start learning a new language. I know I won’t be fluent, but I’d love to learn a new language. I took 3-4 years of French in high school, and that’s the one I’m trying to learn right now through Duolingo. It’s a good language to learn when sailing about the world, so wish me luck!
  8. Learn how to dive. We would possibly like to add scuba equipment to our sailboat so that we can explore the water further as we sail about the world. So, that means I actually have to learn how to do it. This is definitely a huge goal of mine for this year!

I hope you enjoyed this 2020 year in review blog post. It’s always interesting putting these types of blog posts together so that I can reflect on the previous year.

And, it’s nice to take a look at it once this next coming year is over as well.

How was 2020 for you? What questions do you have for me? Share in the comments below!

The post 2020 Business and Life Review appeared first on Making Sense Of Cents.

Source: makingsenseofcents.com

ByCurtis Watts

Are Social Security Disability Benefits Taxable?

A disabled woman talks to her accountant about taxes.Social Security benefits, including disability benefits, can help provide a supplemental source of income to people who are eligible to receive them. If you’re receiving disability benefits from Social Security, you might be wondering whether you’ll owe taxes on the money. For most people, the answer is no. But there are some scenarios where you may have to pay taxes on Social Security disability benefits. It may also behoove you to consult with a trusted financial advisor as you navigate the complicated terrain of taxes on Social Security disability benefits.

What Is Social Security Disability?

The Social Security Disability Insurance program (SSDI) pays benefits to eligible people who have become disabled. To be considered eligible for Social Security disability benefits, you have to be “insured”, which means you worked long enough and recently enough to accumulate benefits based on your Social Security taxes paid.

You also have to meet the Social Security Administration’s definition of disabled. To be considered disabled, it would have to be determined that you can no longer do the kind of work you did before you became disabled and that you won’t be able to do any other type of work because of your disability. Your disability must have lasted at least 12 months or be expected to last 12 months.

Social Security disability benefits are different from Supplemental Security Income (SSI) and Social Security retirement benefits. SSI benefits are paid to people who are aged, blind or disabled and have little to no income. These benefits are designed to help meet basic needs for living expenses. Social Security retirement benefits are paid out based on your past earnings, regardless of disability status.

Supplemental Security Income generally isn’t taxed as it’s a needs-based benefit. The people who receive these benefits typically don’t have enough income to require tax reporting. Social Security retirement benefits, on the other hand, can be taxable if you’re working part-time or full-time while receiving benefits.

Is Social Security Disability Taxable? 

This is an important question to ask if you receive Social Security disability benefits and the short answer is, it depends. For the majority of people, these benefits are not taxable. But your Social Security disability benefits may be taxable if you’re also receiving income from another source or your spouse is receiving income.

The good news is, there are thresholds you have to reach before your Social Security disability benefits become taxable.

When Is Social Security Disability Taxable? 

A senior's tax return

The IRS says that Social Security disability benefits may be taxable if one-half of your benefits, plus all your other income, is greater than a certain amount which is based on your tax filing status. Even if you’re not working at all because of a disability, other income you’d have to report includes unearned income such as tax-exempt interest and dividends.

If you’re married and file a joint return, you also have to include your spouse’s income to determine whether any part of your Social Security disability benefits are taxable. This true even if your spouse isn’t receiving any benefits from Social Security.

The IRS sets the threshold for taxing Social Security disability benefits at the following limits:

  • $25,000 if you’re single, head of household, or qualifying widow(er),
  • $25,000 if you’re married filing separately and lived apart from your spouse for the entire year,
  • $32,000 if you’re married filing jointly,
  • $0 if you’re married filing separately and lived with your spouse at any time during the tax year.

This means that if you’re married and file a joint return, you can report a combined income of up to $32,000 before you’d have to pay taxes on Social Security disability benefits. There are two different tax rates the IRS can apply, based on how much income you report and your filing status.

If you’re single and file an individual return, you’d pay taxes on:

  • Up to 50% of your benefits if your income is between $25,000 and $34,000
  • Up to 85% of your benefits if your income is more than $34,000

If you’re married and file a joint return, you’d pay taxes on:

  • Up to 50% of your benefits if your combined income is between $32,000 and $44,000
  • Up to 85% of your benefits if your combined income is more than $44,000

In other words, the more income you have individually or as a married couple, the more likely you are to have to pay taxes on Social Security disability benefits. In terms of the actual tax rate that’s applied to these benefits, the IRS uses your marginal tax rate. So you wouldn’t be paying a 50% or 85% tax rate; instead, you’d pay your ordinary income tax rate based on whatever tax bracket you land in.

It’s also important to note that you could be temporarily pushed into a higher tax bracket if you receive Social Security disability back payments. These back payments can be paid to you in a lump sum to cover periods where you were disabled but were still waiting for your benefits application to be approved. The good news is you can apply some of those benefits to past years’ tax returns retroactively to spread out your tax liability. You’d need to file an amended return to do so.

Is Social Security Disability Taxable at the State Level?

Besides owing federal income taxes on Social Security disability benefits, it’s possible that you could owe state taxes as well. As of 2020, 12 states imposed some form of taxation on Social Security disability benefits, though they each apply the tax differently.

Nebraska and Utah, for example, follow federal government taxation rules. But other states allow for certain exemptions or exclusions and at least one state, West Virginia, plans to phase out Social Security benefits taxation by 2022. If you’re concerned about how much you might have to pay in state taxes on Social Security benefits, it can help to read up on the taxation rules for where you live.

How to Report Taxes on Social Security Disability Benefits

If you received Social Security disability benefits, those are reported in Box 5 of Form SSA-1099, Social Security Benefit Statement. This is mailed out to you each year by the Social Security Administration.

You report the amount listed in Box 5 on that form on line 5a of your Form 1040 or Form 1040-SR, depending on which one you file. The taxable part of your Social Security disability benefits is reported on line 5b of either form.

The Bottom Line

A disabled man in a wheelchairSocial Security disability benefits aren’t automatically taxable, but you may owe taxes on them if you pass the income thresholds. If you’re worried about how receiving disability benefits while reporting other income might affect your tax bill, talking to a tax professional can help. They may be able to come up with strategies or solutions to minimize the amount of taxes you’ll end up owing.

