Tag Archive Save Money

ByCurtis Watts

How to Copy Warren Buffet’s Biggest Investment of 2020

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Warren Buffett is notoriously a good investor. Sure, he’s made some mistakes along the way (who hasn’t?), but whatever move he makes, you can bet he’s thought it through, and it will pay off — big time.

Which is why when Mr. Buffett made his biggest stock purchase of the year into Apple, we thought, “Isn’t it too late to do that?” Apple is already trading at the highest price it ever has. It feels out of reach for us non-billionaires.

But it turns out, that’s not the case. While we don’t have the ability to own $111 billion (yes, billion with a B) in AAPL shares, we can still get our hands on some — and reap the rewards as the market goes up.

One of our favorite ways to get into the stock market and be a part of infamous big-tech returns, without risking billions is through a free app called Stash.

It lets you be a part of something that’s normally exclusive to the richest of the rich — on Stash you can buy pieces of other companies — including Buffett’s choices — for as little as $1.

That’s right — you can invest in pieces of well-known companies, such as Amazon, Google, Apple and more for as little as $1. The best part? If these companies profit, so can you. Some companies even send you a check every quarter for your share of the profits, called dividends.1

It takes two minutes to sign up, and it’s totally secure. With Stash, all your investments are protected by the Securities Investor Protection Corporation (SIPC) — that’s industry talk for, “Your money’s safe.”2

Plus, when you use the link above, Stash will give you a $5 sign-up bonus once you deposit $5 into your account.*

Kari Faber is a staff writer at The Penny Hoarder.

1Not all stocks pay out dividends, and there is no guarantee that dividends will be paid each year.

2To note, SIPC coverage does not insure against the potential loss of market value.

For Securities priced over $1,000, purchase of fractional shares starts at $0.05.

*Offer is subject to Promotion Terms and Conditions. To be eligible to participate in this Promotion and receive the bonus, you must successfully open an individual brokerage account in good standing, link a funding account to your Invest account AND deposit $5.00 into your Invest account.

The Penny Hoarder is a Paid Affiliate/partner of Stash. 

Investment advisory services offered by Stash Investments LLC, an SEC registered investment adviser. This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Investing involves risk. 

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

4 Inexpensive East Coast Destinations to Travel to With Your Family

It’s amazing how things change when you have kids. Before kids, weekend getaways and trips were fairly easy. When we needed to take a break, I remember we could look at the calendar and twenty minutes later, have a few dates to run by work for time off.  Even the destinations would already be top of mind and after looking for deals on travel sites and asking around, we’d settle with whatever had the best price. Pretty easy.

Fast forward a few years and now we’re parents of an eight-year-old and a four-year-old.  

Those first few years with our little ones were honestly rough. We’re trying to coordinate between two jobs and one school schedule. It was tough finding the perfect time to take a week or so off. Once we had our dates, we’d then have to make sure that we could find a deal. Thankfully, we’ve gotten a little bit wiser. We found our footing and came up with our little system for timing our vacations and snagging some good savings. We’ve also found some spots that allow us to unwind without breaking the budget.  

Affordable Family Vacations to Take This Fall 

While school is back in season, that doesn’t mean you have to write off the rest of the year.  You still have time to take one last getaway to recharge your battery, have some fun, and connect as a family.  

To make things easy for you, I want to share a few of our favorite spots that both we and the kids enjoyed. The cherry on top? They’re also affordable spots!  

Daytona Beach, Florida 

If you’re looking to escape and have some beach time, then Florida is the way to go. However, staying in Orlando is not on the list if you’re looking for a chance to relax and actually save money. Instead, soak up some beach time before the weather gets too cold and hang out for a bit in Daytona Beach.  

When we did our trip last October in Florida, it couldn’t have been more perfect. The weather was still warm, the large crowds of tourists were gone (along with the overpriced hotels), and there were plenty of things to do around.  

Racing fans can enjoy the Daytona International Speedway or if you’re in the mood for stars, you can head over to MOA’s planetarium.  And if your kids really want to visit the Magic Kingdom or Universal Studios, you can make it a more affordable day trip rather than blow your budget by spending your whole time there.  We once went to Universal right after Thanksgiving and were able to skip waiting in line because it was so quiet.  

Charleston, South Carolina 

We took trips to Charleston for the last few Decembers and I have to say, we’ve enjoyed every one. While the temperatures have cooled down a bit, making beach time minimal, we still managed to be out and about. Throw on a jacket, wear your fall layers, and you’re all set to hit the town and enjoy some history and food.  

