Don’t Let Holiday Shopping Sink Your Credit Score

When you’re holiday shopping, your credit score is probably the last thing on your mind. But seemingly unimportant decisions about which cards to use and whether to apply for new credit can affect your credit score come January.

The biggest holiday threats to your credit come from:

  • Increasing your credit utilization, or the percentage of your credit limit you are using.
  • Missing a bill payment, which creates a negative mark on your credit reports.
  • Having too many credit applications, because they trigger “hard inquiries” on your credit reports, which can ding your credit score.

But if you know how to keep credit healthy, you can avoid or minimize the damage.

Be strategic with credit utilization

Credit utilization simply means how much of your available credit you’re using. It’s calculated both per card and overall. If you charge more than usual on your credit card or cards, your utilization can go up. Using more than 30% of the limit on any card can lower your score.

Credit expert John Ulzheimer says he advises people who want to protect their credit score to put holiday shopping on the card with the most available credit.

You may need to spread spending around to stay below 30% of your limits, but be aware that having multiple cards with balances can hurt your credit scores. Can Arkali, senior director at FICO, explains it this way: “A larger number of accounts with amounts owed can indicate higher risk of over-extension.” Credit scores are simply an estimate of how creditworthy you are, so anything signaling higher risk usually leads to a lower score.

What to do: Pay down credit card balances as soon as you can, and preferably get in the habit of paying them off every month. If your utilization does go up temporarily, know that the hit to your score will disappear as soon as a new, lower balance is reported to the credit bureaus.

Avoid missing payments

It’s easy to overlook bills in the crush of email and postal mail that arrives during the holidays. But paying a bill 30 days late can drop your credit score 100 points or more — and the damage doesn’t disappear quickly. It typically stays on your credit report for seven years, although the effect on your score fades over time.

What to do: Set up alerts for every credit card you have. “I have alerts set on all of my credit card accounts so I’m constantly being notified of charges, statements, due dates, etc.,” Ulzheimer says. “Leverage the tech.”

Beware of too many credit applications

Many retailers, both online and in physical stores, market credit cards as you check out. You may be offered a discount on your purchases, free shipping or some other perk in exchange for a successful credit application. But applying triggers a “hard inquiry” on your credit, and each inquiry can shave a few points off your score — possibly more if you have a limited credit history.

While there’s nothing wrong with applying for a card you want, doing so on impulse is often a mistake. “You’re using your credit report as a 10% off coupon,” Ulzheimer says.

It’s especially worrisome if you plan to shop for a mortgage soon. “If you’re going to apply for anything meaningful in the next 12 months, it’s a bad idea, because you have no idea what the new account — or accounts, if you open several — is going to do to your credit scores,” he says.

What to do: Be aware that credit applications can ding your score, and multiple credit applications can leave a pretty big dent. It’s smart to wait about six months between applications.

If you already opened a new card and regret it, Ulzheimer says you might as well activate it. The hard inquiry already happened and will stay on your credit report for two years, although its impact will fade much sooner than that. Meanwhile, you benefit from the additional credit limit, which helps your overall credit utilization level.

The article Don’t Let Holiday Shopping Sink Your Credit Score originally appeared on NerdWallet.

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A New Set of Shopping Tips in the Pandemic

Prior to March, shoppers would go to the mall or grocery store — without masks — and scout out the latest sales.

Now, shopping looks much different.

“The way consumers approach shopping has understandably changed as a result of COVID-19,” said Katherine Cullen, senior director for industry and consumer insights at the National Retail Federation, in an email.

“With stay-at-home orders and mandatory store closures, many consumers have utilized digital channels and tools in ways they may not have before.”

As how we shop changes (think mobile shopping and buying online, picking up in store), we have to adapt as shoppers, too.

The best prices and first available inventory go to consumers who are more than just shoppers. They’re also deal-hunting detectives and strategists.

Here’s how to shop smart in the midst of the pandemic.

Put on your detective hat

While some in-demand products, such as hand sanitizer and toilet paper, have become easier to find after initial shortages at the onset of stay-at-home orders, items like disinfecting wipes still aren’t readily available.

To get a shot at any popular products, sign up for in-stock alerts, recommends Saoud Khalifah, CEO of Fakespot, an artificial intelligence platform that analyzes e-commerce transactions and online reviews.

If an item isn’t available, retailers typically offer a field to input your email address. You’ll get notified when the item is restocked and can jump on it right away.

Expand your search, too, advises Charles Lindsey, associate professor of marketing at the University at Buffalo School of Management in New York. He says the first wipes he was able to score were off the beaten path, not at a chain store.

“Diversify your consideration set in terms of the stores where you shop,” he says. That may mean going to mom-and-pop shops or pharmacies instead of grocery stores.

And consult with others. Lindsey says social media networks can provide localized information. Check online sources such as Nextdoor or Facebook to see if any of your neighbors have posted about seeing delivery trucks outside of the warehouse club on a specific day of the week or restocked shelves at a certain time of the day.

Avoid extra fees

It’s also important to avoid overpaying for items, especially as many former in-store shoppers face added expenses, like delivery fees and shipping costs.

If you’re shopping for groceries, avoid delivery to save money, Lindsey advises. Opting for contactless curbside pickup will circumvent some of the fees and tips associated with home deliveries, while still eliminating your time in a physical store.

And there’s no need to overly stockpile, says Andrew Ching, a professor in the Carey Business School at Johns Hopkins University.

At the onset of the pandemic, many consumers panic shopped, buying as much as possible of essential household items. But inventory will come back, so try to stay calm.

Do plenty of research

You can also learn a thing or two from extreme couponers. These bargain hunters are famous for their thorough research of sales, deals and coupons.

If you’re shopping at online marketplaces like Amazon, compare prices among sellers, Khalifah recommends. Even if you find a low price, take it a step further to compare prices on other sites, such as Walmart and eBay. Online shopping tools and browser extensions, including one from Fakespot, can do this analysis for you.

Lindsey also recommends using deal apps, such as ShopSavvy, and websites that aggregate available offers.

But before you buy anything, try to validate the legitimacy of the listing you found. “When you’re looking at the first page of reviews, that first page is usually not the best page to be looking at,” Khalifah says.

In the age of fake reviews and phony products, you’ll need to scroll through several pages of reviews to get a better sense of the seller and product. Pay close attention.

And if you’re purchasing something for the first time, Khalifah says, watching video reviews is often more valuable than reading written reviews. You’ll be able to see someone actually using a product, as opposed to reading a review that could’ve been written by a computer program, or bot.

Stay the course

As you start implementing these smart shopping habits, don’t forget them anytime soon. Shifts in consumer shopping habits likely won’t be going away, according to Catherine Roster, professor of marketing at the University of New Mexico’s Anderson School of Management.

She says most marketers believe many of these changes will be “sticky.” That means the popularity of online shopping for groceries and low-contact transactions like curbside pickup are sticking around for a while.

This article was written by NerdWallet and was originally published by The Associated Press.




The article A New Set of Shopping Tips in the Pandemic originally appeared on NerdWallet.

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5 Credit Mistakes That Can Haunt You

Some credit mistakes are a lot worse than others. Little ones, like paying a credit card bill a day late, may cost you a penalty fee, but that’s a relatively minor irritation — it’s not going to stand between you and a mortgage. Other seemingly small slip-ups can lead to full-fledged disasters.

What makes a credit mistake haunt you?

Some things can be reversed quickly. Running up credit card bills can tank your credit score, for instance, because the portion of your credit limits you’re using is weighed heavily in credit scoring. But when you pay down the debt, the damage disappears as lower balances get reported to the three major credit bureaus, Equifax, Experian and TransUnion.

Mistakes that have long-running ripple effects hurt the most, says credit expert John Ulzheimer. A late payment, for example, can get sent to a collection agency, then perhaps grow into a repossession or bankruptcy. Those batter your credit and stay on your credit record for years. Likewise, co-signing a loan for someone who is later unable to pay can hamstring your finances for a long time.

Common mistakes that can hurt your finances

Missing a payment: A payment that’s a little late might cost you a penalty fee, but your credit score won’t suffer because creditors can’t report your account as delinquent until it’s 30 days past due. If you have a high score, going 30 days late can knock as much as 100 points off your score — and it stays on your credit report for seven years. The damage gets worse if you let the account slide to 60 days past due, 90 days past due or more. Your score can recover, but it will take time. Catching up on that account, and keeping all other payments up to date and balances low, can help.

Raiding retirement funds to pay debt: Most people don’t want to file for bankruptcy. Almost half of Americans say they would not file no matter how much credit card debt they had, according to a recent study commissioned by NerdWallet. Bankruptcy attorney Roderick H. Martin of Marietta, Georgia, says some of his clients have tapped — or even emptied — retirement savings in a desperate attempt to stay afloat. That often just delays the inevitable — “then they turn around and file for bankruptcy,” he says. Retirement savings are typically protected in bankruptcy, but money already withdrawn cannot be recovered.

Co-signing a loan: Aaron Smith, a financial planner in Glen Allen, Virginia, says co-signing so a friend or relative can get credit is often a mistake. “My personal and professional opinion is if they can’t get it on their own, there must be a problem,” he says. If the primary borrower doesn’t pay as agreed, it can leave both your relationship and your credit in tatters. Even if the borrower repays as agreed, remaining on the loan can limit your borrowing capacity. Before you co-sign, ask if you can be taken off the loan at some point.

Sometimes doing nothing is the mistake

We may think we’re too busy to trouble ourselves with fine print or financial chores. Either can come back to bite us.

Not checking your credit: “I think checking your credit is like going to your dentist for a cleaning,” says Elaine King, a certified financial planner and founder of the Family and Money Matters Institute. “You need to make a habit of doing it. If you wait too long, there can be some rotten stuff there.”

A credit report isn’t exciting reading; it’s a summary of your past handling of credit. But “boring” is what you want — anything you didn’t expect to see is worth investigating in case it’s an error or a sign of fraud. Through April 2021, you can get a free credit report weekly from the three major credit bureaus by using AnnualCreditReport.com. Plan to check at least annually, and more often is better.

Ignoring the details: Not knowing your credit cards’ interest rates or when a 0% interest rate ends can cost you.

Knowing interest rates can tell you which card to use when you’re paying for a new transmission and need to carry that balance for a while, for instance. Knowing when a teaser rate ends can help you ensure you’ve paid off the balance by then. It’s important to read the fine print. Some cards — primarily store cards — charge deferred interest if there is still a balance at the end of the introductory period. That means the “savings” from the teaser rate are added to your balance, wiping out any benefit.

This article was written by NerdWallet and was originally published by The Associated Press.



The article 5 Credit Mistakes That Can Haunt You originally appeared on NerdWallet.

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When Debt Relief Does More Harm Than Good

In a crisis, long-term planning may lose out to quick and dirty solutions — regardless of the consequences.

As the pandemic and its economic fallout continues, more cash-strapped consumers could fall into this trap if the Great Recession is any indicator.

A recent report by the Consumer Financial Protection Bureau found that from 2007 through 2010, debt settlements — which can be financially risky — increased. Meanwhile, credit counseling, a debt relief option that keeps consumers in good standing with their creditors, declined.

Before you hit a moment of crisis decision-making, understand how to think through debt relief options.

Why debt settlement isn’t all it’s marketed to be

You’ve probably heard the radio ads or maybe received a robocall promising a solution to your debt that can cut what you owe by 50% or more.

Debt settlement claims are as lofty as the industry’s marketing budget. But these programs aren’t all they’re hyped up to be — and the ads gloss over the downsides.

With debt settlement, you stop making payments to creditors and instead direct your money to the debt settlement company, which holds it in an escrow account. Then, typically after several months, the company contacts your creditors and haggles to cut a deal where the creditor accepts less than originally owed. This period of waiting between when you stop paying creditors and the debt is settled (which isn’t guaranteed) is where things can go awry.

“There’s no free lunch,” says Glenn Downing, a Miami certified financial planner. “There really are some significant trade-offs with debt settlement. I’d try to make it a last resort.”

Debt settlement risks include:

  • Leaving yourself open to lawsuits: When you stop making payments to creditors and debts go delinquent, you can be sued by the original creditor or by a debt collector who purchases the debt. Until the debt is resolved, either through full payment, settlement or bankruptcy, you’re at risk of being sued.
  • Owing a tax bill: The IRS considers any amount of debt settled as taxable income.
  • Saving less than what was advertised: Debt settlement companies often take a fee of around 30% of your original debt balance. So even if you did settle for 50% of what you originally owed, you won’t come out as far ahead as you might expect after you pay the fee to the settlement company. Additionally, your debt can continue to grow when you stop making payments, as late fees and interest are added to your balance.
  • Credit damage: Missing payments and defaulting on your debts are among the worst things you can do to your credit. These marks stay on your credit reports for around seven years and will make you look risky to future creditors, which can result in you not being approved for credit or having to pay higher interest rates.

A better choice for long-term financial health

What if there was a way to roll multiple credit card payments into one, at a lower interest rate — while preserving your good standing with your creditors?

That’s what nonprofit credit counseling agencies offer. These organizations have arrangements with many credit card companies that provide a lower interest rate in exchange for regular monthly payments over three to five years to resolve your debt.

But many consumers aren’t aware of these benefits, according to a 2018 Harris Poll survey commissioned by Money Management International, a nonprofit credit counseling agency. It found that 62% of the 2,012 respondents didn’t know credit counseling can roll multiple credit card debts into one payment. And 73% weren’t aware that credit counseling offers lower interest rates on credit card debt.

There are some drawbacks if you use a credit counseling agency’s debt management plan. You typically need a regular income to qualify, and if you miss a payment, the agreement can be dissolved, leaving you to manage on your own.

But for the long-term health of your credit profile, credit counseling is the clear winner. This debt relief tool generally keeps consumers in good standing with creditors since they’re making good on their obligations. The only harm to their credit profile would come from closing credit accounts, which some agencies require.

To find a reputable nonprofit credit counseling agency, look for one that has been certified by the National Foundation for Credit Counseling or the Financial Counseling Association of America.

Know when a third option might be best

Before choosing debt settlement or credit counseling, consider whether:

  • You’re barely able to make regular debt payments.
  • Your monthly debt payments — excluding student loans and housing costs — exceed 40% of your take-home pay.
  • Your debt burden is interfering with your quality of life, for instance keeping you up at night.

If so, you might want to consider bankruptcy. Although it’s been stigmatized, this debt relief tool can resolve what you owe faster than credit counseling or debt settlement. In addition, credit scores can start to rebound quickly in the months after filing.

This article was written by NerdWallet and was originally published by The Associated Press. 



The article When Debt Relief Does More Harm Than Good originally appeared on NerdWallet.

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How to Get Started If You’ve Never Had a Bank Account

Managing your money without a bank account is doable. But it can pose challenges — and the COVID-19 pandemic has only added more.

Your economic impact payment might’ve arrived weeks or months after others’ did, in the form of a check or prepaid debit card, because you couldn’t choose the faster delivery option of direct deposit into a bank account. And if you’ve gone to the store lately, you may have been asked to pay with a debit or credit card or in exact change due to a nationwide shortage of coins and concerns over germ transmission.

A bank account can make life easier in these situations, among others. To avoid future issues, consider opening one — or try again if you’ve been rejected in the past. Here’s a guide to getting started.

Assess your money needs

If you’re one of the 14 million adults without a bank account in the U.S., you might have a system that works for you. Maybe that includes using alternative products such as prepaid debit cards and check cashing services. Financial counselor Brandy Baxter has worked with clients who used check cashing services for practical reasons.

“They preferred to walk in, walk out with cash in hand,” says Baxter, an accredited financial counselor and financial coach who runs the firm Living Abundantly in the Dallas-Fort Worth area.

Check cashing stores like Check ’n Go and ACE Cash Express may operate for longer hours than banks and have easy approval processes to get cash quickly. But this comes with a steep fee, which can range from 1% to 6%, or more, of the check amount.

Bank accounts can fulfill money needs beyond what prepaid cards and check cashing services can. For example, their fraud protections can limit what you pay if you’re victimized, and many accounts let you lock debit cards remotely when stolen.

And once you’ve begun a relationship with a bank, other doors open: Credit cards, auto or small business loans and cheaper alternatives to payday loans may eventually be within reach.

Checking accounts “don’t just help you save costs; they’re the stepping stones to use other financial products,” says David Rothstein, principal at Cities for Financial Empowerment Fund, who manages BankOn, a national platform that promotes financial inclusion.

Find a bank that fits you

If you find banks intimidating or have had issues getting an account before, community banks and credit unions tend to be more accommodating than national banks and are often mission-driven — for example, focusing on the financial health of their surrounding communities.

“We’re very lenient at giving someone a second chance,” says Pedro Murillo, area branch manager in the San Francisco Bay Area for Self-Help Federal Credit Union. “If an employee comes in to apply for a loan and doesn’t have pay stubs, what else (can they) show us? A letter from (their) employer? We don’t want to give up.”

Like other credit unions, Self-Help requires a person to open a savings account to become a member; the minimum to open an account is typically a few bucks. Then members can apply for other products, like a credit builder loan.

You can search online for the term “CDFI” — which stands for community development financial institution — to find credit unions like Self-Help near you. Many require those who join to be in the same area or state where the credit union or bank has branches.

What to know about applying

To open an account, you’ll generally need your Social Security number, one or two forms of identification and money for the first deposit.

It’s common to apply for two bank accounts at the same time: a checking and a savings account. The checking account grants access to a debit card, bill payment system and other services, while the savings account lets you set money aside and, ideally, grow by earning interest.

Banks usually screen applicants on ChexSystems, a national reporting agency that keeps records of accounts closed against a person’s will. If you have lost access to a bank account in the past, you might be rejected by other banks until you settle your ChexSystems record. This can mean paying off debt to a bank or disputing errors on the record.

Once you’re cleared, consider what banks often call a second chance checking account or a BankOn-approved checking account. Many of these don’t charge overdraft fees, which kick in if you try paying for something that would put your balance in the negative.

Finding and opening the right bank account involves some effort. But once you’re approved, having a safe place for your money and a better chance to get affordable loans can make it worthwhile.

“To have a checking account… is the cornerstone of any financial empowerment effort,” Rothstein says.

This article was written by NerdWallet and was originally published by The Associated Press.



The article How to Get Started If You’ve Never Had a Bank Account originally appeared on NerdWallet.

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Financial Lessons We’ve Learned While Staying at Home

Shelter in place. Lockdown. Quarantine.

Whatever you call it, it’s been a few months since the COVID-19 pandemic taught us what staying home for an extended period of time actually looks and feels like.

These are unprecedented times. And although things are unpredictable right now, we can control our ability to emerge from this challenge differently than we entered it.

“Like everything in life, every challenge and every hardship is a lesson to be learned,” says Eric Simonson, certified financial planner and owner of Abundo Wealth, based in Minneapolis.

Some of these takeaways are spiritual, emotional, mental or physical. And some are financial.

Here are three pieces of money advice you can apply to your bank account, budget and lifestyle as life evolves after lockdown.

Insulate against an emergency

Financial experts believe this pandemic has illuminated the pressing need for emergency funds and cash reserves.

“Financial advisors for years, I think, with a lot of people, could talk until they’re blue in the face about why an emergency fund is a good idea,” says Kevin Mahoney, CFP, founder of Illumint, a virtual financial firm based in Washington, D.C.

“But for people who were fortunate to have not actually experienced an unexpected medical event, a long-term job loss, whatever it might be, it can be hard to really convince people that this is a top priority for their money.”

Now, job losses, furloughs and medical emergencies have provided a tangible example of why these funds are so important.

The general rule of thumb for an emergency fund is to have three to six months’ worth of living expenses saved. That may or may not be enough, depending on the circumstances. If you’re able, save something now. Even $500 is a good start.

Prepare (don’t panic)

Emergency readiness will likely also extend to home pantries. For better or worse, when frenzy sets in, consumers begin panic shopping. Americans have seen the repercussions of that firsthand — disinfecting wipes are still difficult to come by.

Forward-thinking consumers will likely begin to accumulate a reasonable amount of essential supplies or stock an emergency kit in case they’re ever again unable to leave the house for an extended period of time.

“Consumers will adopt a mindset of ‘sufficient stockpiling’ as their awareness of life’s uncertainties has been magnified due to COVID-19,” Ross Steinman, professor of consumer psychology at Widener University in Pennsylvania, said in an email.

While there’s no need to hoard, it may be beneficial to prepare in case other people once again panic shop for food and essentials at the onset of future emergencies.

You may want to employ savvy shopping strategies for those necessary items that you’ll continue to buy. That may include purchasing bulk quantities at a lower price per unit, using products more sparingly or applying online coupons in an attempt to save money.

“During COVID-19, many consumers lost their primary source of income, or had it drastically reduced,” Steinman said. “As a result, individuals will be aggressively searching for discounts and promotions.”

Shift your spending

Monthly expenses will likely also look different moving forward. Mahoney believes the stay-at-home orders have acted as a budget reset for many.

“It’s hard to press pause on spending habits that you’ve had for many years,” Mahoney says.

But for months now, most people have been left with no choice other than to stop traveling, dining out, attending concerts and going to the movie theater. Budgets have therefore skipped over expenses that used to be recurring.

Some of these new routines might stick even when life regains some sense of normalcy. (Maybe you actually like those PB&J sandwiches at home. Or, maybe you’ll continue watching movies at home instead of in the theater.) If these do stick, it’s possible you’ll spend less discretionary money in the months ahead than you did before the pandemic began.

Through all three of these lessons, it’s clear living through a pandemic has served as an impetus to raise awareness about financial preparedness.

“A lot of my clients are now way more interested in budgeting and knowing where all of their dollars are being spent than they used to be,” Simonson says. “I think that will continue.”

This article was written by NerdWallet and was originally published by The Associated Press.



The article Financial Lessons We’ve Learned While Staying at Home originally appeared on NerdWallet.

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Can’t Make Money Right Now? Free Up Cash in Your Budget

You’re not the only one with a tight budget. Millions of Americans are currently struggling with unemployment, lost hours and lowered wages.

There’s little comfort in knowing that others are feeling strapped. But you may be relieved to hear there are ways to make things easier — even if you’re out of work or can’t make more money.