Tips on Taxes

  • Consider talking to a financial advisor as well about how to make the most of your Social Security disability benefits and other income. If you don’t have a financial advisor yet, finding one doesn’t have to be complicated. SmartAsset’s financial advisor matching tool can help. By answering a few simple questions you can get personalized recommendations for professional advisors in your local area in minutes. If you’re ready, get started now.
  • While you don’t have to reach a specific age to apply for Social Security disability benefits or Supplemental Security Income benefits, there is a minimum age for claiming Social Security retirement benefits. A Social Security calculator can help you decide when you should retire.

Photo credit: ©iStock.com/kate_sept2004, ©iStock.com/JannHuizenga, ©iStock.com/AndreyPopov

The post Are Social Security Disability Benefits Taxable? appeared first on SmartAsset Blog.

Source: smartasset.com

ByCurtis Watts

Does Medicare Cover Home Health Care?

Medicare generally covers home health care services, including home health aides and certain therapies. To qualify for coverage, though, you’ll have to meet certain requirements. And for some services, you’ll be responsible for part of the cost. Which home health care services are covered by Medicare? Eligible services covered through Original Medicare — which comprises…

nerdwallet.com

ByCurtis Watts

FIRE: How to Find Your Aha Moments and the Key to Achieving FIRE

Although enduring the pandemic has been stressful to say the least, I have learned a multitude of lessons I’ll never forget. One of the biggest is that, like it or not, I’m not cut out to homeschool four kids while trying to work at home. Most of all, though, the pandemic has reinforced my feeling of gratitude for the life I live — and the life my family lives.

For example, when schools began shutting down and the whole country went into lockdown, neither my wife, Mandy, or I had to miss work or struggle to find childcare. When I work on my blog, my podcast, and other ventures in my home office, my wife already stays home with the kids and has done so for several years. 

And when the economy stalled and the stock market dropped like a rock, we never had to wonder how we’d pay our bills or what the future might hold. After all, we have a fully stocked emergency fund, and have plenty of passive income streams that aren’t tied to an employer or the stock market on any given day.

The bottom line: The pandemic has reminded me all I have to be grateful for, including the peace of mind that comes with financial independence.

Teaching My Kids About Financial Independence

Anyway, part of me has always worried that my kids wouldn’t get to learn the same financial lessons I did — at least, not in the same way. Because of the situation we’re in, my kids have never really lived in a modest home, and they have never had to go without. They have never been in a situation where we are trying to stretch the groceries for another week until payday, and in fact, the pandemic has made us rely a lot more on takeout and food delivery than we normally do.

Regardless, I recently took some time on one of our homeschool days to map out what it takes to run and pay for a household for my kids. 

Writing It All Out

On a giant whiteboard in my office, I created a list of most of our household bills — our mortgage payment, transportation expenses, phones, gas, insurance, utilities, and all of the taxes we pay. In another column, I wrote out a rough example of the amount of income it would actually take to cover those bills. 

From there, I talked with the kids about our household wants, or stuff they prefer to have. My kids went ahead and added shoes to the list, an Xbox and some dolls. 

At one point, the kids started asking questions about where the money for our bills actually comes from. I explained that, while I continue working on my podcast and blog and other business ventures, the majority of our income is mostly passive — as in, I am not actually working for it and I am no longer getting paid by an employer.

And in that moment, I began explaining to them my thoughts on financial independence — what it means to me, and how we actually got to that point. 

While my kids were sick of dad teaching and barely listening by then, they did have some thoughts on financial independence. I explained to them that, if they could save a ton of their income in their early working years, they could invest in passive income streams they could rely on for decades after that. 

We also talked about how secure it can feel to have enough money stashed away to get by, and to not have to rely on the whims of an employer or a J-O-B to stay alive. 

How I Realized We Were Financially Independent

All of this got me thinking about when I knew we were financially independent, and the “aha moments” I had along the way. After all, our journey to financial security didn’t happen overnight, even though sometimes it does feel that way.

But before I share how I knew we didn’t need to worry about money, I want to explain what I think financial freedom really is, based on a note I wrote on my whiteboard for our kids. 

What Financial Independence Is (and What It Isn’t)

For me, financial independence is not about making the most money you absolutely can, and it’s not about how much is in your bank account, the car you drive, or the size of your home. 

Instead, financial independence is about choice. 

Based on the way I interpret the FIRE movement, financial independence is about being able to choose where you work and what you work on, having the ability to spend your free time how you want, and living life on your own terms. It’s about not having to go to a job you hate, and to still have the money you need to pay bills and live comfortably, regardless.

Further, financial independence means being able to have the freedom of choice without any worry, without any stress, and without any anxiety — at least when it comes to paying bills.  

My Aha Moments

So, what are the “aha moments” that helped me realize we had been blessed with all we need — that we are financially independent?

In reality, it has been a lot of small things over the last decade or so — things like being able to rent two hotel rooms or a large Airbnb each time we travel, and not having to worry whether we can afford it. After all, I have four kids, and my wife and I don’t want to sleep in a hotel room stuffed six-people deep. 

Another big moment we had was the first time my wife and I maxed out our old Roth IRA accounts while also fully funding our 401(k)s, which happened early in our marriage. 

Then there was the year we started building our first “dream house,” which we lived in before the one we live in now. Our “starter home” was around 1,900 square feet and we lived there for quite a while. But we started building our 5,000 square foot dream house right before the birth of our second son — we even put in a pool shortly after that. 

This was when we were in our early 30’s, and building at that time just seemed like a dream come true. We even started building our new home before we sold our old one, which was only possible because we had our financial ducks in a row.

Other key “aha” moments along our journey to financial independence included:

  • The many times I turned down lucrative job offers and opportunities so I could continue pursuing my own dreams
  • When I realized I could take two weeks off to drive my family to the Grand Canyon in an RV — and I did it!
  • When I’ve made more money in a month than my parents used to earn in a whole year (since my parents topped out at around $40,000 to $50,000 per year during their working years)
  • Realizing I had the cash savings to purchase my childhood dream car (a yellow Lamborghini!), if I really wanted to
  • The time I sold a minority stake in one of my businesses and was handed the largest check I have ever received to date
  • The first time I paid $400 for a pair of Jordan shoes with no regrets or stress, which actually happened just a few years ago!