You have to visit The Tavern at Rainbow Row. Besides being the oldest liquor store in the country, the vibe there is incredible. It’s small, but the selection is wide. Want to have an incredible lunch that’s still cheap? Try out The Blind Tiger. The truffle duck, bourbon bread pudding, buffalo cheese curds are delicious.  

Asheville, North Carolina 

One of our favorite low-key trips we’ve taken was a camping adventure with some friends just outside of Asheville. Being able to see the mountains shift into autumn colors was incredible. If you’re a photographer or love being outdoors, you have to take a trip here. It’s so peaceful and the views are amazing. For the parents, Asheville is the hot spot for fantastic food and a wide array of awesome breweries.   

After spending your days enjoying the parks and maybe getting some tubing in, treat yourself and the kids to Double D’s Coffee and Dessert. It’s a cool double-decker bus in the city that’s also nearby Wicked Weed brewery.  

Tuxedo, New York 

If you absolutely love New York City but also relish some peace and relaxation that a more rural spot gives, then you should check out some of the small towns upstate.   

I may be a little biased since I lived here for a few years, but fall is pretty much the best time to visit. You can truly have the best of both worlds with renting a spot in a town just outside the city.  The Metro-North Railroad means you can take a train to New York City, allowing you to enjoy a scenic ride and skip put on the nightmare of driving in Manhattan.  

Have your day trips to shop, visit the museums, and explore some of the best restaurants. You can then head back to your affordable getaway spot and enjoy some of the local events including celebrating autumn with exquisite apple cider.  

Saving Up for Family Trips 

While you hunt for the deals, you can start now saving up for your trip. You can create a vacation fund as separate savings to keep you motivated.  

Using a tool like Mint makes it easy to track your progress and help you find ways to trim your budget a smidge so you have more money for fun during your trip. Knowing our money leaks allowed us to try some fun monthly challenges to sock away an extra couple hundred dollars.  Keep your vacations debt-free also means there’s less stress as you don’t have to worry about a bill afterward. Double win in my book!  

If you’re looking for tips, please check out my post on how to shift gears and become a savvy saver.  It’s much easier than you think and you’ll be surprised at what you can accomplish in one month.  

Your Take on Family Getaways 

Wherever you go, I hope you have a wonderful time together. Now that you know my favorites, I’d love to hear about your spots.  What have been some of your best vacations together?  

 

 

 

The post 4 Inexpensive East Coast Destinations to Travel to With Your Family appeared first on MintLife Blog.

Source: mint.intuit.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

401k Early Withdrawal: What to Know Before You Cash Out

When it comes to making a 401k early withdrawal, there are a number of reasons why it might be tempting. With millions still unemployed due to the pandemic, unexpected expenses are taking a particularly hard toll. One reason why early withdrawal isn’t uncommon in the U.S. might be because it’s easy to assume you’ll have time to rebuild your 401k nest egg.

However, is the benefit of withdrawing your retirement savings early truly worth the cost? For many people, their 401k is their primary method of investing in their financial future. Before making a decision about early withdrawal, it’s important to consider the penalties and fees that could impact you. Read on to learn exactly what happens when you decide to dip into your 401k so you won’t be surprised by the repercussions.

How Much Are You Penalized for a 401k Early Withdrawal?

On the surface, withdrawing funds from your 401k might not seem like a bad option under extenuating circumstances, but you could face penalties. Young adults are especially prone to early withdrawals because they figure they have plenty of time to replace lost funds.

 

401k early withdrawal penalties

 

If you’re not experiencing a significant hardship, 401k early withdrawal probably isn’t the right choice for you. Ultimately, you could lose a substantial portion of your retirement savings if you choose to withdraw your 401k early to use the money to make other risky financial moves. Below, let’s delve further into the penalties that usually apply when you withdraw early.

1) Your Taxes Are Withheld

When you prematurely withdraw from your retirement account, your first consideration should be that you’ll have to pay normal income taxes on that money first. This means you’re losing at least roughly 30 percent of your savings to federal and state taxes before additional penalties.

Even if you only have $10,000 you want to withdraw, consider that you’re automatically giving $3,000 of your cash to the government. In the best case scenario, you might receive some money back in the form of a tax refund if your withholding exceeds your actual tax liability.

