expenses http://www.wisebread.com/taxonomy/term/11371/all en-US 5 Unexpected Costs of Living in a Tiny House http://www.wisebread.com/5-unexpected-costs-of-living-in-a-tiny-house <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-unexpected-costs-of-living-in-a-tiny-house" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/guest_house.jpg" alt="Guesthouse" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Not having a mortgage can certainly make life a lot cheaper. With the average price of a traditional home coming in around $273,000, according to Redfin, it's no wonder some people are turning to <a href="http://www.wisebread.com/5-alternative-housing-options-you-can-afford?ref=internal" target="_blank">alternative housing</a> in efforts to save more money.</p> <p>The tiny house movement has gained a lot of traction in recent years, made all the more attractive by tiny home prices as low as $20,000. But there are some expenses that tiny homebuyers may not consider before building or buying a small home. Here are five of the most unexpected. (See also: <a href="http://www.wisebread.com/can-tiny-house-living-actually-save-you-money?ref=seealso" target="_blank">Can Tiny House Living Actually Save You Money?</a>)</p> <h2>1. Land</h2> <p>Adding the price of land to a tiny home's cost shouldn't be unexpected, but it can be forgotten about if the house is on wheels and you plan to move it. Even if you get a free deal to place your home on your parents' or friend's property, you should factor in the possibility that you may eventually want to move it. When you do, you may have to pay rent for a lot or space on the property of your choice.</p> <h2>2. Zoning laws</h2> <p>The jurisdiction in charge of the land you want to put your tiny house on will likely have laws on zoning, land use, building, and other red-tape headaches. None of these are cheap.</p> <p>Zoning laws and building codes are meant to make sure a home is safe and in an area where homes are allowed. If your tiny house isn't approved by your municipality, a code enforcement proceeding could be started against you and you could be forced to remove your tiny home and pay a fine.</p> <p>And while a tiny house built on a permanent foundation may have one set of zoning codes to follow, a tiny house on wheels that qualifies as a recreational vehicle will likely have others. An RV on wheels may only be allowed for temporary residential use, and it may be illegal to live in one unless it's parked at an RV or mobile home park. You'll need to check your local regulations so you understand the specific laws in your area.</p> <h2>3. Cost of being mobile</h2> <p>One appeal of a tiny home is that they're mobile, and can either be towed or put on a flatbed truck. If you're spending money to meet zoning laws and buy land, then being mobile may not be so cost-efficient. And unless you can safely tow your tiny house yourself with a truck big enough to haul it, you'll have to pay someone else to move it.</p> <p>To be legal to tow, a tiny home must meet certain road requirements; namely, it can't be bigger than 13 feet by 6 inches in height and 8 feet by 6 inches in width, according to regulations in the U.S. Even if you have a truck with a big enough engine to tow a tiny house of 15,000 pounds or more, you'll want to ensure you can hook up trailer brakes to the truck, that your truck has the proper transmission for towing, and that you have the skills required to tow it.</p> <p>These costs can vary, but <em>Tiny House Giant Journey</em> estimates the annual cost of towing their tiny house at $1,520. That includes gas, truck and trailer maintenance, truck insurance, campground fees, and propane.</p> <h2>4. Utilities</h2> <p>No matter how big or small your house is, utilities such as water, electricity, gas, and garbage are part of your living expenses. How do these utilities factor into the costs of living in a tiny home?</p> <p>Probably not by much if the area you're living in has such services normally available. But if you're moving around often, you may have to pay hookup fees each time. You may also face other unique obstacles such as not being able to find drinking water that can easily be hooked up to your tiny home. You might also need to pay extra for things like a mobile internet service, which can be more expensive than service in a fixed location, and regular visits to the laundromat if you don't have room for a washer or dryer.</p> <h2>5. Resale value</h2> <p>Selling your tiny home sometime down the road may be the last thing on your mind when you first move in, but resale value could be a potential problem later on.</p> <p>The tiny house market is too new to know yet if the resale value of these homes will go up. Location will likely play a big part, as it does for permanent homes. A home on wheels may be thought of more as an RV, which can depreciate quickly in value like a car.