Topic: MONEY

Getting through to an IRS representative takes time, so before you call, look for answers online at irs.gov. Start with Tax Information for Individuals or try the IRS’s list of Complex Tax Topics for more complicated situations. For refund questions, search the Tax Season Refund FAQ page and use the embedded search feature. 

If the IRS website doesn’t answer your specific question, here’s what to know about speaking to a representative at the IRS.

WHICH NUMBER TO CALL AT THE IRS

The main IRS phone number is 800-829-1040, but the agency maintains different departments with their own phone numbers to help callers with specific areas. Help lines are open Monday through Friday. Here’s a list of primary departments to call:

Note: Alaska and Hawaii residents should follow Pacific time. Puerto Rico phone lines are open 8 a.m. to 8 p.m. local time. 

• Individuals: 800-829-1040, 7 a.m. to 7 p.m. local time
• Businesses: 800-829-4933, 7 a.m. to 7 p.m. local time
• Nonprofit taxes: 877-829-5500, 8 a.m. to 5 p.m. local time
• Estate and gift taxes (Form 706/709): 866-699-4083, 8 a.m. to 3:30 p.m. Eastern time
• Excise taxes: 866-699-4096, 8 a.m. to 6 p.m. Eastern time
• Overseas callers should use the International Services page
• Callers who are hearing impaired: TTY/TDD 800-829-4059

If you have a question about something even more specific, like a missing child tax credit payment or how to order a tax transcript, the IRS has additional phone numbers for those kinds of questions. NerdWallet maintains an extensive list of lesser-known IRS phone lines. 

WHAT TO EXPECT AND BEST TIME TO CALL THE IRS

Unfortunately, it’s not easy getting a live person at the IRS on the line to talk to you—the agency received more than 100 million calls in 2020. Don’t give up, but do be strategic. 

Hold times during tax filing season (January-April) will average around 13 minutes, according to the IRS, while post-filing calls (May-December) average 19-minute wait times. But if you call at peak times, you could wait up to an hour or longer. 

Extended holds are difficult to avoid, but East Coast callers have found that calling early, before 9 a.m. local time, may reduce the wait time. On the West Coast, calling after 5 p.m. can help. 

INFORMATION TO GATHER FOR YOUR IRS CALL

Because tax information is highly confidential, you’ll need to be prepared to verify who you are once you’re speaking to an IRS representative. Gather the following documents so you can refer to them during the call. You’ll likely need to answer some highly specific questions to proceed:

• Social Security numbers (SSN) and birth dates
• Individual Taxpayer Identification Number (ITIN) for taxpayers without a Social Security number
• Filing status — single, head of household, married filing joint, or married filing separate
• Prior-year tax return 
• Tax return you’re calling about
• Any correspondence the IRS sent you

If you’re calling about specific forms or accounts, you’ll want to have as much information on hand as possible. 

CALLING THE IRS ON BEHALF OF ANOTHER PERSON 

If you’re calling on behalf of someone else, you’ll need authorization (either verbal or written) to discuss their account. For verbal consent, that person must be on the line with you in order to authorize the discussion with the IRS representative. Verbal consent, also known as an oral disclosure, is limited to the current conversation – you’ll need verbal consent every time you start a new conversation with the IRS. 

On top of that, you’ll also need:

• Their taxpayer name, and SSN or ITIN
• Their tax return you’re calling about
• Valid Form 8821, Tax Information Authorization or Form 2848, Power of Attorney and Declaration of Representative
• Your preparer tax identification number or personal identification number (SSN or ITIN)

If you’re calling about someone who is deceased, you’ll need a copy of that person’s death certificate and either a court approval letter or a completed copy of IRS Form 56 (Notice Concerning Fiduciary Relationship).

HOW TO HANDLE THE CONVERSATION WITH AN IRS REPRESENTATIVE

When you do call, keep in mind that IRS representatives handle basic questions and issues related to your tax return. They may not be able to help with particularly complex questions. And just like many other industries, the IRS is experiencing processing delays due to the pandemic. That might also affect your experience on the phone. Bring your patience. 

Taxes are stressful, but IRS representatives aren’t your enemy. They want to help you. The more prepared you are going in, the easier and more productive the conversation will be. Know what you want before the call starts.

If you’re calling to set up a repayment plan for back taxes, it’s important to understand you can’t negotiate the outcome. The IRS has very specific guidelines for how plans are constructed. The representative should be able to walk you through your options.

WHEN TO CONSULT A TAX PROFESSIONAL

If the online or phone resources don’t address your issue, you may be better off scheduling a face-to-face appointment with your local IRS office. 

Taxes can be complicated. If you have multiple sources of income, own your own business, have investments, or have accounts in foreign countries, you likely would benefit from working with a CPA or other certified tax expert.

Some people can still get a lower rate on their current home loan, however — and save some money in the process.

An estimated 472,000 well-qualified homeowners can still refinance their mortgages by at least 0.75 percentage points, according to the data and analytics company Black Knight. Doing so would save these homeowners an average of $309 per month on their mortgage payments — or about $3,708 per year.

Outside of cost savings, there are other reasons why refinancing now could make sense. If you are nearing the end of the fixed-rate period on an adjustable-rate mortgage, refinancing into a fixed-rate loan lets you lock in a steady rate that won’t change periodically. Another option is a cash-out refi, which allows you to use the equity you’ve gained in your home to pay off higher-interest debt.

Mortgage refinancing isn’t a quick process: the average closing time on a refi loan was 52 days in June, according to ICE Mortgage Technologies. So if a refinance makes sense for your budget, the sooner you start the better.

Here’s exactly how to do it, broken down into seven steps to help move the process along.

1. Set a refinancing goal

Most homeowners refinance in order to get a lower interest rate and, as a result, reduce their monthly payments. However, that’s not the only reason to refinance.

Different loan types offer different advantages.

You may want to switch from an adjustable-rate mortgage to a fixed-rate mortgage to guarantee a permanently lower rate. Maybe you want to switch from a 30-year loan to a 15-year loan to pay off your mortgage faster. If you have enough equity, you may also be able to save on mortgage insurance by switching from an FHA loan to a conventional mortgage.

Perhaps you’ve recently run up against major medical bills, unexpected home repairs or other expenses that are weighing you down financially. If you’ve built up enough equity in your home, a cash-out refi will not only let you refinance your loan but also take out extra cash.

Knowing what you want to accomplish with a refi will help you determine the type of mortgage product you need. Consider all the options to see which works best for you.

2. Check your home equity

You may be able to qualify for a conventional refi loan with as little as 5% equity in your home, according to Discover Home Loans. However, most lenders prefer you have at least 20% equity.

If you have more home equity, you may qualify for a lower interest rate and lower fees, as lenders will view borrowers who have higher equity as less of a lending risk. More equity also means that you are less likely to end up owing more than the home is worth if home prices fall.

To get an estimate of your home equity, subtract your current mortgage loan balance from your home’s current market value. The result will be your home equity. Contact a knowledgeable local real estate agent to get an idea of your home’s value. Zillow’s home price estimate can also be a rough starting point too.

You should also prepare your home for an official appraisal, which will be part of the refinance application process. Have documentation about any improvements you have made to the home handy. (For example, did you add a bathroom or replace an old roof?) It won’t hurt to clean and organize your home to get it in showing condition.

3. Check your credit score and credit report

Before making any loan decisions, it’s important to check your credit score, as well as your credit report.

Your credit score will in large part determine how favorable a rate a lender will offer. The higher your score, the lower the rate you’ll qualify for and the lower your monthly payments will be. If you have a low score, look for ways to improve your credit score well before applying for a loan.

Your credit report shows the information your score is based upon. It’s where you can check if there are any errors that may be negatively affecting your credit score. If you find mistakes in your report, you can contact the credit bureaus to have these items removed. Be prepared to provide documentation proving the mistake.

As part of the consumer protections put in place by the CARES Act, you can get a free weekly credit report from any of the major reporting bureaus until December 31, 2022. (Typically, you’re entitled to one free report from each credit reporting company per year.)

You should also be aware of what factors could cause a temporary hit to your credit score. Applying for credit cards, personal or auto loans just before, at the same time, or just after applying for a refi will lower your score, albeit temporarily.

The origins of mental illness are varied and complex. There are a nearly limitless number of reasons why mental illness happens, from biological causes to environmental influences.

One contributing factor that has the potential to impact nearly everyone at some point in their life is personal finance. Researchers have repeatedly found a clear link between mental and financial health.

In many instances, that link is cyclical – poor financial health leads to poor mental health, which leads to increasingly poor financial health, and so on. But researchers have also concluded that mental health issues – including depression, anxiety, and certain forms of psychosis – are three times more likely to occur when an individual is in debt.

Additionally, a data analysis by personal loan company Payoff found that 23 percent of respondents to a financial health survey reported experiencing symptoms of post-traumatic stress disorder (PTSD) due to their personal finances. These respondents admitted to irrational or self-destructive behavior motivated primarily by a desire to avoid the reality of their financial problems.

The implication here is not simply that poor financial health may lead to poor mental health. Much more important is the logical inverse: that taking active steps to ensure our financial health is very likely to pay positive dividends on our mental health as well.

COMMON SIGNS OF DEPRESSION

Are your personal finances having a negative impact on your mental health? That may not be immediately clear.

Per the National Institute of Mental Health (NIMH), these are the most common symptoms of depression:

• Persistent sad, anxious, or “empty” mood
• Feelings of hopelessness, pessimism
• Feelings of guilt, worthlessness, helplessness
• Loss of interest or pleasure in hobbies and activities
• Decreased energy, fatigue, being “slowed down”
• Difficulty concentrating, remembering, making decisions
• Difficulty sleeping, early-morning awakening, or oversleeping
• Appetite and/or weight changes
• Thoughts of death or suicide; suicide attempts
• Restlessness, irritability
• Persistent physical symptoms

Regardless of whether or not your particular symptoms are rooted in financial distress, if any of this sounds like you, it’s important that you speak with as qualified mental health professional.

If you’re feeling suicidal, please call 1-800-273-8255. The National Suicide Prevention Lifeline is free, confidential, and available 24/7. 

STEPS FOR DEALING WITH FINANCIAL STRESS

If your finances are causing you mental harm, there are steps you can take to reduce the noise, refocus your attention, and start making positive changes.

FIGURE OUT WHAT MATTERS THE MOST TO YOU

If your finances are causing you mental distress, a good first step is actually a step backwards.

“Take the time to clearly define your financial goals and understand your values, both as an individual and as a family,” suggests Maura Attardi, MMI Director of Financial Wellness. “Defined goals help us understand if our spending habits are pushing us in the right direction, while our values help us determine if our goals are realistic and meaningful. Also, there may be conflicting values within a relationship or family, which can cause a lot of stress. Getting everything in alignment relieves stress, reduces interpersonal friction, and makes financial decision-making much easier.”

Once you’ve reached consensus on your financial priorities, you can begin to address the specific causes of your mental distress.

“Taking an honest and open look at why we spend money the way we do can also be helpful in alleviating stress and determining the steps we need to take,” says Attardi. “If the issue is overspending, try to determine what inner voids you’re trying to satisfy through spending money, and then replace your expensive coping techniques with something that might be easier on your pocketbook, like free yoga classes, reading, or exercising.”

BEGIN THE CONVERSATION WITH SOMEONE YOU TRUST

“In addition, finding someone that you can be completely honest and open with about your financial situation can help,” says Attardi. “Where we may only be able to see the bleakest possible financial future, a credit counselor, a friend, or an objective family member can help open our eyes to some of the positive options we have available.”

Simply talking about your stresses and anxieties can offer incredible relief. You’ll realize quickly that you’re not alone – many of us struggle with money in one way or another. But perhaps most importantly you’ll be released from the burden of feeling like you’re hiding something.  

MAKE A PLAN AND KEEP IT SIMPLE

A little progress can make a world of difference. Simply feeling like things are moving in a positive direction can reduce stress and create a growing sense of contentment.

Once you’ve identified your values and goals and unburdened your soul a bit, you can get to work. Create a plan to help you achieve your goals. Make the steps small, clearly defined, and reasonable. Set yourself up for success by creating a series of achievable benchmarks that will slowly but surely guide you to your destination. And don’t hesitate to celebrate your wins. Feel good about all the boxes you check!

GET PRIVATE, CONFIDENTIAL SUPPORT

If you need help finding a positive financial path, consider speaking with one of MMI’s certified credit counselors. Debt and budget counseling is always free and can go a long way toward alleviating your financial stress by providing you with expert, judgment-free advice and access to helpful resources.

Mental illness is very common and no one should ever feel ashamed or embarrassed to admit that they need help. Once again, if you or someone you know is dealing with symptoms of depression, anxiety, or any other mental illness, please seek assistance from a qualified mental health professional in your area. For helpful mental health resources, visit MentalHealth.gov (a division of the U.S. Department of Health & Human Services) and NAMI.org.

Last fall, I received an email that appeared to be from my web host. The email claimed that there was a problem with my payment information and asked me to update it. I clicked on the link in the email and entered my credit card number, thinking that a recent change I’d made to my site must have caused a problem.

The next morning, I logged onto my credit card account to find two large unauthorized purchases. A scammer had successfully phished my payment information from me.

This failure of security is pretty embarrassing for a personal finance writer. I know better than to click through an email link claiming to be from my bank, credit card lender, or other financial institution. But because the email came from a source that wasn’t specifically financial (and because I was thinking about the changes I had made to my website just the day before), I let myself get played.

Thankfully, because I check my credit card balance daily, the scammers didn’t get away with it. However, it’s better to be proactive about avoiding credit card theft so you’re not stuck with the cleanup, which took me several months to complete.

Here’s how you can protect yourself from credit card theft. 

Protecting your physical credit card

Stealing your physical credit or debit card is in some respects the easiest way for a scammer to get their hands on your sweet, sweet money. With the actual card in hand, a scammer has all the information they need to make fraudulent purchases: the credit card number, expiration date, and the security code on the back.

That means keeping your physical cards safe is one of the best ways to protect yourself from credit card theft. Don’t carry more cards than you intend to use. Having every card you own in a bulging wallet makes it more likely someone could steal one when you’re not paying attention and you may not realize it’s gone if you have multiple cards.

Another common place where you might be separated from your card is at a restaurant. After you’ve paid your bill, it can be easy to forget if you’ve put away your card (especially if you’ve been enjoying adult beverages). So make it a habit to confirm that you have your card before you leave a restaurant.

If you do find yourself missing a credit or debit card, make sure you call your bank immediately to report it lost or stolen. The faster you move to lock down the card, the less likely the scammers will be able to make fraudulent charges. Make sure you have your bank’s phone number written down somewhere so you’re able to contact them quickly if your card is stolen or lost.

Recognizing card skimmers

Credit card thieves also go high-tech to get your information. Credit card skimmers are small devices placed on a legitimate spot for a card scanner, such as on a gas pump or ATM. 

When you scan your card to pay, the skimmer device captures all the information stored in your card’s magnetic stripe. In some cases, when there’s a skimmer placed on an ATM, there’s also a tiny camera set up to record you entering your PIN so the fraudster has all the info they need to access your account.

The good news is that it’s possible to detect a card skimmer in the wild. Gas stations and ATMs are the most common places where you’ll see skimmer devices. Generally, these devices will often stick out past the panel rather than sit flush with it, as the legitimate credit card scanner is supposed to. Other red flags to look for are scanners that seem to jiggle or move slightly instead of being firmly affixed, or a pin pad that appears thicker than normal. All of these can potentially indicate a skimmer is in place. 

If you find something that looks hinky, go to a different gas station or ATM. Better safe than sorry.

Protecting your credit card numbers at home

Your home is another place thieves will go searching for your sensitive information. To start, you likely receive credit card offers, the cards themselves, and your statements in the mail. While mail theft is relatively rare (it’s a federal crime, after all), it’s still a good idea to make sure you collect your mail daily and put a hold on it when you go out of town.

Once you get your card-related paperwork in the house, however, you still may be vulnerable. Because credit card scammers are not above a little dumpster diving to get their hands on your credit card number. This is why it’s a good idea to shred any paperwork with your credit card number and other identifying information on it before you throw it away.

Finally, protecting your credit cards at home also means being wary about whom you share information with over the phone. Unless you’ve initiated a phone call of your own volition — not because you’re calling someone who left a voicemail — you should never share your credit card numbers over the phone. Scammers will pose as customer service agents from your financial institution or a merchant you frequent to get your payment information. To be sure, you can hang up and call the institution yourself using the main phone number.

Keeping your cards safe online

You should never provide your credit card information via a link in an email purporting to be from your financial institution or a merchant. Scammers are able to make their fake emails and websites look legitimate, which was exactly the reason I fell victim to this fraud.

But even with my momentary lapse in judgment about being asked for my payment information from my “web host,” there were other warning signs that I could’ve heeded if I had been paying attention. 

The first is the actual email address. These fake emails will often have a legitimate looking display name, which is the only thing you might see in your email. However, if you hover over or click on the display name, you can see the actual email address that sent you the message. Illegitimate addresses do not follow the same email address format you’ll see from the legitimate company.

In addition to that, looking at the URL that showed up when I clicked the link could’ve told me something weird was going on. Any legitimate site that needs your financial information will have a secure URL to accept your payment. Secure URLs start with https:// (rather than http://) and feature a lock icon in the browser bar. If these elements are missing, then you should not enter your credit card information.

Daily practices that keep you safe

In addition to these precautions, you can also protect your credit cards with the everyday choices you make. For instance, using strong, unique passwords for all of your online financial services, from shopping to banking, can help you prevent theft. Keeping those strong passwords safe — that is, not written down on a post-it note on your laptop — will also help protect your financial information.

Regularly going over your credit card and banking statements can also help ensure that you’re the only one making purchases with your credit cards. It was this daily habit of mine that made sure my scammers didn’t actually receive the computer they tried to purchase with my credit card. The fact that I check my balance daily meant I was able to shut down the fraudulent sale before they received the goods, even though I fell down on the job of protecting my credit card information. 

If you’re invested in stocks and constantly checking on your portfolio, you probably haven’t had a great few weeks. The S&P 500 dipped into bear market territory on Friday, the Dow Jones Industrial Average is down around 15% for the year, and the tech-heavy Nasdaq has fallen 28% in 2022.

Even though the market declines may make you feel uneasy, keeping your money in the stock market now is likely a good move long term. That’s because the market’s best days tend to happen right around the market’s worst days. Between January 1, 2002, and December 31, 2021, seven of the S&P 500’s best days occurred within just two weeks of the index’s 10 worst days, according to J.P. Morgan Asset Management’s 2022 “Guide to Retirement” report.

“The pendulum in the stock market swings very, very wildly,” says Jack Manley, a global strategist at J.P. Morgan Asset Management. “When things get out of whack, they swing back very quickly.”

Why the stock market’s best days are so close to the worst days

Markets today are fundamentally different from how they were 10 years ago, Manley says. That’s because technological innovation has led to developments like high-frequency trading, which involves large volumes of shares being traded at high speeds. But it’s also led to a boom in retail investing.

We especially saw that boom during the pandemic. COVID-19 kept many people at home, where they took up investing as a hobby. Stimulus checks from the federal government gave retail investors more money to buy stocks, cryptocurrency and such, or it provided them with funds to invest for the first time.

Meanwhile, online trading platforms like Robinhood made commission-free trading easy and allowed people to buy fractional shares, meaning they could invest in a company like Tesla(which has traded at more than $1,000 per share) with as little as a single dollar.

“Information moves a whole lot more quickly,” Manley says. “It is that much more easy to be an investor in today’s world.”

The combination of fast-moving information and more market participants means that the stock market in general is more volatile than it used to be, Manley says.

Just take a look at the last month. The S&P 500 was down 3.6% on April 29, which marked one of the worst days of the year for the index. But just a few days later on May 4, the index was up nearly 3% for one of its best days, according to data from J.P. Morgan Asset Management. And back in 2020, March 12 — the S&P 500’s second worst day of the year — was immediately followed by its second best day of the year.

The market is used to being overbought or oversold, meaning there’s no real “happy medium,” Manley adds.

CONTACT THE UTILITY COMPANY

First, reach out to the utility company directly and let them know your situation. There are humans on the other end and if you can’t afford to make payments they might have some options to help keep the lights on. 

Depending on the company, they might lower your payments, temporarily take you off the hook for upcoming payments, or drop late fees. For instance, PG&E, which is located in Northern California, offers relief options such as reduced payments. The Florida Public Utilities has expanded billing options and payment options for those experiencing financial hardship. Do some poking around to see if your utility company offers similar routes. 

If you were in good standing and paid your bills in a timely manner, there may be a better chance that they’ll be open to working with you on coming up with solutions. 

APPLY FOR A RELIEF PROGRAM

There might also be information on the websites of the utility company. Depending on where you live and your situation, different forms of relief might be available. Along the same lines, relief programs and assistance agencies might be able to provide help should you need it. You can also try 211.org and FindHelp.org for a listing of local organizations and resources that can help meet your basic needs in a crisis. 

Besides letting you know what forms of financial relief are available, these assistance agencies can also help you stay informed of any changes at the national or local level that could impact your rights and protections.

SEE IF AVERAGE BILLING IS AN OPTION

As we use more gas in our homes during the winter months and more electricity in the warmer months, we tend to see our bills spike in tandem. Many utility companies offer what’s known as budget billing or average billing, which looks at records of the total amount you paid in utilities over the course of a year. That number is then divided into 12 equal payments. The average that’s calculated will be what you pay each month (with changes to account for any significant fluctuations). 

Average billing could come in handy in a number of ways. First, it bumps down the amount you paid during typically peak seasons. Next, it makes for easier planning. Instead of anticipating your utility bills to be $75 one month, $200 the next, paying the same each month means you can aim to set that money aside ahead of time, and won’t fall short with another bill. 

TRACK YOUR ENERGY USAGE 

To get a better idea of how much it will cost you over the course of a year, track how much gas and power you are expending. You can track your usage using affordable devices such as a handheld wattage meter or by way of a smart app that measures the energy usage in your home. By tracking your usage, you can get a better idea of how much energy you use in your home, and make tweaks to be savvier with your usage. 

REDUCE ENERGY USE 

To save on energy, make it a habit to turn off lights and devices when you’re not in a room. You can also look into a smart plug, which you can schedule to turn and off at certain times, but could also track how much energy you’re using. Just be sure to wait for a sale so you can scoop up the best deals on smart plugs. 

Another tactic? Think up creative solutions to using energy. For instance, if it’s safe to do and you have the space to accommodate it, consider using a propane gas tank in lieu of a standard stove. And LED lights typically are more energy-efficient than standard lightbulbs. Try using candles, a camping lamp every so often, or those little tea lights that are powered by a small cell battery. There are also inexpensive ways to insulate your home. Every little bit can help.

LOWER YOUR LIVING EXPENSES

Ok, so you’ve found ways to cut back on your energy use. To free up money to help afford to pay your utilities, expand your money-saving savvy to include overall living expenses. You might’ve already done a round of cutbacks when you were first laid off or furloughed. 

Look for unexpected ways you can cut back further. Nix subscriptions, find ways to save on groceries, cut back the costs of staying physically fit — let no expense go unexplored of its money-saving potential! 

Not having enough to keep the lights on and the heater going during the cooler months is a scary, unsettling thought indeed. But know there are resources at your disposal, and things you can do in your power to prevent it from happening.

The S&P 500, an index commonly used to measure how stocks are doing overall, jumped 2.8% Tuesday, while the Dow Jones Industrial Average and the the Nasdaq Composite closed up 2.4% and 3.1%, respectively. Tuesday marked the largest one-day percentage gains since June 24 for all three indexes, and a welcome relief for investors. The S&P 500 was up around 0.9% during trading midday Wednesday as well.

While financial markets for much of the last two years were buoyed by stimulus money from the government and near-zero interest rates, stocks have been struggling after hitting their peak in January amid sky-high inflation and rising interest rates.

The S&P 500 fell into a bear market in June and was still down around 18% for the year at Tuesday’s close.

The truth is that rallies like Tuesday’s during an overall downturn are common, and they certainly don’t mean stocks have hit bottom or are going to recover all their losses in a hurry.

“Bear markets are typically thought of as periods of relentless declines in the market where stocks do nothing but trade lower,” analysts at Bespoke Investment Group wrote in a note to clients Tuesday. “The reality of bear markets, though, is that they often include periods of extreme countertrend rallies, sucking investors in along the way.”

What past stock market downturns tell us

If history repeats itself, rallies as big as even 5% or more don’t necessarily mean the bear market has bottomed.

Look at the dot-com bust. Between the S&P 500’s peak in March 2000 to its low in October 2002, the index lost 49% — but along the way it saw 11 different rallies of 5% or more, according to Bespoke.

It’s a similar story around the financial crisis of 2008: The S&P 500 experienced 12 different rallies of at least 5% between October 2007 and March 2009, when it lost 57% of its value.

Applying for a Personal Loan

To apply for a personal loan, you’ll typically need to provide information about your finances, and, most importantly, information about your income. The loan company will also expect you to submit to a credit report pull. The lender will review your information to determine whether or not you qualify for the loan. 

What if I’m Unemployed? 

Getting a loan when you’re unemployed is tricky to do and may not be possible. The number one criterion that lenders consider when they evaluate your loan application is your ability to pay the loan back on time. If you don’t have an income, you are an extremely risky bet, and you’re likely to be turned down. That makes traditional lenders, like a bank or a credit union, an unlikely option for a personal loan. 

However, it still may be possible to get a personal loan. If you have excellent credit and some source of income, such as child support, alimony, disability, rental income, or something else, you may still have a chance.

But if you have no income at all, you may be limited to using your property as collateral to obtain a loan. That means you may be limited to title loans or pawn loans. With a title loan, you’re using your car’s title as collateral. With a pawn loan, the item of value you offer the pawn shop, like jewelry or electronics, serves as collateral for the loan. In both scenarios, failing to repay the debt in the required amount of time can result in you losing your property. Both types of loans are extremely risky.

What About Payday Loans? 

Payday loans (also known as fast cash loans) are not a good option if you’re unemployed. These are loans structured to be paid back on your next payday. Even though lenders might not check your credit, they’ll still typically want proof that you have a source of income. 

If you’re unemployed, you likely won’t qualify for a payday loan. If you do somehow receive a payday loan despite not having a steady source of income, the terms will almost certainly not be favorable. 

It’s important to understand that these loans need to be repaid quickly to avoid rolling over and adding extremely costly interest charges. If you’re unemployed, you should avoid payday loans as they can spiral into high-cost interest you can’t afford.

What Else Can I Do?

The bottom line is that taking out a loan while you’re unemployed is nearly impossible. If you have savings, now is the time to fall back on those funds. That includes using retirement savings, though you should evaluate the risks of depleting or borrowing against your retirement. The next best option is to use your credit card if you have one. It’s better to use your available credit limit than to try to get funds through a loan. Using a credit card may also be preferable to tapping your retirement account.

It may not feel helpful to hear this in the moment, but it’s always a good idea to prepare for rainy days when times are good. Once you’re re-employed, build your savings, work on building your credit score, and open a credit card or two with favorable terms and sizable credit limits. Even if you don’t like using credit when you’re stuck, having available credit is a better option than taking a loan in a financial emergency. 

For right now, if you’re trying to make ends meet without a job, MMI offers unemployment resources to help you. We would be happy to discuss your budgeting changes to make it through these difficult times. Once you have a new job, if you’ve accumulated debt during your unemployment, we can help you accelerate your debt repayment with a debt management plan. Reach out if you’d like help.

Your credit score can make or break your ability to open a credit card or buy a new car or home at attractive interest rates.

To boost your score, you need to know where you need to improve.

Keeping tabs on your credit report — which outlines your debts, bill payment history and other financial information — can help you do that.

The three major credit reporting agencies — Equifax, Experian and TransUnion — recently extended the availability of free weekly credit reports to consumers through the end of 2023. By law, consumers are entitled to one every 12 months from each agency, but that during the pandemic, the companies expanded access to weekly free checks.

The reports are available at the Annual Credit Report website.

“We always recommend once a year, at least, to always check your credit report at annualcredit report.com,” said Trent Graham, program performance and quality assurance specialist at GreenPath Financial Wellness, a nonprofit providing free debt counseling services.

While the free credit report you’ll get won’t show your credit score, it can offer clues in terms of how to boost that number. You can access your credit score by paying for it from one of the three credit reporting agencies, or access it for free from your credit card company if it offers the perk.

In terms of credit scores, anything in the 700 range or above is generally “pretty good,” Graham said. The closer your score gets to the high 700s or 800s — approaching popular scoring models’ perfect score of 850 — the better off you’ll be, he said.

The national average credit score recently reached an all-time high of 716, according to FICO.

Your credit score may vary slightly by provider.

A credit monitoring service monitors one or more of your credit reports on a regular basis—usually at least one report from the big three credit reporting agencies: Experian, Equifax, and TransUnion. The monitoring provider watches for any strange or adverse activity such as new accounts in your name or inquiries suggesting that someone is attempting to open an account in your name. The provider alerts you as soon as these types of activities are detected. 

Additionally, some packages also include routine scans of the dark web and public records for signs that your personal information has been stolen or compromised. 

Cost of Credit Monitoring 

Monitoring can be free with some services, such as the one offered by Credit Karma. You might also be eligible for free credit monitoring as a result of previous data breaches, including the 2017 data breach at Equifax. 

For non-free credit monitoring services, the price can range from $10-$40 a month. 

Does Credit Monitoring Offer Benefits?

If you’re not the DIY sort, credit monitoring can be helpful for keeping an eye on your credit reports. 

Basic monitoring tells you if any unusual activity shows up on your credit report, although the service may not monitor all three reporting agencies so it’s not fool-proof. Anything outside of your normal monthly transactions (online bill-paying activity) would be reported, which could help catch fraud early. The problem is credit monitoring only alerts you after the fact, so it doesn’t necessarily prevent fraud from happening—it just catches it earlier. 

A more robust monitoring package will likely include dark web scans. These scans check to see if your information has been stolen and made available for purchase to a bad actor. This kind of information could help you head off potential fraud by closing impacted accounts or freezing your credit to prevent new accounts from being opened in your name. 

Many for-pay premium credit monitoring services include identity insurance, which could help you offset costs stemming from having your identity stolen.

Can I Monitor My Accounts Myself? 

Yes, absolutely. In fact, we recommend it—and of course, that’s free. Most of what’s offered through credit monitoring services are things you can do on your own. To monitor your own accounts, it’s important to do the following: 

• Check your bank balances and credit card statements regularly for purchases you don’t recognize. 
• Take advantage of your free credit reports from the three credit reporting agencies to review credit activity. Usually, you are entitled to a free report once a year, but the agencies are offering free weekly reports through the end of 2023 as a response to the pandemic. You can access your reports through AnnualCreditReport.com. 
• Monitor your credit score for free through a service offered by your credit card or a personal finance website. That allows you to watch for unusual changes. 
• If you’re concerned about your identity being stolen and accounts created in your name, you can proactively freeze your credit. That means you won’t be able to open credit in your name, but you can lift the freeze when you need to. Meanwhile, no one else can open an account in your name. 

Then Why Would I Purchase a Monitoring Service?

If you’re not eligible for free monitoring, purchasing credit monitoring can make sense. Here are some examples of when you might want to buy it. 

• You don’t follow through on monitoring your accounts. (Let’s face it, it’s one more to-do task that often gets pushed to the back burner.) 
• You were already the victim of identity theft or you know some of your information is out there.
• You don’t want to put a freeze on your accounts for the long term. 

If you decide to purchase credit monitoring, NerdWallet recommends not purchasing from the credit agencies themselves for a couple of reasons. One, they might not offer enough identity theft coverage even though their product could cost as much as other companies. Two, when you sign up with a credit agency, you may be required to waive your right to a class-action lawsuit and agree to binding arbitration, neither of which are in your best interests as a consumer. 

If a credit agency has a data breach, as happened to Equifax in 2017, the inability to sue is bad for you. Look for another organization to provide credit monitoring. 

The Limits of Credit Monitoring

Although credit monitoring can offer peace of mind, it’s important to understand that monitoring really only tells you about something after it’s happened. It’s useful to know, for sure, because reacting early helps you. The faster you move, the less damage a potential Identity theft inflicts. But credit monitoring doesn’t necessarily stop these things from happening in the first place.

What are Fixed Expenses?

Fixed expenses are the easiest ones to grasp and usually the easiest to plan for. They happen regularly and are the same cost every time. Your mortgage payment is a fixed expense. Your car payment, insurance payment, and any other set, regular payment are all fixed expenses. They’re easy to plan for because you know what they’ll cost and how often you’ll need to pay them.

What are Variable Expenses?

Variable expenses are the biggest category. These include food, utilities, entertainment, and transportation costs. A variable expense occurs semi-regularly and the cost can changes depending on a number of factors. For example, you don’t pay the same amount every time you shop for groceries, so the cost is variable. 

You can plan for variable expenses by examining your spending over a period of time and creating an average for each category. This means that each individual payment might not hit the budget exactly the way you planned, but over time and multiple payments you’ll (hopefully) arrive at your estimate.

What are Periodic Expenses?

Periodic expenses, by comparison, are the trickiest expenses to plan for because while they occur regularly, they’re usually rare (maybe once a year) and can vary widely. Gift giving falls into this category, along with maintenance and repair costs for your home and automobile. 

How to Budget for Periodic Expenses

The problem with periodic expenses is that when we’re drawing up a budget we tend to forget to consider these costs. You don’t forget to account for your rent or your electric bill because you have to pay those every month. But if you’re planning in January you might forget that by the end of the summer you’ll need money to buy your kids back to school clothes and supplies. 

It’s easy to forget about property taxes, car registrations, and the fact that your tires probably need to be replaced this year. So even though you’ve paid for these things before (many times) they can still sneak up on you and ruin an otherwise solid budget. 

The simplest way to plan for a year’s worth of periodic expenses is to do a thorough inventory of all the periodic expenses you incurred last year. Any expense that isn’t fixed and isn’t accounted for in your variable category is periodic and goes in the pile. 

Once everything is gathered, total up the cost of every expense and divide by 12. Now take that number and add it to your budget. This is the amount you need to save every month in order to cover your periodic expenses. 

It’s an estimate, of course, so some years your periodic expenses might outpace your designated savings, and some years you might have money left over. Even if it’s not exact, at least you’ll never be caught unprepared by a periodic expense again. 

If things you thought were true were actually wrong, when would you want to know?

When I was a child, I recall my mother saying that drinking and driving was against the law. For many years after that, whenever I saw someone drinking a soda while driving, I assumed they were criminals. Years later, I figured out that my mother was talking about drinking alcohol while driving.

Many people go through life believing things without ever considering the possibility that those things are actually wrong. I see it every day in nearly every conversation I have with people: the misinterpretation of financial terms, the misapplication of various wealth strategies and confusion about how much risk they are actually taking.

Why does this happen? Well, the internet gives everyone instant access to unlimited amounts of information. Unfortunately, there is rarely any context, and we have a tendency as human beings to process information as true or false based on the source and a basic understanding of the topic. If Google says it, then it must be true! As a result, people end up with a false sense of confidence and a laundry list of beliefs that aren’t necessarily true.

Misconceptions come with costly consequences

Your financial future rests on your understanding of what you’re doing and why you’re doing it, and the consequences are real. Any misinterpretations you may have about money could potentially destroy your quality of life and reduce your chances of experiencing true financial freedom.

The biggest obstacle to unlearning something you have always thought was true is to accept the possibility of having inaccurate information. Once you do that, unlearning bad financial information is not as complicated as you may think.

The biggest misconception I see over and over again is the focus on accumulation. People tend to evaluate their progress or level of financial success based on how much money they accumulate. While having money in the bank is important, reliable cash flow should be the ultimate goal.

Think about it: You can survive without any money accumulated, but you cannot easily get by without cash flow. Cash flow can be generated in any number of ways: a paycheck from your job, a business you own or a passive-income source. Regardless of where it comes from, cash flow is like water – you simply cannot survive without it. 

How to know if your money is fulfilling its primary purpose

Money is obviously a big part of our lives, so we have a tendency to desire more of it. But how do you decide how much is enough?

What I find is that people often use arbitrary account balances and rates of return to assess how much progress they have made, but neither of these things actually indicates whether your money is fulfilling its primary purpose: income replacement, also known as cash flow.

While having money is, of course, part of the equation, it is the wrong measurement for success. A lot of people with plenty of money still struggle with not feeling financially free or confident, and that is a problem.

Achieving financial confidence starts with answering these two questions:

• How much actual income do you have coming in right now that you don’t have to work to receive? I am talking about actual dollars being deposited into your checking account or brokerage account.
• If you quit working tomorrow, how much money would you need to cover all of your expenses? This includes taxes, trips, lifestyle expenses, etc.

If you’re like most people, there is a gap between how much income you’re receiving and how much you need. (That is why you work, to fill that gap.) If you want to stop working, you’ll need to figure out how to close this gap with passive income.

How is financial security different from financial freedom?

So, how do you do that? Start by understanding the difference between financial security and financial freedom.

The idea of financial security cannot necessarily be defined by exact numbers or percentages and is often expressed as a feeling of safety. That’s why most people focus on reducing debt and accumulating money. They believe that spending less, paying less in interest and earning more on their investments is what will lead them to a successful retirement.

Having large sums of money brings a sense of financial security, but it does not create financial freedom. If you’re like most people, knowing creates more confidence than assuming, and a good way to know is to complete a Gap Report™.

Security vs. independence vs. freedom

I speak with people every week who have millions of dollars saved but don’t feel financially free. They say things like, “I think I will be OK,” or “I feel OK with what I have,” but their word choices — “I think” and “I feel” — say it all: They are not confident.

In short, if you have large sums of money, but you are still working to support your income needs, worried about market returns or uncertain about the future… that is not freedom.

Folks with medical collections under $500 may see their scores increase by 21 points within the first quarter after their last medical collection is removed from their credit report, an analysis from the Consumer Financial Protection Bureau found. Those with debts higher than $500 could see their credit improve by as much as 32 points.

While the improved creditworthiness could expand access to credit for millions of Americans, the study found, many lawmakers say more could be done to mitigate the negative effects of medical debt.

“I am asking your companies to stop putting medical debt on these reports,” Sen. Sherrod Brown, (D-OH), Chair of the Senate Banking, Housing and Urban Affairs Committee told the three main credit bureau CEOs last week.

“After increasing scrutiny and pressure, one year ago, Equifax, Experian, and TransUnion all announced they would significantly change how medical collection debt is reported. This is a positive first step, but it is not enough.”

Creditworthiness improved

Last month, the nation’s three main consumer reporting agencies announced the removal of medical debt collections under $500 from consumer credit reports.

The move concludes a series of steps that Equifax, Experian and TransUnion have undertaken since last year following a CFPB probe on the negative impacts of this type of debt on vulnerable citizens.

In July 2022, the three removed paid medical collection debt from credit reports. They also increased the time before an unpaid medical collection would appear on a credit report from six months to one year.

With the latest effort, the CFPB’s analysis estimated that approximately 22.8 million people had at least one medical collection removed from their credit reports and 15.6 million had all medical collections eliminated from their credit reports.

Further, the CFPB analysis documented how access to credit was expended after the elimination.

For instance, six quarters after the last medical debt was removed, available revolving credit increased by an average $1,028 and the total available installment credit increased by $4,123. Additionally, the consumer watchdog noted that a 20-point improvement in credit score typically lowers the upfront fee on mortgages by 0.25% of the loan balance, or $625 in savings for a mortgage of $250,000.

Additionally, the CFPB analysis found that consumers are more likely to apply for a mortgage in the first quarter after a medical collection is removed.

The CFPB’s analysis builds on similar findings from other companies.

In a separate analysis from VantageScore, medical debt was found to provide little effects on predictive performance or borrowers payment habits. As of January, the credit score development company decided to eliminate medical debt or medical collection data, regardless of its payment status, from its VantageScore 3.0 and 4.0 scoring models.

“Someone with otherwise excellent credit could easily lose 100 points or more off their credit score because a medical bill went to collections,” Ted Rossman, senior industry analyst at Bankrate, told Yahoo Finance. “That could make a huge difference in terms of your approval odds and the interest rates you’ll pay on various financial products.”

Some folks remain affected

While the national credit reporting agencies have taken steps to reduce the burden of medical collections from credit reports, medical debt and the system’s lack of transparency continues to trouble some individuals.

Last year, the CFPB noted that medical debt disproportionately affects low-income families and communities of color, perpetuating the racial wealth gap – and hurting their relationship with the health care system.

The CFPB analysis also noted the difficulty individuals have in disputing medical collections and ultimately having them removed from their reports on their own.

“It’s an effort to take off things that were wrongly hurting people’s scores,” Rossman said. “It’s possible that this debt someone is being accused of failing to pay didn’t even belong to them – it was the insurance company’s responsibility, or perhaps even a billing error.”

That’s why some lawmakers say the partial removal falls short by leaving those larger-dollar collections accounts on people’ reports.

“If you have $1,000 in medical debt, you’re no less credit-worthy than someone with $500,” Brown said. “It stems from the same problem – someone in your family or you got sick… No one should have their financial future destroyed because of a medical emergency, or a sick family member.”

If things you thought were true were actually wrong, when would you want to know?

When I was a child, I recall my mother saying that drinking and driving was against the law. For many years after that, whenever I saw someone drinking a soda while driving, I assumed they were criminals. Years later, I figured out that my mother was talking about drinking alcohol while driving.

I can laugh at the absurdity of this today, but it is the perfect example of how easy it can be to carry around half-truths when you don’t know what you don’t know.

Many people go through life believing things without ever considering the possibility that those things are actually wrong. I see it every day in nearly every conversation I have with people: the misinterpretation of financial terms, the misapplication of various wealth strategies and confusion about how much risk they are actually taking.

Why does this happen? Well, the internet gives everyone instant access to unlimited amounts of information. Unfortunately, there is rarely any context, and we have a tendency as human beings to process information as true or false based on the source and a basic understanding of the topic. If Google says it, then it must be true! As a result, people end up with a false sense of confidence and a laundry list of beliefs that aren’t necessarily true.

Misconceptions come with costly consequences

Your financial future rests on your understanding of what you’re doing and why you’re doing it, and the consequences are real. Any misinterpretations you may have about money could potentially destroy your quality of life and reduce your chances of experiencing true financial freedom.

The biggest obstacle to unlearning something you have always thought was true is to accept the possibility of having inaccurate information. Once you do that, unlearning bad financial information is not as complicated as you may think.

The biggest misconception I see over and over again is the focus on accumulation. People tend to evaluate their progress or level of financial success based on how much money they accumulate. While having money in the bank is important, reliable cash flow should be the ultimate goal.

Think about it: You can survive without any money accumulated, but you cannot easily get by without cash flow. Cash flow can be generated in any number of ways: a paycheck from your job, a business you own or a passive-income source. Regardless of where it comes from, cash flow is like water – you simply cannot survive without it. 

How to know if your money is fulfilling its primary purpose

Money is obviously a big part of our lives, so we have a tendency to desire more of it. But how do you decide how much is enough?

What I find is that people often use arbitrary account balances and rates of return to assess how much progress they have made, but neither of these things actually indicates whether your money is fulfilling its primary purpose: income replacement, also known as cash flow.

While having money is, of course, part of the equation, it is the wrong measurement for success. A lot of people with plenty of money still struggle with not feeling financially free or confident, and that is a problem.

Achieving financial confidence starts with answering these two questions:

• How much actual income do you have coming in right now that you don’t have to work to receive? I am talking about actual dollars being deposited into your checking account or brokerage account.
• If you quit working tomorrow, how much money would you need to cover all of your expenses? This includes taxes, trips, lifestyle expenses, etc.

If you’re like most people, there is a gap between how much income you’re receiving and how much you need. (That is why you work, to fill that gap.) If you want to stop working, you’ll need to figure out how to close this gap with passive income.

How is financial security different from financial freedom?

So, how do you do that? Start by understanding the difference between financial security and financial freedom.

The idea of financial security cannot necessarily be defined by exact numbers or percentages and is often expressed as a feeling of safety. That’s why most people focus on reducing debt and accumulating money. They believe that spending less, paying less in interest and earning more on their investments is what will lead them to a successful retirement.

Having large sums of money brings a sense of financial security, but it does not create financial freedom. If you’re like most people, knowing creates more confidence than assuming, and a good way to know is to complete a Gap Report™.

Two popular options among new business owners are sole proprietorships and limited liability corporations (LLC). Which one you choose will impact the steps you need to take to start your business and the ongoing requirements for running it. It will also affect the extent of your personal liability and your business’s tax treatment.

See below for all you need to know about starting a sole proprietorship versus an LLC to determine which best fits your needs.

Sole proprietorship vs. LLC explained

A sole proprietorship refers to a single-owner business where the owner isn’t treated as a separate legal entity from the business. Under this structure, the owner keeps all business profits, but is also completely responsible for its debts.

Sole proprietorship is perhaps the simplest structure you can have, and you can get started immediately without many formalities.

So, what is an LLC, on the other hand? This type of business provides limited liability protections for your personal assets like a corporation. This means its accounts and debts are separate from your own and, if the LLC could not pay its expenses, creditors could only go after the LLC’s assets, not your personal ones.

Starting an LLC requires registering with the state and designating the members who will run it.

Both sole proprietorships and limited liability companies make suitable structures for single-owner businesses, and, before making a decision, it’s important to understand the pros and cons to both.

Sole proprietorship

A sole proprietorship is a business you own and don’t have to formally register with the government in a particular way.

This popular choice for single-owner businesses offers simplicity in starting and operating the business. You’ll control all aspects so you can make daily business decisions, keep all profits and even change the business’ direction as you’d like. In addition, you can still hire workers like you could with a more formal structure.

Formation documents needed

A sole proprietorship doesn’t require any state document to start the business. Instead, you start the business by simply providing work for clients.

However, if you plan to use a trade name, your county or state may require filing a fictitious business name statement with your desired business name. You’ll first have to confirm availability for the name and check any restrictions on allowed business names. For example, your business name can’t include “corporation,” “LLC” or similar terms implying a different business entity type. You can consult your state or county for the list of disallowed terms.

You’ll also want to know if you need any licenses or permits for your type of work. For example, running a food service business might require licenses from the health department, food handling safety certifications, among other requirements. Obtaining these means meeting all requirements, submitting paperwork and, of course, paying fees.

Registration and filing fees

You usually don’t have to register with your state to operate as a sole proprietor. However, you’ll pay a nominal fee if you register a fictitious business name. The amount of the fee depends on the state. For example, the state of Washington charges a $5 filing fee for fictitious business names, while the state of Florida charges $50.

Depending on your line of work, you may also need to pay for business license and permits. These can include occupational licenses, operational licenses, zoning permits and sales tax permits. You’ll want to check with local, state and federal authorities to determine your requirements and costs.

Taxes and business expenses

As a sole proprietor, you wouldn’t need to file a separate business tax return; instead, you’d list your business income and deduct business expenses on your state and federal personal tax returns. Your business income gets taxed at your usual individual income tax rate. You’d also pay self-employment tax, which covers the employee and employer shares of Medicare and Social Security taxes.

You’d also need to pay estimated taxes to the tax authorities each quarter. This means estimating your annual income, so you don’t come up short. Otherwise, you could owe taxes and penalties when you file your return.

You can use your Social Security number as your tax ID as a sole proprietor. However, consider getting an Employer Identification Number (EIN) from the IRS if you want a business-specific number. An EIN offers more privacy than your Social Security number, boosts your business’s credibility and is required if you hire workers.

Let’s say, for example, you purchase a $200,000 house and you contribute 20% of the price as a down payment with a conventional mortgage (20% is usually the percentage required in order to avoid paying extra for mortgage insurance). That’s a $40,000 down payment. You would then need a $160,000 mortgage to complete the sale.

But what if you don’t have $40,000 saved? Or even $7,000 saved? That’s where down payment assistance comes in. For borrowers with limited savings, down payment assistance programs can help them overcome a potential barrier to buying a home and building equity.

Here’s what to know about down payment assistance programs. 

What is Down Payment Assistance?

Down payment assistance is usually a loan or grant provided by a third party, although some assistance programs offer tax breaks instead. These programs are typically funded by government agencies, charities, or private foundations. Assistance can work in a variety of ways.

For example, the Chenoa Fund is a program that offers eligible FHA-insured home loan borrowers 3.5% of the home’s purchase price as a 0% interest second mortgage with a 30-year term. This interest-free second mortgage helps cover the cost of the down payment and is typically forgiven as long as the borrower makes 36 consecutive, on-time payments on the first mortgage.

Most programs are similar, offering funds at little or no interest to help cover the down payment. They may even offer loan forgiveness under certain circumstances.

Who Qualifies for Down Payment Assistance? 

Down payment assistance programs are highly localized, so the required qualifications will be unique to each program. However, a few common qualifications apply to many programs, including the following: 

• You’re a first-time homebuyer
• You’re a low-income borrower (check the program’s income requirements)
• The down payment assistance program is directly connected to select loan programs
• You may be required to use a specific list of participating lenders for your mortgage

Additionally, most programs require that the property being purchased will be your primary residence. In other words, people looking to buy a second house or a rental property wouldn’t qualify for down payment assistance. 

What is Required to Be Accepted into a Program?

Different down payment assistance programs have different requirements. Some may require that you complete first-time homebuyer counseling (or an online course). Some may require that you participate in a support program to ensure that you successfully manage your payments. Some may offer benefits for consistently making full, on-time payments (or penalties for failing to do so).

Where to Find Down Payment Assistance Programs in Your Area

The best place to start is usually your lender. When shopping for home loans, be sure to ask if you might qualify for any down payment assistance programs.

Also, you can review the US Department of Housing and Urban Development’s (HUD) Local Homebuying Programs page for your state to see what programs are available. Another good place to find links to local resources is FHA’s Down Payment Grants page. 

Do Commercial Lenders Offer Down Payment Assistance? 

Generally, down payment assistance programs are run by local government agencies and charities. You likely won’t find a program offered through a commercial or for-profit organization. However, if you do find a for-profit group offering something they call down payment assistance, be cautious. Make sure you understand all of the requirements of the program—and find out if it’s legitimate. Be extremely wary of anyone charging a fee as part of the application process. 

If you’re ready to buy a home but you’re worried you don’t have enough saved, we can help you explore your budget, clear out debt, and put your focus back on building savings. Connecting with a certified counselor is free and confidential. Better yet, you can complete your counseling completely online. Start today!

The rate on the 30-year fixed mortgage increased to 6.32% from 6.12% the week prior, according to Freddie Mac. Rates had been flirting with 6% in recent weeks and were more than three-quarters of a point lower than in mid-November when the rate neared 7%.

But the recent spike eroded some of the newfound purchasing power buyers gained recently, dampening spirits. The small window for refinancing has also shut for many homeowners.

“In terms of home buying, elevated rates certainly are a deterrent for potential homebuyers,” Keith Gumbinger, vice president of HSH.com, told Yahoo Finance. “Still-high home prices combined with relatively high mortgage rates have crushed affordability.”

Purchase applications tumble

The number of Americans who said it’s a good time to buy fell to 17% in January from 21% in December, according to Fannie Mae. A year ago when rates were slightly above 3%, roughly 59% of respondents thought it was a good time to buy.

“Potential buyers remain quite sensitive to the current level of mortgage rates, which are more than two percentage points above last year’s levels and have significantly reduced buyers’ purchasing power,” Joel Kan, deputy chief economist at the Mortgage Bankers Association, said in a statement this week.

That was evident in the latest measure of homebuying activity.

The volume of mortgage applications for a purchase fell 6% for the week ending Feb.10, marking its second drop in three weeks due to higher rates, according to MBA’s latest survey of applications. Overall purchase application volume was down 40% from a year ago, the MBA cited, its lowest point since the beginning of the year.

“Our latest analysis shows the income needed to buy a median-priced existing home in the fourth quarter of 2022 was about 48% higher than that which was needed in the fourth quarter of 2021,” Gumbinger said. “That’s not something that’s easily overcome when incomes are only rising about 5% per year or so.”

The total number of debt collections on credit reports dropped by 33% from 261 million in 2018 to 175 million in 2022, according to the Consumer Financial Protection Bureau, while the share of consumers with a debt collection on their credit report shrunk by 20%.

Medical debt collections also dropped by 17.9% during that time, but still made up 57% of all collection accounts on credit reports, far more than other types of debt combined — including credit cards, utilities, and rent accounts.

Despite the reduction in collections, the CFPB noted that the results underscore ongoing concerns that current medical billing and collection practices can lack transparency, often hurting the credit scores and financial health of those most vulnerable.

“Our analysis of credit reports provides yet another indicator that, due to a strong labor market and emergency programs during the pandemic, household financial distress reduced over the last two years,” Rohit Chopra, CFPB director said in a statement. “However, false and inaccurate medical debt on credit reports continues to drag on household financial health.”

Having a debt in collections means your original creditor sent your debt to a third-party agency to collect it. According to the CFPB, common items that can slip into collections include medical debt, student loans, unpaid credit card balances and rent, to name a few.

Once in collections, these debts can stay on your credit report for up to 7 years, Experian noted, potentially harming your chances of gaining access to new credit in the future.

While pandemic-era stimulus benefits may have helped families reduce some of their overall debt, the CFPB noted that the decline in collections was mainly due to some debt collectors underreporting data.

According to the report, debt collectors — particularly those who primarily collect on medical bills — reported 38% fewer collection tradelines from 2018 to 2022. Chopra noted this could be troubling.

The “decline in collections tradelines does not necessarily reflect a decline in debt collection activity, nor an improvement in families’ abilities to meet their financial obligations,” he said, “but a choice by debt collectors and others to report fewer collections tradelines, while still conducting other collection activities.”

Fortunately, a growing share of Americans may see even more medical debt disappear from their credit history this year, helping to improve their creditworthiness.

In the first half of 2023, Equifax, Experian, and TransUnion will no longer include medical debts under the amount of $500 on credit reports. That followed the credit bureaus’ move last year to remove approximately 70% of medical collection debt tradelines from consumer reports. Additionally, unpaid medical debt would take a year — rather than the current six months — to show up on a person’s credit report, the bureaus said.

Those upcoming changes may still be just a drop in the bucket toward reducing medical debt, Chopra said.

“While this will reduce the total number of medical collections tradelines, an estimated half of all consumers with medical collections tradelines will still have them on their credit reports,” Chopra said in the report, “with the larger collection amounts representing a majority of the outstanding dollar amount of medical collections remaining on credit reports.”

The CFPB analysis builds on the Biden-Harris Administration’s aim to strengthen the Affordable Care Act and implement new consumer protections to reduce the burden of medical debt and lower medical costs.

It also follows a string of CFPB reports citing how inaccurate medical debt tradelines could not only unfairly harm consumers’ credit scores, but also create long-term repercussions such as avoidance of medical care, risk of bankruptcy, or difficulty securing employment.

In reality, the answer is a little more complex. After working so hard to pay off your credit card debts, you may not be inclined to lose all that great progress, but once you use up your savings, it’s gone (until you can build it back up again). And while you’d hope that today’s car problems are the worst thing you’ll have to deal with in the immediate future, there’s no guarantee that another unexpected expenses isn’t just around the corner. 

So while there’s no right or wrong answer, there are a few questions you can ask yourself to make sure you’re making the best choice for your situation.

Considerations for Using Up Savings vs. Adding More Debt

Are there bills you can’t pay with credit?

The top priority for your emergency savings account is ensuring that your basic needs are met even in the event that your income is cut off. When thinking about the most important bills in your budget (mortgage, rent, electricity, food, etc.) it may be helpful to determine which can be paid with credit and which cannot. 

If a sizeable portion of your most important monthly expenses can’t be put on a credit card, you may want to make sure that you’ve always got enough in savings to handle those payments at least.

How much is your new debt going to cost you?

Carrying debt wouldn’t be such a big deal if it wasn’t so expensive. The biggest factor in the ultimate cost of a new debt may be the interest rate of the credit card you’re using to make the payment. 

A card with a favorable rate may make using credit card and maintaining your savings preferable, since the interest charges will likely be manageable. But if your credit options all come with big interest rates, that may a reason to consider using your savings instead. 

How comfortable are you going to feel operating without a financial safety net?

Leaving aside the dollars and cents, you know you better than anyone else. So consider your own feelings, values, and priorities. Would you feel comfortable moving forward without those emergency savings? Would backsliding into more debt be a real blow to your morale?

Everyone has a different relationship with money. Some people need deep cash reserves to feel safe, and some feel pretty confident that they can make it work no matter what. Be honest with yourself and let your heart have a say in the matter.

And if you need a little more personalized advice, MMI offers free, confidential financial counseling. We’ll review your bills, your debts, and your goals and help you start making the best money decisions for you and your family.

What is Rental Assistance?

Rental assistance programs were originally created to distribute federal or state government funds to qualifying renters and/or landlords. Typically, a local government agency distributes the funds, whether the money comes from the state or federal level. 

Funding is often given out in response to a major need: Covid-19 is the best recent example. The American Rescue Plan Act of 2021 made available over $20 billion in federal funds to local governments to assist qualifying households. In some cases, new local agencies were formed to manage these funds, though in most cases, the funds were distributed to existing local housing assistance programs. 

What Rental Assistance Programs Cover 

Each program is different, with different criteria and different goals, so it’s possible you could receive funds for costs other than rent. However, generally, funds primarily help renters cover budget shortfalls in two areas, both tied to keeping you in your home:

• Rent payments
• Utility payments

Typically, the goal is to help families stay in their homes and keep their necessary utility services operating, such as water, electricity, and gas.

Rental assistance may also take the form of affordable rental housing. In other words, the available assistance may be helpful in finding and accessing more affordable housing, in addition to payments covering the monthly rental fees.

How to Find a Program 

You’ll need to look for programs specific to your area. Start with the list of local rental resources maintained by the US Department of Housing and Urban Development (HUD). Find your state and see what is available to you. 

The Consumer Financial Protection Bureau also maintains a list of renter resources, which you can narrow down by state and county. New programs are typically developed in response to a specific need, so keep an eye out for new applicable programs in your region (try an online search for your area).

How to Qualify for Relief or Assistance

Every program has different requirements, so you’ll need to check what they are for your area, but the most common program requirements are that you:

• Live in a particular city, county, or state;
• Have a household income that doesn’t exceed a certain amount (based on where you live and how many live in the household); and
• Don’t live in a home where the monthly rent exceeds the program’s specified limit.

What to Do if the Local Program Ends

A program ending can pose a frustrating problem for renters. The first thing you can do is keep open communication with your landlord. It’s best if you can try right away to come up with a repayment plan that satisfies both parties. 

Also check to see if your state offers eviction protections. Many states have put special eviction protections in place for tenants who were affected by the Covid-19 pandemic. While some of those protections may have expired in some states, certain states (including New York) have no expiration date on the protections—assuming the hardship took place during a specified period. Although these protections may not prevent an eviction in the end, they could provide time and resources to help you avoid a possible pending eviction.

It’s also recommended you work with a housing counselor. Nonprofit foreclosure and eviction counselors can help you understand your options, know your rights as a tenant, connect you to applicable resources, and help you work with your landlord and other creditors. 

Finally, if your landlord has filed a lawsuit to have you evicted, work with an attorney if at all possible. Depending on your location and circumstances, you may qualify to receive free legal support. Start with LawHelp.org to find legal resources in your state or county. 

Even if you don’t have a lawyer, be sure to follow any instructions you receive from the court. You’ll typically be given the opportunity to file a written appeal explaining why you shouldn’t be evicted. This response should include information about your efforts to correct the situation, what aid or relief you’ve received (or attempted to receive), and any efforts by the landlord to help or hinder your ability to pay. 