2) You Are Penalized by the IRS

If you withdraw money from your 401k before you’re 59 ½ , the IRS penalizes you with an extra 10 percent on those funds when you file your tax return. If we use the example above, an additional $1,000 would be taken by the government from your $10,000 — leaving you with just $6,000. If you’re 55 or older, you could try to get this penalty lifted by the IRS through the Rule of 55, which is designed for people retiring early.

Also, there are exceptions under the CARES Act, which is designed to help people affected by the pandemic. There are provisions under the act that state individuals under the age of 59 ½ can take up to $100,000 in Coronavirus-related early distributions from their retirement plans without facing the 10 percent early withdrawal penalty under certain conditions.

3) You Lose Thousands in Potential Growth

Even if you’re not deterred by tax penalties, think twice before you sabotage your long-term retirement savings goals. When you withdraw money early, you’ll miss out on potential future savings growth because you won’t gain the perks of compound interest. Compounding is the snowball effect resulting from your savings generating more earnings — not only on your principal investment but also on your accrued interest.

Also, if you make a 401k early withdrawal while the market is down, you’re doing yourself a disservice because you’ll be leaving thousands on the table. It’s unlikely you’ll fully recover the lost years of compound interest you would have benefited from. You might need to get creative with a passive income stream to help support you later in life.

 

tips to minimize 401k withdrawal penalties

 

When Does a 401k Early Withdrawal Make Sense?

In certain cases, it actually might be strategic to move forward with 401k early withdrawal. For example, it could be smart to cash out some of your 401k to pay off a loan with a high-interest rate, like 18–20 percent. You might be better off using alternative methods to pay off debt such as acquiring a 401k loan rather than actually withdrawing the money.

Always weigh the cost of interest against tax penalties before making your decision. Some 401k plans do allow for penalty-free early withdrawals due to a layoff, major medical expenses, home-related costs, college tuition, and more. Regardless of your strategy to withdraw with the least penalties, your retirement savings are still taking a significant hit.

401k Early Withdrawal, Hardship, or Loan: What’s the Difference?

Knowing the differences between a 401k early withdrawal, a hardship withdrawal, and a 401k loan is crucial. Due to the many obstacles to make a 401k early withdrawal, you may find you want to keep it untouched. If you’re convinced you still need to use your 401k for financial assistance, consult with a trusted financial advisor to figure out the best option.

When Does This Apply?

Taxes and
Penalties

Early Withdrawal

Your funds are withdrawn to pay off large debts or finance large projects. Your 401k fund is typically subject to taxes and penalties.

Hardship Withdrawal

You’re only eligible for this type of withdrawal under circumstances such as a pandemic or natural disasters. Withdrawals can’t exceed the amount of the need and the funds are still subject to taxes and penalties.

401k Loan

The loan must be paid back to the borrower’s retirement account under the plan. The money isn’t taxed if the loan meets the rules and the repayment schedule is followed.

Additional Considerations

If you’ve left a job and don’t know what to do with your Roth IRA, a 401k transfer is a good option. Most likely, you will save money and have a wider range of investment options when you transfer your funds. 401k fees can be high, and rolling over your funds to a Roth IRA account could be wise in the long run. Also, be aware that the process is more complicated for indirect rollovers. 

In Summary:

  • If you’re one of the millions of Americans who rely on workplace retirement savings, early 401k withdrawal may jeopardize your future financial stability.
  • There are very few instances when cashing out a portion of your 401k is a smart move.
  • In most cases, any kind of early 401k withdrawal is detrimental to your retirement plans.
  • Stick to your budget and bulk up your emergency fund to stay one step ahead.

In short, 401k early withdrawals are usually counterproductive. Prevent compromising your hard-earned savings by using a free budgeting tool that will set you up for success. After all, being prepared and informed are two of the most important parts of maintaining financial health.

Source: SEC

The post 401k Early Withdrawal: What to Know Before You Cash Out appeared first on MintLife Blog.

Source: mint.intuit.com

ByCurtis Watts

How to Fight Back Against the Companies That Ripped You Off in 2020

Some of the companies you’re using right now are totally taking advantage of you. Here are some of the worst offenders — and what you can do to fix it.

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

How to Maximize Credit Card Rewards and Earn Cash and Perks

If you’re looking for ways to put some extra cash in your pocket, make sure to take advantage of credit card rewards programs.

Credit card companies and banks make some of their money from the merchant interchange fees that are charged when you use your card.