We talked to financial experts for advice about getting more mileage out of the money you have available right now. Here are their tips for finding extra money in your monthly budget.

Go line by line

Depending on where you live, you’re probably spending a lot of time at home these days. Devote at least some of the free time to analyzing your finances.

Go over every single transaction in your checking account, savings account, credit card bills and so forth, says Robinson Crawford, certified financial planner and founder of the adviser firm Montebello Avenue in Phoenix.

Crawford says you can use a budgeting system to make this step easier. Try an app, Excel file or some other tool.

Once you see all of the dollars going in and out, you’ll be able to identify areas for savings. And you’ll be ready to start making some (or all) of the changes outlined below.

Pick up the phone

As you look at your line items, focus on the largest bills first, suggests Cady North, CFP, founder of North Financial Advisors LLC, with offices in San Diego and Washington, D.C.

Lowering substantial, recurring payments has the potential to reap the biggest savings. For example, even if you already received an automatic rebate from your auto insurance company, it doesn’t hurt to call up and see if you can negotiate additional savings. That’s particularly applicable if you’re not driving right now.

Another option? If you have student loans, your federal student loan payment has likely already been suspended, but you’ll want to take the extra step to ensure you’ve stopped your automatic payments. That is, if you don’t want to continue making payments right now.

If you choose to contact companies and service providers you do business with, be honest about how COVID-19 has affected you. Crawford recommends telling them about your situation and why you’re asking for help, especially if you’ve been laid off. They’re likely to empathize.

“Part of the reasoning should be, ‘Listen I’m trying to do everything to keep all of my bills paid. I want your service. I want to keep you. I want to stay as a customer.’”

Unplug and unsubscribe

After the big expenses, seal smaller holes in your spending. Try looking around your house, recommends Shehara L. Wooten, CFP, founder of investment advisor Your Story Financial LLC.

Unplug electronics when they’re not in use. Stop buying disposable paper towels and paper plates — switch to reusable towels and plates instead. Monitor the thermostat and lights as you spend increased amounts of time at home.

You can also pull the plug on unnecessary subscriptions. Crawford says now might be the right time to cancel those streaming services and online shopping memberships, especially ones you haven’t found use for even while you’ve been cooped up at home.

“If you’re not watching one of your streaming subscriptions during COVID, news flash: You’re never going to watch it.”

If you still like (and use) your subscriptions and aren’t willing to give them up completely, cut them out temporarily. Some companies allow you to go online and pause your account for a period of time.

“That’s a way to get $15, $20 here and there extra in your budget,” North says.

Get money back

Finally, while you may not be able to find a new job right now, there could still be methods to expand your budget that you hadn’t considered.

One way is to sign up for cash-back shopping sites or apps to earn money back when you purchase groceries and other essentials, Wooten points out. With some apps, you scan your receipt after a transaction for post-purchase savings.

As you free up money, make sure you’re devoting those newfound funds to absolute necessities first, like food and shelter.

Every change you can make — no matter how major or minor — can make a difference.

This article was written by NerdWallet and was originally published by The Associated Press.



The article Can’t Make Money Right Now? Free Up Cash in Your Budget originally appeared on NerdWallet.

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5 Money Goals If You’re Still Employed During COVID-19

The coronavirus pandemic has thrown tens of millions of people into financial turmoil. But not everyone is feeling the pinch. Not yet, at least.

Roughly a quarter of Americans (24%) said the coronavirus crisis has not impacted their financial situation, according to a survey conducted April 10-12 by J.D. Power. But that figure could change as more companies cut salaries, halt 401(k) match programs and announce layoffs while they struggle to adjust to the new normal.

“It is still important for those of us that are employed during this pandemic to understand our financial health,” says Dan Slagle, a certified financial planner who co-founded Fyooz Financial Planning LLC in Minnesota with his wife, Natalie. “Just because you are employed (now) doesn’t mean you are safe a month from now.”

Those fortunate enough to have financial stability now can use this time of social distancing to focus on their fiscal health and emerge from this economic crisis in better shape than they went into it.

Here are five ways you can pay down debt, build up your savings and retool your budget while you’re staying at home.

1. Turn expenses into savings

Your car is sitting idle. You’re not taking Ubers. You can’t go to yoga or spin or CrossFit. Your daily coffee is now prepared at home. Same goes for breakfast, lunch and dinner, most days. The money you’re saving on daily expenses could well be eaten up (literally) by hungry kids who are now home all the time. But if not, use it to build up your emergency reserves.

In an ideal world, you’d have three to six months’ worth of living expenses stashed away in an emergency fund. If that feels intimidating, start with one month, then build it to two months, and keep going from there.

If you already have a healthy emergency fund, use the money you would normally spend on things like commuting, gym memberships and traveling to pay off debt or build up your retirement fund (more on that below).

2. Get a jump on your student loans

Payments on most federal student loans are suspended, interest-free, through Sept. 30. That means any payments you make between now and then will go directly toward the principal on your loan, which could save you money in the long run.

Consider your financial circumstances before paying down your loan during the forbearance, though. Your money might be more urgently needed elsewhere. If you have credit card debt, for example, divert your normal student loan payment to pay off that high-interest debt more quickly. You can also redirect your loan payment to savings if you don’t have an emergency fund.

If you’re on track for Public Service Loan Forgiveness or another loan forgiveness program, making payments during the forbearance may not serve you in the long run.

3. Ramp up your 401(k) contributions

If your emergency fund is solid, and you aren’t carrying a load of credit card debt, consider giving your retirement savings a boost.

“Recurring contributions to retirement plans such as your 401(k) or 403(b) are buying shares at a discount compared to February highs,” Slagle says.

If you were already planning to max out your 401(k) contributions this year, doing it while prices are low means you’ll increase your returns when the market eventually rebounds.

4. Save money on your mortgage

If you own a home, run the numbers on refinancing — you may be able to lower your housing costs thanks to lower interest rates. Even relatively new homeowners could benefit, as mortgage rates are one percentage point lower than they were just one year ago.

“If you can lower your rate by 1% or more, it can have a huge payoff in the long run,” says Mike Zung, owner of Java Wealth Planning LLC in Missouri.

Keep in mind: Lower rates mean higher demand for refinances, and it may be harder to qualify than it was a few months ago.

5. Give back to your community

This one won’t technically improve your financial situation, but it will make a difference in your community. If you’re still financially sound during the pandemic, support small businesses. Donate to your local food bank. And do your part to support those hit hardest by this financial crisis.

“Personal finance is not all about accumulating money,” Zung says. “It’s about spending it in a way that reflects what you value.

This article was written by NerdWallet and was originally published by The Associated Press.

The article 5 Money Goals If You’re Still Employed During COVID-19 originally appeared on NerdWallet.

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How to Manage Your Credit Score During a Crisis

Even in a financial crisis, credit scoring still works the same as it always has. But managing your credit may look a little different now as the coronavirus pandemic leads to widespread financial upheaval.

As money gets tighter, especially if you can’t pay every bill in full, you’ll need to be strategic — and perhaps accept a lower score temporarily. Understanding how credit works can help you minimize damage and position yourself for quicker recovery.

Using credit vs. emergency fund

If you have an emergency fund, should you tap it before using credit? “I think there are two schools of thought here,” certified financial planner Lynn Ballou of EP Wealth Advisors in Orinda, California, said in an email. “If not a global pandemic, then what in the blazes is an emergency fund for anyway?”

On the other hand, Bruce McClary, vice president for communications at the National Foundation for Credit Counseling, suggests proactively cutting costs first. Your landlord and utility companies, for instance, may be willing to make temporary arrangements, he says. “Have these conversations before you spend a dollar of your emergency fund.”

About 3 in 10 of us (30% of Americans) have tapped emergency funds due to the economic effects of the coronavirus pandemic, according to a NerdWallet survey conducted online by The Harris Poll from April 8-10. But almost 1 in 5 Americans (18%) had no emergency fund to tap.

Be strategic to limit score damage

You may be relying on your credit more than ever. Knowing how credit scoring works will help you pick actions that limit damage to your score. The two biggest factors affecting your credit score are:

  • Paying on time. A late payment — one that’s 30 days or more past the due date — can tank your score. The damage is lasting: It will linger on your credit reports for up to seven years.
  • How much of your credit limits you use. The less credit you use, the better it is for your score. When your credit utilization goes up, your credit score will likely go down, but the damage is quickly reversed once you can lower balances again.

Do everything you can to pay creditors on time so you avoid the biggest, longest-lasting score danger, which is paying late.

Paying minimums is fine. It’s much better for your credit to pay minimums on all of your cards than to pay one in full and not have enough to cover the minimum on another. While it’s true that paying minimums leads to rising balances, it’s quicker and easier to reverse the score damage from that.

Manage your balances

Even while you’re putting more on cards or paying minimums, you may still have some latitude to keep credit balances low relative to limits:

  • Ask for higher credit limits from your card issuers. If you qualify, getting a higher credit limit can help you keep credit utilization lower. The recent survey found that 17% of Americans have requested a higher credit card limit due to the economic effects of the coronavirus pandemic.
  • Become an authorized user. See if a friend or relative who has a credit card with a high limit and low balance will add you as an authorized user. The account holder is not required to actually give you a card or let you make purchases. Just being on the account benefits your score.
  • Keep credit cards open. Even old, unused cards may be helping your credit score by contributing to your overall credit limit. Use them occasionally to keep the issuer from closing them for inactivity.
  • Think beyond credit cards. An unsecured personal loan, sometimes called a signature loan, may be a better option, McClary says. The interest rate is likely to be much lower than credit card interest. You may be able to find a low-rate loan by searching online for “pandemic personal loan,” or contact your bank or credit union.

Minimize the costs of using credit

If you’re using credit cards to stay afloat, know how the cards operate, McClary advises. For example, taking out a cash advance will cost you far more in interest than a purchase of the same amount. You can find out by calling the customer service line or looking up the customer agreement online.

Also, don’t assume that the terms you have now are the best you can get. Rather than simply checking APRs, Ballou recommends reaching out to your current issuers to see if they will give you lower rates or lower minimum payments or eliminate fees. You might be able to move some debt from higher-interest to lower-interest cards, she said, adding that telling an issuer you are considering transferring your balance to a competitor can be a good negotiating tool.

If you apply for a credit card hardship program, it’s important to know the drawbacks and decide whether you want to apply for help from your card issuer now if you might need it later.

And if you have autopay in place for bills, adjust the payments or turn them off to avoid paying more than is required or overdrawing your account.

Monitor your credit reports

You are now entitled to one credit report every week from each of the three major credit bureaus, through April 2021. Check them to be sure:

  • You recognize every account and your identifying information is correct.
  • Any account in forbearance or deferment is being reported as current, as required by the CARES Act, if it was in good standing before any pandemic-related concessions were made.
  • A disaster code shows on your credit reports if you requested one. This can help a potential lender or landlord better understand changes in your credit behavior, McClary says. And it won’t hurt your credit scores.

If you see errors, you can dispute them. If an error suggests identity theft — such as addresses you’ve never lived at or accounts you don’t recognize — report it to IdentityTheft.gov.

Harris survey methodology

This survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet from April 8-10, 2020, among 2,042 U.S. adults ages 18 and older. This online survey is not based on a probability sample, and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact Madison Gouveia at mgouveia@nerdwallet.com.

The article How to Manage Your Credit Score During a Crisis originally appeared on NerdWallet.

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Do These 4 Things for Your Parents During Coronavirus Outbreak

Americans everywhere are concerned about the coronavirus and COVID-19, the respiratory disease it causes.

But COVID-19 has demonstrated that it’s particularly serious for older adults whose immune systems naturally weaken as they age — and especially for those with chronic medical conditions, according to Dr. Samir K. Sinha, a member of the American Red Cross Scientific Advisory Council.

In fact, 8 out of 10 deaths reported in the U.S. related to COVID-19 have been in adults 65 years old and older, according to the Centers for Disease Control and Prevention.

If your parents fall in one of the vulnerable categories, you’re probably wondering how to help them. Here are four things you can do right now.

1. Grocery shop

You’re likely well aware of the shopping frenzy surrounding coronavirus. Personal care and household items have disappeared from store shelves. Lines are out the door. Online prices have skyrocketed.

Many Americans are hunkered down at home self-quarantining or under shelter-in-place orders, and your parents may be leery of venturing out to a grocery store for fear of being exposed.

That’s understandable, according to Maria Brown, an assistant research professor at Falk College and member of Syracuse University’s Aging Studies Institute.

“Because of their vulnerability and the longevity of the coronavirus, older adults should be avoiding public spaces where other people can be coughing or sneezing near them, or depositing the virus on objects or surfaces that they end up touching,” Brown said in an email.

Let your parents stay home and consider going to the store for them and dropping off groceries on their doorstep. Or, help them place online orders that can be delivered to their house.

2. Call or video chat regularly

The CDC says the virus is thought to spread mainly from person-to-person contact, particularly between people who are within about 6 feet of each other. Because of that, you’ve likely already been separating yourself from your family members, including your parents.

To avoid possibly exposing your mom and dad, turn to technology instead. Skype, FaceTime or call. Remain in communication to keep their spirits up and check on how they’re feeling.

“Staying in touch also helps us to verify their mental and physical health as these days of social distancing wear on,” Brown said.

Try setting a schedule with specific times you’ll call so they have something to look forward to throughout the day.

3. Warn about scams

Scammers are preying on Americans during this medical and financial crisis. Talk to your parents about these scams so they can safeguard themselves.

The Federal Trade Commission has issued guidelines for avoiding scams. Pass these along to your parents, or anyone else, for that matter. Here are some highlights from the FTC’s tips:

  • Hang up on robocalls and don’t press any numbers.
  • Know who you’re buying from. Online sellers may claim to have in-demand products in stock when they actually don’t.
  • Don’t click on links from sources you don’t know.
  • Do your homework before making donations. If someone wants donations by cash, gift card or wiring money, don’t do it.

4. Keep them busy

Older Americans face special challenges when they remain at home.

“The inactivity that can come with being confined to the home can cause declines in physical health and in physical abilities,” Brown said. “Older adults are also at greater risk of developing depression in social isolation, and their elevated risk for bad outcomes from this virus can cause higher levels of anxiety and lead to sleep difficulties.”

If your parents are feeling lonely or bored, remind them of things they can do to stimulate their minds and occupy their time. Encourage them to read a book, play a board game, do a puzzle or even go for a walk — as long as they’re keeping their distance from others.

Additionally, religious groups across the country are moving their services online, and studios have brought movies in the theater to on-demand platforms for home viewing.

Most importantly, ensure your parents are taking the pandemic seriously. Stress to them the importance of social distancing.

The article Do These 4 Things for Your Parents During Coronavirus Outbreak originally appeared on NerdWallet.

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Tips for using credit cards, debit card and cash to your advantage while traveling

In the 21st century we have numerous methods for using our money, even when we are on the other side of the world. Additionally, the financial world is very competitive which can be a plus for the consumer if you can learn to play the game to your advantage. In this article you will discover small and not-so-small realizations that can benefit you for travel. Simple actions to take and easy habits to create that can save you money and help make travel more affordable.

Credit Cards

Find a credit card with no foreign transaction fees. Most restaurants, stores and tourist destinations you visit today will accept credit cards for payment, which is incredibly convenient and safer than using cash. However, it is important you understand all the possible fees that could be associated with your transaction. Some banks can charge 3% or more every time you swipe your card (this is the same for debit cards). That is going to add quiet a bit of expense to your overall vacation. Find credit unions or banks (such as Capital One) that offer no foreign transaction fees and swipe away while confident you won’t come home to hundreds in unexpected charges.

Open a credit card with an excellent point rewards programs or one which is joint with your favorite airline. Then, as long as you are a strong budgeter and money manager, get in the habit of using that card for everything (just be sure you ALWAYS pay the balance prior to interest charges). Build those points so you can cash them in for a free flight!  Bonus: many airline cards give options for reserved seats and checked bags for free in addition to the miles and points.

For extra protection, always make sure your credit card has the EMV (chip) technology.

Skip the cash withdrawal on credit cards. Only do a cash advance on a credit card as a last resort; the interest rate and fees are usually much higher on credit than using your debit card.

When applicable, be sure to process the transaction in the local currency. Sometimes you are given are an option to pay in your home country’s currency or in the visiting country’s money. Mainly in Europe you can be offered more than two options, but it is always best to stick with the local money to ensure the best possible exchange rate and to avoid any fees from the vendor or your bank.

Review the advantages of your specific credit card, many offer added benefits and protections. For example, if you purchase your rental car with your credit card and then have an unfortunate accident some cards will offer reimbursement or added insurance to help cover the unexpected costs. Same with airfare or hotel and even tours. Read the fine print or search specifically for a card that offers added support.

Debit Card

Use debit cards predominately for cash withdrawals while traveling. It is strongly recommended you get cash at ATMs as they offer the lowest fees and best exchange rate. Be sure the ATM is located at a secure location (bank, airport, train station), check for skimmers and withdraw cash during the day when you are headed to your hotel or hostel so you can safely store the cash you won’t be using right immediately. Extra tip: find a bank or credit union that offers free ATM withdrawals to help minimize fees.

Know your limits and balances. Don’t check you r balance at the ATM, you will get charged. Also, ATMs themselves and your card specifically both have daily limits, be sure to know these so you can take the most cash out at once to save on fees.


Be wary of counterfeit bills when getting change for cash purchases. Some countries more than others are notoriously known for counterfeit bills. The last think you need is to be out money from a sham.

Know the exchange rate. Take a moment to understand local currency and exchange rates. Look at pictures of legitimate and counterfeit bills online prior to arriving at your destination. And have a currency exchange calculator on your phone or get in the habit of calculating the approximate exchange in your head so you actually know how much something cost before committing to a purchase. An example, if you don’t know what 100 Mexican Pesos equals to in American Dollars then you could end up spending more than you thought on that souvenir.


Do you have access to a mobile wallet (Apple Pay, Google Pay or Samsung Pay)? Use this option when traveling to countries that utilize the technology. It will keep you safer from fraud and protect you better in cases of theft.

Check expirations of all card and your passport. Make sure to have at least 6 months of validity available prior to your travel. Some countries will require at least six months or more for passports.

Spend the money on travel insurance. The unexpected tend to happen well unexpectedly. Therefore, it is best to anticipate the unknowns with different types of insurance especially those that protect your health.

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The Low-Down on Credit Counseling

What It Is, Who It’s For, And How It Can Help

Have you ever wondered if credit counseling might help you?

Most of us have never stopped to even think about what credit counseling is until we find ourselves facing a financial roadblock. Credit counseling isn’t just for those who need to improve their financial health — it can also help you to be more proactive in maintaining your finances as well.

What is Credit Counseling?Credit counseling, also called debt counseling, is a process that helps people manage their finances and solve problems with debt. Credit counselors work with people to:• Manage money and debt• Create a budget or spending plan• Understand credit scores• Learn about options, tools and educational resources for getting out of debt

Through a credit or debt counseling session, a credit counselor can help you figure out your situation and make your own personal plan. They’ll explain different options for getting rid of debt and achieving your financial goals.

Every situation is different, so the advice and information a credit counselor shares will vary depending on what makes sense for your circumstances.

Who Can It Help?Credit counseling is for anyone who wants to improve and maintain financial health. Maybe you’re looking to buy a house, or refinance your car, or be prepared for financial changes. It’s a great option to help you be ready for whatever your financial life throws your way.

Credit and debt counseling could be helpful if you want to:• Get out of debt• Make and live on a budget• Improve your credit• Relieve stress and anxiety about your finances• Buy a house or save money for a big goal

If your finances are stressing you out, or you are worried about debt, credit counseling can give you a sense of relief.

In fact, a recent study conducted by our partners at GreenPath found that 90% of people who speak with a GreenPath financial counselor feel better prepared to handle their finances.

There are no rules about how severe or mild your financial concerns need to be. We encourage you to trust your instincts, and if you sense that talking with  someone would help, credit counseling is a great step to start a new chapter in your financial life.

How Does It Work?Our credit counseling services are provided through our partnership with GreenPath, who conduct most of their counseling sessions by phone. The first person you talk to will ask you some questions about your financial situation and what you need, and they will connect you to a financial counselor who is an expert in that area.

A typical counseling session takes about an hour and includes:• A review of your financial situation• An overview of different options foraccomplishing your goals• Recommendations for your situation• Development of a personalized action plan to support you on your journey

Each GreenPath credit counseling session is tailored to your individual needs.

Learn More with a Free Counseling Session with Our Partners at GreenPathIf you think you could benefit from credit counseling, we encourage you to take the first step and call our partners at GreenPath Financial Wellness today.GreenPath counseling sessions are free, no-pressure, and 100% confidential.

Article provided by our partner: GreenPath Financial Wellness

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How to Save the Environment While Saving Money

Going green is more than a trend; it’s the evolution of humans to learn to live in harmony with our beautiful world. It’s significant for future generations to be able to thrive and have a quality of being. Going green is more than ditching the straw and plastic water bottles. It’s a lifestyle that doesn’t need to be done to perfection; it simply needs to be done imperfectly many people.

Now don’t be misled by expensive eco-consumerism trends, being environmentally conscious can save you money, not cost you. Minimizing your consumption and waste are best practices to slow the negative impacts on the planet. The key to successfully participating in the movement is to take small steps at first and to educate yourself on the details of production and manufacturing. If you are new to the ‘green’ movement it can feel overwhelming. It is recommended that you start with simple adjustments to encourage success in your efforts.

Here are a few ways you can make easy changes in your life that saves the planet and money.

Water. Are you still using plastic water bottles? If so, you could be throwing away money. The beverage companies use convincing marketing techniques to make you think bottled water is safer than other alternatives. Often times you could be exposing yourself to toxic chemicals leaching from the plastic into the water (even BPA free plastic). Check the quality of your tap water here. Then buy a filter for home or work or a bottle with one built in and start using a reusable water bottle straightaway (glass or stainless steel are your best options).

Buy used. Clothes, books, houseware, etc. All these items can be purchased used from a secondhand store. You can save 75% and upwards going this route. Upcycle items to refresh the look and make it more your style.

Borrow items from family and friends. Join the sharing economy. Why go buy something when you can rent it for a fraction of the price? Companies like Rent the Runway, Briefly Baby,  and Poshmark are great places to get started.