Longer-term Solutions to Paying Rent 

It’s important to understand that most rental assistance programs are designed to be temporary solutions to extraordinary circumstances. They’re not meant to pay your monthly rent on a long-term basis. If you regularly struggle to manage bills and expenses, consider working with a free credit counselor to rebalance your budget, focus your priorities, and figure out how to make life more affordable.

Retirement can be a time for relaxing and enjoying some hard-earned leisure time. It’s also an opportunity to spend quality time with family and loved ones and build lasting memories with them.

Retirement is also your time to finally get around to doing all those things that you’ve always wanted to do — your retirement bucket list — but have been putting off due to the pressures of work or the day-to-day necessities of running a business.

For some people, that means going on that cruise you promised your spouse years ago. Or discovering America together in an RV. Or playing all your dream golf courses. Or finally starting that pottery business with your husband.

Everybody’s retirement bucket list is different. When I sit down with retirees, I generally hear bucket list items such as Europe, African Safari, traveling with family, Asia, Australia, New Zealand, Alaska, cruises, famous U.S. parks and more… Amazing places to visit and experience.

Your Retirement Bucket List ‘Window of Opportunity’

As someone who’s worked with many retirees since starting in the financial services industry in 1994 as an insurance professional, I’ve got one critical piece of advice: Whatever is on your “bucket list,” get to it early in retirement. Don’t put it off.

Here’s why: If you’re like most retirees, you’re going to be in your best health early on in your first years after retirement. I wrote on Kiplinger about taking advantage of your first 10 years of retirement, which I call your “Go-Go Years.”

Early in retirement is when you are most likely to have these three necessary elements going for you at the same time:

• Money
• Health
• Time

You have only a limited window of time when you will have all three elements in place at the same time. And none of us knows how long that window will be open for them.

Money: There Are Four Phases

Most of my clients are retired millionaires. So the “money” part of the equation is usually manageable, given proper planning and risk management.

Our goal is to help keep their money window open for a long time, sometimes for multiple generations. So if you’re starting out with a big enough nest egg, the money factor is usually manageable. At least it is for my retired millionaire clients.

One thing to keep in mind when it comes to your money in retirement is that retirement is moving from the “collection phase” of your life to the “clean-up phase” to the “keeping it phase” and then the “passing it on phase.”

So it’s important to set up a retirement plan designed to help mitigate losses — you win by not losing! Warren Buffett is famous for saying a lot of things, but his top two rules of investing are: Rule No. 1: Never lose money. Rule No. 2: Never forget rule No.1.

The other two vital items needed to accomplish your bucket list are closely interrelated: your health and your time.

Health: Don’t Let Inertia Set In

As we get older, most of us begin to lose endurance and mobility. It gets harder to keep up with the grandchildren.

What’s more, the grandchildren get older, too. And more independent. They’ll have less and less time for you. They’ll be dating and borrowing the car and working jobs or going to college — just as you did when you were their age!

Later in life, you may have other demands on your time. There may come a time when you have medical appointments multiple days a week, which might put a crimp in your travel plans.

At a certain point, some of those bucket list activities that you’ve always wanted to do with your family, friends and loved ones may not be an option for you anymore… This is not to be a downer — entering retirement can and should be a joyous time. But don’t let time get away from you. Many people take it easy for a while, and then inertia may set in. Some retirees settle into a routine, continually putting off those important bucket list tasks for one reason or another.

Another day becomes another month. A month becomes a year. And then their health might fail. Or their time runs out altogether. It’s better to pass away tired than pass away with regrets at the things you didn’t get around to doing.

The 2023 tax season has started.  And whether you like to file your tax returns early or prefer to wait closer to Tax Day 2023 (i.e., April 18), there are a few things you need to know about income reporting, new tax credits, state stimulus checks, and potentially smaller tax refunds—before you file your 2022 taxes.

Tax Season 2023

First and foremost, the IRS began accepting tax returns on Monday, January 23rd. The agency says that it is expecting more than 168 million tax returns this season and that many people will file early.

If you are an early filer, be sure that you have all the information you need before you file. You are responsible for filing a complete and accurate tax return, so gather your records, and double check your taxpayer identification number and PIN.

Also worthy of note: The IRS recently added more than 5,000 new customer service staff. This increased IRS staffing stems from the Inflation Reduction Act and is part of the agency’s goal to improve service this filing season. But the IRS still says that visiting the website, IRS.gov, is the fastest way to get tax refund information, and answers to common tax questions.

The IRS also says that direct deposit is the fastest way to get your tax refund if you’re due one. 

Free File Taxes

If you earned $73,000 or less in 2022, you can file your taxes online—for free.

The IRS Free File program operates with seven providers who each have their own various eligibility rules and products. IRS Free File has been open since January 13. If you filed your taxes through the program before January 13, your Free File provider likely held onto your return until the IRS began accepting tax returns on January 23.

If you haven’t filed your taxes yet and are interested in IRS Free File, you can go to the IRS Free File site. Follow the prompts to the online lookup tool to find the right product for you.

2023 Tax Day

This year, the tax filing deadline to submit 2022 tax returns, or to submit an extension to file and pay taxes you owe for 2022, is Tuesday, April 18. (The due date is not the typical April 15 mainly because that would fall on a weekend.)

If you live in an area that was affected by natural disasters (e.g., floods, tornadoes, wildfires, etc.), you have a little more time to file because your individual and business tax returns aren’t due until May 15, 2023. That 2023 filing extension currently applies to storm victims in Alabama, California, and Georgia.

2022 “Stimulus” Payments

If, during 2022, you received a state tax refund payment, inflaiton relief check, or other 2022 special rebate or “stimulus” check from your state,  you may have been wondering whether the amount will be taxable on your federal income tax return. 

The IRS recently announced that it won’t challenge the taxability of most of the special state payments made in 21 states.  (The IRS had recently asked taxpayers who had received the special payments, to wait to file their 2022 tax returns so that the agency could decide whether the payments would be treated as taxable income.)

Not having to report most of the special state payments on your federal income tax return is good news for many taxpayers. But, if you’re unsure whether the special 2022 state payment you received is taxable, consult a professional before you file your 2022 federal return.

For many people, their home is their most valuable asset. And while tapping into the value of your house might seem like a great way handle expenses when money is tight, the terms of a reverse mortgage aren’t necessarily in your best interest, and there may be a better way to balance your finances. 

Whether a reverse mortgage is right for you is nuanced. The short answer? It depends. Here’s what to know and a few considerations for moving forward. 

What is a Reverse Mortgage? 

A reverse mortgage is a type of loan that allows homeowners ages 62 and older to convert part of the equity in their homes into tax-free income with no obligation to repay while they live in that home. You’ll need to own the property outright, or at least have a significant amount of equity built up. Once the borrower dies or moves out, the lender is repaid from the home sale (or the borrower’s heirs repay the loan if they want to keep the house). 

Typically, if the borrower passes away, their spouse can stay in the home, but rules may vary so it’s important to understand the fine print to know what’s required if there are two of you. 

Despite the name, these loans aren’t the true reverse of a traditional mortgage. The lender is not attempting to buy the property from you. Instead, the lender is simply loaning money which is secured by the home’s equity. When the homeowner/borrower dies, permanently moves out, or sells their home, the reverse mortgage comes due and must be paid in full. 

Payment terms can vary. Some borrowers choose to get a lump sum payment, while others choose a line of credit or periodic payments. Whatever you choose, the infusion of cash can be appealing to people who don’t have enough saved to manage retirement, or simply come up against unexpected expenses and have no other way to generate income. 

Types of Reverse Mortgages 

Homeowners have access to three different types of reverse mortgages. The most common is the HECM (home equity conversion mortgage), but there are also the single-purpose reverse mortgage and the proprietary reverse mortgage. Here’s what to know about each. 

Home equity conversion mortgage 

The HECM is federally insured, which means it’s backed by HUD, and it’s the most popular because it has the fewest restrictions. It has no income or medical requirements, and no requirements for how the money is used. It does require the home to be your primary residence. Other terms include the following: 

• Tends to have the highest upfront fees (often the most expensive option overall) 
• Counseling is required before you can close (MMI offers this counseling) 
• Comes with a variety of payment options:
  • Credit line you can draw from whenever you want 
  • Term option with monthly cash advances for a set period of time 
  • Tenure option with continuous monthly payments for as long as you own and occupy the home (it must remain your primary residence). You should consider your health and your ability to remain in the house rather than, say, an assisted living or memory care facility. 

Besides being at least 62, you must either own the house outright or have paid a significant portion of the mortgage. You also can’t be delinquent on any type of federal debt. HUD sets an annual cap on HECM borrowing, and for 2023 it’s $1,089,300. That might sound attractive, but there are a few other terms as well, which is why it’s important to explore all the details before deciding if it’s an option for you. 

Proprietary reverse mortgage 

This reverse mortgage is similar to the HECM, with two major differences, the second of which may not apply to most people seeking a reverse mortgage:

1. The reverse mortgage is backed by private lenders (not the federal government).
2. It’s generally reserved for more expensive homes (appraisal value of around $1 million and up).

This reverse mortgage has similar payments to the HECM, and the lower the remaining balance of your existing mortgage, the more you can borrow. 

Single-purpose reverse mortgage 

This reverse mortgage is the least common of the three, in part because it comes with the most restrictions and, as a result, doesn’t fit most people’s needs. Unlike the HECM, it’s offered by local organizations such as nonprofits or local governments. Terms for these reverse mortgages include:

• Tends to be the least expensive option (lower/fewer fees, interest charges, etc.). 
• Proceeds are heavily restricted (must be used for a single, lender-approved purpose such as home repairs or paying off outstanding property taxes). 
• Repayment isn’t due until the owner sells, moves out, or passes away. Also comes due immediately if the property is condemned by the city.

The Downsides of a Reverse Mortgage 

While staying in your own home might seem like the best option—and it can be for many people—reverse mortgages have downsides. One of the main issues is that reverse mortgages can be costly, with relatively high interest rates and fees for closing costs, insurance, and servicing. All of these costs come out of the loan, leaving you with a smaller lump sum to live on. And while it’s possible to repay the loan and keep the home, it’s more likely that the home will end up being sold. If it’s important that your home stay in your family, a reverse mortgage may not be the right option. 

However, if you need funds to support you through retirement, a reverse mortgage may be a viable solution. Learn more about the pros and cons of a reverse mortgage for your specific situation before making a decision. Be sure to understand the terms for non-borrower spouses. 

Scams to Consider 

Watch out for people who pressure you to take a reverse mortgage with some kind of empty promise. Here’s what you shouldn’t be doing with the funds: 

• Paying for anything other than daily living expenses. Be alert to someone trying to talk you into a reverse mortgage to flip a home, use for home repairs, or purchase an insurance product. 
• Repaying unsecured debt , like credit card balances, or using it to avoid foreclosure. 
• Helping family members with their own financial woes. 

Taking out a reverse mortgage is a major decision, and it’s important to review all your other options first. There may be other ways to reduce your expenses (downsizing to a smaller home, for example), or increase your income (picking up part-time work, etc.). If you’re struggling to pay bills, start with a free credit counseling session from MMI to see what resources are available to you. 

But a budget—and the act of creating a budget—can help you step back, evaluate your situation, and reduce the stress of money management. Simply taking action can help to calm the nerves. 

The Role of a Budget

If you’re struggling with debt, a budget can be your way out of the woods. It sets firm rules for what you can do with your money, and it gives you a tangible way to chart your progress. By removing the guesswork of where your money goes, it tells you when you’re on the right path—and when you’re not. 

Once you’ve figured out where your money is going, you can decide what you might like to change to meet your goals. 

How to Get Started if You’ve Never Used a Budget

Setting up a budget isn’t difficult if you have the right tools, but it does take some thought. If you don’t understand and buy into your reasons for creating a budget, you may have a hard time maintaining one. Our suggested approach includes the following steps, outlined in MMI’s Ultimate Guide to Creating a Budget:

Identify your why

The best budget begins with a clear, meaningful reason for doing a budget in the first place. What’s your why, and why now? Make sure it’s something you care about – and be as concrete as you can. It could be getting out of debt. It could be saving for your dream vacation. It just needs to be well-defined, meaningful, and motivating. 

Set your priorities

Separate from your budget goals, what’s most important to you? What makes day-to-day life fun, rewarding, and meaningful? Which activities or hobbies are most important? Determining your priorities helps you make hard choices more easily. In other words, if something rises to the top as a priority, it comes first. Basing your budget and spending around your priorities makes staying on track much easier.

Track your spending

It’s best to figure out where your money is going before you change anything about how you spend it. For example, maybe you estimate your grocery bill to be a certain amount, but it turns out you rely on take-out food deliveries more than you realized. Accurate tracking is the only way to see where your money goes.

Choose your method

What budgeting method works best for you? Pick the style that you think you’ll have the easier time sticking with. MMI’s Ultimate Guide spells out the different budgeting styles, including the 50/30/20 Rule, Zero-Sum Budget, Anti-Budget, and Money Flow. Take a look at them to see what will work for you. If you’re tracking to the penny, one of the first two might be best. 

From there, choose your budget tool. It could be a simple spreadsheet or an app like Mint, You Need a Budget (YNAB), or Digit. Pay attention to any subscription fees. For a spreadsheet template, do a simple Internet search and decide which one looks good to you. 

A Few Other Budget-starting Secrets: 

It’s not always easy to figure out where to cut back or make room in your budget when attempting to slash debt. Take a look at these low-effort ways to cut back on spending, including “batching” your shopping trips to reduce spending exposure, tallying your online purchases before hitting “checkout,” and reviewing your recurring expenses regularly. 

Paycheck budgeting is a granular strategy for budgeting each paycheck. A two-week budget might work better for you. Explore these budget secrets for other tips. 

How a Budget Helps with Unexpected Expenses 

Clear priorities are the cornerstone of a good budget. The most important expenses come first—core human requirements like shelter, food, and healthcare. 

But a budget can also make unexpected emergencies easier to navigate because your immediate financial responsibilities are already spelled out. You have all the budgeting information you need at your fingertips to make an informed decision about, for example, a sudden car repair. 

To get the money for the repair, you can see where to cut back. It’s possible that you may need to fall behind somewhere, but at least you see everything clearly. That makes the unexpected expense decision easier to map out. 

How to Break Bad Money Habits 

Sometimes we do things that aren’t necessarily bad one or two times, but over time they add up and ruin our best budgeting intentions—such as ordering take-out several times a week because we didn’t shop over the weekend. Habits that deviate from your budget are bad money habits. But don’t feel guilty! Consider these tips: 

Don’t sweat it too much

Habits are psychological—they’re patterns that develop subconsciously over time. Feeling bad won’t help you break a habit. Instead, focus on creating positive change.

Consider what triggers the habit

Lots of people stress shop. But everyone’s triggers are different – it could be anything from your emotional state to a specific time of day to shopping with another person who frequently overspends. Try to identify when the habit kicks in.

Identify what you get from the habit

Does stress shopping make you feel calm? Does it trigger a sense of belonging or purpose? If you do something that you consider “bad,” you’re likely getting something out of it. Try to figure out what that positive return is.

Experiment with alternatives

For example, maybe your relationship with your mother stresses you out. You notice that when you talk to her on the phone, you open Amazon and fill the virtual cart. What could you do instead—for free? Yoga? Exercise? Fill the cart and cancel the order? Try to find something that gives you a similar response but doesn’t involve your credit card.

The following is presented for informational purposes only and is not intended as credit repair or credit repair advice.

Plus, owning your own home can provide stability by allowing you to become part of a community and invest in neighborly relationships. Along the way, you build equity in your home, strengthen your credit score, and come tax time, possibly qualify for a tax deduction. 

But not everyone is well positioned to buy a home, especially if they have a poor credit score. Here’s what to know about credit scores for buying a home and how to improve yours. 

Credit Scores That Mortgage Lenders Want to See 

The baseline credit score that mortgage lenders will consider is a minimum score of 500 (read up on how a mortgage works). But that’s a low score in their view, and it will limit you to certain types of loans, likely with higher interest rates. To be able to access better mortgage products, a better minimum score is 620. For the best interest rates, 740 or higher is optimum. 

However, the rules can be different for government-insured home loans, with added flexibility for lower credit scores. VA and USDA loans have no minimum credit requirement. FHA loans allow for an absolute minimum score requirement of 500, but scores at that level will require a down payment that’s 10% of the purchase price. That can be difficult for many new buyers. If your score is 580 or higher, you’ll be eligible for the maximum funding available for an FHA loan, which is 96.5% of the purchase price. The remaining 3.5% you’ll need to provide as a down payment. 

Lenders Use Multiple Scores When Evaluating Applications

Mortgage lenders go further than credit card companies to determine if you’re a good risk for a mortgage. It’s useful to understand how they use your FICO® scores as you plan ahead.

Mortgage lenders typically want to see reports from each of the big three credit bureaus, along with a FICO score for each report. The big three are Transunion, Experian, and Equifax. The lenders will typically receive one report containing information from all three reporting bureaus, along with three different FICO scores. A FICO score is a number associated with the information in your credit reports. Scores likely vary because each bureau reports your credit history a little differently.

The mortgage lender may use the middle score for lending to you. So, if you need a minimum 580 score, your middle score might need to be at least 580. However, there are exceptions. 

Besides FICO scores, mortgage lenders often look at the information in your credit reports as well when reviewing your application. For example, even if you have decent FICO scores, a lender could turn you down if they don’t like your debt-to-income ratio or see that you owe too much money to collection agencies. Other factors include loan amount, down payment, and location of the home. 

Bottom line: a higher credit score benefits you in many different ways, but it’s not the only factor considered.

The Impact of Low Credit Scores on Interest Rates

While it’s true that all lenders are a little different, it’s standard for interest rates to be based largely on the range of your credit score. The higher your score, the lower the interest rate — and that means paying less money over the long haul for a house. 

Check out this interactive chart by FICO to see the connection between credit score, interest rate, and monthly payment. The reason higher scores benefit you so much is that they demonstrate to lenders that you’re a good risk as a borrower. In theory, a high score is the result of successful borrowing in the past with regular and on-time payments. The converse is also true: a low score can be interpreted as you being a riskier borrower. 

Of course, maybe you just haven’t borrowed much money, or you don’t have a portfolio of different types of credit. That can result in a low score even though you haven’t been irresponsible with credit cards. But to lenders, that’s a risk to them because they don’t have evidence for well-managed borrowing behavior. And the riskier the borrower, the more lenders will try to minimize the risk to themselves with a higher interest rate and other possible terms that are costlier to the borrower. 

How to Buy a House If You Have a Poor Credit Score

So, what can you do if you want to buy a house but have a poor credit score? There are a few steps you can take, including improving your credit score. That takes time but it may be the optimal path, depending on just how low your score is. 

You can also explore any government-insured loan programs that you may qualify for (FHA, USDA, VA). Those programs may qualify you to buy a house more quickly.

Homebuyer assistance programs are primarily run at the state level. Check out the programs available in your state. At the federal level, the FHA is the largest insurer of homes in the world. It’s a great place to start as long as your credit score is at least 500.

How to Improve Your Credit Score 

Improving your credit score doesn’t take anything complicated. Mostly, it takes discipline and consistency over time. Here are the best ways to improve your score. 

• Make on-time or early payments, and never miss one. In most scoring models, on-time payment history is the single most important factor in your credit score. 
• Reduce your overall debt to increase available credit. That means paying down active credit cards and keeping those balances low. The larger your balance compared to the available credit, the worse it can be for your credit score. 
• Avoid too many recent credit inquiries. For example, if you try to open new cards, and they conduct a credit inquiry, that can ding your credit score. Minimize those inquiries. 
• Try boosting your score with alternative data, such as rental payment history and utility payment history reported via a credit reporting service. Keep in mind, some of these credit-boosting services cost money, ranging from $6.95 to $8.85 per month, sometimes with a startup fee. And they may not impact the specific credit scoring model that your lender is using, but, still, alternative data is a potential option to explore. You’ll have to decide whether the monthly fee is worth a credit score bump. 

Are you concerned your credit history and score are keeping you from your dream of homeownership? Buying a home isn’t a quick process. If you want to improve your credit score, work with a certified credit counselor to find ways to reduce debt, build savings, and improve your credit health. Credit counseling from MMI is free, confidential, and available online or over the phone.

After all, you’ll need a good credit score and a solid credit history if you ever plan to purchase a home or take out an auto loan. A bad credit score can even come back to bite you if you want to rent an apartment or apply for certain jobs.

But your score isn’t the only detail you need to pay attention to. You also need to keep an eye on your credit report — the document that lists your formal credit history including any accounts you have open, balances due, and payments you’ve made. 

Your report and your score are intricately intertwined. If bad information gets on your credit report due to fraud or misreporting, this can easily cause your credit score to nosedive. Likewise, a clear credit report with nothing but true (and positive) information can help your credit score reach greater heights.

That’s why, every single year, you should get a free copy of your credit report from all three credit reporting agencies — Experian, Equifax, and TransUnion. Fortunately, this part is easy to accomplish via AnnualCreditReport.com.

How to dispute information on your credit report

Once you have a copy of your credit report from all three bureaus, you’ll want to look over all the details to make sure they’re correct. Incorrect information you might notice on your report may include: 

• Errors regarding your name or personal information
   
• Accounts that aren’t even yours
   
• Accounts belonging to someone with a name that is similar to yours
   
• Closed accounts that are reported as open
   
• Incorrectly reported late payments
   
• Accounts listed more than once
   
• Incorrect balances on accounts
   
• Incorrect credit limits on accounts

Thanks to the Fair Credit Reporting Act (FCRA), both the credit bureau and whoever is providing them with information are responsible for correcting misinformation on your credit report. This means that, if a specific retailer or bank is reporting an account that isn’t yours or an incorrect balance, both the credit bureau and the retailer or bank have to work together to make things right.

If you find an error, here are the steps you should take right away:

Inform the credit bureau with the incorrect information of the mistake

The first step you should take is informing the credit reporting agency of their error, keeping in mind that it’s possible not all the credit bureaus will have the same information. You should let them know about the mistake in writing, taking special care to list important details about the mistake with proper documentation. The Federal Trade Commission (FTC) even offers a sample letter you can use if you need help. 

Note that credit bureaus usually have 30 days to investigate your claim and they are required to get back to you with a response. They are also required to forward the information you sent them to the provider who shared the information with them in the first place. 

Inform whoever provided the information of the mistake

You’ll also want to provide the company reporting the incorrect information with copies of any documentation that prove an error has occurred. Make sure to include all details required to prove your claim along with copies of documentation that backs you up. The FTC offers another sample dispute letter you can use for this instance. 

The most popular type of mortgage is a fixed rate mortgage. As the name suggests, it locks you into a set interest rate for the life of the loan (usually 30 years), unless you later decide to refinance.

That stability is why fixed rate mortgages are so popular, but they’re not your only option. Depending on your circumstances (and your appetite for risk) you may want to finance your home purchase with an adjustable-rate mortgage (ARM). 

How an Adjustable-Rate Mortgage Differs from Other Mortgages

The defining characteristic of adjustable-rate mortgages is their variable interest rates, which are usually tied to market conditions. During the first few years of the mortgage, the rate is fixed, just like a fixed rate mortgage.

Once the fixed period ends, however, the interest rate on your loan begins adjusting regularly, sometimes as frequently as every six months. These adjustments could be good or bad for your monthly payment, depending on how the corresponding market moves, but typically you should expect your rates to increase substantially. This means that an ARM can be much riskier than a fixed-rate mortgage if you don’t plan to sell or refinance before the terms change.

What to Know About ARM Terms 

Usually, the initial fixed period for an ARM is 3, 5, or 7 years (sometimes even 10). The shorter the fixed period, the lower the interest rate, which means that – at least initially – you can often find a lower rate with an ARM as compared to a fixed rate mortgage. According to Bankrate, the average annual percentage rate (APR) on a 30-year fixed rate is up to 6.28% (as of Sept. 16, 2022) while the average APR on a 5-year ARM is 4.67%. 

ARMs are more complicated than fixed-rate mortgages due to how often the interest rate—and your payment—changes. You have several things to track and understand about the terms, including the following:

• Adjustment frequency: Amount of time between interest-rate adjustments.
• Adjustment indexes: The interest rate changes for your ARM will be tied to the interest rate on a type of asset, like a certificate of deposit, or a benchmark interest rate like the Secured Overnight Financing Rate (SOFR). 
• Margin: The difference between your rate and the adjustment index. You will always pay a certain percentage over the identified adjustment index (possibly 2%, for example), which is the margin for your loan. 
• Caps: A cap sets a limit on the amount the interest rate can increase during each adjustment period. 
• Ceiling: The highest that the adjustable interest rate can go during the life of the loan.

Benefits of an Adjustable-Rate Mortgage

Lower interest rate. The biggest benefit of an ARM is that it typically comes with a lower interest rate (APR) and more affordable payment for the first few years. 

Higher loan limit. Because of the lower APR, you may also be able to qualify for a larger loan with an ARM. 

The Drawbacks of an Adjustable-Rate Mortgage

ARMs have big downsides, however, particularly if you plan to own the property beyond the life of the ARM’s fixed-rate period. Here’s what the Consumer Financial Protection Bureau recommends you understand:

• Your monthly payments could go up — sometimes by a lot—even if interest rates don’t go up. 
• Your payments may not go down much, or at all—even if interest rates go down. 
• You might end up owing more money than you borrowed—even if you make all your payments on time. 
• If you want to pay off your ARM early to avoid higher payments, you might pay a penalty.

Another downside to watch out for is a negatively amortizing loan. It’s a type of ARM that offers a monthly payment so low that each payment might not cover all of your monthly interest. The unpaid interest then gets shifted to your principal balance and increases the loan balance. That could mean that after a certain number of years of payments, your remaining principal may actually total more than what you borrowed.

When Should You Use an Adjustable-Rate Mortgage?

ARMS are best suited for the following types of borrowers:

Someone expecting an income boost

For example, if you’re a couple years away from finishing your medical residency and you expect a significant income boost, then maybe an ARM could work with an all-but-certain pay raise on the horizon.

You don’t plan to have the home (or the loan) for very long

Are you expecting to move in a few years? Do you plan to buy a new home before you’ve sold the old one or refinance in the near future? If you don’t anticipate maintaining the ARM past the point when the APR goes up, this might work out well for you. Just be aware of any early payoff penalties.

The most important thing to understand is that if you’re using an ARM because you can’t afford a home otherwise, you could be setting yourself up for financial difficulty in a few years. For most people, a fixed-rate mortgage is a safer way to purchase a home. 

How to Apply for an ARM

If you do decide to apply for an ARM, the process isn’t significantly different from applying for a fixed-rate mortgage. You’ll need to work with a lender or loan broker (perhaps multiple entities if you’re shopping for rates) to determine which loan products you’re able to qualify for. You’ll need to provide plenty of documentation, including the following:

• Social security number
• Address
• Proof of income and employment information
• Recent W-2s (1099s if applicable)
• Bank account information

The lender will determine how much they can loan you based on your credit history, current earnings, available assets, and more.

Ultimately, an ARM can be a risky loan type if you don’t have a plan for the adjustable-rate years of the loan (such as selling the property). If you’re relying on the lower payment and lower APR during the first 3-7 years, you need to have a clear plan for what happens when the rate goes up.

Even if you’re trying to be frugal, you might struggle to keep your budget from ballooning thanks to the inflation that’s made everything more expensive this year.

But don’t give up hope. The following five tips can help you keep your holiday costs down this year without skimping on anything.

1. Shop sales starting right now

Black Friday might be a few weeks away, but many retailers are already offering holiday deals. If you wait until Black Friday, you could miss out on some incredible savings. Not to mention waiting increases the likelihood that some of your must-haves could sell out before you’re able to buy them.

If you don’t find any good sales right now, you can at least do some scouting for later so you know which retailers have the items you want and what how much they normally charge. This will help you identify the best deals when more retailers start discounting their prices.

2. Use coupons

Coupons can help you get free shipping or a discounted rate on items you were going to buy anyway. You can find these pretty easily by searching the store name and “coupons” online. However, keep in mind that not all stores will offer these and some may only make them available for a limited time.

Don’t just use this tactic on holiday gifts either. Check your local newspaper for coupons on grocery items and use this to shave a few dollars off the cost of your holiday meals.

3. Use credit card rewards

Now’s the time to cash in those credit card rewards you’ve been accumulating all year. You can use cash back credit card points to either reduce your credit card bill for the month or to purchase gift cards you can use to buy presents for others. And if you plan to travel over the holidays, see if you have enough miles on your travel rewards credit card to save on your flights or hotels.

Be sure to review any terms and limitations on your credit card rewards, though. Some have points that expire or miles with blackout dates that you can’t use at certain times. Know these limitations before you try to cash in your rewards.

With inflation still at the highest level in a generation, the Fed’s policy-making arm delivered a fourth consecutive mega three-quarters of a percentage point hike in its benchmark rate to a 3.75% to 4% target range at the end of its meeting on Wednesday. It’s the sixth straight rate hike this year and brings the fed funds target range to the highest level since 2008 from between 0% and 0.25% at the start of the year.

The Fed also said it expects “ongoing increases” in rates as it continues to focus on combating inflation, so consumers should expect their costs to head even higher and job losses to mount as economic growth slows.

Although the Fed doesn’t directly control consumer interest rates, its rate increases ripple through the economy and ultimately, hit businesses and consumers and slow demand and inflation.

“Given the environment of rising rates and a slowing economy, the financial steps for households to take are boosting emergency savings, paying down high-cost debt, and maintaining contributions into, and a long-term perspective on, retirement accounts,” said Greg McBride, Bankrate chief financial analyst.

he Fed raised rates Wednesday by 75 basis points, marking the fourth consecutive increase of that size, but that won’t be the end.

The Fed’s year end median fed funds forecast is 4.4% and 4.6% next year before heading lower, according to its economic projections released in September. That means there’s likely another rate increase coming at the Fed meeting in December.

Economists generally expect the Fed to slow its rate hikes in December with a half-point rise to get inflation closer to its 2% target, but another 0.75-point hike isn’t out of the question. Deutsche Bank analysts, for now, expect a fifth consecutive supersize 0.75-point rate increase in December as inflation and the labor market continue to run hot.

In September, overall annual inflation dipped to an 8.2% pace from August’s 8.3%, but the core rate without the volatile food and energy sectors rose 6.6%, from 6.3% the prior month and the largest increase since August 1982. Both topped economists’ mean forecast and unleashed worries that inflation’s getting entrenched in areas that’ll be harder to control if the Fed doesn’t act faster.

Navigating a job loss can be scary and stressful, and figuring out how to pay next month’s bills is also worrying. In fact, it’s normal to feel anxiety and fear. You may also be wondering about taking out a loan to cover your expenses.

Applying for a Personal Loan

To apply for a personal loan, you’ll typically need to provide information about your finances, and, most importantly, information about your income. The loan company will also expect you to submit to a credit report pull. The lender will review your information to determine whether or not you qualify for the loan. 

What if I’m Unemployed? 

Getting a loan when you’re unemployed is tricky to do and may not be possible. The number one criterion that lenders consider when they evaluate your loan application is your ability to pay the loan back on time. If you don’t have an income, you are an extremely risky bet, and you’re likely to be turned down. That makes traditional lenders, like a bank or a credit union, an unlikely option for a personal loan. 

However, it still may be possible to get a personal loan. If you have excellent credit and some source of income, such as child support, alimony, disability, rental income, or something else, you may still have a chance.

But if you have no income at all, you may be limited to using your property as collateral to obtain a loan. That means you may be limited to title loans or pawn loans. With a title loan, you’re using your car’s title as collateral. With a pawn loan, the item of value you offer the pawn shop, like jewelry or electronics, serves as collateral for the loan. In both scenarios, failing to repay the debt in the required amount of time can result in you losing your property. Both types of loans are extremely risky.

What About Payday Loans? 

Payday loans (also known as fast cash loans) are not a good option if you’re unemployed. These are loans structured to be paid back on your next payday. Even though lenders might not check your credit, they’ll still typically want proof that you have a source of income. 

If you’re unemployed, you likely won’t qualify for a payday loan. If you do somehow receive a payday loan despite not having a steady source of income, the terms will almost certainly not be favorable. 

It’s important to understand that these loans need to be repaid quickly to avoid rolling over and adding extremely costly interest charges. If you’re unemployed, you should avoid payday loans as they can spiral into high-cost interest you can’t afford.

What Else Can I Do?

The bottom line is that taking out a loan while you’re unemployed is nearly impossible. If you have savings, now is the time to fall back on those funds. That includes using retirement savings, though you should evaluate the risks of depleting or borrowing against your retirement. The next best option is to use your credit card if you have one. It’s better to use your available credit limit than to try to get funds through a loan. Using a credit card may also be preferable to tapping your retirement account.

It may not feel helpful to hear this in the moment, but it’s always a good idea to prepare for rainy days when times are good. Once you’re re-employed, build your savings, work on building your credit score, and open a credit card or two with favorable terms and sizable credit limits. Even if you don’t like using credit when you’re stuck, having available credit is a better option than taking a loan in a financial emergency. 

For right now, if you’re trying to make ends meet without a job, MMI offers unemployment resources to help you. We would be happy to discuss your budgeting changes to make it through these difficult times. Once you have a new job, if you’ve accumulated debt during your unemployment, we can help you accelerate your debt repayment with a debt management plan. Reach out if you’d like help.

In August, existing homes sales fell 0.4%, marking the seventh straight month of declines and sliding 20% from the same month a year ago. Year-over-year sales dropped from $5.99 million in August 2021 to 4.8 million in 2022.

Meanwhile, the median home price, while still rising 7.7% in August on a year-over-year basis, fell 6% in the past two months. After reaching a record all-time high of $413,800 in June, it dropped to $389,000 in August.

Rate of home price decline

One average, cumulative two-month declines generally tends to be in the 2% range, said NAR Chief Economist Lawrence Yun during a Q&A with reporters after the report was released.

“So that cumulative 6% decline is certainly unusual,” said Yun.

The last time it fell by more than 6% over two months was in September 2013 when it fell by 6.5 %, according to NAR data shared with USA TODAY.

Climbing mortgage rates

“The housing sector is the most sensitive to and experiences the most immediate impacts from the Federal Reserve’s interest rate policy changes,” said Yun. “The softness in home sales reflects this year’s escalating mortgage rates.

Mortgage rates went from 2.87% for a 30-year fixed mortgage the week ending August 26, 2021 to 5.5% the week ending August 25, 2022, according to Freddie Mac.

“Mortgage rate always has the biggest impact on home sales,” said Yun. “So one can have a job creating environment, but the higher mortgage rate clearly knocks off the home buying potential.”

As prices continue to decelerate, Yun said he would not be surprised if there’s only 3% or lower year-over-year increase in median prices by December.

Housing inventory

Total housing inventory in August stood at 1,280,000 units, a decrease of 1.5% from July and unchanged from the previous year. Unsold inventory sits at a 3.2-month supply at the current sales pace, up from 2.6 months in August 2021.

“Inventory will remain tight in the coming months and even for the next couple of years,” Yun added. “Some homeowners are unwilling to trade up or trade down after locking in historically-low mortgage rates in recent years, increasing the need for more new-home construction to boost supply.”

Talking about debt is even more taboo and embarrassing to boot. In a recent survey commissioned by Questis, a finance startup, 56 percent of respondents revealed they believe discussing money is taboo. Debt was such a taboo topic that 3 in 5 (58 percent) respondents admitted to faking financial stability on social media. 

Why Do We Feel Uncomfortable Talking about Debt?

When we’ve absorbed the cultural messaging that debt is bad, opening up about it is even more difficult. Why is that? For many people, money is something we believe we should be able to handle on our own. We buy into the idea that success is earning and saving money, and so, conversely, debt is a sign of failure. 

We may feel guilty about the reasons why we’re in debt, and we may feel ashamed about our inability to better manage the situation. 

Shame and guilt are cousins, but they’re slightly different from each other. When we feel shame, we focus our feelings inward and see our whole self, and our character, in a negative light. We feel guilt, on the other hand, when something we did resulted in a poor outcome. 

Staying silent about money issues can only feed shame and guilt. The silence affects our ability to develop good money skills. Opening up about debt—and being willing to talk about money—are the only ways through to financial health. 

How to Cope with Emotions Around Debt

First, it’s important to remember that debt is quite common. It can happen to anyone, for many different reasons, including divorce, job loss, medical emergency, major home repairs, or needing to financially support a family member or friend. Typically, most of these situations are entirely out of our control.

Second, it’s important to understand that debt isn’t a sign of personal failure – it’s not a reflection of your character. While you may worry that people will judge you for it, remember that your debt doesn’t define you. Try your best to be kind to yourself – give yourself some grace for experiencing what is a very stressful situation.

Third, remember that your debt is temporary, even if it feels all-encompassing and you can’t see a way out of it right now. You may feel overwhelmed, but with the right plan and some hard work, you can make debt a part of your past. There is absolutely a light at the end of the tunnel.

How to Talk to Your Loved One Who Has Debt

Perhaps you’re not the person struggling with personal debt, but your spouse or family member is. If you can see they need help, approach them with empathy and understanding. Make it clear you’re not judging. Also, emphasize that your love and acceptance isn’t contingent on their financial success.

Don’t dwell on the how and why of the debt—they don’t need to defend their actions. Instead, focus on the achievable steps you can take together to start addressing the debt. Help them feel supported. If you’re able, offer to help them create a plan or put some of those steps into action. If they need to talk to someone else, help them find a trusted friend or professional to ask for support.

In 2021 alone, phones in the U.S. were pummeled by more than 50 billion robocalls, according to YouMail, a robocall blocking and analysis company. That’s more than 150 calls for every person in the country. In July, that number was 3.8 billion.

The result? Many of us just don’t answer our phones unless we recognize the number.

The damage done can have serious consequences, intended and not. In addition to fraudulent marketing, ignoring unknown numbers could prove dangerous – take the hiker lost on a mountain in Colorado who was reported to have ignored repeated telephone calls from Lake County Search and Rescue because they didn’t recognize the number. Consequently, the hiker didn’t even know anyone was searching. It’s a behavior common to most of us. A 2019 Consumer Reports survey found that 70% of Americans don’t answer the phone if they don’t recognize the number. 

Are Robocalls Legal?

In general, unless a company has your written permission, it is against the law to contact you via robocall, especially if the caller is trying to sell something. There are some exceptions. According to the Federal Trade Commission, these types of robocalls are permitted by law:

• Messages that are purely informational as long as the caller isn’t also trying to sell you something.This includes calls about flight cancellations, for example, or reminding you about an appointment or letting you know about a delayed school opening.
• Debt collection calls. A business contacting you to collect a debt can use robocalls to reach you. But robocalls that try to sell you services to lower your debt are illegal and are probably scams.
• Political calls to landline phones, as long as they contain required identifying information.
• Calls from some health care providers, such as from a pharmacy reminding you to refill a prescription.
• Messages directly from charities. But if a charity hires someone to make robocalls on its behalf, unless you are a prior donor or member of the charity, the robocall is illegal. They also must include an automated option to let you stop future calls.

How to Avoid Robocalls

Quilici offered the following advice:

1. Get a robocall blocking app on your cell phone. This will filter a lot of the bad guy calls so you don’t have to worry about them.
2. Let calls from unknown numbers roll to voicemail. 
3. Do your homework before calling a number back – generally, if they claim to be a bank, say, go to the bank’s website and call the number there, and do not just call back the number that called you.
4. Finally, if you do answer, never give out personal information and hang up if asked for it.

You can also forward suspicious text messages to 7726 (or SPAM). This free text exchange with your wireless provider will report the number, and you will receive a response thanking you for reporting it.

In addition, the FCC offers the following advice:

• Don’t answer calls from unknown numbers. If you answer, hang up immediately.
• Be aware: Caller ID showing a local number does not necessarily mean it is a local caller.
• If you answer the phone and you are asked to hit a button to stop getting the calls, hang up. Scammers often use this trick to identify potential targets.
• Do not respond to any questions, especially those that can be answered with “Yes.”
• Never give out personal information such as account numbers, Social Security numbers, mother’s maiden name, passwords or other identifying information in response to unexpected calls or if you are at all suspicious.
• If you get an inquiry from someone who says they represent a company or a government agency, hang up and call the phone number on your account statement, in the phone book, or on the company’s or government agency’s website to verify the authenticity of the request. You will usually get a written statement in the mail before you get a phone call from a legitimate source, particularly if the caller is asking for a payment.
• Be wary of pressure for information immediately.
• If you have a voicemail account, be sure to set a password for it. Some voicemail services are preset to allow access if you call in from your own phone number. A hacker could spoof your home phone number and gain access to your voicemail if you do not set a password.
• If you use robocall-blocking technology, tell that company which numbers are producing unwanted calls so they can block those calls for you and others.
• To block telemarketing calls, register your number on the Do Not Call List. Legitimate telemarketers consult the list to avoid calling both landline and wireless phone numbers on the list.

If this happens to you, getting the situation fixed can be difficult and time-consuming. But you can set things right.

If someone took out a loan in your name, it’s important to take action right away to prevent further damage to your credit. Follow these steps to protect yourself and get rid of the fraudulent accounts.

1. File a police report

The first thing you should do is file a police report with your local police department. You might be able to do this online. In many cases, you will be required to submit a police report documenting the theft in order for lenders to remove the fraudulent loans from your account.

2. Contact the lender

If someone took out a loan or opened a credit card in your name, contact the lender or credit card company directly to notify them of the fraudulent account and to have it removed from your credit report. For credit cards and even personal loans, the problem can usually be resolved quickly.

When it comes to student loans, identity theft can have huge consequences for the victim. Failure to pay a student loan can result in wage garnishment, a suspended license, or the government seizing your tax refund — so it’s critical that you cut any fraudulent activity off at the pass and get the loans discharged quickly.

In general, you’ll need to contact the lender who issued the student loan and provide them with a police report. The lender will also ask you to complete an identity theft report. While your application for discharge is under review, you aren’t held responsible for payments.

If you have private student loans, the process is similar. Each lender has their own process for handling student loan identity theft. However, you typically will be asked to submit a police report as proof, and the lender will do an investigation.

3. Notify the school, if necessary

If someone took out student loans in your name, contact the school the thief used to take out the loans. Call their financial aid or registrar’s office and explain that a student there took out loans under your name. They can flag the account in their system and prevent someone from taking out any more loans with your information.

4. Dispute the errors with the credit bureaus

When you find evidence of fraudulent activity, you need to dispute the errors with each of the three credit reporting agencies: Experian, Equifax, and TransUnion. You should contact each one and submit evidence, such as your police report or a letter from the lender acknowledging the occurrence of identity theft. Once the credit reporting bureau has that information, they can remove the accounts from your credit history.

It pays to learn about the mortgage process so that you’re ready when the right house comes along. Here’s what to know about mortgage preapproval and prequalification. 

WHAT PREAPPROVAL FOR A HOME LOAN MEANS

When a mortgage lender preapproves you, they’re stating they would be willing to provide you with a loan of a specific amount. It’s a tentative declaration that isn’t a commitment, but it tells you the lender determined what your finances are and feels comfortable loaning you the specific amount listed in the preapproval letter. That number gives you a ballpark range of what you can afford when you shop for a house. 

IS PREAPPROVAL REQUIRED?

Generally, no, but some sellers may require it. Preapproval shows house sellers that you’re a serious buyer, and if you’re shopping in a competitive region, being preapproved can give you a leg up. 

REQUIRED DOCUMENTS FOR PREAPPROVAL

Getting preapproved is similar to applying for a mortgage. Every lender will have slightly different requirements, but you can expect to be asked to provide the following information:

• Social security number
• Address 
• Proof of income and employment information
• Recent W-2s (1099s if applicable)
• Bank account information

HOW IS PREQUALIFICATION DIFFERENT FROM PREAPPROVAL?

Prequalification is much easier and more informal than preapproval. Prequalification requires only basic information. In fact, some lenders may not even need to pull your credit report to prequalify you for a loan. Prequalification primarily benefits you, the buyer. It can help you understand your mortgage budget (how much you can afford to borrow), so you can set your expectations when you begin shopping for a house. Prequalification typically requires sharing the following information with a lender:

• Income 
• Assets (including savings)
• Expenses
• Debts
• Credit score

With that information, the lender should be able to give you a rough idea of how much of a mortgage loan you might qualify for. Use it as a gauge rather than a sure thing. 

HOW LONG DOES THE PREAPPROVAL PROCESS TAKE?

The length of time for preapproval will vary by lender. You could have an answer in less than 24 hours or it could take up two weeks. But most lenders will let you know if you’re preapproved within a few business days. 

How long your preapproval lasts will also vary by lender. Generally, you can expect you’ll need a new preapproval after 90 days. However, it’s important to understand that preapproval isn’t a guarantee of a specific loan amount, and the further you get from your initial preapproval date, the more likely it is that changes to your finances might lead to a change in terms. (For example, maybe you forgot to pay a hefty credit card bill and your credit score took a hit, which no longer qualifies you for your preapproved interest rate.) Even if your preapproval hasn’t expired, the loan terms you get when you apply for a mortgage could look different from the deal you were expecting. 

FINDING A GOOD LOAN OFFICER 

Word of mouth, talking to friends, and consumer reviews are a good way to find a trustworthy loan officer. If you’re using a realtor, that person might have a relationship with a loan officer that they can vouch for. 

Ideally, you should try to get preapproved with multiple lenders to see what kind of rates and offers you can get.

ARE LARGE LOAN COMPANIES TRUSTWORTHY?

It’s certainly fine to use larger companies like Rocket Mortgage or Better Mortgage. They may have more modern conveniences than smaller companies have, such as a faster approval process, for example. Just like any option, make sure you know what you’re getting into and compare options whenever possible.

According to a 2022 Bankrate survey, 74% of Americans rank homeownership as the highest gauge of prosperity. Despite its challenges, most people still consider homeownership a vital part of the American Dream. 

However, these efforts are undermined by tangled titles, a property title that doesn’t accurately reflect a homeowner’s claim to a residence. Most often, tangled titles happen when a homeowner dies without a will. As a result, children or grandchildren may live in a deceased relative’s home without ever transferring the deed to their name.

This puts heirs at a practical and financial disadvantage, preventing the probate process from properly transferring property after death without a will. It also puts them at risk of housing instability. The results can ruin generational wealth as people can’t access the home’s equity, sell the property, or transfer ownership to heirs. 

Simply put, tangled titles disrupt generational wealth for families across the US, making it more difficult for people to climb out of poverty or advance prosperity by leveraging their most valuable asset – their homes.

UNDERSTANDING “TANGLED TITLES” 

While tangled titles only impact a small percentage of homeowners, they play an outsized role in disrupting generational wealth. In addition to preventing people from accessing a home’s value, property title issues make it difficult for people to purchase insurance or receive benefits from federal or local agencies, while at the same time obligating them to pay real estate taxes and fulfill the practical responsibilities of homeownership. 

It subjects people to the burdens of homeownership without many of the most impactful benefits. What’s more, tangled titles primarily impact the Black community. A census analysis by a local PBS and NPR affiliate found that 87 percent of tangled titles belong to Black-owned homes. 

The causes are both tragic and historical. For generations, Black people were locked out of the judicial system. Meanwhile, they chose not to consolidate heirship and didn’t list just one person in a will because it offered some protection against racist and unethical entities that might try to take their homes away. If bad actors didn’t know who owned a property, it was more difficult to force them out. 

There was also an element of culture. Purposefully tangled titles meant that there was “family land” or a “family home”. It meant that no matter what happened, family members would always have a place where they could gather. 

An analysis of tangled titles in Philadelphia by the Pew Charitable Trusts demonstrates the impact on homeowners and communities. According to the analysis, Philadelphia has more than 10,400 tangled titles for homes with a median value of nearly $89,000. While the home values are lower than the citywide average, these properties are collectively worth $1.1 billion, a significant amount of family wealth that goes untapped and unused. 

The consequences can be devastating and far-reaching. Tangled titles mean that people don’t legally own their homes, and resolving the conflict can be difficult and expensive. 

HOW HOMEOWNERS CAN RESPOND TO A TANGLED TITLE

There are several ways that heirs can resolve a tangled title.

Families can decide to transfer the deed to one person’s name, split the property between multiple people, or form a cooperative. This can be expensive, but it doesn’t have to be. In addition to the cost, this process is often slow and setbacks are common, requiring genealogy records and other references that are challenging barriers for many people. 

Regardless of the approach, resolving tangled titles can be a costly, time-consuming process that many homeowners can’t afford. Fixing a tangled title requires a specialized attorney, which means people have few options when selecting legal counsel. Pew Charitable Trusts estimates that total costs, including subsidized legal counsel, fee waivers, and other public assistance, exceed $9,000. 

There are several excellent companies helping people address tangled titles, and nonprofit organizations are a good place to start. Unfortunately, there isn’t a big national organization that does this work. Consequently, there often aren’t enough financial or personnel resources to get to everyone quickly, and the longer it takes, the more protracted the problem becomes. Contacting your local legal aid organization is a good way to connect with groups that can help.

Right now, homeowners can protect themselves and their heirs against tangled titles by formalizing an estate plan that describes the intentions for the property while designating one person to inherit the property to avoid future title issues. Taking care of a tangled title before it becomes a critical issue can preserve wealth and minimize disruption.

While MMI doesn’t offer services for untangling titles, this problem often arises when homeowners face financial hardship and need to extract value from their homes. Anyone struggling with repaying credit card debt, balancing income and expenses, or recovering from a natural disaster can contact MMI today to find answers and develop solutions with the help of a qualified representative. Confidential counseling is free and available online for your convenience.

Homeownership is considered one of the foundational elements of building and transferring generational wealth. Tangled titles disrupt this process, requiring more resources, greater awareness, and a comprehensive response to help people keep and capitalize on their most valuable asset.

The average domestic airfare per ticket will drop to $286 round-trip this month, down 25% from May when the average round-trip ticket topped $400, according to Travel booking app, Hopper’s pricing forecast released this week. The average fare should remain below $300 through September, before notching upwards ahead of the holidays.

Don’t expect air travel to get any easier as fares drop, though, with trip delays and cancellations remaining a stubborn problem. For the smoothest flight, the two key tips are timing both booking and your travel right.

“Many airlines plan to maintain capacity below 2019 levels through the end of the year to prevent future disruptions,” Andrew Heritage, senior economist at Hopper told Yahoo Money, “meaning more customers vying for fewer available seats this fall and holiday season.”

Air fares are sinking more than usual from their summer peaks in time for fall getaways. But time is of the essence when it comes to snagging a deal.

The average domestic airfare per ticket will drop to $286 round-trip this month, down 25% from May when the average round-trip ticket topped $400, according to Travel booking app, Hopper’s pricing forecast released this week. The average fare should remain below $300 through September, before notching upwards ahead of the holidays.

Don’t expect air travel to get any easier as fares drop, though, with trip delays and cancellations remaining a stubborn problem. For the smoothest flight, the two key tips are timing both booking and your travel right.

“Many airlines plan to maintain capacity below 2019 levels through the end of the year to prevent future disruptions,” Andrew Heritage, senior economist at Hopper told Yahoo Money, “meaning more customers vying for fewer available seats this fall and holiday season.”

Why prices are dropping

A dip in fall ticket prices is generally not noteworthy. Airfares typically fall between 10% and 15% as demand in late August through mid-October dips when kids go back to school, the weather gets cooler, and carriers are eager to boost travel.

“But this year’s decline from the highs of summer is steeper than usual,” Heritage said. “High jet fuel prices and pent-up demand coming out of two depressed summer seasons” pushed this summer’s airfares during the peak vacation months to abnormal highs.

Airfare for June and July averaged $357 per round-trip ticket versus $285 last year, according to Hopper data.

Currently, U.S. Gulf Coast jet fuel is $3.34 per gallon, up from $1.88 a year ago, according to the U.S. Energy Information Administration (EIA) data. In late April, the price per gallon briefly topped $5 and has hovered around $4 per gallon most of the summer. Jet fuel prices typically account for anywhere from 15% to nearly a third (30%) of an airline’s operating expenses, according to Heritage.

But if you start losing track of the different balances and what you owe, the monthly payments can feel overwhelming. 

Credit card consolidation brings multiple credit card debts together into a single debt, and therefore a single monthly payment. It can make monthly bills easier to manage and offer you peace of mind. But is consolidating your credit cards really worth it? That depends on a few factors. 

PROS AND CONS OF CONSOLIDATING

Broadly speaking, consolidating can be helpful when it achieves the following for you: 

• Reduces the number of payments you need to manage
• Reduces your interest charges
• Creates a faster timeline to becoming debt-free

The downside? Consolidating credit card debt doesn’t do you any good if you’re simply kicking the can down the road. In other words, if consolidating doesn’t help you pay down your debt, moving it around doesn’t gain you any benefit. 

In fact, consolidation could make your debt situation worse if your old credit cards remain open and you’re still struggling with the original issues that got you into debt in the first place. You might end up charging to your old cards while you’re also paying off a consolidation loan, taking on even more debt than you had before you consolidated. 

So, if you do decide to consolidate, make sure you understand the terms of the new payment and the interest rate, and be sure to make a plan for paying off your debt. 

THREE WAYS TO CONSOLIDATE CREDIT CARD DEBT

DEBT CONSOLIDATION LOAN 

You can consolidate multiple credit card debts into an unsecured loan. This process involves shopping for a personal loan and weighing the available options. You may want to begin by checking with your bank or credit union to find out what terms they offer. 

When you apply for a debt consolidation loan you’ll need to fill out some paperwork, provide evidence of your financial situation, and submit to a credit check. A poor credit score may make it difficult to land a consolidation loan with the kind of terms that will make debt repayment easier for you. If you’ve already begun missing payments, you may have hard time qualifying for many consolidation loans.

If you’re approved, the loan is used to pay off all your outstanding credit card balances, setting them back to zero. The lender may or may not require you to close the other credit cards. Then you start making payments on the loan. 

BALANCE TRANSFER 

With this method, you transfer all your card balances to a new credit card, somewhat similar to a debt consolidation loan. You find an appropriate card with favorable terms, such as 0% introductory APR for 12-18 months, apply, and hope to be approved. As with a consolidation loan, the better your credit score, the more likely it is that you’ll be approved. 

If you’re approved, you then use the new card to pay off the balance on your other cards, effectively transferring those balances to the new card and then making payments on that one card. 

This method can help you get ahead if it comes with a 0% interest rate, but keep in mind it will bounce back to a regular APR once the introductory rate is over. Many promotional rates may also expire immediately in the event that you miss a payment. 

DEBT MANAGEMENT PLAN 

A debt management plan (DMP) includes some of the better attributes of a consolidation loan (single monthly payment, reduced interest rates), but isn’t a loan and doesn’t require strong credit to qualify.

To begin a DMP you connect with a nonprofit financial counseling agency to review your finances and ensure that a DMP is a good fit. At MMI, you can complete this process entirely online. If the DMP makes sense for you, you’ll begin your plan by making payments to the agency handling your DMP, who will in turn make payments to your creditors. Your creditor accounts are closed as part of the process, and most creditors offer significantly reduced interest rates for participating on a DMP, which is why most plans are paid off in less than four years. You can also cancel your DMP at any time, which makes it a slightly less risky option.

HOW CONSOLIDATION AFFECTS YOUR CREDIT SCORE AND OTHER TIPS

How debt consolidation impacts your credit score depends entirely on the method you choose. Taking out a consolidation loan may temporarily lower your credit score due to the credit inquiry and the fact that the average age of your accounts will go down. (Older accounts are better for a good credit score, and your consolidation loan is brand new.) 

Closing old accounts usually hurts your credit score temporarily, so any method that involves closing accounts can ding your credit, at least in the short term. Keep in mind, if debt consolidation helps you make on-time payments and successfully reduce your debt, the benefits can soon outweigh the hit to your credit score and your score should recover quickly.

Debt consolidation isn’t a magic bullet. It can be a very helpful tool if you’re committed to reducing your debt, but to make it work, you need to have a plan and timeline in place to guide you out of debt.

A growing number of home sellers have been forced to readjust their home prices in recent weeks. According to Redfin, an estimated 6.1% of homes for sale during the four weeks leading to June 19, asked for a price drop – a record high as far back as the data goes, through the start of 2015.

That comes as mortgage rates hit 5.70% last week and are nearly 2.5 percentage points higher than the beginning of 2022, relegating some buyers to the sidelines with busted budgets.

“If you overprice your home in any market, you’re going to feel resistance,” Lizy Hoeffer, owner and mortgage broker at Cross Country Mortgage LLC, said. “In the last three years, sellers have been able to get basically whatever they want for their house. We’re just not in a market like that right now.”

‘Buyer budgets don’t stretch as far as they used to’

The dream of homeownership is slipping out of grasp for many would-be buyers as costs rise.

“Homeowners thinking about moving should know that while recent sellers have enjoyed favorable housing conditions that included high prices and fast sales, the tide is shifting,” Realtor.com Chief Economist Danielle Hale, told Yahoo Money. “Higher rates and home prices mean that homebuyer budgets don’t stretch as far as they used to.”

According to Realtor.com, rising mortgage rates have increased the monthly mortgage payment on a median-priced home an estimated 60% more than last year. The median monthly mortgage payment has jumped by $513 from the start of the year through May, according to a recent report from MBA.

For instance, in the most populated county of Washington State, King County, the average price is over $1 million, according to Adriana Perezchica, real estate broker and owner of Via Real Estate Group. Despite the challenges, Latinos there – which comprise a large portion of her clientele – are buying in the outskirts for an average of $550,000.

DOWN PAYMENT 

How much do homebuyers put down as a down payment on their new homes? Because home prices vary so greatly by region, it’s difficult (if not impossible) to find an average dollar amount. According to a 2021 survey by the National Association of Realtors, however, the average down payment is 12% of the purchase price. 

That average varies significantly depending on the age of the homebuyer. Young homebuyers (ages 22-30) only put down 6% on average, depending on the cost of the home, while older homebuyers paid more than 20%. Why the discrepancy? Older homebuyers tend to already have a home (and equity in that home). Younger homebuyers relied more heavily on savings (84%), while older homebuyers drew on the sale of their previous home (55-60%).

HOME SALE CLOSING COSTS

On top of your down payment, you’ll have other closing costs. These are the fees associated with purchasing a house. They could include the following: 

• Loan origination fee
• Points—these are optional, paid in exchange for a lower interest rate 
• Home inspection report
• Appraisal 
• Credit report
• Deed recording
• Notary fees

Some of these fees may be paid by the seller if you negotiate that outcome. Closing the sale typically takes 30-45 days before you can move in. 

INSURANCE/TAX COSTS

On top of these fees, there are also several types of insurance costs that might be rolled into your mortgage payment through a mortgage escrow account. These include the title insurance policy premium (if you buy title insurance), homeowner’s insurance, property taxes, and a private mortgage insurance premium. 

Your mortgage lender manages these premiums through the escrow account, and you pay monthly allotments to your lender. For you, it’s all part of the mortgage payment, and you may not even realize what portion is the actual house payment, and what portion is homeowner’s insurance or property taxes. 

Not everyone needs private mortgage insurance (PMI): buyers who put down less than 20% for their down payment are typically required to purchase this insurance because it protects the lender if you default on the loan. 

COMMON HOME MAINTENANCE COSTS

Now that you own a home, there’s no landlord to call if your dishwasher begins to malfunction or if your roof starts to leak during a heavy rainstorm. It’s up to you to handle any repairs or replacements, and these costs can be a shock to new homeowners. 

If, during the buying process, your home inspection turns up any unexpected discoveries, such as a leaky roof, you can advocate for the seller to address the issue before you close. But they may say no, so it’s important to factor in future potential costs to your overall budget. 

Here are few other costs you likely didn’t need to think about as a renter. 

Heating and cooling systems. If your furnace or AC unit break, you’ll probably need to call an HVAC professional for repairs. Even a healthy system will need to be serviced, usually twice a year.