As an incentive for you to use their cards, many credit card issuers pass some of those funds on to the consumer in the form of credit card rewards.

If you have good credit and the ability and discipline to pay off your credit cards in full each month, you should try to maximize your credit card rewards. Otherwise you may be leaving a lot of money on the table.

But it can be challenging to navigate the world of credit card rewards. Hundreds, if not thousands, of different credit cards exist, and the type and amount of rewards vary with each card.

There are three main kinds of rewards card offers available:

  • Bank and credit card points: Chase Ultimate Rewards, American Express Membership Rewards, etc.
  • Airline miles and hotel points: Delta SkyMiles, Hilton Honors points, etc.
  • Cash back: Straight cash that can be redeemed either as statement credits or checks mailed to you.

How to Maximize Your Credit Card Rewards

You have three different ways to maximize any credit card rewards program:

  • The sign-up bonus or welcome offer: Many cards offer a large number of miles or points as a welcome bonus for signing up and using the card to make purchases totaling a specific amount within a specified time period.
  • Rewards for spending: Most rewards credit cards offer between one and five points for every dollar you spend on the card. Some cards offer the same rewards on every purchase, while others offer a greater reward for buying certain products.
  • Perks: Simply having certain credit cards can get you perks like free checked bags on certain airlines, hotel elite status or membership with airline lounge clubs and other retail partners.

Usually, the rewards for signing up are much higher than the rewards you get from ongoing spending, so you may want to pursue sign-up bonuses on multiple credit cards as a way of racking up rewards.

Consider a card like the Chase Sapphire Preferred, where you can get 60,000 Ultimate Rewards points for spending $4,000 in the first three months of having the card. That means that while you’re meeting that minimum spending requirement, you’re earning 15 Ultimate Rewards points per dollar. Compare that to the one or two points you’ll earn with each dollar of spending after meeting the minimum spending. You can see the difference.

Other than getting the welcome bonus offers for signing up for new credit cards, another great way to maximize your rewards is by paying attention to bonus categories on your cards. Some cards offer a flat 1 or 2 points for every dollar you spend.

How Applying for Credit Cards Affects Your Credit Score

It’s important to be aware of how applying for new credit cards affects your credit score.

Your credit score consists of five factors, and one of the largest factors is your credit utilization.

Credit utilization is the percentage of your total available credit that you’re currently using. If you have one credit card with a $10,000 credit limit and you charge $2,000 to that card, then your utilization percentage is 20%. But if you have 10 different cards, each with $10,000 credit limits, then that your credit utilization percentage is only 2%.

Since a lower credit utilization is better, having multiple credit cards can actually help this part of your credit score.

New credit — how recently you’ve applied for new credit cards — accounts for about 10% of your credit score. When you apply for a new credit card, your credit score usually will dip 3-5 points. However, if you’re conscientious with your credit card usage, your score will come back up in a few months.

What to Watch Out for When Using Credit Card Rewards

While it’s true that careful use of credit cards can be a boon, you should watch out for pitfalls.

The first thing is to make sure that you have the financial ability, discipline and organization to manage all of your credit cards. Missing payments and paying credit card interest and fees will quickly sap up any rewards you might earn.

Another thing to be aware of is the psychology of credit card rewards. It can be easy to justify additional spending because you’re getting rewards or cash back, but remember that buying something that you don’t need in order to get 2% cash back is a waste of 98% of your money.

Pro Tip

Credit card rewards are alluring, but what do they really cost? Here’s what you should know about the dark side of credit card rewards.

The Best Credit Cards to Get Started

Before signing up for a new credit card, it’s best to pay off your existing cards first — otherwise the fees and interest will quickly outweigh any rewards you earn.

If you’re ready to start shopping rewards offers, here are five credit cards to consider. Note that these introductory offers are subject to change:

  • Chase Sapphire Preferred – The Sapphire Preferred card earns valuable Chase Ultimate Rewards and currently offers 60,000 Ultimate Rewards if you spend $4,000 in the first three months. It comes with a $95 annual fee.
  • Capital One Venture Rewards – The Capital One Venture Rewards is offering 100,000 Venture miles, which can be used on any airline or at any hotel. It also comes with a $95 annual fee.
  • Barclays American AAdvantage Aviator Red – With the AAdvantage Aviator Red card, you’ll get 50,000 American Airlines miles after paying the $99 annual fee and making only one purchase.
  • American Express Hilton Honors – If you’re looking for a hotel card, consider the no-fee Hilton Honors card, which comes with a signup bonus of 80,000 Hilton Honors points after spending $1,000 in three months. There is no annual fee.
  • Bank of America Premium Rewards – The Bank of America Premium Rewards card comes with a bonus of 50,000 Preferred Rewards points (worth $500) after spending $3,000 in the first three months. The card has a $95 annual fee.
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The Bottom Line

The best credit card is the one that gets you the rewards that help you do what is most important to you.