Funny enough, I sent my wife Mandy a text, for research purposes, asking when she first felt financially independent. Her answer was totally different than mine. 

Mandy says that she felt like she no longer needed to worry about money when we reached one year of expenses in our emergency savings account.

I have to agree with her, because that milestone did give me a lot of peace of mind. After all, having 12 months of expenses in an emergency fund means a lot could go wrong with our finances and we would still have the time and space to figure it all out.

3 Key FIRE Principles and How You Know You’re On Track

If you’re pursuing financial independence but progress feels slow, know that your path to financial freedom will have a lot of bumps along the way. If you’re like me, you might also find that you’re inching toward financial freedom in spurts, and that it doesn’t all hit you at once. 

The key for those seeking FIRE is being on the lookout for those “aha moments” that tell you you’re on the right path. No matter what anyone says, you won’t become financially independent overnight. Instead, you’ll probably hit several different stages over the months and years it takes to get there.

Not only that, but you should strive to adopt the right mindset for FIRE. For the most part, this means being willing to think differently about how the world works and how it should work, and being open to going your own way.

What are the key principles of FIRE — or the key mindset changes that can get you there? Based on my personal experience, here’s what I think they are.

Key Principle #1: Gratitude for What You Have

In my opinion, being grateful for what you have (and what God has provided) is one of the most important steps anyone can take. Even if things aren’t really going your way, and if life seems bleak and miserable at times, there is always something we can be grateful for. 

With that said, I recommend being grateful and hungry — as in, don’t be so grateful that you become complacent and stop pushing for more in your life. 

Continue to entertain the idea that there is always something else you can learn, more experiences you can have, and more wisdom to obtain by trying new things. And if you try something and fail, look for the lessons you can find in that failure and be grateful you had the chance to learn them. 

Key Principle #2: Flexing Your Bold Intentions

Another key principle of achieving financial independence is being willing to share your goals with the world — loudly and without hesitation.

In your own life, you might’ve noticed that people who are pursuing FIRE can’t stop talking about it. This is because FIRE enthusiasts usually have one important thing in common: they’re brave enough to put their bold intentions on display no matter what anyone thinks.

Let’s say you have the bold intention of achieving financial independence and retiring at 35. Why not take that goal and post it to your Facebook page? Start sharing it with your family, and don’t forget to tell your friends. 

Chances are good that you’re probably going to get a lot more criticism than support from your peers, but who really cares? 

Most people who pursue FIRE actually don’t care at all what other people think. That’s part of the reason they’re able to live differently, save a large percentage of their income, and stop trying to keep up with the Joneses in the first place.

Key Principle #3: Full Release of the Past

Finally, you have to make sure your future is bigger than your past — as in, don’t let your past mistakes define who you are today and who you can become.

I know from experience that it’s far too easy to focus on all of the mistakes you’ve made and opportunities you’ve missed out on. Trust me, I’ve made more than my share of bone-headed mistakes that could’ve easily derailed me, yet here I am. 

The key for anyone pursuing FIRE is having some humility for the situation while never letting your past mistakes hold you back. You have to be willing to put yourself out there again and again, knowing you might fail. The thing is, every failure has a lesson, and sometimes those lessons lead you to something great right around the corner. 

Maybe you skipped saving for retirement early in your career, and you feel behind from where you should be. Although you definitely missed out by not getting started early, you can only control the steps you take to reach your goal right now.

Perhaps you made a poor investment and lost money at one point, which is something most investors have done at least a few times. Instead of dwelling on that mistake, you have to learn to cut your losses, find the lesson in the mess, and move on. 

Why? Because the alternative isn’t moving forward, and that won’t get where you want to be.

The bottom line: Let go of the past and take stock of where you’re at now. From there, figure out a plan to reach your goals, and don’t stop until you get there.

The post FIRE: How to Find Your Aha Moments and the Key to Achieving FIRE appeared first on Good Financial Cents®.

Source: goodfinancialcents.com

ByCurtis Watts

DoorDash vs. UberEats: Which App Is Right For Your Next Side Gig?

For better or worse, apps like DoorDash and Uber Eats have disrupted the food-delivery industry. Since their launch in 2013 and 2014 respectively, restaurants across the country have outsourced delivery services to independent drivers who use the apps to make extra cash.

During the pandemic, these services have seen demand like never before. For customers, the apps make ordering food from just about any restaurant as easy as opening their smartphones. For drivers, it’s almost as easy to land a delivery job hawking food from local eateries.

But before you download your next job, take some time to review the key differences between DoorDash and Uber Eats so that you can make the most of your delivery gig.

DoorDash vs Uber Eats: The Top Food Delivery Apps Duke It Out

The general premise of the two apps is almost identical: Customers place food orders at local restaurants. The apps alert drivers in the area with the order details. The first driver to accept the order picks up the food and drops it off to the customer. Simple enough, right?

Several differences are worth noting, though. Some minor and some major. We took a deep dive into those differences, looking at pay, vehicle and job requirements, available locations, driver reviews and more to help you make an informed decision before you start delivering.

And if it’s too close to call, you can always sign up for both to see which one suits you better.

Round 1: App Reviews

A woman looks at what's offered on Uber Eats.

Because the apps are so popular, they’ve amassed more than 4.1 million driver reviews. Both companies require their drivers to use different apps than customers, a huge perk when trying to get a sense of drivers’ perspective. Worker reviews from Glassdoor are also included.

DoorDash Driver (Dasher) Reviews

Feedback from Dashers is overall mixed, but there’s a clear preference for the iOS version of the app. Trends in negative reviews across all platforms show that many drivers have trouble with glitches and crashes, especially Android users, and that the nature of the work takes a toll on their vehicles. Many negative reviews mention that DoorDash’s strict performance metrics are a hassle.

Workers reviewed DoorDash more than 760,000 times.

App Store (iOS) review: 4.7 out of 5.
Google Play (Android) review: 3.3 out of 5.

Glassdoor review: 3.7 out of 5.