Plumbing. This includes maintenance of sinks, toilets, dishwashers, washing machines, and any of the associated pipes. You might be able to handle a simple sink blockage yourself, but a deeper pipe blockage might require a professional. 

Roofing. A new roof can set you back a pretty penny.

Painting. An exterior professional paint job also isn’t cheap, but it extends the life of the house and minimizes other rot repair. 

Pest control. Infestations of carpenter ants, borer beetle, or mice can cause true damage to foundational elements of the home.

Landscaping. Many people handle their own lawns and gardening, or soon learn to, but tree trimming might require a professional. 

Appliances. They can stop working suddenly and it’s up to you to service or replace them. 

Lighting and electrical work. Replacing lighting might be a feasible DIY project, but more complicated electrical work may require a professional. It’s always best to play it safe with electrical systems to avoid injury.

Home furnishings. When people buy a new home, they usually want to upgrade furniture and décor, paint the interior, and purchase new linens for the bathroom and bedroom. But buying new items all at the same time can put a real dent in your budget if you haven’t planned for it.

Home utilities. You may be accustomed to paying some utilities as a renter, but with a new home, you may have new bills you didn’t cover as a renter. These can include garbage, water, sewer, and recycling. Even if you did pay those bills while renting, they may be higher in your new home if it’s bigger. 

By factoring various costs into your overall budget, you can prepare for the costs of homeownership and not purchase more house than you can afford.

Credit cards let you spend money you might not otherwise have, which is both the biggest pro and the biggest con of credit cards as a concept. Used mindfully as a tool, credit cards open up all types of convenient doors, but if used unwisely, they can also dig you into a financial hole. 

THE UPSIDE AND DOWNSIDE OF CREDIT CARDS

The Pros. Putting purchases on a credit card and paying off the balance within a short period of time is more than just convenient. 

• Using credit allows you to purchase and enjoy things you want or need without having to wait until you’ve saved enough money. 
• It also saves you from having to take a costly short-term loan for an unforeseen emergency. 
• Credit cards often reward you with points for your spending, which you can often utilize for cash back, money toward travel, and other bonuses. 

The Cons. The ability to spend money you don’t actually have can be extremely damaging if you don’t have the means to repay your new debt quickly. Because the money doesn’t feel “real,” it’s all too easy to keep whipping out the card with no thought to what happens when the bill comes due.

The key is to spend within your means and pay off credit card balances in full every month (if possible) to avoid interest charges and any possible account delinquencies. In other words, don’t expand your spending just because you can. 

HOW CREDIT CARDS WORK 

A credit card gives you access to a revolving line of credit from a card lender. Revolving credit is credit you can keep using over and over as long as you repay some or all of your balance each month. The amount you borrow can’t usually exceed the account’s limit, although some accounts may allow you to go over, but charge fees in the process. 

The card itself is simply a fast way to share your information with vendors to authorize the transfer of borrowed funds from the lender to the vendor. 

Before you get the actual credit card to use, you sign an agreement with the card lender. The agreement spells out how much you can borrow (your credit limit), when payments need to be made, what fees are involved, and how your interest rate will be calculated and charged.

HOW INTEREST WORKS

Your credit card comes with an annual percentage rate (APR). That’s the interest rate charged on any balance not paid off each month. The lender charges you interest in exchange for lending you money. APR is used to calculate how much your credit card debt is going to cost on top of the account balance itself. The higher the APR, the more interest you will owe on any balance carried over month-to-month. 

In its most basic form, your APR determines how much interest will accrue after one year. For example, let’s suppose the APR on your credit card is 25%. If you have $1,000 in credit card debt, a 25% APR would end up costing you roughly $250 in interest over one year.

HOW CREDIT CARDS BUILD YOUR CREDIT SCORE

In many ways, credit cards are a requirement for building a strong credit history and a solid credit score. You have to use credit (wisely) to get access to more credit. That’s the only way to prove your creditworthiness to lenders. Simply avoiding credit is possible, but it can put you in a vulnerable position later by leaving you with no credit history. 

To establish a good credit record, stick with the following guidelines: 

• Never miss a payment. Payment history is typically the biggest factor in most credit scoring models. Even a small number of delinquencies (months when a due balance went unpaid) can drive down your score. 
• Don’t max out your cards. Avoid using any more than 50% of your credit limit if possible. The more of your available credit that’s being used, the more detrimental that is to your credit score.
• Keep accounts open. The older your accounts, the better. Avoid constantly opening new accounts and closing old ones. 

BEST WAY TO START FOR NEW CREDIT CARD USERS

If you’re just starting on your credit-building journey, your options may be limited. One option is being added to another user’s card (such as the card of your parent or guardian). A better option is to start with a secured credit card. 

Secured cards are backed by an initial deposit from the card holder, typically no more than $500. Your deposit functions as your card’s credit limit. You can then use the card just like you would any other card to make purchases and pay the monthly balance. 

Although it may feel like you’re essentially borrowing from yourself, you are actually borrowing from the lender and building a credit history. The deposit is there as collateral to eliminate risk to the lender. If you don’t pay your bill, the lender reimburses themselves from the deposit.

After certain period of time (usually 6 to 12 months), the card will convert to a normal credit card and your deposit will be returned.

TIPS TO AVOID CREDIT CARD DEBT 

If you establish good habits around credit card use, you can use it successfully as a tool and not wind up in trouble. Try sticking to these rules:

• Treat credit like you would a debit card and avoid spending money you don’t have on things you don’t need. If you’re spending money you don’t have, make sure that you have a plan to manage the debt.
• Repay your monthly balance in full every month—or as often as you can—to avoid paying interest fees. 
• Set up your payments so they post automatically. Missing a payment can be costly.
• If debt starts to feel overwhelming, don’t avoid it! Too many people avoid their monthly statements and stop answering the phone once things start going in the wrong direction. Unfortunately, avoiding the problem inevitably just makes it worse.

This is perhaps not the best way to run a business, but it is indicative of the current mood — a lot of people have a sense that something’s just off in the economy, or it’s about to be. There’s this nagging sentiment that we’re in a precarious spot, that there’s some economic boogeyman lurking just around the corner.

This sense of dread is so pervasive that it might surprise you to hear that many aspects of the US economy are generally in good shape right now. The unemployment rate is low, and the labor market is strong. Job openings are at near-record levels, and many workers who want to find something better are doing so. Household and corporate balance sheets are strong. Business profit margins are coming down some but are not disastrous. The stock market is faltering, but the worst troubles seem to be concentrated to the high-flying tech sector that was bound to cool off a bit. Stock market investors are still much wealthier than they were five, 10 years ago. 

The elephant in the room is, of course, inflation, which is high and, for most consumers, just incredibly annoying. Rising prices are cutting into wage gains for workers. The average price of gas nationally was $4.91 as of June 7, climbing just as many Americans get ready to hit the road for the summer.

“Everything else is going swimmingly, but the inflation is painfully high. People can’t get around that, psychologically,” said Mark Zandi, chief economist at Moody’s Analytics. Add to inflation over two years of a pandemic, war in Ukraine, mass shootings, and political dysfunction, and it makes it hard to say you feel good about anything, including the economy. “It’s just a noxious brew that’s come together and is weighing very heavily on the collective psyche at this point.”

The Federal Reserve is tightening monetary policy to try to combat inflation, which could push the economy into a recession. Regardless, the breakneck pace of the recovery from the pandemic recession is slowing down.

The economy isn’t terrible, but a combination of factors make it feel like it is — and that it’s only going to get worse, even though that’s not at all a foregone conclusion.

Inflation, not fun

Inflation in the US is at levels the country hasn’t seen in decades, and people, frankly, hate it. A recent poll from FiveThirtyEight and Ipsos found that over half of the country says inflation is the most important issue facing the country, well ahead of issues such as political extremism, gun violence, and climate change. Pew found that 70 percent of Americans say inflation is a very big problem, with no other issue coming very close.“IT’S JUST A NOXIOUS BREW THAT’S COME TOGETHER”

Inflation can be really painful for consumers, especially on items such as food and gas that they can’t really skip buying. It’s also always staring them in the face in a way that other facets of the economy are not, at least not so obviously.

If you have gotten a raise over the past year — and many people have — it was likely a one-time thing. “It’s not like every week your boss is like, ‘Hey, we gave you another raise.’ With inflation, it’s a constant creep,” said Nick Bunker, economic research director at Indeed. Gas prices, in particular, are almost unavoidable, even if you’re not filling up your tank. “How many goods and services do we have where the price is prominently displayed on large signs?”

The inflation issue weighs heavily on how people perceive everything else to be going. Many members of the public appear to believe the country is already in a recession. That is very unlikely to be the case, though the economy did shrink in the first quarter of the year.

The way people say they feel about the economy doesn’t necessarily align with how you might expect them to if the country were in a dire economic situation. Consumers are still spending, though more appear to be dipping into their savings to do so (and it’s not clear if they’re taking home less due to inflation). In late 2021, a survey from the Fed found that Americans were reporting the highest levels of financial well-being since the survey began in 2013, even though their perceptions of the broader economy declined. The Atlantic’s Derek Thompson recently named the scenario a sort of “everything is terrible, but I’m fine” situation. 

The University of Michigan’s consumer sentiment index in May fell to its lowest level since August 2011, driven down by how consumers feel about conditions for buying houses and durable goods and their outlook about the future of the economy because of inflation.

“We’re at levels that would be consistent with a bigger recession,” said Claudia Sahm, a former economist with the Federal Reserve. “There is no way, given the labor market, given consumer spending, that right now we are in a recession.”

Sahm pointed out that last time consumer sentiment was so low, the US was in the midst of the debt ceiling crisis and still climbing out of the Great Recession, and there was turmoil in Europe. Essentially, a lot of things were bad. Now we’re in a similar scenario — people feel bad about a lot of things, which translates into how they’re feeling about the economy. Consumers are “just really pissed off about the world,” Sahm said. There’s still Covid, there is again turmoil in Europe, there’s growing anger over politics. Practically no one says they’re happy about the direction of the country. “When we think about the world, the economy, it’s not so separable.”

A recession isn’t for sure looming, but it feels like it is

In early June, JPMorgan Chase CEO Jamie Dimon warned an economic “hurricane” is on the horizon, citing the Fed shrinking its balance sheet and the Russia-Ukraine war’s impact on commodities prices in his reasoning. “Right now, it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle this,” he said. “That hurricane is right out there, down the road, coming our way. We just don’t know if it’s a minor one or Superstorm Sandy.”

WHAT IS A MORTGAGE?

A mortgage is a type of loan specifically used to purchase a piece of property such as a primary home, a second home, rental, condo, or apartment. A mortgage is an agreement between you and a lender, such as a bank or credit union, that gives them the right to reclaim the property if you fail to make the payments as agreed. The property is used as collateral to secure the loan; you won’t technically own the property outright until the mortgage has been paid in full. 

A mortgage comes with terms and conditions related to the principal (the amount you borrowed), fees, interest rate, a repayment period (when it’s paid in full), and a payment schedule that tells you what the monthly payment is and when it’s due. 

HOW DO I QUALIFY FOR A MORTGAGE AND WHAT IS INVOLVED? 

Qualifying for a mortgage starts with finding a lender willing to offer you a loan based on your specific financial profile. You can apply directly with a lender or you can work with a mortgage broker, who will help you find a lender. The broker’s job is to compare lenders and find loan terms that work for you. They’ll also handle all the documents, verify your income, pull your credit score, and negotiate terms with the lender. 

Typically, the lender will pre-qualify you for a mortgage that is worth a certain amount. Pre-qualification is a hypothetical: if you applied for a home loan, this is what we’d be able to offer you. You’ll need to provide some basic information about income, expenses, and debts, and possibly consent to a credit pull. 

Getting approved is more involved. Most lenders will consider your credit score, which also partially determines the type of mortgage available to you. The higher your credit score, the better the terms regarding interest, loan principal amount, and other loan features. A low credit score might mean you don’t qualify for a mortgage with certain lenders. 

Your loan officer will let you know what documents are needed, but they’ll likely ask for your recent tax documents (W-2s and returns from recent years), recent paystubs, and recent bank statements.

WHAT IS A DOWN PAYMENT? 

A down payment is the amount you contribute to the purchase of a home from your own funds. The bank loans you the balance remaining after your down payment to purchase the property. For example, if you purchased a $200,000 home with a $40,000 down payment, you’d need a $160,000 mortgage to complete the sale. You’d own 20% equity in the property, and the lender would own 80%. 

Generally, the more you can pay upfront, the better. Larger down payments typically mean better terms. The less equity the bank has in your home, the lower the risk is to them, and the better the terms for you, including a more favorable interest rate. A larger investment also means a smaller mortgage and a smaller monthly mortgage payment. 

However, it’s important not to sacrifice your financial security by stretching too thin for a down payment you can’t afford. You’ll want to seriously consider your budget before deciding on the amount of your down payment. Make sure you have enough in reserve for emergencies, home repairs, and other financial surprises. 

DIFFERENT TYPES OF MORTGAGES

CONVENTIONAL MORTGAGES

Lenders issue conventional mortgages to consumers with good-to-great credit (typically a 620 or higher FICO score) who can afford a substantial down payment. These mortgages aren’t backed by the federal government. If you put down less than 20% of the sale price as a down payment, you may be required to carry private mortgage insurance (PMI). Also, your debt-to-income ratio can’t be over 43% for most loan programs, though some allow as high as 50%. 

GOVERNMENT-INSURED MORTGAGES

These three government-backed loans are an option for certain homebuyers with lower credit scores and not much savings for a down payment:

FHA LOANS

The Federal Housing Administration (FHA) backs loans, typically for borrowers with lower credit scores. If you have a FICO score of 580 or higher, you can secure 96.5% funding. You’ll need to provide the other 3.5% as a down payment. For a lower FICO score (as low as 500) you can still get 90% funding with a 10% down payment. 

FHA loans also require mortgage insurance, regardless of your down payment amount, but it functions differently from PMI. These loans include two mortgage insurance costs. One is called Upfront Mortgage Insurance Premium, an upfront fee of 1.75% of the loan amount, which you can roll into your loan amount or pay during closing. The other is called Mortgage Insurance Premium (MIP), a monthly premium, typically between 0.45% and 1.05% of the loan amount. You can’t get rid of the monthly premium unless you refinance into a different loan type. 

VA LOANS 

VA loans are backed by the U.S. Department of Veterans Affairs, so they’re limited to members of the U.S. military and their families. Typically, a VA loan doesn’t require a down payment, PMI, or minimum credit score.

USDA LOANS 

Backed by the U.S. Department of Agriculture, USDA loans are intended for low-to-moderate income families in rural areas. The property you’re purchasing needs to be located in an eligible rural area as defined by the USDA. Depending on your income level, you may or may not need to provide a down payment. You will have to pay an upfront fee of 1% of the loan value (can be rolled into the loan), as well as an annual fee, which is determined by loan amount, income level, and other factors.

FIXED-RATE VERSUS ADJUSTABLE LOANS

Mortgages come with different time-frame terms and interest rates. 

• Fixed-rate loans lock you into the same interest rate for the life of the loan. Typically, fixed-rate mortgages are for 15 or 30 years, but other term lengths may be available (up to 30 years). These loans provide consistency for budget planning. 
• Adjustable-rate mortgages (ARM) come with variable interest rates, typically tied to market conditions. For the first few years, the rate is usually fixed and then begins regularly adjusting, sometimes as frequently as every six months. The interest rate may be lower than a fixed-rate mortgage during the “fixed” portion, but it can spike over time and become unaffordable. If you don’t plan to sell or refinance in the near future, an ARM is riskier than a fixed-rate mortgage. 
• Interest-only mortgages let you pay only toward the interest for a certain period of time, usually five years. After that period, the payments increase as you start paying toward the principal. You might choose this option if you plan on selling or refinance quickly, or if your income will increase before the payments do. 
• Balloon mortgages behave as a typical conventional 30-year mortgage does for 5-10 years, and then the remaining balance comes due all at once. It’s another product that’s best if you plan to sell or refinance before the big payment comes due. 

DO I NEED PRIVATE MORTGAGE INSURANCE? 

You’ll likely need private mortgage insurance (PMI) if you take a conventional mortgage and can’t provide a down payment of at least 20% of the home’s purchase price. PMI provides extra protection to the lender if you default on the mortgage. When a lender owns more than 80% of the equity in a property, there’s an increased risk to them that they may not be able to fully recoup the original loan amount if the house is foreclosed and re-sold.

In the event of defaulting, the lender will want to re-sell the property to recoup the loan amount – but home values can be volatile. So, until you have paid down the balance below 80% of the original sale price, you’ll have to pay this added insurance cost.

Not only is the cost a source of stress, but so is the emergency itself. It’s normal to experience a double dose of anxiety, fear, and worry in these situations. 

Other common debt triggers include medical emergencies, divorce or separation, job loss or reduction, major home repairs after a natural disaster, or stepping in to help another family member. 

Many families don’t have wiggle room in their budget to handle sudden, unexpected costs, and recent inflation has made paying bills that much harder. Nearly two-thirds of American families live paycheck-to-paycheck, according to a 2022 LendingClub report. Even folks who earn six figures are struggling to cover costs, depending on where they live, with 48% living paycheck-to-paycheck. 

If you have bad credit, it’s even tougher to find a lower-interest personal loan (also called an installment loan). Poor credit compounds the situation because it reduces your options. Here’s what to know about emergency personal loan products if you have bad credit. 

HOW DOES YOUR CREDIT SCORE AFFECT EMERGENCY LOAN TERMS? 

The lower your credit score, the more limited your options are for a favorable loan. A poor credit score may lead to a higher interest rate, higher fees, or a low loan amount—or you might not qualify for a loan at all. Traditional banks and credit unions use your credit score as one component to calculate your loan terms. 

However, these institutions typically don’t provide small personal loans ($3,000 and under). You’re probably going to be limited to payday loans, or an online lender such as Upstart, Best Egg, or Avant. 

Because some of these online lenders specialize in serving borrowers with poor credit, a low credit score may not be a barrier. These alternative lenders may weigh evidence of satisfactory income more heavily than credit score. However, you won’t have access to low interest rates with a low credit score – those are reserved for consumers with stellar scores. 

WHAT RISKS SHOULD I BE AWARE OF WITH EMERGENCY PERSONAL LOANS?

Try to avoid payday loans (or fast cash loans) whenever possible. These lenders charge high interest rates and may require you to pay back the loan in full within 14 days or by the end of the month, which can be difficult for someone facing a financial emergency. 

Beware of companies offering guaranteed loans for an upfront fee. These loans may be scams because no one can guarantee you’ll receive a loan. Legitimate lenders won’t ask for an upfront fee to guarantee a loan.

Research lenders and look for online reviews. Make sure you understand the terms being offered. Interest rates and fees on small, personal loans tend to be high, even from legitimate online lenders, especially on loans for people with poor credit. Rates will usually be higher than the lender’s advertised rate, which is almost always reserved for those with pristine credit.

LESS RISKY ALTERNATIVES TO AN EMERGENCY LOAN

Savings. If you have savings to dip into, that’s the best way to avoid the high-interest trap of an emergency loan. Of course, many people with a financial emergency don’t have adequate savings to cover it. If you don’t, consider whether you could borrow from family or friends or ask for an advance on your paycheck. 

Credit card. Believe it or not, putting an unexpected expense on a credit card, even one with a high APR, is usually a better bet than taking an emergency loan from a payday or online lender. If your card doesn’t have a sufficient credit limit or you don’t have a credit card, work on building credit and opening a card so you have a working alternative before an emergency pops up.

Retirement savings. If you have a 401(k) or IRA, you may be able to borrow against the balance in the account. The particulars of the loan or withdrawal will depend on the rules of the retirement savings account you’re trying to borrow against. If you’re making an early withdrawal from an IRA, you should expect to pay a fee (typically 10%). If you’re taking out a loan against your 401(k) you may be barred from making further contributions until the loan is repaid. Borrowing against your retirement comes with risks, so make sure you understand what’s at stake before borrowing. 

Payday alternative loan. If you belong to a credit union that offers payday alternative loans (PALs), you might be able to qualify. They’re a much more affordable option to payday loans or online lenders. If you aren’t a member of a credit union that offers these types of loans, ask about eligibility requirements for membership. PALs come in small amounts ($1,000 and below), interest rates are capped at 28%, and they allow repayment in one to six monthly installments. 

WHERE CAN I GET AN EMERGENCY PERSONAL LOAN? 

If you have no alternative but to turn to a payday or online lender, MMI recommends exploring the online lender option first. It’s a better option than risking a debt-trap cycle with a payday lender. Three online lenders that are well-reviewed are Upstart, Best Egg, and SeedFi. 

If cash is so tight that an unexpected emergency can throw your finances into total disarray, it’s time to talk to an expert. The debt and budget experts at MMI can help you evaluate your budget and create a plan to shed debt, trim your spending, and start saving for rainy days. We’re here to help with confidential counseling.

It’s a terrible way to feel, but there’s always something you can do. Creating a plan and taking real action is the best way to combat that negative feeling and put yourself in a position to weather the storm. If you ever find yourself facing an unexpected unemployment, consider the following ten steps to be your unemployment checklist. 

DECIDE BETWEEN RESIGNATION AND TERMINATION 

How the job ends matters. If you find yourself able to choose between voluntarily resigning or being fired, think carefully before choosing. In certain instances if a work situation is untenable and the writing is on the wall, you may consider resigning in order to avoid the potential stigma of having been fired. Sometimes an employer may inform you that you are being fired and then offer to let you quit if you’d prefer. It seems like a kind gesture, but usually it’s nothing of the sort. 

Voluntarily resigning may make future job interviews less tricky, but by doing so you also forfeit your right to unemployment benefits. Which is more valuable to you – the unemployment check or the job reference? Be clear on what you’re agreeing to and what that impact is going to look like. In the immediate aftermath of learning that you’ve lost your job, you may make a snap decision based on the high emotion of the moment. Take a little time before deciding. It makes a big difference. 

FILE FOR UNEMPLOYMENT

Presuming you haven’t resigned or been fired for cause (meaning that you were fired for engaging in an illegal or unethical behavior), you’re likely eligible for unemployment benefits. The amount of your benefits will vary depending on your prior income and the process for application is different in every state. So go to your state’s unemployment office website and begin that process immediately. The sooner you apply, the shorter you’ll have to go without at least some income. 

CONTACT YOUR CREDITORS

Even with unemployment benefits, your money is going to be extremely tight until you find a new job. And when you’re in a financial crisis, one of the first expenses to suffer is going to be your creditor payments. 

Get out ahead of that inevitable issue by contacting your creditors directly to let them know about the situation. Many creditors offer short-term hardship programs that could significantly reduce your payments for six or 12 months. Some may even let you miss a set number of payments. (It’s important to note, however, that in most of these hardship programs interest continues to accrue, meaning you won’t fall behind, but your balance may increase.) 

See what your creditors can offer you. Some won’t be able to do anything for you, at which point you’ll have to weigh the cost of keeping your accounts current against the more important cost of maintaining your household. But at the very least, you need to pick up the phone and see what’s possible. 

MAKE A DECISION ON HEALTH INSURANCE

Maintaining your health insurance coverage through COBRA can be expensive, but dealing with a medical emergency while uninsured can be even more costly. You need to decide what you’re going to do about health insurance while you’re laid off. If you have the ability to be added to a spouse’s insurance plan, begin that process right away. 

MAKE AN HONEST ASSESSMENT OF YOUR FINANCES 

How much is unemployment paying you? How much do you have in savings? What are your living expenses? Where can you cut back? 

You’re not going to be able to wing it at this point, so it’s important to create a detailed list of your available funds and ongoing financial responsibilities. You may also want to sort your expenses into different categories based on priority. 

CREATE YOUR UNEMPLOYMENT BUDGET 

Once you have the raw numbers it’s time to create a spending plan to see you through your unemployment. Bear in mind, your finances may be especially irregular during this time, so you might consider using short-term, week-to-week budgets, especially if your unemployment checks arrive weekly. 

Understand what elements of your budget are optional and which are not, and try to keep your expenses as basic and necessary as possible. 

PREPARE YOURSELF TO BECOME A JOB APPLICANT 

Being a good job applicant has never been as simple as just having the required skills and experience. As a job applicant you are essentially a product that needs to be sold. And just as cautious consumers do a lot of research before making a purchase, so too do employers research their applicants before making a hiring decision. 

Becoming a desirable job applicant begins with a well-constructed resume, but it goes much further. Consider your online presence. We’d like to imagine that our social media accounts are a part of our civilian life, so to speak, and shouldn’t have any bearing on our job prospects, but that’s simply not the case. If it’s online, it’s more than likely public, and you have to assume that the things you post on social media could very well be viewed by someone in charge of evaluating you for a job. 

So think about how you present yourself online. Don’t go on Facebook and badmouth the company that let you go. Don’t go on Twitter and say things – even as a joke – that a reputable company wouldn’t want to be associated with. If you need to clean up your social accounts, now’s the time. 

GO TO WORK FINDING A NEW JOB

When you’re unemployed, your job becomes finding a new job. It’s time-consuming and often very defeating, but you need to treat your job hunt like the work that it is. Be diligent. Put in the hours. Set aside a specific portion of the day for job hunting tasks and be consistent. If you mirror your job hunting hours with your previous working hours, it can help you to maintain a schedule and avoid the kind of lengthy periods of inactivity that can lead to anxiety or depression. 

DON’T NEGLECT YOUR HEALTH, HOBBIES, AND RELATIONSHIPS

Just because your budget needs to tighten up doesn’t mean that no need to stop living your life. People in the midst of unemployment very often begin to isolate themselves because they’re too ashamed to be around friends and loved ones. Joblessness also has a tendency to lead people to stop taking the time and effort to exercise and maintain their hobbies and interests. 

Adding additional layers of misery to an already difficult situation isn’t going to improve anything. Be sure to stay active during a layoff. Spend the necessary time hunting for a new job, but once those tasks are over, let them go and focus on personally fulfilling ways to spend your time. Stay physically and mentally fit. Continue interacting with friends and family. Don’t forget to continue being you. 

FOCUS ONLY ON THE THINGS YOU CAN CONTROL 

Finally, during the course of your unemployment, there will be things you can control and things you cannot. It’s natural to worry about things that are out of our control, but try to focus your time and energy on the things you can actually do to actively improve your situation. Let go of everything else. Eventually, with a lot of hard work and determination, you’ll make it through to the other side. But until then, stay positive and stick to the plan.

“Oftentimes in this chamber you will hear the phrase transformative,” said Ways and Means committee chairman Richard Neal (D-MA) as the bill neared passage. “Sometimes it’s hyperbolic but on this occasion, this is transformative legislation.”

Expanding on a landmark 2019 retirement bill, the bill aims to further expand Americans’ ability to save for retirement and increase their options for doing so. If it passes the Senate, SECURE 2.0 could be a boon for savers from people still paying student loans to retirees behind on their bills.

“SECURE 2.0 is fundamentally designed to make it easier for people to save,” Susan Neely, American Council of Life Insurers President and CEO, told Yahoo Finance Live on Monday. She added there’s “a lot going on in this bill that will be great for retirement savings and it has momentum, thank goodness.”

The bill unanimously cleared the House Ways and Means committee about 11 months ago. Despite the bipartisan support, it languished as lawmakers wrangled over a separate retirement proposal that Democrats had hoped to include in the now-moribund Build Back Better Act.

Now, the resurrected SECURE 2.0 — endorsed by outside groups like AARP and the Red Cross — heads to the Senate where lawmakers of both parties have expressed support for the ideas contained in it and advocates hope it could earn a vote in the upper chamber in the coming months.

“In this bill, we take serious steps to address the savings gap,” Rep. Kevin Brady (R-TX), another of the bill’s key backers, said on Tuesday. “I’m hopeful the Senate picks it up and moves it quickly.”

Here are a few ways the bill could change the way Americans save for retirement.

New options for those nearing retirement

Proponents note Secure 2.0 will give retirees — who are living longer than previous generations — more flexibility as they manage a longer retirement.

For one thing, it gives workers more options for “catch-up” contributions as they near retirement, up to $10,000 per year. Another key provision gradually raises the age for taking mandatory distributions from 401(k) plans or IRAs to 75 from 72.

Some lawmakers want to take things even further with required minimum distributions. “My goal is to get rid of it completely,” Brady said of the age restrictions on distributions during an appearance at the Bipartisan Policy Center Solutions Summit streamed on Yahoo Finance in 2020.

On Monday, Neely also highlighted provisions that will makes annuities or other lifetime income options more accessible which, she said, “can be really really helpful in rounding out your retirement.”

A recent study found that one in three adults have less than $5,000 in retirement savings and nearly half (46%) have taken no steps to prepare for the likelihood that they could outlive their savings.

Automatic enrollment and increased access

According to the latest government data, only about half of private sector workers participate in a retirement plan at work. Many don’t participate because they have no access, but many simply haven’t signed up for available benefits.

To remedy this situation, the bill would push more employers to automatically enroll new employees into their company’s retirement plan if one is offered. Studies have shown that employers with auto-enrollment retirement plans have higher rates of participation.

The bill also includes inducements to help employers, particularly small businesses and nonprofits, with the daunting start-up costs of offering new plans. Employers can also receive credits for matching workers’ contributions. Currently, only 42% of part-time workers have access to a retirement plan at work.

An idea around student loans and retirement

One part of the bill that will surely get the attention of younger people would allow people to save while paying down student loans.

The idea here is to allow businesses to contribute to employees’ retirement accounts when workers make student loan payments. In other words, if you put $100 towards your student loan, your company could “match” it with up to $100 going into a retirement plan like a 401(k).

Data from Bankrate suggests that college graduates with student loans often have to delay other priorities. Thirty-four percent report having delayed emergency savings, 23% say they have delayed buying a home, and 29% have delayed retirement savings.

In a recent webinar co-hosted by Yahoo Finance and the Bipartisan Policy Center, Rep. Fred Keller (R-PA) touted these provisions in particular as “a thing that I think everybody can get behind because it’s incentivizing people to save.”

Brady adds that the provision “really recognizes reality of newer and younger workers in the workforce and finding smart ways to begin to help them to save.”

Also known as “payday loans,” these short-term loans are marketed as a helpful stopgap to consumers who have no savings. They’re meant to be a short-term loan fix that you pay back as soon as your paycheck arrives. That sounds enticing, but is it too good to be true?

Fast cash loans are legitimate, and they’re legal in 37 states. But that doesn’t necessarily mean they’re a good idea. In practice, people who are already struggling to make ends meet struggle even more to repay these kinds of loans. According to a recent Consumer Finance Protection Bureau report, nearly half of those who took a payday loan rolled it over at least one payday, accruing fees along the way.

Taking out a fast cash loan can create a vicious cycle of repeat borrowing and exorbitant fees that cost much more than the original financial shortfall itself. Here’s what else you should know about them.

HOW A FAST CASH LOAN WORKS

FAST CASH LOANS ARE TYPICALLY SMALL

Many states have set limits on the allowable limit, typically around $500, though some states allow a higher limit. This interactive map by Experian shows each state’s limit. The National Conference of State Legislatures also provides details on allowed limits and fees by state.

INTEREST RATES TEND TO BE HIGH 

Fast cash loan rates are typically higher than the rate offered by a traditional lender. Some payday lenders charge a transaction or finance fee instead, which can be costly. Fees may range from $10-$30 per $100 borrowed, according to the CFPB. On a two-week borrowing period, a $15 fee per $100 equals a nearly 400% annual percentage rate. By comparison, a traditional credit card’s APR typically runs 12-30%.

Let’s say you borrowed $500—that’s a $75 fee. Even a $20 fee on a $200 loan can create difficulties if things are so tight that you had to borrow to get to next Friday.

THE REPAYMENT PERIOD IS SHORT 

Usually, repayment is required within 14 days, or possibly within the month. It’s guaranteed through an automated withdrawal from your bank account or a post-dated check, and the lender pulls the owed amount as soon as your paycheck is deposited.

PAYDAY LENDERS AREN’T TRADITIONAL BANKS OR CREDIT UNIONS 

Quick cash loans are offered through payday loan stores or stores that offer financial services, such as pawn shops, rent-to-own stores, or stores with check-cashing services.

NO CREDIT CHECK IS REQUIRED 

Unlike traditional financial institutions, fast cash lenders aren’t really concerned about your past credit history. Your credit score is almost never considered, nor is your employment history or debt-to-income ratio. According to the CFPB, all you need is a bank account in decent standing, identification, and a steady source of income.

It’s important to note that your credit score isn’t affected (positively or negatively) by a fast cash or payday loan. That’s because these lenders don’t tend to report the loan, or the payments, to any credit reporting bureaus. So, unless you default on a loan and it gets sold to a collection agency, it’s unlikely to ever show up on your credit report or impact your credit score.

ALTERNATIVES TO A FAST CASH LOAN

Coming up with an alternative may not be easy if you and your extended family are already on financial thin ice. But, if possible, you’d be better off dipping into your savings if you have it, or using your credit card, which has preferable fees compared to payday loans. You might consider borrowing from friends or family or asking for an advance on your paycheck. All of these options are typically preferable to taking a fast cash loan. 

If you do decide to take a fast cash loan, you should always read reviews and check with the Better Business Bureau first. Also, double-check the fine print and make sure the fees don’t exceed the maximum in your state.

WHAT TO DO WHEN YOU ALREADY HAVE A FAST CASH LOAN

We recommend prioritizing paying off the fast cash loan as soon as possible, no matter what your other financial commitments are. Make it your top priority to get out from under the fees, even if those fees feel manageable now. 

If you’re able, cut your spending in other areas to come up with the cash to pay off the loan. Or take temporary, extra work to bring in additional money. If you’re juggling multiple debts, you may be able to roll these debts into a consolidation loan through a traditional lender with more reasonable fees. 

For military families, be aware that the Military Lending Act provides protections to members of the military. Perhaps most relevant, lenders cannot charge more than 36% interest (including fees), which protects members from exorbitant payday loan fees.

In January 2022, Navient, one of the country’s largest student loan servicers, reached a $1.85 billion settlement over allegations it defrauded students with deceptive and predatory loan practices. The settlement resolves a lawsuit brought against Navient by 39 state attorneys general, and it provides some borrowers with student loan relief. 

The allegations: Navient directed struggling borrowers toward costly forbearance plans rather than into more appropriate income-driven repayment (IDR) plans. As a result, borrowers accrued unnecessary interest that bloated their loan balances and pushed them further into debt. Had borrowers received appropriate guidance, they could have been placed in an IDR plan with reduced payments, in some cases as low as $0 per month, depending on income. 

WHAT KIND OF STUDENT LOAN RELIEF DOES THE SETTLEMENT PROVIDE? 

The settlement provides two kinds of relief. Keep in mind, it’s limited and doesn’t apply to many borrowers. 

Private student loan cancellation. Borrowers who took out private student loans with Sallie Mae to attend for-profit colleges between 2002 and 2014 may be eligible for loan cancellation (aka discharge). The balance or a portion of the balance you owe could be canceled, and any payments made after June 30, 2021, could be refunded. 

Eligible borrowers may include those who were issued a subprime loan (made to borrowers with low credit scores) or those who attended a specific non-profit school. Check the settlement information for a list of schools. 

Restitution. Borrowers with federal student loans who were steered into long-term (2+ years) forbearance periods—periods of no payment—rather than receiving counseling on income-driven repayment plans may receive a “restitution” payment of $260. Loan forgiveness isn’t being offered to these borrowers. 

WHAT SHOULD I KNOW ABOUT ELIGIBILITY?

To be eligible for federal loan restitution—the $260 payment—you must be a resident of one of the 39 states that sued Navient. The restitution-participating states are: AZ, CA, CO, CT, DC, DE, FL, GA, HI, IA, IL, IN, KY, LA, MA, MD, ME, MN, MO, MS, NC, NE, NJ, NM, NV, NY, OH, OR, PA, TN, VA, WA, and WI. 

To qualify for cancellation on certain private subprime loans, borrowers must reside in any of the above restitution-participating states, or Arkansas, Kansas, Michigan, Rhode Island, South Carolina, Vermont, or West Virginia. A military address postal code also qualifies. 

Review the information at navientagsettlement.com for more details on eligibility. 

WHAT SHOULD I DO IF I THINK I QUALIFY? 

You don’t need to take any action to receive benefits, so if you’re not sure you qualify, don’t worry. Navient will notify all borrowers (in writing) who receive private loan cancellation or restitution payments.

Right now, the best thing is to make sure your contact information is up to date with the U.S. Department of Education and Navient. Go online to studentaid.gov to review and update your information and then call or go online to Navient to review or update your information for any private loans. 

If your loans are canceled due to the settlement, you may owe taxes on the forgiven amount. It’s worth checking with a qualified tax professional about the tax implications. 

HOW THE PUBLIC SERVICE LOAN FORGIVENESS (PSLF) WAIVER FACTORS IN

As part of the settlement, Navient must reform its counseling practices. The servicer is required to explain forbearance, deferment, and income-driven repayment plans to borrowers, as well as help them determine the best repayment option for them. 

Navient is also required to educate borrowers about Public Service Loan Forgiveness (PLSF) for federal loans and notify them about the PSLF limited waiver available through October 31, 2022. 

If you work in qualified public service (a 501c3 or a government job), you might benefit from the waiver, whether your loans are held by Navient or another servicer. PSLF still requires that you be working for a qualifying public service employer, but it has eased other requirements. 

You might qualify for forgiveness if you have any of the following: 

• Direct Loans not in repayment through a qualifying income-driven repayment plan 
• FFEL, Perkins, or other federal student loans not consolidated into a Direct Loan
• Payments that were disqualified because they were late or partial payments

Make sure to apply before October 31, 2022.

WHAT ELSE TO KNOW ABOUT STUDENT LOAN FORGIVENESS

The Department of Education offers several federal forgiveness programs besides PSLF. There’s also the Teacher Loan Forgiveness program, or you might be eligible for forgiveness in your state if you work in a particular profession. It’s worth researching. 

Forgiveness is also offered through Income-Driven Repayment Plans. In one of these plans, you make qualifying income-based payments for 20 or 25 years, depending on the plan, after which the balance is forgiven. Private student loans aren’t typically eligible for forgiveness. Keep an eye on studentaid.gov for updates on student loan forgiveness, who qualifies, and where to learn more. 

IF YOU WON’T BENEFIT FROM THE NAVIENT SETTLEMENT, WHAT CAN YOU DO? 

Even if you aren’t included in the Navient settlement, your federal student loans may qualify for discharge if you believe you were defrauded or deliberately misled by false promises or misrepresented information. The primary reasons someone might qualify for discharge: 

• False certification. Discharge for false certification applies to borrowers who think their school falsely certified their eligibility to receive loans. For example, if the institution falsely certified your ability to benefit from the program, falsely certified your eligibility for the program, or signed your name to the application or promissory note without your authorization. 
• Unpaid refund discharge. If you withdrew from the school, and it didn’t properly refund the loan when you withdrew, you could be eligible for the portion of the loan not refunded to be discharged. 
• Borrower defense against repayment discharge. Finally, if you believe the school misled you, engaged in misconduct, or violated state law, you may be eligible for discharge. Examples include misrepresenting graduates’ job placement rates, employment prospects, accreditation status of programs, ability to transfer credits, and program completion claims.

Start by submitting your complaint through the Federal Student Aid Feedback Center or by calling 877-557-2575 for the Federal Student Aid Ombudsman Group. The ombudsman group can help you understand your rights, assist in identifying and evaluating your options for resolving specific concerns, and refer you to the appropriate resources.

The discharge application forms can be found on the StudentAid.gov website. Review the information before applying: unpaid refund discharge, false certification discharge, or borrower defense discharge. 

According to a recent Society of Actuaries survey, about half of the pre-retirees report experiencing some type of unexpected financial shock, as well as more than 4 in 10 retirees. And, 1 in 5 pre-retirees report that these shocks have reduced their assets by 25% or more and reduced their spending by 10% or more.

The good news is that far fewer retirees report these reductions, according to the 2021 Retirement Risk Survey Report of Findings. For example, just 1 in 10 retirees (11%) report that shocks reduced their assets by more than 25%.

Pre-retirees least prepared for a crisis

Other key findings: When asked what they could afford to spend out of pocket on an emergency without jeopardizing their retirement security, half of pre-retirees report that they could only afford to spend $10,000 or less and more than half of retirees could afford no more than $25,000. Black/African American pre-retirees (61%) are more likely than pre-retirees in general (40%) to be impacted by an unexpected expense of up to $10,000.

Among retirees, Black/African American respondents (58%) and Hispanic/Latino (52%) said they are not able to spend $10,000 without it affecting their retirement security. This was much greater than the general retiree response (32%), according to the Society of Actuaries survey.

So, what to make of all this? How might you, be you a pre-retiree or retiree, better prepare for unexpected financial shocks?

Build an emergency fund

Most financial planners recommend that you have at least three to six months of living expenses set aside for, well, emergencies or financial shocks, such as a new roof or dental work.

“Early in my career, I had a 90-plus-year-old client say to me regarding financial assets, ‘You never know what it will take to get you out of this world,’” said Bill Harris, a certified financial planner with WH Cornerstone Investments. “Her life wisdom was spot on. I use that quote to tell pre-retirees with ‘constrained’ or under-funded retirement assets that life has its unexpected turns. We also tell pre-retirees, ‘You can never ever save enough for retirement. An emergency fund is always needed.’”

Build a reserve fund too

Unexpected spending shocks are a reality at any age, said Roger Whitney, host of the “Retirement Answer Man” podcast. “When they happen in retirement – after income from work ends – they aren’t as easily absorbed or worked through,” he said. “To be better prepared, create options for your future self to deal with a shock. Building cash reserves above a normal emergency fund, eliminating debt to lower fixed monthly payments, or working part time can help create financial slack to help you be agile as your retirement life unfolds.”

But if you’re new to credit you may not be entirely sure what the fuss is all about. Why exactly do you need good credit? Here are the biggest reasons why you should care about your credit score, and why building good credit is worth the effort.

GOOD CREDIT SAVES YOU MONEY

If you ever plan to buy a house, own a car, and use a credit card to buy anything, you’re going to want to want a high credit score. 

Simply put, your credit score goes a long way toward determining what kind of interest rate you’re going to get from lenders. The higher your credit score, the more faith lenders will have in your ability to pay them back. When lenders feel confident in your ability to pay them back, they’re more willing to offer low interest rates. And the lower the interest rate, the less that loan or line of credit is going to cost you.

Fool.com has a nice breakdown on how your credit score can change your interest rates and what those changes mean in terms of monthly payment and total interest paid over the life of the debt. Someone with excellent credit can expect to pay hundreds less per month and tens of thousands less in total for a mortgage as compared to someone with average or below average credit. If you carry any amount of credit card debt, a high interest rate can be extremely costly. 

GOOD CREDIT CAN HELP YOU LAND A JOB

A recent nationwide survey of hiring professionals found that 25% used credit checks as part of the hiring process. Why? It’s not that they’re looking for your credit score (they aren’t able to see that). Instead, they’re looking for potential red flags.

While you may not think your credit history says much about your ability to do a particular job, if your credit report shows signs of an inability to successfully manage your finances that might be disqualifying for some positions. Ultimately, it may just be another data point to consider when weighing your application against other, similarly qualified applicants.

GOOD CREDIT CAN REDUCE YOUR CAR INSURANCE BILL

Over 90% of car insurance companies review your credit when determining what insurance premiums to charge. Insurance companies, like employers, aren’t interested in your score, but they are interested in the positive behaviors that make up your score. A spotless payment history, for example, makes you seem more likely to pay your auto insurance bill on time every month.

Basically, if you do a good job managing your credit and debt obligations then insurance companies will assume that you’ll also manage your insurance obligations just as well. 

GOOD CREDIT MAKES IT EASIER TO OPEN UTILITY ACCOUNTS

When it come time to open an account for a utility service, your credit report is crucial. You may not think of electricity as a form of lending, but functionally it’s not much different from a credit card: you spend as little or as much electricity as you like each month and at the end of the cycle you get a bill for what you’ve spent.

Utility companies prefer seeing that you’re someone who pays their other bills on time and doesn’t become overextended. The kind of good behavior that raises your credit score also makes you more trustworthy in the eyes of the gas company.

Poor credit doesn’t mean you’ll automatically be denied service, but it will be harder, and you may have to pay a deposit before you can establish an account.

GOOD CREDIT MAKES FINANCIAL RECOVERY EASIER

Whether you’re unemployed for a lengthy period of time or simply coming up short for the month, good credit makes it easier to stay afloat and manage your recovery once things are back to normal. Most importantly, having good credit makes it easier to borrow money at an affordable rate, which makes any debt you accumulate during a setback that much easier to repay when your income has returned.

GOOD CREDIT GIVES YOU PEACE OF MIND

Having good credit doesn’t shield you from every possible problem, but it does take a little bit of that burden away. Which is important, because over half of all Americans report feeling anxious about their finances, with the majority citing debt as their biggest reason for feeling anxious.

So, while good credit isn’t everything, it is a big part of your overall financial health. Good credit can help turn around a difficult situation and make a good situation even better.

That’s a big change from last year when you filed your 2021 tax return on 2020 income. For 2020 federal tax returns, the American Rescue Plan of 2021 allowed an exclusion of up to $10,200 per individual, but that tax break wasn’t extended for 2021. 

As the April 15 income tax filing deadline approaches, you need to be prepared to pay federal taxes on unemployment compensation you collected in 2021. You could be hit with some sticker shock. Here’s what to know. 

WHY UNEMPLOYMENT BENEFITS ARE TAXABLE

Unemployment benefits are treated like regular income. Your benefits get reported to the IRS and are subject to federal income tax. The amount you received during the year gets added to your overall taxable income. Although the benefits aren’t specifically taxed (nothing is withheld unless you opt in), it’s that total amount of income that shapes your tax bill. 

Most states with a state income tax also collect taxes on unemployment benefits, but some do not. Check the table at the end of this article to see if your state taxes unemployment benefits and what the rate is. You can find more details about each state’s approach in this guide.

The main difference between unemployment and regular wage income is that you don’t pay Social Security or Medicare taxes on unemployment benefits (listed as FICA taxes). Also, the percentage you pay on your benefits is determined by your income bracket. For example, if you’re a single filer and you earned between $9,951 and $40,525, you fall in the 12% federal tax bracket for 2021-2022. 

HOW TO HANDLE A TAX BILL IF YOU’RE STILL UNEMPLOYED 

You may be feeling the financial pinch if you’re still unemployed. If you can’t afford to pay your tax bill, the IRS offers a few options. 

First, contact the IRS right away to explain your situation and find out if you’re eligible for an alternative payment plan. They can discuss your options with you and set you up on a repayment plan, such as a short-term repayment plan within 180 days or a long-term installment plan over 72 months. It’s peak tax season right now, so it may not be easy to get through right away. Try to be patient. 

If you’re not able to pay anything at all, the IRS may decide your account is “currently not collectible.” That designation temporarily delays their collection process. 

Keep in mind, your tax debt doesn’t go away. Penalties and interest may accrue on the unpaid amount during this “not collectible” period. You’ll also be expected to pay fees and interest on any installment plan as well. Going forward, if you can afford to pay a little bit toward next year’s tax bill, that’s advisable to avoid a lump sum in April. 

HOW TO AVOID A HEFTY TAX BILL ON UNEMPLOYMENT BENEFITS

To avoid being socked with a large bill come tax time, you can voluntarily choose to withhold a portion from your unemployment benefits so you don’t get stuck with a tax bill or lose out on a refund you were expecting. 

Unless you absolutely can’t manage to pay throughout the year, it’s highly recommended you opt in to withholding a certain amount. The agency that pays your unemployment benefits will withhold a flat 10% to cover all or a portion of your tax bill. 

Once you’ve returned to work, it’s worth making sure you have the correct amount withheld to avoid a surprise bill. Use the IRS tax withholding calculator to see how much you should withhold. 

WHAT ELSE TO KNOW ABOUT UNEMPLOYMENT TAX WITHHOLDING 

Even though the IRS recommends you withhold a certain amount from your unemployment benefits to cover taxes, your wellbeing comes first. Of course, avoiding a big tax bill is preferable, but if money is extra tight, it’s more important to pay your utility bills and keep food in your pantry. You can always work out a way to repay your bill with the IRS later. Better that than letting your fridge go unstocked. 

Are you still unemployed? Take a look at our unemployment resource. We are here to help. If you’re back to work but dealing with a hefty tax debt because of your time away from work, talk to an MMI credit counselor. We may be able to help you address your other debts and bring some balance to your budget.

Chart: States that tax your unemployment benefits

It’s useful for you to know your DTI, too, because it can help you identify whether you need to make changes to your budgeting and spending. The higher your DTI is, the less money you have for other household expenses outside of debt. It’s also a sign that you might have trouble with an unexpected expense and could fall behind on your debt obligations. 

HOW TO CALCULATE YOUR DEBT-TO-INCOME RATIO

Calculating your DTI isn’t hard. It just involves a bit of math and a debt-ratio formula. You can use our Debt-to-Income Ratio Calculator to find yours. 

First, add up your monthly debt payments, such as a mortgage, car loan, student loans, and credit cards. These are formal debt agreements that are different from variable expenses like, say, childcare, groceries, or utility bills. While your mortgage is a debt, rent is not and shouldn’t be included in your DTI ratio.

Divide your total debt figure by your gross monthly income to get the ratio (percentage) of debt to income. To find your gross monthly income, divide your gross annual salary by 12. 

Here’s how the math works for someone with monthly payments for a car loan, student loan, and credit cards, with an annual gross income of $45,000: 

Monthly debts:

• Car: $250/month
• Student loan: $500/month
• Credit cards: $450/month.
  • Total: $1,200/month

Annual gross income: $45,000 ÷ 12 = $3,750 gross monthly income

Monthly debt payment ($1,200) ÷ gross monthly income ($3,750) = 32% DTI 

Keep in mind, lenders calculate your DTI using your minimum monthly credit card payment, not the total you owe on the card

THE IDEAL DEBT-TO-INCOME RATIO 

As a rule, the lower your DTI, the better for you. However, there is no set ideal ratio because if you own a home — a significant debt — your DTI is going to be much higher than if you rent.

However, if you don’t own a home, and you’d like to qualify for a mortgage, it’s a good idea to get your DTI under 40% because anything above 40% could disqualify you from certain mortgage programs (more in a minute). 

HOW YOUR DEBIT-TO-INCOME RATIO AFFECTS YOUR CREDIT SCORE

In short, your DTI doesn’t impact your credit score. Your credit utilization ratio might seem related to your DTI, but it’s a different animal. Credit utilization measures how much of your credit limit you’re using. For example, if you spend $6,000 of your $12,000 card limit, you’re using 50% of your credit (the optimum percentage is 30% or less). That’s credit utilization. It’s a factor in your credit score, but it doesn’t affect your DTI, and the two aren’t directly related. 

The main reason a high DTI matters is that it indicates you could struggle to meet your debt payments consistently. If you start missing payments, then your credit score will almost certainly take a hit. 

HOW TO REDUCE YOUR DEBT-TO-INCOME RATIO IF IT’S HIGH

Really, there are only two ways to reduce your debt-to-income ratio: increase your income or reduce your debt. 

If your day job makes for a full schedule, it might be tricky to increase your income, but people do pick up side hustles for additional income.

Reducing debt might be a better option for bringing down your DTI, particularly if you carry a lot of credit card debt. That means reviewing your spending and cutting back where you can. 

A third option is to downsize — either your house or your car — to a less expensive choice. Moving house isn’t easy, but it might be worth exploring. 

Consolidating your unsecured debts (such as credit cards) can be a way to reduce your monthly payments without having to qualify for a loan. Following a debt management plan, such as MMI’s option, is one way to bring down your monthly payment. 

WHAT TO UNDERSTAND ABOUT DEBT-TO-INCOME RATIO FOR SEEKING A MORTGAGE 

Lenders know, from historical trends, that borrowers with a high DTI tend to struggle to make their payments and are more likely to default on their loans. That’s why lenders often won’t agree to lend to someone with a high DTI — the borrower is too risky to the lender. 

If you’re planning on buying a home, assess whether you’d qualify for a mortgage. These loan programs, for example, require specific limits (2022):

• FHA loans allow a maximum DTI of 43%
• USDA loans allow up to 41%
• Conventional loans allow a maximum of 45% but can be as high as 50% under certain circumstances

It’s important to understand the DTI calculation includes the new mortgage payment. For example, to qualify for an FHA loan, your existing debt and your new mortgage payment must not exceed 43% of your gross monthly income. 

FHA has another ratio, which is called mortgage payment expense to effective income. It’s a simple calculation: new housing payment (principal, interest, taxes, insurance, mortgage insurance, etc.) divided by gross monthly income. This number cannot exceed 31% to qualify for an FHA loan. 

If your DTI is higher than or close to these ratios, you’ll need to make some changes before you can qualify for a mortgage. Reduce your debt, increase your income, or buy a lower-cost house. 

WHAT ELSE TO KNOW

Your DTI is most important when you’re trying to qualify for a loan. It’s not something people necessarily track regularly like their credit score. But it’s still a good idea to periodically review your DTI’s general direction. If it’s increasing over time, that might be a sign that you’re spending more than your income can accommodate, which can quickly become a major problem if unaddressed. 

If your DTI is too high to qualify for a loan or has been steadily growing over time, your best bet is reducing your debt ASAP. A debt management plan is one way, but nonprofit experts can help you review all your options. Begin your free analysis online and receive personalized recommendations today.

SELF-EVALUATION: DO YOU DESERVE A RAISE?

Of course, we all want to make more money. The question is whether or not you deserve to make more money. And while that may seem like a cold way to look at things, your ability to plead your case with actual facts and figures will go a long way. So, do you have a good case?

Before you make your request, ask yourself the following questions:

• Do you meet and exceed the expectations of your job description?
• Are you known as a person who gets things done?
• Do you take on additional responsibility outside the realm of your job description?
• Do others look to you for advice and leadership?
• Are you constantly increasing your knowledge of your industry?
• Would at least one person at work describe you as indispensable to the company?
• Do you deliver consistent or exceptional results?

If you can convince your boss that many or all of those statements are true about you and your work, you’ll be that much closer to getting your raise. 

TIPS ON ASKING FOR A RAISE

Even if you feel confident about the quality of the work you do, asking for a raise can be intimidating. Following are some tips to help the process go smoothly.

KNOW YOUR WORTH

When asking for a raise, it’s important to know what you bring to the table. Make a list of your accomplishments and contributions to help strengthen your case.

• Show quantifiable success (for example, the percentage you have helped increase sales or the amount of money you have helped the company save by implementing a certain procedure). Consider the success of projects you’ve supported. Provide clear numbers if possible.
• Highlight your unique skills and experience. What can you do that no one else can?
• Provide positive peer feedback. Emails from coworkers and clients praising your work can serve as social proof that you are worthy of a raise. Did you get a great work review last year? Use it to help show your established history of quality work.

DO YOUR RESEARCH

Consult with others in your industry and conduct research online to find out what the going rate is for your position. Be sure to consider your level of experience, education, and city of residence as all of these factors will have some bearing on salary.

PICK THE RIGHT TIME TO ASK

Before asking for a raise, consider your organization’s finances. It’s often less expensive for a company to pay slightly more for an employee who already knows the job than it is to hire and train a new employee. 

That being said, there are certain times when your company’s finances are tighter than others, and there are times when the budget is more receptive to change. Be sure to take into consideration your employer’s financial outlook when planning to ask for a raise.

LEAVE YOUR NEEDS OUT OF IT

You may have extremely valid personal reasons for why you want or even need to get a pay increase, but those reasons should rarely be part of the negotiation process. Raises are primarily rewarded based on merit and past success. No matter how much your boss may want to help support you, they’ll have a hard time justifying a potential raise if you haven’t earned it in some quantifiable way.

HAVE YOUR ANSWERS READY

Expect follow-up questions. Your boss may want to ask questions about the numbers you provide, the projects you cite, the salary comparisons you use, and anything else that may come up as part of your pitch. Be familiar with any claims you make so that you’re prepared in the even that your boss wants a deeper discussion on those items.

THINK WIN/WIN

The relationship between employee and employer should be based on mutual benefit. When you discuss your salary with your employer, try to keep this balance in mind. Be assertive in asking for what you think you deserve, but leave ultimatums like “give me a raise or I quit” out of the discussion unless you are really ready to move on to a new job. 

Remember that if your company cannot grant your request for a raise right now, increased benefits and vacation time are other “wins” that your employer may be willing to discuss in lieu of a higher salary.

EXAMPLE SCRIPT OF ASKING FOR A RAISE

You should feel free to speak in your own manner, but it may be helpful to practice your pitch ahead of time. You may even want to write it down if that helps (although I wouldn’t recommended reading a prepared statement as part of your pitch).

Here’s a basic template to help you get started:

I appreciate you taking the time to meet with me. I wanted to discuss my recent performance and the possibility of a salary adjustment.

In the past year, I’ve worked on a number of major initiatives that have increased revenue and improved efficiency. My work on [project name] helped us [achievement], and my contributions to [project name] resulted in [achievement].

Considering my expertise, skills, and years with the company, as well as comparable salaries in this region, a salary increase of [desired increase] is fair. Can we make that work?

WHAT IF YOUR EMPLOYER SAYS NO TO A PAY RAISE?

Your employer may decline a salary increase for a number of reasons, which is why keeping the relationship amicable when you are discussing a pay raise is important. A “no” now is not necessarily a “no” forever. Strive to enhance your worth at the company by increasing your knowledge of your industry and broadening your work responsibilities.

A 2021 Lending Tree survey found that 88 percent of Americans would rather own a home than rent. It’s easy to see why: owning your own home represents both freedom and wealth. Owning a space means you can do whatever you want with that space, without needing to run it past a landlord first. And homeownership is a foundational way to build wealth, as most homes increase in value over time.

But buying a home is a massive and expensive undertaking. And with that freedom comes a ton of new responsibilities and potential costs.

HOW DO YOU KNOW IF HOMEOWNERSHIP IS RIGHT FOR YOU? 

The idea of homeownership may be enticing, but when is buying a home a good idea for you? There are a few areas to consider.

WILL YOU NEED TO MOVE AGAIN IN THE NEAR FUTURE?

Buying a home isn’t a lifetime commitment, but unless you’re flipping a property, it may not be in your best financial interest to buy and sell a home in short order. There are the costs associated with closing on a mortgage. So unless the value of your home has already increased (and it may have, depending on the market), you may need to stay in your house for a while in order to avoid losing money on the transaction. 

Additionally, it’s important to note that markets are volatile. During some periods it may be very easy to find a buyer, and during others it may take months or even years to sell your property. Which is why buying a home can be tricky if you aren’t settled, at least for the near future.

CAN YOU HANDLE BEING RESPONSIBLE FOR EVERYTHING THAT GOES WRONG?

Things happen when you own a home. Plumbing problems. Issues with heating, electricity, wildlife, and more. You don’t necessarily have to have the skills to fix all of these problems on your own, but they’re your responsibility. You have to find someone who can fix it and then pay them, because there isn’t a landlord to handle that for you.

DO YOU FEEL CONFIDENT IN YOUR ABILITY TO PAY?

Buying a house is an investment and a commitment. No one plans on defaulting on a home loan, but a large factor in the collapse of 2008 was the thousands (if not millions) of consumers who had been talked into purchasing homes they couldn’t afford. Your financial situation should be the primary consideration when buying a house – not how “good” the market is at that moment.

WHEN IS A HOUSE A GOOD INVESTMENT?

Generally speaking, a house is almost always a good investment simply because home values usually go up over time. That’s not a guarantee, of course, and it’s not the only factor to consider when trying to decide if buying a specific house will be a good investment for you. When weighing your housing options, be sure to examine these key points.