If you’re looking to maximize travel credit, then pick an upcoming trip and figure out what airline miles and hotel chain points you’ll need. Then pick the credit cards that give those miles and points. If you want to maximize your cash back, look for a card with a good signup bonus that either offers cash back or bank points that can be converted into cash.

Dan Miller is a contributor to The Penny Hoarder.

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

Dear Penny: How Do I Save for Retirement on a Teacher’s Salary?

Dear Penny,

I’m 51 years old and don’t have a large nest egg. I’m a single parent with three kids. I’m a second career middle school teacher, so there is not a lot of money left over each month. 

How much money should I be saving to be able to retire in my 70s? Where should I invest that money?

-B.

Dear B.,

You still have 20 years to build your nest egg if all goes as planned. Sure, you’ve missed out on the extra years of compounding you’d have gotten had you accumulated substantial savings in your 20s and 30s. But that’s not uncommon. I’ve gotten plenty of letters from people in their 50s or 60s with nothing saved who are asking how they can retire next year.

I like that you’re already planning to work longer to make up for a late start. But here’s my nagging concern: What if you can’t work into your 70s?

The unfortunate reality is that a lot of workers are forced to retire early for a host of reasons. They lose their jobs, or they have to stop for health reasons or to care for a family member. So it’s essential to have a Plan B should you need to leave the workforce earlier than you’d hoped.

Retirement planning naturally comes with a ton of uncertainty. But since I don’t know what you earn, whether you have debt or how much you have saved, I’m going to have to respond to your question about how much to save with the vague and unsatisfying answer of: “As much as you can.”

Perhaps I can be more helpful if we work backward here. Instead of talking about how much you need to save, let’s talk about how much you need to retire. You can set savings goals from there.

The standard advice is that you need to replace about 70% to 80% of your pre-retirement income. Of course, if you can retire without a mortgage or any other debt, you could err on the lower side — perhaps even less.

For the average worker, Social Security benefits will replace about 40% of income. If you’re able to work for another two decades and get your maximum benefit at age 70, you can probably count on your benefit replacing substantially more. Your benefit will be up to 76% higher if you can delay until you’re 70 instead of claiming as early as possible at 62. That can make an enormous difference when you’re lacking in savings.

But since a Plan B is essential here, let’s only assume that your Social Security benefits will provide 40%. So you need at least enough savings to cover 30%.

If you have a retirement plan through your job with an employer match, getting that full contribution is your No. 1 goal. Once you’ve done that, try to max out your Roth IRA contribution. Since you’re over 50, you can contribute $7,000 in 2021, but for people younger than 50, the limit is $6,000.

If you maxed out your contributions under the current limits by investing $583 a month and earn 7% returns, you’d have $185,000 after 15 years. Do that for 20 years and you’d have a little more than $300,000. The benefit to saving in a Roth IRA is that the money will be tax-free when you retire.

The traditional rule of thumb is that you want to limit your retirement withdrawals to 4% each year to avoid outliving your savings. But that rule assumes you’ll be retired for 30 years. Of course, the longer you work and avoid tapping into your savings, the more you can withdraw later on.

Choosing what to invest in doesn’t need to be complicated. If you open an IRA through a major brokerage, they can use algorithms to automatically invest your money based on your age and when you want to retire.

By now you’re probably asking: How am I supposed to do all that as a single mom with a teacher’s salary? It pains me to say this, but yours may be a situation where even the most extreme budgeting isn’t enough to make your paycheck stretch as far as it needs to go. You may need to look at ways to earn additional income. Could you use the summertime or at least one weekend day each week to make extra money? Some teachers earn extra money by doing online tutoring or teaching English as a second language virtually, for example.

I hate even suggesting that. Anyone who teaches middle school truly deserves their time off. But unfortunately, I can’t change the fact that we underpay teachers. I want a solution for you that doesn’t involve working forever. That may mean you have to work more now.

Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com.