Uber Driver Reviews

More than 3 million drivers reviewed Uber. A caveat worth noting is that Uber has one driver app. That means it’s hard to get the opinions of only Uber Eats drivers because general Uber app reviews are mixed in. Overall, reviews are positive.

Trends in negative delivery reviews on Glassdoor indicate GPS issues and trouble contacting customer service. Several drivers mentioned problems with promotion and surge pay (bonus pay during in-demand times). Negative reviews regarding vehicle wear-and-tear are common.

App Store (iOS) review: 4.6 out of 5.

Google Play (Android) review: 3.8 out of 5.

Glassdoor review: 3.9 out of 5.

Round 2: Job and Vehicle Requirements

A woman drives for Uber.

To become a Dasher or Uber Eats driver, you have to meet a baseline of requirements. Some are vehicle related and some are age and experience related.

DoorDash

To qualify as a Dasher you must be at least 18. Dashers need to have a valid driver’s license. There are no car requirements, but auto insurance is required. In some markets you can make deliveries on scooters, bicycles and motorcycles.

Uber Eats

To make automobile deliveries, the minimum age requirement is based on your local jurisdiction, plus at least one year of driving experience. Vehicles must be no more than 20 years old. Drivers must be properly insured and can use bikes and scooters in certain markets. The age requirements are higher for those who prefer two wheels — 18 for bicycles and 19 for scooters.

Round 3: Sign-Up Process

Becoming a delivery driver for DoorDash and Uber Eats is simpler than landing a part-time job. You can complete the entire process from your smartphone or computer.

DoorDash

You can sign up to become a Dasher on the driver app. You’ll have to consent to a background and motor vehicle check (and pass both). They could take as little as a few days, but err on the side of a week or two.

After passing the checks, you’ll need to select what type of “orientation” you want. The pandemic paused in-person orientations. Depending on your market you may need to request an “activation kit” instead. Receiving your activation kit may take an extra couple of weeks, according to driver reviews.

The activation kit includes a Dasher manual, a hot bag and a credit card, which is used to pay for orders. Once you receive and set up the card through the app, you can start accepting orders.

Uber Eats

For drivers new to Uber, you can sign up on the website or through the driver app. Because of the stricter vehicle requirements, the application requires more detailed information on your ride. A background check is also required, which may take three to five business days to process.

After the background check clears and your application is approved, you’re free to start taking orders. No orientation or additional equipment is needed.

If you’re a current rideshare driver for Uber, it’s easy to start delivering with Uber Eats. You simply opt in to Uber Eats orders through the driver app and start delivering without any additional screening.

Round 4: Pay and Tipping

The two apps handle pay a little differently, both in how you get paid and how you pay for customers’ orders when you pick them up. Neither company offers guaranteed wages (unless you live in California).

DoorDash

As of Fall 2019, the company switched to a payment model where Dashers earn a higher base pay per order in addition to keeping 100% of their tips. Previously, a customer’s tip would subsidize the Dasher’s base pay.

Check out how this food delivery driver may $8,000 in one month.

Dashers report earning between $11 and $15 an hour depending on location, but those earnings aren’t guaranteed. Pay is based on how many orders you accept per hour and how much customers tip you. DoorDash pays weekly through direct deposit, or you can access your earnings early through Fast Pay, for $1.99.

When picking up orders, you may be required to pay for the order using the company red card from your activation kit.

Uber Eats

Depending on your location, you can expect to earn $11 to $14 an hour on average. Again, those wages aren’t guaranteed because your earnings are based on orders and tips. With Uber Eats, you pocket 100% of your customers’ tips. You get paid weekly via direct deposit, or you can pay a fee to access your earnings early through Instant Pay for 50 cents.

You won’t be involved in the payment process for food orders. Partner restaurants are reimbursed directly by Uber.

Round 5: Available Locations

People walk alongside a lake and tall buildings.

This one’s easy. Both services are available in most big cities in all 50 states.

Previously, DoorDash and Uber Eats ran driver support centers in major metro areas of most states. In 2020, many of these centers closed due to the coronavirus. Some still exist, but neither company offers a comprehensive, public list of remaining locations.

Final Round: Additional Perks

Promotional offers are popular with both DoorDash and Uber, but they’re temporary and vary by location. Aside from sign-up bonuses and referral codes, here are a couple perks that are here to stay.

DoorDash

A few perks unique to DoorDash include grocery delivery options, automatic insurance coverage and health care services.

After you’re screened and accepted as a Dasher, you can choose to deliver food in any city where DoorDash operates, meaning there are no hard location requirements. The company also launched grocery delivery services in some Midwest and West Coast areas.

Dashers also get supplemental auto insurance and occupational accident insurance for accidents or injuries that fall outside your current auto insurance. The insurance plan covers up to $1 million in medical costs, a weekly payment of $500 for disabilities and $150,000 to dependents for fatal accidents. Coverage is automatic. There are no deductibles or premiums.

While DoorDash doesn’t offer health insurance, the company does partner with Stride Health, which provides free health care advising and assistance to Dashers who need help finding affordable insurance plans.

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Uber Eats

Uber Eats drivers get a variety of discounts and may be eligible for Uber Pro perks.

All Uber drivers receive discounts for vehicle maintenance and phone service plans. Uber also partners with Stride Health to provide health plans and tax advice. Drivers automatically receive supplemental auto insurance, which covers up to $1 million in damages. There’s a $1,000 deductible before benefits pay out.

Uber Pro perks have recently expanded to all of Uber’s markets across the U.S. Only top-rated drivers receive Pro perks like tuition and gas reimbursement, and the program is designed for Uber drivers primarily, not Uber Eats drivers.

If you drive for both Uber and Uber Eats, your food deliveries may apply to Uber Pro, but Uber-Eats-only drivers aren’t eligible.

Final Decision in DoorDash vs Uber Eats

Ding! Ding! It was an even match-up. Uber Eats and DoorDash were neck and neck throughout. No knockout punches. A good few jabs by DoorDash’s insurance coverage and grocery options and a couple of hooks by Uber’s overall ratings and ability to switch to ridesharing.

The decision goes to our judges. (That’s you.)