YOU CAN REASONABLY EXPECT THE PROPERTY’S VALUE TO ADEQUATELY INCREASE OVER TIME

While it’s fair to say that most houses will increase in value over time, those numbers rarely move in a straight line. Values fluctuate constantly for a variety of reasons. Prices may suddenly skyrocket due to temporary scarcity in the market. And those same prices may plummet during periods of major economic upheaval. There’s no way to know exactly how much your house will be worth in ten years.

There are, however, trends that develop over time. Home values in particular neighborhoods may rise faster than those in other neighborhoods. Certain styles or sizes of home may be gaining (or losing) popularity.

If you’re thinking of your home as an investment and not simply the place where you keep your stuff (which is a perfectly valid way to look at your home, by the way), then you’ll want to consider all aspects of your home’s potential value. Are there major public works projects on the horizon that may make the neighborhood more or less appealing? Are climate changes making an area more disaster-prone? Consider all of these angles and more before making your purchase.

THE COST OF REPAIR AND MAINTENANCE MUST BE LOWER THAN THE PROJECTED INCREASE IN VALUE

You will inevitably need to sink money into your new home. The amount will vary, depending on the age and condition of the home at the time of purchase. There’s also the possibility that the house will simply be lacking certain features that you desire. 

All of that work will add value to your home. But will it add enough value to become a net positive investment? That’s what you need to figure out. A fixer-upper can be a good, low cost investment or it can be a money trap if you’re not careful. If you’re thinking of your new home as an investment, you need to be mindful of what you spend on upgrades and monthly maintenance. If you put more into a home than you can reasonably expect to get back out once it’s time to sell, then that house may not be a good investment for you.

THE EQUITY YOU CREATE SHOULD BE GREATER THAN THE AMOUNT YOU MAY HAVE SAVED BY RENTING

Few people actually own their homes outright. It’s much more common to take out a mortgage and use the proceeds to buy your home. Over time, you build equity by making payments, narrowing the gap between what your house is worth and how much you still owe the lender.

That equity is key, because even if you never pay off your mortgage in full, it represents a sort of return on your investment. When you sell the house, that equity comes back to you. It’s why so many people favor owning a home to paying rent. You don’t build equity while paying rent.

That said, if renting were cheaper than paying a mortgage (plus the other costs associated with owning a home), you’ll want to verify that the difference isn’t greater than the amount of equity you’re creating each month. It’s probably unlikely that this would be the case, but if there’s chance that the money you save from renting were greater than the equity you earn through owning, that’s something you should consider.

WHEN IS A HOUSE NOT A GOOD INVESTMENT?

If a house costs you more than it earns you, by definition it’s not a good investment. 

More importantly, though, a house is a bad investment when you can’t afford it. Even if the value of the property increases, if the cost of the house puts your monthly finances in jeopardy, then it’s a bad investment. If the cost of the house has you worried that someday you may lose your home, that’s a bad investment. A house should never be a burden.

The simple answer is “yes” they can do that. But before you panic, know that if they do so legally, you’ll have plenty of notice.

REAL PROPERTY VERSUS UNSECURED DEBT

If you have secured debt, like a vehicle or home, you’ll receive notices demanding payment or you’ll be in default. If that happens, they’ll repossess your car or foreclose on your home. But in most cases, they won’t come after your bank account.

Unsecured debts though, like personal loans and credit cards, don’t have that option. There’s nothing for them to repossess so they have to find another way to get their money. And there are a few avenues they can choose to take.

For instance, if you owe money to the IRS, there’s a very good chance they will eventually freeze your accounts and garnish your wages until you’ve paid up. But they will send you plenty of notices to warn you this will happen if you don’t pay. 

If this is your situation, the best option is to contact them and work out a payment plan. As long as you are meeting your payment obligations, they will not go after your bank accounts or wages. If you owe a significant amount, it may be beneficial to get a tax professional to handle negotiations with the IRS; they can often be successful in reducing the penalties and interest that has been added on to your tax obligation.

CAN A CREDITOR FREEZE MY BANK ACCOUNT WITHOUT TELLING ME?

No matter who you owe, there will always be some amount of warning before they take an action as extreme as having your accounts frozen. If you owe money to a credit card company, for example, they must first receive a judgment against you in court before they can freeze your bank account.

This means that they have to serve you with papers notifying you that they are suing you. You will also receive notification from the court as to the date of your scheduled court appearance. You can skip it, but if you do the case will most likely be decided against you. If you attend, you’ll at least have the opportunity to argue your case and maybe reduce the amount you owe or set up a payment plan.

If the creditor receives a judgement against you, they will then have permission to seize your bank account. Depending on the state you live in, your bank may or may not notify you in advance.

HOW LONG CAN A CREDITOR FREEZE MY BANK ACCOUNT?

Once your account is frozen, it goes into a holding period for about two to three weeks. During this time, the money is still in your account, but you are not able to access it. This gives you time to take action of your own, either settling with the creditor or counter-suing them.

Keep in mind; they can only freeze the amount you owe. If your account balance is $5,000 and you owe your creditor $3,000 in debt and court costs, you’ll still have access to $2,000. The frozen funds will remain frozen until the debt is repaid to the satisfaction of court order, the judgment is overturned, or an alternative arrangement is reached.

YOUR OPTIONS

If this happens to you, you have a couple of options. You can contest their lawsuit, especially if you were not properly served. By law, they have to notify you in writing of the court proceedings. If you were not notified, you have grounds to contest. 

Alternately, you can immediately file for bankruptcy. By doing so you can recoup some or all of the money that was frozen if you can have your bank account labeled as “exempt” in your filing. If this is the case, it’s best to hire a bankruptcy attorney.

Ultimately, the best way to avoid these actions altogether is to work with your creditors to come up with a payment plan you can both agree to. It’s not in either side’s best interest to sink money into court fees, so start the conversation as soon as possible.

There are two big reasons for the lack of savings — and one of them is not easily solvable. Many workers don’t have employer-provided retirement accounts, while others simply don’t have anything to save.

“Access to a retirement plan is an important driver — roughly half of American workers don’t have that,” said Craig Copeland,EBRIsenior research associate. “Many workers are low-wage workers throughout their careers and really don’t have enough money to save in a retirement plan. They are trying to pay off debts to just make ends meet.”

No access to an employer’s retirement plan

Traditional employer-based retirement plans are typically not available for contractors, freelancers, gig economy workers, and part-time workers. And only 42% of small businesses with less than 100 employees offer retirement benefits, according to a LIMRA 2019 study.

“Why small businesses don’t offer retirement benefits to their employees is pretty straightforward,” said David Deeds, the Schulze Professor of Entrepreneurship at the University of St. Thomas in St. Paul. “They didn’t need to in order to hire and retain employees in the previous labor market, weren’t required to by state or federal governments, and the perceived costs and complexity (real or imagined) of managing retirement benefits kept at least half of small business from offering retirement benefits.”

Even without a workplace retirement savings plan, those with earned income can still contribute to an IRA, said Greg McBride, chief financial analyst at Bankrate.com.

“You can open an IRA with a brokerage, mutual fund company, your bank or credit union in many cases,” he said. “Have an automatic monthly transfer from your checking account into your IRA to automate retirement savings.”

A handful of states – Oregon, California, and Illinois – now offer auto-IRA state-sponsored retirement savings plans to workers without employer-sponsored plans. Other states are considering crafting similar offerings. These state-facilitated programs automatically enroll workers in moderate risk, low-cost retirement savings accounts called auto-IRAs.

Three-quarters of Americans say they would participate in state-supported retirement programs if offered one in their state, according to a survey by the National Institute on Retirement Security, a nonprofit, non-partisan research and education organization.

“State-sponsored retirement savings plans offer the best chance in the near term to increase the number of Americans with access to payroll deduction retirement savings plans,” wrote David John, deputy director of the Retirement Security Project at the Brookings Institution think tank, Mark Iwry, senior fellow in Economic Studies, and William Gale, director of Brookings’ Retirement Security Project, in “Wealth After Work,” which explores solutions to help all Americans gain access to retirement savings accounts.

It’s not a foolproof way to get workers to save. For instance, for the Oregon plan that began in 2017, about one-third of eligible workers opt out.

For patients with no health insurance, limited coverage, or insufficient savings, a stay in the hospital can be financially devastating.

If you’re staring at an unexpectedly huge hospital bill there may be some relief available to you in the form of “charity care.”

WHAT IS CHARITY CARE IN HEALTHCARE?

Charity care is another term for financial assistance and relief programs offered by hospitals to their patients. These charity care programs are intended to help reduce costs for patients by providing discounts or waiving some fees outright.

DO ALL HOSPITALS OFFER CHARITY CARE?

Thanks to the Affordable Care Act (ACA), all nonprofit hospitals must offer some form of financial assistance or charity care to their patients. Failure to provide this assistance could result in the loss of their nonprofit status.

According to the most recent data available, approximately 57% of hospitals in the United States are nonprofit, so there’s a better than 50/50 chance that your hospital has a federally-mandated charity care program. And if your hospital isn’t a nonprofit? You may not be out of luck. Many for-profit hospitals also offer financial assistance programs.

DO I QUALIFY FOR HOSPITAL CHARITY CARE?

While the ACA mandates that nonprofit hospitals offer financial assistance programs, it leaves the parameters for those programs up to the individual hospitals. This means that you’ll need to consult with your local hospital and review their policy to know whether or not you might qualify for relief.

That said, most programs are based on income and your household’s relationship to the federal poverty level (FPL). Once you know the requirements for your hospital, you can use this FPL calculator to see if your income is within the necessary threshold to be eligible for aid.

HOW DO I APPLY FOR CHARITY CARE FROM MY HOSPITAL?

It’s important to begin the application process as soon as possible. While aid may still be available even after your bill has gone to collections, you’ll make your life easier by beginning the process as soon as you’re able (which may mean starting before you’ve even left the hospital).

FIND YOUR HOSPITAL’S CHARITY CARE POLICY

The ACA requires that nonprofit hospitals not only offer financial assistance, but also that they post information about this program online. Unfortunately, the requirements don’t go much further than that.

Some hospitals will be more transparent than others when it comes to their charity care policies. You may be presented with information as soon as you check in. You may have to dig through their website. If you don’t receive information upfront, your best bet may be to use your search engine of choice and enter the name of the hospital and “financial assistance” or “charity care.”

If you prefer, you can call the hospital directly and ask for information. Many hospitals have dedicated team members available to discuss your bill and talk you through your options, including any available charitable care programs.

PREPARE AND SUBMIT YOUR CHARITY CARE APPLICATION

The requirements will be different for every hospital, but you should expect to complete an application and submit some supporting documents. These documents will be used to verify for your need and may include pay stubs, previous tax returns, unemployment benefits statements, and more.

Be sure to follow the directions and provide all the required information. Failing to submit required documents may delay your application or get your request denied outright.

You may also have to submit the completed application via fax or mail, depending on the hospital. It’s an inconvenience, but hospitals are rarely set up to handle these kinds of requests entirely online.

One last tip: include a letter, even if it’s not required. Charity care programs tend to be much more flexible than loan applications. Even if you’re slightly outside of the normal requirements, you may still be able to successfully argue your case. Provide any necessary details that may not be included in your application. If nothing else, it always helps to remind the people reviewing these cases that you’re a real human and what this help would mean to you and your family.

IF REJECTED YOU CAN STILL APPEAL

It may take a few weeks (or months if your hospital is backlogged), but eventually you’ll get a decision. If your application is denied, you’ll receive information about why you didn’t qualify. In most cases, you should also receive information on appealing the decision. Be sure to appeal – it may mean more work, but it’s worth it if the payoff is cutting thousands off your hospital bill.

WHAT IF MY CHARITY CARE APPLICATION WAS REJECTED?

If your appeal is also denied, you may want to look elsewhere for assistance. There are many organizations out there that specialize in connecting patients to financial resources. Here are just a few:

• DollarFor.org is an organization dedicated to advocating for patients with overwhelming medical debt. If you’re not having much luck on your own, they may be able to help.
• Good Days supports patients with certain chronic and life-altering diseases. Review this list to see if they’re accepting new enrollments for your specific condition.
• HealthWell Foundation provides funds to offset the cost of copays, policy premiums, and other out-of-pocket costs.
• PAN Foundation is another organization that connects patients to funding for specific conditions and may be a good resource if your hospitalization was connected to one of these conditions.

If you’ve exhausted all of your options on the medical side, you may want to look for ways to reduce other debts or increase your income. If you’re feeling unsure about where to turn, consider speaking with a nonprofit credit counselor to discuss your options.

That pause on payments has been extended several times, most recently in late December 2021 with student loan forbearance now scheduled to end on May 1, 2022. That gives borrowers time to prepare before they need to resume making loan payments sometime after May 1. Here’s what to know — along with some tips if you’re still struggling financially.

CREATE A NEW BUDGET WITH YOUR STUDENT LOAN PAYMENT 

Start by logging into your loan servicer’s portal to review your payment due date, payment amount, and interest rate. If you don’t recall who your servicer is, you can find out by logging into your account at studentaid.gov. 

Next, review your income and monthly expenses. You may need to make adjustments in other expense categories to account for your loan payment and bring your expenses in line with your income. 

READ ALL CORRESPONDENCE FROM YOUR LOAN SERVICER! 

Watch for paper statements and emails in the next couple of months and be sure to respond if it’s required. If you moved or changed your email or phone number during the student loan pause, be sure to update your contact information in your loan servicer’s portal and the studentaid.gov portal. 

RE-AUTHORIZE AUTO-DEBIT

If your loan payment was auto-debited, it may not start again automatically. If you haven’t made any payments during the student loan forbearance period, you’ll need to re-authorize your loan servicer to resume auto-debit payments. Some servicers may allow you to set it up and authorize online — check your servicer portal to see what’s allowed.

DETERMINE IF YOU NEED A REDUCED PAYMENT

If your income is lower than it was before the pandemic, the first step is to explore options for adjusting your student loan payment for your lower income level. You may qualify for a reduced payment through an Income-Driven Repayment Plan (IDR).

Log into your studentaid.gov account and find the loan simulator. Run the simulator to see what your loan payment would be on different IDR plans and which ones you’re eligible to use. If you find a plan that offers a more affordable payment, you can apply through studentaid.gov or contact your loan servicer. 

If you were already on an IDR plan before the pandemic but your income has decreased further, you don’t have to wait for your annual recertification date to recertify to a lower payment. You can ask your servicer to review your current income for a new payment. There’s an IDR application process at studentaid.gov. 

AN INCOME-DRIVEN PLAN CAN HELP EVEN IF YOU’RE UNEMPLOYED 

Even if you’re unemployed (or have a very low income), IDR plans offer relief. Some plans offer payments as low as $0 and still count as a payment. Also, on some IDR plans, the U.S. Department of Education subsidizes (pays for) the interest for the first three years — or even indefinitely, depending on whether you have subsidized or unsubsidized loans. Income-driven plans are worth exploring as a first option. Use the loan simulator at studentaid.gov or contact your loan servicer for help. 

CONSIDER ANOTHER TYPE OF POSTPONEMENT

If an IDR plan does not work for your situation, the next option to explore is deferment. That’s a temporary postponement of payments. There’s also forbearance, a temporary reduction or postponement of payments. Your eligibility for either will depend on the type of hardship you’re experiencing. 

Generally, deferment is available to borrowers coping with economic hardship, unemployment, cancer treatment, or being called to active-duty military service. Forbearance is available for financial difficulties, medical expenses, change in employment, or other reasons your loan servicer will consider. 

For borrowers with subsidized loans, deferment is preferable to forbearance because interest doesn’t accrue on subsidized loans. It does accrue on unsubsidized loans, however, and on all loans in forbearance status. To qualify for either, you’ll need to determine the eligibility criteria and consider if the temporary postponement helps more than an IDR plan. 

Review eligibility criteria at “Get Temporary Relief” on studentaid.gov or contact your servicer to discuss. It’s best to reach out before May 1, 2022, to ensure any changes are determined before payments are due. 

STUDENT LOAN FORGIVENESS ELIGIBILITY

You might be eligible for federal student loan forgiveness or discharge under a few different programs or circumstances, but it’s all in the details. Usually, forgiveness is tied to working for a certain kind of employer, like an eligible 501c3 nonprofit, or working in a public service job. 

One program is Public Service Loan Forgiveness. The PSLF program forgives the remaining balance on certain federal loans after borrowers make 120 on-time payments in a qualified IDR plan. As part of the CARES Act, the federal government gave borrowers credit for each month of loan forbearance as if they were making payments toward both the PSLF program and the IDR plans. In other words, all those months of no payments since March 2020 count as payments for PSLF. 

Another program is Teacher Loan Forgiveness. If you’re working toward that, the CARES Act waived the requirement that your teaching service be consecutive years of service if your service was temporarily interrupted because of the pandemic. 

Finally, if you were permanently and totally disabled during the suspension, you may complete a Total and Permanent Disability Discharge application via DisabilityDischarge.com. 

MORE BUDGET IMPACT: CHILD TAX CREDIT EXPIRATION

The expanded Child Tax Credit under the American Rescue Plan expired on Dec. 31, 2021. This means if you’re a borrower with children at home, you won’t continue to receive $250-$300 per child per month — unless there’s additional action from Congress. That loss may impact your budget significantly. It’s important to create a budget that accounts for your student loan payment’s added expense as well as the possible loss of child tax credit payments if they end.

TACKLE NON-STUDENT LOAN DEBT

Finally, if credit card debt is taking up a significant portion of your monthly budget, consider focusing on repaying this debt – particularly if you have limited options for your student loans. A debt management plan can help accelerate your repayment and create significant savings in the process.

Whichever path you choose, be sure to act quickly and not wait until you’ve begun to feel overwhelmed by your debt payments.

“We have five trips for this year in the planning phase,” says Brill. “We’ve basically decided there is no budget constraint.”

Brill is lucky. He’s a retired pharmacist who lives in Finksburg, Maryland, and he’s been saving his pennies for travel. The pandemic and the surprise delta variant helped him save even more.

“My wife and I desperately want to get back to traveling,” he says.

He’s not alone. Allianz’s latest Vacation Confidence Index showed that summer vacation spending hit $150 billion in 2021, a new high. “And 2022 should be even bigger,” predicts Daniel Durazo, an Allianz spokesman.

Households earning over $100,000 a year have about $1.4 trillion to spend on discretionary items such as remodeling homes, local trips, and now more long-haul destinations, according to AAA’s research.

“Americans have more discretionary funds since they did not spend much in 2020 and 2021 because of the pandemic,” explains Paula Twidale, senior vice president of travel for AAA.

But how do you figure out your travel budget for this year? And what are some of the expert strategies for building a better vacation budget? Just as the pandemic changed travel, so also has the conventional wisdom on travel budgeting.

How to calculate your 2022 travel budget

Not everyone has an unlimited travel budget. This year, Thomas Mustac is planning a weekend trip to see one of his favorite bands, the Red Hot Chili Peppers. It’s a quick weekend trip to Hungary from where he lives in Croatia, so he’s allocated $300 for it, not including the tickets.

“I think one of the biggest budgeting mistakes is bringing exactly how much money you need,” says Mustac, who works remotely for a communications firm in Orlando. “You are risking that worst-case scenario.”

Laurel Barton is watching her budget, too. She’s making plans to travel to Europe next fall and is already looking for inexpensive plane tickets. So far, she’s had no luck. She likes to fly business class on long-haul flights, but prices keep rising.

“So the budget is blown from the start,” says Barton, a guidebook author from Forest Grove, Oregon.

That’s not stopping her from going, though.

“Our mantra is, ‘Postpone nothing,'” she says.

There are ways to figure out what you can afford. The personal finance company Quicken offers a free Vacation Budget Calculator on its site. Add your travel expenses and the number of people, and it comes up with a total and per-day vacation cost. The calculator is useful for remembering items that are easy to overlook, like ground transportation and travel insurance.

But experts and travelers tell me the best way to determine how much to budget for your 2022 vacation is to look at past trips. How much did you budget for those? How much did you actually spend?

Expert advice for travel budgeting next year

“The first thing you need to consider with your 2022 travel budget is the potential increase in fares and hotel rates,” says Baruch Silvermann, a financial expert and CEO of The Smart Investor newsletter. “As domestic travelers returned to air travel, fares increased.” In 2022, that could also happen with hotels and international fares. Silvermann recommends booking early, when prices are relatively low, to avoid going over budget.

Another tip: Add some padding to your travel budget. Jeffrey Zhou, an experienced traveler who runs a financial services company, says having a little extra in the vacation budget can keep you out of trouble when things go wrong.

“Plan for the worst-case scenario,” he advises. “Put enough money aside so that you could easily buy an extra plane ticket for each person you’re traveling with. For most domestic budgets, this would be about $300 per person.”

Actually, it’s better to overestimate your expenses for 2022, according to Silvana Frappier, owner of North Star Destinations, a full-service travel agency in Boston. Most travelers don’t think about the law of supply and demand.

“Travel has changed, and with more demand for safety and restrictions, prices will be higher,” she says.

But whatever you do, make sure you have a budget. Even open-ended trips should have some kind of plan, according to experienced travelers.

Ahmed Mir, the managing editor of a beverage website, is planning a tour of Southeast Asia this year but hasn’t decided where to go yet.

“I’m budgeting about $5,000 for the travel, not including the airfares,” he says. “I think this is a pretty reasonable amount, given that exchange rates against the dollar are generally favorable, so my budget will probably allow me to travel in comfort.”

Not so fast.

Before you sign up for a credit card, be sure you carefully review the fine print, especially if you have poor credit and are working to improve your credit score. The credit card agreement’s terms will become part of a legal agreement between you and the creditor. You’ll want to know those details, including: 

• What annual percentage rate is being offered and if it expires after a promotional period.
• How the lender calculates the interest.
• Any fees you’ll owe due to balance transfers, late and/or missed payments, or other violations of the credit card agreement. 

The first step is understanding the APR and how it works.

WHAT IS APR?

The APR is the rate of interest that a credit card company charges you in exchange for lending you money. APR is important because it’s used to calculate how much your credit card debt is going to cost you above and beyond the account balance itself. The higher the APR, the more interest you will pay on balances you carry month to month.

In its most basic form, your APR determines how much interest will accrue after one year. For example, let’s suppose the APR on your credit card is 25 percent. If you have $1,000 in credit card debt, a 25 percent APR would end up costing you $250 in interest over one year. 

In reality, calculating credit card interest is rarely that simple.

HOW DOES APR WORK? 

Credit card companies usually calculate interest daily, making your daily periodic rate a more realistic number for determining how much you’ll pay in interest. To calculate your daily periodic rate, divide the APR by 365 (the number of days in a calendar year). As an example, the daily period rate on a credit card with a 25 percent APR would be 25 ÷ 365 = 0.068 percent (or 0.00068 in decimal form). Some lenders use 360 instead of 365, and the math changes accordingly. 

When credit card companies calculate interest daily, here’s how the arithmetic works on a credit card with an APR of 25 percent (daily periodic rate of 0.00068) with the following balances and a 30-day billing cycle:

• Balance of $10 for 29 days
• •alance increases to $800 on day 30
• Calculate the average daily balance:
  • $10 x 29 days = $290; add $800 x 1 day; $290 + $800 = $1,090; 
  • Divide $1,090 ÷ by 30 (the number of days in the billing cycle) = $36.33 average daily balance
• Multiply the average daily balance of $36.33 by the daily periodic rate of 0.00068; $36.33 x 0.00068 = $0.025 
• Multiply $0.025 x the 30 days in the billing cycle; 0.025 x 30 = $0.75 in interest

HOW TO SHOP FOR A GOOD APR ON A CREDIT CARD WHEN REBUILDING CREDIT

If you’re looking for a new card but you have poor credit, you’ll need to shop around, then compare and evaluate the credit card offers available to you. In general, the lower the interest rate you can get, the better.

Start by checking the current average credit card interest rate, which as of late November 2021, was just over 16 percent.

With a low credit score, you may not qualify for the lowest APR offers because lenders will consider you a higher risk. If you’re trying to improve your credit to get better interest rates in the future, you may want to consider a secured credit card, which is backed by a cash deposit that acts as collateral should you miss a payment.

Whatever type of credit card account you open, a key step to rebuilding your credit is to avoid missing any future payments and do your best to stay in good standing by paying on time. As your credit score improves, so will the credit card offers that you receive.

WHY CREDIT CARD APR CAN INCREASE

Some credit cards come with low/no interest introductory periods. These rates are temporary by design and your APR will increase once the promotional period is over.

Your APR may also increase if you fail to follow the terms of your credit card agreement, most commonly by missing a payment. Each lender sets its own rules and guidelines. The agreement will list the APR for your account and the reasons why a credit card issuer can change the APR and/or charge fees. 

If your APR increases, look at what your agreement says about violating the terms, such as making a late payment or not making a payment at all. Some lenders may reinstate your previous APR if you get your account current by making the minimum payment (or more) by the monthly due date for a certain period of time. With other lenders, the inflated APR may be permanent. If you’re not sure after reviewing your agreement, contact your credit company and ask.

HOW TO MANAGE A HIGHER APR

If the increase in your APR is permanent, you have a few options:

• Transfer the balance to a different account. If you have another credit card with a lower interest rate, you may be able to transfer the balance (for a fee). Read the agreement or call the credit company to ask what they can offer. 
• Open a new credit card that accepts balance transfers. Carefully review the agreement for the new credit card to be sure it offers a lower interest rate and that you understand the terms for the APR, fees, etc. 
• Pay off the balance and stop using the card. If you can’t bring down the APR, work to pay off the balance as expediently as you can. After that, just don’t use that card anymore. Canceling a credit card is one way to prevent future use, but keep in mind that closing an account, especially one you’ve had for a long time, may cause your credit score to drop because the age of your accounts is part of the calculation in most credit scoring models.

HOW TO PAY OFF MULTIPLE CREDIT CARDS WITH DIFFERENT APRS

If you carry over balances every month or have hit your credit limit on more than one credit card, you’ll want to develop a strategy for paying off the cards and improving your credit.

Two popular strategies are known as “snowball” and “avalanche.”

To use the snowball strategy, begin by identifying the credit card with the smallest balance. Then follow these steps:

• Pay the minimum amount due on your other credit card accounts.
• Put anything extra toward repaying the smallest account.
• Once the smallest account is paid in full, move to the next smallest account.
• Use whatever extra you were paying on the first account toward the next one.
• Continue working from smallest to largest until your biggest credit card debt is paid off.

The avalanche strategy takes a different approach by focusing on the credit card accounts with the highest APRs, which cost you more on a per dollar basis.

To use the avalanche strategy, start by identifying which of your credit cards has this highest APR. Then, follow similar steps as the snowball strategy: 

• Pay the minimum amount due on your other credit card accounts.
• Put anything extra toward repaying the account with the highest APR.
• Once the highest APR account is paid in full, move on to the account with the next highest APR. 
• Use whatever extra you were paying on the first account toward the next one.
• Continue working from highest APR to lowest until all your credit card debt is paid off.

Many people working to get out of credit card debt find the snowball strategy to be more satisfying, in part because it creates more budget flexibility as each debt is repaid and those payments are no longer necessary. However, targeting high interest debts will save you money in the long run. You’ll need to evaluate your options and pick the approach that works best for your situation.

IF YOUR CREDIT CARD BILLS ARE TOO MUCH TO HANDLE

Unfortunately, the people whose APR increases due to a missed payment are often those who can least afford to have their rates go up. If your credit card payments are too much to handle, talk with an MMI credit counselor to see if a debt management plan (DMP) could help to get you out of credit card debt. 

DMPs offer a structured repayment program in which you make a single payment to a nonprofit credit counseling agency (such as MMI) which disburses funds to your creditors on your behalf. Your creditors are often willing to work with a DMP and reduce your interest rate as you work to pay your debts. The average APR for accounts included on a DMP with MMI is less than 7 percent.

BUILD YOUR FILING SYSTEM

Start out with your household filing system. And yes, you may end up with two filing systems: one for physical paperwork and one for digital documents. Of course, you can bring everything together by either printing or scanning documents as needed, but that’s ultimately up to you. The important thing is that you create a system to hold and categorize your important pieces of paperwork.

It’s helpful to have folders set up for each major category—some examples include: health, job, banking, credit cards, taxes, investments, home, automobiles, insurance, major purchases, and other loans. On a weekly basis, review all of the documents that have arrived in the mail or landed in your inbox and sort everything into these folders. While some items can be thrown out (after being shredded), you’ll want to save insurance papers, receipts for major purchases, account statements, pay stubs, health forms, and anything related to your taxes. 

Also: create a folder for the current year taxes. Having everything in one place will make things easier come tax time.

SEPARATE YOUR BILLS

Household bills—anything that’s waiting to be paid—should be filed using a separate system. Sort your bills by due date and add them to the folder of the month they are due. You can also track bills in a personal finance program, spreadsheet, or with a money management app.

It’s best to pay household bills on a weekly basis, although if you only have a few bills, you can pay them bi-weekly or monthly. Online bill pay systems are a great way to stay organized, save money on stamps, and get your payments cleared quickly. Otherwise, you’ll need to make sure that you write and mail your checks well in advance of the due date so that you aren’t charged a late fee.

CLEAN YOUR FOLDERS REGULARLY

On a regular basis, either semi-annually or annually, go through each of your folders and clear out anything that’s no longer needed. If any of the folders are getting too full, separate them out by year, and store newer information in the front of your file drawer, so that it’s more accessible.

How long should you keep your documents? Depends on the document. Most tax documents should be kept for at least seven years. Receipts for major purchases and title information should be kept for as long as you have the corresponding item. Statements and other documents that are received on a monthly basis can be tossed after a year (or less).

While organizing can take some time in the beginning, having all of your financial information sorted appropriately will make day to day bill paying and home financial management easier for you.

The biggest reason consumers reported for not freezing their credit was because they didn’t think it was necessary. To a lesser degree, some respondents (11%) avoided putting their credit on ice because they mistakenly believed it will impact their credit score or that they’ll have to pay to freeze or thaw their credit.

Of the 73% of consumers who believed their personal information had been impacted by a data breach, only 3% froze their credit after receiving a data breach notice, the survey found.

“A credit freeze is generally considered the most effective tool to prevent new accounts from being opened in your name,” Eva Velasquez, President and CEO of the ITRC, said in a press release announcing the survey results. The online survey took place last summer and covered 1,050 U.S. adult consumers.

Here’s what to know about freezing your credit:

What is a credit freeze?

Putting a freeze on your credit halts access to your credit report, so bad actors won’t be able to open a new credit account in your name. They’re completely free.

The process also blocks you from opening up new accounts. But don’t worry if you want to apply for a new rewards credit card or other type of credit — you can lift the freeze temporarily to do so, the Federal Trade Commission explains.

When should you freeze your credit?

Hackers just won’t quit. By the end of September, the number of publicly reported data compromises in the U.S. had already surpassed the total number of compromises in 2020 by 17%, according to the ITRC.

By now, you may be familiar with the notifications companies send out when they’ve been breached, like the note the popular trading app Robinhood sent to users last month when millions of people had their emails or full names exposed, and around 310 had their birthday and zip codes exposed in a data breach.

If you are notified that your data has been compromised — or if you lose your wallet — it’s a good idea to protect your information by freezing your credit so that criminals can’t use the stolen information to open a new account in your name.

Text messages, along with emailing and direct messages on social media, are allowed as part of an update to the Fair Debt Collection Practices Act (FDCPA). The rule changes were drafted and implemented by the U.S. Consumer Financial Protection Bureau (CFPB) to modernize the guidelines first issued more than 40 years ago, well before text, email and social media existed.

THE NEW RULES REQUIRE A WAY TO OPT OUT

To contact you by text, debt collectors must follow two basic requirements (which also apply to phone calls, email, and social media DMs):

• They can only get in touch during reasonable hours, 8am to 9pm.
• Every message must include instructions for a simple, easy-to-use way you can opt out of receiving future communication through that method.

Beyond those two rules, there’s no limit on the number of texts a debt collector can send you. To be prepared, it’s important to know your rights and your options, including ways to make sure the message is really from a debt collector and not a scam artist.

IF YOU GET A TEXT ABOUT A DEBT, VERIFY IT’S LEGITIMATE

Like every other form of communication, texting has become a tool of choice for scammers looking to fool recipients into sharing personal and financial information. 

If you receive a text purporting to be from a debt collector, do not share personal or sensitive information via text message, especially if it’s from someone you do not know. Instead, ask for validating details so you can confirm the debt and the person texting you are legitimate.

Under the CFPB rules, debt collectors must provide details that validate a debt, either at the first point of contact or within five days after the first conversation. The validation information they send you must include:

• The name of the current creditor
• Instructions on how to obtain contact information for the original creditor if the debt has been sold
• The amount of money owed

In addition, you should request the name and contact information for the collection agency in case that’s different from the current creditor.

If the debt information is not familiar, the next step is to get a copy of your credit report, which will list any current debts that you owe. Every consumer is entitled to receive a free copy of their credit report each year from each of the major credit reporting bureaus. Visit annualcreditreport.com to request your free copy.

Once you get your credit report, check to see if the debt cited in the text message is on the list. If it’s there, look for the name of the collection agency that contacted you. If that agency is listed, it’s very likely the debt and the debt collector is legitimate. 

But what if the collection agency isn’t listed in the credit report, or something about it seems off? In that case, contact the original creditor to ask if the debt was sold or for the name of the firm contracted to collect on the debt. If your debt was sold multiple times, you may need to trace back each change of hands to make sure you end up speaking with the right collection agency.

HOW TO COMMUNICATE WITH DEBT COLLECTORS

If you’ve validated the debt and confirmed the debt collector who texted you is legitimate, you can decide if and how to respond. Options include:

• Continuing the conversation via text message
• Calling the debt collector directly 
• For larger debt collection agencies, using their website chat tool to communicate with representatives

Most debt collectors will allow you to set up a repayment plan. If you’re able to make a lump sum payment, you may want to negotiate a debt settlement for less than the full balance, which the debt collector may be willing to accept depending on your type of debt.

An important step to take before a conversation is understanding your state’s statutes of limitations on debt. Each state has its own laws detailing how long you are legally responsible for old, unpaid debts, and it’s worth your time to do a bit of research to be informed about your situation. 

Whatever way you choose to communicate, be sure to take notes about each exchange, including who said what and any agreement you reach. If you agree to a settlement or repayment plan, ask for the full details in writing so you have confirmation of it.

KNOW YOUR RIGHTS: WHAT TO DO IF DEBT COLLECTORS DON’T FOLLOW THE RULES

If a debt collector continues to text after you have opted out, keep a record of your interactions with that person – the dates, times, and messages exchanged. That record will support your case if you decide to file a complaint, which you can do at the federal or state level: 

• The Federal Trade Commission, at reportfraud.ftc.gov
• The Consumer Financial Protection Bureau, at consumerfinance.gov/complaint
• Your state’s attorney general at consumerresources.org/file-a-complaint (click the map for your state)

TO MAKE YOUR CASE, BE SURE TO SUBMIT THE FOLLOWING INFORMATION:

• Your record of interactions with the debt collector 
• The date and time of when you opted out of text message, ideally with screenshots showing the request submission

Lastly, keep in mind that conversations with debt collectors can be challenging. Don’t allow yourself to be bullied or pushed around. 

Remember that you have rights, and debt collectors must follow the law. While it’s perfectly normal to feel guilty or downhearted about having debt in the collection process, your situation is more common than you may realize – and no one deserves to be treated poorly as a result.

As of late 2021, more than 43 million Americans owe an average of $39,351 in student loans. If you are one of them and struggling to make your loan payments, you’ll want to understand what options are available for student loan forgiveness and how to find out if you qualify.

WHAT IS STUDENT LOAN FORGIVENESS?

The term “loan forgiveness” means the borrower is no longer required to repay some or all of their loan. Eligibility is usually determined by the type of job the borrower holds and the type of student loan they have.

Student loan forgiveness is generally a component of an assistance plan for borrowers who cannot make payments on the standard, 10-year repayment plan that’s part of their loan agreement. Typically, a borrower will pay the least in interest — and repay their loan the fastest — by following their 10-year standard plan. You can save money and pay off the loan even faster by putting more money, such as a tax refund, toward your student loan. 

If you cannot make your loan payments and want to explore repayment options, visit studentaid.gov and use the loan simulator to input your situation and see loan repayment options. The loan simulator will calculate estimated payments for all the federal repayment plans for which you are eligible. Once you have considered the pros and cons of each option, you can determine the best fit and enroll if you would like to proceed.

HOW TO GET FEDERAL STUDENT LOANS FORGIVEN

The U.S. government offers several student loan forgiveness programs for federal student loans, and each program has different eligibility requirements. These programs are not automatic. It’s up to you as the borrower to identify what program you may be eligible for, then work through enrollment requirements.

TEACHER LOAN FORGIVENESS PROGRAM

This program forgives principal up to $17,500 on certain federal loans after borrowers have taught for five complete and consecutive years in low-income schools. Loan forgiveness amounts are either $5,000 or $17,500 depending on the teaching field and other criteria. Teacher Loan Forgiveness is not taxable in the year forgiven under current IRS rules. 

• Learn more about the Teacher Loan Forgiveness Program, including eligibility requirements and how to apply.

PUBLIC SERVICE LOAN FORGIVENESS PROGRAM

This program is designed to help borrowers who have large student loans but earn less working in the public service or for 501c3 nonprofits than they could earn in other sectors. For those who qualify, the PSLF program forgives the remaining balance on certain federal loans after borrowers have made 120 on-time payments on a qualified repayment plan. However, whether a borrower will have a loan balance after making 120 payments depends on many factors, including their income and the size of their loan debt; some borrowers may not have a balance left to forgive. 

The PSLF program has many variables, including the types of federal student loans you have, the repayment plan you selected, and the type of job you hold. PSLF forgiveness is not taxable in the year forgiven under current IRS rules.

• Learn more about the Public Service Loan Forgiveness Program, including eligibility requirements and whether you qualify.
• Use the loan simulator on studentaid.gov to determine whether PSLF may be a good option for your circumstances.
• If you are considering applying for PSLF or wonder if you qualify and you have been making payments on your student loan for some time, take time to review the PSLF waiver information. The U.S. Department of Education recently announced changes that could help more borrowers qualify for PSLF. The waiver program is only available through Oct. 31, 2022, so applying now is a good strategy, even if you aren’t sure if you will complete the PSLF process. 

PERKINS LOAN CANCELLATION

Prior to 2018, universities extended Perkins Loans to students with exceptional financial need. Perkins Loans are no longer offered, but borrowers continue to make payments on their balance. These borrowers may qualify for Perkins Loan cancellation based on their profession and a formula that forgives a certain percentage of the loan balance for each year of service. Cancellation of a Perkins Loan typically forgives up to 100 percent of the loan balance over 4-5 years of employment or volunteer service in fields including teaching, medicine, and law enforcement. 

• Learn more about Perkins Loan cancellation.
• Contact your university for more information on Perkins Loan cancellation.

INCOME-DRIVEN REPAYMENT FORGIVENESS PROGRAMS

The federal government offers several income-driven repayment plans for various types of federal student loans. These programs are designed for borrowers who have low salaries relative to their student loan balances and don’t earn enough to make payments under a standard repayment plan. 

Under an income-driven repayment forgiveness plan, a borrower makes lower payments for 20 or 25 years (depending on the plan and types of loans). At that point, any remaining loan balance will be forgiven. However, making payments for 20 or 25 years may mean that the total amount you repaid is significantly more than what you would have paid on the standard plan. In addition, the amount forgiven is generally taxable income under current IRS regulations, although the American Rescue Plan provisions make discharge of remaining balances exempt from taxation through 2025.

• Learn more about income-driven repayment plans and how to submit a request.
• Use the loan simulator on studentaid.gov to determine whether what loan forgiveness options may work for your circumstances.

FORGIVENESS PLANS FOR CERTAIN PROFESSIONS

There are state and federal plans that assist in repaying or forgiving student loan debt for certain professions. Several programs provide loan repayment or forgiveness for military service for those in medical and legal professions. In addition, some state programs provide partial repayment of federal and/or private loans for borrowers in medical, legal, and teaching professions. 

ARE FORGIVENESS PROGRAMS AVAILABLE FOR PRIVATE STUDENT LOANS? 

Private loans are a contract between the lender, such as a bank, and the borrower. In general, private student loan servicers have not offered loan forgiveness. Some may offer loan short-term forbearance – a temporary postponement or reduction in your payments – but may charge you a fee. To explore what’s possible, contact your private student loan servicer to discuss options. 

Some employers or state grants or programs may provide repayment assistance for private loans. To find out, check with your employer and the student financial aid agency in your state.

WHAT STUDENT LOAN FORGIVENESS PROPOSALS ARE UNDER CONSIDERATION?

Given the size and scope of student loan debt in the U.S., public officials are continuing to review options for providing relief. For example, on Oct. 6, 2021, the federal government announced a temporary expansion of the PSLF program to allow borrowers to receive credit for payments that previously did not qualify for the program. 

On Nov. 11, 2021, U.S. Secretary of Education Miguel Cardona noted that recent reforms to the forgiveness process would result in over 30,000 veterans and service members seeing an estimated $2 billion in student loans forgiven in the immediate future. These reforms include automatically crediting service members for their years of service (removing the need to complete and submit paperwork) and expanding the credit to include the time when loans were in deferment or forbearance due to active military service. 

For income-driven repayment options, the U.S. Department of Education is reviewing the implementation of the Expanded Income Contingent Repayment Plan, but details are not yet available.

WHERE CAN I CHECK FOR UPDATES ON STUDENT LOAN FORGIVENESS?

Always check studentaid.gov, run by the Office of Federal Student Aid within the U.S. Department of Education, as the most accurate and authoritative source of information and updates about federal student loan forgiveness. Many private websites provide information, but their details may not be correct or up-to-date, and those organizations may be selling services related to student loans. 

For information and updates about state programs for student loan forgiveness, check the student financial aid information website for your state.

he higher your credit score, the lower the risk you represent to the lender. That’s important because the best terms and interest rates will be offered to applicants with scores in the higher ranges.

While two people with very different credit scores might both be offered a loan, for example an auto loan, the person with the low score might be required to have a substantial down payment and be offered a much higher interest rate than the individual with the high score. The person with the lower credit score is going to pay more for the use of credit than an individual with a high score.

WHAT IS A GOOD CREDIT SCORE?

FICO, the company that created the most widely used credit score, has a score range of 300-850. FICO provides the following ranges as a guide:

Lenders usually have internal lending guidelines and set their own ranges for what they consider to be “poor,” “good,” or “excellent” credit scores. Their ranges may, or may not, match FICO’s guide.

HOW IS A CREDIT SCORE CALCULATED?

While the exact formula that FICO uses to calculate a credit score is proprietary, they have identified the five key factors, in order of how they are weighted:

• Payment history: 35%
• Amounts owed: 30%
• Length of credit history: 15%
• New credit: 10%
• Types of credit used: 10%

Bear in mind that your credit score is a snapshot in time and may fluctuate from month to month depending on your circumstances. Don’t focus on the exact score from month to month, but rather where your number falls within the ranges. 

HOW TO CHECK YOUR CREDIT SCORE

If you don’t have a recent credit score, it’s a good idea to get your current number – especially if you’re about to make a major purchase and don’t want any surprises. You have several options for getting your score.

Check first with financial institutions, creditors, and commercial companies where you have accounts. They often provide credit scores to customers for free, sometimes with a requirement that you sign up for certain services like identity monitoring. If you don’t have access to a free credit score, you can purchase your credit score from FICO at myfico.com.

HOW TO GET YOUR CREDIT REPORT

FICO and other organizations that issue credit scores calculate your number using information from your credit report, which is handled by three national credit bureaus – Experian, Equifax, and TransUnion. To better understand your credit score, you’ll need to review your credit report.

You can get a free copy of your credit report from each of the credit bureaus once per year by submitting a request through AnnualCreditReport.com. Typically, you can only get a copy of each credit report for free one time per year, but there are exceptions:

• If you are denied credit, the Fair Credit Reporting Act requires that credit bureaus provide you with a free copy of the credit report used in the decision.
• Due to the COVID pandemic, the three credit bureaus are making free credit reports available weekly through AnnualCreditReport.com until April 20, 2022. This access has been very helpful for making sure creditors are reporting accurately based on various COVID pandemic relief requirements of the federal CARES Act and American Rescue Plan.

HOW TO REVIEW YOUR CREDIT REPORT

Once you get your credit reports, review the information for each credit entry carefully to check it for accuracy. If any information is inaccurate, you can dispute it through the credit bureau’s website. If you see items on your report that you believe are fraudulent, you could be a victim of identity theft. If you believe you are a victim of identity theft, visit the  Federal Trade Commission website to learn how to recover.

HOW TO HANDLE NEGATIVE ITEMS IN YOUR CREDIT REPORT

If you have some negative items in your credit report, those items will most likely not be removed for at least seven years from the date the negative activity occurred. Making payments on time going forward will continue to improve your score, and lenders typically give greater weight to more recent history. 

It might be tempting to close some of your credit accounts, but in most cases, keeping credit accounts open is likely to help you, not hurt you. While potential creditors do look at the amount of outstanding credit you have available, they also look at the length of your credit history, as well as your credit utilization. Closing older, lesser-used accounts actually can impact your score in two ways:

1. by decreasing the length of credit history and 
2. by increasing the percentage of your total credit you are using. 

New credit, which is one of the factors used in calculating the score, includes the number of recent account inquiries as well as the number of new accounts opened.

HOW TO IMPROVE YOUR CREDIT SCORE 

If your credit score isn’t in the range you’d like, there are no shortcuts to improving the number immediately. However, applying good credit practices over time can help bring up your score. Here’s are key steps to take:

• Make payments to creditors on time and in full. This is the most impactful way to improve or maintain your credit score. Make at least the minimum payment, if not more. Be sure to make payment by the due date because payment history is 35% of your credit score calculation.
• Take care of any delinquent payments. If you have missed payments that are considered delinquent, it is important to make up those payments as soon as you can and stop the reporting of delinquent status. While not all creditors report on time payments, they do report payments that are delinquent. They also consider the length and severity of delinquencies.
• Make sure that you aren’t using the full credit limit available to you. The amount of money you owe relative to your credit limits on revolving debt is called your credit utilization. It makes up 30% of your credit score calculation. A high level of credit utilization can push your credit score down, even if you are paying off your balances in full each month. If you have high balances compared to your credit limit, focus on paying them down to improve your credit score over time.
• Report different types of financial data. For a fee, alternative credit-building services can provide the credit bureaus with your payment history for expenses including rent and utilities, and that can make a positive impact on your credit score. Be sure to review pricing to ensure these services are worth the cost within your circumstances. 

HOW CAN A DEBT MANAGEMENT PLAN HELP IMPROVE MY CREDIT SCORE?

For consumers who are struggling with credit card debt and have a low credit score, a debt management plan can help you rebuild credit and contribute to improving your credit score over time. 

While there is no immediate way to get a higher credit score, MMI has found that consumers who enroll in a debt management plan and follow it see improvement within the first year, then see continuing gains as their payment history improves and their credit utilization goes down.

To determine how a debt management plan might impact your credit score, MMI reviewed multiple years of anonymized data for clients we have worked with. Here’s what we found:

• Clients who enrolled in a DMP – and stayed enrolled – had a 43-point average increase in their credit score over the first year.
• Those clients saw a cumulative 62-point average increase in their credit score over two years.
• Clients who completed a debt management plan saw their credit score increase an average of 88 points. 

MMI clients who received one-time debt counseling, but who didn’t do a debt management plan, also saw improvements, although not as much:

• An average 23-point increase over the next year.
• An average 37-point increase over two years.

HOW TO GET HELP REBUILDING CREDIT AND YOUR CREDIT SCORE

If you’re struggling with credit card debt and looking for a way to improve your credit score, we can help. A debt management plan sets up a strategy for you to make consistent monthly payments to your creditors. Some creditors may choose to bring accounts enrolled in a debt management plan to “current” status despite previous missed payments, and that change is shared with the three credit bureaus. 

Making consistent payments, stopping delinquent status, and paying down credit cards will all make a positive impact on your credit report and your credit score over time.

Before you begin the home buying process, however, it’s vitally important that you understand exactly how much money you can afford to spend on a house. While it can be a bit heartbreaking to find the home of your dreams, only to discover that’s out of your price range, it’s considerably worse to actually buy a house and then find out that you can’t actually afford to live there.

So how to go about setting your homebuyer price range?

DETERMINE HOW MUCH MORTGAGE YOU QUALIFY FOR

To determine how much you can realistically afford, you’ll want to determine how much you will have for a down payment. In general, you will need to have at least 10 percent of the home’s price for a down payment. If you want the best loan terms, you should aim to have at least 20 percent for a down payment. 

When making lending decisions, banks also consider the cost of housing in comparison to your income. Your monthly housing expenses, including your mortgage, taxes, and insurance should be no more than 28 percent of your monthly income. Of course, your other debts also play a factor. In general, lenders want your total debt-to-income ratio – which includes things like credit card debt, child support payments, and student loans – to be no more than 36 percent.

On top of all of that is your credit history. The better your credit score, the higher the likelihood that you’ll qualify for a mortgage with reasonable terms. If your credit is average or poor, you may be able to overcome that with a long employment history and strong source of income, but the mortgage will likely be much, much more expensive. This may mean bring down the total loan value that you can qualify for.

If you’re ready to start house-hunting, you may want to begin by mortgage shopping first to see if you can get pre-approved and up to what amount. 

UNDERSTAND THE NON-MORTGAGE COSTS OF OWNING A HOME

One of the many reasons why some people prefer to own a home instead of rent an apartment is that the money you spend on your mortgage payment each month goes toward creating equity in your home. It’s a form of investment and should you someday sell your home, you’ll get some of that money back. You might even make money in the process. Money spent on rent, however, doesn’t earn you any equity.

But what rent often does get you, however, is maintenance. It gets you repairs for normal wear and tear. If a pipe bursts and the ceiling in your apartment needs to be replaced, it’s going to cost a lot of money – but it won’t cost you a lot of money. 

So while your mortgage will almost certainly be your biggest expense as a homeowner, it won’t be your only expense. You’ll have new taxes to worry about. You’ll have water and trash bills you may not have paid before. You’ll need to hire your own plumbers and HVAC specialists. You’ll need to buy lawnmower or hire someone else to take care of your lawn or trim your trees. You may want to install a security system. Oh, and homeowners’ insurance is going to be more expensive than renters’ insurance.  

Those costs will all be different depending on where you live and various aspects of the house you ultimately buy, but it’s important that you consider those costs and how they’ll all fit into your budget before you start house-hunting.

HOW MUCH SHOULD YOU SPEND ON A HOUSE?

Ultimately, the final selling price of the house isn’t the issue; it’s how much the house costs you each month. There’s no firm number that everyone has to follow, but based on averages, it’s usually in your best interests to never dedicate any more than 35% of your total budget to housing expenses. 

Again, your personal circumstances may be different, but once you’re spending more than a third of your available money on housing, you run the risk of becoming “house poor.” This means that you may no be able to balance the costs of maintaining your home with all of your other needs.

Owning a home is a great joy for many people, but it can be a terrible challenge when the cost of living in a house is more than you can afford. Do your research and happy house-hunting!

Now, when it comes time to repay your debts, your first thought may be, “Do I really have to pay all of this back?” 

The answer to that is, “Well…it depends.” 

It is possible to negotiate down certain debts, but there are a lot of conditions to consider. Here’s what you should know:

ACCOUNTS IN GOOD STANDING ARE DIFFICULT TO NEGOTIATE

Your credit card company is very unlikely to offer to forgive any amount of your debt, especially if your accounts are current. Same goes for most lenders, especially when the loan is secured with real property (like a house or a car). There’s really no incentive to let you pay less than what you owe.

If you’re struggling with your payments, some creditors may be able to offer some form of short-term hardship program, and some may even be able to reduce your interest rate if you make the request, but if you’re hoping to get your debt reduced or completely absolved, there’s not much chance of that happening. 

YOU MAY HAVE MORE LUCK NEGOTIATING ONCE A DEBT HAS BEEN CHARGED OFF

Once a debt has become severely delinquent, the creditor will likely charge off the debt for their own tax purposes. It’s important to note that you’re still responsible for the debt. After the charge off, the original creditor may sell the debt to a third party, which will begin making efforts to get you to pay them for the debt. 

Because they purchased your debt for less than what’s owed, a debt collector is much more likely to be willing to discuss a reduced payoff of your debt. This is called a settlement.

THE MORE YOU CAN PAY AT ONCE, THE LESS YOU’LL HAVE TO PAY IN TOTAL

The goal for debt collectors is to maximize the profit on any given debt. But they’re also trying to earn that profit as quickly as possible. Time is money, after all. While many will let you make monthly payments, they’ll almost always accept less in total if you can make a large enough one-time payment.

So while they’d prefer to get the full amount, as long as they can exceed their investment most debt collectors are very willing to talk. Keep this in mind when attempting to negotiate with a debt collector. They probably won’t agree to a settlement that results in a loss for them, but if the choice is between making a small profit or nothing at all, they’ll probably be able to work with you.

NEGOTIATE SERVICE COSTS UPFRONT IF POSSIBLE

Medical and service-related debts usually have more leeway for negotiation. That doesn’t mean private practices or large hospitals will definitely forgive portions of your debt. It just means that there’s a general recognition that medical debts are often overwhelming and many patients need assistance repaying those debts. 

The best time to talk about pricing and repayment options is actually before any procedure has been performed, but that’s often not possible, especially in an emergency situation. 

Once you’ve received a bill and verified with your insurance that the amount you owe is accurate, contact the applicable billing department and discuss the situation. Many hospitals have hardship programs to help defray the cost of medical expenses, in which case you may need to provide certain documents and complete the required paperwork. 

Whatever caused the debt in the first place, if you don’t feel like you’ve got the financial ability to repay everything that you owe, take the time to speak with a certified financial counselor. There may be a solution available that you hadn’t considered. At the very least, a trained counselor can help you understand your options and walk you through the steps you need to take to reach your goals.

Finding the answer just takes a little time to get organized and crunch a few numbers. Here are the steps to help you determine which debts should be getting your attention right now.

FOCUS ON “BAD” DEBTS FIRST

Debt has different categories, and yes, there is such a thing as good debt. A mortgage or loans for education are generally considered “good debt” because they’re investments of a sort. Your home has value (and may gain value over time), and an education helps increase your earning potential. In addition, some of this debt is tax-deductible, which creates less of a tax burden. As long as the rates on these types of debt are reasonable and you’re able to continue to pay on time, these debts don’t need to be at the top of your pay off list.

Bad debt isn’t so much debt that’s evil, as it’s just debt with some character flaws. This is the kind of debt you’ll likely want to pay off first. These debts include credit cards, unsecured personal loans, medical debts, and more. These debts cost you money without representing a clear, continued benefit. They also usually come with higher interest rates than mortgages and student loans.

EXPLORE REFINANCE AND CONSOLIDATION OPTIONS

Mortgages and student loans are usually not the debts you’ll want to prioritize, because they’re investments, and perhaps more importantly, because the interest rates on these loans are usually much, much lower than other kinds of debt.

But while you may not want to focus on either, it’s important to keep in mind that both come with variety of refinance and consolidation options. If debt is a problem, and you can’t balance your monthly expenses because your debt repayments are too high, you may want to consider refinancing or consolidating debts where possible. Refinancing your home or your student loans may not accelerate your repayment, but there’s a good chance it may help make your month-to-month budgeting a little easier. 

USE MATH TO DETERMINE WHICH DEBT WILL BENEFIT YOU THE MOST TO PAY OFF

Paying off debt with a high interest rate before anything with a low interest rate will allow you to save money in the long-run. Paying $500 towards a loan with an 18 percent interest rate will be far more beneficial than paying $500 towards a loan with a 5 percent interest rate.

Paying off a debt with a higher interest rate first may not be the best priority every time, though. You may want to consider targeting debts with lower balances. This can serve two purposes – first, it frees up money to direct towards other debts, and second, it feels pretty great to pay off an account. Don’t discount the mental boost you can get from clearing a few of your smaller debts away before focusing on the big ones.

When determining which of these debts to pay off first, consider all factors. What is your interest rate? How much will you end up paying if you take longer to pay it? And can it be paid fairly quickly if you focus on that debt above others?

CONSIDER YOUR CREDIT SCORE

Another consideration in deciding what to pay off first is how it will affect your credit score. If you have a large purchase coming up (home or car) that you’ll need a good credit score for, paying down credit cards that are near their limit will likely improve your overall score. Improving your debt ratio can not only improve your credit score, it can help to lower the interest rate on any new loans.

CONSIDER CREDIT COUNSELING

Whatever debt you decide to pay off first, create a plan and budget for the extra payments. Staying focused and sticking with your payoff plan will help you get all of those bad debts paid off sooner.

If you’re feeling stuck or just need a second opinion, don’t hesitate to connect with a certified credit counselor. Nonprofit credit counseling is free and provides direct advice and crucial education to help you make the best decision about your debts.

You’d probably assume that once a debt is charged off and handed over to a debt collector, the balance won’t change. In fact, quite a few people intentionally allow accounts to land in collections in the hopes that they can settle the whole thing for less than what’s owed. So it’s pretty upsetting to learn that yes, in certain circumstances debt collectors are within their rights to continue adding fees to your debt after they’ve purchased it.  

HOW TO DETERMINE WHAT YOU ACTUALLY OWE TO A DEBT COLLECTOR

While it’s possible that the debt collector has been within their rights to add fees to your debt, you shouldn’t just take their word for it. The first thing you need to establish is the details of where the debt came from, how much it was originally, and how it got to be the amount it is now. 

The Fair Debt Collection Practices Act (FDCPA) requires that all debt collectors provide written validation of the debt they’re attempting to collect. This means they need to give you all of that information within five days of making first contact with you.

If you don’t think the amount of debt is correct, you can send a written dispute to the collection agency. All collection activities should stop until they’ve responded to your dispute. 

However, once they’ve provided you with a document outlining all of the fees and interest charges that caused your debt to continue swelling, post-charge-off, the ball is back in your court. Which leads to the next question: are those fees and interest charges legal? 

Unfortunately, yes, they are.

COLLECTION AGENCY FEES – WHAT ARE LEGAL?

Debt collectors can charge you interest, up to the maximum amount outlined in the original contract. It’s generally listed as the “penalty rate” in credit card contracts and it can soar past 30 percent, depending on the creditor. 

Often states will cap the amount of interest a debt collector can charge, but those caps are for accounts that do not explicitly state a maximum interest rate (like a medical debt). 

If the collector has validated the debt and shown you that the increased charges are legitimate, your next best step is to either work out a repayment plan or ask about the possibility of removing the extra fees in exchange for a full, one-time payoff of the original debt. You need to remember that debt collectors purchase old debts for pennies on the dollar. If the debt was $190, they likely purchased it for 60 percent of that. If the debt’s been sold multiple times, this collector likely paid even less. They may say no, but often they’ll be happy to collect what they can and be done with your account.

But there’s probably one big question on your mind: How do I manage my debt? 

There are several steps to take if you are dealing with debt and unemployment:

APPLY FOR UNEMPLOYMENT BENEFITS

While you may earnestly want to keep up with your bills, if you don’t have the necessary income, it’s almost impossible to keep making payments on your debts. When your paychecks are paused, reduced, or cut off entirely, it’s important to consider your cash flow and how you can keep at least some money coming in.

Chris Tuck, a CFP® and wealth advisor at SJK Wealth Management, explains, “Claiming unemployment benefits is a great way to make sure that you are able to pay your current bills.”

The rules for unemployment vary by state, but you’ll want to file for unemployment as soon as possible. Even though the benefit amounts are based on a percentage of your previous salary, every dollar counts when you’re dealing with debt payments and other monthly expenses.