Consume less. Find fulfilment in sustainable activities. Ditch the throw-away culture that’s on high in today’s culture. Try to purchase things that will last, have more than one purpose or skip things you can live without.

Are you living in an urban area? Explore the option of ditching your car. On average owning a car can cost you $8,496 per year. Turn to public transportation, biking or walking and you could save thousands.

Make your own. Personal care products or cleaning supplies are easy and cheap to make yourself. Also, they won’t be full of harmful chemicals. Browse Pinterest to find countless recipes.

Grow your own food, especially leafy greens and herbs since those tend to go bad the fastest. Try to cook at home often and shoot for less meat (that includes chicken). Cooking at home helps limit your packaging waste and saves you a ton of money (and calories). Furthermore, eating meat has environmental consequences so the less you eat of it the more you’re doing for our planet.

Automate and go paperless for you bills. It’s less clutter around the house and easier to organize digitally. While you’re at it, make sure bills are set to autopay to alleviate any chances of missed payments.

There you have it, eight suggestions to get you started! Stay open-minded and be creative when exploring ways positively impact the health of our planet.

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Money Matters for New Parents

Becoming a new parent is one of the most exciting things that can happen in your life. It can also be very disorienting as you try to take care of a new human, manage your relationship with your partner, and adjust to your new role and identity. During pregnancy, parents are consumed with visits to the doctor’s office and reading baby book after baby book. But something that is often overlooked is how your little bundle of joy will impact your financial outlook. Here are some key things to think about:

BudgetingBabies are expensive! Yes, they are cute, but there are financial obligations that come with parenting. According to the book Baby Bargains, parents spend more than $6,200 in the first year on food and gear alone. But you can definitely get by for way less. The book recommends this more reasonable budget:

• Crib, mattress, dresser, rocker: $1,280• Bedding, decor: $200• Baby clothes: $340• Diapers: $300• Maternity/nursing clothes: $540• Nursery items, high chair, toys: $225• Baby food/formula: $350• Stroller, car seat, carrier: $200• Miscellaneous: $500TOTAL = $3,935

Notice that this budget does not include some high cost items, such as childcare. If you require childcare, keep in mind that prices can range anywhere from $400 to $2,000 per month depending on location.

Medical bills are not included in on this budget either. In order to understand the costs of delivery and follow-up visits, make sure to contact your healthcare provider and your health insurance company. Make sure you understand exactly what is and isn’t covered by your insurance. Prices and coverage vary widely.

Ways to SaveThere are lots of ways to cut back on costs. Some are time-consuming, while others are incredibly simple. When you combine all of these tips and tricks, you willsee some massive savings.

Breastfeed if possible. While breastfeeding may not be for everyone, there are a lot of benefits if you can make it work. First, most doctors recommend breastfeeding over formula for the baby’s health. Breastfeeding is less expensive than formula. You can save at least $1,400 in the first year of your baby’s life.

Shop at resale stores. Babies grow out of their clothes very quickly, so it can be a budget buster. To cut back on costs, shop at thrift-stores or resale shops. You will be able to find pre-worn clothes at a fraction of the cost of retail. You can also find a lot of cute stuff!

Borrow From Friends: If you have friends or family who have kids, they will likely have more expensive items (like cribs and bassinets) just lying around their house. Borrowing for a year or two will save you money and them storage space – a win-win!

Make your own baby food. Here’s a secret: baby food is just mashed up fruits and veggies. Rather than spend money on marked-up prepackaged baby food, mash up some sweet potatoes and avocado and a fraction of the cost. Your little one won’t know the difference, and you’ll save a lot of money!

Article provided by our partner: GreenPath Financial Wellness

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It’s College Savings Month. Do You Know Where Your 529 Plan Is?

Make the college tuition sticker shock a little less shocking

September is College Savings Month, an appropriate time to think about education costs and how the average person can prepare to send their kid(s) off to the university of their choice without burying themselves in mountains of debt.

In this post, we’ll talk about how 529 plans can help, but first let’s start with a broad picture of the student loan landscape.

General statistics

According to the U.S. Federal Reserve and the Federal Reserve Bank of New York:

  • Americans are carrying $1.56 trillion in total student loan debt (that’s $521 billion more than the total U.S. credit card debt)
  • 7 million Americans have college debt
  • 5 percent of student loans are 90 or more days past due or in default
  • The average monthly student loan payment is $393
  • The median student loan payment is $222

Class of 2018

Among those who graduated in 2018:

  • 69 percent of them took out student loans
  • Their average debt was $29,800
  • 14 percent of their parents took out PLUS loans at an average of of $35,600

Sources: Student Loan Hero; Savingforcollege.com; U.S. Federal Reserve

How 529 Plans can help families prepare for college costs

College Savings Month is a great time for parents to get familiar with a 529 College Savings Plan. The commonly used college savings plan offers parents, and their college-bound kid(s), tax-free withdrawals to pay for college.

Here’s what you need to know about a 529 College Savings Plan:

  • Sometimes called “qualified tuition programs,” 529 Plans are vehicles that allow you to save for the higher education costs of someone else.
  • Family members, friends or anyone else can establish a 529 Plan to benefit a future student.
  • 529 Plans are provided by a state, agencies of the state or by educational institutions themselves.
  • Money invested in the plan accumulates on a tax-deferred basis and distributions used for higher education expenses are tax and penalty-free, as long as the funds are used for approved education expenses.

That last point is the key. The tax benefits of 529 Plans are only applicable if the funds are used to pay for approved education expenses. There are nuances to these plans in different states, so talk to your financial advisor before opening an account.

What are qualified expenses for a 529 Plan?

529 Plans have to be used cover qualified expenses. There are actually many applications for the funds in these plans. You can use them to pay for undergraduate or graduate tuition, trade or tech schools, cooking schools, and some accredited schools abroad. Funds can also be used for room and board, books and other fees.

What about using a trust instead?

Some parents consider creating a trust for college expenses. But be aware that trust funds may not be an effective way to shelter money from the financial aid process, which is concern if your student will apply for such aid. Trust funds can be counted as assets during the financial aid process, affecting your child’s eligibility for aid. A potential work around could be established if the trust was restricted to withdrawing just the principle for the beneficiary.

Before investing, the investor should consider whether the investor’s or beneficiary’s home state offers any state tax or other benefits available only from the state’s 529 Plan.

David Murdock is a Registered Representative(s) of, and securities and advisory services offered through Cetera Advisor Networks LLC, member FINRA, SIPC, a Broker/Dealer and a Registered Investment Advisor.  Securities and investments products are: Not FDIC/NCUSIF insured – May lose value – Not financial institution guaranteed – Not a deposit – Not insured by a federal government agency. Cetera is under separate ownership from any other named entity. Branch: 500 Main Street, Suite 100, New Brighton, MN 55112, (651) 631-3111.

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Summer Activities within Budget

Summer -it is the most anticipated season by those who live in places like Minnesota, where the weather is freezing and the sky is overcast most of the year. Where seasonal depression is a thing and most people experience at least a few symptoms. Where we are cooped inside for over six months breathing the stale air cycled through furnaces (unless you are one of those crazy people who actually like winter activities). It’s a place where you run from your house to your car and vice versa; anything to minimize the time out in the tundra.

Ok, enough doom and gloom; we don’t have to worry about these things for months so let’s focus on what lies ahead!

With summer usually comes more social engagements and activities in general.  The longer days and warmer temps make people happy, energetic and ready to have fun. Though it also makes it tough to stick to that dang budget. I know it’s not what any of us want to hear but that budget needs to be a priority no matter what season, no matter what we WANT to do. So here are some ideas to participate in all the fun throughout the Twin Cities summer season, without breaking the bank.

#1: Stop going out to eat so much. You don’t want to be inside anyways. Have friends and family over to the house to grill and chat around a fire. Make it pot-luck style; everyone brings a dish and drink to share. A step up: make it THEMED! If you don’t have your own space, hang out and grill by the beach (we are the land of 10,000 lakes). Make a day out of it- read, swim, laugh and play.

#2: If you must participate in patio season, and I admit I am one of those people, then check out local restaurants for deals. Many have date night specials usually earlier in the week or make sure to go during happy hours. Find places that offer an activity along with it, maybe live music or trivia. That way you get a full stomach and entertainment on the cheap.

#3: Don’t go to those expensive movie theaters. I repeat: you don’t want to be inside anyways. Check out Vali-Hi Drive In. Go early on the weekend, the line starts growing before the box office opens. For under $10 you get three movies! That’s cheaper that just seeing one at a big theater.

#4: Summertime is also festival and fair time in our great state. I’m not exaggerating, there is something FREE going on every weekend in Minneapolis and St. Paul. Check out the City Pages or sign up for the weekly newsletter to stay up-to-date.  Check out Minneapolis Park and Rec too, their events newsletter shows events (most free) for all ages and interests.

#5: Speaking of Minneapolis Park and Rec, starting after Memorial Day they offer FREE music and movies in the parks all over the city. Pack a picnic and have your dinner sitting in the grass while listening to a local musician or enjoying a flick. If you don’t live in Minneapolis don’t fret, your community probably offers something similar. Use that magical search engine called Google to find it.

#6: If you’re 30 going on 70 like me, you may want to check out Tea in the Garden or similar places in the greater metro area. High tea outside among beautiful flowers, yes please! Grab the girls and cruise north with the windows down for great tea, food and conversation.

#7: Get active! Walk down to the tennis or basketball courts with your best pal. Make it competitive all summer by tracking who has the most wins, or just play for enjoyment. Sports not your idea of excitement? Take a walk, rent a Nice Ride or chat and people watch in a park.

#8: Sit outside and read (be sure to put on the sun block). Take it a step further and start a book club with your friends. Assign a few to bring hors d’oeuvre and a few to bring wine and enjoy the company on you back patio. Cheaper than $8+ glass of vino at the local wine bar.

#9: Save the game of golf. It isn’t just for the well off or for business men. It can be affordable and amusing. Just don’t take yourself too seriously. The city or county run courses have very affordable twilight rounds. You should be able to find a course for under $20 after 6pm. Many have clubs to rent for low cost as well.

The list could keep on going there are so many ways to enjoy summer on a budget; you just have to be creative and open-minded. Keep checking our blog all summer long for more tips like these.


Amanda- Director of Community Affairs at Wakota FCU

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More Than Your Score: Credit Basics You Need to Know

Getting your credit score today is easy — just turn to your bank, credit card issuer or one of the many apps and websites out there.

That means millennials, unlike their parents, have the advantage of early insight into their financial profiles. But looking isn’t enough. Without knowing the basics of credit, looking at your data is like having the pieces to a puzzle, but not understanding how they fit together.

Here’s what to know.

You have many scores

You have multiple credit scores, not just one. Those scores vary, depending on:

  • What scoring model was used. You’ve probably heard of FICO, the one most widely used by lenders. VantageScore is its fast-growing competitor.
  • Which version of FICO or VantageScore was used. They each have a few — some older, some newer, some specific to financial products like credit cards or auto loans.
  • Which of your credit reports provided data to create the score. Three major credit bureaus — Experian, Equifax and TransUnion — each maintain a record of your credit use. Those reports can be slightly different, depending on whether your creditors report activity to one, two or all three.

Lenders may pull different versions of your scores than you see, and you cannot always know which one they use for approval decisions, says Katherine Lucas McKay, program manager in the financial security program at the Aspen Institute, a Washington, D.C.-based think tank.

Don’t panic about your score

You cannot control what score lenders use, but you can control how you manage credit. Fortunately, a small set of good credit habits have the power to benefit all of your scores.

Paying your bills on time and using less than 30% of your available credit limits (the lower the better) will help build a strong score, regardless of the scoring model. That’s because FICO and VantageScore both emphasize having a good payment history and low credit usage when calculating scores.

To accurately track how your credit is doing, make sure you’re looking at the same score (FICO or VantageScore) generated using data from the same credit report.

Forget the myths

When it comes to credit, common misconceptions get in the way of building good habits.

One persistent myth: Checking your own score hurts it.

“You’re not going to lose points for looking at your credit,” says Angela Moore, a certified financial planner at Modern Money Advisor in Miami. Checking your own score triggers a “soft” pull on your credit but doesn’t affect your score.

A “hard” pull, on the other hand, occurs when you apply for a loan or a landlord asks to scrutinize your credit, for example. Hard pulls also go on your credit reports and can temporarily knock a few points off your score.

Moore says another misconception is that utility and cell phone payments help credit. Managing those bills responsibly is necessary, she says, but they don’t affect your score — unless you forget to pay.

Say you move out of a shared apartment and leave the power bill in your name. If your former roommates don’t make payments, the account could end up in collections and damage your credit.

To prevent such surprises, use free services to scan your reports for accounts you don’t recognize or forgot were open, Moore says. Also check your detailed credit reports from annualcreditreport.com; you’re entitled to one free annual report from each bureau.

Don’t get credit just to have it

“Credit should be used cautiously and strategically when needed and not because you feel forced,” Moore says. Don’t take on more debt than you can handle just to build a score.

Scoring models consider the mix and number of accounts you have, but that matters much less than paying on time and keeping credit usage low. Making student or auto loan payments is enough to maintain a decent score, Moore says.

Credit cards are convenient, and many offer rewards, but if you cannot pay off monthly balances, you might pile up debt. A TD Bank survey released in March found that nearly a third of millennials surveyed didn’t pay their cards off in full each month. They may be falling for another credit myth, that keeping a balance is good for your score. It isn’t.

If an issuer offers you an increase, think carefully before accepting, says Lucas McKay.

“If you use it just to increase your available credit but keep your spending the same, that’s great. But if not, then think about how much more you are likely to spend with that increase.”

This article was written by NerdWallet and was originally published by The Associated Press. 

The article More Than Your Score: Credit Basics You Need to Know originally appeared on NerdWallet.

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Don’t Freak Out About an Emergency Fund — Just Start One

Let’s be real: For millennials, having an emergency fund is way down on the financial worry list, behind student loan debt, medical bills or saving for a down payment.

Some weeks, it can feel like you barely have enough money to get by, let alone put some away for a rainy day.

But that cash stash can be crucial in preventing a debt spiral or keeping you afloat if you lose your job. Regardless of income, building your emergency fund doesn’t have to be intimidating.

Start small, build a habit

First, pick an amount you can put away on a regular basis, no matter how small. Then, commit to it.

“It can be as little as $10 a week into a separate savings account,” says Lara Lamb, a certified financial planner at Abacus Wealth Partners in Los Angeles. Making a small contribution every week is less painful than shooting for an ideal final sum, she says. Automatically transferring the money to a separate account helps you succeed at saving.

The saving habit — even if it’s small — is valuable for your finances in the long term, says Eric Gabor, a certified financial planner at Eagle Grove Advisors in Jersey City, New Jersey.

A family with at least $250 in savings is less likely to face financial turmoil such as a missed utility payment or eviction, according to a 2016 study by the Urban Institute, a Washington, D.C.-based think tank. Any amount above that — $400, $500 — improves your chances of navigating a setback.

Getting started is especially important for younger adults. An Urban Institute study released this year found 35.6 percent of adults ages 18-34 surveyed in December 2017 had experienced “financial insecurity” in the previous 12 months. That was the highest among the study’s three age groups of adults under 65.  It defined financial insecurity as the “inability to come up with a small amount of money to buffer negative economic shocks or to pay his or her credit card or nonmortgage loan.”

Lamb suggests working toward one month’s fixed expenses, which includes rent, groceries, transportation and insurance. “Don’t worry about your eating-out money or shopping money,” she says. “If you are in an emergency or a transition, the whole idea is you would cut back on your spending.”

A savings account that pays a high interest rate is a smart place to keep your fund, both planners say, so it can grow.

Make use of windfalls

An easy way to kick-start your fund is to use windfalls — part of a tax refund or even birthday money from relatives.

Young professionals typically get tax refunds instead of owing money, Gabor says. The IRS allows you to direct deposit your refund in up to three accounts, so you can send part directly to your emergency fund.

If no windfall is imminent, check your checking account. Leave a small buffer so that you aren’t at risk of overdrawing and put anything else in the emergency fund to earn interest, Lamb says.

There’s no ideal amount to keep in your checking account. But both financial planners warn that having a lot of extra “cushion” in a checking account carries the temptation to spend it.

Plan for non-emergencies

If you’re building the habit of saving for emergencies, use that muscle to plan for other expenses.

Financial experts often use the terms “irregular expenses” and “unplanned expenses.” An unplanned expense is something you don’t foresee, such as an illness or car repair. Irregular expenses are predictable costs that come up during the year — think of car registration fees or holiday season spending.

Ideally, an emergency fund shouldn’t be used for irregular expenses, Lamb says. Instead, build a separate pool of money for them.

“Sit down and look at last year’s worth of spending and look at the things that popped up periodically,” she says. “Think about the coming year and how that might change. Figure out the annual amount and divide by 12. That dollar amount is what you set aside every month in an irregular expense account.”

Use the money when you need it

Don’t be afraid to use your emergency fund when you need it. Knowing the difference between unplanned and irregular expenses can help you decide when to tap it.

If the alternative is maxing out your credit cards or taking a high-interest loan, it’s cheaper over the long term to use your cash, then immediately start rebuilding the fund.

The article Don’t Freak Out About an Emergency Fund — Just Start One originally appeared on NerdWallet.

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Best and Worst Reasons for a Personal Loan

Let’s talk about personal loans.

We all wish the guide to personal finance was black and white, though sometimes it can be, it’s mostly a big grey area. You need to be your own advocate and understand the whys in order to make the best decision that fits your individual goals.

The purposes of personal loans can be very vague. Think of this product as a filler loan; it fills the gaps for miscellaneous funding.

Personal loans tend to have higher interest rates than a car loan or other collateralized loan products because most personal loans are unsecured. Unsecured means there is no physical material that is securing the loan. That being said you want to be careful with why you choose to take out a personal loan. Here are some good, ok and not-so-ok reasons to use this type of product.

Good reasons:

Debt consolidation is the most common and best reason for a personal loan. Most of the debt being consolidated is credit card debt, though it can be other types. Usually credit cards have one of the highest interest rates of any lending product and it is the easiest way for people to access borrowed funds which can result in a bad situation fast for those who cannot control their spending. If you are thinking to consolidate credit card debt, it is recommended that you cut up the cards or close the credit card accounts once you transfer the debt to ensure you don’t find yourself in a similar situation again.

In the case of an unexpected event, a personal loan is better than a credit card because it is an installment loan. Installment means it is a fixed term, it makes you pay off the debt in an allotted amount of time rather than paying the minimum and having the debt last longer than necessary. To better prepare for the next unanticipated incident, start an emergency savings now. Begin with a goal of a $1000, then keep moving that goal up each time you reach the set figure. Eventually you should want 3-6 months of salary in a savings account.

Weddings. According to the wedding website the Knot, the average wedding in the U.S. is $33,000. If you’re fortunate you may have support from family and friends, but most people end up funding their nuptials on their own these days. Items like venue, catering and the dress can be the most expensive components. It is a common recommendation in personal finance that you only buy things once you’ve saved the money for them but in the case of the modern day wedding you may need more than you can realistically save by the time you are ready to commit to your partner.

OK reasons:

Once-in-a-lifetime vacation because you only live once. Now it wouldn’t be recommended to borrow money for your annual beach vacation, but let’s say you have an opportunity to go to China with your best friend and you probably won’t have the opportunity again in the near future. It may be ok to borrow the money through a personal loan. Although you should have an aggressive repayment plan in place so you can minimize the overall interest you will pay. Additionally, save as much beforehand as possible, that way you won’t need to borrow the entire expense of the trip.

Projects around the house are another OK reason to use a personal loan. If your project is an expensive undertaking, then you may want to look at a home equity product instead. If you are needing to fund a project under $10,000 a personal loan can be helpful since it is easier and faster to access the cash than a home equity product. Plus, you aren’t putting another lien on the house. Analyze the price of the project and if it will add value to your home. Research any tax benefits from a real estate loan as well.

New Appliances or Technology may have zero percent financing at the store, or with your provider.  Better yet, save the money prior to making the purchase. If neither of those are an option for you, then it is an ok reason to utilize a personal loan. Though as mentioned previously, make sure to have a plan to pay the debt off quickly. Check the personal loan for any early payoff penalties or fees.

Unfortunately, medical bills are quite common in the U.S.  It may reduce your stress to consolidate them to a personal loan, though it depends if it is the best move financially speaking. Talk to your clinic before making any decisions. You may be able to set up a payment plan directly with the health organization or your insurance company. This way you don’t have to pay interest. In the case that you cannot have a payment plan directly with whom you owe, or the required payments are too high then it could be a good idea to apply for a personal loan. Whichever you decide, do not wait until the debt is in collection status.

Not-so-OK reasons:

Debt consolidation for a second or third time. Although debt consolidation is the best reason for a personal loan, you may have a bigger spending issue to reflect upon if you need to keep borrowing money to get yourself out of debt. Nonetheless, still consolidate the debt as the overall interest paid will most likely be less than the credit cards. However, it may be time to review your budget and relationship with money and perhaps cut spending.

College or consolidating student loans. Do not use a personal loan for this type of debt. Student loans are not considered bad debt and there are specific loan products available for funding your education or consolidating the debt once your done with school. Talk to the financial aid office at your university or college. Some federal loans are subsidized (where you don’t have to pay the interest while in school) others may have tax benefits or could be included in a loan forgiveness program down the road.

Anything with possible collateral should not be funded using a personal loan. If there is an asset you have which can be used to secure the loan, always take that option because the interest rate will be much lower.


Of course, there are endless scenarios you could find yourself in. The best practices are being honest with yourself and discovering a realistic path out of expensive debt as fast as possible.


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There’s Always a Next Recession, so Be Prepared

Recessions are like natural disasters: They’re inevitable, but smart preparation may reduce the impact on you.

The U.S. economy has grown steadily since emerging from the “Great Recession” in June 2009, but expansions can’t continue forever, and this one is already the second-longest on record. Only the expansion from March 1991 to March 2001 lasted longer.

Recessions occur when growth stops and the economy starts to shrink. They vary in severity and length, but often jobs disappear, incomes decline and lenders make it harder to qualify for credit.