There are a lot more delivery options out there. Here’s how the top 10 delivery apps stack up.

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 ​latest 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.

Source: thepennyhoarder.com

ByCurtis Watts

Seven things college freshmen don’t need — and ten they do

This article originally appeared on NerdWalletThose ubiquitous checklists of “dorm room essentials” for college freshmen are filled with items that will be ditched by the end of first semester.

Some parents “go 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,” 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 who’s 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. Don’t 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 else’s room. Bonus: Your teen gets out and meets others.
  • Speakers. Small spaces don’t 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 — a lot of ramen and candy — 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 (who’s 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 — besides the all-important mattress topper and laptop — that many students consider dorm room essentials include:

  • One or two fitted sheets in the correct bed size, plus pillowcases. Heffernan says most students don’t 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 it’s a lot of work to get something out, your student won’t, 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 — something from home that will make the space a bit more personal.

Afraid you’ll 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 “dorm necessities” often go on sale once school starts.

Do a Reality Check

If you or your student still want to replicate the rooms you’ve 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 parents’ weekend?

Dornfest, a co-host of the Edit Your Life podcast, offers a compelling reason not to make things too comfortable. “A freshman needs to be encouraged to get out of the dorm room,” she says. “Anything that pulls you into campus life can be good.”

She’s 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 Don’t Need — and 10 They Do originally appeared on NerdWallet.

Source: getrichslowly.org

ByCurtis Watts

FHA Loan Requirements – Guideline & Limits

FHA loan requirements are simple; they’re different than conventional loan requirements. For a conventional loan, for example, you will need a good credit score. However a FHA loan credit score is only 580.

If you’re a first time home buyer and need a first time home buyer loan to purchase your dream home, then keep reading to find out how an FHA loan is right for you.

Click here to compare the rates if you’re thinking of applying for an FHA loan. It’s totally FREE.

In this article, we will cover several topics around the FHA loan requirements. As a first time home buyer, you will need to be aware of these requirements so that your home-buying process can go as smoothly as possible.

Here’s what we will cover: FHA loan limits, FHA loan rates, FHA loan credit score, FHA lenders, and so many others. In addition, we will address the difference between conventional loan requirements versus FHA loan requirements.

Click here to apply for a FHA loan.

FHA Loan Requirements – Guideline & Limits:

Buying a house through an FHA loan, while exciting, can be daunting, especially as a first time home buyer. Taking a few moments to familiarize yourself with the FHA loan requirements can save you from costly mistakes during the home buying process. Below is an overview of FHA loan process

FHA loan definition

What is an FHA loan? Simply stated, an FHA loan is a loan that is insured by the Federal Housing Administration. These type of loan are popular among first time home buyers because they allow them to put as low as 3.5% down payment and require a very low credit score.

So if you’re a first time home buyer with a bad credit, then an FHA loan makes more sense.


Feeling Overwhelmed With Your Finances?, You have options and there are steps you can take yourself. But if you feel you need a bit more guidance, simply speak with a financial advisorSmartAsset’s free tool matches you with fiduciary advisors in your area in 5 minutes. If you are ready to meet your goals, get started with Smart Asset today.


FHA loan limits

FHA loan limits refers to the maximum amount of loan the FHA will give you. For 2019, for example, in low cost areas, FHA loan requirements have been set in place allowing the maximum amount for a single family home to be $314, 827. Whereas for a four-plex, the maximum amount is $605,525.

FHA loan limits – low cost areas
Single Duplex Triplex Fourplex
$314,827 $403,125 $487,250 $605,525

 

For high cost areas, the FHA loan limits for a single family home is $726, 525 and for a duplex, the FHA limit is $930, 300. Those limits, of course vary depending on your states and they are update annually. So visit your state to determine what the FHA mortgage lending limits are.

FHA loan limits – high cost areas
Single Duplex Triplex Fourplex
$726,525 $930,300 $1,124,475 $1,397,400

Click here to compare current FHA loan mortgage rates

FHA loan vs conventional

When it comes to get a home loan for presumably the biggest purchase you’ll ever make in your life, you certainly have to know the key differences between an FHA loan and a conventional loan. While it’s easier to get approved for an FHA loan, it’s important so that you can make the best decisions.

FHA loan requirements

fha loan requirements
FHA credit score loan requirement

The FHA loan requirements are fairly simple and straightforward. Here’s what they require: 1) You must have a credit score of at least 580.

2) A 3.5% down payment is required. (*note, if your FICO score is between 500 and 579, then you will have to put 10% down payment). 3) You will have to pay Private Mortgage Insurance (PMI);

4) Your debt to income ratio must be < 43%. Your debt to income ratio is the percentage of your income that you spend on debt, including mortgage, car loan, student debt, etc..

5) The home you intend to purchase must be your primary residence. You must also occupy the property within 60 days of closing.

Click here to shop for FHA mortgage rates in your area

It can’t be an investment property. However, you can buy a duplex or triplex, live in one unit and rent the other units. As long as you reside in the property, you will satisfy that requirement. Also, the house must meet FHA loan limits (see above).

6) Finally, and of course, you must have a steady income and proof of employment. I will discuss later whether a FHA loan is better than a conventional loan. For more information about FHA loan requirements in general, visit the FHA website.

Conventional loan requirements

The requirements for a conventional loan, however, are much stricter. By the way a conventional loan or traditional loan is not insured by the Federal Housing Administration. But instead it is guaranteed by a private lender such as a bank, credit union, mortgage companies, etc…

Of course whether you will qualify for a conventional loan vary from lenders to lenders, but the following are required:

1) A credit score of at least 680 (of course the higher the score is, the more likely you will get qualified, and the lower your interest rate on the loan will be.

2) A down payment of at least 20% of the house purchase price. If you have less than 20%, you still can get the loan. But the problem is, you will have to take out private mortgage insurance, pay its premiums until you achieve at least 20% equity in the house.

3) Your debt to income ratio needs to be around 36% and no more than 43%.

Should you apply for an FHA loan or conventional loan?

As you can see above, the FHA loan requirements are less strict than the conventional loan requirements. However, which one you choose to apply to depends on your personal circumstances.