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

Should I Refinance My Mortgage? When to Refinance

The Federal Reserve recently lowered interest rates in an effort to stimulate the economy during the coronavirus pandemic. As a result, more and more people are becoming interested in refinancing their mortgage. Depending on the situation, refinancing your mortgage can prove to be a savvy financial decision that can save you massive amounts of money in the long-term. But is it right for you? 

If you’re curious about refinancing your mortgage, this article should answer many of your questions, including: 

  1. How Does Refinancing Work?
  2. When Should I Refinance My Mortgage? 
  3. What is the Downside of Refinancing My Home? 
  4. How Do I Calculate if I Should Refinance My Mortgage? 
  5. What are My Refinancing Options? 

How Does Refinancing Work? 

“Refinancing your mortgage allows you to pay off your existing mortgage and take out a new mortgage on new terms,” according to usa.gov. So when you refinance your mortgage, you’re essentially trading in your old mortgage for a new one. The new loan that you take out pays off the remainder of the original mortgage and takes its place. That means the terms of the old mortgage no longer apply, and you’re instead bound by the terms of the new one. 

There are many reasons why homeowners choose to refinance their mortgage. They may want to secure a loan with a lower interest rate, switch from an adjustable rate mortgage (ARM) to a fixed-rate, shorten or lengthen their repayment term, change mortgage companies, or come up with some cash in order to pay off debts or deal with miscellaneous expenses. As you can see, there are a vast number of reasons why someone might be interested in refinancing. 

There are also a couple of different ways to go about refinancing. A standard rate-and-term refinance is the most common way to do it. With this method, you simply adjust the interest rate you’re paying and the terms of your mortgage so that they become more beneficial to you. 

However, you could also do a cash out refinance, where you pull equity out of your home and receive it in the form of a cash payment, or take out a new loan that’s greater than the remaining debt on the original mortgage. Even though you’ll get an influx of cash in the short-term, a cash out refinance can be a risky option because it increases your debt and it’ll likely cost you in interest payments in the long-term.


When Should I Refinance My Mortgage?

Maybe you’ve been wondering, “Should I refinance my mortgage?” If you can save money, pay off your mortgage faster, and build equity in your home by doing so, then the answer is yes. Whether you can achieve this is dependent on a variety of things. Take a look at these refinance tips in order to get a better idea of when you should refinance your mortgage. 

Capitalize on Low Interest Rates 

When mortgage rates go down, a lot of people consider refinancing their mortgage in order to take advantage of that new lower rate. And this makes perfect sense—by paying a lower interest rate on your mortgage, you could end up saving thousands of dollars over time. But when it comes to refinancing your mortgage, there are a number of other factors you should consider as well. 

Regarding interest rates, you should take a look at how steeply they drop before making any refinancing decisions. It might be a good idea to refinance your mortgage if you can lower your interest rate by at least 2 percent. It ultimately depends on the amount of your mortgage, but anything less than that amount likely won’t be worth it in the long run. 

Switch to Fixed-Rate Mortgage

It’s also very common for people to refinance in order to get out of an adjustable rate mortgage and instead convert to a fixed-rate. An adjustable rate mortgage usually starts off with a lower interest rate than a fixed-rate, but that rate eventually changes and it can end up costing you. That’s because the interest rate on an adjustable rate mortgage changes over time based on an index of interest rates. It can alter based on the mortgage market, the LIBOR market index, and the federal funds rate. 

By converting to a fixed-rate mortgage—where the interest rate is set when you initially take out the loan—before the low rates on your adjustable rate mortgage increase, you can minimize the amount you have to pay in interest. If you’re able to lock in a low fixed interest rate, you’ll be less susceptible to market volatility and more capable of devising a long-term payment strategy.   

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When debating the question of “Should I refinance my mortgage or not?”, you should also keep in mind what lenders will look at when determining the terms of your loan. In order to come up with an interest rate and approve you for a refinancing loan, lenders will take the following factors into consideration: 

  • Payment history on your original mortgage: Before issuing a refinancing loan, lenders will review the payment history on your initial mortgage to make sure that you made payments on time. 
  • Credit score: With good credit, you’ll have more flexibility and options when refinancing. A high credit score will allow you to take out loans with more favorable terms at a lower interest rate. 
  • Income: Lenders will want to see that you generate a steady, reliable income that can comfortably cover the monthly mortgage payments.  
  • Equity: Home equity is the loan-to-value ratio of a borrower. You can calculate it by dividing the amount owed on the current mortgage loan by the home’s current value. Before you consider refinancing, you should ideally have at least 20% equity in your home. If your equity is under 20% but your credit is good, you still may be able to secure a loan, but you’ll likely be charged a higher interest rate or have to pay for mortgage insurance, which is not ideal.