The first step is to file with your state and contact the State Unemployment Insurance agency.

CREATE TEMPORARY INCOME IF POSSIBLE

It may be difficult to immediately replace your primary source of income. While you work on getting back into a fulltime position, you may want to consider temporary or part-time positions to help create at least some income.

A good place to start would be flexible side hustles with low start-up costs. If you have a car, you can sign up for a rideshare program or work part time as a delivery driver. Whatever you can do to safely bring in income will help increase your options and make managing your debts a little easier.

ASK ABOUT STUDENT LOAN FORGIVENESS FOR THE UNEMPLOYED

If you have student loans and you’re temporarily out of work, you may have options. Most federal student loans are eligible for some period of forbearance or deferment. 

As soon as you know that your income will be reduced, connect with your loan servicer to discuss available options and begin the application process. While deferment may add additional interest costs and both options will increase the length of time spent repaying your loans, both options will provide immediate financial relief and prevent your loans from falling into delinquency.

ASK ABOUT CREDIT CARD HARDSHIP OR DEFERMENT PROGRAMS

The more you can do to pause your debts during unemployment, the better. While the overall goal is to eventually pay everything off, once you start missing payments and becoming delinquent, paying off a debt gets harder and harder. 

That’s why you should reach out to your creditors before you start missing payments. They may be able to place you on a hardship program or a temporary deferment. They also may not be able to help at all. You won’t know until you reach out for help, though, so check in with your creditors as soon as possible.

UNDERSTAND WHAT YOU CAN AFFORD

Whether or not you can continue to make payments on your debts will depend largely on what your budget says. If you have adequate savings and at least some amount of income thanks to either unemployment benefits or a temporary position, you may be able to safely continue making your payments. 

It’s important that you set your priorities and spend accordingly. If you have no income and minimal savings, for instance, you probably can’t afford to spend money on anything other than the essentials. Remember that the safety and wellbeing of you and your family comes first. That means shelter, food, and good health come well before credit card payments. 

If you need help understanding what you can afford, consider speaking with a certified credit counselor. Counseling is free and designed to help you understand the best ways to reach your financial goals. If you’re feeling overwhelmed, a confidential, judgment-free session with a credit counselor is a great first step. 

EXPLORE ALL OF YOUR OPTIONS

The ideal option is usually to keep making payments in full every month until your debts are all gone. Unfortunately, when your income is compromised this option may be impossible. Depending on how long you’re unemployed, you may find that a debt management plan or debt settlement make sense for your situation. Or it might be that bankruptcy makes sense for you. 

“It’s not often that we advise bankruptcy, but the laws exist for a reason,” says Tuck. It can be a difficult process to navigate and it will likely damage your credit deeply, but that doesn’t mean it isn’t right for you. “Sometimes it is the only viable option,” says Tuck.

DON’T LOSE HOPE

Debt and unemployment can be a difficult combination, especially when you’re confused about what steps to take. As you navigate the nuances of debt and unemployment, don’t lose hope. Even if it doesn’t feel like it in the moment, you’ll make it through.

“Obviously I want to believe him when he says he doesn’t owe debt right now,” the writer goes on to say, “but it’s pretty obvious I have my doubts because I am asking you for advice. Why do those letters come? Is he in debt right now? How much debt does one accumulate and for how long before those letters start coming?”

WHAT DO CREDIT CARD DEBT RELIEF LETTERS MEAN?

It’s understandable to be concerned about a loved one who’s previously struggled with debt – especially if they’ve been inclined to try and hide their problems in the past. However, letters simply promoting some form of debt repayment program are not a clear indication of a current problem.

“Credit card relief” is often (but not always) another way to say debt settlement. Companies offering debt settlement or credit card relief to consumers who have struggled with debt in the past are essentially just advertising their services to the population most likely to need those services. It has nothing to do with someone’s actual current circumstances. Keep in mind, a debt settlement company does not have the right to pull someone’s credit report, so there’s no way for them to know who is in debt and who isn’t.

It is possible, though, that the debt settlement company sent these letters as the result of a direct inquiry from the consumer. The family member in question may have contacted the settlement company looking for information about the solutions they offer and received the letters as a result. If this were the case, obviously it would be an indication that they are at least concerned about their debt.

CLEAR WARNING SIGNS OF DEBT PROBLEMS

Everyone’s experience with debt (and shame, for that matter) looks a little different, so the signs of a growing problem with debt will differ from person to person. That said, there are a few common signs that someone you care about is struggling with debt.

RECEIVING COLLECTION LETTERS OR PHONE CALLS

Here’s the part of the article where I remind everyone that you really shouldn’t be going through someone else’s mail. Stealing mail and tampering with mail are both felony offenses. And while there’s no law against taking a good long look at the unopened envelope of a letter addressed to someone else living in your house, you should always strive to do your best to respect the privacy of others.

That said, if you notice a loved one has started receiving letters from companies you can identify as collection agencies, that’s an indication they may be struggling with debt. If they begin receiving multiple phone calls a day that they either ignore or hang up on immediately, that could be a sign that someone is attempting to collect on an unpaid debt.

SPENDING DOESN’T MATCH INCOME

Assuming you have some sense of a loved one’s financial situation, you can probably tell (without knowing all the details) when their spending seems out of line with their means. If you they make lavish purchases that seem well beyond what they can normally afford, or if you know for a fact that their income has dropped (or stopped outright) but they continue to spend as normal, those can both be warning signs that they’re leaning on credit and creating debt.

BECOMING EVASIVE ABOUT FINANCES

Personal finance can be a very personal subject. Quite a few people don’t like to discuss the coming and going of their money. If you’re concerned about someone’s debt situation, what you’re really looking for is a change in how they talk (or don’t talk) about money. If they seem overly defensive about purchases or more closed off than usual, that may be a sign that something is wrong.

CONTINUALLY ASKING TO BORROW MONEY

We all hit hard times and there’s nothing particularly odd or worrisome about a trusted loved one asking to borrow money to help them through a difficult time. Routinely asking to borrow money, however, is a major red flag. At the very least, continually asking for money suggests a major problem that needs to be investigated. 

If you have reason to believe that someone you care about may be struggling with debt, your best bet is to simply let them know that you’re there, that no one is judging them, and that help is available should they need it.

If you’ve transferred jobs more than once, you may find yourself with several retirement accounts at various employers. So what do you do about all these old retirement accounts?

DECIDE WHAT OPTION BEST SUITS YOUR NEEDS

You usually have four options when it comes to managing old retirement accounts. You can leave the accounts alone (assuming that’s allowed by your old plan); you can move the accumulated assets into your new account (assuming that’s allowed by your current plan); you can cash out the old account (understanding there will likely be penalties involved); or you can roll it all into an IRA.

Rolling over your retirement accounts into an IRA (Individual Retirement Account) is often the best bet. Not only does this consolidate your assets into one place, making them easier to keep track of, but IRAs usually offer more investment options and flexibility than a 401(k). Rolling over to a 401(k) can be a bit tricky, and if you do it incorrectly, you may find yourself paying a penalty.

Make sure you understand your options and the consequences of each before making your decision. Consider speaking with a retirement specialist if you need additional guidance.

FIND A BROKERAGE FIRM

You’ll want to select a brokerage firm, so be sure to do some research before deciding which firm you’d like to use. 

If you already have retail accounts, you may want to open your account with the same firm. In some instances, you might even be eligible to receive discounts if your assets are over a set minimum amount. Ask about fees, including low balance fees and annual fees, and choose an account with features that best serve your needs.

CONTACT THE PLAN ADMINISTRATOR TO INITIATE THE ROLLOVER

Once you’ve chosen a brokerage company and opened the account, contact the plan administrator for the plan in question and ask for a direct rollover. With a direct rollover, the proceeds of your 401(k) account will be sent directly to the IRA trustee rather than you. This saves you some money, because if the funds were sent to you, tax withholdings would be kept, and you may be subject to a penalty.

PICK YOUR INVESTMENTS

Once the money arrives in your new account, you may want to meet with your brokerage firm to decide how to invest your money. With an IRA, you usually have a good deal of flexibility with your investment options, so you’ll want to develop an investment strategy that supports your goals.

When you rollover your account, you may be tempted to use the assets to pay current debts. Keep in mind that by using retirement assets for current spending, you’ll not only jeopardize your retirement security, you’ll also be subject to tax withholding and (often very steep) penalties.

Social Security’s surplus reserves are expected to run out in 2033, one year earlier than previously estimated, according to the Trustees of the Social Security and Medicare trust funds. That means the entitlement program will only be able to pay out 76% of scheduled benefits at that time if nothing is done to boost the fund.

“People who are looking to retire in their early 50s or in the next 10 or 15 years can probably expect less than 80% of that benefit,” Kristen Carlisle, general manager of Betterment for Business, told Yahoo Money.

The economic fallout brought on by the pandemic changed Social Security’s funding outlook. Employment, earnings, interest rates, and GDP dropped significantly last year and will recover gradually over the next two years. The pandemic also elevated the mortality rate, slowed the birth rate, and reduced, all of which affected the shortfall projections, the report said.

hat’s only exacerbated the already hamstrung agency.

“Social Security has been paying out more than they’ve been taking in,” Scott Thoma, retirement strategist at Edward Jones, told Yahoo Money. “At some point in time, there won’t be any reserves left for them to pull from.”

Thoma said the government can enact the same levers it pulled four decades ago like increasing the full age of Social Security eligibility and payroll taxes, but it’s a matter of prioritization and the country’s other pressing problems.

“There’s a lot of things that they see that are higher near-term priorities,” he said. “It’s not like it’s not an issue. It’s just a 2033 issue versus a 2021 issue.

Assess your retirement savings

Americans should factor the potential reduction into their retirement plans. Financial experts encourage a retirement plan stress test for multiple outcomes relating to health, employment, and living expenses, and when to file for Social Security benefits, which should be treated as a supplement to savings.

“[Social Security isn’t] going to be the sole cushion for you after you stop working,” Carlisle said. The program was conceived to provide for only 30% to 40% of your pre-retirement income and not fully support retirement, Carlisle said.

Considering the average individual Social Security benefit is around $1,500 monthly — or $18,500 annually — the average per year would equal $14,060 after the 24% benefit reduction. That’s a loss of nearly $90,000 over the course of a 20-year retirement.

To calculate what your benefits will look like after the estimated reduction, use your Social Security statement. Take the estimated monthly benefits based on the different filing ages and then reduce it by a quarter, Thoma suggested. That figure is what you can expect per month.

If that’s not enough — in addition to your own savings — savers over 50 can contribute more than the annual maximum to their retirement accounts, known as catch-up contributions. Younger savers should take regularly contribute as much as they can to employer-sponsored plans or IRAs or Roth IRAs that can be set up independently.

“You want to make sure that you’re taking advantage of retirement programming as it exists before you turn 50,” she said.

While unpaid medical bills can harm your credit and cause potential legal issue if left unaddressed, there is often some flexibility when it comes to repayment. And unlike most credit card and loan debt, medical debt rarely accrues any sort of interest charges or penalties. If you’re stuck with a large medical bill, take the following steps to help bring down the cost and create a repayment plan that fits your budget.  

REVIEW MEDICAL BILLS FOR ACCURACY

If you are facing significant medical debt, the first thing you should do is to review all of the medical bills to make sure they are completely accurate. Check dates of service, as well as the services performed and the doctors performing them. Don’t be afraid to ask your provider to walk you through the bill and explain all the charges. Healthcare often involves a lot of moving parts and personnel, so there’s always a chance that items have been entered incorrectly.

If you find anything that’s incorrect, ask that the charge be investigated and, if not valid, removed from your bill.

REVIEW YOUR INSURANCE POLICY TO SEE WHAT’S COVERED

Next, you should verify which charges were (or were not) covered by your insurance. Were any of your claims denied? Does your policy have an out-of-pocket cap and have you met it yet?

To ensure that you’re getting the most out of your insurance, you’ll really need to understand the terms of your policy. If something doesn’t seem to add up, contact your insurance provider for more information. If you believe that a claim was denied incorrectly, you have a right to appeal the denial. There are some simple errors, such as incorrect billing codes, that can cause your insurance to reject the claim. There’s a good amount of legwork involved, but ensuring that you’re getting the maximum insurance coverage possible is an important way to keep your medical bills in check.

CONTACT YOUR MEDICAL PROVIDERS TO SEE IF YOU ARE ELIGIBLE FOR AN ASSISTANCE PROGRAM

Once you know exactly what your true financial obligation is, contact your medical providers to see if there is any assistance available. Many hospitals offer assistance programs to can help reduce your bills. Unfortunately, you usually have to ask to find out if you are eligible. 

You should also ask about available payment options – you may be able to negotiate a long term payment plan that works better for your budget.

AVOID BORROWING MONEY TO PAY MEDICAL DEBTS

It may be tempting to put your medical debt on a credit card, but that’s not usually a good idea. As noted before, medical debt is usually interest-free, so the debt itself isn’t costing you additional money. Once you move the debt onto a credit card or loan, however, you’ll almost always start accruing interest charges, meaning you’ll be paying both the debt and the new interest charges on the debt. 

Perhaps worse, though, you may also no longer be eligible for financial assistance or payment options from your medical billing company once you’ve already “paid” the debt by putting it on your credit card. If you have to borrow money to pay a medical debt, it’s likely better to wait and see what you can work out with the provider first before paying anything.

If you’re looking for an easy side hustle to start earning extra money, the first question you may ask yourself is, “What kind of side hustle can I afford to start?” After all, most freelance work is going to require some form of investment on your part.

Fortunately, there are quite a few side gigs out there that don’t require a lot of money, materials, or equipment upfront. Here are a handful of side hustles that require very little investment to start:

DOG WALKING

If you love pups, why not consider taking up being a professional dog walker? All you need is some experience with dogs, dog leashes, doggy poop bags, and a sturdy pair of sneakers. Since you’ll be walking (it’s right there in the name), you’ll also want to be in relatively good shape. Dog walking platforms such as Wag! and Rover make it easy to open an account and set up a profile.

Once you land your first few reviews, you’ll have an easier time landing more gigs. You can get a dog walking certification if you’d like to boost your credit, but it’s not necessary to get started. According to Glassdoor, the average hourly wage for a dog walker on Wag! Is $16 and $17 if you’re a dog walker for Rover.

HOUSE SITTING

Want a change of scenery and get paid for it? Sites such as Nomador and Trusted Housesitters have listings of homeowners that are looking for a solid, reliable people to watch over their homes while they’re away on vacation or business trips. All you need is a clean record, strong communication skills, and a pleasant demeanor. Of course, any prior experience house sitting or watching over pets is a bonus.

FOCUS GROUP PARTICIPANT

Want to get paid for voicing your political views, or for test-tasting a new brand of chewing gum? The eligibility requirements depend on the study, but if you fall within a certain age, gender, or ethnicity, you could make some easy money for being part of a focus group.

Depending on the type and length of the study, you could be raking in anywhere between $50 to $200 a study. Check out opportunities to participate either online or in person on Focus Group or 20|20 Panel.

ONLINE PAID SURVEY

Similar to being part of a focus group, you can side hustle by taking paid surveys. You can earn either cash or gift cards, and can rake in anywhere from $5.00 to $30.00 a survey. Fair warning: They can get tedious pretty fast. And you can either sit for a stretch of time or break up surveys into smaller chunks.

Earning a decent chunk of change is definitely a matter of volume — the more you do, the more you earn. The best part of online surveys is that you can do them in the comfort of your home, relaxing in a pair of sweats, and on your own time. Popular online survey sites include Swagbucks, Survey Junkie, and CashKarma.

FOOD DELIVERY

You don’t need a car to deliver food from restaurants to businesses and people’s homes. While having your own set of wheels could certainly come in handy, many popular food delivery services, such as DoorDash, Postmates, and Grubhub, allow you to deliver food via scooter or bike. You’ll just need a method of carrying the food around.

What’s nice about food delivery is that if you like staying busy, you can also stagger with other “easy” side hustles, such as being a rideshare driver.

BABYSIT

Do you go “ga-ga” for babies? Then consider taking up babysitting. You can scour local listings on sites such as Care.com or Urbansitter. You’ll need to be reliable, responsible, and have a way with children. If you have a certification in CPR or disaster training, it could make you a more attractive kid-sitter. But besides having some experience caring for children under your belt, you probably don’t need a lot of equipment or supplies to get started.

Taking up a side hustle with relatively little investment upfront makes it easier to get the ball rolling. What’s more, you can test out the waters. If you don’t want to continue pursuing a particular side hustle, you won’t have to worry about having put in a lot of resources and time upfront. You can try out a bunch of side hustles to see which ones are most profitable or jive best with you.

As a result, tenants who are behind on their rent could soon be facing off with their landlords to prevent being kicked out of their homes.

As of the first week of July, nearly 6.4 million households were behind on rent. That’s about 15% of all renter households and represents an estimated total back rent of $21.346 billion, according to the National Equity Atlas. That works out to an average of $3,300 per household.

At the height of the pandemic, 19% of all rental households were behind on rent. The original eviction moratorium plus all its extensions have prevented an estimated 2.45 million eviction filings since the beginning of the pandemic, according to the Eviction Lab.

What the eviction process is like

At risk renters can take a small bit of comfort from the fact that evictions don’t happen overnight. There is a lengthy legal process that varies depending on the state, and sometimes the county or city, you live in.

While the timeline and certain details will differ by location, the general process looks like this:

For renters facing eviction due to lack of payment, the legal process to remove you from the home begins with a Pay or Quit Notice, more commonly known as an Eviction Notice. You should receive the notice by certified mail, as well as having a copy of the notice placed on the entry to the rental unit in question.

Once you’ve received the notice, you’ll usually have 30 days to either pay the back rent due or vacate the property. If you move out before the landlord files a legal complaint, you could still be sued in civil court for any back rent due. If you do neither, then the landlord can file an eviction complaint with the courts. You’ll be notified of the court date and have the opportunity to present your case as to why the eviction should not proceed.

If the judge rules in favor of the landlord, you’ll be given a number of days to leave the property. If you don’t vacate within the prescribed time period, the landlord can then bring in law enforcement and have you forcibly removed.

Because there’s money involved (and often a great deal of money) it makes sense that lenders want a credit score they can trust. That’s why credit score providers, like FICO and Experian, keep the formula used to create your score a secret. If borrowers can manipulate their scores, then those scores are no longer an accurate gauge of risk, and if that’s the case, then the scores become meaningless. 

Fortunately, just because we don’t know the whole formula doesn’t mean we’re completely in the dark when it comes to building strong credit. In fact, we have a pretty good idea what really matters when it comes to good credit. 

WHAT DO YOU NEED TO ACHIEVE A GREAT CREDIT SCORE?

All credit scoring models take into consideration the following five categories: payment history, amount currently owed to creditors, length of personal credit history, amount of new credit recently acquired, and types of credit currently in use.

Each category says something distinctive about you and your risk as a potential borrower. In order to maximize your credit history and reduce your risk in the eyes of lenders, you should strive for the following:

A CLEAN PAYMENT HISTORY

The most important category is also the simplest to master. A positive payment history includes no missed payments. Borrowers who do not fulfill their obligations are considered riskier than those who do. The circumstances behind a missed payment, unfortunately, do not matter. Make consistent, on-time (and in-full) payments and you will be on your way to an exemplary credit history. 

A LOT OF AVAILABLE CREDIT

An overextended borrower is a risky borrower. This is a complex category, but the standard rule of thumb has long been to avoid using more than 40 percent of the credit available to you. The closer you come to maxing out your available lines of credit, the riskier you appear in the eyes of lenders. Keep an eye on your debt levels, especially if you plan on applying for additional credit in the near future.

You can use this calculator to figure out how much of your credit line is still available.

A LONG (AND POSITIVE) PERSONAL CREDIT HISTORY

Lenders are most apt to feel comfortable lending money to a borrower who has been using credit successfully for many years. That’s why it’s important to begin using credit responsibly at a young age. A long history of smart credit usage will have a very positive impact on your credit score.

This is usually measured by the age of your current credit accounts. The older, the better. That’s why you should be wary of closing old accounts in favor of newer ones – there may be a hit to your credit (at least temporarily).

A REASONABLE AMOUNT OF NEWLY ESTABLISHED CREDIT

As noted in the previous category, lenders like to see that you’ve been successfully managing your credit and loan accounts over long periods of time. When you’ve recently taken on new debt, it makes you riskier, because there’s no established history of success managing that account. This is why you may find that your credit score dips a bit after opening a new account. You need to prove all over again that you can handle the new debt. 

This is a relatively minor category, but it’s important to keep in mind, especially if you intend to acquire multiple new loans or sources of credit within a short span of time. 

A VARIED MIX OF CREDIT TYPES

Building good credit is essentially a cycle of using today’s credit to prove to tomorrow’s lenders that you can be trusted with their money. In order to maximize your credit score and minimize your perceived risk as a borrower, you need to prove that you can handle many different types of credit. A borrower who has used credit cards responsibly, but has never shown that they can handle a loan, is simply riskier than a borrower who has successfully handled all types of credit. 

A COMPASS, NOT A ROADMAP

So even though we don’t have a map to a particular score, we know what direction we must travel in order to build a strong credit history. Focus on being the kind of borrower you would lend to, if the tables were turned. If you borrow wisely and fulfill your obligations, your credit score will reflect your true creditworthiness in due time.

As summer quickly approaches and things re-open in the U.S., it is prime time for enjoying many of life’s most fun activities — travel, dining out, sports, and more — or maybe even some big life changes like moving or a new job. Especially if you expect spending shifts as a result, it’s a great time for taking stock of where you stand financially and re-setting your credit card strategy to help you meet your money goals for the rest of the year. Think of it as an opportunity to focus on what’s working, take advantage of new opportunities, and recalibrate your spending patterns. Here are five simple ways to do so.

Check Your Credit Report

It’s always a good time to check your credit report, but doing so mid-year can be especially useful if you’re planning for any big, upcoming purchases (such as home buying, which can often occur during the summer, and which I’m considering at the moment). Staying abreast of any changes on your credit report can help you address any issues, but can also alert you to opportunities. If you credit score has increased recently, for example, you may qualify for higher credit limits or lower interest rates on loans or credit cards. You can get a full credit report for free once per year at freecreditreport.com. For more frequent credit monitoring, some credit cards even provide free monthly FICO credit scores.

Plan Ahead for Big Purchases

One of the best aspects of responsible card use is enjoying rewards for your purchases. The Bank of America Customized Cash Rewards Card is an especially useful tool, because it allows you to change your 3% cash back category every month. So, since I know I’ll be traveling to see family in August, I can change my category to “travel” that month from my usual choice of “dining.” Plus, with an introductory 0% APR offer lasting more than a year, you can plan for big purchases — such as home remodeling, or new furniture. You can even set your monthly cash back category to your intended purchase category to layer your rewards. Combine this with a banking loyalty program, and you can layer your rewards together. As an added bonus, because I am a Bank of America Preferred Rewards member, I’m able to boost my cash back earnings even higher.

Review Your Rewards

The summer is also the perfect time to review card rewards earned to date. Mid-year can be a useful time to review the rewards you’re receiving, how much you’ve earned in rewards, and reset your rewards strategy, if needed. You can also plan for ways to use your card in order to maximize your earnings in the remainder of the year. Plus, loyalty programs often add or change their offerings, making card use even more rewarding in various ways, so check in with your credit cards to determine whether you’re enjoying the full range of benefits available.

Monitor Card Changes

Has your card’s APR changed since last year? If your credit has improved, do you now qualify for zero APR card offers, lower interest rates, or premium cards? Have there been other changes to your card program, such as terms of service, offerings, or card benefits like concierge services or purchase protections? Mid-year is a good time to refresh your understanding of your card’s features, and adjust your strategy accordingly.

Review Your Spending & Budget

Many credit cards allow you to see your spending history by category, so that you can track your monthly spend and expenses against your budget. Summer is an ideal time to review your spending to date, assess whether you’re meeting your budget goals, and re-formulate intentions for the rest of the year. As many businesses re-open, and new spending opportunities are again available, your habits or spending may change to reflect the post-pandemic economy. Think about how you want your spending habits and budget to look. For example: If you’re ready to travel again (which the majority of Americans are, according to a Bank of America survey), should that be re-added into your budget? If your work commute is back, are you incorporating that into your monthly expenses? Your credit card can be an excellent tool for tracking your spending, ensuring you stay within budget. And your rewards can even be another way of ensuring you stay within budget — especially if you get cash back.

If this happens to you, getting the situation fixed can be difficult and time-consuming. But you can set things right.

If someone took out a loan in your name, it’s important to take action right away to prevent further damage to your credit. Follow these steps to protect yourself and get rid of the fraudulent accounts.

1. File a police report

The first thing you should do is file a police report with your local police department. You might be able to do this online. In many cases, you will be required to submit a police report documenting the theft in order for lenders to remove the fraudulent loans from your account.

2. Contact the lender

If someone took out a loan or opened a credit card in your name, contact the lender or credit card company directly to notify them of the fraudulent account and to have it removed from your credit report. For credit cards and even personal loans, the problem can usually be resolved quickly.

When it comes to student loans, identity theft can have huge consequences for the victim. Failure to pay a student loan can result in wage garnishment, a suspended license, or the government seizing your tax refund — so it’s critical that you cut any fraudulent activity off at the pass and get the loans discharged quickly.

In general, you’ll need to contact the lender who issued the student loan and provide them with a police report. The lender will also ask you to complete an identity theft report. While your application for discharge is under review, you aren’t held responsible for payments.

If you have private student loans, the process is similar. Each lender has their own process for handling student loan identity theft. However, you typically will be asked to submit a police report as proof, and the lender will do an investigation.

3. Notify the school, if necessary

If someone took out student loans in your name, contact the school the thief used to take out the loans. Call their financial aid or registrar’s office and explain that a student there took out loans under your name. They can flag the account in their system and prevent someone from taking out any more loans with your information.

4. Dispute the errors with the credit bureaus

When you find evidence of fraudulent activity, you need to dispute the errors with each of the three credit reporting agencies: Experian, Equifax, and TransUnion. You should contact each one and submit evidence, such as your police report or a letter from the lender acknowledging the occurrence of identity theft. Once the credit reporting bureau has that information, they can remove the accounts from your credit history.

If your credit score took a hit due to thieves defaulting on your loans, getting them removed can help improve your score. It can take weeks or even months for your score to fully recover, but it will eventually be restored to its previous level.

5. Place a fraud alert or freeze on your credit report

Parents from all over the country cheered when they received their first child tax credit payment. Getting up to $300-per-child each month (depending on the age of the child) can be a lifesaver for families who are struggling financially because of the pandemic. But Americans had to wait for months after the program was announced before receiving any money. Now that the first round of payments has been delivered, the waiting begins again for the next round of direct deposits, checks, and debit cards.

The IRS sent payments to approximately 35 million families on July 15. Additional payments will follow each month through the end of the year according to the schedule below. As it stands right now, the payments will not carry over into 2022 (although President Biden wants to extend them beyond this year), so plan accordingly.

Schedule of 2021 Monthly Child Tax Credit Payments

“It’s devastating,” said Safiya Kitwana, a single mom with two teenagers living in DeKalb County, Ga., who lost her job during the pandemic. Like 7 million other Americans, Kitwana has fallen behind on rent.

Kitwana and many other renters had been protected by a ban on evictions from the Centers for Disease Control and Prevention, but the U.S. Supreme Court effectively blocked the CDC from extending the eviction moratorium past the end of July. And Congress didn’t have the votes to extend it.

Kitwana fears what could be next.

“A marshal coming to your door,” she says. “I’ve seen it happen where they just throw your stuff out in the parking lot.”

Kitwana says it’s painful to think about her kids going through that.

Help was supposed to be on the way. Congress set aside nearly $50 billion to help families like hers pay the back rent they owe and avoid eviction. But that money flowed to states and counties, which created hundreds of different programs to distribute it. And many so far have managed to get just a small fraction of the money to the people who need it.

In Kitwana’s case, she applied for the help and she was approved.

But DeKalb County officials worried they might run out of that federal money because so many people needed help. So to try to spread the money around, they made a rule — the county would pay landlords only 60% of what renters owed. And to get that, landlords had to agree to forgive the remainder of the debt or split the difference with the renter and drop the eviction case.

But, as NPR previously reported, some landlords like Kitwana’s said that wasn’t enough money and moved ahead with the eviction process.

The CDC moratorium expiring has created a new sense of urgency in states and counties around the country. In DeKalb County, it has also prompted some big changes. A county judge has now put in place an emergency two-month local eviction ban.

“This is a godsend, really, for tenants,” says Michael Thurmond, the county’s top elected official. He’s also announcing another big change.

“Landlords will be receiving an increased amount of revenue to cover back rent,” says Thurmond. The new rules will reimburse landlords for 100% of the back rent they are owed going back as far as 12 months. Thurmond expects the rules to be formally approved on Tuesday — welcome news for thousands of renters nearing eviction in the county.

That means Safiya Kitwana should now be able to avoid eviction by paying her landlord everything she owes. In addition, the new program gives renters like her three months’ rent going forward to get back on their feet.

“It is a huge relief,” she says. “I just didn’t know what I was going to do.”

“There are essentially three things you got to do to prepare for retirement,” Caroline Bruckner, Kogod Tax Policy Center’s managing director, recently told Yahoo Finance Live. “Number one, you got to save in a preferably tax-advantaged retirement saving plan. Number 2, you have to have your individual savings outside of that.”

“And then number three, people tend to rely on Social Security” for retirement, especially women, which often is not enough, Bruckner said. She encourages Americans to look at individual retirement accounts or IRAs.

“IRAs [and] Roth IRAs are things that most Americans don’t necessarily utilize in the way that they should,” Bruckner said.

For people who don’t have access to a workplace retirement, Bruckner pointed out that setting up an IRA or a Roth IRA can be done online with relative ease and minimal expense, depending on your income.

“The income eligibility rules are fairly generous for most low and moderate-income Americans,” she said, “particularly those that don’t otherwise have access to a retirement plan.”

IRAs and Roth IRAs don’t come with the benefit of automatic paycheck deductions like 401(k)s or 403(b)s, but Bruckner said that “thoughtful taxpayers” can use their annual tax refunds, instead.

Throw that money into an IRA if they don’t otherwise have access to a retirement plan, forget about it, and just let it grow,” she said. Annual IRA contributions are capped at $6,000 and $7,000 for people over age 50.

Investing in other accounts like “traditional retirement savings plans” like IRAs and 401(k)s “can really help substantiate an overall retirement saving strategy.”

“The earlier you can start saving, the faster that money will grow and help substantiate your retirement,” she said.

In other words, the idea of having your debts forgiveness by your creditors is an appealing one. And debts are sometimes forgiven, but there are often costs associated with debt forgiveness. This is what you need to know about debt forgiveness, including when you might qualify and why debt forgiveness is rarely ever free. 

WHEN IS A DEBT FORGIVEN?

Debt forgiveness can come in many forms. If you have an account in collections, you may attempt to negotiate with the collector by offering to pay a portion of the debt in exchange for having the remaining debt forgiven. As an example, let’s see you owe $10,000 on a charged off credit card account. You ultimately agree to settle the debt for $5,000, with the remaining $5,000 being forgiven.  

If you foreclose on your home, or are forced into a short sale where the sales price doesn’t cover the remaining mortgage, the lender may forgive all or a portion of the remaining debt. 

On certain federal student loans, if you’ve made the required payments over a set period of time (usually between 10 and 30 years), whatever is left of your remaining balance may be forgiven. 

Essentially, in any scenario where you owe money and don’t eventually make a full repayment, part or all of the remaining balance may be considered forgiven debt. Nearly any debt could potentially be forgiven (or at least partially forgiven), but whether or not that happens is almost entirely up to the lender or whoever owns the debt. Forgiveness needs to be in their interests, as well, so if you’re perfectly capable of repaying a debt in full, there’s little chance of a lender offering to forgive any portion of the debt in question. 

WHAT DOES DEBT FORGIVENESS COST YOU?

Because debt forgiveness is most commonly connected to settlement, there are two major costs to consider: the cost of the settlement itself (that is, the portion of the debt you do pay), and the tax you pay on the forgiven debt. If you’re using a third party to negotiate your settlement, there will be additional costs and fees associated. 

As for the settlement amount itself, it will vary, but typically falls around 35-50% of the original debt amount. And if you’re using a settlement company, they typically charge 15-25% of the total debt (though some charge based on what you saved, and others may use totally different pricing methods).

So, using the $10,000 example again, in order to get out of the debt, you’ll likely need to pay the creditor between $3,500 and $5,000, while paying the settlement company $1,500 to $2,500. Using the low end, we’ll say you started with $10,000 in debt, spent $5,000 (including settlement company fees) and had $6,500 forgiven. Not free by any measure, but at least you’re out of debt and saved $5,000 in the process.   

However, just because you’re square with your creditors doesn’t mean you’re square with the government. Forgiven debt is almost always considered taxable income. 

“How can debt be income?” you may ask. Well, I suppose you have to look at it this way – you were provided with money, goods, or services in the amount of your debt. In the above example, from a tax perspective you got a free $6,500. But of course, nothing is actually free, so now you need to pay taxes on that $6,500. 

Any time a creditor forgives a debt in excess of $600 they are required to send you a 1099 form reflecting the amount of the forgiven debt, which you must then add to the “Other Income” section of your personal tax return for that year. It should be noted that creditors are required to send you this form because they themselves are claiming your forgiven debt as lost income. If you have a forgiven debt that’s less than $600 you still need to claim it on your taxes – creditors just aren’t required to send notification in that instance. 

The impact on your tax return could be major or minor, depending on a lot of factors, such as your income bracket and the amount of the forgiven debt. If you have questions or concerns about how to complete your tax return, be sure to speak with a qualified tax professional. 

EXCEPTIONS TO THE RULE

You should generally assume that if your debt is being forgiven, you are going to have to pay taxes on the balance. But there are definitely exceptions to that rule. 

Your forgiven debt might not be taxable if: 

IT’S A RESULT OF A PERSONAL BANKRUPTCY

All debts discharged through bankruptcy are generally not taxable. 

YOU ARE INSOLVENT IN AN AMOUNT GREATER THAN THE FORGIVEN DEBT

Insolvency is when your debts outweigh your assets. If you currently owed $10,000 more in debt than you held in assets, and then had a creditor forgive $3,000 in debt, you would not have to claim that $3,000 as additional income. If they forgave $11,000 in debt, however, you would have to claim $1,000 as income.

YOU COMPLETED THE TERMS OF A CAREER-SPECIFIC STUDENT LOAN REPAYMENT PLAN

If you made all of the required payments on a public service loan forgiveness, teacher loan forgiveness, law school loan repayment assistance, or National Health Service Corps Loan Repayment program your forgiven debt is not considered taxable. Any forgiven debt resulting from any other student loan repayment plans, however, including income-based and income-contingent plans, is taxable. 

There are a few other unique exceptions, including exceptions for student loans that were discharged due to the death or permanent disability of the student, but those relatively rare. Again, if you have specific questions about how debt forgiveness may impact your personal tax return, please contact a tax specialist. It’s what they do. 

In almost every case, the benefit of a forgiven debt far outweighs the tax consequences, but it’s important to be aware of those consequences and plan accordingly. Free money almost always costs you something in the end.

As our team here at MMI discussed during a recent webinar, that fallout has been especially harsh for low-to-moderate income, Hispanic, and BIPOC individuals. With multiple relief programs set to expire in the second half of 2021, these households will likely experience a new set of burdens, including payment shock as long deferred bills begin hitting their budgets. For homeowners in particular, the possibility of another major financial crisis is very real. 

Thankfully, the American Rescue Plan Act of 2021 includes millions of dollars for housing counseling services aimed at those facing housing instability, including potential eviction, default, foreclosure, loss of income, or homelessness. In addition, up to $46.55 billion has been made available to states and local governments to provide financial support to eligible households though emergency rental assistance programs. 

For me, each announcement of a new housing stability program hits close to home because a housing stability program changed the trajectory of my own recovery during the Great Recession. If you’re skeptical on the value of housing counseling, or simply unsure if it’s right for you, hopefully my story will help you understand how life-changing these housing stability programs can be.

FINDING STABILITY IN A CRISIS 

In 2007, I bought a 1930s bungalow at the height of the housing bubble. It was near the outer limits of my budget, given the inflated market at the time, but it was by no means extravagant. I fully financed the purchase and moved in, excited to start my life in a new neighborhood and in a new relationship. 

But as life has a way of doing, a curveball was soon thrown my way. Just a year later, I was laid off from my union job at a global financial services company where I had worked for nearly seven years. In a panic, I cut expenses, added roommates, and downgraded my vehicle from a new SUV to a well-used economy car. But it wasn’t enough. 

After a brief stint of unemployment, I found a new job, ironically as a financial counselor at a nonprofit called Clearpoint, which later became part of Money Management International. I was grateful to have a job with all the layoffs and downsizing across the country, but my new salary was significantly less than when I had purchased my home. I was one of the millions of Americans experiencing underemployment during a recession. 

An Obama-era federal housing stability program was a significant part of my recovery. While I was not behind on my mortgage payments, I was struggling to balance all the financial commitments that come with homeownership. On top of adjusting to the true cost of owning a home, I also had student loans and credit card debt. 

The Home Affordable Modification Program (a now-expired program known as HAMP) reduced my loan interest rate and made the monthly payment much more affordable. In addition, annual incentive payments were applied toward the balance over the course of the modification, helping to reduce the principle. I was so grateful that I volunteered to share my story to promote the program and, as a counselor, encouraged my clients to apply. 

Now, more than a decade later, I have just sold the home I so desperately tried to keep during the Great Recession and am moving on to the next chapter in life. Thanks to a lot of hard work and a timely housing stability intervention, I was able to protect my credit and make my homeownership a success. 

Last fall, I shared my experience once again with Money, in the hopes that it helps others find the encouragement and support they need during the current economic downturn. For those experiencing housing instability, whether due to the pandemic or any other unique situation, you aren’t alone. There are programs available to help you through difficult times. The best way to start is to openly communicate with your lender or landlord and connect with a nonprofit housing counselor right away. Help is just a click or phone call away.

Debt repayment is a marathon, after all. Most of us are always working on at least one debt, and when you’re juggling multiple debts, it’s smart to wonder which debt to target first. If building your credit score is your top money goal, it’s helpful to understand how debt impacts your score, so you can make an informed decision on how to tackle that debt.  

Standard disclaimer to start: there’s never any guarantee that any credit-related action you take will improve your credit score by any amount. We know in a very general sense what most major credit scoring models use as a basis of their calculation, but the actual formulas used are complex and proprietary. It takes a long time and a lot of hard work to build a great credit score. 

UNDERSTANDING HOW DEBT IMPACTS YOUR CREDIT

To begin, here’s a quick reminder of the major factors examined in the FICO scoring model, which is one of the more popular, widely-used models: 

• Payment history (35 percent) 
• Amount owed to all creditors (30 percent) 
• Length of credit history (15 percent) 
• Amount of new credit (10 percent) 
• Types of credit in use (10 percent) 

As you can see, how much you owe is the second most important factor in your score. Assuming that you’ve been able to make your monthly payments consistently and haven’t opened a ton of new accounts recently, simply paying down your debts is the likely the most impactful thing you can do for your credit score.

REDUCE YOUR CREDIT UTILIZATION RATIO 

Your credit score judges your “amount owed to creditors” level not as a measure of your overall debt, but as ratio of debt to available credit. If you used $5,000 of a $10,000 credit limit you would have the same credit utilization ratio (50 percent) as someone who used $500 of a $1,000 credit limit. 

Generally speaking, the lower your credit utilization ratio is the better it is for your score. Most experts suggest trying to stay below 30 percent utilization, with your score likely to suffer once you go over 50 percent. 

It’s important to note, however, that FICO factors credit utilization in two ways – on an account-by-account basis and as an overall reflection of your debts and limits. This means that if the utilization ratio is low on most of your cards, but one of your accounts is close to maxed out, that will likely have a negative impact on your score. 

So, if you have multiple credit cards and you’re trying to decide where to concentrate your repayment efforts, check the limits on each card. If you’ve got any accounts where you’re using more than 50 percent of the available limit, that may be where you want to start. If the utilization ratio is below 30 percent for all of your cards, then you may want to focus on whichever account has the highest interest rate. 

LINES OF CREDIT VS. CREDIT CARDS

When it comes to lines of credit, it can be tricky to pin down their impact on your score. Different scoring models use different rules and they can vary pretty wildly. 

The confusion is in how you classify the line of credit – as revolving credit or as an installment loan. Only revolving credit accounts are factored into your credit utilization ratio. Installment loans are considered differently. 

A regular line of credit, like a business line of credit, is usually considered to be revolving credit and would be treated exactly the same as a credit card. 

A home equity line of credit (HELOC), however, may be considered revolving credit or an installment loan. In many cases it depends on the size of the available credit. A general rule of thumb is that a HELOC over $50,000 is usually factored as an installment loan, while anything below that is considered a revolving line of credit. 

So which should you pay off first? Again, it’s difficult to know for sure. I would suggest that if your line of credit is on the smaller side, treat it the same as a credit card and use the rules listed above. If it’s a relatively large HELOC, it’s probably in your best interests to pay the credit card debt first. 

And while we didn’t address it here, the same goes for mortgages, car loans, and student loans – if credit building is your focus, work on reducing your credit card debt, while keeping your loans current.

The IRS debuted on Monday its new non-filer sign-up tool so families can ensure they’ll get the credit and monthly payments starting July 15.

In addition to enrolling for the child tax credit, the tool will help people register for their third $1,400 economic impact payment as well as claim the recovery rebate credit if they did not receive previous stimulus checks they were eligible for, according to the agency.

“We have been working hard to begin delivering the monthly Advance Child Tax Credit to millions of families with children in July,” IRS Commissioner Chuck Rettig said in a statement. “This new tool will help more people easily gain access to this important credit as well as help people who don’t normally file a tax return obtain an Economic Impact Payment.”

The new portal is only for people who have not filed a 2019 or 2020 tax return and who did not use the IRS non-filers tool in 2020 to register for economic impact payments. With the online tool, people will be able to give the IRS their personal information, including name, address and Social Security number, as well as details about their children ages 17 and under and their direct deposit information.

The portal was developed by Intuit and delivered through the IRS Free File Alliance.

One more IRS portal is coming

Another portal set to launch later in June will help families who have filed a 2019 or 2020 tax return that’s been processed by the agency give more current information about their household. This is important for families who have more eligible children in 2021, have had a change in marital status or a significant drop in income — all of which could mean they’re owed larger monthly checks through the credit.

This portal will also allow families to opt out of receiving the monthly payments, meaning they’ll get the full credit amount when they file 2021 taxes, as the monthly payments are an advance on a 2021 tax credit.

The child tax credit was enhanced by the American Rescue Plan, signed into law by President Joe Biden in March. The new credit increases the annual benefit per child age 17 and younger to $3,000 from $2,000 for 2021. It also gives an additional $600 benefit for children under the age of 6.

The full expanded benefit is available to all children 17 and under in families with 2020 or 2019 adjusted gross income of less than $75,000 for single parents and $150,000 for a married couple filing jointly, and ends for individuals earning $95,000 and married couples filing jointly making $170,000, though they’d still be eligible for the regular child tax credit.

For families getting the full credit, payments will be $300 per month for children under the age of 6 and $250 per month for those between the ages of 6 and 17.

Most families — roughly 80% — will get the payments via direct deposit on the 15th of each month, unless the day falls on a weekend or a holiday, according to the IRS. Those without direct deposit information will receive either paper checks or debit cards, the agency said.

The monthly payments will continue through the end of the year. When families file their 2021 tax return next year, they’ll get the second half of the enhanced credit as a refund. If families don’t send the IRS updated information that would have led to a larger monthly payment, they can claim the rest of the credit they’re owed when they file 2021 taxes.

The answer for some may be short-term disability insurance. Should you fall ill, become diagnosed with a medical condition, or get into an accident that prevents you from working for awhile, short-term disability can replace some of your income until you’re back on your feet.

“Short-term disability is important because it can protect your savings and investment accounts in the chance that you are temporarily unable to work due to a disability,” says Ben Smith, founder and financial planner of Cove Financial Planning. “Without coverage, many people are forced to take on debt, draw on their cash reserves, or worse, their retirement savings, in order to pay bills and living expenses in an instance where they are not earning an income due to a disability.”

Nearly every worker could potentially benefit from having short-term disability insurance, but there are some instances where having that extra protection is even more important.

YOU’RE SELF-EMPLOYED

If you work for yourself or have a small number of employees, you’ll definitely want to consider getting short-term disability insurance. 

“Doctors, veterinarians, CPAs, and similar professionals who have their own practices are often self-employed and may not have the coverage, and also may be earning high incomes that lead to expensive month-to-month lifestyle costs,” says Ian Bloom, a CFP® and Financial Life Planner for Nerds. “In some cases, a disability would exhaust their savings rather quickly.”

You’ll also want to consider short-term disability insurance if you’re a full-time freelancer. Freelancers don’t get sick leave or get coverage through an employer. So if they’re unable to work, and their cash flow takes a halt, it could put them in financial peril.

YOU DON’T HAVE ENOUGH IN SAVINGS

It might be okay to forego short-term disability coverage if you have six months worth of income in savings, as well as a considerable cushion beyond that, points out Bloom. When figuring out whether you have enough in savings to cover your living expenses when you’re disabled, keep in mind that if a disability occurs, you’ll likely have medical expenses — doctors’ visits, treatments, medication — in addition to your regular monthly expenses.

On the flip side, let’s say you have a large cash reserve. In that case, you might not need short-term disability. “This means that they may be able to ‘self-fund’ a potential temporary loss of income during a disability,” says Smith. And if your spouse or partner has a high-income job, and they can cover household expenses for a short time, you may not necessarily need to be covered with short-term disability.

“Every situation is different, so it’s important to learn about your unique options and needs,” says Smith.

YOUR EMPLOYER DOESN’T OFFER IT

If your employer doesn’t offer short-term disability, it might be worth looking into getting it on your own. And even if your employer does offer short-term disability insurance, it might not be enough for your potential financial needs. 

To gauge this, review the coverage amounts and terms with your employer. You’ll also want to assess what your current living expenses are, and tack on additional expenses for medical treatment. If the current coverage doesn’t match your costs, you may need add additional coverage on your own.

TIPS FOR SHOPPING FOR SHORT-TERM DISABILITY

A few pointers if you’re thinking of hopping on a short-term disability plan:

LOOK FOR COVERAGE THROUGH YOUR EMPLOYER FIRST

You might be able to get coverage through your employer, which is typically less expensive than buying a private plan, explains Smith. What’s more, it’s usually easier to get coverage through a group plan. When it comes time to re-up on your company benefits, be sure to ask about short-term disability coverage if that’s something you’re interested in.

SEE IF THE STATE YOU LIVE IN OFFERS SHORT-TERM DISABILITY

Only five states in the U.S. offer their own short-term disability programs: California, Hawaii, New Jersey, New York, and Rhode Island. The coverage amounts and time periods vary. Even if you live in a state that offers it, you might still want to get additional coverage to make sure you have enough to live on should you need it.

CHECK THE ELIMINATION PERIOD

An elimination period is the amount of time you must wait until your insurance coverage kicks in. For example, a 14-day elimination period means you must wait 14 days after you become disabled before receiving any benefit from the plan. Elimination periods for short-term disability are usually are typically 7 or 14 days, while some might be up to 30 days. “In most cases, the longer the elimination period, the lower the cost of insurance will be,” says Smith.

And even if you hop on a short-term disability plan, you could still need some cash reserves to cover your expenses until the elimination period ends.

If you took out a mortgage, you borrowed money to purchase your home and put up the home as collateral. Foreclosure is the legal process that allows the lender to repossess a home when borrowers fall far enough behind on their payments.

Facing eviction and losing the time, equity, and love you’ve put into a home can be a sad and scary prospect. But it’s important to remember that even if you’re months behind on your mortgage payments, there may be ways to remedy the foreclosure and keep your home. Or, if your goal is to move to a more affordable home, there could be alternatives to foreclosure that can save you money, time, and may not hurt your credit as much.

In either case, understanding the process can help homeowners identify where they stand and their options.

WHAT HAPPENS DURING FORECLOSURE?

Foreclosures can be governed by a combination of federal, state, and local laws. The foreclosure process, relevant terms, laws, your rights, and the timeline can, therefore, vary depending on where you live and the agreement you have with a lender. However, the processes tend to follow a similar path:

THE BORROWER MISSES A MORTGAGE PAYMENT

Missing a single payment won’t immediately lead to losing your home, but it’s the first step towards a foreclosure. Once a borrower misses a payment or pays less than the total amount due, the mortgage could become delinquent.

The lender, mortgage service or a collection agency may start reaching out to the borrower to inform them of the missed payments. It may also notify you of different options you have to help avoid foreclosure and keep your home.

THE LENDER SENDS A DEFAULT NOTICE

The timeline can vary, but often around three to six months after you miss a mortgage payment, the lender will send a letter or notice that your loan is in default. The notice may also tell you how much you currently owe, including past-due payments and fees, and how long you have to bring your loan current.

The notice could also be posted on the door of the home and a record of the notice might be filed with the local county office. You may see this letter referred to as a Notice of Default or lis pendens (“suit pending”).

PRE-FORECLOSURE BEGINS

If you don’t bring your loan current by the deadline, the lender can begin the foreclosure process. The pre-foreclosure period may be one to several months long, during which you still have options to avoid the foreclosure by repaying the amount owed, selling your home, modifying your loan, or coming to another agreement with your lender.

THE FORECLOSURE PROCESS OFFICIALLY STARTS

The lender may be able to pursue different types of foreclosures:

JUDICIAL FORECLOSURE

A judicial foreclosure is an option in every state, but isn’t required everywhere. The judicial foreclosure process goes through the courts, and you will be sent a notice of the pending lawsuit. If you don’t respond, the lender will win a default judgment. Generally, if the lender wins the suit, an auction date for the home will be chosen, and the local court or sheriff will then sell the home at the auction.

NONJUDICIAL FORECLOSURE

Some states allow lenders to pursue a prescribed foreclosure process outside of the courts. The process can vary, but often takes at least a month and involves one or more notices informing you of how much you owe, how you can bring the mortgage current, and when the home will be put up for sale.

THE HOME IS OFFERED FOR SALE

Either the lender, a representative of the lender, a local court, or the sheriff may sell the home via an auction. Or, in some cases, the lender simply takes ownership of the home. The lender will also become the owner if the home isn’t sold at the auction.

Depending on the state, you may have the right to repay the entire amount due and reclaim your home as long as the auction hasn’t ended. In some states, you may even have the right to buy the home back after it was sold at auction.

THE BORROWER IS ASKED TO LEAVE OR IS EVICTED

Once a new entity takes ownership of the home, you may receive a notice that you have to leave the house. You could have anywhere from a few days to several weeks to vacate, and sometimes a new owner will offer you money to move out quickly and leave the home in a good condition.

If you don’t leave, the new owner may take steps to forcibly evict you. The eviction process could also take several days to several months. Although you’ll be able to stay in the home longer, having an eviction on your record could make it harder to find a rental in the future.

YOU MAY HAVE OPTIONS IF YOU’RE FACING FORECLOSURE

Foreclosure doesn’t happen overnight, and the lengthy process isn’t a desirable outcome for borrowers or lenders.

Generally, acting sooner is better than waiting. Even if you haven’t missed a payment yet, reaching out to your lender and letting it know you expect to have trouble in the future could be a helpful first step that leads to avoiding foreclosure proceedings altogether.

Your lender may have programs that can temporarily, or sometimes permanently, lower your monthly payments. The U.S. Treasury Department and Department of Housing and Urban Development (HUD) also have many programs aimed at helping borrowers avoid foreclosure.

As the process and programs can vary depending on where you live and your mortgage agreement, speaking with a trained professional is often be a good idea. Some attorneys specialize in housing cases, including foreclosure defense, that may be able to help.

For those with federally-backed mortgages, the CARES Act suspended potential foreclosure until May 2021, and created a path to extended mortgage forbearance for those who needed to divert their mortgage payments to other essentials.

According to a study from the New York Federal Reserve, by May 2020 approximately 7% of all mortgage accounts were in forbearance. American homeowners had jumped at the chance to push back their mortgage payments until they had a clearer picture of how COVID-19 was going to impact their finances.

Interestingly, that broad interest didn’t last. The New York Fed found that by June 2020 the trend was already reversing, with more consumers exiting a forbearance than entering one. As of March 2021, the forbearance rate was 4.2% of mortgage accounts. 

The concerning issue, however, is not the overall number of mortgages in forbearance – it’s that the homeowners currently in forbearance don’t seem well positioned to recover once their forbearance ends. Per that New York Fed study, the households taking advantage on the extended forbearance period are more likely to:

• Be first-time homebuyers
• Live in lower-income areas
• Be one or more months past due on their mortgage payments

While overall forbearance numbers are down, the majority of those currently on a mortgage forbearance entered their forbearance on or before June 2020. In other words, there is a worryingly large population of homeowners who were struggling with new mortgages before the pandemic began, who’ve been on a forbearance since they were first available, and who will likely only come out of forbearance when their 18 months is up.

So what should these and other homeowners do to prepare for the end of their forbearance?

REFINE YOUR POST-FORBEARANCE BUDGET

Whether you’re making payments during your forbearance or not, it’s crucial that you understand what life is going to look like financially once your forbearance ends. Review your spending. Consider any other expenses that may be currently paused, but will need to be factored into your budget.

If you’ve got the income necessary to handle your full mortgage payment, then you’re all set. But if you’re coming up short you may need to consider taking additional steps to ensure that you don’t fall (further) behind.

PURSUE A REFINANCE

Depending on the status of your loan and your overall credit profile, you may be able to qualify for a mortgage refinance. Per the Federal Housing Finance Agency (FHFA), even if you’re currently in forbearance, you may be eligible for a refinance as long as you’ve made at least three consecutive monthly payments.

Of course, a refinance may extend the length of your repayment period and there are additional costs to consider, but if your goal is to stay in your house and your post-forbearance mortgage payments won’t allow that, then it may be the best path forward.

PREPARE TO SELL YOUR HOME

Home prices are skyrocketing at the moment. That’s bad for prospective homebuyers, but great for home sellers and may provide a potential solution if your post-forbearance outlook isn’t positive. 

What you don’t want is to be forced to sell your home after falling behind on your payments. If downsizing your home or becoming a renter (at least until prices begin to fall) is the best way to stabilize your budget, it’s better to be proactive.

WORK WITH A HOUSING SPECIALIST

If you’re concerned about your mortgage – no matter what your forbearance status might be – you should consider working with a HUD-certified housing counselor. MMI’s housing experts can help you review your options and get you started on the best path for you, your home, and your financial stability. 

If you’re not sure if your problems can be solved with better budgeting, or whether or not it makes sense to refinance or sell your home, a housing counselor can help. 

Dreaming about your ideal home is all well and good, but once you find the perfect home, will you be able to get a mortgage for your forever home? If you ever want to make your homeownership dreams a reality there are a few actual, proactive steps you should be taking to make yourself the kind of borrower lenders dream of working with.

USE CREDIT AND USE IT CORRECTLY

First, let’s establish two crucial facts. One, lenders hate risk. And two, mortgages – by the simple nature of their size – are risky.

Lenders are looking for low risk applicants. They’ll almost certainly dive into your financial history and employment status to get an accurate picture of how reliable you may be, but that deep dive usually begins (and sometimes ends) with your credit report and score.

Having a low credit score will often disqualify you immediately from many types of loans (and certainly from most loans with favorable terms). If you’re interested in buying a home someday – even if that day is years in the future – start using credit wisely today. The only way to build a strong credit history is by using credit. You don’t have to carry a balance and you don’t have to go into debt. You simply need to have a few open credit accounts that you use regularly and repay immediately.

KEEP ALL YOUR ACCOUNTS IN GOOD STANDING

Lenders want to feel confident that you can be relied upon to pay them back as promised. There are a lot of factors they’ll consider on that front, but perhaps the most critical bit of evidence is whether or not you’ve been reliable in the past. That extends to all financial obligations. Have you made your required payments, on time and in full?

Minor slip-ups happen, so one mistake doesn’t mean you’ll never get that dream house. But the more thoroughly you can demonstrate that you take your obligations seriously and follow through on your commitments, the more comfortable lenders will feel giving you a mortgage without astronomical fees and sky high interest rates.

REDUCE OR ELIMINATE YOUR OTHER DEBT OBLIGATIONS

Repaying your debts (and not creating new ones in their place) serves two purposes. It usually helps build your credit score, and it will reduce your debt-to-income ratio. We’ve already discussed why having a higher credit score can help you, so here’s what you need to know about your debt-to-income (DTI) ratio:

Debt-to-income ratio captures the percentage of your monthly income that’s eaten up by debt repayment. If you have a lot of debts and they take up a high proportion of your income, that makes you risky to potential lenders. When debts already consume so much of your paycheck, it becomes more and more likely that you’ll eventually falter and struggle to repay all those debts.

Many lenders may even have pre-established cutoffs, where if your DTI goes above a certain percentage (over 40 percent is usually a red flag for most lenders), your application will be automatically denied. That’s why it’s a good idea to focus heavily on debt repayment before getting ready to purchase a new home.

BE FINANCIALLY CONSISTENT

Financial fluctuation is not your friend – at least not when you’re trying to buy a home. Lenders prefer applicants that make a consistent income, with consistent expenses, living a consistent financial lifestyle. That kind of consistency (preferably over a stretch of two or more years) make it easier for lenders to forecast your ability to repay.

If you’re self-employed and find that money tends to come and go, buying a home is not impossible. It just means you need to do your best to strengthen the other six areas discussed in this article.

STAY IN YOUR JOB

As an offshoot of financial consistency, it helps quite a bit to be stable in your employment. The longer you’ve been in your current job, the better (from an underwriting perspective).

Of course, the job market isn’t quite what it once was (Americans now stay in a job for an average of less than five years – and even that is continually shrinking), and it’s relatively rare for anyone to stick with a job from day one to retirement. So don’t fret and worry that you need to stay in a less than ideal job situation for the sake of your dream house. Just keep in mind that if you just started a new job, you may want to wait at least six months (if not the recommended two years) before applying for a mortgage.

BRING CASH – LOADS OF IT

Having cash up front is a great way to reduce a lender’s risk and earn more favorable terms for yourself. How much do you need? Well, as much as you can reasonably afford.

Having a large down payment can help you on two fronts. First, if you have at least 20 percent of the loan’s value to put down up front, you can avoid having to purchase private mortgage insurance (PMI). Lenders require PMI (on top of your regular homeowners’ insurance) in instances where the borrower has less than 20 percent equity in their home. As with most things “loan,” this is done to help mitigate the lender’s risk.

Secondly, a borrower with plenty of cash on hand is just generally more appealing for a lender. The more equity you can start with, the less risk there is for the lender. Of course, you don’t want to invest more up front than you can reasonably afford, and you definitely don’t want to sink all of your available savings into your home. You can’t easily access that equity if there’s ever an emergency, so make sure you’ve got an adequate emergency savings built up and close at hand.

STAY MODEST

I know we’re talking about “dream homes” here, but you can do yourself a big favor by keeping your dreams at least somewhat restrained. Ultimately, when a lender is considering whether or not to extend you a mortgage, they’re asking themselves, “Will this person be able to repay the debt on time, in full, and as agreed upon?” The bigger, grander, and more expensive the house, the more likely it becomes that you may one day struggle to make your payments. 

So while it’s okay to dream, try to dream in moderation. If you look at the costs of your dream home, grit your teeth, and say, “I think we can make this work,” it might be in your best interest to keep looking until you find something a little less expensive.