Knowing what may be coming can help you fortify your finances to withstand a possible slowdown. Here are some steps to consider.

Reduce your ‘must haves’

The 50/30/20 budget suggests limiting your must-have expenses to 50 percent of your after-tax income, with 30 percent allocated to wants and 20 percent to debt payment and savings. Must-haves include shelter, transportation, food, utilities, insurance and minimum loan payments.

Limiting essential expenses ensures you have room to pay off the past, save for the future and have a little fun. Capping them also helps during bad economic times, when you may need to sharply reduce your spending because of job loss or reduced hours.

Protect your credit scores

Lenders often get pickier during recessions. They may freeze lines of credit, close credit card accounts and make new loans harder to get.

People with good credit scores tend to fare better when lenders get choosy. Lenders need to stay in business, after all, so when delinquencies and defaults rise they want to cultivate customers who are most likely to pay them back.

Because high scores suggest you’ll pay as agreed, protecting your scores is essential. That means paying all your bills on time, using only a small amount of your credit limits, keeping old credit card accounts open and being selective about opening new accounts.

Increase your financial flexibility

Ideally, everyone would have an emergency fund equal to at least three months’ worth of expenses. But most people don’t have nearly that much saved, and building up such a stash can take years.

In the meantime, it’s smart to set up access to additional credit that you can tap if you lose your job or face other financial setbacks. If you own your home, you may be able to set up a home equity line of credit or replace your current line with one that has a higher limit. Having a few credit cards can help as well.

The key to the strategy is to keep these lines open and unused. (You’ll need to make a few small charges to keep the credit cards active, but you should pay the balances in full each month.) If you have credit card debt, focus on paying that down since you’ll free up available credit and save money on interest.

But don’t rush to pay off student loans or mortgages, especially if you have higher-rate debt or a paltry emergency fund. Your extra principal payments typically won’t reduce your required monthly payment, and you can’t get that money back if you need cash in an emergency. Although being debt-free is a good goal, in a recession it can be more important to have financial flexibility.

Update your investments

If your stock market investments include money you’ll need in the next five years, now is the time to move it to a lower-risk investment such as a short-term bond fund or cash.

You should be able to leave any stock market investments alone for at least five years and preferably 10, so your portfolio has time to recover from downturns.

Now is also a good time to rebalance your portfolio to your target mix of stocks, bonds and cash. The long bull market means that you may have too much money in stocks, which leaves you more vulnerable to drops. If you’re not in the habit of rebalancing at least once a year, consider using a target-date retirement fund, a lifestyle fund or a robo-advisor, which all take care of that chore automatically.

There won’t be tax consequences for these moves if you’re investing inside a tax-deferred account, such as an IRA or 401(k). Before making moves in a taxable account, consult a tax pro.

All of these steps make sense regardless of what happens with the economy. Taking them now can help you better handle whatever comes next.

This article was written by NerdWallet and was originally published by The Associated Press.

The article There’s Always a Next Recession, so Be Prepared originally appeared on NerdWallet.

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Scrub These Expenses From Your Budget in 2019

You don’t have to cancel your Amazon Prime or turn your vacation into a staycation in order to save money.

Here are some less painful things you can cut from your budget in 2019.

Duplicate clothing

Make this the year you resolve to stop buying your favorite piece of clothing in every color of the rainbow.

“People wear the color they like best,” said Kit Yarrow, a consumer psychologist and author of “Decoding the New Consumer Mind: How and Why We Shop and Buy,” in an email.

“The extra one in a different color is usually forgotten and a waste of money.”

Before you buy a blue sweatshirt to hang alongside those identical yellow and green ones that are already in your closet, think twice.

Disposable products

The cost of disposable products like paper plates, paper towels or floor sweeper pads adds up over time, and is especially noticeable if money is tight.

Washable products are generally cheaper than one-time-use products, according to Annette Economides, author of “America’s Cheapest Family Gets You Right on the Money.”

To get started, opt for a hand towel instead of paper towels; instead of disposable sweeper pads, use a washable rag and a bucket of water.

Small daily expenses

Even small purchases can become expensive over time, says Ross Steinman, a professor of psychology at Widener University who studies consumer decision-making.

Take coffee, for example. “If you purchase two drinks from a Starbucks-type cafe every day, that’s approximately $8,” Steinman says. “Over the course of the year, it’s well over $2,000.”

For coffee, the cost-effective solution is to brew your daily cups at home. But look for other small expenses — gum or lottery tickets, for example — that could also be costing you.

Excess utilities

If you don’t keep a close eye on your heater and air conditioner, money could be seeping out of your pocket.

To save money if you leave for the day, try using a programmable thermostat that lets you set the temperature remotely. That way, you can wait to turn on the heat until shortly before you get home, Steinman suggests.

In-app purchases

Many of the apps you download on your phone, such as games or photo editors, have paid versions and options for in-app purchases. But spending even a few dollars here and there can add up.

Opt for the free version of the app, and limit in-app purchases. In most cases, the nonpaid version work just fine, as long as you’re content with sitting through a few advertisements.

Coupon-induced spending

Coupons are great, as long as they’re not encouraging unnecessary spending.

If a coupon or sale announcement spurs you to buy something you wouldn’t have otherwise, you’re not really saving money. A better approach? Find a coupon to lower the cost of an item you were already going to buy anyway.

Alcohol and sweets

Discretionary purchases like alcohol and sweets are also costly, so consume with caution.

Restaurant beverages in particular have a high markup, Yarrow says. She recommends skipping the coffee, iced tea or extra cocktail and having water instead.

But not necessarily all of the above…

If removing all of these things from your budget sounds too painful, choose a few to see how much money you can add to your pocket each month in 2019. And pat yourself on the back if you weren’t spending on some of these to begin with.

Regardless of which expenses you trim, now is a good time to hit reset on your budget.

“January 1. The start of a New Year. They’re all psychological markers,” Steinman says. “That idea of starting fresh and starting anew resonates.”

The article Scrub These Expenses From Your Budget in 2019 originally appeared on NerdWallet.

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Smart Ways to Rein In Holiday Spending

The holidays are a huge deal in the Weston household — and every year, the expenses threatened to gallop out of control.

Keeping the holiday joyous and less stressful means keeping a firm rein on our spending. Here’s what we do, as well as smart frugal tips from others:

Budget for every expense

By early November, I set up a spreadsheet with budgeted amounts for:

  • Gifts, with names and how much we expect to spend on each person.
  • Holiday tips, again with names and amounts.
  • Travel expenses, including gas, hotel and meals.
  • The tree, lights and other decorations.
  • Food, drinks and treats for holiday gatherings.
  • Holiday cards, postage and wrapping supplies.

Spreadsheets aren’t exactly warm, fuzzy and cinnamon-scented. But they allow us to see our total expected holiday spending and to make adjustments as necessary. (Adjustments are always necessary.)

» Track all your spending with this free budget calculator

We’ve used various ideas over the years to curb expenses, as our fortunes and the size of family gatherings change. One year the adults drew names for gifts. We’ve also asked friends and more distant relatives to exchange cards instead of presents. We set an overall budget for our daughter’s presents, then have her prioritize her wish list. Learning to prioritize is an important life skill, so this exercise does double parenting duty.

Check the ‘cushions’

Remember the days when you ransacked the couch cushions for loose change? There are better places to hunt for forgotten money. Some places to look:

Your gift card stash. Pass them along, use them to buy presents or cash them in at sites such as Gift Card Granny or Raise.

Credit card rewards. Rewards points can be used to buy gift cards and merchandise. We typically use our rewards for travel, but I sometimes turn points from little-used or orphaned accounts into gift cards.

The coin jar. Some banks and credit unions will count change for free, or you can use the CoinStar machines found at many grocery and drugstores. We avoid CoinStar’s exchange fee by opting for electronic gift cards from Amazon, Starbucks and other retailers.

The gift stash. Surely I’m not the only person to tuck away the perfect gift for someone, only to find it years later. Now I keep a bin in the closet to stash presents year-round. The bin also includes some all-purpose gifts (candles, scented soaps, fancy corkscrews) that can be used to thank a hostess or give to the friend who ignored the “no gifts this year” agreement.

The heirlooms. Consider passing along a treasured object while you’re still around to enjoy the recipients’ pleasure. It could be something you inherited or that the other person admired: a piece of artwork or jewelry, a beloved toy, a musical instrument, a grandparent’s toolbox or baking supplies.

Take a hatchet to other expenses

Our holiday spending surge requires cutting other expenses to keep our budget in balance. We:

  • Eat out less and plan meals that mostly use items from our pantry.
  • Scour our recurring bills for possible savings, such as pausing subscriptions or canceling an unused gym membership.
  • Look for cheap entertainment, such as free community concerts or baking cookies with friends.

We’re also changing how we make charitable donations, since the 2017 tax overhaul likely means we’ll no longer get a tax deduction. Instead of rushing to make big year-end contributions, we’ve set up monthly payments to our favorite charities. That provides them with a steady source of income and avoids another big December dent in our budget.

Keep the budget updated

A budget should be a living document, regularly updated and adjusted. I log our spending every week or so and use apps such as Santa’s Bag or Christmas List that I can update on my phone.

This approach does more than keep us honest about our spending. At the end of the season, I have a realistic idea of how much to save for next year. I divide that total by 12, and set up a monthly transfer to an online savings account labeled “Christmas.” Having the money to pay for the holidays in cash every year may be the best gift of all.

This article was written by NerdWallet and was originally published by The Associated Press.

The article Smart Ways to Rein In Holiday Spending originally appeared on NerdWallet.

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5 Tips for Cooking an Inexpensive Thanksgiving Dinner

Hosting Thanksgiving dinner can feel like a thankless job if you’ve destroyed your budget to do so. But it doesn’t have to be that way. By setting realistic expectations, shopping strategically and delegating tasks, this can be an affordable meal to prepare. Here’s how to pull it off:

1. Stick to the basics

First, drop the “Pinterest fantasy,” says Hali Bey Ramdene, food editor for The Kitchn. Your sanity and wallet will take a hit if you attempt the pear sangria and the sweet potato and Brussels sprout okonomiyaki and the apple-pecan pumpkin Bundt cake. Oh, and the turkey.

Use Pinterest and other social media sites as inspiration, not as a barometer of success. If you want to attempt a challenging dish, go for it. Otherwise, take advantage of the affordability of the Thanksgiving basics: turkey, potatoes and other vegetables.

Ramdene also points out that you probably don’t need a dozen appetizers and side dishes. “Think of the plate,” she says. A dish with just the essentials is a feast, when you consider a couple of slices of turkey, along with stuffing, potatoes and cranberry sauce. Would your guests even have room for the fancy Bundt cake?

» MORE: How to eat healthy on a budget

2. Downplay social media

Just as Pinterest can set unrealistic expectations while you’re planning the meal, Instagram, Facebook and Snapchat can up the ante come dinnertime. “Before, you just had dinner with your people. You fed them, and it was wonderful,” Ramdene says. “Now those people are taking photos of every single thing and narrating the dinner.”

Ramdene suggests gently asking guests to not use their phones at the dinner table. That way, they’re more present to exchange real-life experiences rather than Instagram stories. “The goal of Thanksgiving is to feed your family and be thankful together,” Ramdene says, “even if your potatoes don’t really look good with the Lark filter on them.”

3. Rethink the turkey

Look at your guest list and ask yourself if you really need to roast and serve a whole turkey. That’s a lot of food and a lot of work.

Instead, consider serving just a turkey breast. That’s what Katie Moseman, owner of the blog Recipe for Perfection, has done for the past three years. Moseman says a turkey breast is cheaper than a whole turkey and much easier to cook. Plus, it’s still tasty and attractive, with a “beautiful caramel brown exterior,” she says.

Worried about bucking tradition? “You’d have to have pretty fussy guests to complain,” Moseman says. “The carving the turkey on the table thing really only happens on TV.” As Ramdene puts it: “This is not a Norman Rockwell painting.”

If you’re feeding many guests and want to roast the whole bird, you’ll encounter a range of price tags and types. The Kitchn’s guide to buying a turkey may help you find one that fits your budget.

4. Shop wisely

That means starting now. Moseman scouts online and paper flyers of local stores and compares prices for the ingredients she’ll need. “A lot of times, the best deals won’t be found all at one store,” she says. So if you’re truly looking for the best bargain on each item, you’ll likely have to make a few stops.

As you create your “plan of attack,” as Moseman calls it, consider the value of your time, too. The grocery across town may sell pumpkin pies that are 80 cents cheaper than those at your neighborhood store, for example, but is that worth a 30-minute drive?

5. Enlist help

“Cooking Thanksgiving dinner by yourself is a falsehood,” Ramdene says. Save yourself stress and money by having guests bring dishes or beverages to share.

» MORE: How to throw a thrifty (and easy!) ‘Friendsgiving

Ask guests with food intolerances or allergies to bring a side dish that’s safe for them to eat. That way, you’re not shelling out for specialized ingredients or sweating over a tailored dish, Moseman says.

Specify requests for other guests, too. “Don’t just tell guests to ‘bring whatever,’” Ramdene says. “If you decide to host, you’re like a taskmaster.” Ask for a dessert to share, for example, or a hot appetizer.

Chances are your guests will appreciate a chance to contribute during the giving season. “People like to show up and bring their best dish,” Moseman says. “It takes pressure off the host, it costs less, and they’re happy to say, ‘Here’s something amazing I cooked. Please compliment me.”

The article 5 Tips for Cooking an Inexpensive Thanksgiving Dinner originally appeared on NerdWallet.

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Things to Consider When Applying for a Consumer Loan

There are many factors to think about before, during and after you apply for a loan. Some may not be as obvious as others nonetheless they all are important. Let’s break it down.


#1 Your credit score. Keep an eye on the number itself and the information that is being reported to ensure accuracy. Your credit score is going to be a considerable factor in getting approved for a loan and it will determine the interest rate in most scenarios. Always review all three credit bureaus annually at annualcreditreport.com and Credit Karma is a good website to keep an eye on it throughout the year.

#2 Have a budget and decide what you can afford. Don’t rely on what you can get approved for because lifestyles are not part of the expenses portion on an application. Are you a foodie or a world traveler, maybe you like to spend your money on sporting events or some special hobby? It is especially important that you establish a desired monthly payment prior to applying for the credit.

#3 Down payment. Have some money ready to put down on the item you are purchasing, whether it is a car to get to work or a toy to use on the weekend, be sure you have some liquid cash to put towards the purchase. It shows the lender that you are invested in the collateral and can help compensate for a lower than desirable credit score in the approval process.


#1 Interest Rate. If there is one most important part of a loan contract the borrower should be concerned with it’s the APR (annual percentage rate). This is the expense you pay the financial institution for borrowing the money. The higher the rate the more you end up paying over the original purchase price. Though the monthly payment can feel like the most impactful part of your loan, which is may very well be, the specification that will cost you the most is the interest rate. It is also important to know that adjusting the term can change the overall monthly payment. You may be paying a lower monthly payment but a higher interest rate for a longer term can cost you.

#2 Knowing the term or if the loan is open-ended (such as a credit card or line-of-credit) is also exceedingly important because this is the second factor that will impact the overall interest paid to the lender. Interest is paid daily on the majority of consumer loans therefore the longer the term the more money you will pay.

#3 Your monthly payment should fit into your budget that you figured beforehand. It is best to have that affordable number ready to go and have the term fit into your desired payment. For example, if you can afford $300 a month for a car loan and at a typical 48-month term with a 3.49% rate your payment would be approximately $225, you should then cut the term to fit your $300 payment. In this scenario, by working out your budget ahead of time you would have saved a whole year of payments and a little shy of $200 in overall interest paid.


*You want to familiarize yourself with these points before signing on the dotted line though they will be more applicable once the loan is open and in repayment status.

#1 Grace periods are important because life happens. A typical consumer loan runs 36-72 months, that is a long stretch of time and even if you are great at making on time payments you may still run into a bump in the road every now and then. Understanding your grace period options may aid you from accruing any unwanted late fees or other consequences.

#2 It’s also recommended that you inquire and understand if your financial institution has any early payoff penalties or fees for making principle payments. Though it is uncommon on most consumer loans, it is still possible to run into a product that may have these stipulations. This could end up costing you more or not fit into your future plans of perhaps paying the loan off early. Be sure to ask these questions to lender when reviewing the details at your loan closing.

#3 Know your options for making the payment. As mentioned previously, terms on a loan may extend over a few years or more and sometimes the unforeseen happens; therefore, it is best to be as prepared as possible. Knowing the different avenues you can use to make your loan payment may be helpful. Autopay from your primary checking is quite widespread and a highly desirable option but can you make a payment in a branch or over the phone? Maybe it fits your budgeting style to make weekly or bi-weekly payments. It is good to think about these things as a missed or late payment can result in fees and reflect poorly on your credit report.

Borrowing money is a commitment and is best if treated with high importance. Doing your due diligence can prevent a hard time later on or can save you money in the long run.

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Got Debt? Get a Side Hustle

If you’ve got debt and a main job that covers your regular monthly expenses, aim to apply earnings from side hustles directly to your debts.

Flexible side hustles that are worth your time do exist (and we’re not talking about pyramid schemes or online surveys). There are legitimate options to help pay off debt. And the extra income can be meaningful: Pay an additional $250 per month toward a $10,000 credit card balance with a 20% annual percentage rate and you’ll save over $9,000 in interest and pay off the balance almost seven years faster.

Here are some ideas and tips to get started.

Rideshare drive or delivery

Potential monthly earnings: Up to $300 or more, depending on location and how many hours you work.

Flexible hours make rideshare driving with Uber and Lyft a popular side hustle for people who own or have access to a car.

Uber drivers earned an average of $364 a month, while Lyft drivers made $377 each month, on average, according to a 2017 study of thousands of online loan applications by Earnest.

If you aren’t comfortable driving strangers, an alternative is to use your car to deliver items with companies like Roadie, which matches drivers with stuff bound for their destination. Pets, furniture and lost luggage are just a few items that can be delivered.

Earnings range from $8 to $650, depending on the trip distance and size of delivery, says Marc Gorlin, Roadie founder and CEO.

Delivering packages via Amazon Flex could be a lucrative side gig, with drivers earning $18 to $25 an hour, according to the company, and it operates in about 35 regions nationwide, including some major metro areas plus smaller cities.

Tutor or teach

Potential monthly earnings: $200 to $1,000, depending on experience.

Tutoring can be an option for teachers, professors or those with expert knowledge they can share. Startup costs are typically limited to books and other supplies.

Teachers have a leg up in tutoring for tests like the SATs, since they already know how to prepare students, says Gabriel Kaplan, founder of Wealth Habits, a financial planning firm in New York.

Telecommuting can expand your potential customer base. Remote tutoring jobs are listed on sites such as FlexJobs and SimplyHired.


Potential monthly earnings: $200 to $500 or more, depending on experience and clientele.

Freelance blogging, proofreading or editing are popular gigs for wordsmiths, while graphic design and music composition may appeal to artists.

If your passion is photography, income opportunities may include taking pictures at weddings and graduations and doing family portraits.

These side hustles can be found on job boards such as Indeed, Remote.Co or ProBlogger, or at freelance sites such as Fiverr.

Startup costs and time requirements could be on the higher side with these gigs. You’ll need the right equipment, a strategy for getting clients and ideally a website to market your services.

Rent or sell your stuff

Potential monthly earnings: Up to $1,000 for short-term home rentals in popular travel destinations; $100 to $300 or more for car rentals, depending on location.

Things you already own can create passive income. For example, you can rent your car via sharing marketplaces such as Turo or Getaround, which operate in many larger cities.

You can rent your home, apartment or a guest room through Airbnb or HomeAway. Check local laws because some cities restrict short-term rentals.

Sell unused items on eBay, Craigslist or specialty sites like ShareGrid, where you can rent or sell camera equipment.

Side hustle considerations

Set debt repayment goals. Seeing how much interest you’ll save by repaying debts early can motivate you to continue your side hustles. Track your debts on a spreadsheet or a budgeting app and check your progress monthly.

Match up skills to the hustle. Find something you’re good at and enjoy, says Chad Rixse, co-founder and financial planner at Millennial Wealth, in Seattle.

Don’t jeopardize your 9-to-5 job. Consider the time commitments of the side hustle, and check if you have a noncompete agreement, which may prevent you from working a gig in a similar field.

Obtain permits or licenses. For example, contractors may need a business license to work on houses, while fixing up and reselling items online may require a sales tax license, says Dwight Dettloff, a CPA and financial planner for Winding Trail Financial Planning, in Lafayette, Colorado.

Get insurance. You may need liability insurance for side hustles where there’s risk of being sued, Rixse says. Short-term house rentals and renting equipment are a few examples. You may also need rideshare insurance if your car insurance policy doesn’t cover it.

The article Got Debt? Get a Side Hustle originally appeared on NerdWallet.

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Ace Back-to-School Shopping With 6 Smart Moves

Back-to-school shopping is an expensive chore. And if you shop local sales, it’s a chore you’ll share with thousands of other parents in the vicinity. If it’s big savings you’re after when you brave the crowds, sales flyers won’t cut it. You’ve got to get creative.

“Back-to-school shopping can put a big strain on family budgets, but planning ahead to take advantage of discounts, setting a budget, and only buying what your child actually needs helps your dollar go a lot farther,” says NerdWallet personal finance expert Kimberly Palmer.

Going beyond the sales flyers in your savings efforts may take a bit more work, but it can pay off for your pocketbook and peace of mind.

»More: How to save money: short and long term strategies

1. Splurge strategically

Two-thirds (66%) of parents admit to splurging on clothing during back-to-school shopping and 50% on classroom supplies, according to a recent NerdWallet survey. But busting your budget on gel pens or the latest teen fashions doesn’t make financial sense. Instead, spend where it counts — on the things that last for years. For example, a high quality backpack or laptop can last your high-schooler into college. Splurge where you’ll truly get your money’s worth, and bargain shop on classroom supplies and fad items.

2. Take advantage of credit card rewards

Putting your back-to-school expenses on a cash-back credit card could put your money to work for you. Putting all of your expenses on one may reap enough to cover next year’s back-to-school expenses entirely. Just make sure you’re able to pay off the balance each cycle, as interest could negate any benefits.