</p> <p>And since a tiny home is so small, the new owner will have to be happy with the same customizations you chose if they don't want to spend a lot of money changing things. You may be OK having a small kitchen and a bigger living room, but another buyer may want it the other way around. (See also: <a href="http://www.wisebread.com/3-ways-to-finance-a-tiny-house?ref=seealso" target="_blank">3 Ways to Finance a Tiny House</a>)</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/aaron-crowe">Aaron Crowe</a> of <a href="http://www.wisebread.com/5-unexpected-costs-of-living-in-a-tiny-house">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-hidden-housing-costs-new-homeowners-dont-expect">10 Hidden Housing Costs New Homeowners Don&#039;t Expect</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/23-hidden-costs-of-buying-an-old-house">23 Hidden Costs of Buying an Old House</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-unexpected-expenses-of-a-new-baby">15 Unexpected Expenses of a New Baby</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-simple-way-to-decide-how-much-rent-you-can-really-afford">The Simple Way to Decide How Much Rent You Can Really Afford</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-questions-to-ask-before-signing-a-lease">10 Questions to Ask Before Signing a Lease</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing expenses hidden costs lifestyle mobile homes resale value tiny homes tiny houses utilities zoning laws Thu, 23 Nov 2017 09:00:06 +0000 Aaron Crowe 2058940 at http://www.wisebread.com When Dropping Your Life Insurance Is the Right Decision http://www.wisebread.com/when-dropping-your-life-insurance-is-the-right-decision <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/when-dropping-your-life-insurance-is-the-right-decision" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/family_property_life_and_health_insurance_concept.jpg" alt="Family property, life and health insurance concept" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Life insurance is a crucial way to protect your family if you should suddenly pass away. The payout from a life insurance policy can help your loved ones continue to pay a mortgage and other large bills they may not otherwise be able to afford.</p> <p>Life insurance is so important that few people ever decide to terminate their policies. But are there times when canceling a life insurance policy actually makes sense?</p> <p>The surprising answer? Sure. It all depends on who continues to rely on your income and who doesn't.</p> <h2>Your children</h2> <p>When deciding whether to cancel a life insurance policy, don't focus solely on your age. Yes, the odds are higher that once you get older (past retirement age), you won't have as many people relying on the money you are making today. With fewer people depending on you financially, it might make sense to cancel your life insurance policy and save the money you are spending on premiums.</p> <p>Life insurance is most important when you are worried about providing your children with a financial safety net. When your children are young, they need the financial protection that a life insurance policy provides. After all, they won't be working or generating their own income.</p> <p>But when your children become adults, they might no longer need the payout that your life insurance would provide them if you should die. Canceling a policy designed to protect your kids is usually a sound financial move once these children become adults who are working and providing for themselves.</p> <h2>Your spouse</h2> <p>What if your life insurance policy is also a form of protection for your spouse or partner? That might change your decision to cancel, even as you get older.</p> <p>Say you die at the age of 65. Would a payout from a life insurance policy provide that extra bit of financial protection to your spouse or partner? Would it help ensure that this person won't struggle with finances after you die?</p> <p>If the answer is yes, canceling your life insurance policy may not be the right move. You may want to hold onto that policy, even as you inch closer to retirement age. (See also: <a href="http://www.wisebread.com/when-should-single-people-get-life-insurance?ref=seealso" target="_blank">When Should Single People Get Life Insurance?</a>)</p> <h2>Getting a better plan</h2> <p>There are other reasons to cancel your life insurance. Say you are no longer happy with your current plan; maybe the monthly premiums seem too high.</p> <p>If you shop around and can find a plan that provides enough coverage at a lower price, canceling your existing policy is not only OK, it ranks as a smart financial move.</p> <p>Just be sure to compare your existing policy with your potential new one carefully. Yes, a new policy might be cheaper &mdash; but it might also not provide the same amount of coverage. Make sure to do your research before canceling any life insurance policy.</p> <h2>You've already paid for your biggest expenses</h2> <p>Life insurance is supposed to be a financial safety net for your loved ones in case you suddenly die. But what if you've already paid off your mortgage? Your spouse or partner won't need a payout from your life insurance policy to cover that bill. What if you've already paid for sending your children to college? Life insurance isn't necessary to help cover this big expense, either. So why not cancel your policy if those big expenses are already in your past?</p> <p>You can take the money you were spending on life insurance premiums and save it for retirement, add it to your emergency fund savings, or invest in the stock market.</p> <p>Of course, this type of plan only works if you actually will take the money you were spending and do something financially savvy with it. But canceling a life insurance policy when the big bills are paid can be an effective way of putting your dollars to better use.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fwhen-dropping-your-life-insurance-is-the-right-decision&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhen%2520Dropping%2520Your%2520Life%2520Insurance%2520Is%2520the%2520Right%2520Decision.jpg&amp;description=When%20Dropping%20Your%20Life%20Insurance%20Is%20the%20Right%20Decision"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/When%20Dropping%20Your%20Life%20Insurance%20Is%20the%20Right%20Decision.jpg" alt="When Dropping Your Life Insurance Is the Right Decision" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/when-dropping-your-life-insurance-is-the-right-decision">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-should-single-people-get-life-insurance">When Should Single People Get Life Insurance?