The payments are an advance on the annual child tax credit, which – under normal circumstances – is factored into your annual tax return, and would be distributed as part of your tax return (if applicable). Instead, a portion of the tax credit will be delivered to eligible households throughout the course of the year, with the intention of helping families (and specifically children) who need the money right away. 

WHO’S ELIGIBLE FOR THE CHILD TAX CREDIT ADVANCE?

Similar to the coronavirus stimulus payments, eligibility is based primarily on your most recent reported annual income. You may still be eligible for some amount of the tax credit if your income is over the threshold, but not the full amount.

The income cut-offs are:

• Individuals – up to $75,000
• Single parent head of household – up to $112,500
• Married couples filing jointly – up to $150,000

If you make less than the stated maximum for your filing status and you claimed an eligible child on your tax return, you should expect to receive your first payment on July 15.

It’s important to note that the credit is fully refundable. You don’t need to have earned income (or owe income tax) to qualify.

HOW MUCH WILL YOU GET FROM THE CHILD TAX CREDIT ADVANCE?

In addition to authorizing advanced payments on the credit, the American Rescue Plan of 2021 also increased the maximum tax credit amount per child. The tax credit is now $3,600 for children under 6, and $3,000 for children 6 and up. The credit amount was previously $2,000 per child.

The advance will be 50% of your total credit, spread out over 6 monthly payments. The remaining credit amount will be factored into your 2021 tax return. 

Your child’s age on December 31 is key. Children who turn 18 before the end of 2021 aren’t eligible. Similarly, children who turn 6 before the end of the year won’t be eligible for the higher credit amount.

WHAT DO YOU NEED TO DO TO GET YOUR CHILD TAX CREDIT PAYMENT?

If you haven’t yet filed your 2020 tax return, be sure to do so as soon as possible. The IRS will use your 2020 return to calculate your credit amount. 

If you’ve already filed your taxes, you don’t need to do anything. The IRS will make payments by direct deposit, paper check, and debit card (you will very likely receive payment the same way you received your stimulus payment).

If you don’t want to receive this advance, the IRS will be providing a way to opt out of these payments. Be sure to check IRS.gov as we get closer to July 15.

Between car loans, mortgages, student loans, credit cards, medical bills, and so on, if you’re participating in society, you’ve probably got debt.

But just because you’re carrying debt, doesn’t necessarily mean that you consider yourself to be “in debt,” right? Which raises the question: exactly when do you go from simply having debt, to being “in debt?”

Honestly, there’s no one correct way to look at it. There are, however, three criteria that can help you decide if you’ve just got debt, or if debt’s starting to get you.

YOUR DEBT’S EATING TOO MUCH OF YOUR BUDGET

A healthy financial ecosystem requires a balance of give and take. In other words, money comes in and money goes out. That’s all perfectly normal. 

And debt can be a perfectly healthy part of that flow. The question, though, is whether or not your debt is consuming too much space in your budget. 

What’s too much? There’s no hard and fast rule, but 36% is a popular rule of thumb. What that means is that you don’t want your non-mortgage debt payments to account for more than 36% of your income. 

Of course, the cost of living varies depending on where you live, and so it may be easier (or harder) to carry more debt depending on what your other costs look like. But generally speaking, if your debt-to-income ratio is nearing (or exceeding) 40%, that’s a warning sign, and you may well and truly be in debt.

Use this calculator to see how much of your income is devoted to debt repayment.

YOUR DEBT’S COSTING YOU WAY MORE THAN IT’S GETTING YOU

Quite a bit of debt is a form of investment. A house is an investment. A college education is an investment. A car is an investment (although one that depreciates alarmingly fast).

Ideally, the money we spend should come back to us in some way, either as more money, as good health, as peace of mind, as increased opportunities, etc. You may not like the amount of student loan debt you’re carrying, but if it helped you land a high paying job, you probably don’t think of it negatively.

On the other hand, if you’ve got a massive student loan bill and the career opportunities are slim pickings and you’re barely scraping by, then you may not think too kindly of that debt.

Generally, when a debt’s just creating more costs and not offering any tangible value, it’s more likely to feel like a burden, while you – by extension – feel deeply in debt.

YOUR DEBT’S CONSUMING TOO MUCH MENTAL AND EMOTIONAL REAL ESTATE

Finally, you don’t necessarily need an equation to determine if you are or aren’t “in debt.” You probably already know, simply based on how your debt makes you feel.

• Do you think about your debt regularly?
• Do you worry about your debt (enough to read articles about whether or not you’re technically “in debt”)?
• Do you fantasize about a life without debt?

A healthy amount of debt shouldn’t give you heartburn and it shouldn’t be something you think about much more than once or a month or so. No matter what the numbers say, if your debt is sticking with you and causing you regular distress, that’s enough to say that your debt is a problem.

Ultimately, being in debt is more about whether or not your debt is preventing you from living the life you want. If your debt is a barrier to better options or a weight that’s keeping you from making progress, it doesn’t really matter what you call it – it just matters that you get rid of it.

It’s a great question, because there are two totally unrelated issues at stake when it comes to an old debt like this: the impact on your credit and your legal responsibility to the debt in question. 

NOTHING WILL CHANGE HOW LONG AN ITEM STAYS ON YOUR CREDIT REPORT

There’s a fairly common misconception that you can inadvertently “reset the clock” on delinquent items on your credit report. Just when you thought it was going to disappear from your credit report, you make a critical mistake and now your credit report (and credit score) gets dinged for another seven years. Fortunately, that’s not possible.

The Fair Credit Reporting Act was amended in 1996 specifically to prevent unscrupulous collectors from taking actions that kept delinquent items alive on your credit report for years and years and years. 

Now it’s pretty cut and dry. The reporting period runs for seven years and 180 days from the date of the last delinquency or missed payment. It doesn’t matter when the account was charged off, when it was sold or if you ever paid a single penny towards the debt. That means that if you missed a payment due date over seven and half years ago, and never made any payments from that point, the account in question is very likely to have fallen off of your credit report by now. 

(As an aside, it’s important to remember that even if you pay off an account all delinquencies still stay on your credit report until the reporting period is over. The difference is that the account is listed as paid, rather than unpaid, which is definitely better for you.)

THE STATUTE OF LIMITATIONS CAN RESET WITH CERTAIN ACTIONS

The idea of “restarting the clock” comes from the statute of limitations for collecting on a debt and has nothing to do with how the debt is reported by the credit bureaus. Broadly speaking, once the statute has expired, your legal responsibility to repay the debt goes with it.

The statute of limitations is set by each state, so the timeframe varies. It’s completely separate from your credit report. In fact, if you live in a state where the statute is greater than 7 years, a collector could sue you for a debt that’s already fallen off of your report.

The statute of limitations in your state doesn’t protect you from being sued, necessarily, but if you can prove that the applicable statute has expired, you should be able to get your case dismissed.

Crucially, making a payment, agreeing to a repayment plan, or, in some instances, simply confirming that the debt is yours can revive the debt and restart the clock. So it’s important that you know whether or not the applicable statute has expired before making a decision.

THERE ARE RARELY DRAWBACKS TO PAYING OFF AN OLD DEBT

So what should you do about an old debt? The answer really depends on your unique circumstances. 

Generally, if you have the funds to pay off a debt they’re really aren’t many drawbacks to doing so. It certainly won’t hurt your credit to pay off an old debt, and while it may “revive” the debt that really doesn’t matter once the debt’s paid off (just make sure you keep adequate records of everything). 

Either way, your old delinquency will fall off your report after seven years regardless of what you decide to do (or not do). But in the meantime, anyone looking at your credit report will see that unpaid debt. If you’re considering getting a loan or looking for a new job or even moving into a new home or apartment, it might be worth it just to be certain that you don’t miss out on something good because of a really old debt.

President Joe Biden has said he supports canceling $10,000 in student loans per borrower.

Facing pressure from other Democrats, progressives and borrowers, Biden has now also asked his Education secretary to prepare a memo on his legal authority to wipe out as much as $50,000 each for all.

“I think the odds of some student loan forgiveness being enacted is as good as it has ever been,” said higher education expert Mark Kantrowitz.

Still, nothing is certain, and many borrowers have a lot of questions while they wait to learn the fate of their debt, which can impact everything from when and if they’re able to buy a home to the careers they pursue.

Here are some answers, based on what we know at the moment.

When could forgiveness happen?

If Biden chooses to cancel the debt through executive action, in theory borrowers could see their balances reduced or eliminated pretty quickly. But such a move may be met by court challenges, which could lead to delays.

A clearer picture may soon emerge.

“If Biden decides he can do it via executive order, I expect we’ll hear about it by June or July,” said Betsy Mayotte, president of The Institute of Student Loan Advisors.

If the White House opts to leave student loan forgiveness to Congress, Democrats would likely use the budget reconciliation process to get it done.

That’s because that process allows them to pass legislation with a simple majority, which is all they have. Other bills typically must garner 60 votes to advance, thanks to Senate procedural rules. Republicans are largely hostile toward the idea of a student debt jubilee.

The next budget reconciliation process will likely be in the fall.

Can I count on my student loans being forgiven?

Although the odds of student loan borrowers getting their balances reduced or eliminated have never been greater, “until legislation is signed into law, you can’t count on anything,” Kantrowitz said.

Currently, there are pending reports from the U.S. Department of Education and the Justice Department on whether the president has the legal authority to implement loan forgiveness through executive action, Kantrowitz said. It’s still unclear when the findings will be published.

In the meantime, he added, “borrowers should not take any precipitous action in anticipation of loan forgiveness.”

How much could be forgiven?

At the moment, the main point of contention among student loan forgiveness proponents is over how much debt should be scrapped: $10,000 or $50,000.

If all federal student loan borrowers got $10,000 of their debt forgiven, the outstanding education debt in the country would fall to around $1.3 trillion, from $1.7 trillion, according to Kantrowitz. And roughly one-third of federal student loan borrowers, or 15 million people, would see their balances reset to zero.

Setting aside whether or not $600 is an adequate amount, most Americans are grateful to get something after months of financial hardship and uncertainty. The problem, however, is that some recipients aren’t getting their payments because they’re hitting closed or incorrect accounts. If you’re still waiting on your check, here’s what you need to do:

VERIFY THAT YOU HAVE A PAYMENT COMING

For starters, are you eligible for a stimulus payment? If you received money during the first round of economic impact checks back in the spring of 2020, you’re almost certainly eligible for the second payment, which is $600 per U.S. citizen or resident alien, plus $600 per qualifying child. (If you filed taxes jointly with your spouse, you’ll receive $1,200 for the pair of you.)

The amount of your stimulus may be reduced if your adjusted gross income (AGI) is too high. Per the IRS, you’ll get the full amount as long as your AGI does not exceed:

• $150,000 if married and filing a joint return or if filing as a qualifying widow or widower;
• $112,500 if filing as head of household; or
• $75,000 for eligible individuals using any other filing status.

Over the threshold? You may still get a check, but the payment will be reduced by “5% of the amount by which your AGI exceeds the applicable threshold.”

CHECK WHERE YOUR PAYMENT IS HEADED

Payments are going out digitally and by mail, with most direct deposit payments already out the door and in accounts by now. There was no action required on your part, by the way – just like before, payments were sent out automatically based on the info from your 2019 tax return.

To verify the status of your particular payment, use the IRS’ Get My Payment tool. This will tell you the where and when of your stimulus payment. The IRS really doesn’t want you to call (they don’t have the capacity to help over the phone), so this online tool is your best bet for up-to-date info.

YOUR TAX PREP PROVIDER MAY HAVE YOUR FUNDS

Because payments on both stimulus checks are tied to your most recent tax return, if you used a third party tax prep company like H&R Block or Turbo Tax, your money may have ended up there. 

H&R Block has already announced how they plan to handle client payments, while Turbo Tax’s parent company issued a statement noting that they would reject any stimulus payments back to the IRS (note – this doesn’t mean your money is gone, it just means Turbo Tax doesn’t want to be responsible for handling these payments).

Long story short: if you used a tax prep service and it looks like that’s where your payment was sent, be sure to check their website or contact their customer service for more info.

CHECKS WON’T BE REISSUED

If your check is headed to the wrong place or was deposited into a closed account, you can still get your funds, but it may not be as immediate as you’d like.

The IRS has already stated that they won’t be able to reissue any checks. Instead, if you were due a payment and it never made it to you, you’re advised to claim the “Recovery Rebate Credit” on your 2020 tax return. Technically, this stimulus payment is already a tax rebate, but most of us will receive it in the form of an advance. By claiming the credit on your tax return, you’ll either see your refund increase by the amount owed to you, or have your tax bill decrease by the amount owed.

After having waited so long for this assistance, it’s understandably upsetting to have to wait even longer to receive your share, but unfortunately that seems to be the only option. Be sure to prep and file your taxes early this year to get access to any funds owed to you.

For this year only, the credit amount for many families is increased from $2,000 per child to $3,000 per kid ($3,600 for children under age six), 17-year-olds qualify, and the credit is fully refundable.

One additional major element of the new child tax credit regime requires the IRS to make advance payments of the credit to qualifying families in 2021. The IRS will base eligibility for the credit and advance payments, and calculate the amount of the advance payment, based on previously filed tax returns. It will first look to your 2020 return, and if a 2020 return has not yet been filed, the IRS will look to your 2019 return. The advance payments will account for half of a family’s 2021 child tax credit. The amount a family receives each month will vary based on the number of children in the family, the ages of the kids and the amount of the family’s adjusted gross income. Families who qualify for the full $3,000 or $3,600 credit could see checks of $250 or $300 per child for six months. Families with higher incomes who qualify for the $2,000 credit will get monthly payments of $167 per child for six months. 

The American Rescue Plan also requires the IRS to develop an online portal so that you can update your income, marital status and the number of qualifying children. So, if your circumstances change in 2021 from your last filed federal tax return, and you believe those changes could affect the amount of your child credit for 2021, you would be able to go onto that portal once it is up and running and update it for the correct information. Also, people who want to opt out of the advance payments and instead take the full child credit on their 2021 return could do so through that same online portal.

RS Commissioner Charles Rettig said today in testimony before Congress that the IRS fully expects to launch the portal by July 1 as required under the law, with advance payments going out on a monthly basis to eligible families beginning in July. That means many families who qualify for the child tax credit should receive six payments in 2021, one each month from July through December. This is very good news because just last month Rettig warned that the IRS might not be able to have the portal set up in time and that sending monthly payments out would be difficult. Rettig acknowledged today that the IRS is not historically an agency that is used to sending out periodic payments and that there is a lot of work still to be done in creating this huge undertaking. He estimates that a minimum of 300 to 500 agency employees will be involved in the program. He also said that, though the online portal will be launched by July 1, it is sure to need future enhancements and adjustments as taxpayers begin to enter data into the tool. In other words, don’t be surprised to see snags, at least in the beginning.

Not so fast. In some cases, paying a debt off early doesn’t save you all that much money. Let’s take a look at the pros and cons of paying down debt before you have to.

Pro: You’ll save thousands of dollars in interest

You can’t take out a loan without paying interest. You also can’t carry a credit card balance without paying interest. And the longer you owe money, the more interest you’ll pay. Let’s say you buy a car for the price of $25,000, and you borrow $20,000 at an interest rate of 3 percent on a 60-month loan. That could mean more than $1,500 in interest payments over the course of five years. What a waste, right?

So whether it’s a car loan or credit card debt, the sooner you wipe it out, the more money you’ll save in interest payments, and depending on the balance, this could mean hundreds or even thousands of dollars.

Con: You may have paid off most of the loan interest already

Most loans have something called an “amortization schedule” that maps out how much you’ll pay in interest and how much you’ll pay in principal each month. With many loans — especially mortgages — you pay most of the interest in the early years and pay mostly principal later on.

For example, let’s say you have a 30-year loan of $300,000 with a 5 percent interest rate. Using this handy amortization calculator, this means you’ll pay $1,610 per month. (For simplicity purposes, I am not including taxes and insurance in this calculation.) A typical amortization schedule shows that you will pay $1,250 per month in interest payments at first. But toward the end of the lending period, your interest payments are much lower. By the time you have three years left on the loan, you’ll pay a little over $200 in interest per month and it will continue to decline from there.

If you are fairly late in the loan term, there’s not a major financial advantage to paying your loan off early. You’re practically borrowing money interest-free at this point, so you might as well hold onto your cash or use it for something else.

Pro: You free up cash for other things

Your mortgage is $1,500 a month. Your car payment is $200 per month. Your student loan payment is $180. The minimum payment on your credit card balance is $250. If you’re locked into these payments each month, you may not have a lot of money left over for other needs or wants. Debt prevents you from having true financial flexibility. Pay those debts off early, and breathe easier knowing you’ve freed up a significant amount of cash.

Con: You could deplete your emergency fund

Your drive to pay off debt early may be strong, but where is that money coming from? It’s not easy for most people to pay off the $20,000 left on a mortgage in one fell swoop, for example. If you do have that much cash available, you need to make sure it’s not coming out of your emergency fund. It may feel good to pay off a debt, but when you have no money left to cover a medical emergency or job loss, you’re playing a dangerous game. It’s best to keep at least three months worth of living expenses on hand in cash, and avoid the temptation to raid it just to pay off a debt early.

Pro: You’ll sleep better

For many people, carrying debt from month to month is physically and mentally exhausting. It weighs on you. And that’s totally understandable. Everyone has their own comfort level with debt, and if you simply can’t stand the thought of even a small debt burden, pay those loans off in full if you can. In many cases, paying off a debt early offers a mental and financial freedom.

Con: You might stop building credit

Believe it or not, paying off debt early may actually hurt your credit. If you insist on always clearing debts in full long before they are due, you may cease to have enough credit history to get a favorable rating from credit agencies. As long as your debt burden is not too high, making consistent, regular payments on debts and paying bills on time is the best way to build strong credit.

Pop the Champagne (in a safe, outdoor setting) because 2021 is finally here. Even in a pandemic, a new year is an opportunity for a fresh start. Vaccines are coming, the economy is slowly returning to normal, and you’re perfectly poised to improve your financial life.

And Money is here to help.

We’ve compiled a list of the 21 smartest money moves you can make in 2021. Fix your budget, maximize your savings, spice up your resume and more with our guide. While these aren’t necessarily easy, we looked for things that could realistically be accomplished with a few hours (or in some cases days) of effort.

See how many you can complete!

Finance Your Future

1. Get Serious About Saving

If Americans ever doubted the importance of saving, the coronavirus pandemic has made it clear just how necessary a financial cushion can be. A study from the Pew Research Center found that 41% of all adults in the U.S. have had trouble paying their bills and making housing payments since the pandemic began, while a study from Clever found that 61% of Americans said they don’t expect to have any emergency savings by the end of 2020. That’s why in 2021, it’s time to get serious about saving — even if you think you’re already in a comfortable financial position.

Financial advisors often encourage people to follow a 50-30-20 rule when dividing up their take-home pay, with 50% of your income going towards living expenses like rent and groceries, 30% for recreation or entertainment, and 20% going into savings. But for people who are just starting to save (or even those who are already on the right track), jumping from zero to 20 can be a daunting task — and sometimes downright impossible. That’s why it helps to set incremental goals, according to Kristen Euretig, a certified financial planner and founder of Brooklyn Plans.

She recommends starting with a number you can actually commit to, even if it’s just a few dollars and gradually adding more as you get comfortable. For example, start by saving 5% of your monthly income in January and then increase that amount by one percentage point each month. By December you’ll have tripled the money going towards an emergency fund each month. “Saving is a long game, and it’s a situation where the tortoise wins every time,” says Euretig.

— Kenadi Silcox

2. Actually Earn Something on Your Cash

One additional obstacle savers face right now: Low interest rates make it hard to earn much, even in CDs and so-called high-yield saving accounts offered online. The good news is there are better options if you are willing to put in a little extra legwork.

One good place to look is high-yield checking accounts (also known as rewards checking accounts), according to Ken Tumin, founder of DepositAccounts.com. Some of these pay as high as 4% (compared to less than 1% for most CDs). Of course these accounts, mostly offered through credit unions and regional banks, do have some caveats, typically requiring a certain number of electronic transactions per month and limiting the amounts on which they will pay out top dollar.

For example, Consumers Credit Union’s Reward Checking account offers up to 4.09% interest on $10,000 or less, although there are some hefty stipulations. To earn the full amount, members need to make at least 12 monthly debit card purchases and deposit $500 each month. To earn the maximum interest, members also need to spend $1,000 each month using a CCU Visa credit card. However, account holders can opt out of the credit card and still get a comfortable 2.09% APY.

— Kenadi Silcox

3. Reconsider Small Caps 

It’s been hard out there for shares of so-called small-cap companies, those with market values below $2 billion or so. While tech giants like Apple and Amazon have seen business actually improve during the pandemic, smaller companies, whose financial prospects tend to be tied closely to the overall health of the U.S. economy, have struggled mightily: While large-cap stocks have returned 14% over the past three years, small cap core stocks have returned just 8.7%.

The silver lining: Historically, once the economy begins to pull out of a recession, investors tend to warm to small caps and their returns can sling-shot ahead of those of bigger, steadier names. Looking at the past 11 recessions small-cap stocks beat larger ones by more than six percentage points on average, in the six months immediately after the recession ended, according to brokerage firm LPL.

While the U.S. economy isn’t out of the woods yet, the prospect of an effective COVID vaccine has many Wall Street analysts hoping small stocks could turn the corner in 2021. “Small caps may have history on their side,” wrote Invesco portfolio managers Matthew Ziehl, Adam Weiner and Jason Farrell in a recent blog post.

— Ian Salisbury

4. Invest Your Conscience with an ESG Fund 

With issues like racial justice and climate change on young investors’ minds, so-called ESG (or environmental, social and governance) funds have been gaining fans. By the end of September, U.S. sustainable funds attracted a record $31 billion in new investment dollars, according to Morningstar. The strategy is also getting the attention of some of the biggest names on Wall Street. In its annual letter to clients, BlackRock said the company was making sustainability integral to the way it manages risk and constructs portfolios.

As an investor, it’s nice to think that you can easily sort “good” companies from “bad” ones. But that’s not always the case. “There are some notable shortcomings that the industry still has to iron out,” says Jennifer Coombs, associate professor at the College for Financial Planning specializing in ESG investing. Among these concerns is that the handful of agencies that grade companies on their adherence to ESG principles tend to vary widely in their approaches.

Click Read More for 17 more tips.

(Excerpt, click Read More below for full article)

Yet while lawmakers made it easier to take a withdrawal from your retirement savings, many experts say that it should not be the first step you take if you’re struggling financially. First make sure that you have explored and exhausted the other options available to you, says Kevin Mahoney, a CFP and founder of Washington D.C.-based advisory firm Illumint.

Depending on whether you’re employed or not, refinancing existing debt may help. Or you might be able to tap home equity. And don’t overlook family and friends who may be able to help with temporary assistance. “No matter the specific circumstances, a retirement withdrawal should stay down as far as possible on the list of potential options,” Mahoney says. 

“Withdrawing money from a retirement account is a reasonable move in a worst-case financial scenario,” Mahoney says. But make sure you’re only taking the money if you really need it.

If you tap into your 401(k) or other retirement accounts, make sure you’re using the money to pay off outstanding debts or cover an income gap during this difficult time, says Michael Kelley, an Ohio-based CFP and founder of Kelley Financial Planning. Don’t take it out to have an extra financial cushion or to make a big purchase, like a car.

And if you did take money from your retirement savings, give yourself a break, DuQuesnay says. “No one predicted that a global pandemic would cause 30 million Americans to lose their jobs in just six weeks,” she says. “Do what you need to do to get through the current crisis, then evaluate a path forward.”

At the local level, governments have provided these moratoriums as a way to keep people in their homes during this difficult time. However, an eviction moratorium doesn’t prevent your rent or mortgage from falling further and further behind and once a moratorium ends you’ll need to bring yourself current or face a potential eviction. 

Of course, if your financial outlook hasn’t improved (or hasn’t improved dramatically), staying in your home will be a challenge. Here’s how you can prepare yourself for the end of an eviction moratorium:

KNOW YOUR RIGHTS

Eviction moratoriums vary depending on where you live. So you’ll want to do some research on COVID-19 eviction moratoriums in your city, state, and county. Here are a few things you’ll want to look into: 

• How long an eviction moratorium is in place for. Some locales have extended moratoriums so be sure to understand the protections in your specific county or city.
• Whether you’ll be on the hook for any nonpayment fees or penalties. You most likely won’t need to pay for fees or penalties for not making your rent during a moratorium. However, this could change once it’s been lifted, or after the grace period to pay outstanding rent ends. 
• How to be offered protection under an eviction moratorium. You might only be eligible if you’ve suffered an economic setback, are on unemployment, or if your business has been hit hard financially. 
• How much time you have to pay back in rent or mortgage payments you owe. This varies depending on the locale. In some places, it’s 3 months after an eviction moratorium is lifted. In other areas, it’s 6 months or 12 months. During this time, you cannot get kicked out for deferred rent. 

NEGOTIATE FOR LOWER RENT 

If you can afford to, pay something now. Not only does it show your landlord that you’re a responsible tenant, but it also means you’ll owe back less money down the line. 

Try to work out an agreement with your landlord. While it might seem intimidating, start by approaching your landlord as a teammate. And your situation is a problem to work out together, suggests Tilden Moschetti, a real estate attorney of the Moschetti Law Group. “Everything is negotiable,” says Moschetti. “Most landlords want to work out arrangements to get caught up.” So come up with a plan to get caught up on your payments — which we’ll get to in just a bit.

A pro tip: It’s often easier to negotiate when there are no intermediaries between the tenant and owner, explains Alexander Lerner, a realtor with Figure 8 Realty in Los Angeles. In other words, the landlord is an individual or is a family-run operation versus a property management company. 

Be upfront about your situation. “Tenants should be honest and forthcoming with as many details as they feel comfortable sharing,” says Lerner. “The more you can show that you have been impacted financially and need assistance, the greater the likelihood you will find the person on the other side being amenable to negotiation.”

Put yourself in your landlord’s shoes. As Lerner, who works with landlords and is one himself, points out, landlords don’t want to be in a situation where you’re defaulting on your lease or aren’t unable to pay at all. In turn, they’d probably rather know that you’re going to pay a reduced amount. 

If you aren’t able to cover any rent, it puts the landlord in a position of having to find a new tenant when the rental market might not be as strong as when you rented out the place. Or needing to pour resources into getting you evicted or collecting on any money owed. 

Let’s say your rent is $2,000 a month. And it takes the owner a month to find a new tenant. In that case, they’d be missing out on one month’s rent. But if your rent got bumped down to $1,800 for four months, they’d only be losing $800. So it’s worth their while to keep you around but bump down your rent. 

“Plus, there’s no guarantee — given a lot of the current economic uncertainty — that a landlord will be able to find someone to rent right away, which could mean that the unit will stay vacant longer,” says Lerner.

COME UP WITH A PAYMENT PLAN 

Your payment plan depends, of course, on your financial situation. If you’ve been laid off and are receiving unemployment benefits, you might be able to afford to pay half of your rent now. Once you are gainfully employed again, you can drum up a plan to make up whatever remains.

If you’re out of work and have zero income coming in, you might have to skip rent payments for now, and get on a more aggressive repayment plan, where you’re paying, say, your rent plus 20% for a year or what have you.

Whatever your case might be, it’s essential to plan ahead. Your plan should be feasible and in step with your current financial situation. 

Should things change, keep your landlord looped in and make sure they’re on board. Try to think of any payment plan as a win-win. If you need more time to pay off whatever rent is owed, communicate this to your landlord as soon as you can. This especially rings true if you were a tenant in good standing that stayed on top of your payments before the pandemic. If you’ve got a positive payment history before everything went sideways, your landlord might be flexible and give you a few options so you won’t need to uproot. 

WHAT TO DO IF YOU GET EVICTED

Evictions are a loss for both parties involved, points out Anderson Franco, Esq., a San Francisco-based tenant attorney. “Tenants don’t want to lose their homes, and landlords don’t want the expense of a vacancy or eviction,” he says. “As such, it behooves both tenants and landlords to negotiate mutually beneficial terms that could allow the tenant to remain in their home and avoid the landlord-eviction expenses.” 

If you look just at the numbers, reducing your rent might generate less money for the landlord. But let’s say you end up defaulting on your rent, and the landlord ends up needing to evict you. That’s extra money and time they need to dole out on evicting you. Plus, they’ll need to find a new renter, which takes time, and potentially lost rent money during the vacancy. 

In the worst-case scenario and you are in danger of getting evicted, know your rights. The process of eviction, including the timeframe and your responsibilities, will depend on the laws in your state of residence. No matter where you live, be sure to keep track of all communications from your landlord or lender. You can seek more information and help from a non-profit agency that can provide free legal guidance to tenants. Some might even offer free mediation. 

Finally, it may come to pass that there’s no path forward other than leaving the property. Once that decision has been made, you’ll want to refocus your financial and mental resources towards finding temporary or long-term shelter.

Travel credit cards make it easy to earn all kinds of rewards ranging from airline miles to hotel points and flexible travel credit. While the value of the points you earn will vary depending on how you redeem them, it’s not unheard of to receive 2 cents per mile or point in value from airline miles or hotel points for certain, high-value redemptions. 

On the flipside, you can also redeem your rewards for some pretty awful items, and even ones that let you get half a cent in value or less. That doesn’t make these redemptions “wrong” per se, but it does mean you’re effectively leaving money on the table when compared to other options.

If you have a travel credit card, a hotel rewards card, or a flexible travel credit card that lets you redeem points for airfare, hotels, and more, here are the redemption options you should avoid.

1. Merchandise

Many rewards currencies let you cash in your points for merchandise. With some rewards portals, for example, you can redeem points for purchases made through Amazon.com or at Apple stores.

While this isn’t the worst option in the world, redeeming points for electronics, small household appliances, and other types of merchandise will typically get you one cent per point in value, and often a lot less. 

Delta SkyMiles offers some of the worst merchandise redemptions you can find. For example, they want 141,880 miles for a 10.5-inch iPad Air with Wi-Fi. This same model currently costs only $649 at Apple.com, so you’d be getting significantly less than half a cent per point.

While it may seem tempting to use points for merchandise (free is free, right?), if you can bank enough points for something of higher value, it’ll be worth the wait. 

2. Low value transfers to airlines

Most travel rewards enthusiasts know that transferring points to airlines can help you get more bang for your buck, but you have to remember this isn’t always the case. High value airline transfers can be a good deal, but not all programs are created equal.

For example, it’s common to transfer your points to the card issuer’s airline partners and receive at least 2 cents per point in value when you go to redeem. That’s because your points will typically transfer 1:1, with the exception of certain airlines.

But some programs offer paltry transfer ratios. For example, the IHG Rewards program lets you transfer points to airline programs like Air France/Flying Blue and Alaska Airlines, but you’ll only get 2,000 airline miles for every 10,000 hotel points you transfer. 

Takeaway: not all points transfers are equal. Sometimes it makes sense to lose points in the transfer just to be able to use the points, but when you’re sacrificing thousands of points just for the privilege of transferring, you’re better off finding a different travel partner to use the points for.

3. Trading airline miles for hotel stays

If you have a bunch of airline miles you can’t seem to use, it might be tempting to cash them in for hotel stays through the airline’s portal. This isn’t the end of the world, and redeeming miles for hotels is better than letting them expire. Still, you won’t get very much value in return if you choose this option. 

Take the American AAdvantage program, for example. You can use miles to book free hotel stays, but redemption values are not great. For random dates I chose this year, they wanted 188,500 miles for a free stay at the Ritz-Carlton Bal Harbour in Miami at the same time a paid stay would set you back $1,185 per night. That means you would get a lot less than 1 cent per point in value, which is a significantly lower value than you’d receive if you cashed in your miles for flights. 

Don’t be in so much of a hurry to book your entire trip on points when saving them for your next trip will give you much more value.

4. Gift cards

Almost every rewards program lets you cash in your points or miles for gift cards, and this can be a decent value if you don’t have the option to redeem for travel. However, you may receive less than one cent per mile in value if you cash in airline miles from an airline loyalty program for gift cards, and even flexible programs might only give you 1 cent in value per point with this option.

Cashing in travel rewards for gift cards should really only be your last resort if you find you absolutely cannot travel or your miles are about to expire. 

5. Magazine subscriptions

Please don’t ever cash in your miles for magazine subscriptions, even though several programs including Delta SkyMiles advertise this option. With Delta’s “MagsforMiles” program, for example, you can get six to 228 issues of various magazines like People and The Wall Street Journal in exchange for your miles. 

“Children observe and soak up everything, including how you use and talk about money,” said money and budgeting expert Andrea Woroch. “In fact, family attitudes toward spending and saving and mom and dad’s financial habits directly shape how children will value their own money in the future. It’s critical that parents understand how their own habits will influence their children and that they need to model the behavior they want their children to adopt.”

While kids can absorb many beneficial financial lessons from their parents, they also tend to take in less helpful ones as well. HuffPost asked Woroch and other financial experts to break down the kinds of harmful money messages kids learn from their caregivers ― and to share the types of approaches parents should try instead. Read on for their insights.

1. Money is a taboo topic.

“There’s a taboo out there that talking about money is bad, especially if you’re in debt, and that it’s shameful,” said Woroch. “When you don’t talk about money in your own household because you don’t want your kids to worry or because you don’t think it’s important that they are involved, you’re teaching your kids not to talk about money, and you restrict the opportunity for learning valuable money lessons early on.”

Tim Sheehan, co-founder and CEO of the family-focused financial literacy app Greenlight, echoed this sentiment. He believes that not discussing money at all with children leaves them in the dark when it comes to understanding what money means, how to get it and the right ways to manage it.

“Parents can start by helping their kids learn the ropes of decision-making,” Sheehan said. “Start small by explaining why you choose to spend money on groceries instead of takeout.”

Because so much of money management today happens on cellphone apps, children don’t observe things like bill-paying the way they did in the past. So parents need to “perform” money a bit to make sure their kids see them engage with finances and feel empowered to develop opinions about it, rather than simply getting lectured on the topic.

“I ask my children questions about money, which establishes that money is a thing we talk about,” said financial therapist Amanda Clayman. “These talks also demonstrate that people have questions without easy answers when it comes to money, that this is something you don’t have to be ashamed of, and that I’m a trusted source you can come to for help making decisions.”

2. Money is always around, no matter what. 

The experts who spoke to HuffPost emphasized the importance of helping kids understand that people earn money from work and that it doesn’t simply “grow on trees.”

“It can start with something as simple as a chore,” Sheehan said. “This helps kids make the connection that, ‘If I do this work, then I’ll earn money.’ Then, kids can set a saving goal and work towards it. It teaches them about making real-world trade-off decisions instead of giving in to instant gratification.”

In addition to teaching kids about earning money, Sheehan believes that chores like hosing down the car or taking out the trash can help kids become generally more responsible and prepared for adulthood. As for families that don’t pay for household chores, they can look to neighborhood jobs or other ways to demonstrate that money is earned, not given.

3. Financial literacy is just a grown-up thing.

In addition to not talking about money, many parents don’t let their children gain experience managing money. But there are countless age-appropriate ways for kids to learn financial literacy and practice these skills.

“Start a small business,” suggested financial expert Kim Kiyosaki. “It’s key to learn the language of money. Kids can learn things such as income and expenses, profit and loss, cash flow, inventory, marketing, and the value of their time. This is hands-on, and it’s fun. And the learning is tremendous.”

She recommended businesses like mowing neighbors’ lawns, selling a product online, opening a lemonade stand, shining shoes, or even finding lost golf balls on local courses, cleaning them and selling them to golfers.

Kiyosaki shared other ways to teach kids about money, like buying a few shares of a company familiar to your children (like Disney) and letting them watch the price fluctuations and learn about the stock. Another approach is buying a 1-ounce silver coin. Or, you can leave it up to your kids.

“If your child wants a new toy or gadget, ask them, ‘How could you earn the money to buy it?’” she said. “Let them get creative.”

“You can’t teach your child the difference between needs and wants, or even the value of saving, if you are continually swiping a credit card for everything.”- KUMIKO LOVE, FINANCIAL COUNSELOR AND CREATOR OF THE BUDGET MOM

4. Money talk only evokes negative emotions. 

“Children are wired to be attuned to the emotions of their caregivers, so they start to notice associations,” Clayman explained. “They might notice if conversations about money seem to be tense or if their parents get upset and start talking about money when they ask for something. These form an emotional context that kids tend to grow with and bring into their financial lives as adults.”

If you’re looking for some easy ways to simplify your finances, consider these straightforward ways to master money management:

1. Create a financial calendar: Many of us start the year with great intentions, but we fall off track along the way. I always recommend creating a budget as an essential piece of money advice, and I’m going to make a slightly different suggestion for those of you who already have a budget — make a financial calendar. Store your calendar on your phone or tablet, so you can set reminders and create a list of major financial tasks you intend on completing, along with their due date. For example, you might remind yourself to complete your taxes by early April, compile all of your tax documents by March 1, and increase your 401k contributions for the year by January 15. You can also use it to set financial goals, such as the date by which you hope to save $2,000 for a vacation, or to track goal milestones toward paying off debt.

2. Ditch the Paper: Paper bills, credit card statements and other financial documents can become easily disorganized. Take a moment to request all of your financial documents be switched to e-delivery, and if you have old files of paper document you still need, start scanning them into an e-format. They’ll be easier to retrieve and use, less likely to be misplaced, and may allow you to make better financial choices when you can see everything at once.

3. Clean Out Your Wallet: If you’re savings-conscious like me, your wallet is probably overflowing with retailer loyalty cards and coupons. These are powerful tools for reducing costs with perks like free shipping, early access to sales, and other special promotions and discounts. However, having too much plastic in your wallet can also leave you feeling disorganized, scattered, and less likely to use these many programs regularly. Consider downloading apps for your favorite loyalty and coupon programs, or better yet, an app to consolidate all of your accounts in one place.

4. Streamline Credit Cards: While you’re cleaning out your wallet, consider the myriad rewards credit cards you may have. You’re less likely to use multiple rewards cards as intended, and more likely to run up needless fees. I recommend using a single rewards card, such as Bank of America^® Cash Rewards credit card, that allows you to switch your cash-back category on a monthly basis. That means a single card can earn you top-notch cash back for online shopping, travel or many other common shopping categories. You’re more likely to get all the cash back you deserve and can save on fees associated with juggling multiple cards.

Credit card technology has taken a leap forward in the past decade-plus, with new features that make transactions faster and safer. But that doesn’t mean your cards won’t fail you at the most inconvenient time.

So why do credit and debit cards stop working? There are two big picture reasons: there’s something wrong with the card, or there’s something potentially wrong with your account.

REASONS YOUR CREDIT CARD MAY MALFUNCTION

Most credit cards these days come equipped with at least two mechanisms to complete your transaction: the classic magnetic strips and the more recent computer chips. On top of that, many cards now offer contactless payment through an antenna connected to that computer chip.

Which means that if one option isn’t working, you may be able to try a different method with the same card. 

Still, if you’d rather not risk it either way, here are some of the most common reasons why a card may malfunction.

EXPOSURE TO STRONG MAGNETS

The magnetic strip on your credit card doesn’t play well with other magnets, although it takes a fairly strong magnet to actually cause your card to stop working. Bringing your card into a room where an MRI machine is operating could do it, for instance.

To be safe, limit your cards exposure to magnets and magnetic devices.

THE MAGNETIC STRIP IS SCRATCHED

This is likely the most common physical reason for a credit card to stop working. If the magnetic strip gets roughed up enough it may eventually become unreadable.

Be gentle with your plastic and try to keep your cards together in a wallet or money clip.

THE CARD IS DIRTY

If enough dirt or debris gets between your card’s strip or chip, the card reader may not be able to process the transaction. Luckily, this is the easiest one to remedy – you can wipe the card down with a clean cloth, or even use adhesive tape to pull off offending particles. While soap and water probably won’t ruin the card, it’s better to keep your card dry and soap-free.

THE CARD IS DAMAGED

It takes a lot to make the chip in your credit card stop working, but bending, cutting, crushing, or otherwise mangling your card will do the job. Most modern credit cards can survive years of normal wear and tear, but we all have our limits. Extended exposure to water (particularly salt water) can cause your card to stop working, too.

THERE’S SOMETHING WRONG WITH THE READER

Sometimes it’s not your card’s fault! There may be an issue with the card reader at the store. There may be an issue with the system tasked with authorizing and process the payment. Or you may be inserting your card incorrectly. More times than not, a card failure can be resolved by just trying again, or swiping instead of dipping.

REASONS YOUR ACCOUNT MAY NOT BE WORKING

Sometimes the card itself is fine – it’s the account at the other end that’s got an issue. Here are the most common reasons your card isn’t working (that aren’t the card’s fault):

YOUR CREDITOR SUSPECTS FRAUD

A creditor may temporary freeze your account if there’s been enough “suspicious” activity to warrant a closer look. This usually means transactions in strange places, at strange frequencies, or for strange amounts. Basically, if the card issuer has reason to suspect that you’re not the one using the card, they may put it on lockdown until they make contact with you to confirm whether or not the transactions are legit.

YOUR CARD NEEDS TO BE REPLACED

Creditors will send a new card when the old one expires, or if the old one was lost or compromised. If you’re trying to use a card that’s expired or one that’s been replaced, it likely won’t work.

Conversely, your new card won’t work until you activate it, which is another reason your card may not be working.

THE BILLING INFORMATION DOESN’T MATCH

Many transactions, particularly online ones, require more info than just your card number. If the information on file with your credit card doesn’t match the info you provided, the transaction won’t go through. If you’ve moved recently, make sure to update your address on all of your financial accounts. The wrong ZIP code is a pretty common reason why transactions sometimes don’t go through.

YOUR ACCOUNT IS MAXED OUT

Many credit and debit accounts provide a little wiggle room for going above and beyond your credit limit/available balance (at a premium to you), but if there’s not enough money or available credit to cover the transaction, it likely won’t go through.

I am seeing an interesting pattern in discussions with my clients about retirement — and it’s certainly not one I was expecting. Instead of worrying about whether they’ll have enough saved to enjoy retirement, they’re worrying about whether they’ll enjoy retirement at all.

It seems like discussions about retirement start almost as soon as we get our first job. Whether it’s saving as much as possible in your 401(k) plan or making an annual IRA contribution, the focus is always on having enough money to retire and enjoy all the things they’ve been dreaming of doing. For some, the big plans include traveling to far-flung destinations; for others, it’s spending time with family, finally moving to that place you love to visit on vacation, or volunteering.

As financial planners, we talk about these dreams as goals and put dollar amounts on them with anticipated timeframes around when you could expect to achieve them.

Nearing Retirement, Client Has Second Thoughts

As we diligently make progress on achieving those retirement dreams, we don’t spend as much time as we should thinking about what life may actually look like in retirement. Just last week, I spoke to a client who says she would like to retire at the end of this year. We have been working toward her economic freedom for years, and she has enough assets to be able to make all the dreams she has expressed come to fruition. We got to the end of the financial plan discussion and I was all set to celebrate starting the countdown to the long-awaited retirement date.

But there was a pause, and then she said, “I don’t know if I can actually start to withdraw the money and feel good about it. I have been so focused on saving, investing and planning for years that I don’t know how I will feel about starting to take money out, even if it’s for things I think I want.”

She went on to say that she always thought she wanted to move to another state to be close to her extended family, but she now realizes that they are going to be busy with their own lives, and it won’t just be fun all the time like when she visits now. And if her family won’t be able to see her multiple times a week, then maybe she doesn’t actually want to live in that state and make a major lifestyle adjustment to weather she doesn’t enjoy year-round and not being able to walk on the beach every day.

She shared that she worries that the photography and golf hobbies that she feels like she never has time to enjoy now won’t be enough to fill her days. She has traveled extensively already, and the list of places she still wants to visit is getting shorter. In other words, her biggest worry about retiring is what she is going to do with her time when she retires — even though she says frequently, even now, that she can’t wait to stop working.

I have had similar conversations with physician clients who start our discussions by telling me that they are very stressed, and the only thing they want to do is close their practice as soon as financially possible. And yet, when we work through their wealth management plan and show that they have more than enough assets to walk out the door tomorrow, they can’t do it. For some people, retiring from being an expert in their field or having a prestigious job feels like giving up part of the identity they have worked very hard to earn.

Coping Tips If You’ve Got Cold Feet for Retirement

So, what do you do when the hardest part about retirement is actually retiring? The most successful transitions to retirement I have helped clients implement start years before the planned retirement date or have elements that help ease them into decisions. Here are some ideas to make retirement the next step in a journey, not a final destination:

1. Consider slowing down at work instead of stopping completely. Working part-time allows you to have the best of both worlds: Continued income and a day-to-day sense of purpose, as well as the time to pursue hobbies, travel and leisure. The physician who wanted to walk away from his practice is now only working three days a week, happy to still be caring for patients while being able to participate in his teenager’s school and sports activities.
2. Try before you buy. If relocation is in your retirement plans, you can similarly take a new location for a test drive before committing to living there full-time. In the case of the client who might want to live by her family but really likes her current home, I recommended that she rent a house for a year in the new state to see if she can deal with the weather, and if her extended family’s lifestyle suits her before she sells her current home. She can rent out her current home for some income, or she can just come back home for a break during the very hot or cold months in the new state.

For a quick refresher, the new rules are basically updates to the Fair Debt Collection Practices Act (FDCPA), which sets guidelines for how debt collectors can behave when attempting to collect a debt from consumers. The FDCPA is over four decades old at this point, so an update was arguably overdue.

The Consumer Financial Protection Bureau (CFPB) has actually been working on this update for over five years now. The rule changes are an attempt to modernize the FDCPA and better account for how consumers and creditors communicate in the 2020s.

Here’s how these changes will impact you and the process of debt collection.

STRICTER LIMITS ON COLLECTION CALLS

The core rules of the FDCPA remain in place. That means debt collectors still can’t:

• Call before 8am or after 9pm (local time)
• Threaten or harass you
• Tell your friends or family about your debt
• Contact you at work (after you’ve asked them not to)

One issue the text of the original FDCPA didn’t cover was how often a creditor could call you. This new rule sets hard limit of one call per day. However, if the collector actually talks to you, they can’t call again for at least seven days.

On top of that, you’ll no longer have to send a letter to request that collectors stop calling you. You can make that request on the phone and collectors will now be obligated to stop trying to contact you that way.

COLLECTORS WILL BE ALLOWED TO TEXT, EMAIL, AND DM YOU

The only two communication methods mentioned in the original FDCPA are phone calls and letters, and it’s fair to say that both methods have fallen out of favor with many (if not most) consumers in recent years. 

The new rules provide guidelines for collectors contacting you through text message, email, and social media. There are two basic requirements for collectors using these communication methods:

• Like with phone calls, they need to keep their outreach to reasonable hours (8am to 9pm); and 
• Every text, email, and DM needs to include instructions on how to opt out of receiving future communications through that method.

It’s important to note that “social media” is limited to private communications. They aren’t allowed to Tweet at you or post about you on Facebook. Only direct, non-public messages are permitted.

VALIDATING DEBTS IS GOING TO BE A LOT SIMPLER

Perhaps the most consumer-friendly change is the new requirement that collectors need to provide validation of the debt in question either at the point of first contact, or within five days after the first contact. 

Prior to this rule change, if you wanted clear details on where the debt came from and an itemized breakdown of the charges, you’d have to request this validation yourself and collectors would have 30 days to comply. Now the onus will be on collectors to provide this information upfront and in an easy-to-understand format. 

COLLECTORS CAN’T REPORT ON A DEBT BEFORE CONTACTING THE CONSUMER

There’s good news on the credit report front. Collectors will now be prohibited from reporting on a collection debt to the credit bureaus until they’ve:

• Spoken to the consumer in person or over the phone about the debt; or 
• Sent the consumer a message about the debt through mail or email.

If the collector is reaching out via letter or email, they have to wait a reasonable amount of time (14 days seems to be the guideline) to ensure that the message was delivered. 

This gives consumers a fair chance to deal with a collection debt before it hits their credit report.

COLLECTORS CAN’T SUE FOR EXPIRED DEBTS

Debts don’t really “expire,” but each state does maintain statutes of limitations that spell out how long a creditor has to take legal action to collect an unpaid debt. Once that statute of limitations has passed (which can be anywhere from three to ten years, depending on where you live), the creditor or collector may still try to sue you, but if you can prove that the statute of limitations have passed, you’ll almost certainly win the case.

Of course, many consumers don’t know this, which some collectors may use to their advantage by using threats of a lawsuit to coerce the consumer into making a payment.

The new rules of the FDCPA explicitly prohibit collectors from threatening to sue on debts where the statute of limitations has passed (these are referred to as “time-barred” debts). 

TWO MAJOR DRAWBACKS TO THESE NEW RULES

While these changes are largely consumer-friendly and should improve many elements of the debt collection process, there are two big drawbacks.

First, while it’s nice to be able to pick and choose your preferred method of communication (particularly if you’re interested in working with the collection company), things could get hectic and frustrating fast with collectors on the phone, in your DMs, in your inbox, in your texts, and on and on. 

Conspicuously absent in these new rules is a limit to how often collectors can text, email, and DM you. Unlike phone calls, there is no one-a-day cap on messages sent through these other methods. Your only protection is to opt out, but there’s no universal opt out. You’ll need to opt out of each source individually.

Second, the increase in digital communication is almost certainly going to come with an increase in scams. You’ll need to be on alert to separate the real collectors from the fakes, which will likely just add to the already overwhelming amount of noise.

If your lights stayed on during the cold front, however, you may be facing a different kind of crisis. Many Texans buy their electricity wholesale, which can be a great deal most of the year. Unfortunately, the market price of electricity spiked drastically during the deep freeze. Electricity that might normally cost 12 cents per kilowatt hour, jumped up to $9 per kilowatt hour (an increase of more than 7,000%). 

As a result, families across the state are suddenly dealing with enormous electricity bills, with many on the hook for thousands of dollars in charges. 

While unexpected spikes are always a possibility with any variable rate utility, it’s hard to imagine that anyone was prepared for these kinds of prices.

If you find yourself stuck with an enormous utility bill as a result of a natural disaster, severe weather event, or smaller scale misfortune, here are some of the initial steps you should take to protect your finances.

BE PATIENT

A big bill takes your breath away. We’ve probably all had those moments when we first lay eyes on an unexpected medical bill or car repair quote and the number nearly puts you on the floor. 

It’s easy to panic, but it’s important that you stay calm and patient when faced with an almost inexplicably huge bill. The last thing you want to do is make a hasty decision that comes back to bite you.

As in the case of the Texas electric bills, there may be relief coming, but that can take time. Until you know what aid is available, avoid taking any actions that may make it difficult to get relief later (charging the bill to your credit card or emptying your savings, for example).

DISABLE AUTOPAY

If you have automated payments in place, you may want to cancel those as a precaution, particularly if your autopay is set to take whatever’s due straight from your account without any additional approval. You can reinstate your preferred payment method once things are sorted with you and the utility company.

KNOW YOUR RIGHTS

In the immediate aftermath of the severe winter event in Texas, the state’s utility commission enacted a temporary moratorium on electricity shut-offs for nonpayment, protecting families faced with unmanageable bills. 

Check to see what protections are in place where you live. If you stop making payments while you wait for aid, will you still have access to your utilities?

CONTACT YOUR PROVIDER

Start the conversation with your utility provider as soon as possible. Ask what they can do for you. At the very least, they should be able to help you create a payment plan. Ultimately, what you really want is relief or forgiveness, but that may require government intervention.

In the meantime, figure out what you need to do to keep your utilities running until more information is available.

EVEN OUT YOUR SPENDING

If no help is coming you may have to work that new, unexpected cost into your monthly budget until the charges are paid off. If that’s the case, consider working with a trained, nonprofit financial counselor to reorganize your spending. 

As the pandemic shut down the world around her, Ashli Smith , an Atlanta resident and mom to a newborn, says she set up autopay for her recurring bills to help her stay organized and avoid late payments. “With everything going on, plus being a mom, I don’t want to forget to pay something or someone,” she says.

While the pandemic caused incredible financial stress and uncertainty, it also led many consumers like Smith to form new financial habits worth keeping, including saving more and spending less. A NerdWallet survey found that most people who formed new financial habits plan to continue them into 2021.

Here are five habits to consider sticking with even as life starts to return to normal:

1. SPEND LESS, SAVE MORE

For many Americans, spending less amid the pandemic came naturally because of income loss or fewer spending options after restaurants and travel largely shut down. NerdWallet’s survey found that among those who said they picked up new financial habits during the pandemic that they plan to carry into 2021, 58% said they were cutting back spending on “wants” and 36% said they were cutting back spending on “needs.”

“If your job was eliminated or your pay was reduced, then you’ve probably decreased spending and gotten used to a lower monthly budget,” says Eric Simonson, certified financial planner and owner of Minneapolis firm Abundo Wealth . “As soon as that income returns, it would be an amazing opportunity to keep expenses the same but save all of that new income.”

Natalie Slagle, founding partner at Fyooz Financial Planning and a CFP based in Rochester, Minnesota says, “For those who were furloughed or laid off, the No. 1 priority is replenishing savings.” For those who got used to spending less, she says, “we encourage them to sustain that habit so their cash flow can go toward building up their emergency fund at a higher rate than what was possible before the pandemic.” That way, it’s easier to handle the next crisis, whether it’s income loss or an unexpected expense, without taking on more debt.

2. STICK WITH A BUDGET

In the NerdWallet survey, 39% of those who adopted new habits that they plan to carry into 2021 said that one of those habits was sticking to a budget.

“So many people have looked at their budgeting and spending during (the pandemic), often for the first time,” Simonson says. “It’s important to stick with this post-pandemic, since keeping a budget is part of a healthy financial plan.”

Many people turned to budgeting to help regain a sense of control that the pandemic took from them, he adds. “The financial habits you’ve been forced to learn and adopt have the power to create huge, positive, lasting change if you stick with them,” Simonson adds. Continuing to budget makes it easier to generate long-term savings and avoid debt, for example.

3. MINIMIZE TRAVEL EXPENSES

Among survey respondents, 40% said one of the new habits they plan to continue in 2021 was cutting back on travel spending.

“One reason we saw our clients enjoy lower expenses (during the pandemic) is because they didn’t go on their planned vacations,” Slagle says. “Not only did that cut expenses, but they also have flight vouchers and unused travel miles to spend.”

As travel begins to start again, Slagle says she’s helping clients plan on using some of those savings and credits on their next trip to avoid overspending.

4. EARN EXTRA INCOME

Based on the study, among those who developed new financial habits, just over a quarter said they picked up a side hustle or extra work to make money. Kevin Mahoney — a CFP and founder of Illumint , a financial planning firm for millennials based in Washington, D.C. — says earning a side income can help provide financial stability during uncertain times, which is why he encourages his clients to consider it.

“Supplemental income mimics an emergency savings fund. People who can consistently generate self-income are better prepared to withstand financial volatility,” he says.

The push for a third stimulus check started in December before the second round of $600 payments were even authorized. So, we’ve had to wait a couple of months to see how this would all play out. But, on Thursday, President Biden signed the American Rescue Plan Act, which authorizes another round of stimulus checks. So, finally, we now know that a third round of stimulus payments is coming…we just don’t know exactly when they will arrive.

According to White House Press Secretary Jen Psaki, some people could start receiving electronic payments as soon as the March 13-14 weekend. This would just be the first wave of payments. More stimulus check payments would then be sent over the following weeks.

When second-round stimulus checks were authorized in December, the IRS started issuing electronic payments in less than one week. So, it shouldn’t come as too much of a surprise if the tax agency is able to repeat that feat and start sending payments within days this time around, too. Psaki recently noted that the IRS is “building on lessons learned from previous rounds to increase the number of households that will get electronic payments, which are substantially faster than checks.”

We don’t know yet how long it will take to distribute all payments. Hopefully, it will be a matter of weeks, not months, before the vast majority of third stimulus checks are delivered. We shall see.

Nevertheless, whether it’s in a few days or a couple of weeks, at least we know the payments will be sent soon. And since the IRS has bank account information for more Americans than it did when first-round stimulus checks were being processed, they will be able to deposit payments directly into bank accounts for most people. This will speed up the payment process considerably. That’s good news for Americans who have lost income because of the pandemic and desperately need the extra cash.

Tracking Your Third Stimulus Check

We expect the IRS to fire up the popular “Get My Payment” portal again so that you can track the status of your third stimulus check. The online tool lets you:

• Check the status of your stimulus payment;
• Confirm your payment type (paper check or direct deposit); and
• Get a projected direct deposit or paper check delivery date (or find out if a payment hasn’t been scheduled).

For first-round stimulus checks, you could also enter or change your bank account information to have your payment directly deposited into your account. But that feature wasn’t included in the tool for second-round payments. So, we’re not sure if you’ll be able to provide or update bank account information for the upcoming round of stimulus payments.

However, for first-round stimulus checks, you couldn’t use the “Get My Payment” portal to track the status of your payment if you didn’t file a tax return. Instead, there was another online tool that non-filers could use to give the IRS with the information it needed to process a payment. The non-filers tool wasn’t used for second stimulus checks, though. We don’t know if the tool will be used for third stimulus checks.

Calculating Your Third Stimulus Check Amount

Under the American Rescue Plan, every eligible person will receive a $1,400 third stimulus check “base amount.” For married couples that file a joint tax return, the base amount is $2,800. Then, for each dependent in your family, an additional $1,400 will be tacked on.

But not all people will receive the full amount. As with the first two stimulus payments, third-round stimulus checks will be reduced – potentially to zero – for people reporting an adjusted gross income (AGI) above a certain amount on their latest tax return. If you filed your most recent tax return as a single filer, your third stimulus check will be phased-out if your AGI is $75,000 or more. That threshold jumps to $112,500 for head-of-household filers, and to $150,000 for married couples filing a joint return. Third-round stimulus checks will be completely phased out for single filers with an AGI above $80,000, head-of-household filers with an AGI over $120,000, and joint filers with an AGI exceeding $160,000.

Generally speaking, however, charging rent payments to a credit card is a bad idea. While it certainly adds convenience and can help keep you afloat if you’re short one month, the cons largely outweigh the pros – especially if you’re charging rent on a regular basis.

If you’re thinking of using a credit card to cover your next rent payment, consider the following reasons why you shouldn’t.

COSTLY FEES

Most sizeable apartment complexes and rental management companies offer some form of online payment portal, where you can make payments through a bank account or credit card. Even if you rent from an individual landlord who’s not set up for online payments, there are a ton of services that still allow you to make rent payments via credit card. Plastiq and RentTrack both process credit card payments and send them on to your landlord on your behalf (usually in the form of a paper check).

Another feature all of these services have in common is hefty fees. Most charge a service/processing fee on credit card payments of just below 3% of the rental payment. If your rent is $1,000, for example, you may be charged an additional $25-30. Taken as a one-time fee that might seem acceptable, but if you’re making every payment this way, you’ll end up spending an extra ~$300 in fees on the year.

While there are plenty of credit cards out there with great rewards programs, it’s unlikely that any points or cash back reward is going to be worth more than the cost of the service fee.

INTEREST CHARGES

Beyond the immediate processing fees, charging your rent also opens you up to potential interest fees if you haven’t repaid the bill before the end of the associated billing cycle. The amount of these interest fees will depend on the terms of your credit card and how long it takes you to repay the borrowed rent. If it takes you multiple months to complete your payoff, you’ll likely be accruing additional interest charges every month along the way.

No matter how long it takes to pay off your credit card, you’re better off not spending money on interest charges if you can help it.