3. Price match before and after shopping

Price matching involves comparing identical items at other stores and asking a retailer to match any lower price, and 10% of parents never do it, according to that NerdWallet survey. The trick may not make sense for a package of pencils, but for clothing, electronics, bookbags and other more expensive items, a successful price match could save you tens of dollars, if not more.

Check a retailer’s website or ask in store for its price matching policy. Many will also refund the price difference if you spot a cheaper price within a certain time frame after the purchase.

4. Team up to buy in bulk

Those classroom supply lists can get pretty long, and with roughly 25 students in your child’s classroom, many other parents are looking at the same list. By teaming up with other parents, you can purchase all of the supplies for homework and note-taking in bulk. If your child’s teacher is reluctant to give out parent contact information, ask if they would send yours out in a group email, allowing other parents to reach you if they’re interested in group savings.

»Read: More back-to-school shopping tips

5. Shop on tax-free holidays

Fourteen states are having sales tax holidays in August 2018. Most of them last through a full weekend, and some even longer. The specifics of each state’s holiday vary but generally allow you to purchase certain back-to-school items without paying sales tax.

6. Wait to buy some items

Your child doesn’t need a brand new wardrobe or the entire year’s worth of classroom supplies on the first day. By postponing some purchases, you can spread the costs across several months and possibly hit better prices. For example, fall apparel tends to drop in price after the initial back-to-school rush.

“Being strategic about your spending now will also make it easier to manage when other school-related expenses, for field trips or after-school activities, pop up as the year continues. Back-to-school spending shouldn’t stress your budget before the school year has even begun, and with a few smart moves, it doesn’t have to,” Palmer adds.

The article Ace Back-to-School Shopping With 6 Smart Moves originally appeared on NerdWallet.

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Rake in Cash at Your Yard Sale

Your yard sale hosting strategy can determine whether you rake in cash or waste a day. If you pull it off, others get to enjoy the items collecting dust in your home while you pocket extra money.

For those who’ve never held a sale before — or at least not a successful one — here are a few tips for making it worth your while.

Before the sale

Schedule strategically. First, check your local government website to learn if you need a permit. Then, pick a date. Spring and summer are typically the most popular times for yard and garage sales. Fall can also be fruitful, because shoppers are searching for Christmas gifts, says Chris Heiska, who runs the yard sale website yardsalequeen.com.

Saturday morning through early afternoon sales are crowd-pleasers. Bargain hunters tend to arrive early, so Heiska recommends setting up about half an hour to an hour before your designated start time.

In most cases, it’s best to skip weekdays, evenings and holidays when foot traffic is light. Weather can deter visitors, too. Check the forecast so that you don’t accidentally schedule a sale during a downpour.

Advertise. What good is a yard sale if nobody shows up? Advertising is perhaps the most important way to make it thrive, Heiska says. Your recipe for success: Mix equal parts old-fashioned and modern methods.

  • Hang flyers on bulletin boards at your community grocery store and coffee shop
  • List details along with photos of select items on local online marketplaces such as those on Craigslist, Nextdoor and Facebook
  • Post signs throughout the neighborhood. They should be sturdy and easy to read from a distance.

Make sure your ads include key sale information, such as the date, time and location. Start advertising at least a few days in advance.

Curate your collection. Yard sales with various objects attract more customers than ones with a single category, like books or baby clothes, Heiska says. However, there are exceptions. “If you live in a neighborhood with all young families with small kids, having a kid yard sale with baby stuff could be really popular,” she says.

Best-selling items can vary by region, but small kitchen appliances, household goods, tools and newer sporting equipment usually sell well, Heiska says. “You don’t want to drag out your 1950s exercise bicycle. That will not sell.”

» MORE: How to create a budget

Other tough sells include adult-size clothing, DVDs and anything damaged beyond repair. Your front lawn isn’t the best venue for expensive property like fine jewelry or high-end KitchenAid mixers, either. Not only do yard sale shoppers expect cheap prices, but your items also can get stolen. Heiska recommends selling valuables through online marketplaces and keeping cash on your person instead of in a box.

Set fair prices. You won’t make out like a bandit charging nickels and dimes. At the same time, don’t expect anyone to pay $50 for your ratty old baseball cap and VHS collection. Heiska suggests pricing most objects at about a third or quarter of what they cost new. Or, hit up a few garage sales in your neighborhood in the weeks leading up to your own to get a feel for the going rates.

On sale day

Tidy up. Presentation and cleanliness are key. Place items on tables, rather than the ground, to spare customers’ aching backs. If you don’t have tables, improvise with boxes and boards. And if you’re selling clothes, pick a handful of pieces to neatly fold or hang up.

“Seeing a mountain of clothing on a tarp, that’s kind of a turnoff,” Heiska says. “If you select a few items of clothing that may draw people in, it makes it look like your stuff is worth more and that you took the time to set it up nicely.” She adds that a visually appealing display provides leverage to price the items a bit higher.

Think of your yard sale as “a little department store,” Heiska says. Create a furniture section, an electronics section and so on. Face movies, video games and books the same direction with the titles visible. As items sell, rearrange what’s left to make your tables look fuller. Another word to the wise: Eliminate anything stained, dusty or sticky. The last thing customers want is to leave a garage sale needing a shower.

Make it inviting. Safety should be the top priority. Clear the vicinity of pedestrian tripping hazards like holes and extension cords. Once you’ve drawn in visitors, give them a reason to stick around and browse. Strike up a little conversation and consider playing some background music.

yard saleShoppers browse a yard sale hosted by Chris Heiska and other community members. (Photo via Chris Heiska)

After the sale

Sell or donate your leftovers. Unless you have a killer collection of merchandise  — or you’re an incredibly smooth talker — you’ll probably have items left unsold. Before chucking them in the trash, try selling them for a few bucks at local thrift stores or on marketplaces like Letgo and Craigslist.

» MORE: How to sell stuff online

Don’t want to deal with another sale? You can also donate to a church, Goodwill or another charitable organization. Your donation may qualify for a tax deduction.

Keep these tips in mind whenever you hold a yard sale. You’ll probably pick up a few of your own over time, too.

The article Rake in Cash at Your Yard Sale originally appeared on NerdWallet.

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Pesky Debt: Strategies for Paying It Off

What does financial freedom mean for you? A general answer to this question is to be debt-free. Especially among the younger generation burdened with student loans, being free of debt is a goal many feel is unattainable or far off from their present situation. But it’s not just student loan debt that can be a burden. According to Fortune the average American household has $8,284 in credit card debt and the average used car loan is $21,375 from Forbes. Other types of debt include personal loans, payday loans and medical bills.

For some it can be emotionally and physically draining dealing with debt. For others, it may be less stressful but still a cloud hanging over their heads. Whatever the feeling is for you the approaches towards a debt free life are the same.

Here are simple strategies to aid you in your journey at any stage:

Start with a Review

How much debt do you have? Review all your debts. Write down the current balances, interest rates, monthly payments and remaining terms. Organize them from highest to lowest in three different ways: balances, rates and monthly payments. This will help you determine which method is best for you.

What kind of debt do you have? Though the type of debt doesn’t necessarily matter in the payoff process, there could be tax benefits to some forms of debt such as real estate or student loans. It’s also helpful to know the type of debt so you can evaluate your spending.

First Steps and Preparation

Assess and Cut Spending This is the best first action step because it forces you to observe. Many of us get the habits of auto payments and subscriptions then we don’t always look at our account history as much as we should. Taking a moment to cancel subscriptions not being used or acknowledging that we spend way too much on that morning coffee and adjusting our behaviors can free up cash to put towards the debt.

Set Goals and Re-work that Budget Now that you know where your money is going and you’ve trimmed some expenses, it’s time to set or review your financial goals. Picture your future self, debt free living your best life. Once you know what you want then re-work your budget keeping those newfound objectives in the forefront.

Discover Means to Increase Your Income Track if you get any bonuses or commissions from work, utilize that tax return better, or start a side hustle are a few ideas. Be creative and openminded. If you earn any extra money besides your regular income throw it straight at the debt before you have a chance to think about other things to do with the funds.

Other Tools

Balance Transfer Promotions: most of us get unsolicited ‘junk’ mail in the form of credit cards offers quite frequently. If you are in the process of creating your debt plan, it may be worth your while to look at some of these. Transfer balances to credit cards that offer 0% interest promotions are a great tool. Tip: make sure to read the fine print and understand all the stipulations prior to transferring your balance.

Talk to your creditors: Occasionally you can get your interested rates lowered by simply asking. It’s worth a call.

Debt Consolidation Loan: If you’re debt is all over the place with high interest rates, consolidating before you start your payoff method may be helpful. Review your plan with your debts as they stand and again in a consolidation loan. Calculate any fees or costs associated to measure the worth of this option.


Avalanche There are two ways to approach the Avalanche payoff method. The most common is setting it up regarding the highest interest rate however you can do the same thing with the highest monthly payment amount. Using the highest interest rate as a gauge will result in less interest paid overall, but the highest monthly payment loosens your monthly cash flow. You will need to examine your goals to know which is best for you.

The method is simple to understand though putting it into action is more difficult. For the Avalanche method, you pay the minimum amounts due on all the loans. Then any free funds you have, would be direct to either the loan with the highest interest rate or the highest monthly payment amount, depending which you chose. Once you pay off the highest account you move all the funds from that payment to the next highest and continue this until all your debt is paid off. The amount you pay towards your debt doesn’t change during the process; you merely roll it to the next.

Here is an example assuming you went with the highest interest rate. You have $500 available each month to put towards your debt. Your current situation is as followed.

  • $1,000 credit card at 22% APR with a $50 minimum payment
  • $5,000 student loan at 5% APR with a $100 minimum payment
  • $3,000 car loan at 7% APR with a $150 minimum payment

Pay $100 and $150 towards your student loans and car loan. Pay $250 on your credit card (highest rate). In approximately 4 months you will have this paid off. Now move that $250 plus the $150 you are already paying to the car loan (second highest rate) so now you are paying $400 a month. The car loan will be paid off in roughly 8 months. Then put all $500 towards the remaining student loan, until all the debt is paid back.

Snowball This method is quite similar to the Avalanche method only it’s based off the smallest balance. This approach tackles debt faster but may end up costing more depending on your interest rates. Organize your debts based on balances, smallest to largest. Make the minimum payments on all your loans but pay as much as your budget allows to the loan with the smallest balance, once that is paid off, roll all the money to the next smallest balance loan. Repeat each step until all accounts are paid in full.

Here is an example. Let’s say you still have that $500 available each month. And your debts look like this:

  • $300 medical debt with a $50 minimum payment
  • $700 credit card with a $50 minimum payment
  • $5,000 car loan with a $150 minimum payment
  • $8,000 student loan with a $150 minimum payment

Start with the medical bill, apply $150 to that until it is paid, then combine that $150 with the $50 minimum from the credit card and pay $200 towards that until paid off. Then move on to the car loan and pay $350. Finally, all $500 will be applied to the student loan. There you have it; you are now DEBT FREE!

A good way to stay motivated is to track the debt being paid or think of fun ways to use that $500 once you have it to yourself again. Just don’t wait any longer. Begin with a small undertaking and build up from there. Remember, your action plan doesn’t have to be flawless, you just need to act.

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Ditch This Phrase and Jump-Start Your Financial Plan

Moving on after financial mistakes is tough when you’re stuck in “I should have” mode. I should have started saving for retirement sooner. I should have cut up my credit cards years ago. I should have said no to my brother-in-law’s dumb investment idea.

Acknowledging mistakes is one thing, but ruminating keeps you mired in mental muck.

And as long as you stay stuck, “you’re going to keep repeating those mistakes,” says Therese Nicklas, a certified financial planner and owner of The Wealth Coach for Women in Rockland, Massachusetts.

If your money mantra is an endless loop of “I should have” (or “I shouldn’t have”), then it’s time to shift to what you can do now. Here’s how:

Face the money mistake and assess what led to it

“Some people think, ‘If I ignore it, it’ll just work itself out,’” says David Clarken, a certified financial planner and owner of FWI Wealth Management in Atlanta. “It’s important to know what you did and how you got there.”

He recalls his own time of reckoning some 20 years ago. He was spending more than he earned in his first job out of college as a staff accountant. The overspending eventually led to using balance transfer credit cards to make minimum payments on other credit cards. Each time, he’d tell himself, “You’re an idiot.”

But the pattern didn’t stop until he created a spreadsheet and faced the bottom line: He had $10,000 in credit card debt. He realized he had been spending at the level he expected to make after getting promoted. Once he faced the stark numbers and understood the problem, he cut spending and steadily paid off the debt.

Take responsibility without beating yourself up

It’s OK to feel remorse, Nicklas says. But don’t take a guilt trip.

“Guilt is like a pity party. You feel bad, but you are not moving forward,” she says. “You’re just deliberating over the thing you did wrong and not hitting the pause button and identifying, ‘What can I do better?’”

Statements like “I’m just lousy with money” become excuses to repeat mistakes, she says. Instead, she says, ask yourself, “How is this going to benefit me going forward?”

She recalls clients — a couple who owned a small business — who spent months regretting a decision to spend $3,000 on an unsatisfactory sales training program. They couldn’t get their money back because of fine print in the contract. The lost money was a distraction until they planned how they’d carefully evaluate training programs before buying them.

Forgive yourself

What’s done is done, but “people get stuck in a cycle of shame and negative self-talk,” says Jamie Lynn Byram, an accredited financial counselor and owner of Peace Within Financial Counseling in Suwanee, Georgia. One of her clients who came for help with his wife was so ashamed that he showed up at the appointment with a bag over his head.

She tells clients: “You’re not where you want to be now, but you are taking the steps to get to where you want to be.”

When clients are troubled by financial mistakes, Clarken has them write down the errors, and after assessing what led to them, burn the pieces of paper.

Ask for help if you need it

Telling someone can help, but this is not news to share with an overly critical mother or a gossipy friend. “Be careful about who you choose to go to,” says Linda Leitz, a certified financial planner and co-owner of Peace of Mind Financial Planning Inc. in Colorado Springs, Colorado. “What you don’t want is to get in front of people who will beat you up for it.”

Stick to people you trust, like Clarken did by talking with his family members about his credit card debt. Among them was his grandfather, who he knew would support his efforts to pay off the debt and hold him accountable.

Emotional support from friends and family is important, but turn to professionals if you need help fixing the mistake. Perhaps you bought a financial product that wasn’t right for you, such as an annuity or a whole-life insurance policy you didn’t need. Or you can’t control your spending. Or you’re too overwhelmed to create a financial plan.

To get an unbiased opinion, choose a financial advisor who doesn’t earn commission on financial product sales. See these 10 questions to ask a financial advisor to help you find the right match.

If the mistake is a pattern with deep roots, consider talking to a therapist or financial counselor.

You can find accredited financial counselors through the Association for Financial Counseling and Planning Education and financial therapists through the Financial Therapy Association’s member directory.

Move on

Once you’ve acknowledged the mistake, assessed how it happened and forgiven yourself, it’s time to let go of the past. Focus on setting goals and creating a plan to achieve them. Make a commitment to what you will do, rather than just thinking about what you should do.

As you move forward, acknowledge each positive step, however small. Simply telling yourself “good job” or getting a high-five from a trusted friend can do wonders.

“The most important part of the plan is celebrating the victories,” Leitz says.

The article Ditch This Phrase and Jump-Start Your Financial Plan originally appeared on NerdWallet.

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Don’t Let Friends Derail Your Finances

Over the past few years, Meghaan Lurtz has had to turn down two destination bachelorette parties for dear friends. She was in graduate school and didn’t have the money to go.

“It felt really crappy, because these are people that I know and I love and I care about, and I absolutely wanted to be there,” she says. “But finances are what they are. You have a budget, and budgets have restraints.”

Lurtz is the president-elect of the Financial Therapy Association. She’s counseled people who’ve been in similar situations and said yes to both the pricey activity and, in turn, credit card debt.

After all, it’s hard to turn down fun with friends. But that fun can add up, as buddies expect you to shell out for group vacations or smaller expenses, like dinners, drinks and concerts.

Here’s how to determine whether you’re spending too much with friends and, if so, fix your finances without hurting your relationships.

Reflect on your — not your friends’ — finances

First, recognize that everyone has a unique “money mindset” that shapes financial decisions, says wealth psychology expert Kathleen Burns Kingsbury, author of the recent book “Breaking Money Silence.” Income and savings certainly play a part, but so do our upbringings, personalities, cultures and values. “What’s important to you and how you spend your money might be different than your friends,” Kingsbury says.

» QUIZ: What’s your money personality?

So resist giving the side-eye when your friend goes for those $600 boots — that’s her decision and her money. Instead, “try to come up with your own philosophy around money,” Kingsbury says. Determine what’s important to you — traveling the world, paying off your credit card debt or buying a home, for example. Then prioritize accordingly.

Kingsbury suggests scrutinizing last month’s credit card and bank statements to make sure your spending aligns with your priorities. Aim to get a broad sense of where your money is going and whether you ought to adjust your spending habits.

For example, you may want to course-correct if you spent $500 at the bars but put $0 toward that home you’re saving for. Creating a budget, if you don’t already have one, will help.

Spend less money (not time) with friends, if needed

Say you realize you’re overspending on social activities with friends. This problem is pretty common, Lurtz says, and it’s often driven by FOMO — the fear of missing out. You may say “yes” to every pricey dinner or group trip, for example, even though your budget screams “no.”

Remember that the point of these outings is likely more about spending time with friends than it is about eating or vacationing, Lurtz says. “So, if you can be with the person in a less expensive way, do it,” she adds. Here are a couple of strategies:

Use cash. Participate in the activity, but leave the plastic at home and bring only the amount of cash you feel comfortable spending. Unlike swiping a credit card, handing over cash feels more substantial and forces you to use “mental accounting,” Lurtz says.

“Believe me, you’re less likely to buy a round of shots for all your friends when you only have a $50 bill in your pocket,” she says. And you still get to hang out. “You’re out there, you’re going, but you also have the pride in knowing that you prioritized your goals.”

Focus on the friendship. You can always pass on activities you don’t want to spend money on. Fight that FOMO by spending time with friends in a different way.

For example, skip the $100 dinner with your crew and grab a $5 latte with those friends the next morning. “You’re honoring the friendship” and showing interest in spending time together, Kingsbury says. “But you’re coming up with an alternative for the connection they’re trying to have with you — at your spending level.”

Discuss money with friends

When you pass on an activity, thank your friends for the invitation and give them plenty of notice. Be honest about your financial priorities and respectful of theirs, Kingsbury says. Rather than complain about their expensive tastes, explain that you’re trying to save for a home, for example.

An open talk about your financial goals — and your friend’s, if she’s up for it — does more than lessen the blow of a declined invitation. It can help you become better friends.

Discussing our money and values, Kingsbury says, “increases intimacy and helps us understand where the other person is coming from.”

The article Don’t Let Friends Derail Your Finances originally appeared on NerdWallet.

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Should We Pay People to Save?

Long ago, people were rewarded for saving. Banks contributed something known as “interest” to the amounts deposited in savings accounts.

OK, technically they still do, but you’d be forgiven for not noticing the tiny amounts added in a low-rate environment. The current average interest rate on savings accounts is 0.06%.

Anemic rates may not be a major reason why Americans don’t save enough, but there’s some evidence that better rewards could induce more people to save. Two approaches that seem to work: matching funds and prize-linked accounts.

The prize-linked approach is by far the sexier one, since it combines savings with a lottery aspect. Each deposit of a certain size, typically $25, earns a chance at a larger cash prize that can range from $100 to $5,000 or even more.

“It seems a bit surreal. It’s not what we’re used to in a savings product,” says John Thompson, senior vice president and head of research consulting at the Center for Financial Services Innovation, a bank-backed nonprofit that researches ways to improve financial health.

The accounts may or may not pay interest. The prizes are often funded from a financial institution’s marketing budget, or from general revenue, says Brian Gilmore, senior innovation manager for Commonwealth, a nonprofit that promotes prize-linked savings.

Prize-linked accounts have successfully promoted savings for decades in other countries. In the U.S., the movement is still relatively small and promoted mostly by credit unions, although Walmart added a prize feature to its prepaid MoneyCard in 2016 and some startups, including Long Game, offer prizes as well.

Commonwealth reports credit union members saved an average of $2,429 and a total of $175 million in such accounts from 2009 through 2016.

The accounts are a particular hit with people Commonwealth deemed “financially vulnerable,” which includes those who aren’t regular savers, earn less than $40,000, have less than $5,000 in assets besides home equity or are single parents with dependent children.

The accounts also may be a way to bring more people into the financial mainstream. One in 10 savers joined their credit union because of a prize-linked program, and six out of 10 savers in prize-linked accounts said they were more likely to use the credit union’s other financial products.

That’s an important hook for financial institutions, CFSI’s Thompson says, since savings accounts themselves aren’t a profit center.

“Financial institutions make their money from lending money out, from fees they charge, from other solutions you might sell to the customer,” Thompson says. “A consumer who uses multiple financial products is a more loyal and more profitable customer.”

Matching funds also can bring people into the mainstream and promote savings. Researchers who evaluated Assets for Independence, a federally supported matched-savings program for low-income people, for example, found:

  • New savings, not including the matching funds, rose a median $657 in the program’s first year
  • Economic hardships experienced by participants fell 34%
  • The use of check-cashing services dropped 39%, indicating the program may have guided participants away from alternative banking services toward the mainstream

Funding for matched savings programs, also known as individual development accounts, typically comes from U.S. Department of Health and Human Services grants, but also can come from financial institutions and charities.

More of them should consider making this investment, since so many Americans could benefit. Nearly half of U.S. adults don’t have the ready cash to cover an unexpected $400 expense, according to the Federal Reserve, and that’s leading to an “epidemic” of financially fragile families, Thompson says.

Increasing incomes would make it easier to set money aside, of course, but CFSI’s research shows that just being in the habit of saving can help people survive financial shocks without dire consequences.

“The way to improve people’s financial health,” Thompson says, “is to help them to save.”

This article was written by NerdWallet and was originally published by The Associated Press. 

The article Should We Pay People to Save? originally appeared on NerdWallet.