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-your-group-life-insurance-is-not-enough">Why Your Group Life Insurance Is Not Enough</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/term-vs-whole-life-insurance-heres-how-to-choose">Term vs Whole Life Insurance: Here&#039;s How to Choose</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-happens-to-your-debt-after-you-die">What Happens to Your Debt After You Die?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-fair-way-to-split-up-your-familys-estate">The Fair Way to Split Up Your Family&#039;s Estate</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Insurance beneficiaries canceling children dependents estate planning expenses life insurance mortgages Tue, 14 Nov 2017 09:31:05 +0000 Dan Rafter 2051050 at http://www.wisebread.com 9 Things Sellers Should Watch Out for During Escrow http://www.wisebread.com/9-things-sellers-should-watch-out-for-during-escrow <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-things-sellers-should-watch-out-for-during-escrow" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-505598422.jpg" alt="making it through escrow" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When selling real estate, such as a home or condo, you'll have to go through escrow &mdash; a process in which a third party holds your property and the buyer's funds until both you and buyer meet your contractual obligations.</p> <p>While waiting for your home to close can feel like forever (average escrow time ranges from 30 to 40 days, depending on the state and type of sale), escrow is a necessary process to make sure that your buyer is capable of making payments and your property is thoroughly inspected. Here are some key things you should do to make sure that your escrow period goes smoothly.</p> <h2>1. Fine tune your property's description</h2> <p>When you receive a first offer from a buyer, you'll notice that the offer will include a clause with a description of your property. It's best practice to add to the description, &quot;Exact legal description to follow in escrow.&quot; This is to cover the possibility that some material changes are found during the escrow process and to set the expectation that such changes could happen. For example, an escrow officer may uncover clerical or filing errors that could affect the deed or survey of your property. Once the full legal description of your property is set by your escrow company, the company will include that lengthy description in the title report.</p> <h2>2. Limit additional prorations and closing adjustments</h2> <p>During escrow, you should continue paying all obligations related to your property, such as mortgage payments, insurance premiums, taxes, and homeowner's dues. However, your costs will be prorated once you close, usually based on a 30-day month. (The terms of the proration are usually spelled out in the purchase contract.) For example, if you were to close your sale on the ninth of the month, you would be responsible for the first nine days of the month and you would receive a refund for the other 21 days in your final payment.</p> <p>Watch out if a buyer sneaks the words &quot;any other acceptable to buyer&quot; into the list of prorations and closing adjustments. This would open the door for a buyer to include expenses that aren't really your responsibility, such as the installation of a central air conditioning unit or keyless entry system not discussed prior to sale. If you see the phrase, &quot;any other acceptable to buyer,&quot; include an instruction in your counteroffer to delete that description and replace with &quot;none.&quot;</p> <h2>3. Keep the definition of your title objective</h2> <p>In your offer, you'll find a section that describes all aspects regarding the title of your property. In there, a clause will state that you agree to convey your property to the buyer free and clear of all liens and encumbrances save for some exceptions, such as an easement (somebody having the legal right to cross your property without owning it) or a rule from a homeowner's association.</p> <p>Under this clause, again look out for a buyer including &quot;any other acceptable to buyer&quot; in the list of exceptions, which could cause delays in escrow. It's best to delete those words and replace them with &quot;exceptions of record.&quot; Examples of exceptions of record are the discovery that a third party, such as a mortgage lender or the federal government, have a monetary claim to your property or a neighbor has invaded your property without you realizing (such as with a misplaced fence). This way, title exceptions will be set objectively and not be subject to opinions.</p> <h2>4. Tighten time frames for buyer's obligations</h2> <p>During escrow, it may seem that the seller has a long list of obligations to meet. In reality, the buyer also has several obligations, such as acting in good faith to obtain a mortgage loan, if applicable; delivering an approval letter of the mortgage; and providing actual payment.</p> <p>Ask your agent what time frames are appropriate for a buyer to complete these and other obligations. Use those benchmarks to evaluate the number of days presented by your buyer to complete those tasks. Depending on your scheduled closing date, you'll often find that those time frames can be shortened.