REDUCED AVAILABLE CREDIT

Most of us have a finite amount of credit available. Even if you have a fairly large credit limit, charging your monthly rent means two things:

1. There’s less credit available for other needs or emergencies. The credit tied up in your rental payments won’t be available again until you repay that debt. In the meantime, you may be financially shorthanded, particularly if you need to make another large purchase, or if you run into an emergency and need to access a large portion of your credit limit.
2. Your credit may take a temporary hit. Nearly all credit scoring models base some percentage of your credit score on the amount of available credit that’s currently in use. The closer you are to your credit limit, the more negatively your score will be impacted. In other words, the lower your credit utilization ratio, the better that is for your credit score. 

WHAT ABOUT EMERGENCIES?

Of course, the reason credit card charges for rent were on the rise in 2020 is because many families had limited income and couldn’t afford to pay their rent any other way. It’s perfectly okay to use credit to help survive a crisis situation – that’s one of the primary reasons why you work so hard to have a strong credit history in the first place.

There are some instances, however, where you should make sure that using credit isn’t doing more harm than good.

Are you always one payment behind? If your rent is due before your next paycheck, it’s natural to turn to credit to tide you over. But if your rent is always due before your next paycheck, you may need to make some changes to your budget so that you’re not spending paychecks before they hit your bank account. 

Are you always just a little short? If you’re using credit to cover a persistent shortfall in your budget, you may be walking a dangerous line, especially if your debt keeps going up and up. It’s possible you don’t have enough income to cover your expenses. Fortunately, there may be simple tweaks you can make to even out your spending and stop relying on credit.

There’s no shame in using credit cards to manage an emergency. But if you’re continually relying on credit to help cover major expenses like rent that may be a sign of growing financial problem.

While it may be easy to say, “Too bad – work on improving your credit score,” that work takes time. And when it comes to things like housing or transportation (in the case of a car loan), there’s usually no time to spare.

So, despite all the warnings, you offer up your primo credit history and co-sign on the loan. Most co-signers are family members. It’s easy to see why a parent or sibling would want to help a loved one get what they need, even with the risks attached.

But then…you notice that your credit score has taken a dive. Looking further, you find that payments are being made late or not at all. They may be family, but their inability to follow through is costing you. You may even have collectors calling you (your name is on the loan, after all).

So how do get your name off a co-signed loan?

SEE IF REFINANCING IS AN OPTION

Co-signing for a loan or credit account makes you just as responsible for that account as your family member or friend. Your credit will be impacted if payments are missed and collectors have every right to come after you for what’s owed.

If things aren’t quite so dire yet, you can see if the co-signer is able to refinance what’s owed onto a new loan or account that’s only in their name. This gets you off the hook, although any damage you took before the original loan was paid off will still be on your credit report. 

Unfortunately, this is…pretty unlikely. If the borrower couldn’t get a loan without help to begin with and now you’re trying to get out of the loan because things are going poorly, there’s very little chance they’ll be able to get approved on their own now. This is the ideal path out from under a bad co-signer situation, but it’ll be very difficult to pull off. 

REPAY THE LOAN DIRECTLY

The best option is the one you’re going to be the least excited about. If you’ve co-signed on a loan and the other co-signer isn’t holding up their end, the path of least harm to yourself is to assume full responsibility for the loan and start paying it directly. 

Of course that’s not “fair” and probably not at all within the spirit of the initial agreement you made with the borrower. But here’s the thing: your agreement with the borrower doesn’t matter. Perhaps, if you put something in writing and took the steps to create a formal contract, you may be able to eventually seek compensation directly from the borrower. But in the meantime, you already have a contract with the lender. In co-signing the loan, you were essentially saying, “If they can’t pay, I will.”

So if you’re concerned about the potential damage to your credit and the chance of a creditor taking you to court for an unpaid loan (which is a very real possibility), then it’s in your best interest to start proactively paying the loan yourself.

You can work with the borrower (if they’re responsive) to create a repayment plan, but in the meantime, your priority should be to protect your own finances and get the loan in continued good standing.

WORK WITH THE LENDER

If assuming the payments for a co-signed loan is beyond your financial capacity, it may be worth your time to contact the lender to discuss any available options. There’s a good chance they may not be able to do anything for you, but you may be able to work out a revised payment plan that keeps the account in good standing. Again, a lender isn’t required to do this, but it’s still worth a phone call.

SOME IMPORTANT THINGS TO KEEP IN MIND ABOUT CO-SIGNING

Because co-signing is often pitched as “helping out” a friend or loved one, it’s important to remember that lenders, creditors, and leasing agents really don’t care all that much about any agreements or “understandings” you may have with the borrower/applicant.

• You can’t remove yourself from a loan contract just because the other borrower isn’t holding up their end. Your responsibility doesn’t end until the contract is fulfilled and the loan is repaid.
• Ownership and liability are two separate things. If you co-signed on an auto loan for someone’s car, but aren’t on the title, you’re responsible for the loan that paid for the car, but have no claim to the car itself. You may think that if you paid for it, you must also own it, but that’s not always necessarily true.

Unfortunately, the co-signing horror stories are very real. A bad co-signing situation can be extremely costly, terribly damaging to your credit, and almost impossible to escape. 

If you’re considering co-signing to help a friend or family member, be cautious and keep this information in mind. There are situations where co-signing can be mutually beneficial and there’s nothing wrong with wanting to help a loved one, but it’s important to remember that if things go south, it may be long, hard road to recovery.

WHAT’S A CHARGE OFF?

Charge off is an accounting term. It basically means that the account in question is a loss for the lender. 

When a lender or servicer charges off an account, they’re essentially claiming the lost profits for the purposes of lowering their tax liability. It’s a standard course of action for accounts that have gone unpaid for an extended period of time (most credit cards will charge off once they reach 181 days past due, though installment loans and other debts may reach charge off at different times). Your account will be closed as a result (if it hasn’t been closed already).

It’s incredibly important to remember, however, that a lender charging off an account doesn’t mean that the associated debt goes away. Legally speaking, your obligation to repay the debt does not change, even after the account is charged off. This is basically just a bookkeeping move from the lender to save a little money on their end.

WHEN IS AN ACCOUNT CHARGED OFF?

Different lenders will have different policies when it comes to charging off delinquent accounts. As a rule of thumb, lenders won’t charge off an account unless it’s seriously delinquent – again, most credit cards need to be 181 days (or six billing cycles) past due. The account will likely be well into the debt collections process by that point, and may even be serviced by a third party debt collection agency.

Don’t expect to be notified of a charge off. Instead, you’ll likely be receiving communications from the lender’s collection department or a third party debt collector. Those collection activities can continue long after the debt’s been charged off.

DO YOU STILL OWE MONEY ON A CHARGED OFF ACCOUNT?

You are absolutely still responsible for the repayment of debts even after they’ve been charged off. 

A lender choosing to charge off an account does not change any of the agreed upon terms and conditions of the original agreement. Interest can still accrue. Fees and penalties can still be added. 

Don’t make the mistake of assuming that a charge off absolves you of your obligations to the debt. It doesn’t.

CAN YOU NEGOTIATE ON A CHARGED OFF ACCOUNT?

The one potential bright side of having your account charged off is that you may be able to negotiate a settlement for the outstanding balance. This is essentially how debt settlement programs work – you allow an account to go unpaid and become severely delinquent; once it’s charged off you may be able to settle with the account owner for a fraction of the full balance.

Of course, there are drawbacks to this scenario. Missing payments on your debts (intentionally or otherwise) will almost definitely cause your credit score to drop. No matter what happens after, those negative marks will stick around for seven years, so the damage may take a few years to shake. It’s also important to keep in mind that forgiven debt (the amount of the debt you don’t pay) will likely need to be claimed as income on your taxes, which could result in a bigger tax bill.

All that said, if your account has changed off because you simply couldn’t afford the payments, settlement can be a useful solution for both parties – the lender recovers some amount of what’s owed to them and you get to put the debt behind you, usually for a much more affordable amount.

CAN A CHARGE OFF BE UNDONE?

You can make arrangements with the lender or collection agency to repay the debt, either in full or partially as part of a settlement, but you won’t be able to “undo” the charge off. Your account can’t be reopened and you can’t remove the negative marks from your credit report.

If your vacation plans have been waylaid, how can you enjoy a vacation without straying too far from your stomping grounds? 

While many places in the U.S. are starting to allow businesses to reopen, and stay-at-home mandates have been relaxed to safer-at-home orders, if you’re playing it safe and trying to minimize the risk for yourself and others, you probably won’t be traveling anytime soon. 

To help fill that summertime void, we’ve drummed up some ideas for a fun quarantine staycation: 

BREAK OUT OF YOUR ROUTINE

While maintaining healthy habits and routines can be a good thing, there are also benefits to mixing things up. Studies reveal that routines can set us in autopilot. It could mean losing touch with your emotions and senses. 

During your staycation, find small ways to break out of your daily doldrums. Take a different route on your neighborhood walk, and hone in on one of your senses. For example, take deep breaths while you take a stroll around the neighborhood. Smell different flowers and plants on your walk. Or order dishes from local restaurants that you’ve never tried before. Has it been years since you’ve hopped on your bike? Dust it off and take it for a spin. 

Breaking out of your routine could be as simple as switching rooms you sleep in during your staycation. It might sound a bit silly, but waking up from a sleeping bag in your living room floor, or letting the kids sleep in the master bedroom, could be enough to enliven your senses. 

GO ON A MISSION-BASED STAYCATION 

Give your staycation a twist by centering your trip around a mission. See if you can find the best sandwich in town by ordering takeout at a few of the best cafes and sandwich shops on Yelp. Or if you have a sweet tooth, see if you can go on a hunt for the best chocolate caramel cupcake in your area. 

I’ve gone on little themed-based missions where I live in search of the best donut or pastor taco. It’ll help you discover new eats in your neighborhood and give you an excuse to check out the menu of a restaurant you might’ve previously overlooked. 

HOST A WEEK OF MOVIE NIGHTS 

If you live in a household of cinephiles,have you and each member of your family choose a movie you can watch together. If you live alone, you can organize a group viewing party on Netflix Party or Disney Plus Party. Toss together a charcuterie board featuring a spread of your favorite meats and cheeses. And have plenty of treats on hand for the kids. 

If you and your family are a bunch of art lovers, enjoy virtual tours of museums. 

PUT ON YOUR CULINARY CAP 

If you love to cook, think of recipes you’ve wanted to try. See if you can recreate dishes in the region or country you were planning to travel to this summer. With the extra time on your hands, ferment some napa cabbage and make some homemade kimchi. Or dice up some ginger, and add sugar and water and make your own ginger bug to create homemade ginger ale. 

CAMP IN YOUR BACKYARD 

Pitch a tent in your backyard and cook up some hot dogs or roast smores over your grill. When it gets dark, you can gather around and tell spooky stories. During the day, you can romp about outside and form designated areas for play, art and crafts, and rest and relaxation. 

GET OFF YOUR COMPUTER 

If you’re burnt out from all those Zoom calls during the quarantine, limit time spent on electronic devices. Go on a social media break, and don’t answer work emails if possible. And treat your staycation just like you were taking a proper holiday. Put up an “I’m on vacation” auto-responder on your work email, and try not to think about work. 

EXPLORE LOCAL NATURE

Whether it’s a hiking trail or urban park, spend some time outdoors. You can pack up a picnic lunch and inhale some fresh air and learn about flora and fauna in your area. 

Before you venture out, check online to see if your chosen outdoor spot is indeed open and if there have been any adjustments in the hours. And of course, be sure to practice social distance, wear a mask when outdoors, wash your hands frequently, and carry hand sanitizer with you. 

COME UP WITH A PLAN FOR THE MONEY SAVED 

If you’ve had to cancel summer travel plans, see if you can get a refund for that airfare or train ticket. And because you’re saving money by not traveling, those funds can go toward another goal. Which of your money goals is most pressing? For instance, you could squirrel it away into an e-fund, or put it toward debt repayment. If you can afford to, consider tucking it away for next year’s vacation fund. 

Whatever you decide to do for your quarantine staycation, focus on what it is about travel that you enjoy. Maybe it’s seeing new sights, exploring new terrain, trying fresh cuisines, spending time with your family, or taking a break from work. While you might not be able to travel, creating a staycation that’s rooted in what’s most important to you will make for time off at home that provides what you need.

Given the way 2020 unfolded, if you’re making a financial resolution for the new year, a lot of new considerations may be coming into play – whether that’s changes in your financial situation and outlook or new spending habits and priorities. As an unprecedented year comes to an end, here are a few tips that may be helpful if you’re sitting down to map out 2021.

• 1. Set Short- and Long-term Goals. Instead of making the sweeping promise that you will generally “be better with money” moving forward, break down what you hope to achieve in a set of specific goals, spanning from short-term to long-term. Maybe it’s to pay off student loans in the next three years, buy a home within ten years and make sure you have enough saved for retirement in the long-term. Especially when you don’t know what the future might hold, this could help you maintain a sense of control. Also, you can more easily chart your progress, reassess and course correct as needed.
  
• 2. Keep Up with Good Habits. Many Americans were fortunate enough to be able to improve their finances in 2020 — putting more aside toward savings or taking advantage of opportunities like mortgage refinancing. Of course, not everyone is in a position to save more, but if you can, continue to keep your foot on the gas, whether that’s shoring up savings or staying on the lookout for opportunities, like refinancing, that may be unique to the current times.
  
• 3. Clean Out Your Wallet. Do you have credit cards floating around in your wallet or desk drawer that haven’t been used for years? Do you have a travel-centric credit card but rarely take trips? It might be a good time to reassess what you’re carrying, whether it fits with your spending habits and how you can simplify. One option if you don’t want to juggle multiple cards is the Bank of America^® Cash Rewards credit card, which allows you to earn 3% cash back on purchases in a category of your choice — including online shopping, gas, dining, travel, drug stores, or home improvement/furnishings — and you have the ability to change that category each month. If you expect your spending to change next year (perhaps you are doing a lot of online shopping now but would like to start dining out and traveling more when you can), this card can adapt with you as your priorities change.

If you’ve been too busy to sit down and take a closer look at your debt, the end of year is the perfect time. Here are some simple tips for assessing your debt and setting a plan for the next year: 

MAKE SURE YOUR DEBT LOAD IS MANAGEABLE 

Debt isn’t inherently bad and it’s entirely possible to have a completely manageable amount of debt. But for a debt load to be manageable, two things need to be true: you need to be able to comfortably afford the costs of your debt, and any growth in your debt needs to be in proportion to your income and financial capacity. In other words, you need the income to handle your debts, and income was a challenge for a lot of consumers in 2020. 

“When income is limited, people prioritize their daily expenses over debt,” says Brandy Baxter, an accredited financial counselor and founder of Live Abundantly. And when you’re out of a job, you might need to resort to digging deeper into debt to make up for reduced income. “On the surface, this strategy seems to make sense,” says Baxter. “However, without a cash infusion or an income increase, your debt will only continue to grow and create a bigger challenge in the future.” 

Do you have the income to support your debt? Was your income reduced or cut off for a period during the previous year? If there’s a gap there, you may want to prioritize debt repayment next year, either through increased earning, decreased spending, or a structured repayment plan.

GRADE YOUR PROGRESS 

Just like how a teacher calculates grades at the end of a semester, you can take a good look at your debt to see where it stands, explains Baxter. First, look at your credit card statements. Has your credit usage increased during the year? Have you had to take on a personal loan, or incurred medical debt? It’s also a good time to sit down and calculate how much interest you paid throughout the year. 

If a debt has defaulted, and you’re not sure where your debt is exactly, contact the creditor to see if it’s been moved to a collections agency. You’ll also want to review your debt to make sure you’re aware of the total balance, interest rate, and your monthly payment. 

Where are you versus where you started the year? And, more importantly, where are you versus where you want to be? Do you feel like things are moving in a positive direction? If not, it may be time to reach out for a little additional support.

Baxter suggests taking a look at the section of your credit card statement that shows you how long it’ll take to pay off your debt if you made only the bare minimum payment. It could be eye-opening how long it could take — and how much you would pay in interest fees alone.

REACH OUT TO YOUR CREDITORS

Your creditors want you to succeed. And by succeed, we mean that they want you to pay back your debts and then borrow more in the future. Defaulting for missed payments is bad for both of you. 

During these difficult economic times, creditors and lenders are often willing to talk to you about your situation and explore options to make your debt more manageable. Some credit card companies have some information on forms of relief on their website. That can be a good place to start if your debt has been trending in the wrong direction this year. 

“If you’re a client that has been in good standing and has never missed a payment, reach out to them to see what they might be able to lower the interest rate before you find yourself missing payments,” says Baxter. “Remember: The answer is always no, if the question is not asked.” 

If you’re not feeling positively about where things are headed, connect with your creditors to ask about waiving late fees, temporarily pausing payments, or lowering the monthly payment amount. 

LOOK INTO REPAYMENT OPTIONS 

If it’s time to take a more focused approach to debt repayment, there are ways you can potentially lower your monthly payments, interest fees, or both. For instance, debt consolidation lumps all of your unsecured credit card debt into a single payment. That may make it easier for you to manage your debt, particularly if the consolidated payment is lower and the interest rate is an improvement on what you were previously paying. However, debt consolidation loans usually require a strong credit score to qualify, and if you’ve been struggling your score may have been dinged already. 

Another standard option is a balance transfer, where you move your credit card debts to a new card, often with a low introductory interest rate. While a balance transfer could potentially save you money during the intro period, there’s usually a balance transfer fee, which is anywhere from 3% to 6% of the outstanding balance. And of course that low interest rate often only lasts 6-12 months. 

Besides debt consolidation and refinancing, you can also look into a debt management plan (DMP), which is similar to a debt consolidation loan: you make one payment and there’s usually pretty substantial savings on interest charges. A DMP isn’t a loan, however, making it a great option for consumers with a low credit score.

At the end of a particularly challenging year, it’s important to take stock and set an appropriate course for the year ahead. There will always be plenty of factors in life that you simply can’t control, so focus on what you can do, make a plan that suits your goals, and never hesitate to ask for help when you need it.

I have been working a long time on retirement planning that creates more and safer income for retirees. So long, in fact, that I sometimes forget the subject is new to most investors. They get much of their financial information from their advisers — who often simply treat these investors as “de-accumulators.” Another way to describe their message is, “Invest like you did when you were 55, only more conservatively.” In my opinion, that is not helpful guidance.

Please consider this article as a reference tool on a new way to plan and manage your retirement that you can come back to periodically to refresh your understanding. By the end of the article, I hope to answer your basic questions about the new Income Allocation planning and how it can benefit you with a more secure retirement.

Income Is the Foundation of Your Retirement Plan

Most eras in history are unsettled, but it sure seems we’ve got a lot going on now, and much of it makes us uncertain about how to plan for the future.

Interest rates are low and are expected to stay low for an extended period. The markets are volatile, making “stay the course” a particularly gut-wrenching choice. Add a pandemic to the mix. As you prepare for — or enter — retirement, you want to be able to celebrate. That means satisfying your desire for a self-sufficient lifestyle (while anticipating expenses such as unreimbursed medical or caregiver costs, or the premiums to cover these costs) even as you spoil the grandkids.

And that means income. A good retirement income plan is one that allows you to enjoy your retirement and provide the necessary cash flow that will create peace of mind.

Build Income Certainty into Your Retirement Plan

For the past several years I have been working to educate consumers about the pitfalls of typical Asset Allocation planning for retirement. That is the name for an approach to investing and retirement spending that leaves you with the risk of running out of money. Asset Allocation by its name allocates your savings among a range of investment categories — stocks, bonds and cash — then tests to see if that “plan” can deliver a desired level of income to your age at passing. There is rarely a distinction between dividends, interest, capital gains and withdrawals of capital — and the tax effects thereon. And, of course, what happens if you outlive your plan?

I advocate starting with a focus on income, and specifically allocating your sources of income among dividends, interest, withdrawals from your IRA and annuity payments. The annuity payments (replacing the pension that doesn’t exist for most new investors) are guaranteed for your life, are backed by highly rated insurance companies and complement your Social Security payments.

Why Annuity Payments? Why Now?

Income Allocation is not simply the act of adding annuity payments to your retirement mix. Instead, it integrates annuity payments with your other income sources to provide the most income with the lowest taxes and fees — and the lowest risk — to allow you to enjoy the rest of your life.

Some advisers say annuity contracts are too complex. They often confuse income annuities, intentionally or not, with index or variable annuities. (In fact, I introduced a “living benefits guarantee” to the variable annuity business leading in large part to its growth as a $1 trillion industry, and so I know the difference.) Advisers may want to talk about an annuity’s high fees and confusing crediting rate formulas; once again these are not features of annuity payment contracts. These contracts are really quite simple: Guaranteed payments are deposited monthly into your savings or checking account while you are alive, and optionally while your spouse is alive, or to a beneficiary if you pass before the investment is paid out. A good annuity agent shops the market of highly rated companies to get the highest income for your investment.

For the unacquainted, crowdfunding is when one raises money for a project, cause, or business endeavor through donations of small amounts. This money is pooled for a common goal. 

As they say, you can go a long way with a little help from your friends. Luckily, there are a ton of easy-to-use online platforms dedicated to helping you collect cash. But which platforms are best for which scenarios?

To help you decide, let’s take a look at some of the best crowdfunding options around: 

KICKSTARTER 

Founded in 2009, Kickstarter is one of the early crowdfunding platforms. To date, Kickstarter has helped raise over $5.4 billion, and over 191,000 projects have been successfully funded. 

Kickstarter is designed for innovators, makers, and entrepreneurs who have a business idea, creation, or endeavor they need help funding. To offer an incentive for donations, there are usually rewards for different tiers.

Note that unlike other crowdfunding platforms, Kickstarter is all-or-nothing funding. In other words, if you don’t reach your goal, you don’t get any money you raised. Another feature about Kickstarter is that campaigns undergo a review process and need to get approval.

Cost: Kickstarter charges a 5% fee on the amount you raised (often referred to as a platform fee), plus there are processing fees between 3% to 5%. So you’re looking at anywhere from 8% to 10% in total fees. If you don’t hit your reward, you don’t need to pay any fees. 

Best For: 

• Launching a new product
• Growing a small business

If you have an idea for a business or artistic project you’d like to launch, or need help developing a product, or scaling or growing your company, Kickstarter may be the right choice for you. It can also be a good platform if you want to use Kickstarter to market your product or business endeavor. If that’s the case, you could use it to raise part of your funds. 

GOFUNDME 

GoFundMe has traditionally been known to be a crowdfunding platform for those who have experienced an unexpected emergency. Memorial funds, disaster recovery, and exorbitant medical bills are common fundraising themes. They can also be used to fund celebrations, such as graduations and honeymoons, and raise capital to start a business. 

According to its website, GoFundMe has helped raise over $9 billion dollars and over 120 million donations have been made through its platform. Unlike Kickstarter, rewards aren’t offered for different tiers. And you don’t have to go through a screening process to launch your campaign. In other words, anyone can go start crowdfunding on the platform basically immediately. 

Cost: GoFundMe charges a 2.9% processing fee (plus a flat $0.30) on every donation. There is no platform fee. 

Best For: 

• Health and disaster-related requests

While the platform can be used for almost any kind of fundraising, the simplified structure makes it better suited for charitable requests. Since you don’t need to get the green light before launching your campaign, GoFundMe might be best if time is of the essence, and you need to secure some funds sooner than later. 

FUNDLY 

Instead of raising money for a business idea or to launch a product or service, Fundly is dedicated solely to fundraising for charity or a cause. Nonprofits and individuals can both raise money. As you might expect, the most common campaigns are related to medical and health expenses, kids and family, and education and schools.

One benefit Fundly pushes is easy integration with Facebook. If you’re active on Facebook (and your target donors are there as well), this integration can simplify the marketing process and get your request out to the right people. 

Cost: There’s a platform fee of 4.9%, and a payment processing fee of 2.9% (plus another flat $0.30 per donation). 

Best For: 

• Personal/charitable requests
• Users who need help getting the word out

Fundly seems to work best for those who need money to take care of urgent costs related to childcare, education, kids, or medical or health care expenses. 

PATREON 

Patreon is primarily for creators who have an audience and would like to ask for financial support in return for sharing their works. This includes artists, writers, YouTubers, gamers, performers, and everything in between. 

Patreon offers creators a platform where they can distribute a wide variety of content, including tutorials, webinars, artwork, podcasts, coaching sessions, and more. There’s a support tier system, and each tier comes with different benefits. Unlike other fundraising platforms, however, donations are usually subscription fees, which roll over every month. The expectation is that you’ll be producing work on a regular basis (although, technically that’s not a requirement).

Cost: There are three membership tiers for creators: Lite, Pro, and Premium. Patreon Lite charges 5% of the money you bring in, Patreon Pro takes 8%, while the Premium level takes 12%. The more expensive membership tiers come with additional features and tools. 

Best For: 

• Dedicated content creators

If you’re a creator and you have the drive and time to create content on an ongoing basis, then Patreon might be for you. However, the support of your fans hinges on your commitment to creating more content, or being available for coaching or mentoring sessions.

KO-FI 

A newer kid on the crowdfunding block, Ko-Fi is part freelancing platform, part crowdfunding platform. It allows users to set up shop and offer their services or products, with payments coming through one-time donations, rolling monthly subscriptions, and direct purchases. 

If you’re not ready to commit to something long-term or ongoing, such as regular offerings to your audience, then Ko-Fi is a good place to start. It works well as a “casual” fundraising platform and may be a good in-between option for hobbyists looking to generate extra income on the side. 

Cost: While Ko-Fi itself doesn’t take a fee, there is a standard payment processing fee (which varies depending on the amount and location of the donation. It’s free to set up shop. However, Ko-Fi offers a Gold tier, which is $6 a month. Instead of just the $3 tip, the Gold tier allows you to choose how much your “tip” is and how you get paid. Plus, you can glean insights through analytics and post exclusive rewards. 

Best For: 

• Entrepreneurs looking to get their feet wet
• Creators who don’t want to commit to a monthly reward schedule

Ko-Fi is a great first stop for anyone who’s interested in offering products, services, or content, and isn’t quite ready to create content on an ongoing basis. 

SHOULD YOU USE A FUNDRAISING PLATFORM?

If you’re intrigued by the idea of raising money through a crowdfunding platform, it’s best to know the pros and cons. All in all, crowdfunding platforms are nice because they don’t require much time or resources to get started. Plus, you don’t have to worry about paying anyone back. 

On the flip side, successful crowdfunding campaigns typically require a lot of time and energy to launch and execute. You might find yourself emailing every single person you know to hit your goals. And of course, you’ll want to be mindful of the fees, terms, and also the limitations of each platform.

Ultimately, the success of your campaign comes down to some things you can control (your messaging and how well you promote yourself) and some things you can’t control (the financial capacity of the people you’re asking). In most instances, there’s not much harm in at least trying, but success is far from guaranteed: GoFundMe campaigns have about a 90% failure rate.

I learned the hard way that avoiding credit may seem like a smart way to save yourself from future hardships like debt and overspending, but it’s much more likely to cause a different sort of hardship when you discover that having no credit history is the same as having a very bad credit history. And while it’s completely reasonable (and advisable!) to be extremely cautious with credit, avoiding it altogether can be a recipe for disaster.

So here’s what happened, what I learned, and why developing a healthy relationship with credit is a much better goal than never using credit at all.

THE RATIONALE FOR AVOIDING CREDIT

I was a saver growing up. I liked having money, but not nearly as much as I was afraid of not having money. Even from a young age, I was predisposed to reducing risk and avoiding regret. 

When I got older, that urge to avoid risk influenced how I managed my money. The financial education I received basically boiled down to “credit cards lead to credit card debt, which leads to shame, social rejection, and maybe even bankruptcy.” There didn’t appear to be a healthy middle ground, so I stuck to cash and debit cards for a decade-plus. It just seemed safer and it kept me out of debt, which had to be a good thing, right? 

GOOD CREDIT MEANS PROVING YOURSELF

While not being in debt was certainly nice, that continued avoidance of any and all credit and loan products wasn’t actually a good thing. 

Since we tend to think of credit scoring as demerit-based (because it seems like the only things on there are notations of the few times you messed up) there can sometimes be an assumption that by not using credit – and therefore not having any mistakes – our credit should be “good” (if not perfect). That was my thinking, anyway. As I desperately avoided credit card offers at all turns, I thought I was actually preserving a spotless credit history. Of course, that wasn’t the case. 

That’s because a credit score is a product, created by credit reporting agencies, and sold to potential lenders. The purpose of this particular product is to help lenders understand how risky it will be to extend credit to certain individuals (or companies). Credit reporting agencies, therefore, need that product (the score) to be as accurate as possible, or else lenders won’t use it. 

What that ultimately means is that if you don’t have enough of a credit history, then credit bureaus don’t have enough information to assign you a score that they feel would be an accurate representation of your riskiness as a borrower. How can they know how risky it is to lend you money when you’ve never borrowed money before? 

HAVING NO CREDIT IS EXPENSIVE

My great credit awakening came when my car broke down for the last time and I found myself in a position all too familiar to many Americans: I didn’t have enough saved. I wasn’t prepared for such a singularly large expense. In fact, I barely had enough for a down payment on the cheapest used car on the lot. 

The moment of enlightenment happened in the financing office, where an increasingly exasperated loan officer did his best to get me the funds needed to buy a truly underwhelming car. In the end, I got the loan and the car, along with an interest rate so embarrassingly high, I can’t bring myself to share it here.

That’s when the loan officer explained the issue at hand: “You don’t have any credit history. Like, none. At all.” 

Lending money is risky, you see. In order to mitigate that risk, lenders set standards and protocols for who they will and will not lend to. With no credit history and no credit score, I simply didn’t meet the standards for a lot of creditors, who rejected me one after the other. (Seriously, I got at least a dozen different “Here’s why we rejected your application for credit” letters afterward.) 

The lender that did agree to finance my car was required – by their protocols – to charge me an exorbitant interest rate in order to mitigate the risk. 

That’s how the cheapest car on the lot ended up costing me about as much as a new car.

MAKE CREDIT AN ALLY, NOT AN ENEMY

Ultimately, my extremely expensive cheap car was a valuable lesson in why I couldn’t ignore credit any longer. On top of maintaining timely auto loan payments, I opened a secured credit card, which I used regularly (and paid off immediately, thanks to the power of online banking). After the secured card graduated to a regular, unsecured card, I refinanced the car loan and opened a second card with a higher limit and better terms. 

To this day I make my payments on time and avoid carrying a balance. And that’s basically it, but it’s been enough to build a strong credit history and a high credit score. That credit score helped me buy a house and a new car (for my wife – the expensive cheap car, long since paid off, continues to be an inexplicably good investment).  

There are a lot of good reasons why you might want to avoid using credit. And if you’ve been burned by credit before, you may be especially inclined to live a plastic-free life from now on. But in the long run using credit responsibly will serve you much better. Take my word for it.

Such an impactful event also brings up questions of how people are coping and which new habits will stick when we no longer have to worry about the coronavirus. We talked to some experts to find out how COVID has changed us and what changes may be still to come.

FIGHT, FLIGHT, OR FREEZE

Looking back at how people initially responded to the coronavirus outbreak offers some insight into how a crisis can impact us. 

“First and foremost, COVID is affecting our mental health by creating an initial stress response: fight, flight, and freeze,” says Dr. Alex Melkumian, founder of the Financial Psychology Center in Los Angeles. 

Perhaps you’ve seen or experienced some of these responses. People “fighting” by updating their LinkedIn profile and jumping into a job hunt. Flight and freeze might look like avoiding the situation and putting off everything until the last minute. Although, a similar lack of response can come from optimism bias—the belief that everything will work out okay. 

Of course, there’s more at play than an initial response, and people react differently depending on the situation. For example, after a layoff some people may avoid filing for unemployment due to shame or pride rather than a flight or freeze response. 

Crisis responses have also played out in different ways on a large scale. If you think back to the early days of the pandemic (a lifetime ago), you’ll remember how panic-buying led to toilet paper shortages. 

SOME FINANCIAL HABITS ARE ALREADY CHANGING 

Over half-a-year in, people have had time to adjust, develop new routines, and implement changes. Some of these might not be habits, per se, but they can still have a long-term impact. 

“A lot of what holds people back is that they think there’s all the time in the world to get it done,” says financial therapist Lindsay Bryan-Podvin. “When the reality hits… the fire burns to get things going.” Many of her clients are finally crossing things off their financial to-do list, such as getting life insurance or writing up a will. 

A McKinsey & Co. survey from October 7, 2020, offers more insight into what types of financial habits may be changing: 

• Most people are cutting back on discretionary spending.
• About 23% to 25% of people recently started using food or grocery delivery services for the first time, or are using them more often. Of those, over half plan to continue using these services after the coronavirus subsides. 
• A small group (12% to 13%) is trying curbside store and restaurant pickup for the first time, and about half of that group plans to continue using curbside pickup. 
• More than two-thirds of people are trying new shopping methods, brands, or stores. Many are “trading down” to find cheaper brands and retailers. 
• Since the pandemic, people are increasingly aware of how companies care for their employees’ safety (23%) and a company’s purpose or values (17%).
• The increased use of social media, wellness apps, online streaming, and online fitness programs may continue post-pandemic. Topping the list of changes that may continue is an offline activity—regularly cooking.

Katherine Milkman, a professor at the University of Pennsylvania’s Wharton School, also recently shared some insights on what habits can be “sticky” in an interview on the Slate Gist podcast and article by Joe Pinsker in The Atlantic. 

For example, it’s not hard to imagine someone developing a preference for a lower-cost brand or more convenient services. But washing your hands for 20 seconds might not stick when there’s no fear of a virus. 

TRAUMAS MAY STAY WITH US 

Specific habits aside, there could be a lasting impact on people’s relationship with their work and finances. 

Even before the pandemic, the American Psychological Association’s annual Stress in America survey from 2019 found that most people listed work and money as one of their most significant sources of stress. The pandemic and resulting layoffs has only exacerbated those stressors. 

“This is our Great Depression,” says Melkumian. “The level of anxiety and concern and worry could be exponential to where we were before. From a mental health standpoint, we’ll see an increase in financial trauma.” 

There’s no single answer to how this plays out. The pandemic is affecting households in drastically different ways, and even those who are impacted in similar ways may have different responses. 

“How much we’re going to be ruled by fear, caution, worry, anticipation, and doomsday scenarios is going to be part of our overall psychology and how we approach finance,” says Melkumian. “There may not be answers until we get there, but we need to beware of our psychology.” 

He also draws the connection between financial stressors and the resulting impacts on how you may interact with your spouse or kids, and your overall wellbeing. “In turn, how does that affect your physical health? What happens to your family and identity as a provider and contributor?” Melkumian asks. 

BUT THIS IS ALSO AN OPPORTUNITY FOR CHANGE 

While the pandemic can cast a foreboding shadow over everything, if you can get out of crisis mode, it can also be a significant opportunity to rethink your life and the habits you want to change. 

As Bryan-Podvin shared, some of her clients have done this by checking off some of their financial to-dos. She’s also observed a growing interest in making more drastic lifestyle changes. “They’re starting to consider what life would be like if they downsized housing and could retire earlier, or spend more money elsewhere,” she says. What might have been a daydream before has become a more realistic option. 

“Obviously there’s a lot of uncertainty. We’re in a limbo pattern of not knowing when we can resume normal life,” says Melkumian. “But I’d love COVID to be the call to action to improve and increase our financial consciousness, awareness, and literacy.”

hese wellness tips might be met with an eye roll if you work 40-plus hours a week. Being squeezed on time, money, and space is the unholy trifecta that can have you spiraling into making poor lifestyle choices.

If you don’t have access to a full kitchen, or if you work a ton and don’t have the luxury of cooking every night, it might be easier to nuke a frozen dinner in the microwave or order your favorite greasy combo meal from the McDonald’s drive-thru. Eating well when you’re tight on resources is entirely possible. Let’s take a look at how it can be done: 

BUY INEXPENSIVE, NUTRITIOUS INGREDIENTS 

Look for low-cost, nutrition-packed ingredients that have a long shelf life. This includes grains, beans, and rice. If you have a freezer, frozen foods are as nutritious as their fresh counterparts. As an added bonus, the nutrients in certain frozen veggies are sometimes “frozen in,” making them more nutritious than fresh veggies. 

You can also save by eating less meat. Since there’s a meat shortage, you can save money and hassle by eating plant-based more frequently. 

There are some great, free resources to help you eat well on a budget. The Environmental Working Group (EWG) researched over 1,200 foods to assess their nutritional value, price, and environmental impact. While the guide is from 2012, the research remains sound. You can do a search for the top foods and make those items staples going forward. 

INVEST IN A CROCKPOT 

There are many inherent joys of having a crockpot. The convenience factor is a big one. Namely, you just toss in a bunch of ingredients, set the timer and put a lid on it, and let it do its thing for a few hours. You don’t need a kitchen or tons of space to have a slow cooker, either. All you need is an electrical outlet.

Some easy, nutritious meals you can make with a crockpot are veggie chili, which requires some veggies, beans, water, and spices. You can also concoct a quinoa mixture with grains, cilantro, and some veggies. You might be able to find a quality slow cooker at a home goods or discount retailer for cheap. You can also scour online marketplaces like Craigslist or Facebook Marketplace to find a used one. 

Other kitchen tools that might help you save on time but are a little bit of an investment upfront include an air fryer, or Instapot. Air fryers are a popular choice to make healthy veggie snacks. 

KEEP LOW-COST STAPLES ON HAND 

To make sure you get your nutrients in and eat a balanced diet, make sure you keep a rotating selection of food staples on hand. For instance, tinned fish — think sardines, tuna, or cod liver — are packed in protein and vitamin D, but are quite affordable. They go well with a side of crackers or cucumbers. You can even mix them with some mustard or hummus. 

Other food items that are relatively cheap include beans, rice, and grains. You can easily buy these in bulk. To switch things up, experiment with different combinations of spices. Most spices are typically low-cost, and you’ll be surprised at how much you can change the flavor of a dish by playing around with different sauces and condiments. 

CARRY SNACKS WITH YOU 

If you’re always on the go, cut back on highly processed foods and fast food meals. Not only are prepackaged salty snacks and candy low in nutrition, but they tend to be more expensive. 

Instead, go for simple, minimally processed snacks when you’re out and about — nuts, trail mix, apples with some peanut butter, roasted chickpeas, or popcorn with a bit of nutritional yeast sprinkled on top are reliable options. 

These snacks can also help you fill up more quickly, so you end up eating less. And swap out the prepackaged stuff for bulk items, and pack your own. You’ll get more bang for your buck, and you can mix things up as you please. 

SHOP IN YOUR PANTRY 

Before you head to the market, take inventory, and see what’s already in your fridge and pantry. Try using up existing food items before embarking on another shopping trip. If you want to bring things up a notch in terms of commitment, try a 30-day no-spend challenge, where you try to only use what’s in your home. You can only buy items that are a necessity, or to replace something that’s run out. It’ll urge you to be more creative! 

Eating well when resources are tight isn’t as challenging as it seems. It requires a bit of know-how. But really, it’s all about making some minor adjustments, being efficient as to how much time you spend preparing food, and doing a bit of research to see which foods offer the most nutrition for the lowest cost.

As a culture, we struggle to talk openly about a lot of topics, but money is perhaps the one that causes the most discomfort. There’s so much pride and fear and sometimes shame wrapped up in the size of our paychecks, the depths of our debts, and those little three digit numbers that make up our credit scores.

So it’s no surprise that new couples aren’t always comfortable having some pretty crucial conversations about money and our relationship with personal finance. But whether or not you’re headed toward marriage, it’s really important that all couples take the time to understand one another and get on the same page. That doesn’t mean they have to agree or share all the same values. It just means that by having these conversations and understanding one another, they’ll be better able to make compromises that satisfy both parties.

With that in mind, here are ten topics you should always try to explore with your partner. You don’t have to dive into every topic all at once, but the more you know, the more comfortable you’ll both feel.

FAMILY INFLUENCE

How did your family handle money when growing up? You may not immediately recognize the influence of your parents or caregivers in the way you approach money, but it’s there. Your relationship with money – for better or for worse – is shaped largely by how your family dealt with money during your younger year.

So ask each other:

• What did you like/not like about the way your family handled money?
• What about the way you manage money feels like a reaction to how your parents managed money?

SPENDING VERSUS SAVING

How much do you prioritize saving money? Some of us are more naturally inclined to focus on saving money for rainy days or big picture goals, while others focus more on the here and now. Understanding how you and your prioritize your available funds (and why) can help mitigate hard feelings down the line.

Try asking each other:

• How much savings is “enough” savings?
• What would you do if received an unexpected $1,000?

HAVING VERSUS EXPERIENCING

Do you prefer spending your money on things you can keep or memorable experiences? When it comes time to make some big decisions with your collective money, this can be a major dividing line. Understanding what your partner values and what makes them happiest can help you find a middle ground that satisfies both parties.

Ask each other:

• What’s the best gift you ever received?
• Would you rather save up for a special gift (new TV, new car, etc.) or a dream vacation?

MONEY STRESS

Different people have different thresholds for financial stress. For some people, getting calls from creditors is a minor irritation. For others, there mere thought of carrying a credit card balance is enough to cause a minor panic attack. It’s important to know what your partner considers a “problem,” especially if your radar is tuned quite differently.

Try asking each other:

• What makes you worry about money?
• How would you feel if you got a collection call?

DEBT SITUATION

Debt doesn’t need to be a mark of shame or a relationship deal-breaker. But if you can’t openly discuss your general debt situation that can become a major issue down the line. Remind yourself that it’s perfectly okay to carry debt. The issue is always how you’re able to balance that debt against your other expenses and goals. A good partner should be an ally, but they can’t help you if you’re not able to be honest.

Begin by asking each other:

• How do you feel about your debt?
• Do you have any debts that you think we should focus on?

CREDIT SITUATION

While your partner’s previous credit challenges won’t show up on your report, his or her bad credit could cause problems when applying for joint credit, particularly for big picture items, like a new car or a mortgage. 

The important thing to remember about credit is that you can absolutely improve a poor score over time. If you’re able to be open about your current credit situation, you can work together to make the necessary improvements that will have you prepared for when your ready for some of those big picture purchase.

Start the conversation by asking each other:

• How do you feel about your credit?
• Is there anything about your credit history you’d like to work on improving?

JOINT ACCOUNTS

Different couples handle money differently. Having separate accounts can be a practical way to share financial responsibilities while maintaining individual freedoms. However, many couples who agree on spending habits find that a joint account works well for them. The key to either choice will always be open and consistent communication.

Try asking each other:

• Would it make it easier if we created a joint account for joint expenses?
• Do you feel comfortable having an account that we both control?

JOINT DECISIONS 

It may be helpful to define what each of you considers a “big” financial decision. One potential key to a happy financial life is to vow to make all big financial decisions together. For that to work, though, you’ll need to be on the same page when it comes to your definition of “big.” After all, one of you might consider a television a huge purchase, while the other might be thinking more along the lines of a car.

Ask each other:

• What kind of purchases would you want to be consulted on?
• What dollar amount feels like too much to spend without telling you first?

DAY-TO-DAY MONEY MANAGEMENT

Sometimes one member of a relationship loves managing the money and the other one just doesn’t. It’s perfectly okay for one half to do most of the financial driving, but only if that’s the agreement you’ve reached mutually. No assumptions, no unexpressed expectations. Once your finances become interwoven, make it clear how you want to share the work. Ideally, neither side should feel cut out of the process or asked to do things they aren’t comfortable doing.

Begin by asking:

• How comfortable do you feel managing bills and other household financial responsibilities?
• How much do you want to know about where our money goes and how much we’ve saved?

FINANCIAL GOALS

Everyone, whether they’re in a relationship or single, should take the time to set financial goals. Those goals will help guide your decision-making and provide some helpful structure to your spending plan. You just want to make sure that your goals are aligned and that you’re flexible should things shift in the years to come.

Ask each other:

• What are your top three goals?
• How quickly do you want to achieve those goals?

These conversations aren’t always easy to start, but once you have one or two, they’ll become easier and easier. The worst thing you can do is hide your feelings and your financial challenges from one another.

However, plenty of credit cards hide predatory terms in the fine print. Lots of them even couch those bad deals in terms that make them sound like good deals. When you’re considering opening a new credit card account, make sure you understand and agree to these finer points. 

Here are six specific features to review, what to look for, and when to walk away:

1. REWARDS TERMS AND LIMITS

With rewards cards, for every dollar you spend, a percentage of that purchase is applied to a benefit for you. This might be a cash rebate, frequent flier miles, a credit on your account, or a combination of the above. The idea is that you get something of value back, in proportion to how much you spend.

WHAT TO LOOK FOR 

Review the rewards program’s exact details and write them down on a separate piece of paper. Specifically, look for:

• What you get back
• How much you get back per purchase
• If there are any thresholds or limits
• What fees are associated with the program
• The process for using your rewards

Some cards may offer high rewards, but cap them at a level beneath the card’s fees. If, for instance, you get 5% cash back on a prepaid card that costs $7 per $100 you load on it, you’re losing money on that deal.

Similarly, consider how you’ll use the card. If you plan to keep it as an emergency resource without putting regular spending on it, then 3% cash back with a $75 annual fee is worse than no rewards.

2. TERMS OF LOW-INTEREST RATES

Although the average credit card interest rates fall between 12.99% APR and an APR in the low 20s, you can find offers with zero interest. These are almost universally introductory offers with a much higher interest rate after an initial period. 

WHAT TO LOOK FOR

These low interest rates may be a trap, resulting in you paying higher interest later. Find out how long the introductory period lasts and the exact interest rate that kicks in after it expires. Also, look to see if there are ways you can lose the initial rate early. For example, many cards end the deal the first time you make a late payment. 

Be extremely wary of cards that offer a long-term low interest rate. In many cases, these offers come with high fees. Although there is no interest, the costs can add up to the equivalent of an APR of more than 20%.

3. LATE OR MISSED PAYMENTS

Almost every card available charges a late fee if you make your payment past the due date. These run between $28 and $39, according to research by U.S. News & World Report, and they’re added to your interest-accruing balance. This can sting, especially in a month when you already have trouble paying your bills.

WHAT TO LOOK FOR 

Look carefully at the policies for what happens if you miss payment due date. Beyond the loss of an introductory interest rate, it can also bump up your regular interest rate. Read the policy carefully, and ask questions. Some cards might also suspend rewards or benefits after a late payment. 

4. BALANCE TRANSFER SPECIFICS

You can save on interest from high-balance cards and loans by putting the balance on a card with a low-interest balance transfer offer. This works out well for them because they’re getting business you were doing with another company — and because most people end up carrying that balance after the offer expires. 

WHAT TO LOOK FOR 

The most important information here is the length of the low-interest balance transfer offer and how the issuer prioritizes your payments. Calculate how likely you are to pay off or make a dent in the balance within the low-interest period, and then run the math on how long after that you’ll be accruing fees. 

Prioritizing payments tells you whether the money you pay on the card goes first to the transferred balance or any purchases you made with the card. Because both accrue interest at different rates, this can make a surprising difference in how long it takes to pay your balance off. 

Finally, look very hard at the balance transfer fee. It’s typically 3% to 5% and accrues immediately upon the transfer, which can make a huge difference to your bottom line. For example, moving money from a card with a 15% interest rate to a card with a 12% interest rate and a 5% fee could end up costing you more than just staying put. 

5. FEE STRUCTURE

The card looks great, offering a high credit limit, flexible terms, great rewards, and small benefits and bonuses for cardholders. The interest is even lower than you expected for somebody with your credit rating. So, what’s the catch? Check out the fees.

WHAT TO LOOK FOR 

Those too-good-to-be-true offers often have hidden costs in the form of a variety of fees. Annual fees, processing fees, monthly service charges, foreign transaction fees, exchange fees, and a host of other flat or percentage-based fees can show up on our statement. Added up, they can be the equivalent of APRs well above other cards you qualify for, or even higher than the law permits under usury statutes.

Go through the user agreement until you’ve tallied up every possible fee, then add them together. Then use the APR and what balance you imagine you’ll carry to calculate the card’s full and actual cost. In other words, don’t let great perks trick you into opening a card that costs more than it’s worth.

6. BELLS AND WHISTLES

Many higher-end cards come with a variety of small, but convenient, extra benefits for cardholders. For example, one card may give you a free Netflix account. Although these perks aren’t the core purpose of opening a credit card, they can make life more enjoyable and be used as a tie-breaker between two otherwise similar offers.

WHAT TO LOOK FOR 

Nothing is truly free, and most perks come with some sort of a trade-off. Some may even comes with a fee. If the perk is a subscription or membership, there may be a flat annual or monthly fee for access. Find out what the cost is, then compare it to what you would likely spend on that service outside of this credit card offer (assuming you even want that service).

All in all, because they aren’t money-makers for the credit card company, these added extras can leave a lot to be desired when it comes to quality. Read the offer details carefully to be sure you know what you’ll be receiving.

FINAL THOUGHT

This analysis isn’t just for new credit cards you’re considering opening. It can also help you make purchasing and payoff decisions as you work your way out of debt. For example:

• Understanding the late payment policies of different cards can help you choose which to skip paying during a lean month.
• Knowing the limits and details of your miles or cash-back offers can help you understand which one to use for specific situations.
• Remembering the actual fees and interest paid each month can guide which card you aim to pay in full first.

Whether you’re looking at new credit, old balances, or what to do next with what you already have, understanding these fine points will help you master your credit instead of letting it master you.

Some people may even put off working for themselves because they think they need to form a company first. However, with many types of work, you can start and build a successful business without registering a limited liability company (LLC) or forming a corporation. 

WHAT IS A LIMITED LIABILITY COMPANY?

A limited liability company (LLC) is a legal entity that’s separate from you, the business owner. You register an LLC with a state—it doesn’t necessarily need to be the state where you live—and the state’s laws dictate the costs and responsibilities of the business’s owners. 

Often, there is an initial filing fee with the state and requirement to file a report (and possibly pay an additional fee) every year. You may also need to register your business with your city, which can come with its own requirements and fees.

You can do the process yourself, or hire a company to help you prepare and file the paperwork. However, forming an LLC isn’t a requirement if you want to run a business. You can start a business simply by beginning to sell products or services to others, and you’ll have what’s known as a sole proprietorship. 

In fact, if you’ve worked as a contractor (perhaps for a rideshare or delivery app) and received a 1099-MISC, you may have already filed your taxes as a business owner, even if you didn’t realize it. A sole proprietorship can be a great way to start as there’s no additional cost to get started. However, there are also good reasons to form an LLC. 

FORM AN LLC TO LIMIT YOUR LIABILITY

Unlike an LLC, a sole proprietorship doesn’t draw a legal distinction between the business owner and the business. One reason many business owners form an LLC is for this extra layer of separation and, as the name implies, to limit their liability. 

For example, if you have a sole proprietorship and one of your customers gets hurt using your product, the customer may sue you for damages. You could be personally liable, and all your personal assets could be at risk if you lose the lawsuit.

If your LLC sold the product, the customer may only be able to sue the LLC, but not you personally. As a result, the LLC may have to pay for damages. However, even if the LLC doesn’t have enough assets to cover the cost, the other party might not be able to go after your personal assets. 

The level of protection than an LLC offers can depend on a number of factors, including your involvement with the business and whether you’ve taken adequate steps to separate your personal and business finances. If you’re registering an LLC for liability protection, it’s best to speak with an attorney who can help you draft the necessary documents and advise you on how to separate and protect your personal assets. 

CHOOSE A TAX OPTION THAT CAN SAVE YOU MONEY

Whether or not you’re looking to limit your liability, you may also be able to benefit from different tax rules that you can choose for the LLC. 

By default, an LLC isn’t a separate tax entity—it’s a pass-through entity. This means that the money the business makes or loses gets passed through to the owners’ personal tax returns. It will be as if you’re running a sole proprietorship (or a partnership if you have business partners), and you’ll use the same tax forms.

However, you can also elect to have your LLC taxes as either a C corporation or S corporation, and use those tax rules instead. Being taxed as a corporation can add new responsibilities and costs, such as running payroll for yourself, but you may save more on taxes than you spend on administrative fees. 

As with hiring an attorney to discuss the legal protections an LLC can offer, you may want to hire an accountant who is familiar with your industry and state to discuss the tax options. For a one-time fee, many accountants can create a side-by-side comparison of the total tax liability with each option. 

DECIDING IF AN LLC MAKES SENSE FOR YOU

More complex situations can make the business entity choice particularly important. For example, if you’re forming a business with several partners or if you plan on raising money from investors, then there are different trade-offs to consider. But for solopreneurs and freelancers, the decision to form an LLC often comes down to how risky their business is and whether they can save money on taxes. 

If you’re just starting and there’s not much risk involved, sticking with a sole proprietorship often makes sense. As your business grows, you can reevaluate the situation and decide if you want to transition to a limited liability company. 

There was a time when shopping from home was the height of convenience and luxury. Eventually, the idea of just picking up your phone and buying a tub of laundry detergent was so commonplace it hardly seemed notable.

And of course, nowadays making purchases online isn’t entirely about convenience. If you’re looking to limit face-to-face contact and reduce your potential exposure to contagious diseases, online shopping can certainly help.

But shopping online does create an entirely different set of risks – risks to your identity and your financial security. The basics of safe online shopping have remained fairly consistent in the past decade-plus, but it’s always a good idea to refresh yourself and ensure that you’re following all the best practices. If you’re making purchases online, make sure you’re taking these steps every time.

KEEP YOUR DEVICE AND YOUR BROWSER UP-TO-DATE

Malware is constantly evolving. To stay ahead of the curve, software developers are continually updating operating systems and browsers, shoring up weaknesses and vulnerabilities. You may miss out on some of these important tweaks if you’re not updating to the latest version, so stay alert for updates and install them as they become available.

USE ANTI-VIRUS PROTECTION AND SCAN YOUR DEVICE REGULARLY

Most modern anti-virus programs update automatically and runs scans in the background on a regular basis, so you won’t have to do anything on your own. But if for some reason there is no anti-virus protection on your device, or if you need to schedule scans manually, be sure to take care of that, or else you may risk malware infiltrating your device and exposing your personal information.

ONLY MAKE PURCHASES WITH TRUSTED VENDORS AND THROUGH SECURED WEBSITES

If you’re making an online purchase with a new vendor for the first time, take a quick moment to do a little research. Check reviews on third-party websites to see if others have had positive experiences. You may also want to check their listing on the Better Business Bureau.

Once you feel comfortable, be sure to verify that your transaction is being processed through a secure website. Just check the full website address – if it starts with “https” the website is secure.

PAY WITH A CREDIT CARD OR TRUSTED DIGITAL PAYMENT PLATFORM

The last thing you want is for thieves to get access to your bank account. Should your credit card number be compromised, you’ll have the ability to dispute and likely reverse any charges with the card issuer. Digital payment platforms like Paypal offer similar security features.

For an extra layer of security, avoid allowing vendors or your browser to save payment data.

USE STRONG, UNIQUE ACCOUNT PASSWORDS

The stronger and more complex your password, the harder it becomes for a hacker to guess their way to the correct combination. Meanwhile, using unique passwords for all of your accounts protects you in the event that one of your accounts is compromised – either locally (someone saw your password) or via a data breach. It’s no fun to have one of your accounts compromised, but it’s much worse to have all of them compromised, one after the other.

USE TWO FACTOR AUTHENTICATION WHEN POSSIBLE

Two factor authentication adds an additional security layer when accessing accounts or completing certain transactions. One of the most common forms is receiving a text message (to the cellphone number associated with your account) with a special code you need to enter before you can continue. If someone nabs your password, but not your cellphone, they won’t be able to access your account.

AVOID USING PUBLIC COMPUTERS OR UNSECURED WI-FI NETWORKS

If you can’t vouch for the security on a device, don’t use it to submit or share sensitive personal information. The same holds true for public or unsecured Wi-Fi networks. When making online purchases, it’s safer to use a secured personal Wi-Fi network or your cellular network.

TRACK PURCHASES, SAVE RECEIPTS, AND REVIEW YOUR BANK STATEMENTS REGULARLY

Keep a record of what you bought and take a look at your creditor/payment accounts often to verify that there are no strange charges showing up. You should also verify that the amount on your receipts matches what came out of your account.

NEVER EMAIL SENSITIVE DATA

Email just isn’t an especially secure way to transmit sensitive data (like credit card numbers). Be wary if a vendor ever asks for you to complete a transaction via email.

Online shopping isn’t the wave of the future – it’s how we conduct business in the here and now. New threats will always emerge, but as long as you do your best to stay safe, you should be able to shop without (too much) worry.

And some days, those numbers and figures might be swirling around your head in a befuddling jumble. 

In our modern age, you can lean on financial technology to assist. Enter debt repayment apps. In a nutshell, these apps can help you get a handle on your payments, keep track of your debt load, and assist in figuring out how much you’ll be paying in interest based on different timeframes. 

The good news is there’s a bounty of options. Here are our top picks for debt repayment apps: 

UNDEBT.IT 

Undebt.it is a simplified debt repayment online platform that employs different debt payoff methods to tackle your debt. You can choose some payoff options, including the debt snowball, the debt avalanche, the hybrid plan, the highest monthly payment, or the highest monthly interest paid. 

According to its website, Undebit has helped knock out over 700,000 debts. What’s more, there are currently over 120,000 active users, and $8.7 billion of debt is being paid down. 

Features include picking different payoff plans for each debt, sifting through and exporting the payment history for each debt balance, seeing your projected payoff date, and the total interest. 

There is a premium version available, which includes a handful of added features such as payment reminders via text, integration with a Google Calendar, and an at-a-glance view of your payment planner. 

Pricing: Free for the basic plan, and $12 for the premium version. 

DEBT PAYOFF PLANNER 

The Debt Payoff Planner is a solid choice for those who don’t want to create a separate login to track their debt payments. To date, the app has helped over 200,000 pay off debt with custom payoff plans, and successfully crush over $200 million in debt. 

This particular debt repayment tool enables you to choose a debt repayment strategy. You’ll also gauge how long it’ll take you to pay off the remaining balances on your debt. 

How it works: You punch in the current balance of the loan, the APR, and the minimum payment. You can choose between two popular debt payoff methods: The avalanche method or the snowball method. Debt Payoff will come up with a custom plan tailored to your needs. You can also opt to pay an additional amount to get ahead of your debt repayment. 

There are two versions: basic and pro. The pro version includes the following features: 

• The ability to print your plan 
• Web access 
• Payment reminders 
• Charts that show how your debt balance goes down over time if you follow a payment plan 

Available on iOS and Android

Pricing: Free for basic version: The pro version is $1 to $5 a month, depending on the time commitment 

DEBT MANAGER AND TRACKER PRO

The Debt Manager app boasts multiple features, including access to a summary of all your debt and outstanding balances in one place, plus any money owed to you. You can track anything from standard debt such as loans and credit cards, microfinancing, P2P loans, and cash owed to individuals like your friends and family. 

One thing to note is that unlike other debt repayment apps, it doesn’t seem to offer repayment tactics and timelines. However, if you’re looking for a debt repayment app that helps you keep track of all types of debt, it might be worth checking out. 

Available on Android

Pricing: $2.49

ALWAYS KEEP YOUR INFORMATION SAFE 

While apps like these strive to keep your information safe, they do require that you share potentially sensitive data. When using any type of technology that involves personal, sensitive information, you’ll want to take proactive steps to protect your data. 

Finally, although these debt repayment apps and online platforms can help you stay on top of your debt and potentially help you save on interest, in the end, they’re merely tools. The value is all in how you use them. It’s ultimately up to you to make it a priority to pay off debt and figure out how to juggle debt repayment while juggling a bunch of other financial goals.

When schools across the country closed their doors in the spring, many expected that the coronavirus pandemic would subside before class restarted in the fall.

Of course, COVID-19 persists, bringing far-reaching healthcare and economic consequences in its wake. In many places, soaring infections have made the start of school uncertain. 