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Why You Should Save for Something Fun

Financial planners tend to have firm ideas about the most important goals: You should save for retirement, pay off debt and build an emergency fund. Buying a pair of $200 sneakers or an ultra-high definition TV is probably not on that list.

But maybe saving for something you really, really want isn’t frivolous. It may be exactly what you need to get your financial life on track.

Researchers who have studied the role of savings in financial health say what’s important is the habit of putting aside money and having a plan for that cash. People who have a planned savings habit are four times more likely to be financially healthy than those who don’t, according to a report by the nonprofit Center for Financial Services Innovation. That habit is more important than income, age or other demographic characteristics, the report found.

Saving even small amounts can help people avoid the high cost of being broke. A few hundred bucks saved may help bypass credit card debt, payday lenders, rent-to-own stores and bank overdraft fees. It can help avoid eviction, or losing a job because the car broke down. Even a thin financial cushion can help people become more financially stable.

“That ability to be resilient in the face of ups and downs is a very important component of financial health,” says John Thompson, senior vice president and head of research consulting at the Center for Financial Services Innovation. “It also helps people avoid high-cost financial services when they face a short-term challenge.”

But saving a small amount, only to see it wiped out by an unexpected expense, isn’t satisfying. Saving up to buy something we want, on the other hand, can feel like a real win — and it’s the winning that matters to our brains. Each time we anticipate getting a reward, our brains are treated to a shot of dopamine, the chemical that makes us want to repeat a pleasurable experience.

Recalling our small wins also can help us learn to persist when difficulties arise, rather than just giving up, says Michael Thomas Jr., an accredited financial counselor who advises clients at the University of Georgia’s free Aspire Clinic.

Remembering the times we’ve achieved a money-focused goal helps counteract the “negative automatic thoughts and catastrophic thinking” that keeps people from seeing progress, says Thomas, who has studied psychology and is getting his Ph.D. in financial planning and who also co-hosts “Nothing Funny About Money,” a public radio program in Atlanta.

If people aren’t already in the habit of saving money, their goal doesn’t need to be lofty — and perhaps shouldn’t be. Being told to save $1 million for retirement or three months’ worth of expenses for emergencies could cause them to give up in despair.

“When I’m starting from zero, those seem like magical, fantastical, unattainable sums of money,” Thompson says. “How would you begin is a daunting challenge.”

What may be worse is telling non-savers that they need to put aside money for retirement and emergencies and a host of other goals. Researchers at the University of Toronto’s Rotman School of Management found people were much more likely to save money when presented with a single goal. When contemplating multiple goals, people considered the trade-offs and put off taking action, the researchers found.

Letting people set their own goals also may goose savings habits. WiseBanyan, a digital investing site, found the percentage of customers who set up automatic savings plans increased about 50% after it allowed them to create their own milestones or goals, whether retirement, a trip around the world or a new wardrobe, says chief operating officer and co-founder Vicki Zhou.

“When you personalize it, the way you think about it changes,” Zhou says.

That’s not to say people should save only for the fun stuff and ignore their long-term financial health. But the fun stuff can be a powerful motivator.

“The behavior of savings is what we’re trying to encourage,” Thompson says. “It’s not that we’re suggesting [saving for emergencies and retirement] isn’t important, but before that comes the behavior.”

This article was written by NerdWallet and was originally published by The Associated Press. 

The article Why You Should Save for Something Fun originally appeared on NerdWallet.

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You Don’t Have to Go Broke Attending Holiday Parties

Oh, the woes of being popular during the holidays. Each party invitation comes with an unwritten expectation to spend money on transportation, a host gift and a festive outfit.

But party hopping doesn’t have to be expensive. Cut yourself some slack and accept these three fundamental truths.

1. You don’t have to attend every party

For each invitation, consider your relationship with the host and the cost of attending, both in terms of time and money, says Susan RoAne, author of “How to Work a Room” and professional speaker.

“If I have to drive an hour for a party, it better be for someone who I love and adore,” she says.

Here’s what to consider:

Tally costs. Estimate transportation expenses for gas, parking, rideshare services or public transportation. Factor in how much you’ll spend on a potluck contribution or host gift (more on that later), too. Other costs may include a fee for attending a professional event or child care while you’re away from home. If the total of those expenses exceeds your budget, you have an out.

Decline kindly. “You don’t have to go to every party you’re invited to,” RoAne says, “but you do have to be appropriately polite in how you say ‘no thank you.’”

Look to how the invite was extended for guidance on how to decline. For example, RSVPing “not going” is usually fine for an impersonal Facebook invite. Doing the same and adding a small message for an online invitation is OK, too, RoAne says. But if you received the invitation by mail, call — don’t text — to break the news.

Make exceptions. “If you’re saying ‘no’ to every invitation, go back and review,” RoAne says. “You can’t have relationships — business or personal — if you don’t invest some time and, sometimes, money.”

For example, consider a holiday gala hosted by your professional organization. Tickets may be steep, but showing up and mingling could help your career. Or the Uber rides to and from a dear friend’s party may set you back $50, but attending could help nurture that relationship.

2. You don’t have to dress like Beyonce

Let’s face it, women feel more pressure to look fabulous for parties than men. Earlier this year, Michelle Obama compared the scrutiny of her style versus that of the former president.

“Now, people take pictures of the shoes I wear, the bracelets, the necklace — they didn’t comment that for eight years he wore the same tux, same shoes,” she said.

Most of this advice is for the ladies:

Repeat staples. Unless you’re a first lady, the press won’t care if you repeat an outfit — and neither will other party guests.

“Nobody’s going to say ‘you wore that dress at the last party,’” says Catherine Brock, owner and editor of the Budget Fashionista blog.

She suggests investing in a black or navy dress and wearing it to several parties. For each event, change up the accessories. Festive jewelry, scarves, shoes and handbags are more memorable than the staple piece anyway, she says. And those items can be cheap. She suggests perusing websites such as ASOS, Polyvore and ShopStyle, as well as the sale racks at H&M, Kohl’s and Macy’s for inexpensive accessories.

Give life to forgotten pieces. You may not even need to buy anything. “Shop in your own closet,” RoAne says. “Look at what you have that you can put together in a different way.”

Pair a bridesmaid’s dress with a leather jacket, for example. Or unearth that sparkly skirt from New Year’s 2015. Remember, no one will recall that you’ve worn it before.

3. You don’t always have to buy a gift

Host gifts are thoughtful — and one of the easiest spots to cut party costs:

Skip gifts when you can. If you bring a dish to share or bottle of wine, RoAne says, you can forgo a host gift.

“You’re already doing part of the work,” she says, “and you’re spending some money.”

Don’t bring a gift if you have to pay to attend the party, either, she says.

If you bring something, don’t spend much. You can’t go wrong with a cheap bottle of wine that tastes expensive. Need gifts for several parties? Check for discounts on bulk wine purchases from wherever you buy your vino.

If the host doesn’t have a taste for wine, consider bringing a small item for the house. RoAne suggests boxed luxury soap, which you can typically find for cheap at discount stores such as T.J. Maxx, Marshalls and Ross. Homemade presents can be inexpensive and personal, too.

The best gift you can give doesn’t cost a dime — it’s “your willingness and interest in talking to other guests,” RoAne says. “If you see anyone standing alone at any holiday event or party, go over and talk to them. This season is about acts of kindness.”

But just to be safe, be friendly and bring a $10 bottle of prosecco.

The article You Don’t Have to Go Broke Attending Holiday Parties originally appeared on NerdWallet.

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5 Mobile Banking Alerts to Help You Fight Fraud

If a bank account is a house for your money, then mobile alerts are your alarm system. These email or text alerts can help you keep track of when your money enters and exits your accounts — and make sure there’s no breaking-and-entering either.

“As fraudulent behavior has become more public with major retailers being breached, consumers have realized the importance of being involved in identifying fraud and not solely relying on their banks and credit unions to prevent it,” says Chris Hill, senior manager of digital channels at Alliant Credit Union.

Log in to your bank’s app and set up alerts to go off in these five situations:

1. When big purchases happen

You should know every transaction going in and out, but pay more attention to the ones with extra zeros. If any don’t ring a bell, review the transaction details in your account history and talk with any family members who have access to your account.

2. When your profile or password changes

If your personal information on your bank’s website or app changes without your authorization, especially passwords, that’s typically a sign of identity theft.

3. When an ATM withdrawal exceeds a certain amount

If you only use ATMs to get a few twenties at a time, set up this alert so you’ll know of any big withdrawals you didn’t authorize.

4. When your account drops below a specific amount

Normally this can help you avoid overspending. But if you set up this alert on a checking or savings account you rarely use, you can catch any sign of the balance dropping due to unauthorized purchases or even bank fees.

5. When any debit card purchase occurs

This alert might be annoying for some, but consider setting it up if you want to see a real-time list of your purchases either as emails or text messages. When purchases occur at odd hours, you’ll know right away.

» Want credit card alerts, too? Check out the three alerts worth setting up now

Act on suspicious activity

If any alerts lead you to believe that you are a victim of identity theft, contact your bank immediately. Check the back of your debit card or the bank’s website for the number. The sooner you report fraud, the faster your bank can help and the less likely you’ll be responsible for unauthorized transactions.

More fraud prevention tips from NerdWallet

The article 5 Mobile Banking Alerts to Help You Fight Fraud originally appeared on NerdWallet.

© Copyright 2016 NerdWallet, Inc. All Rights Reserved

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Car Sharing, Auto Refinancing and Insurance: Ways to Cut Your Car Costs

Driving is a necessity for many, but it can also be expensive, with an average annual cost of almost $8,700. Here are three easy ways to reduce your car expenses.

1. Decrease auto insurance premiums

Loyalty isn’t always rewarded when it comes to car insurance. It makes sense to compare rates periodically and see whether you can find better ones than your current insurer charges. A NerdWallet study found that drivers could save an average of $859 a year by shopping around. To increase your savings even further:

  • Maintain consistent coverage with no time gaps.
  • Research and claim all discounts you qualify for.
  • Consider raising deductibles to lower premiums.
  • Bundle car insurance with other coverage.
  • Reduce yearly mileage if possible and notify your insurance carrier.
  • Improve your credit score.
  • Drop collision or comprehensive coverage on older vehicles that are worth only a few thousand dollars.

2. Refinance your car loan

If you’re facing hefty auto loan payments, refinancing may bring some relief or shave some time off your obligation. Make sure your current loan has no prepayment penalties, and then explore your options by comparison shopping. Be sure to check out credit unions, since they often have lower rates than banks. Refinancing can sometimes save as much as thousands of dollars if:

  • Interest rates have come down since you took out your loan.
  • You didn’t get the best available rates when you financed originally.
  • Your credit score has improved.

To find out how much you could save by refinancing at a lower interest rate, run the numbers through a car loan calculator.

3. Make your car earn its keep

What’s your car doing while you’re at home, at work or sleeping? Chances are it’s just sitting around and not serving you in any way. The recent emergence of car sharing platforms such as Getaround and Turo can change that. They allow you to offset ownership costs by renting out your car when you’re not using it. Both platforms give the vehicle owner the majority of the rental fee, which varies according to your car’s model and age. If you’re worried about the risk, consider that you’ll be covered by a minimum of $1 million in insurance during rental times.

Car sharing is available in a number of cities, but to participate your car must be a 2005 model or newer, and some mileage restrictions apply: Getaround requires cars to have less than 125,000 miles and Turo rentals must have less than 100,000 miles. Depending on the type of car you drive and how much downtime you have to rent it out, you could make hundreds to thousands of dollars each year.

Owning a car is far from free, but you don’t have to accept high costs without question. Injecting a little research and strategy into the mix can bring down car ownership costs considerably, leaving you with more cash in your wallet to enjoy your journey.

© Copyright 2016 NerdWallet, Inc. All Rights Reserved

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What’s a Good Use for a HELOC?

When you take out a second mortgage, a name for a home equity line of credit, you’re offering your house as collateral to secure another loan. The upside: You can gain access to up to 85% of your home’s value, minus your current mortgage balance and adjusted based on your creditworthiness.

The downside? If you can’t make your payments, you could lose where you live.

Because the stakes are high, you want to make sure you use a HELOC for the right reasons. Here are a few.

Making home improvements

Most people who take out a HELOC do so to make home improvements. Experts say you should only do this if the improvements you’re considering will increase your home’s value. This way, the money you’re borrowing will be returned when you sell your house at a higher price.

The National Association of Realtors’ 2015 Remodeling Impact Report lists these six changes as the ones with the best return on investment:

  • Installing a new front door.
  • Installing new siding.
  • Upgrading your kitchen.
  • Adding on to your deck and patio.
  • Making an attic into a bedroom.
  • Installing a new garage door.

These improvements can range from a few hundred to tens of thousands of dollars, but they don’t change the footprint of your home and tend to be what future buyers look for.

Supplementing an emergency fund

Everyone should have an emergency fund to cover events such as unexpected car repairs and appliance breakdowns. Most people keep these in savings accounts, but you might consider a home equity line of credit as another source of cash. You only pay interest on the amount you borrow, and you could pay the loan off quickly to save money. Still, it makes more sense to have an emergency fund that’s earning a little interest rather than one that charges you interest.

Paying off high-interest debt

Because the average interest rate on a HELOC is much lower than the average credit card interest rate, many people think about using a HELOC to pay off their credit cards. This is a great strategy if you’re committed to never carrying a balance again. Otherwise, you’re just adding another debt at a lower rate.

Regardless of how you use a HELOC, remember that the interest rate is variable and may change each time you tap it. And you’ll have to repay the entire loan by the end of the payment period set by the lender. On the upside, the interest you pay on a HELOC is tax deductible, like your mortgage interest. If you use a HELOC for the right reason, that’s just one more benefit.

© Copyright 2016 NerdWallet, Inc. All Rights Reserved

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How to Take the Heat Off Your Summer Budget

Summertime brings more than sunburns and barbecues — it can also send your monthly expenses through the roof. But with a little work now, you can enjoy the hot season and avoid pinching pennies in the fall.

“Ideally, one saves a little bit of money in each of the cooler months and then spends down those funds in the summer,” says Michael Schupak, founder of Schupak Financial Advisors in West New York, New Jersey. But, if you’ve failed to plan your budget that far ahead, all is not lost.

Saving on travel

Plan vacations wisely, paying for as much as possible in advance. Lodging, transportation and entertainment in many cases are less expensive when booked ahead. And getting started early means there will be less scrambling for money later.

If you’re down to the wire and don’t have enough money for a big trip, visit family who’ll put you up or plan a staycation this year. Crashing on a relative’s couch or being a tourist in your town may not be a dream vacation, but it is still a break and can give you a head start on saving for next year’s trip.

» MORE: 3 ways to save money

Saving while at home

On the homefront, find out if your utility company offers a flat rate plan. This can spread power, heating and cooling costs across 12 equal monthly payments, eliminating spikes on your bill caused by more people, like school-age children, being at home during the day in summer.

Older children home for the summer may spend their days raiding the fridge. Couponing is one way to save on groceries, but it can take a lot of effort to see measurable payoff. Instead, encourage your kids to cook and limit convenience foods — those that are easy to eat mindlessly — on your shopping list.

If you are looking for supervised activities for younger children, an overnight summer camp or full-time day care, generally the most expensive choices, aren’t the only options. If you didn’t budget for these big-ticket items, look for local day camps, which are often run by religious or community organizations and parks departments and are a fraction of the cost of child care.

For next year, Schupak recommends estimating how much expenses climb in the summer and setting aside — through automation, if possible — a portion of each paycheck for a summer fund.

» MORE: How to build a budget

Other tips for cutting summer costs

  • Opt for free or cheap weekend activities
  • Cut out streaming subscriptions
  • Encourage older children to get a summer job for their own spending money

Elizabeth Renter is a staff writer at NerdWallet, a personal finance website. Email: elizabeth@nerdwallet.com. Twitter: @ElizabethRenter.

This article was written by NerdWallet and was originally published by USA Today.

The article How to Take the Heat Off Your Summer Budget originally appeared on NerdWallet.

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Why You Should Get Preapproved for a Car Loan

When shopping for a new car, many people overlook one important step: getting preapproved for an auto loan. It’s a simple process that can make car-buying go more smoothly and save you money.

Preapproval is a quick assessment of your ability to pay off a loan based on your credit history and current financial state. This is how it works: You visit a bank or credit union, in person or online, and provide proof of your identity — such as your driver’s license or Social Security number — your household income, and perhaps your housing costs. The lender will likely run a credit check. Then you’ll find out how much it would be willing to lend you and at what rate — sometimes on the spot.

Here’s why you should get preapproved.

You can get a better interest rate

If you haven’t done your homework, your dealership might try to talk you into a loan at a not-so-great rate. But getting preapproved at a bank or credit union — or several of them — means you can assess the dealership’s offer, and you don’t have to accept it. Bringing your interest rate down just one or two percentage points can save you hundreds, maybe thousands, of dollars over the life of your loan.

You can set a true budget

Once you’re preapproved for a loan, you can plan your purchase. Use an auto loan calculator to factor in a down payment, the value of your trade-in — which you can find online — and your desired monthly payment. Add about 10% for sales tax and other fees. And don’t forget about insurance and the other costs that come with owning a car.

Adjust your dreams — and budget — accordingly. Then go shopping.

You can better negotiate with the dealer

Letting your dealer know that you’re preapproved shows that you’re a ready-to-buy customer who can walk away at any time. That curtails a lot of the early verbal dancing. Just announce you have your preapproval and will only talk price. Try something like this: “I’m looking for this model, in a deep blue with black leather interior and rear parking sensors. I just stopped in quickly to find out the price I would pay after you take my car as a trade-in.” If the salesman doesn’t listen, say, “I just want to hear that one number.” It’s not rude to be assertive in this situation.

And as you’re signing all the papers in the finance office, if a salesperson tries tempting you with an extended warranty or other last-minute add-ons, you can use your preapproval to stick to your price.

When you’re preapproved for a loan, you have the competitive edge in car-buying. You can say no until they say yes.

© Copyright 2016 NerdWallet, Inc. All Rights Reserved

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Enjoy Your Summer Vacation — Without Maxing Out Your Credit Cards

By Eric Jorgensen

Learn more about Eric on NerdWallet’s Ask an Advisor

School is out, and summer is upon us. It’s time to let loose and have some fun. That sounds great in theory, but it can be horrible for our finances if we aren’t careful — especially when it comes to taking summer vacations.

For many people, travel is a significant part of their summer budget, but reckless spending while on vacation can wreak havoc on their finances. People often spend more when on vacation, perhaps because they get caught up in the moment or simply because things are more expensive than at home.

So what can you do this summer to make sure you don’t end up with a financial hangover, wondering where the money went or how the credit card bills got so high? Here are a few tips to help you enjoy your summer vacation without derailing your finances. [external link disclosure]

Make a plan 

It helps to start with a plan for your summer vacations. You don’t have to rule out spontaneity entirely, but having an overview of when and where you’d like to go, what you’d like to do and how much it will cost gets you started off on the right foot.

You can also do some research to identify deals ahead of time. Many hotels offer discounts during offseasons, and some airlines have lower fares when you fly during off-peak times. Services like Airbnb offer competitive prices for lodging and may help you reduce expenses if you eat some meals in instead of going out.

Set up a ‘fun fund’

With a plan in place, you can start saving for your trip. Creating a separate “fun fund” helps cement why you’re saving the money and can help you keep your eye on the big prize when lesser temptations, like a new TV, arise.

To determine how much you need to save each month, divide the cost of the trip by the number of months you’ll be saving. Major trips, such as to a Disney location or overseas, may require significant planning and a longer time horizon to save. For instance, taking a $6,000 trip every three years would require you to save around $170 a month. If you wanted to do this more frequently, you’d have to save even more.

If “staycations” or weekend getaways are more your speed, you may not need to save as aggressively or as long. You can build these trips into your spending plan by setting aside an extra 5% or 10% from your check each pay period.

You can also get the whole family involved by encouraging your children to set aside a portion of the money they receive from birthdays and allowances for parent-free spending while on vacation.

Know your limits

Set a daily spending budget for your trip and don’t exceed it. Include what you’ll spend on food, activities, lodging and anything else that might come up. You can also get your children involved in the planning, having them participate in the family’s budgeting. Even young children will benefit as they are exposed to responsible spending.      

But remember, setting these spending limits means being realistic. If you have to budget $500 a day for a five-day trip because you plan to eat at restaurants for every meal and you want to bring souvenirs home to friends and family, so be it. It’s more important to be realistic about what you’ll spend and to save for it than it is to convince yourself you won’t spend much and go two or three times above what you budgeted.

Stay disciplined

Once you’ve settled on how much you’ll spend, stick to it. It’s easy to talk yourself into not counting little purchases like a coffee here or mouse ears there, but those little purchases add up and can have a significant impact on your vacation fund. Give yourself a 3% to 5% buffer in your budget for the “Oh, that’s so cute” and “Man, I just need to have that” moments — we’ve all had them.

With practice, you’ll get better at estimating how much you’ll need each day, but having a cushion can help in case you underestimate.

Have fun

Most of us aren’t going to plan a vacation down to the minute, but with money saved up in a “fun fund” and a cap on your daily spending, you can enjoy yourself and avoid maxing out your credit cards.

Eric Jorgensen is a fee-only financial planner with MainStreet Financial Planning in Silver Spring, Maryland.

The article Enjoy Your Summer Vacation — Without Maxing Out Your Credit Cards originally appeared on NerdWallet.

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Key Tax-Preparation Tips to Cut Stress

Although it comes around every spring, tax season tends to inflict the same headaches year after year. To reduce your stress — and maximize your refund — it’ll help to stay organized and be aware of recent changes to the tax code.

For additional motivation to get on track, keep in mind that the average refund has been about $3,000 in recent years. Even if you don’t expect to get that much back, there are plenty of ways to put a refund to good use. But first, you’ll have to file your returns properly, taking advantage of any deductions you might qualify for. Here’s a look at where to get started.

Compiling the necessary information

For starters, you’ll need your W-2 form listing earnings and tax withholdings, which employers typically send out in January or early February. Be sure to have your Social Security number or taxpayer identification number available, as well as those numbers for any dependents you’ll claim. You’ll also need documentation of any income they may have had.