What is the Downside of Refinancing My Home? 

Refinancing a mortgage isn’t for everyone. If you don’t take the time to do your research, calculate savings, and weigh the benefits versus the potential risks, you could end up spending more money on refinancing than you would have had you stuck with the original loan. 

When refinancing, you run the risk of placing yourself in a precarious financial position. This is especially true when it comes to a cash out refinance, as this can put you on the hook for even more money and bury you in interest payments. 

Don’t refinance your home and pull out equity just to get quick cash, make luxury purchases, and buy things you don’t need—doing this is an easy way to dig yourself into a deep financial hole. In reality, you should only refinance your mortgage if you know that you can save money doing it. 

How Do I Calculate if I Should Refinance My Mortgage? 

Before you refinance your mortgage, it’s crucial to crunch the numbers and determine whether it’s worth it in the long-run. To do this, you’ll first have to consider how much refinancing actually costs. 

Consider Closing Costs

So how much does it cost to refinance? One of the most significant expenses to take into account when refinancing is the closing costs. All refinancing loans come with closing costs, which depend on the lender and the amount of your loan, but average around three to six percent of the principal amount of the loan. So, for example, if you took out a loan of $200,000, you would end up paying another $8,000 if closing costs were set at 4%. 

These closing costs are most often paid upfront, but in some cases lenders will permit you to make the closing costs part of the principal amount, thus incorporating them into the new loan. While closing costs generally don’t cover property taxes, homeowner’s insurance, and mortgage insurance, they do tend to include the following: 

  • Refinance application fee
  • Credit fees 
  • Home appraisal and inspection fees 
  • Points fee
  • Escrow and title fees 
  • Lender fee

Determine Your Break-Even Point

To make an informed decision as to whether refinancing your mortgage is a sound financial decision, you should calculate how long it will take for the refinancing to pay for itself. In other words, you’ll want to determine your break-even point. To calculate your break-even point, divide the total closing costs by the amount you’ll save on a monthly basis as a result of your refinance loan. 

The basic equation for figuring out your break-even point is as follows: [Closing Costs] / [Monthly Savings] = [# of Months to Break Even] 

Taking this into consideration, you can see how the length of time you plan on staying in a home can make a big difference as to whether or not refinancing your mortgage is the right option for you. If you’re thinking of moving away and selling your house in a few years, then refinancing your mortgage is probably not the right move. You likely won’t save enough in those few years to cover the additional costs of refinancing. 

However, if you plan on remaining at the house you’re in for a long stretch of time, then refinancing could potentially save you a lot of money. To make an informed decision, you have to do the math yourself—or, to make the calculations even simpler, use Mint’s online loan repayment calculator. 

What are My Refinancing Options? 

As stated above, you have options when it comes to refinancing loans. You could refinance your mortgage in order to secure a lower interest fee and a change in the terms of your loan; or you might opt for a cash out refinance that lets you turn your home’s equity into extra income that you can use to pay for home improvement, tuition costs, high-interest debt payments, and more. 

In order to actually start refinancing your home, you’ll have to find a lender and fill out a loan application. Shop around at large and small banks alike to see who will offer you the lowest interest rates and the best terms. How long does a refinance take? The timeline depends on a few things, including the lender you borrow from and your own financial situation. But, in general, it takes an average of 45 days to refinance a mortgage. 

You might also consider forgoing the traditional banks and dealing with an online non-banking company instead. Alternative lenders often offer greater flexibility in terms of who qualifies for a loan and they can, in some cases, expedite the refinancing process. For example, Freddie Mac is a government-sponsored mortgage loan company that, in addition to offering no cash out and cash out refinancing, has a third option available for borrowers whose loan-to-value ratio is too high to qualify for the traditional refinancing routes. Learn more by visiting freddiemac.com. 

When tackling any big financial decision, it’s important that you’re informed and organized. Learn the facts, do the calculations, and research your options before beginning the refinancing process to make sure it’s the right choice for you. 

The post Should I Refinance My Mortgage? When to Refinance appeared first on MintLife Blog.

Source: mint.intuit.com