As a result, some schools are opting to start the school year virtually, hoping extra time in isolation will reduce infection rates and allow more time to prepare for students back on campus. Meanwhile, other schools are deploying a hybrid approach, allowing some students to return to school buildings while others continue virtual learning. Of course, some are choosing to open for business as usual. 

Taken together, there is incredible uncertainty about the efficacy and responsibility of restarting schools. When coupled with broad disillusionment with earlier attempts at virtual learning, this reality is driving up the number of people considering or opting to homeschool their kids. According to a survey by Real Clear Education, a curation platform for educational issues, 40% of parents indicated that they were considering alternative options to traditional school structures. 

However, many education experts are encouraging families to make this decision carefully, noting that homeschooling is a significant undertaking for families. 

It can also have a substantial impact on personal finances, something that looms large for families navigating an uncertain economy. While we are not education experts at MMI, we know a thing or two about personal finances and we have homeschoolers in our ranks, including myself. To help you in the decision-making process, we asked our staff to discuss some of the financial considerations associated with homeschooling.

Here’s what we found. 

HOMESCHOOLING & YOUR BUDGET 

The costs associated with homeschooling will vary by household. However, everyone should evaluate these expenses – both direct and ancillary – before committing to full-time at-home education. 

SALARY

For several months, parents have been asked to play many roles at once. They were simultaneously employees, parents, teachers, and an exclusive support system. This isn’t sustainable, and opting to homeschool is committing to being your child’s primary educator. Although this arrangement is nuanced and somewhat flexible, it may require a parent to take reduced hours, a temporary leave of absence, or quit a job altogether. While families can find creative ways to both work and teach – including relying on extended family and tutors to provide additional academic support – it’s important to crunch the numbers and consider your options before making a decision. 

SOCIALIZATION

Peer-to-peer interactions continue to be one of the most valuable, intangible elements of in-person schooling. Parents choosing to homeschool will likely want to augment this through camps, clubs, sports or other extracurricular activities. While these activities are optional, they each come with a price tag that needs to be factored into your bottom line. 

WORKSPACE

A commitment to homeschooling might require updating or retrofitting space in your home for this purpose. Parents and students will need workspaces, supplies, and other upgrades to create a fertile learning environment. Some of these costs aren’t mandatory (or these features may already exist in your home), but understand the true costs of your workspace expectations, and factor them into your decision-making process.

ACADEMIC ASSISTANCE

Schools are outfitted with a plethora of academic resources that meet the needs of all types of learners. These “extras” come with a cost. Evaluate your child’s academic needs, and estimate the potential academic assistance costs required to provide a high-quality academic experience. 

CURRICULUM

Opting to use an individual curriculum is an up-front investment. There are entire organizations, blogs, and digital resources dedicated to this, which can help parents best understand the cost of academic curriculum. However, be careful not to assume that homeschooling can be completed on free resources alone.

HOW TO CONSOLIDATE COSTS

Homeschooling undoubtedly comes with a cost, but it isn’t necessarily a net loss. Before making a decision, carefully evaluate your entire household budget for potential savings. This might include: 

TRANSPORTATION

While homeschooling, can you consolidate your vehicles? Moreover, how much money can be saved if one parent is no longer commuting to work?

EATING OUT

When families are more home-based, they have the opportunity to be more thoughtful about diet and food plans, giving them more control over an often-overspent budget category. 

Employment & education-related spending. Eliminate costs associated with maintaining a professional wardrobe, licensing, and other job-related expenses. Similarly, parents might be able to save money by spending less on the school clothes and other items that typically accompany the on-campus experience. 

ENTERTAINMENT

The same circumstances that encouraged you to homeschool in the first place are curtailing travel and recreational opportunities. During this season, these budget savings can help make up some of the difference when choosing to homeschool. 

SHOULD YOU HOMESCHOOL?

COVID-19 has pulled back the illusion that we are entitled to a public education that is both academically rigorous while serving as a de facto daycare. All parents want to make the best decision for their children, and there likely isn’t a right or wrong answer when it comes to opting to homeschool (although the stress and long-term financial impact could be a factor). Parents should carefully evaluate their finances as part of a holistic assessment of homeschooling as a best practice for your family.

Ultimately, it’s important to remember that this decision doesn’t have to be permanent. In the years ahead, you can pivot and make adjustments. Just because you are making a change right now, doesn’t mean that you have to make this decision forever. Do your best to make an informed decision and remember you aren’t alone. 

axes are more complicated. Health insurance is expensive and difficult to navigate. Even at-work injuries and gaps in income usually covered by government programs are out of reach. 

Credit is one of the farthest-reaching categories. Lenders prefer W-2 income to self-employed earnings, even when an entrepreneur is making more each month. Here are six specific ways being self-employed can create roadblocks for your financial goals, with insights on how you can overcome those roadblocks.

1. IT CAN BE DIFFICULT TO GET A LOW INTEREST RATE

You might be approved for a loan, maybe even with no more hassle than somebody with a regular job. The trouble is when you look at your statement and see how much that loan costs.

Your credit is all about risk from a lender’s perspective, and banks consider the self-employed a higher risk than people with a regular job. You’ll pay more interest on a similar loan than you would with employment earnings. As a result, every borrowed dollar costs you more — sometimes much more. 

The Solution

You have two ways to mitigate this issue. First, look at the fine print on every loan you’re offered. Find the nominal APR (annual percentage rate) and the actual price you’ll pay after fees and escalators. Don’t be shy about negotiating if that price is high.

Second, form a meaningful relationship with the bank where you hold your business accounts. Know the manager’s name, and say hi to the tellers. When it comes time to negotiate for credit, this can grease the wheels.

2. INCONSISTENT PAYCHECKS CAN LEAD TO MISSED PAYMENTS

You gave up a lot of things you didn’t like when you went to work for yourself, but one generally positive perks you let go of was predictable paychecks showing up on anticipated days. When you’re self-employed, your income ebbs and flows each month. It may be enough to get by, but it’s hard to set a budget with that kind of cash flow.

When business lags, it can get so low you have trouble paying all your bills. Missed and late payments go on your credit report, making it harder to get credit during the next slow patch — which means you have even more trouble paying your bills. This downward spiral can severely damage your credit and your business’s health. 

The Solution

You can solve this quickly by changing your relationship with your budget. Set a salary and pay it as W-2 income to yourself or take an owner’s draw. Base your monthly budget, including debt payments, on that amount. Any extra money you earn becomes a bonus once a month or once a quarter, which you can use for large purchases or fun indulgences. It takes a little organization upfront but is well worth the trouble.

3. LENDERS MAY NEED A TON OF ADDITIONAL DOCUMENTATION

When you’re looking for a loan as an employee, you just show a couple of pay stubs and tell the lender how to contact your boss to confirm that you work there. As a self-employed person, this process gets replaced by a much more in-depth look into your financial situation.

Your credit score won’t be enough proof that you’re a low-risk borrower. Lenders might ask for additional documentation such as a profit and loss statement, business plan, several years of company and personal tax statements, and even letters from vendors or your landlord. The process is more complicated and requires meticulous record-keeping.

The Solution

Keep all of your records. Keep them up to date. Keep them well-organized and easy to find, both in hard copy and electronic format. If you already do this, the keep doing it. If you don’t do it, you’re in for some work.

Get a list of the documents lenders are most likely to want when you apply for credit. Over the next several weeks, locate the materials you have and create the documents you don’t have. Make them look sharp, and store them someplace where you can find them easily.

4. YOU MAY BE TARGETED BY PREDATORY LENDERS

Predatory lenders love business loans. Regulations are more relaxed than those for personal credit, and the numbers can be much higher. You may have already received calls from them, offering you a high credit limit with unreasonably low requirements and stipulations. They’re more like loan sharks than traditional lenders. 

These loans tend to take advantage of desperate or inexperienced business owners, trapping them in a cycle of minimum payments and high interest. Usually, they come with one or more deal-breaking aspects, such as:

• Exceptionally high interest rates (often more than 20%)
• Hidden costs and fees spiking the effective interest rate to levels that would otherwise be illegal
• A contract allowing the lender to debit payments from your account at will

Such conditions make for bad loans and can kill a business over time. Even if you make the payments faithful, these lenders often report late payments early and negotiate in bad faith. They can ruin your credit quickly, especially if you start to push back against their questionable policies.

The Solution

Apply two simple rules to any credit offer you’re considering. First, if the lender called you rather than the other way around, you should be cautious. Second, apply the well-worn advice that anything that seems too good to be true probably is, and move on.

5. YOU MAY LEAN ON PERSONAL CREDIT TO FINANCE BUSINESS EXPENSES

Because business credit is expensive and hard to get, many self-employed people end up putting business expenses on personal credit cards. Credit churn happens when you’re constantly using a personal card to cover operational costs, including inventory, payments to vendors, and similar expenses, and then quickly paying that personal debt with business income. 

This one’s not so much a problem as an opportunity with a downside. The churn puts you at risk of carrying a balance every month. When business revenues drop, that balance can harm your credit history by showing you’re borrowing more than you should. It also increases your business costs because you’re paying interest on those expenses.

The Solution

As we said, it’s also an opportunity. As Tim Ferriss says in The 4-Hour Workweek, you can run those expenses through a card that earns cash back, air miles, or other rewards. As long as you keep your balances paid each month, the churn can net you meaningful savings, tax-free.

6. YOUR REPORTED TAXABLE INCOME MAY BE TOO LOW FOR CREDIT APPLICATIONS

One benefit of being self-employed is charging some expenses to your business. Although you should never be abusive or dishonest, it’s common practice to drive a company car, expense office supplies, and apply part of your utilities and phone expenses to your business. These write-offs save on taxes but can cause credit issues.

For most self-employed people, the income they report on their tax returns doesn’t represent the buying power of their full earnings each year. This can be a problem when you’re trying to get credit and the lender wants to compare your reported income against the needs of the loan you want. 

The Solution

Unfortunately, there isn’t a reliable solution to this dilemma. If you report more income, you pay more taxes. If you report less income, your access to credit may suffer. Your best bet is to plan for your credit needs to the best of your ability. That way, you can at least adjust your tax strategy accordingly. 

FOLLOW CREDIT BEST PRACTICES NO MATTER WHAT YOUR EMPLOYMENT STATUS IS

For anyone, self-employed or not, it pays to keep your credit score as high as possible and your credit report clean. But this is especially crucial for the self-employed. A high enough credit score can overcome or alleviate most of the problems mentioned above. Keep yours healthy and robust with techniques like:

• Checking your credit report regularly for problems
• Paying your credit card balances down to zero whenever possible
• Paying all bills on time
• Negotiating directly with lenders if you can’t avoid paying late
• Avoiding unnecessary applications for credit
• Keeping zero-balance cards open and on hand, even if you don’t use them

There’s no guarantee that getting all the credit you need will be a cinch, even if you’re armed with a good credit score and reliable business records. But it’ll certainly be easier if you follow these tips and keep your credit healthy on a day-to-day basis.

While the money you contributed is yours forever, accounts can sometimes get forgotten about in the shuffle. And, in some cases, you may not have even realized you’d had a retirement account if your employer automatically signed you up and withheld contributions. 

Whether intentional or not, you can wind up with a handful of retirement accounts at different companies and lose track of some of them over time. Former employers and plan administrators may lose track of your current contact information. 

Here’s how to check and track down old accounts, and what you can do to get your finances organized. 

FINDING OLD RETIREMENT ACCOUNTS

You may want to start by contacting your former employers and the plan administrators, the companies that ran the retirement plan. Sometimes, you’ll find that your retirement account is still there and chugging along as is, hopefully growing in value over time. If you want, you may be able to leave it there, although update the company with your current contact information so it can let you know about any important changes. 

However, it’s not always that easy. If your account had less than $5,000 in it when you left, the plan administrator can transfer the funds to an individual retirement account that was set up in your name. If it had less than $1,000, the company may have tried to send you a check for the amount to the address it had on file. You may also have trouble tracking down the account if the company went bankrupt or switched plan administrators, leaving it up to you to figure out who is holding onto the money now. 

One thing is certain—other companies don’t get to keep your money. If a company can’t figure out how to contact you, it has to turn unclaimed funds over to state agencies. You can start searching for your unclaimed funds in these databases:

• The Unclaimed.org and MissingMoney.com databases are run or endorsed by the National Association of Unclaimed Property Administrators. It’s a good place to search for all sorts of unclaimed funds, not only forgotten retirement plans. 
• The U.S. Department of Labor has an Abandoned Plan Search tool that’s specifically for retirement plans that don’t have a plan sponsor or plan administrator. This could help you track down a retirement plan if your former employer or plan administrator. 
• The National Registry of Unclaimed Retirement Benefits can also help you find retirement plans if your former employer registered with the service. 

Once you find your account or money, you’ll still need to decide what to do with it. 

WHAT ARE YOUR OPTIONS FOR OLD RETIREMENT PLANS?

You generally have four options for dealing with money that’s in an employer-sponsored retirement account when you’re no longer working at the company:

• Leave the money where it is: Although you might not be able to contribute to the account any longer, you may be able to leave the money in your former employer’s plan. Sometimes, you may need to meet a minimum account balance to qualify, such as $200 for a TSP or $5,000 for some 401(k)s. 
• Transfer funds to a new employer-sponsored plan: If you have a new job with a company that sponsors a retirement plan, you may be able to “roll over” the money into your new employer’s plan. When this is an option, compare the previous and new plan’s fees, terms, and investment options to see which is best. 
• Roll over to an individual retirement account: You can also move the money into an individual retirement account (IRA). An IRA may give you more control as you can choose where to open the account and invest in a wider range of funds. It’s also fairly easy to move from one IRA to another as the account isn’t tied to your employer. However, IRAs could have more fees, especially if you don’t have a lot of assets and don’t qualify for lower-cost investment funds. 
• Cash out: You can also take the money out of retirement accounts completely. But unless you’re 59½ or older (55 if you just left the job), you may need to pay a 10 percent early withdrawal penalty in addition to income taxes on the money. 

PICKING THE BEST OPTION

Figuring out what to do can be difficult, as there may be complex tax and investment return implications for each decision. 

In many cases, unless you’re ready to retire, moving the funds into a new retirement account is often a good option. If your funds are in an IRA that was opened in your name, the IRA provider may be charging high fees. And, unless the old employer offers a much better plan than your current options, consolidating your money within a few accounts can make it easier to track your investments and help you qualify for discounts or benefits from plan administrators. 

The easiest way to do this is with a direct transfer, where the money never touches your hands. Otherwise, 20 percent of the money has to be withheld for taxes, and you only have 60 days to deposit the funds into the new retirement account or the withdrawal will be treated as a cash out. 

Fair warning, there can still be a lot of paperwork involved with a direct transfer. However, the company that you’re sending the money to will often be able to help you with the process. 

No matter what option you choose, if you’ve got old retirement accounts floating out there it’s in your best interests to track that money down sooner than later. The more you know about your retirement funds, the more options you may have the next time you’re faced with a major financial setback. At the very least, you’ll understand where you stand as you prepare for retirement.

Financial calamities, like the current coronavirus pandemic, mean that credit card issuers may have to temporarily increase the scope of those hardship programs or else risk seeing millions of accounts defaulting simultaneously. The problem, however, is that sometimes the deferment ends before your situation has gone back to normal.

So let’s take a look at what happens when your credit card deferment ends, and what you can do to protect yourself.

VERIFY THE TERMS OF YOUR HARDSHIP PROGRAM

To start, make sure you understand what benefits are actually in place and for how long. At the outset of the coronavirus pandemic, many creditors were quick to offer a wide variety of COVID-related benefits, from waived fees to bonus perks to extended deadlines on existing rewards. Not all offered payment deferments and many only offered deferments on a case by case basis.

It should also be said that not all deferments are the same. The terms “deferment” and “forbearance” can sometimes be used interchangeably, but both can mean something different depending on your creditor’s policies. 

If you’re unclear on your responsibilities or when your hardship expires, connect with your creditor ASAP. Here are some questions you should know the answers to:

Is there a monthly minimum payment? While a deferment usually means that no payment is due during the specified period, a forbearance program may sometimes simply reduce the amount of your monthly minimum. Make sure you understand what your creditor expects from you each month.

When does the deferment end? Many of the deferments offered by creditors at the start of the pandemic were for 60 or 90 days, but you should verify when it started and when it’s scheduled to end.

Are you being charged interest or fees? In a student loan forbearance, interest charges are almost always accruing even as you aren’t making payments (which is one of the arguments against using a student loan forbearance). Most credit card deferment programs don’t charge interest during the deferment period, but that’s not universal. 

How much will you owe once the deferment ends? This is the big question. What will your new minimum monthly payment look like post-deferment? If you haven’t been charged any interest, it may be what it was before the deferment began. However, if your creditor expects you to “catch up” on your missed payments within a certain timeframe, you may be expected to make substantially higher payments.

ASK FOR AN EXTENSION OR NEW HARDSHIP

Assuming things haven’t gone back to normal and you still need help managing your credit card debt, your first step should be to contact your creditor before your current deferment ends and ask about an extension. 

It’s hard to say whether or not a creditor is going to be willing to help you out a second time. Like most lending decisions, it usually comes down to some form of risk versus reward. And in many cases, the customer representative is simply working off a set of pre-determined guidelines. But it never hurts to ask. Just be prepared to explain your situation and know that it may take a few phone calls (and some persistence on your part) to get to a definitive answer.

REVIEW YOUR DEBT REPAYMENT OPTIONS

If you can’t get a new deferment in place, you’ll need to consider your situation and your options. Is it that you can’t pay the minimum required by your creditor or are you not able to pay anything at all?

If you need a lower payment to make it work, consider your options. If your credit is in good standing, you may benefit from a debt consolidation loan. If it’s difficult to get a loan with good terms, you can access a lot of the same benefits through a debt management plan.

Be proactive, though. If it’s your intention to keep your accounts in good standing and continue to pay, then figure out your debt repayment plan early. Once you start missing payments, you may find that some of your options have dried up.

PRIORITIZE YOUR AVAILABLE CASH

If your income is reduced or paused entirely, there’s only so much cash to go around. In a situation like that, debt repayment should naturally fall to the bottom of your budget priorities. 

Take the time to review your available money and routine expenses. There may be enough to keep some accounts current, while others become delinquent. It’s not a bad idea to let creditors know that you won’t be able to make your payments to them (even if they can’t offer you a new hardship).

Ultimately, you need to do what’s best for you and your family, and that may not include making payments to your creditors. 

CHECK YOUR CREDIT REPORT REGULARLY

Finally, if you’ve used a creditor hardship program of any type, it’s important that you review your credit report to verify how that account was reported during the hardship. Specifically, the CARES Act requires that creditors who offer deferments during the coronavirus pandemic not report those accounts as delinquent during the deferment period. In other words, the payments skipped during the deferment shouldn’t adversely impact your credit.

No matter the details of your hardship program, review your credit report frequently to see how your accounts are reported. If you see an error, be sure to request that your creditor correct their reporting as soon as possible.

And if you cut back on your spending during the last few months, you’re not alone. According to estimates from the Bureau of Economic Analysis (BEA), personal consumption among Americans dipped 13.6% (or $1.89 trillion) in April (as compared to March). 

As non-essential businesses start to reopen across the U.S. and life tries (successfully or not) to get back to normal, it’s not a bad idea to think about the budget-trimming tactics you picked up while cities and states were in lockdown. While you’ve probably come up with some great money-saving techniques, here are a few budgeting tricks I learned during the quarantine — and have stuck to: 

BATCH YOUR SHOPPING TRIPS 

Confession: I used to head over to the nearest discount grocery store to unwind. I’d sometimes go several times a week. As you might suspect, this typically led to impulse buys as I got a cheap thrill from the hunt for “amazing bargains.” 

After stay-at-home orders were mandated, and we were advised to limit our shopping trips, I got used to only grocery shopping once every two weeks. To limit my exposure, I made this one trip count and tried to get any and all shopping done before hustling home. Shopping with purpose (and a list) made me more efficient and helped me cut way down on my extracurricular purchases.

Leaving aside the fact that limiting my exposure is still a good thing, I’m staying dedicated to shopping rarely and efficiently. Meanwhile, I’m still working on finding some less costly ways to unwind. 

ACCESS THE BENEFITS OF ONLINE SHOPPING

While online shopping can cause you to spend more and buy things you don’t need, there are also a few tools in place that could help you save. For instance, consider online buying mainly essentials — groceries, household supplies, and personal care items. When you shop online, you have an easier time tallying the bill before you checkout. 

What’s more, you can also keep items in your cart before buying. For household items, I’ll add items into my virtual shopping cart throughout the month. Before I hit “checkout” I’ll go over the full list and make sure I still need everything I’ve picked out. This staves off impulse shopping. I also prefer to pick up in-store or opt for a curbside pickup. That way I won’t be tempted by items that catch my eye, which is a danger when you’re perusing the aisles. 

USE CASH-BACK REWARDS 

You can also use cash-back rewards on your credit cards — this is usually when you’re paying through PayPal, or making a purchase on Amazon. Instead of routinely redeeming my credit card points on ride-shares or gift cards, I’ve used cash-back rewards a few times during quarantine. Browser extensions like Honey can help you find promo codes and apply them automatically. 

For everything else, limit the amount of time you spend shopping. You can also limit your purchases. When I was in quarantine, I found myself squandering chunks of time surfing the web. In turn, those banner ads or an Instagram influencer account would entice me to buy something. I made a pact to allow myself only one non-essential online splurge a week. 

CONSIDER ECO-FRIENDLY ALTERNATIVES 

Going green can also put some greenback in your pocket. Due to shortages in household staples such as paper towels and toilet paper during quarantine, I started using eco-friendly choices that are also budget-friendly. I treated the last roll of paper towels in my kitchen as a sacred resource, and used them sparingly. Instead, I opted for cloth towels as much as possible. 

Instead of paying for Swifter pads, I bought a cloth pad that I could wash and reuse. And I used white vinegar and Simple Green, which is available in concentrate, to clean cookware and surfaces. 

REVIEW SUBSCRIPTIONS AND RECURRING BILLS REGULARLY

When the pandemic hit, I went through my living expenses to see which bills could be lowered, and which needed an adjustment. I switched car insurance providers from a policy where I paid in six-month chunks to a pay-per-mile policy. The coverage was pretty much identical to my previous insurer. Because I now batch my shopping trips and typically use my car to run local errands, I’ve saved an average of $50 a month on car insurance, or $600 a year. 

I also went through my subscriptions and found a home internet plan that was the same price, but with faster speeds, than my old internet provider. Other subscriptions and recurring bills I reviewed included streaming entertainment platforms, charges for money apps, services for my freelance business, and recurring domains. I decided to drop a few subscriptions for services that I wasn’t really using. 

Here are some tips for getting your credit card balance back to zero after a long layoff: 

STRIKE A BALANCE

In a perfect world, you would be able to pour all your efforts into aggressively repaying your debts (new and old). The reality is that you’ll need to pay off credit card debt while juggling other needs — covering your rent, putting food on the table, restoring your emergency fund, etc. — and that takes a bit of awareness. 

To help you juggle your other financial priorities while paying off your credit card balance, jot down all your money goals. Then order them in order of urgency or importance. Last, figure out exactly how much you can reasonably put toward each financial priority. 

This is the time to get granular. Get specific and assign an exact dollar amount to each of your money goals. Next, figure out a target date as to when you’d like to hit each financial goal. 

LIVE LEAN 

You’ll probably have a hard time ramping up on your credit card payments if you’re also undergoing lifestyle inflation. If you’re starting to rake in some money, instead of going back to your old ways of spending, rework your budget. 

Figure out how much you’ll need to reasonably get by. Go through your list of expenses, and see where you can cut back. Easy wins include nixing or lowering the cost of recurring costs, such as memberships and subscriptions. Let’s say you can cut back on a streaming subscription service that costs $12 a month. That’s $144 a year back in your wallet. 

Big wins include cutting down on the three most significant categories — housing, transportation, and food. If you can slash monthly grocery spending by $50, you’ll have saved $600 a year. Or if you switch car insurance carriers, and save an average of $25 a month on your policy, that will earn you $300 a year. 

FIND WAYS TO MAKE MORE MONEY

While unemployment is at a record high, there are ways you can make a bit of extra scratch. For instance, sell some unwanted stuff. Grow herbs and veggies in your garden, and offer contactless pickup. 

Or you could see what kind of side hustles might suit you. Don’t feel comfortable doing frontline work? You could take up a work-from-home gig, such as being an online tutor, virtual assistant, or work in computer support. If you’re qualified, you could also potentially do in-home bike repairs and general lawn maintenance. Handy with a needle and thread? Set up an Etsy shop and sell customized face masks.

It’s not easy, and finding the time is a real challenge, but for a lot of people the fastest path to debt repayment and a balanced budget is more income. The key is finding ways to leverage your skills (and resources) to meet a consumer need. 

LOOK FOR CREDIT CARD RELIEF PROGRAMS 

A handful of credit card networks — Chase, Citi, Capital One, Apple, Discover, American Express, and Bank of America, to name a few — have been offering economic relief to cardholders who have been impacted by the coronavirus. Depending on your situation, you might be able to have late fees waived, have your payments paused temporarily, or your monthly payments lowered.

It typically depends on your situation. Reach out to your credit card company to see if you can request financial assistance. If you plan on giving the card issuer a ring, anticipate longer than usual wait times. 

KEEP WATCH ON YOUR CREDIT 

Of course, you’ll want to maintain the best practices to minimize damage to your credit score. While paying off debt, be sure to continue making minimum, on-time payments (presuming you can afford them). Plus, you’ll want to keep watch to ensure that your credit usage remains low. Otherwise, your credit score might take a hit. 

There are plenty of ways to check your credit score these days, including some popular money management apps and directly through select credit card issuers. Don’t just pay attention to the score, however. Be sure to review your actual credit reports often. You can access reports from the three major credit reporting bureaus through AnnualCreditReport.com. 

CONSIDER A DEBT REPAYMENT PLAN 

If you’re drowning in your debt, consider a debt repayment plan (DMP). Under a DMP,  you make a single payment for all your credit card debt. While it’s not guaranteed, for most consumers a DMP can lower your interest rates, waive late fees, or lower your monthly payments. The downside of a DMP is that you’ll likely have to close your credit cards. 

Paying off credit cards, while challenging, is certainly doable. The more you know and the greater vigilance you have around your situation, the better. In time, you’ll get that balance down. 

While it sounds like a positive move to help workers and self-employed folks, you’ll want to get your head around the facts and know the pros and cons that come with such a deferral. Here’s a breakdown of what it means, how it might impact you, and how to prepare should you owe back taxes when April rolls around: 

WHAT IS THE PAYROLL TAX DEFERRAL?

In a nutshell, your payroll taxes for Social Security could be put on hold until the end of 2020. This executive order mainly impacts two groups: eligible workers and their employers. 

If you’re an employee, what this means is that the employer portion of Social Security taxes is pushed back until the end of the year. In return, you’ll receive a four-month pay hike of 6.2%, explains Josh Zimmelman, a managing partner at the NY-based Westwood Tax & Consulting. This deferral went into effect on August 28th, 2020, and is in effect until December 31, 2020. 

HOW THIS MIGHT IMPACT YOU 

In the immediate, the impact for employees is fairly straightforward: less comes out of your paycheck, so your take home pay through the end of the year is higher. 

On the employer’s end, it could be more complicated, says Zimmelman. For one, if you’re an employer, you’ll need to adjust your payroll systems to provide this deferral to your employees. 

Plus, the repayment process could be an issue. “For their workers to repay the deferred taxes, employers would need to increase their withholding on future paychecks,” says Zimmelman. But if you’re an employee and you end up leaving the company before your employer boosts their withholding on your upcoming paychecks, you might be on the hook for paying back the difference. 

NO, IT’S NOT A TAX BREAK 

As one might expect, there are a few misconceptions around the payroll tax deferral. The biggest one? It’s not a tax break or a tax cut. “It’s just a deferral, so the taxes will need to be repaid the following quarter,” says Zimmelman. 

“So while it may result in slightly larger paychecks until December 31, starting in 2021, those same workers will likely see even smaller paychecks.” 

That’s because your Social Security withholding will likely double in order for you to pay back those deferred payroll taxes. 

Another common misconception? Is that it’s for all workers. It’s only available for workers who will benefit from this deferral. As Zimmelman explains, workers in the U.S. earning less than $4,000 on a pre-tax biweekly basis are eligible. This adds up to $104,000 annually. Plus, employers aren’t mandated to participate. “Some may not prefer to, because of the administrative challenges of repayment,” he says. 

If your employer decided to opt in to the deferral, they likely would have informed you prior to August 28th start date.

HOW TO PREPARE FOR INCREASED PAYROLL TAXES 

And just like how the deferral is for four months, you’ll have four months in 2021 — between January 1 and April 30, 2021 — to pay back the 6.2% of each paycheck that would have gone to taxes. Again, you won’t just go back to your old pre-deferral paycheck — you’ll be paying double the rate in order to catch up.

If your employer has opted into this payroll tax deferral, here’s how you can best prepare to pay back those taxes once the new year rolls around: 

KNOW WHAT YOU OWE

Tax rules, thresholds, limits, credits, deductions, and other relevant items often change each year, points out Riley Adams, a CPA, and founder of Young and Invested. So even if your financial circumstances haven’t changed, your tax bill might experience a shift. 

“Staying on top of these developments will help avoid any surprise come tax return preparation time each year,” says Adams. “It’ll also allow you to make financial changes, where possible, to account for these changes and potentially use them to your benefit.” 

LOWER YOUR LIVING EXPENSES

While you might be squeezed financially right now, try to do your best to bump down your living expenses. And if you’ve tackled the big three categories — food, transportation, and housing — and don’t think you can cut back any more, try again. By implementing small changes, you might be able to scale back on your spending. 

After you’ve focused on the big stuff, go down your list of fixed expenses and see if there’s anything you’ve overlooked. For instance, app subscriptions that renew automatically every year, domain names you purchased during a burst of inspiration, only to have forgotten about them. It might not seem like much, but a $5 savings adds up to $60 a year.

Remember: if you’re opted in to the deferral, you’re currently taking home a bigger paycheck. Spend what you need to, especially if you’ve fallen behind on important bills, but don’t forget that the income boost is temporary. 

RAMP UP YOUR EARNINGS, IF POSSIBLE

Given the timing delay of these payroll taxes, any impact you will experience will be temporary, points out Riley. If your employer does offer payroll tax deferral, you might be better off keeping your tax situation as is and find ways to boost your income by, say, 5% to 10%. Finding ways to increase your take home pay might be a better, long-term solution. 

If you’re looking to earn more money within a short period, consider side hustles that don’t cost a lot upfront and have a low barrier to entry — walking dogs and shopping and delivering food on platforms such as Instacart. 

The truth is, while the payroll tax deferral is well-intentioned, there’s probably not a lot of employers who are offering it to their employees due to the administrative hassle. This tax deferral really won’t have much of an impact on most workers, explains Zimmelman. Very few employers are likely to opt into the program. And those who were hit the hardest by Covid-19 and are unemployed won’t benefit from this. 

“If you’re one of the few employees who are eligible, you can use this extra money to help shore up your savings or pay down debts incurred during the pandemic,” says Zimmelman. “Just don’t forget that you will need to pay that back eventually and will likely do that via smaller paychecks next year.”

That’s because many landlords and property management firms require a credit check as part of the application process. And depending on your score and the requirements for the property, that credit pull may lead to your application being denied.

Why do landlords look at your credit report at all?

It’s probably helpful to understand why landlords are looking at your credit report at all. After all, they aren’t loaning you money, so why do they care about your creditworthiness?

In truth, however, your landlord is lending you something of value – the rental property itself. And just as banks and credit unions weigh the risk and reward of lending you money, property managers do the same thing before handing over the keys. 

So while your credit report and, more specifically, your credit score can’t tell a landlord exactly how you’ll behave as a tenant, they can tell a prospective property manager how you’ve handled other financial responsibilities. A bad credit score can be interpreted as you having a hard time staying current on previous debts and bills. If a landlord or property management firm is trying to minimize the risk of having tenants who fall behind on rent (or worse, ultimately require an eviction) they’ll likely see your credit score as a strong indicator of what to expect over the course of the lease. 

So it helps (a lot) to have strong credit score. And while it would be great if you could just fix your credit overnight, improving your score takes time – time you probably won’t have if you’re looking for new housing. So what can you do if your credit score is low but you need to find a new apartment? Here are some steps to take if you’re trying to rent an apartment with bad credit.

EXPLAIN THE ISSUES IN YOUR CREDIT HISTORY

There are a lot of reasons why your credit score can dip and you being irresponsible with money doesn’t have to be one of them. If you feel comfortable explaining the circumstances behind your poor credit score, go ahead and share that with the property manager. Landlords are more interested in your recent history, so if your low score is the result of something that happened years prior be sure to discuss that and share what you’ve been doing to improve your score and fulfill your responsibilities since then.

OFFER REFERENCES FROM PRIOR LANDLORDS

You can have a poor credit score and a spotless rental history, which is why it may be helpful to provide documentation from previous landlords. If you can show that you have a history of making your rent payments on time (in addition to all the other behaviors that make you a good tenant) then a poor credit score may not be as big of a deterrent.

BE WILLING TO PAY MORE UP FRONT

A security deposit is one way that landlords offset the risk of renting out their property. Should something happen, they can use those funds to cover any cleaning or repairs above and beyond what’s covered in the rental agreement.

The higher the risk, the more you may need to pay up front to mitigate that risk. This could be a larger than usual security deposit, or possibly even upfront rent payments for one or more months. Whatever you agree to, however, make sure it’s captured in the lease and you understand how that money will be used and how you can get it back (if applicable). You should also consider your financial capacity – while you’re likely under pressure to find an apartment, try not to overextend yourself. If the required deposit puts you in a dangerous position, keep looking.

ADD A CO-SIGNER

As a last ditch option, you can try to add a co-signer. The co-signer wouldn’t need to live at the property, but they would be equally responsible should you fail to meet your obligation. In other words, if you miss payments, the property manager could go after the co-signer for the back payments. 

Co-signing can put both parties in an awkward position, though, so be sure that you and the co-signer are comfortable with the arrangement and understand what’s expected.

Finding an apartment with a bad credit score is far from impossible, but it’s harder than the alternative. If you’re not planning on moving any time soon, now’s the ideal time to start working on your credit score. If we have tons of great articles on building a positive credit history, but if you’re interested in one-on-one help with your credit, consider working with a trained counselor to review your credit report and create a plan for long-term credit success.

If you’re playing it safe and staying out of your favorite stores and restaurants, you may be wondering how you can keep supporting those businesses (so they’re still around when you’re ready to leave the house).

If you’re trying to support a local restaurant, the solution may seem simple: just boot up your favorite food delivery app and order some dinner. Unfortunately, while ordering up some food on your phone is great for convenience, it’s not always great for your local restaurants. 

That’s because food delivery platforms like Grubhub, Postmates, and UberEats charge enormous commission fees to businesses — we’re talking anywhere from 10% to 30%, and in some instances as high as 40%. That’s not to mention the additional fees pushed on to the customer. 

LetterPress Chocolate is a chocolatier based in Los Angeles that temporarily closed its shop out of an abundance of caution and currently relies on deliveries and online orders. As co-owner and chocolate maker David Menkes explains, these popular food delivery platforms can cut deeply into the profit margins of small businesses. At LetterPress Chocolate the cost looks like this: For every $10 a customer spends on chocolate, the food delivery platform takes $3, plus a $3 delivery fee. So while you’re spending $13, the business only gets $6. (And that’s leaving aside the tip for your driver – don’t forget to tip your delivery drivers!) 

Normally, these kinds of steep costs are easier to bear when balanced against “in-person” customers. Right now, however, these business have, at best, very limited in-person capacity, and at worst are restricted to takeout or delivery business only. 

So how can you better support your favorite local businesses? Here are a few ways to go about it: 

CONTACT THEM DIRECTLY 

Instead of ordering through a third-party platform, check the business’s website. Menkes set up a Weebly site through Square to offer curbside pickup. “It’s not without its glitches, but it allows our customers to order online and even schedule a pickup time,” he says. 

If an establishment is new to curbside pickup or delivery, there’s a chance that its website has yet to be updated or might have outdated info. When in doubt, just give them a ring and see what your options are. A local restaurant I love looked like it was only accepting orders through Postmates. But after giving them a call, it turns out that you can place an order directly. 

ORDER MERCHANDISE 

Besides ordering food from a food establishment, see if there are other ways you can patronize local businesses. They might have products that you can order online and have shipped to your home. For instance, LetterPress Chocolate ships nationwide, which has helped it stayed afloat as a big chunk of its income before the pandemic came from factory tours. 

HELP PROMOTE THE BUSINESS 

And if you’re on a budget, you can do your part by helping promote your most beloved establishments. Share a photo of a delicious meal you just enjoyed on Instagram. Write a glowing review on Yelp. Rave about them on Facebook. Bottom line: Helping spread the word about a local business is just as important as giving them your dollars. 

FOCUS ON A FEW BUSINESSES 

If you’re on a budget during quarantine but still want to support your businesses, pick just a few to order directly from. If you can afford to eat out once a week, rotate the restaurants you patronize. That way you won’t be traveling to a bunch of different eateries around town. Plus, you won’t be quibbling over the delivery fees and tips, and it won’t be as much of a strain on your wallet. 

ORDER A GIFT CARD 

Order a gift card that you or someone near and dear to you can cash in on later. By doing so, you’re helping the business boost sales and its cash flow, plus you’ll have something you can enjoy down the line. 

The efforts you make in putting as much money back into the local economy makes a big difference. “Thankfully, our customers have been super supportive since we closed our retail shop,” says Menkes. “Since it’s literally just the two of us, we can’t afford to get sick. That’s why we aren’t allowing anyone inside at all.”

In 2014, the AARP Public Policy Institute’s Future of Work@50 sponsored a survey that examined how Americans over 50 had fared since the Great Recession. The resulting study, The Long Road Back: Struggling to Find Work after Unemployment, reported that 50% of older workers who had become unemployed in the prior five years were not working. Of those who did find work, 48% reported earning less than they had with their previous job. And that deficit could be substantial: A discussion paper by the Urban Institute’s Program on Retirement Policy found that re-employed men ages 50 to 61 received a median hourly wage that was 20% less than they had received previously, while men over 62 took a 36% salary cut.

If you’re currently unemployed or furloughed, I suggest that you realistically consider your chances of re-employment. Don’t continue to act (and spend) as if you’ll soon be receiving your former income — even if you’ve been furloughed. “Call it realism or pessimism,” writes Christopher Rugaber of the Associated Press, “but more employers are coming to a reluctant conclusion: Many of the employees they’ve had to lay off in the face of the pandemic might not be returning to their old jobs anytime soon. Some large companies won’t have enough customers to justify it. And some small businesses won’t likely survive at all despite aid provided by the federal government.”

I’m not saying these things to depress anyone — just the opposite, in fact. When it comes to your finances, I believe it’s best to plan for the worst and hope for the best. If you can be OK with a worst-case scenario, you’ll feel even better if the worst doesn’t happen. 

To create a plan that can help you get through an open-ended period of unemployment, I suggest you:

Evaluate your financial situation 

When considering your finances, assess your condition as if you are not returning to your previous position. What other sources of income do you have? What expenses?  Do you have any benefits available to you? Create a cash flow plan  so that you can see exactly where you are financially, and where you want to be.

Make any necessary changes

If you’ve unexpectedly lost your job, you may need to cut back on expenses. Put everything on the table. Do you really need two cars, or can you sell one? Is it time to downsize your house? You don’t need to make every cutback you ascertain, but I do think it’s important to identify any expenses that can be reduced, and to seriously consider them.

Think about taking Social Security early

 Though you may have planned to wait to take Social Security later, don’t discount taking it before your full retirement age. In fact, you may want to take it for a year as a sort of interest-free loan. That’s right: If you are 62 or older, you can opt to take your benefits and then change your mind. If you do so within 12 months, you can withdraw your Social Security application and repay the money you have received without interest, (although you will need to include any money withheld for Medicare premiums or taxes).

Don’t skip health care

If you’re eligible for Medicare, congratulations. If you’re not, can COBRA carry you until you’re 65? Or can you find a good plan on the marketplace? No matter what, don’t court disaster by leaving yourself or your family uncovered.

These are especially stressful times for those with debt payments that continue to pile up even as the economy stalls. Fortunately, for the 5.2 million people paying on student loans, there is help and hope for a positive outcome. The CARES Act, one of several federal stimulus packages intended to steady the economy and support workers, offers relief for students and student loan borrowers.

Here are some of the key resources available under this new legislation.

HOW THE CARES ACT IMPACTS STUDENT LOANS

The CARES Act provides financial relief for federal student loan borrowers, including those with Direct, Direct PLUS, Direct Consolidation loans and FFEL or Perkins loans owned by the Department of Education. Notably, the CARES Act applies to all federal student loans, even those in default, which means that struggling borrowers at every stage can benefit from the student loan provisions of the CARES Act.

Borrowers with federal student loans receive an automatic administrative forbearance on loan payments from March 13, 2020 through September 30, 2020. This means that during this time, borrowers are not required to make payments, and auto-draft will be disabled. Additionally, the interest rate during this time is 0%, meaning interest will not accrue while payments are in forbearance.

FFEL Program loans owned by commercial lenders and Perkins Loans owned by academic institutions do not qualify under the CARES Act. However, borrowers have the option of consolidating these loans into a Direct Consolidation Loan, which would then be eligible for the forbearance. Perkins loans held by universities may also be eligible for a 90-day deferment, and borrowers should contact their schools for specific details.

Private student loans are not eligible, and private loan borrowers should review their loan agreement and contact their servicer to inquire about hardship options such as deferment, forbearance, or loan modification.

DEFAULTED BORROWERS HAVE MAJOR OPPORTUNITY

One of the biggest boons of this program is the benefit to those in student loan default. During the forbearance period, administrative wage garnishment, tax refund offsets, and Social Security benefit offsets will be suspended, and the stimulus check will not be subject to offset either.

Loan rehabilitation is often the path out of default. Typically, a defaulted borrower makes a reasonable payment arrangement with their servicer, which can be for as low as $5 a month in some circumstances. After making the arrangement, the borrower pays nine monthly voluntary payments, and the loan will be removed from default. Under the CARES act, the months of forbearance where borrowers make zero dollar payments will count towards the rehabilitation payments, and interest does not accrue during the forbearance.

This is one of the best opportunities ever presented for defaulted borrowers to get on the path to clearing their default. If you have defaulted student loans, don’t wait! Contact your servicer today about entering a rehabilitation program.

A CHANCE TO ESTABLISH SAVINGS

For student loan borrowers experiencing income disruption, this period of administrative forbearance can provide financial flexibility, allowing them to prioritize things like mortgage or rent, groceries, utilities, child care, and other essentials. Consumers can allocate the money that would otherwise go to student loan payments towards priority expenses.

Borrowers can also contact their other creditors to inquire about hardship plans or deferments on credit cards and mortgages in order to allocate available income or savings to the most pressing needs. Ultimately, everyone benefits when borrowers have the resources they need to fulfill their obligations and lenders want to make their customers’ long-term success possible.

For those who are not experiencing financial hardship, the administrative forbearance period is a great time to allocate money towards establishing or increasing a $1,000 emergency savings account, and afterward to pay down student loan principal. If a borrower makes a manual student loan payment, the entire amount will be allocated to paying down principal after paying any accrued interest prior to March 13, 2020. This is a great way to accelerate student loan payoff, save on interest, and decrease the total amount repaid.

For those enrolled in Public Service Loan Forgiveness (PSLF), the administrative forbearance period will count towards their 120 qualifying payments as long as they remain employed full time for a qualified employer and are on a qualified repayment plan. In that case, it may not make sense for a borrower to pay additional principal payments on their student loans, and instead those borrowers can benefit from contributing towards emergency savings and paying down other consumer debts.

ACCESSING HEERF GRANT OPPORTUNITIES

Another provision of the CARES Act provides a grant opportunity for currently enrolled students, whether they are student loan borrowers or not. Eligible students who incurred expenses related to the COVID-19 disruption of campus operations may be eligible for a grant through the Higher Education Emergency Relief Fund (HEERF) – Student Share.

These grants will be distributed through universities’ financial aid offices, so students should look for information from their university or contact the financial aid office to apply. Eligible expenses include those related to cost of attendance such as food, housing, course materials, technology, health care, and childcare. This is a grant, not a loan, meaning students will not need to pay back any money granted for qualified reasons.

If they are forced to sell beaten-down stocks and mutual funds to pay the bills, they could inflict permanent damage on their portfolios, increasing the risk that they will outlive their savings.

That’s what happened during the Great Recession. Standard & Poor’s 500-stock index lost more than half of its value during the bear market of October 2007 to March 2009, and IRAs and 401(k) plans lost about $2.4 trillion in value just during the final two quarters of 2008. Investors who rode out the downturn recouped their losses in the 11-year bull market, but seniors who took withdrawals before the stock market recovered were left with locked-in losses.

Ideally, you have prepared for this calamity by sequestering enough in cash or other low-risk investments that, when combined with guaranteed sources of income, you can cover at least two years of living expenses. “It’s the equivalent of an emergency fund within your retirement plan,” says Andrew Houte, a certified financial planner in Brookfield, Wis. You’re even better prepared if you’ve adopted the bucket system, in which you divide your savings into cash, short- or intermediate-term bond funds, and stocks, based on when you’ll need the money.

Cut expenses. After years of stock market gains and a roaring economy, some retirees and near-retirees may have forgotten the lessons of the Great Recession. David Mullins, a CFP in Richlands, Va., says he recently received a call from a retiree who had invested 100% of his savings in stocks. On one day in mid March, his portfolio lost more than $112,000.

If you find yourself in that unfortunate position, look for ways to cut expenses so you can postpone selling stocks or funds for as long as possible. Review your wireless bills for services you no longer use (or never requested). While you probably don’t want to cancel Netflix until you’re allowed out of the house, look for other subscriptions you can do without.

Low interest rates offer other opportunities to cut costs. If you still have a mortgage, refinancing to a lower interest rate could lower your monthly bill and free up some cash. If your mortgage rate is more than one percentage point above current rates, it’s usually a sign that it makes sense to refinance. For help crunching the numbers, use The Mortgage Professor’s refinance calculator to enter the details of your current mortgage and your new loan to see how long you’d have to stay in your home to start saving money with a refinance.

Look into a reverse mortgage. For homeowners who are 62 or older, a reverse mortgage could provide a reliable source of income until the market recovers. A strategy recommended by some financial planners, known as a “standby reverse mortgage,” is designed for just this type of downturn. Under this game plan, you take out a reverse mortgage line of credit to cover your expenses until your portfolio recovers. If you maintain your home and pay taxes and insurance, you don’t have to repay the loan as long as you stay in your home.

Low interest rates have made these loans even more attractive. Under the terms of the government-insured Home Equity Conversion Mortgage, the most popular kind of reverse mortgage, the lower the interest rate, the more home equity you’re allowed to borrow. And if it turns out you don’t need the money, your untapped credit line will increase as if you were paying interest on the balance.

Be smart about Social Security. If the Great Recession is any guide, there will soon be a spike in claims for Social Security benefits, both by people who were forced to retire earlier than planned and by retirees who are worried about depleting their investment portfolios. Filing for Social Security benefits will provide a guaranteed monthly paycheck, which could allow you to postpone taking money out of your retirement savings. You can file for benefits as early as age 62, but if you do, your benefits will be permanently reduced by at least 25%. If you’re married and are the higher earner, claiming early could also reduce the survivor benefits your spouse will receive if he or she outlives you.

Waiting until full retirement age — 66 or older for those born after 1943 — will allow you to claim 100% of the benefits you’ve earned. If you wait to file for benefits until after you reach full retirement age, your payouts will grow by 8% a year until you reach age 70.

Married couples may be able to play it both ways. Have the lower-earning spouse file before full retirement age — as early as 62. Although that spouse’s benefits will be reduced, you can use that money to pay the bills until your portfolio has recovered. Meanwhile, the higher-earning spouse will be able to put off claiming benefits until full retirement age or later.

As we’re deep into the second month of sheltering-in-place, you’re probably feeling cooped up, listless, antsy, bored, or some combination of all those. Beyond staying socially healthy, you’ll also want to make moves to keep your physical well-being in tip-top shape.

Heading to the gym or local pool to lift some weights or get your cardio on isn’t an option for the time being, so what can you do to get moving and release some endorphins? If you’re on a tight budget, here are a few low-cost ways to stay healthy while in quarantine:

CHECK OUT FREE VIRTUAL CLASSES

As a lot of fitness studios are pivoting to digital platforms, poke around to see which studios offer free or donation-based, pay-what-you-can workouts. Here are a few of our favorites:

RYAN HEFFINGTON’S SWEATFEST

There’s a reason why the L.A.-based choreographer and dance studio owner has attracted a lot of buzz and thousands of attendees per workout. His hugely popular one-hour dance workout session on IG Live, Sweatfest, is donation-based. And there’s no obligation to contribute if you’re not able to.

Offered several times a week, these workouts provide a cathartic vessel to release stress, boredom, and anxiety. What’s more, his central message is to simply focus on love and peace and helping others.

If you’re looking to learn new dance routines, Heffington’s staff of seasoned dance teachers are offering weekly virtual classes via IG Live. This is through Heffington’s dance studio, The Sweat Spot, and is also donation-based payments.

YOGA WITH ADRIENE

There are scads of free workout videos on YouTube. If you’re itching to get your yoga on, check out Yoga With Adriene, who boasts over 7 million subscribers and hundreds of videos. Not sure where to start? Try one of her 30-day yoga challenges, which are centered around themes like “Yoga for Your Back,” “30 Days of Yoga,” or if you’re keen on a more introspective bent, “Dedicate.”

The equipment you need varies, but you can probably do most yoga workouts with a yoga mat, blanket, and a pair of foam blocks.

BEFIT

The BeFiT YouTube channel features a litany of vids from top trainers. These workouts range from cardio and strength to rebalancing and pilates. You can think of the BeFit channel as a catch-all of fitness workouts.

ORANGETHEORY AT HOME

A handful of fitness studios and gyms are offering free virtual workouts. Orangetheory recently released free daily online exercises that focus on everything from strengthening and toning different parts of your body to high-intensity interval training (HIIT).

FREELETICS

If you’re hopping on the calisthenics train, which is a popular type of workout that consists of exercises that primarily rely on your own bodyweight, check out the Freeletics app. There’s a handful of free workouts and one-off runs and drills.

If you want to tap into a guided training route, you’ll need to upgrade to its premium version Depending on the plan, it costs anywhere from $1.44 a week, or $73 a year, to $3.85 a week, or $200 a year.

COREPOWER YOGA

You can access its daily free streaming live classes or a weekly collection of online courses.

USE WHAT’S AROUND THE HOUSE

Chances are you might already have some forgotten exercise equipment nestled in your storage closets and underneath your bed. Before you commit to any exercise program, take stock of what you already own and build a workout around that.

For instance, I have a pair of five-pound weights and a yoga mat. Because I’m trying not to spend too much money on exercise gear, I’ve been doing mainly bodyweight exercises — think planks, pushups, and squats — and yoga routines.

INVEST ONLY IN INEXPENSIVE EXERCISE GEAR

No need to purchase a costly elliptical machine or a pilates reformer contraption. Those types of exercise equipment are not only expensive, but they take up a lot of space and can be a pain to get rid of once you’re done using them.

If you want to spend money on exercise gear, start with low-cost essentials such as a yoga mat, a set of weights, or resistance bands. You can probably find them on sale online. And if you’re going to spend money on more costly gear, make sure it’s worth the spend.

For instance, thinking of throwing down $50 on a set of resistance bands? Commit to using them in your workout several times a week for the next few months. Otherwise, you might find them tossed out alongside your partner’s neglected sparring gear.

STRIKE UP A DEAL

If you already have a gym membership, your gym might offer some virtual classes or online workouts that you can download from your desktop or app.

If you’re squeezed financially and would like to keep your gym membership to tap into the virtual offerings, reach out to your gym to see if they have any current discounts or promotions. 

As the U.S. confronts the spread of the novel coronavirus, most of the country has now implemented stay-at-home orders. And while we grapple with how to pay rent, whether we’re headed into a recession, and how the virus is impacting the housing market, we’re also left with a more basic question: What should we do while we’re stuck at home?

There’s only so much comfort TV to binge-watch before restlessness kicks in, so for those of us that are able, this extended time indoors is an opportunity to tackle those long-avoided home projects. Of course, now is not the time to flock to the stores for nonessential items, so we’ve gathered a list of ways you can upgrade your space with things you probably already have at home.

From restyling your bookshelves to prepping your planters for spring, here are 21 easy projects you can do while social distancing at home.

Rearrange things for a fresh perspective

Renovating your entire living room or splurging on a new bedroom set likely isn’t in the cards at the moment, but that doesn’t mean you can’t make some changes.

Try a new furniture layout: It’s easy to get in a rut with the same ol’ furniture setup, but what if you tried something new? Move the couch to a different wall, adjust where your armchair sits, or mix things up by swapping rugs from one room to another. Even switching a lamp from a side table to another spot in your house could brighten up a space in new ways.

Bring out the “special occasion” dinnerware: There’s no better time to add a bit of drama to your table, so bust out the china, special silverware, or fancy wine glasses. Now that we’re all eating at home, it’s the perfect chance to sip and savor at the dinner table using our favorite pieces. Want to share the fun with a few friends or family? Try hosting a virtual dinner party.

Restyle your bookshelves: Even avid readers don’t change up their bookshelves all that often, so now is the time to rethink them. If you’re focused on the literature, arrange your books by alphabetical order or by theme. If aesthetics are the priority, remember these three tips from designer Emily Henderson: Declutter, use neutral colors, and focus on a few standout pieces.

Cleaning projects

There’s a lot of talk about cleaning these days, and rightly so. But beyond disinfecting all of your high-touch surfaces, it’s also past time to buckle down on the tasks you avoid doing.

Clean your vents and baseboards: Heating and vent covers accumulate dust over time, and cleaning them can help reduce allergens in your home and increase the efficiency of your air conditioning or heating unit. Vacuum the vents with a dusting brush attachment or wipe with a dry microfiber cloth—avoid using water or other cleaning products, because they can smear the dust.

You can also unscrew the vent covers and place them in a sink filled with hot, soapy water. But don’t rub them too hard or paint may come off. And while you’re at it, turn your HVAC unit off and change the air filter on your furnace.

Go under your bed: Vacuuming and cleaning the toilets are usually on the weekly to-do list, but when was the last time you cleaned underneath your bed? Don’t wait until the next time you move to clear out the dirt—move the bed, empty out any storage boxes you might have underneath, and vacuum the dust. Plus: You might be surprised at the things you’ll find (hello, missing phone charger).

Clean out your bathroom drawers: This is another task we put off when we don’t have the time. Our bathroom drawers take a lot of daily abuse; after emptying the drawers you’ll likely find hair, spilled makeup, toothpaste, and so on. Once the insides are free of gunk, toss the junk and reorganize what’s left.

Organizing

Where to begin? There’s no shortage of home organization projects that can yield big results, but the options below won’t require a trip to the store. Of course, if you want to buy new storage solutions, we’ve got you covered there, too.

Don’t forget to check out our 30 Days of Purpose and Productivity throughout April and our “Using Social Distancing to Grow” Bingo Card to track your progress.

After weeks of isolation, and with no clear end in sight, it’s perfectly natural if you’re starting to suffer from the mental strain of being homebound.

While we’re all pining for some sense of normalcy, it won’t be hard to return to our normal patterns any time soon. And unfortunately, neglecting our social needs could lead to serious repercussions: feelings of loneliness and frustration, and other mental health issues such as boredom, depression, and anxiety.

So how can we stay socially healthy in isolation? Here are some low-cost ways to stay active and have our social needs met during the quarantine:

SCHEDULE IN SOCIAL TIME

There are plenty of budget-friendly ways to enjoy social time. If you live with roommates, your partner or family, carve out time to enjoy a puzzle or round of board games, or to play music together. Of course, if you cohabitate with high-risk populations, such as those over the age of 65 and folks with pre-existing health conditions, you’ll want to definitely maintain social distancing and practice proper hygiene and precautionary measures.

If you live alone or would like to connect with those that live elsewhere, schedule in social time on digital platforms. For instance, schedule a social meetup on free video-chatting apps and meeting platforms such as Skype, Zoom, or Houseparty. FYI: Houseparty has partnered with Epic Games to play games such as Quick Draw and Trivia with family and friends. As mentioned, it’s absolutely free.

For family members who might not be as tech-savvy, you could schedule some quality one-on-one phone time or squeeze in a Facetime chat. So that it doesn’t interrupt your daily routine and other tasks, you can book social time during periods when you normally would hang out with loved ones, like during the evenings and weekends.

BE HONEST WITH YOUR SOCIAL NEEDS

If you lean toward being introverted, you might get a case of being oversocialized. How is that possible? Well, you might be bombarded with requests to hang out. New phrases such as “having a zoomy day” or “zoomed out” might come out of the pandemic.

Those who might be overwhelmed with online hangout invites, don’t be afraid to turn down an invite. Just because you’re mostly home doesn’t mean that you’re available. There’s certainly a difference. It’s perfectly okay to politely decline and express that you prefer to lay low for the evening.

If you need to be on a lot of video conference calls for work and need time to recharge, you might limit your social time or stagger them. For instance, as an introvert, I prefer to do fewer than two meetings or phone calls a day. Beyond that, I start to hit a wall.

MAKE THE MOST OF YOUR SPACE

Depending on your living arrangement and where you live, you might be cooped up indoors for most of the day or share tight quarters with family or roommates. And if you’re working from home and so are other co-habitants, you could feel stifled and suffer from pent-up energy.

Consider partitioning your space so that you have a specific area just to work. And if possible, set up work from home stations in separate areas. You’ll also want to be sure to communicate your working hours and boundaries to others. For instance, just because you now work at the kitchen table doesn’t give your partner liberties to park themselves next to you and complain about their co-workers.

Besides setting up designated spaces for work from home stations, to break up your days use different areas of your home for different purposes. You can have a designated space to work out, another for creative projects, and another to read or play video games. That might help you stick to a routine and offer a bit of space from those you live with.

And if you need time alone, don’t be afraid to ask for it. For instance, set quiet time hours. On the flip side, designate social hours if you feel like you’re under-socialized.

AVOID THE COMPARISON TRAP

Staying connected with friends, family, and peers is healthy – comparing your “quarantine output” with anyone else is generally pretty unhealthy and unfair to yourself.

We’ve all heard the stories of the 3rd grade classmate who finally finished their novel and the cousin who started an heirloom tomato garden. Some people are thriving in their environment and some people have successfully cashed in on their free time and/or inability to leave the house. But that’s not everyone. It’s not even most people. Most of us are just trying to do the best we can and make it through all of this terrifying weirdness.

So when you’re Zooming with your parents, don’t feel bad if your big update is that you reorganized your Blu-rays. It’s not a competition and you aren’t losing anything if you’re just trying to get by.

ENGAGE WITH YOUR COMMUNITY

Besides social apps and video hangout platforms, think of ways you can engage with your community. If you are healthy and practice safety, you could volunteer at a local food bank, or help a senior in your neighborhood buy groceries.

Prefer to stay indoors? Create themed meetups or events on Instagram live around your interests. If you’re a meditation ninja, schedule a mindfulness meetup online. Or if you would like to offer others resources or advice during these uncertain times, create an “ask me anything” thread on an online forum such as Reddit or via Instagram Stories.

While it’s certainly tough to get your social needs met during the quarantine, with a bit of ingenuity you can certainly maneuver your way to a healthy state. If you would like help during the coronavirus pandemic, MMI is here for you. We have a number of online resources to help you financially and beyond. Want to speak to a human? You can talk to our team of accredited counselors.