Affordable Care Act penalty

The 2010 Affordable Care Act ushered in one of the most significant tax law changes in recent years. It stipulates that if you didn’t have health insurance for more than three months in 2015 and didn’t qualify for an exemption, you may face a penalty. [external link disclosure]

For tax year 2015, taxpayers who lack adequate insurance may be penalized at either 2% of a portion of their income or $325 per adult and $167.50 per child, to a maximum of $975 per family — whichever is higher. Those fees are set to increase in upcoming years, which means it’s a good idea to get insured as soon as possible[external link disclosure]

Tax deductions reduce taxable income

Deductions reduce the amount of your income that you have to pay taxes on. Sit down and figure out whether the standard deduction or itemized deductions will work best for you. The former is a set amount that reduces your taxable income depending on your filing status; the latter lets you list qualified expenses separately, such as mortgage interest and local property taxes. If your itemized deductions add up to more than your standard deduction amount, go with that.

So what kinds of expenses can you deduct? Contributions to eligible organizations and interest on education loans are among the more well-known deductions you can take. Others, such as medical and home office expenses, aren’t as widely used for various reasons. Make sure to look into which of your expenses you can use to reduce your taxable income, which will probably increase your refund. Bear in mind that income limits and expense thresholds may limit these deductions or eliminate them entirely. [external link disclosure]

If you qualify to contribute to a traditional individual retirement account, or IRA, you may be able to shield up to $5,500 of income from taxes — plus $1,000 more if you’re 50 or over — by putting it in an IRA. You have until April 15 to make deductible contributions for the previous year. Withdrawals are subject to income tax, however.

Also, if you’re in a same-sex marriage, stay alert for further changes in the rules governing your tax status and other financial issues.

The bottom line

Completing your tax returns won’t be much fun, but it’s the first step in claiming a refund. Once you’ve filed your returns, you should expect to get what you’re due within three weeks — or in less than half that time if you ask for the money to be directly deposited to a savings or checking account. Just remember to compile all the essential paperwork before getting started, keeping an eye out for tax credits and changes to the tax code. [external link disclosure]

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Keep Your Budget in Mind When Planning a Vacation

Vacations don’t have to be expensive to be memorable and fun.  Here are some suggestions to plan a successful vacation.

Create a vacation budget

Decide how much money you can afford to spend on a summer vacation.  Start by updating your monthly budget. Review your income, expenses, and debt obligations and be sure to set aside money for emergencies.  Then decide how much you can direct towards a summer vacation.  Add up the total estimated costs of your trip in advance, before making final plans.  Then, put away money each month into a savings account.

Involve your family

Once you’ve determined how much money you can afford for a vacation, decide how best to spend it.  Include your family members to decide on where to go and what to do.  If your budget is limited, consider an at-home vacation like a grand picnic with families, friends and neighbors.  You could also host a pool party at a local pool or visit tourist attractions in your area.

Research your vacation options

Use the internet to get information on sightseeing, tourist attractions, and discount travel and lodging.  Ask travel agents for information on seasonal discounts.  Read the latest travel guides available online, in newspapers, and through local visitor and tourism associations.  Get advice from friends and relatives who’ve traveled to places you plan to visit.  They can help direct you to places that are fun and affordable.

Plan your itinerary in advance

Map out your daily activities and routes to ensure that you’re staying on-course and on budget.  Unplanned activities can often amount to unplanned spending.  Before you know it your budget will be busted.

Have a credit plan

Check credit card balances on your accounts well before you travel.  Make sure they are paid off or under half the limit that you can charge.  Credit cards are helpful on the road.  They’re safer than cash because they can be replaced if lost or stolen.  They can make it easy to overspend, though, so be sure to limit your charges to budgeted expenses.  Also, limit credit card cash advances.  This is expensive cash because you could be assessed a flat fee and charged interest as of the date the advance is taken.  If you need cash, use your ATM or debit card instead.  Only use one or two credit cards and be sure to keep all receipts and record your charges in a ledger.  When you return home, pay off the credit card charges using the money that you saved for the vacation.

If you would like to discuss your vacation budget with someone, you can take advantage of the GreenPath Financial Wellness program, a free financial education and counseling program of Wakota FCU.  GreenPath counselors are available Monday through Thursday 7 a.m. to 9 p.m. (CST), Friday 7 a.m. to 6 p.m. and Saturday from 8 a.m. to 5 p.m. To use this new service, simply call 1-877-337-3399 or visit them on the web at www.greenpathref.com.


7 Ways to Protect Your Identity While on Vacation

Summer vacation season is here, and if you’re traveling far from home, you probably want to do all you can to make sure your wallet or purse doesn’t end up in the wrong hands.  But according to a recent Experian ProtectMyID survey, 30% of travelers have experienced identity theft while away from home or know someone who has.

It’s best to take steps now to keep control of your sensitive information.  Here are some ways you can take to protect yourself on your next trip.

1. Sign up for bank fraud alerts.

Gary Devan of San Diego says he signed up to receive texts from his financial institution so that he’d be immediately notified of unusual or suspicious activity in his accounts, like unusually large purchases.

“If alerts are available on your accounts, you can receive them even while on vacation,” he says.

Devan has good reason to want to avoid an account breach — he happens to be the chief information officer where he banks, Mission Federal Credit Union. He hasn’t experienced any noteworthy issues, but says the fraud alert service gives him peace of mind while traveling.

2. Be careful surfing on public Wi-Fi spots.

Hackers may be able to access public networks and see any information you send over them, including bank account numbers, logins and passwords, says Jason Glassberg, co-founder of Casaba Security, a computer security firm in Redmond, Washington.

Glassberg suggests skipping Wi-Fi while traveling, unless you use a virtual private network.  “If you don’t have a VPN, stick with a cellular signal, as it’s much safer,” he says.  “For a laptop, you can hotspot your phone to connect over cellular.” [external link disclosure]

Cellular text-messaging and VPNs are good alternatives, but the reality is, you may still choose to use public networks to surf the Web, especially if you’re not sending sensitive data over Wi-Fi. If that’s the case, it’s a good idea to set your device to forget that network when you log off.  That way, it won’t automatically log back on to it the next time you go online.

3. Install phone-tracker software.

If your device goes missing, you may be able to use “find my phone” or similar software to pinpoint its location and retrieve it. If that’s not possible, some apps could erase all the data on the device, so it won’t get into the wrong hands. Another way to help prevent data theft is to lock the screens on your electronics.

4. Keep your purse or wallet secure.

If you carry a handbag, try to keep it in front of you, so it’s not an easy mark for thieves.  If you have a wallet, try to secure it as well. “I keep mine in a zipped pocket or travel pack,” Devan says.

Another idea is to wrap the wallet in a rubber band or other coarse material so that it won’t easily slide out of your pocket.  In addition to securing your belongings, it’s also a good idea to be aware of your surroundings and try not to become distracted.

5. Be careful around ATMs.

“Look at them before you swipe. Check for loose housing, exposed wires, bulkiness and anything that looks out of ordinary,” Glassberg says. Those are all signs that a thief may have installed a skimmer on the machine, which could lift the data from your card, he says.  Also, try to use a bank branch or merchant you trust when withdrawing cash. [external link disclosure]

6. Watch out for fake front desk calls.

Say you’re staying in a hotel and someone calls your room, says he’s from the “front desk” and needs to verify your credit card number. Don’t think you have to share your information immediately. You could say you’ll call back and thenhang up. Then, you can call the front desk using the number you have in your records and ask the staff if they really need this information. If not, you may have just avoided an identity theft attempt.

7. Leave your important financial files at home.

Social Security cards as well as credit and debit cards that you don’t plant to use on the trip can stay behind. The fewer sensitive documents you have, the fewer chances that they could be stolen.

Despite your best efforts, if you find that your identity has been stolen, it’s important to report it quickly to your financial institutions and the local police. [external link disclosure]

Your summer vacation should be a time for relaxation, so take steps now to avoid crossing paths with a thief or hacker. By using these tips, you could lower the odds of having your identity stolen and boost your chances of having more fun in the sun.

Margarette Burnette is a staff writer at NerdWallet, a personal finance website. Email: mburnette@nerdwallet.com. Twitter: @margarette

This article originally appeared on NerdWallet.

More from NerdWallet

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Organize Your Finances for the New Year

A new year brings a chance to start fresh with just about anything. If your midnight toast includes a resolution to improve your financial health, here’s how to make it happen.

Get on a budget

To get ahead, it’s important to know where you stand and to create a plan with realistic goals such as a comfortable retirement, education and home ownership. Budgeting may sound old-school, but it’s still one of the best ways to accomplish this. Start by totaling your income and subtracting your monthly expenses for a quick financial snapshot. Then set goals, reduce unnecessary spending and, if the situation calls for it, explore ways to increase your income. [external link disclosure]

Budgeting doesn’t have be time consuming or complicated. Downloading a budgeting app to your smartphone lets you track spending and financial progress effortlessly in real time. To take the work out of saving toward your goals, you may also want to sign up for an automatic plan that electronically deposits an amount you choose from your paycheck or checking account into your savings account at regular intervals.

Prepare for the unexpected

Life can throw you some scary curveballs. Challenges like job loss, medical issues or property damage can leave you drowning in debt for years if you’re not prepared. That’s why it’s essential to build an emergency fund that can cover at least three to six months of living expenses. Even if you can save only a little each month, with consistent deposits and compound interest you can eventually grow a sizable protective cushion. [external link disclosure]

Break free of debt

Making just the minimum payments on major debts means you’re paying mostly interest and barely even chipping away at balances. One effective approach for eliminating debt is to concentrate your efforts on your highest-interest balance first, while still making timely smaller payments on all other obligations. Once this first debt is paid off, focus on the most expensive remaining balance, and continue this way till you’re debt free.

When multiple debts are truly out of control, debt consolidation may provide some relief. This makes it easier to pay off debt faster and more affordably by streamlining multiple debts into one single lower monthly payment. Debt consolidation options include home equity financing, personal loans and zero-interest credit card balance transfers.

Maximize tax deductions

Researching tax deductions and gathering appropriate documents can help you avoid paying more tax than absolutely necessary. You may qualify for tax breaks including:

  • Interest deductions for mortgages, home equity financing, business financing, student loans and loans for boats with living quarters.
  • Deductions for other taxes paid, including sales tax, foreign taxes and self-employment tax.
  • Home office and business insurance deductions.
  • Deductions for monetary and nonmonetary charitable gifts.
  • Pre-tax contributions to traditional IRAs and 401(k) plans. [external link disclosure]
  • Lifetime learning credit.

Re-evaluate your investments

Life conditions change over time, so it only makes sense that investment and retirement accounts should be adjusted periodically. In early years, it’s beneficial to favor an aggressive mix of securities, but as retirement approaches, gradually shift toward more conservative choices like bonds, CDs and mutual funds. It’s also smart to examine your estate plan and make sure your will, insurance policies and beneficiaries are up to date. [external link disclosure]

Financial housecleaning kicks off the new year just right. Over time, things that seemed out of reach become affordable, and every unexpected expense won’t seem like the end of the world. This change may be gradual, but by the next New Year’s Eve toast your improved financial wellness will be something to celebrate.

© Copyright 2016 NerdWallet, Inc. All Rights Reserved [external link disclosure]

How to Avoid the Busy Holiday Scamming Season

You’re not the only one joyfully anticipating the holiday season. Cyber criminals are all aflutter, too, as they look forward to the killing they’ll make ripping off innocent shoppers like you. Here are some of the most common ways these thieves operate, because awareness can help you avoid becoming yet another victim. [external link disclosure]

Antisocial media

Beware those enticing ads that turn up on Facebook and other social media sites offering vouchers, gift cards and deep discounts, as well as the online surveys these ads often link to. These offers are often only empty promises designed to steal your personal information.

Additionally, if you receive concert, theater or sporting event tickets as a gift, never post pictures of them online. Cyber thieves spend lots of time monitoring social media, just waiting for the opportunity to create phony tickets they can resell from your barcode image. If your ticket is resold, you might just find yourself out of a seat on the night of your event. It’s also unwise to post live from an event that gives criminals a heads-up that your home is empty and ripe for picking. Better to wait until the next day to post about the wonderful time you had.

Pandora’s inbox

It may be a mystery to you how cyber thieves got your private email address, but it’s chillingly clear they’re up to no good. Your inbox may fill up with all kinds of legitimate-looking product offers and delivery notices this holiday season, but clicking on links of bogus ones or entering personal information on the linked sites can provide criminals with the opportunity to steal your identity.

Apps are far from immune

With mobile apps available for just about everything, it’s a sad sign of the times that certain free mobile apps (often disguised as games) have been specifically designed to steal personal information from your phone. This is a particularly scary development since many people use their phones to secure their cars and homes. For this reason, only install apps from familiar companies and, at the very least, find a third-party review from a trusted site if you’re interested in an app from an unfamiliar source.

USB Trojan horses

Lots of people use portable USB drives, which makes it all the more important to avoid those being distributed as giveaways this holiday season unless they’re from a trusted source. These innocent-looking devices are often used as a method of introducing malware to computers.

Gifts that keep on giving … to criminals

A spirit of generosity is traditional at holiday time, but if you’re not careful, your donations may never make it to the needy. Fake charities that skillfully tug at your heartstrings abound at this time of year, just waiting for you to willingly give your hard-earned cash to scammers. Before donating, be sure to check out charities thoroughly, to make sure that they’re not only legitimate, but also that they allocate the bulk of funds toward their causes rather than “administrative costs.” [external link disclosure]

Tips to avoid holiday scams

These strategies will also help keep you a step ahead of scammers:

  • Only shop online with reputable businesses you trust, using secure websites with an address that begins with https.
  • Don’t shop or bank over public Wi-Fi.
  • Protect your credit card privacy by covering your account number with your hand when shopping in public. [external link disclosure]
  • Don’t respond to suspicious unsolicited calls or emails. Only open email attachments from senders you trust, and contact businesses only through their official websites, phone numbers or email addresses.
  • Monitor your credit to catch fraud at its earliest stages. [external link disclosure]

Scammers may be smart, but you can still outsmart them. A little foreknowledge and caution go a long way toward ensuring you’ll enjoy a safe and memorable holiday season.

© Copyright 2016 NerdWallet, Inc. All Rights Reserved [external link disclosure]

When to Consider a Home Equity Loan

Are there things you’d love to do if only you had a little extra cash? A home equity loan puts the equity you have in your home to work for you. Here’s how to decide if this option is right for you. [external link disclosure]

Home Equity Loans 101

A home equity loan is a type of second mortgage that uses your home as collateral. You may be able to borrow as much as 80% of your home’s equity, and you’ll receive the money as a lump sum. You’ll have about 10 to 15 years to pay back your loan and interest, although some financial institutions may offer longer or shorter terms. Annual percentage rates tend to be fixed, which means payments won’t change over the life of the loan. Because a home equity loan is secured by your home, the interest rates tend to be low. [external link disclosure]

How can I use a home equity loan?

Since there are no restrictions on qualifying expenses, you can spend this money any way you like. Perhaps you want to consolidate debt, make some home improvements or help your kids with college expenses. A home equity loan can also be a lifesaver if you’re dealing with an unforeseen emergency.

Benefits of a home equity loan

Home equity loans offer a number of advantages over other types of financing:

  • Predictable budgeting: Fixed interest rates ensure that your monthly payments will never increase.
  • Low APRs: Interest rates tend to be lower than for most other loan options, which gives you more affordable payments as well as considerable borrowing power.
  • A tax break: In most cases, your interest will be tax deductible. [external link disclosure]

Important considerations

Before committing to a home equity loan, it’s important to understand the risks. Because your home is securing this loan, if you can’t make the payments, you could lose your home. Additionally, if the housing market falls sharply, you may end up owing more than your home is worth. [external link disclosure]

Is a home equity loan right for me?

Home equity loans are best suited for major one-time expenses such as consolidating debt, building a home addition, remodeling a kitchen or bath or covering an emergency repair or replacement. If you’re dealing with multiple expenses that will be ongoing, a home equity line of credit might be a better choice. A HELOC lets you borrow just what you need at the time you need it. In either case, home equity financing makes sense only if you have a secure and stable income and are confident you’ll be able to make timely payments over the entire financing term. [external link disclosure]

With interest rates still holding at near historic lows, there’s no better time to explore home equity financing. Financial institutions like Wakota Federal Credit Union offer both home equity loans and lines of credit with competitive rates and terms. You can even make payments online, so staying current doesn’t have to interfere with your busy schedule. [external link disclosure]

Roberta Pescow, NerdWallet [external link disclosure]

© Copyright 2016 NerdWallet, Inc. All Rights Reserved


7 Ways to Protect Your Money and Identity During the Holidays

Shoppers will swarm stores and the Internet during the holidays. Joining them will be thieves who are waiting to steal their money and identities. According to Javelin Strategy and Research, 12.7 million American consumers lost $16 billion due to identity fraud in 2014.

During the holidays, thieves want to take advantage of your potential to be distracted by your lengthy to-do list. Here are seven ways to protect yourself when you shop online and in stores.

  1. Look at your credit card and checking account activity frequently during the holidays to be sure there have been no unauthorized charges. Yes, you have a million things to do besides your regular chores, but logging on to your financial sites once a week only takes a minute and can head off any problems. You should also check your credit report for free [external link disclosure]at least once a year. Why not do it today?
  1. Be careful about using public Wi-Fi [external link disclosure]to shop or to connect to your bank or credit union’s website or app. Your personal details like passwords are vulnerable when you connect to public Wi-Fi. If you must use public Wi-Fi, turn off the sharing option on the control panel of your mobile phone and turn off Wi-Fi when you’re not using it. And remember to enable the four-digit security code on your phone.
  1. Don’t click on links in emails, especially those that claim to be from your bank, credit union or credit card issuer advising you of a “problem” with your account. Phishing [external link disclosure]emails proliferate during the holidays. If you get an email of this type, call the bank or credit union to be sure that it’s authentic.
  1. Make sure an online shopping site has the padlock image and https in the URL. You may find the perfect gift for Aunt Lucy on a site you’ve never used. Before you input your credit card information, check the web address and look for the SSL security symbols.
  1. Only carry the credit and debit cards you need when you go shopping; leave the others at home. It’s also better to put your purchases on a credit card, not a debit card — it’s easier to fix if there’s an unauthorized charge. Some financial institutions, such as Wakota Federal Credit Union in Minnesota, have the “Verified by VISA” program attached to their credit and debit cards. You set up a password when you enroll and use it each time you make a purchase.
  1. Beware of offers that promise a discount in exchange for opening a credit card. You’ll have to write personal information, including your Social Security number, on a piece of paper, and your identity could be compromised.
  1. If your credit card or other personal data is compromised, freeze your credit file with Equifax, Experian or TransUnion, the major credit bureaus. A credit freeze means no one, including you, can apply for new credit. The next time you apply for credit, you’ll have to inform the credit reporting agencies that you want the freeze lifted.

By taking the appropriate precautions, you can make sure that holiday joy doesn’t turn into the January headache of dealing with identity theft.

Ellen Cannon, NerdWallet [external link disclosure]

© Copyright 2015 NerdWallet, Inc. All Rights Reserved 

People Helping People

The credit union movement began 160 years ago with a simple but radical idea. That with the help of your neighbors, you can improve your financial well-being.

This idea spread across the world, and credit unions flourished, especially during times of economic hardship.

During the Great Depression, scores of ordinary Americans—farmers, teachers, small business owners—found themselves without access to banking services, so they banded together to become their own not-for-profit financial institution. Credit unions opened in record numbers.

During the recent Great Recession, again credit union memberships swelled. Today there are more than 200 million credit union members worldwide—100 million of them in the U.S.

But even after all this time, the bedrock principles of credit unions remain unchanged. Credit unions are still:

People coming together to be their own bank, so no one can deny them a path to prosperity.

People pooling their savings to provide each other affordable credit.

People helping people.

To celebrate this powerful movement, join Wakota Federal Credit Union at 1151 Southview Blvd. South St. Paul, MN 55075.

International Credit Union Day Celebrates People Helping People

On October 15, 2015, credit unions around the world will celebrate International Credit Union Day (ICU Day).

Since 1948, on the third Thursday of every October, credit unions have celebrated a simple but radical idea—that by working together, people can improve their financial well-being. “People helping people,” this year’s ICU Day theme, is the foundational philosophy of the credit union movement, going back to the very beginning.

In 1850s Germany, a group of weary workers formed the world’s first credit union. Suffering through an economic downturn and tired of loan sharks exploiting them, they banded together to provide affordable credit to each other. Not-for-profit and governed by and for the people who created them, credit unions not only gave working-class people a way to break a cycle of debt that had bled them of any financial gains. It showed them, for the first time, a path to prosperity.

It’s no wonder then that when economic times are hard, credit unions flourish. Credit union membership swelled during the Great Depression and again during the recent Great Recession. Today, there are more than 200 million credit union members worldwide—100 million of them in the United States.

The World Council of Credit Unions, supported by credit unions in the U.S., works to develop credit unions around the world because they believe that every person deserves access to affordable, reliable financial services. As not-for-profit financial cooperatives, credit unions are governed by their members—one member, one vote. In many countries, credit unions offer people their first true taste of democracy.

“Credit unions must do their part. We must share our knowledge, our experience, and our dreams,” World Council Board Chairman Grzegorz Bierecki said earlier this year. “It is the duty of free people to support freedom.”

At its most basic level, a credit union is people pooling their money to provide each other with affordable loans—a credit union is literally people helping people. This is why we celebrate ICU Day at Wakota Federal Credit Union.  This simple idea empowers people, wherever they are in the world or life, to take control of their own financial future.

So when we wish you a Happy ICU Day at Wakota Federal Credit Union, know that we’re thanking you for belonging to a movement that’s helping your neighbors—and people around the world—grow and thrive and follow their dreams.

If you have any questions about the credit union philosophy or how Wakota Federal Credit Union can help you, stop by or contact us at 651.451.3330.


Unclutter Your Home With a Financial Spring Cleaning

Bogged down by mountains of statements, records and bills around your home? A financial spring cleanup will create some more breathing room. Here’s what to do to get that mess under control.