But if you are a first time home buyer, there are a lot of good reasons why an FHA loan would seem more appealing to you. For one, the down payment is only 3.5% (compare that with a 20% down payment a conventional loan requires). A down payment is the upfront money you need to to make when buying a home.

As a first time home buyer, saving for a 20% down payment on a house can be a big burden. Homes are expensive. For example, saving for $450,000 home can take you years to accomplish, especially if you have other debt like student debt, credit card debt, car loan, etc… So a 3.5% down payment makes it easier for you to buy your own home.

Second, the FHA loan credit score is only 580. Although, you should always take steps to raise your credit score, sometimes certain changes in your life may leave you with a low credit score. Perhaps, you had to file for bankruptcy which resulted in a low credit score.

Or maybe you never had a credit card, which means that you don’t have an established credit history. Or maybe you’re a victim of identity theft which lowered your credit score. So there are several reasons why you could have a low credit score.

However, that shouldn’t mean you can’t buy a house. That’s why the FHA loan requirements make it easier for folks who otherwise would not have been qualified for a conventional loan.

Related Articles:

5 Signs You’re Not Ready To Buy A House

The Biggest Mistakes Millennials Make When Buying a House

How Much House Can I afford

Buy a home with the Right Financial Advisor

You can talk to a financial advisor who can review your finances and help you reach your goals. Find one who meets your needs with SmartAsset’s 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, get started now.

The post FHA Loan Requirements – Guideline & Limits appeared first on GrowthRapidly.

Source: growthrapidly.com

ByCurtis Watts

How Many Credit Cards Should You Have for Good Credit?

Have you ever wondered, "How many credit cards should I have? Is it wise to have a wallet full of them? Does having multiple credit cards hurt my credit score?"

If you’ve been following this blog or the Money Girl podcast, you know the fantastic benefits of having excellent credit. The higher your credit scores, the more money you save on various products and services such as credit cards, lines of credit, car loans, mortgages, and insurance (in most states).

Even if you never borrow money, your credit affects other areas of your financial life.

But even if you never borrow money, your credit affects other areas of your financial life. For instance, having poor credit may cause you to get turned down by a prospective employer or a landlord. It could also increase the security deposits you must pay on utilities such as power, cable, and mobile plans.

Credit cards are one of the best financial tools available to build or maintain excellent credit scores. Today, I'll help you understand how cards boost your credit and the how many credit cards you should have to improve your finances.

Before we answer the question of how many credit cards you should have in your wallet, it's important to talk about using them responsibly so you're increasing instead of tanking your credit score.

5 tips for using credit cards to build credit

  1. Make payments on time (even just the minimum)
  2. Don’t rely on being an authorized user
  3. Never max out cards
  4. Use multiple cards
  5. Keep credit cards active

A common misconception about credit is that if you have no debt you must have good credit. That’s utterly false because having no credit is the same as having bad credit. To have good credit, you must have credit accounts and use them responsibly.

Having no credit is the same as having bad credit.

Here are five tips for using credit cards to build and maintain excellent credit scores.

1. Make payments on time (even just the minimum)

Making timely payments on credit accounts is the most critical factor for your credit scores. Your payment history carries the most weight because it’s an excellent indicator of your financial responsibility and ability to pay what you owe.

Having a credit card allows you to demonstrate your creditworthiness by merely making payments on time, even if you can only pay the minimum. If the card company receives your payment by the statement due date, that builds a history of positive data on your credit reports. 

I recommend paying more than your card’s minimum. Ideally, you should pay off your entire balance every month so you don’t accrue interest charges. If you tend to carry a balance from month-to-month, it’s wise to use a low-interest credit card to reduce the financing charge.

2. Don’t rely on being an authorized user

Many people start using a credit card by becoming an authorized user on someone else’s account, such as a parent’s card. That allows you to use a card without being legally responsible for the debt.

Some credit scoring models ignore data that doesn’t belong to a primary card owner.

Some card companies report a card owner’s transactions to an authorized user’s credit report. That could be an excellent first step for establishing credit … if the card owner makes payments on time. Even so, some credit scoring models ignore data that doesn’t belong to a primary card owner.

Therefore, don’t assume that being an authorized user is a rock-solid approach to building credit. I recommend that you get your own credit cards as soon as you earn income and get approved.

3. Never max out cards

A critical factor that affects your credit scores is how much debt you owe on revolving accounts (such as credit cards and lines of credit) compared to your total available credit limits. It's known as your credit utilization ratio, which gets calculated per account and on your accounts' aggregate total.

A good rule of thumb to improve your credit scores is to keep your utilization ratio below 20%.

Having a low utilization ratio shows that you use credit responsibly by not maxing out your account. A high ratio indicates that you use a lot of credit and could even be in danger of missing a payment soon. A good rule of thumb to improve your credit scores is to keep your utilization ratio below 20%. 

For example, if you have a $1,000 card balance and a $5,000 credit limit, you have a 20% credit utilization ratio. The formula is $1,000 balance / $5,000 credit limit = 0.2 = 20%.

There's a common misconception that it's okay to max out a credit card if you pay it off each month. While paying off your card in full is smart to avoid interest charges, it doesn't guarantee a low utilization ratio. The date your credit card account balance is reported to the nationwide credit agencies typically isn't the same as your statement due date. If your outstanding balance happens to be high on the date it's reported, you'll have a high utilization ratio that will drag down your credit scores.

4. Use multiple cards

If you need more available credit to cut your utilization ratio, there are some easy solutions. One is to apply for an additional credit card, so you spread out charges on multiple cards instead of consistently maxing out one card. That reduces your credit utilization and boosts your credit.

Having the same amount of debt compared to more available credit instantly reduces your utilization and improves your credit.

For example, if you have two credit cards with $500 balances and $5,000 credit limits, you have a 10% credit utilization ratio. The formula is $1,000 balance / $10,000 credit limit = 0.1 = 10%. That’s half the ratio of my previous example for one card.

Another strategy to cut your utilization ratio is to request credit limit increases on one or more of your cards. Having the same amount of debt compared to more available credit instantly reduces your utilization and improves your credit.