Divide and conquer

Separating documents into those retained forever, records held temporarily and papers to be trashed immediately simplifies the job of cleaning up:

Shred and toss these documents today:

  • Pay stubs reconciled with W-2s
  • Income tax records over seven years old
  • Owners manuals for items no longer owned
  • Expired warranties

Retain these records indefinitely:

  • Birth certificates
  • Social Security cards
  • Valid passports
  • Legal or bankruptcy filings
  • Marriage or divorce documentation
  • Proof that mortgages and other loans have been satisfied
  • Records of IRA contributions and withdrawals
  • Family health and education records

Here are some recommended time frames for storing remaining paperwork:

  • Income tax-related paperwork: Save tax returns and supporting documents, including income statements and receipts, for seven years.
  • Banking and investment statements: In general, keep for one year. If they support tax filings, keep for seven.
  • Canceled checks: Retain until reconciled with banking statements (or seven years if needed for taxes).
  • Current bills and credit card statements: Hold until reconciled with next statement (or seven years if used for tax filing).
  • Insurance policies: Keep as long as policy is active.
  • Wills: Retain until updated.
  • Property deeds, vehicle titles and receipts for major purchases: Retain as long as item is owned (or seven years if needed for tax filings).
  • Monthly mortgage and loan statements: Hold until reconciled with annual statements or loan is satisfied.
  • Small-business records: Employment tax records should generally be held four years and other business paperwork for three years. Special circumstances, such as certain losses or filing inaccuracies, may make it necessary to hang onto documents longer or indefinitely.

Lighten your load

If paperwork still feels unmanageable, going paperless allows access to records but eliminates paper clutter [external link disclosure]. Opt in for online bill payments and eStatements with utilities, creditors, service providers and financial institutions like Wakota Federal Credit Union. Not only will this simplify your life, it also will reduce waste.

It might seem like drudgery to roll up your sleeves and organize years of paperwork with a spring financial cleanup. But when you discover that important documents are now at your fingertips and you’re enjoying the benefits of an uncluttered home, you’ll be glad you took the time to do it.

Roberta Pescow, NerdWallet [external link disclosure]


Smart Ways to Use a Tax Refund

When a big pile of cash lands in your lap, it’s natural to want to do something fun with it. And perhaps you can — after you’ve put most of that money to work where you need it most.

Here are some good ways to use your tax refund.

Save it for emergencies

What would you do if you got hit with a $1,000 medical bill or car repair? Setting aside an emergency fund can help you avoid going into debt when unexpected bills crop up. Experts suggest keeping six months’ worth of living expenses in an easy-to-access savings account at a financial institution like Wakota Federal Credit Union. But if you’re carrying a lot of debt, think about starting with a mini emergency fund of $1,000 for now so you can pay off more of what you owe.

Pay down debt

Credit card debt is especially toxic, both because it can exert downward pressure on your credit score and because the typical account has relatively high interest. Paying finance charges can make it awfully hard to reduce balances.

Putting your tax refund toward credit card debt can have a big immediate impact. Your credit score might go up when you reduce your balances. And if you can manage to pay off one card entirely, you’ll be eliminating a monthly payment, so long as you avoid using it.

Look to the future

If you’re like most people, your retirement savings could use a boost. Consider funneling that refund into your 401(k) plan by increasing your contributions, or put it in an individual retirement account, or IRA. Putting the money in a traditional IRA will reduce your taxable income for the year when the contribution is made, making a refund next year more likely. Money put into a Roth IRA, on the other hand, won’t reduce your tax bill in the short term — but both contributions and investment gains can be withdrawn tax-free in retirement.

Change your withholdings

Of course, a big tax refund means you’ve been making an interest-free loan to Uncle Sam all year. Adjusting the amount of taxes withheld from your pay will put the money in your wallet sooner. But don’t forget to do something smart with the extra cash — like increasing your retirement contributions or paying down debts a little faster.

Once you’ve used most of your refund on responsible things, don’t forget to keep a little bit back to treat yourself to a massage or a nice dinner. You deserve a reward for not blowing it all at the mall.

Virginia C. McGuire, NerdWallet [external link disclosure]

01/13/2015 Helping Kids Learn Money Skills Can Be Easy and Fun Teaching kids about money is a huge responsibility, but it needn’t be a daunting task. Here are some easy ways to introduce them to the basics they’ll need to know to  develop healthy financial habits.

Everyday opportunities Daily events present countless teachable moments.

  • Tempting toys: Talk about saving for bigger goals rather than buying on impulse.
  • Large purchases: Discuss how satisfying it is to reach savings targets.
  • Unplanned expenses: A broken microwave oven can open up a conversation about setting money aside for emergencies.
  • Using credit: Explain that you’re borrowing money when you use a credit card, and it’s not free.
  • Using cash machines: Make clear the money you’re withdrawing went into your account earlier, so what you can take out is limited.

Learning at every age Fun, age-appropriate activities help kids grasp key financial concepts and skills. Here are some ideas:

Preschoolers These youngsters can learn what different coins are called and that money is used to buy things or pay for services. Playing “store” lets them experience how to “buy” goods using pennies, nickels, dimes and quarters. Give little ones a small allowance and explain the difference between wants and needs. By age 5, children can understand currency values. Letting them clip coupons with you can help teach them about saving money while spending.

Grade-school kids Giving kids separate jars to hold money for everyday spending, savings for large items, investing for the future and giving to others helps them understand the many uses of income. Encourage them to create savings goals by writing down things they want and the cost. Taking youngsters with you to a bank or credit union can introduce them to banking concepts. As your child begins to accumulate cash, a financial institution like Wakota Federal Credit Union can help you open a youth savings account that makes it fun with rewards and even birthday prizes.

Middle-school kids Older children can learn comparison-shopping when you explain how you shop and evaluate the difference in prices based on quantity, brand and quality. Kids also benefit from being on the other side of the coin and hosting a garage sale. They’ll love setting prices, bargaining with customers, making change and, of course, turning a nice profit. Begin to include kids in family financial discussions. They can grasp the idea of everyday living expenses such as food, gas and utilities, as well as long-term savings goals like a special vacation or new refrigerator. This is also a time to explain how money in certain types of accounts earns interest.

Teens As your teenager begins working and driving, help him open a fee-free checking account to manage his expenses. A debit card for the account offers the valuable experience of shopping with plastic. You may also want to discuss the risks and the advantages of credit cards. Introduce teens to advanced concepts such as investing and long-term savings through examples like individual retirement arrangements (IRAs) and encourage them to try their hand at fantasy investing.

Take advantage of tech Let’s face it: It’s more fun to play games online than to listen to a lecture about money, and some games are surprisingly effective in teaching financial concepts and skills. Here are a few your kids might enjoy:

D2D Games

Rich Kid Smart Kid

Savings Spree

The Mint

By combining real-life experience with technology, your kids can develop money skills and habits to last a lifetime.  [external link disclosure]

Roberta Pescow, NerdWallet  [external link disclosure]


Budgets Can Free College Students From Money Distractions

Going off to college often is the first chance teens get to experience handling money on their own. Although this freedom is exciting, many students quickly find themselves broke and asking their parents for a bailout. Here’s how to set up a budget for one that works, and how to stick to it.

Creating a budget

Drawing up a budget isn’t as complicated as it might sound. Start with a family meeting to clarify which expenses will be covered by parents and which by the student. The latter category might include movie tickets, late-night pizza and coffee. Those living off campus might receive a parental allowance to cover rent and some groceries.

Once everyone is on the same page, add up all sources of the student’s income, such as part-time jobs, financial aid or an allowance. Then total expenses that fall to the student to cover. Subtract those costs from income and calculate how much cash is available to spend in a set time frame: weekly, monthly or per semester. Although every situation is unique, experts suggest that those students who are covering most expenses themselves allocate 70% of the budget to living costs, 20% to saving for the unexpected and 10% to pay everyday bills.

The tech advantage

Tracking spending is half the battle of sticking to a budget. To stay organized, take advantage of financial websites and apps, many of which are free to use. Financial institutions such as Wakota Federal Credit Union offer clients online services that can make account monitoring, paying bills and other actions easier to accomplish. [external link disclosure]

These free apps can also serve as good money-management tools: [external link disclosure]

  • Mint: Designed for iPhone, Android and Windows phones, this app links to bank, credit card, loan and investment accounts to track activity. You can use it to set up a detailed budget with specific spending categories and get tips on smarter ways to do things. Mint also sends alerts when bills are coming due or when an account balance gets too low. A particularly nice feature for new credit card users is that the app compares balances with available cash to help prevent users from getting in too deep.
  • Level Money: Students overwhelmed with new responsibilities might especially appreciate this free smartphone app that simplifies budgeting. Instead of separating expense categories, it tells you how much available cash you’ve got on hand and how it’s allocated under your spending plan for the coming month. Just link it to your accounts and set savings goals.
  • LearnVest: This app for iOS devices links to accounts and files purchases into category folders to help track spending. You can set a separate budget for each folder and know what needs to be set aside for clothing, textbooks, entertainment and other college expenses. Users also get access to lots of relevant articles and information.

A number of excellent low-cost budgeting apps also work well for those with limited cash. These include Budgt ($1.99, for iOS), which is designed especially for college students with small incomes, and Spendee ($1.99, for iOS and Android devices). Good planning and a little help from technology to stick with the program can result in worry-free budgets that let students focus on learning, living independently and having memorable college experiences without the distraction of money worries.

Roberta Pescow, NerdWallet [external link disclosure]


How to Choose a Credit Card That Best Suits You

With thousands of credit cards to choose from, you may have trouble determining which piece of plastic fits best in your wallet. Don’t be swayed by celebrity endorsements or interest rates alone. Whether you simply want to rack up rewards or need help funding a big purchase, it’s important to consider the following factors when picking a credit card.

Introductory offers

Credit cards often feature introductory offers to entice consumers. With rewards cards, you’re likely to see sign-up offers for thousands of free bonus points or miles. The catch: There’s always a minimum amount you must spend in a certain time period to qualify. Read the fine print to ensure you can meet the spending requirement, and don’t load up on unnecessary credit card debt just for bonus points.

Another common introductory offer is 0% interest on purchases (and sometimes balance transfers) for a limited time, usually from six to 18 months. If you’re tempted to apply for one of these, read the disclosures so you know what the regular rate will be afterward.

Interest rates

If you think you may carry a balance, look carefully at the interest rate on purchases. If you want to transfer a balance from a high-interest credit card to one with a low rate, also pay close attention to the rate charged on transferred balances, as it may differ.

Rewards programs and restrictions

Rewards-seekers should get familiar with the different types of rewards cards available. There are cash back cards, general points cards and travel cards, including some that earn miles that can be redeemed on any airline and others that are airline-specific. Think carefully about which type of reward program will benefit you most. Travel cards that earn frequent-flier points may look intriguing, but if you don’t travel often, you may be better off with a cash back or general points card. You should also read the fine print to familiarize yourself with restrictions, such as point caps, category limits or blackout dates.

Annual fee

An important factor to consider when comparing cards is the annual fee, which can range from nothing to hundreds of dollars. Many cards that charge an annual fee waive it for the first year to persuade you to sign up, but it can come as a shock once it kicks in. The cards offering the richest rewards often carry a fee, so do some math to determine whether you’ll really spend enough to earn more in rewards than you’ll pay to have the card, or at least break even. For example, if you pay $100 each year but can spend only enough to generate $75 cash back annually, it may not be such a good deal. On the other hand, if you can use points to score a free $300 flight, it may be worth it. Financial institutions like Wakota Federal Credit Union can help you sort through the options.  [external link disclosure]

Other costs

There are a few other fees to consider. If you plan to transfer a balance from a high-interest account to a lower-interest card, check to see whether it will cost you anything. This is usually calculated as a percent of the amount or a minimum dollar cost, whichever is more. Frequent international travelers should also consider foreign transaction fees; not all credit cards have them, but those that do tack on a percentage of every purchase made in a foreign currency. You should also see what the late fees are in case you miss a due date.

Comparing credit cards can take some time, but weighing all of these factors is important if you want to find the right card for your financial goals and needs.

Emily Crone, NerdWallet  [external link disclosure]


How to Set Financial Resolutions You Can Reach

If you aim to make 2015 the year you attain certain monetary goals, start by making some plans. If you fell short of meeting the past year’s resolutions, don’t be discouraged. Often the reason people fail stems from a flawed process. This year, follow these steps to create effective financial objectives:

Set actionable goals

Outline specific the objectives you want to achieve, how they can be met and when. Don’t set goals that are nearly impossible to reach or too vague to act upon. Your plans could be as simple as setting aside an extra $50 a month to save up a holiday shopping fund for next season, or putting an extra $1,000 aside for retirement by the end of the year.

Follow your plan

Consider what it will take to succeed to ensure each goal you set is attainable. For example, if you want to save $50 a month, do you have enough coming in to set up an automatic transfer into a savings account? Can you cut expenses, such as making your own coffee each morning instead of buying it in a store? If the plan seems out of reach, adjust accordingly. [external link disclosure]

Monitor results

Track your progress. For short-term objectives, check how you’re doing every week. For longer-term goals, such as saving for a house down payment or setting aside a retirement nest egg, monthly or quarterly reviews may be enough.

Visualize success

Write down a summary of each goal and the plan to reach it in a notebook that can also be used to record your periodic checkpoints. Maintaining a vision of what it means to succeed can help keep you on track all year.

If you’re feeling overwhelmed, talk to a representative of a lender like Wakota Federal Credit Union about your situation and the financial goals you’d like to reach. Help with the planning process may be available, including tools like savings and investment accounts. [external link disclosure]

Don’t let past failures deter you. And if it’s any consolation, you’ll have plenty of company. Research shows that about 45% of Americans usually make New Year’s resolutions, but just 8% actually fulfill them. By following the steps above, you can be on your way to joining that 8%. [external link disclosure]


Cait Klein, NerdWallet  [external link disclosure]



How to Get a Grip on a Holiday Debt Hangover

As the holiday season winds down, you may find yourself stuck with debt that can produce a nasty financial hangover. It’s easy to go overboard this time of year, but as 2015 begins, it’s time for a financial cleansing. Here are five steps you can take to quickly whip your wallet back into shape:  [external link disclosure]

Face your debt  

Don’t simply hide from your debt load, ignoring how much you spent and paying the minimum due each month. List how much you owe on each account, payment due dates and interest rates.

Make a plan

Set up a budget to tackle the debt. To do this, determine your normal monthly expenses, including rent, utilities, food and other necessities and obligations, like education loan payments. If there’s little or nothing left over, see whether any of those expenses can be reduced. With the remainder, set aside enough to pay more than the minimum due on accounts with the highest interest rates, because those will cost the most in the long run, and at least enough to cover minimums for other debts. [external link disclosure]

Stop shopping

You may be in the habit of shopping for yourself and others during the holiday season, but do yourself a favor and hide the credit cards. Don’t be tempted by sales or extending the seasonal cheer. Instead, return unnecessary gifts or purchases and use the credit to reduce what you owe.

Add income

Getting a side job, generating some income with freelance work or doing things for neighbors like yard clean up or snow shoveling can help you ease your debt burden faster. If adding extra work isn’t feasible, you may be able to sell items in your home.

Find lower interest rates

If you have good credit, you may be able to find credit cards with lower interest rates. You can transfer your balances from higher-rate cards to the lower-rate ones to cut the cost of the debt. Some issuers offer no-fee balance transfers. Others use low-rate introductory periods to attract business. You may be able to take advantage of both. Take fees into account and make sure you can pay off what’s owed before any introductory period ends. [external link disclosure]

Don’t let a financial holiday hangover linger – it will only get worse with time. Feeling overwhelmed? A representative of a local lender like Wakota Federal Credit Union may be able to help you resolve the situation, including taking out a debt-consolidation loan. Setting up a savings account targeted for the 2015 holiday season could help you avoid a similar situation a year from now. [external link disclosure]

Cait Klein, NerdWallet  [external link disclosure] 


Holiday Budget Tips to Keep You From Sliding into Debt

Holiday spending can really sneak up on you. Before you know it, you’re drowning in debt. It might start with splurging on that high-end iPod your daughter’s been eyeing or a new gaming system for your son. If you’re not careful, you’ll blow your budget in the blink of an eye. Paying off the crust of debt left over from the season of good cheer may take months or even years. To avoid sliding down this slippery slope, here are five easy shopping tips to follow: [external link disclosure]

  1. Set limits

Before hitting the stores, list what you need to buy – gifts, decorations, special foods, everything – and then set a spending limit for all of it. Because it can be difficult to keep track over a full season, consider using a budget app such as goodbudget[external link disclosure]

A prepaid debit card can be a good way to stick to your limit. It’s safer than cash, but you may lose some purchase protection offered by credit cards and the insurance backing for money in savings and checking accounts. Avoid credit cards unless you have enough willpower not to overspend, which is all too easy with plastic.  [external link disclosure]

Sometimes something or someone important is left out. And every so often you’ll see a great deal you can’t pass up. So create a splurge fund. Load this amount onto a separate debit card to save for those moments.

  1. Get creative

Buying toys and electronics for the kids is probably unavoidable, but adults who agree to exchange gifts creatively instead can cut down on costs. Grown-up family and friends might enjoy these heartfelt and fun ideas:

  • Comical Come up with silly, inexpensive presents that bring laughter rather than debt. Rubber chicken, anyone?
  • Super discounters Sometimes dollar stores have gifts that are surprisingly nice, such as glass candleholders, figurines and decorative towels.
  • Talent show Prepare a song, dance, comedy routine or magic show to dazzle friends and loved ones.
  • Re-gifting Give a second life to presents that missed the mark last year.
  • Homemade Sew, knit, paint, bake or print and frame a nice picture to give.
  1. Find the best deals

Just because you’ve spied that perfect gift doesn’t mean you’ve found the lowest price. Stretch your money by using free websites and smartphone apps. At the mall, scan barcodes to check for lower prices online.

  1. Slow down

Resisting temptation can help you avoid impulsive spending that could bust your budget. Give yourself some time to think by intentionally putting barriers in the way of convenient purchasing. Take your name off retailer email lists and merchant sites. Once you’ve found something you want, walk away. Give yourself a half hour to make sure you can afford it and it’s really needed.  [external link disclosure]

  1. Get help when needed

If you need a special gift that’s more than you have to spend, options from lenders like Wakota Federal Credit Union can include personal loans and payment skipping on current obligations. Another way to get the big gift might be to give the intended recipient a promise for the item, then save enough each month to reach the amount needed. With a little planning, creativity and the right financial tools, you can create happy holiday memories without slipping deeper into debt.  [external link disclosure]

Roberta Pescow, NerdWallet   [external link disclosure]

Will You Be a Scam Artist’s Next Target?

Believing that fraud can’t happen to us — because we’re too smart, logical or informed — may make us more vulnerable. Successful scam artists skillfully overcome our defenses and get us into emotional states that override logical thinking, says Kathy Stokes, AARP’s director of fraud prevention programs.

“Scammers call it getting the victim under the ether,” she says.

Various studies have tried to identify characteristics that make people more susceptible to fraud. But that can create a “blame the victim” mentality and give the rest of us a false sense of security, she says.

“I’d say the majority of people are unwittingly deceived through no other reason than the criminals are good at what they do,” Stokes says.

Scam artists go where the money is

Research is mixed on whether older people are more likely to be defrauded than younger ones. One thing is certain, though: Older people are more likely to have money. People 50 and older control 83% of the wealth in the U.S.

One way to protect that money is to cut down on our exposure to sales pitches, fraud experts say. AARP studies have found investment fraud victims were more likely than other investors to respond to sales pitches delivered by phone, email or television. They also were more likely to send away for free promotional materials, enter drawings, attend free lunch seminars and read all their mail, including advertisements.

To reduce your exposure to potential scams, consider the following steps:

  • Put yourself on the federal Do Not Call list.
  • Sign up for a telephone call blocking system, such as NoMoRobo, and let unknown callers go to voicemail.
  • If you give out personal information, be sure you know who you are giving it to, and why they need it.
  • Don’t make investment decisions based solely on a phone or email pitch or an ad.

Overconfidence increases our risk

Overconfidence can lead people to trade too aggressively (convinced that they can beat the market), put off saving for retirement (convinced they can catch up later) and ignore warning signs of fraud (convinced that they can’t be victimized).

The risk may increase with age. Studies have found that our financial decision-making abilities peak by our early 50s and decline, sometimes precipitously, after that. But our confidence in our abilities doesn’t drop — in fact, many of us become more self-assured.

“So as we age, this gap grows between actual and perceived ability to make good decisions,”  says Chris Heye, co-founder of Whealthcare Planning, a site that helps older adults and financial advisors plan for age-related changes.

Seniors who got answers wrong on a financial literacy quiz, but who were the most confident they answered correctly, were more likely to be victims of fraud, according to a study by researchers at DePaul University and the Rush University Medical Center.

People of any age can combat overconfidence by getting a second opinion on financial decisions from a trusted advisor or money-smart friend. As we get older, it can also make sense to consolidate our accounts so there are fewer to monitor and switch to investments that require less hands-on management, such as target date mutual funds.

Loneliness can be expensive

The Federal Trade Commission says romance scams cost people more money than any other type of consumer fraud in 2018. Reports of these scams more than doubled between 2015 and 2018, while reported losses more than quadrupled to $143 million.

The scams often start via dating apps, social media or email. The con artists pretend to have a lot in common with their victims, then build trust over many weeks or even months before asking their targets to reveal personal data or send money for an “emergency.”

Once again, the young and old alike can be defrauded. One 90-year-old victim met a man via email who, many months later, told her he needed help with a business deal. She sent him eight infusions of cash, draining her $500,000 life savings.

“She sent all that money, and the only reason she knew that it was a scam was that he didn’t show up on Christmas Day like he said he would,” Stokes says.

A reverse-image search using TinEye or Google Images may show if an imposter is using someone else’s photo, while sites such as Romancescams.org keep track of known scammers’ email addresses.

But perhaps the best inoculation against being defrauded is to talk to someone you trust about the situation before you send any money. That could be enough to bring you out from under the romantic ether.

This article was written by NerdWallet and was originally published by The Associated Press.

The article Will You Be a Scam Artist’s Next Target? originally appeared on NerdWallet.

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