5. Keep credit cards active

Credit card companies are in business to make a profit. If you don't use a card for an extended period, they can close your account or cut your credit limit. You may not mind having a card canceled if you haven't been using it, but as I mentioned, a reduction in your credit limit means danger for your credit scores.

A reduction in your credit limit means danger for your credit scores.

No matter if you or a card company cancels one of your revolving credit accounts, it causes your total amount of available credit to shrink, which spikes your utilization ratio. When your utilization goes up, your credit scores can plummet.

Anytime your credit card balances become a higher percentage of your total credit limits, you appear riskier to creditors, even if you aren't. So, keep your cards open and active, especially if you're considering a big purchase, such as a home or car, in the next six months.

In general, I recommend that you charge something small and pay it off in full several times a year, such as once a quarter, to stay active and keep your available credit limit in place.

If you have a card that you don't like because it charges an annual fee or a high APR, don't be afraid to cancel it. Just replace it with another card, ideally before you cancel the first one. That allows you to swap out one credit limit for another and avoid a significant increase in your credit utilization ratio.

If you're determined to have fewer cards, space out your cancellations over time, such as six months or more. 

How many credit cards should you have to build good credit?

Now that you understand how credit cards help you build credit, let's consider how many you need. The optimal number for you depends on various factions, such as how much you charge each month, whether you use rewards, and how responsible you are with credit.

There's no limit to the number of cards you can or should have if you manage all of them responsibly.

According to Experian, 61% of Americans have at least one credit card, and the average person owns four. Having more open revolving credit accounts makes you more likely to have higher credit scores, but only when you manage them responsibly. 

As I mentioned, having more available credit compared to your balances on revolving accounts is a crucial factor in your credit scores. If you continually bump up against a 20% utilization ratio, you likely need an additional card.

You can keep an eye on your credit utilization and other important credit factors with free credit reporting tools such as Credit Karma or Experian.

Also, consider how different credit cards can help you achieve financial goals, such as saving money on everyday purchases you're already making. Many retailers, big box stores, and brands have cards that reward your loyalty with discounts, promotions, and additional services.

If you continually bump up against a 20% utilization ratio, you likely need an additional card.

I use multiple cards based on their benefits and rewards. For instance, I only use my Amazon card to get 5% cashback on Amazon purchases. I have a card with no foreign transaction fees that I use when traveling overseas. And I have a low-interest card that I only use if I plan to carry a balance on a large purchase for a short period.

There's no limit to the number of cards you can or should have. Theoretically, you could have 50 credit cards and still have excellent credit if you manage all of them responsibly.

My recommendation is to have a minimum of two cards so you have a backup if something goes wrong with one of them. Beyond that, have as many as you're comfortable managing and that you believe will benefit your financial life.

Source: quickanddirtytips.com

ByCurtis Watts

Life Insurance Myths Debunked

Misconceptions and misunderstandings have perpetuated a number of life insurance myths over the years and prevented consumers from getting the cover they need. They see life insurance as something that it’s not, believing it to be out of their reach because of their lifestyle and their budget, or believing that it’s something it’s not.

If you have dependents, want them to live comfortably, and don’t have assets or funds to give them, you need life insurance coverage. And if you have been avoiding life insurance because of something you’ve been told or something you believe, it’s time to dispel those beliefs and get to the truth of the matter.

Myth 1: Life Insurance Premiums are Expensive

One of the most common myths concerning life insurance products is that they are too expensive. It only makes sense, to the uninitiated at least. After all, if they’re promising a death benefit of $200,000 over a twenty-year period, it stands to reason that they would seek to claim at least 25% of that balance to guarantee a profit.

In fact, a recent study found that consumers who had never purchased life insurance overestimated the premium costs by between 400% and 500%. That’s a massive difference.

If you’re in your 20s or 30s and are relatively healthy, you can get 20-year term insurance for less than $20 a month, and if anything happens during that term your beneficiaries will get $200,000. Life insurance companies can afford to offer such huge payouts and low premiums because the chances of a young person dying during that term are very slim.

Assuming you’re paying $20 a month for a 20-year term life insurance policy, this means you’re paying $4,800 over the term, or 2.4% of the total payout. However, the odds of a 20-year-old woman dying during this time are 1.42%, and these odds drop significantly if you remove smoking, drinking, risk-taking, and pre-existing conditions from the equation.

In other words, while it seems like a huge sum and a huge discrepancy, it still falls in favor of the life insurance company.

It’s a similar story for a 30-year-old. The odds of dying during the term are higher, but only just, as they are still less than 3%, leading to higher premiums but a great rate overall.

The older you get, the greater your risks become, but insurance companies want your money. They need you to sign on the dotted line, so they will continue to offer competitive prices. 

Keep this in mind the next time you purchase life insurance and are suspicious of the significant amount of coverage provided in relation to the cost.

Myth 2: It’s All About Money

Financial protection is important. You need a coverage amount that will cover the needs of your loved ones while also securing low premiums to make life easier for you. However, the generosity and cost of life insurance are the only factors to consider.

It’s important to consider the financial rating of the insurance company, which is acquired using a system such as A.M. Best and Moody’s. These ratings are used to determine the financial strength of a company, which is key, because you’re relying on them being around for many years to come and being rich enough to pay your death benefit when you die.

Myth 3: It’s All About the Death Benefit

While term life insurance policies are solely about the death benefit, which is paid upon the policyholder’s death, there are other options available. Whole life or permanent life insurance policies work like savings accounts as well as life insurance policies. They accumulate a cash value over the duration of the policy and the policyholder can cash this sum at any point.

If they do so, they will lose the potential death benefit and the policy will cease to exist, but it’s a good option to have if you ever find yourself in dire need of funds.

Myth 4: Insurers Find an Excuse Not to Pay

There was a time when pretty much all life insurance policies were reviewed upon the policyholder’s death. Thankfully, this changed with the introduction of a contestability period, which begins at the start of the policy and typically runs for up to 2 years.

If anything happens during this time, the policy can and will be reviewed and if any suspicions are raised, it will be contested. However, if this period passes, there is little the insurer can do. More importantly, if the policyholder was honest during the application process and the type of death is covered, the payout will be made.

The truth is that the vast majority of policies do not payout, but this is because the policies expire, the cash value is accepted, or the policyholder outlives the term. For policies that actually result in a death, the majority do payout. 

And why wouldn’t they? A life insurance company can expect to turn a profit via the underwriting process. It doesn’t need to use underhanded tactics or rob your loved ones of a payout to stay in the black.

Myth 5: My Dependents Will Survive Without Me

According to LIMRA, a research organization devoted to the insurance and financial sector, most Americans either have no coverage or not enough coverage. In both cases, they may assume their families will survive without a payout or that a small payout will be enough. There is some logic to this belief as it often comes after they perform a quick calculation, but that calculation is flawed.

Let’s imagine, for instance, that you’re a 35-year man with two children aged 5 and 7 and a 35-year-old wife. You earn $40,000 a year and your wife earns the same. You have a $150,000 house and a $100,000 mortgage.

After doing some quick calculations, you may assume that your wife’s salary will be enough to keep her going and ensure your children are looked after until they are old enough to care for themselves. You don’t have any debt to worry about and the only issue is the house, so you settle on a relatively small death benefit of $100,000.

But you’re making a lot of potentially dangerous assumptions here. Firstly, anything could happen between now and your death. On the one hand, you could comfortably pay off the mortgage, but on the other hand, inflation could rise to a point where $100,000 is a fraction of what it once was, and debts could accumulate. 

Your wife could also lose her job, and if that doesn’t happen when you’re alive and can get more cover, it might happen when you die, and she’s so overcome by grief and the stress of raising two children that she’s forced to give it up.

And then you have to think about your children. What if they want a college education? Can your wife afford that on her own? And what about your funeral or your children’s weddings? What happens if one of them falls ill and incurs huge medical expenses? 

$100,000 is a lot of money to receive as a lump sum, and if you only think in terms of lump sums you may never escape that mindset. But it’s not a single sum designed to be spent freely and enjoyed. It’s a sum designed to last your loved ones for many years and to ensure they are covered for most worst-case scenarios.

By the same token, you shouldn’t assume that your loved ones will survive without you just because you’re not the breadwinner or you have paid off your mortgage. Things can turn ugly very quickly. It only takes a few unexpected bills for things to go south, at which point that house could fall victim to an equity loan, a second mortgage, and eventually be owned by the bank when your loved ones fall behind.

Myth 6: Premiums are Tax Deductible

The premiums of an individual policy are not tax-deductible. However, there are exceptions if the individual is self-employed and using the coverage for asset protection. It’s also worth noting that the death benefit is completely tax free.

Myth 7: You Can’t Get Insurance Above a Certain Age

The older you are, the harder it is to get the financial protection that life insurance can provide. But it’s not impossible, just a little bit more expensive. Your insurance needs increase as you get older and life insurance companies have recognized this. They provide short-term policies specifically tailored to seniors. 

Known as Seniors Life Insurance or Final Expense Insurance, these policies provide a low lump sum payout, often less than $50,000, that can be used to pay for a funeral or to clear debts. You can even pay it directly to the funeral home and arrange your own funeral. 

You may also still qualify for a term life insurance policy. Of course, traditional whole life insurance policies are out of the question, and if you have a health condition you may be refused even a short term policy, but don’t give up before you do your research and check your options. 

This is something that most insurance agents will be happy to help you with.

Myth 8: Young People Don’t Need Life Insurance

Life insurance provides you with peace of mind. It aims to provide cover during a difficult time and ensures that your loved ones have financial support when dealing with your death. If you have dependents, then it doesn’t really matter how old you are. It’s true that you will probably outlive the term if you are young and healthy, but no one knows what’s around the corner.

Death is a certainty; the only question is when, not if. By not purchasing life insurance when you have dependents, you’re rolling the dice and placing their future at risk.

The younger you are, the cheaper the premiums will be and the less of an impact they will have on your finances. What’s more, you can also opt for whole life insurance, locking a rate in early and avoiding the inevitable regrets when you’re 60, don’t have any cover and are being quoted astronomical premiums.

Myth 9: You Won’t Qualify if you are in Bad Health

If you have been diagnosed with a terminal disease, it’s unlikely that any insurer would cover you. However, if you have survived a serious disease or have a pre-existing medical condition, you may still qualify.

It’s all about risk, and if the insurer determines you’re more likely to survive the term than not, they will offer you a policy based on those probabilities. The less healthy they consider you to be, the more premiums you will pay and the lower your death benefit will be. But you can still get a worthwhile policy and it might be a lot cheaper than you think.

Myth 10: If You Have Money, You Don’t Need Insurance

If you have assets to leave your heirs, a life insurance policy is not as important as it might be for a stay at home parent or a low-income couple. However, it still has its uses. 

For instance, many high-income households have a lot of debt, and while the assets can typically cover this debt, it will eat into the estate. There are also estate taxes and legal fees to consider, all of which can significantly reduce the value of the estate.

In this case, a short term policy can provide some additional coverage and ensure that those extra costs are covered.

Myth 11: The Money is Lost if there are no Beneficiaries

If you die with no beneficiaries, the money will likely go to your estate, at which point the probate process will begin. If you have a will, this process will be relatively quick and painless, and your designated heirs will get what they are owed. 

If not, things could get messy and the process will be slow. What’s more, if you have any debts, your creditors will take what they are owed from your estate, including your death benefit.

Adding a beneficiary will prevent all of this, but don’t expect the insurer to contact your beneficiary and let them know. They expect the beneficiary to come to them. It’s important, therefore, to assign at least one (and preferably more) beneficiary and to make sure they know of the existence of the policy.

Summary: Life Insurance Myths Debunked

Now that we’ve debunked the myths concerning life insurance, it’s time for you to get out there and get the cover you need. The type of life insurance you need, and the amount of death benefit you will receive, all depends on your personal circumstances and health. 

This is a subject we have discussed at length here at PocketYourDollars.com, so check out our other guides on the subject.

Life Insurance Myths Debunked is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

ByCurtis Watts

The True Cost of Car Ownership – The Best Interest

New, used, leasing. Insurance, depreciation, repairs. A fantastic breakdown to explain every aspect of the cost of car ownership.

Source: bestinterest.blog