</p> <h2>5. Shorten time for review of seller's disclosure</h2> <p>As part of the escrow, you'll have to fully and accurately disclose in writing to your buyer any fact, defect, or condition that would be expected to measurably affect the value of your property. Some examples include water damage to a wooden floor, a nasty carpet stain, or termite damage. The rule of thumb is that the more you disclose, the better. It demonstrates that you're acting in good faith and accurately describing your property.</p> <p>Since you put so much time and effort into this long list of disclosures, you want your buyer to review it and commit to it within a short period of time. Talk with your agent about what is an appropriate review time for the seller's disclosure in your local housing market.</p> <h2>6. Budget for buyer's contingencies<strong> </strong></h2> <p>During the inspection, a buyer will go beyond the items that you disclosed and will also focus on his or her own checklist. Here are some examples of items that your buyer could be on the lookout for:</p> <ul> <li>Installation of smoke detectors.</li> <li>Inspection of moisture in a bathroom, kitchen, or other room.</li> <li>Proper grounding of electrical outlets.</li> <li>Installation of a ground fault circuit interrupter (GFCI) near a bathroom sink.</li> <li>Replacement of broken faceplates at outlets.</li> </ul> <p>Plan ahead for such expenses and build a cushion in the original listing price and counteroffer price, if applicable, to cover for such contingencies. While you want to sell your property sooner rather than later, you also want to make sure that you settle on a price high enough to cover these and all other expenses involved in the sale. Most real estate agents can show you a list of preferred contractors who can provide you quotes at reasonable prices.</p> <h2>7. Take out clauses to deliver existing warranties and plans</h2> <p>In the spirit of knowing what they're really getting themselves into, a buyer may include a clause to bind you to submit at closing all warranty documents covering improvements of the property, instruction booklets for included appliances, original blueprints of architectural or engineering drawings, and other types of documents.</p> <p>Save yourself a headache and mark such clauses as &quot;not applicable.&quot; When you're in the process of emptying your home, chances are you won't be able to find those documents or will misplace them. Don't commit to delivering those documents in writing, but feel free to provide them if they're readily available.</p> <h2>8. Limit scope of last-minute cleanings</h2> <p>When you got your property showing-ready, you probably spent big bucks in getting carpets professionally shampooed, windows professionally cleaned, and bathrooms scrubbed down. Keep all receipts for those expenses and don't budge at requests to repeat cleaning services a couple of days before closing. As long as you've done a good job to maintain the cleanliness of your home, especially if you already moved out before listing, there's no real reason to do a deep cleaning again.</p> <h2>9. Double check for addendums</h2> <p>In addition to combing through the contract, you'll also want to read through any addendums made by the buyer that could replace the rules of the contract in case of a conflict. Here are three addendums to watch out for:</p> <ul> <li>Request to remedy unpermitted work: In this scenario, a buyer would ask you to get permits for any renovations completed without one. You shouldn't agree to this type of addendum because there are many instances in which you can complete renovations without a permit. Depending on homeowner's association bylaws, some renovations may not require a permit at all, such as the installation of a bathroom sink or replacement of kitchen cabinets. Other type of work completed before a bylaw being introduced may be exempt of a requirement, such as noise proofing of a wooden floor.</li> </ul> <ul> <li>Concession: Reject clauses that allow the buyer to submit a repair or credit request in writing. While the buyer has the right to inspect your property in different ways, you should be the one deciding on how to procure acceptable ways to comply with the buyer's requests.</li> </ul> <ul> <li>Timeline contingency: The longer the escrow process lasts, the greater the chance for a sale to fall through. Delete in its entirety any timeline addenda requesting if a deadline falls on a weekend or federal or state holiday that it be moved to the next business day.</li> </ul> <p>Escrow is the final stretch of a home sale. Keep a positive attitude and stay in touch with your escrow officer and agent. You got this!</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/9-things-sellers-should-watch-out-for-during-escrow">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-tips-to-sell-your-condo-fast">6 Tips to Sell Your Condo Fast</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-reasons-a-home-sale-could-fall-through">5 Reasons a Home Sale Could Fall Through</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/23-hidden-costs-of-buying-an-old-house">23 Hidden Costs of Buying an Old House</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/youre-ready-to-make-an-offer-on-a-house-now-what">You&#039;re Ready to Make an Offer on a House: Now What?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-questions-real-estate-agents-hear-most-often">8 Questions Real Estate Agents Hear Most Often</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing buyers clauses contingencies escrow expenses home ownership inspections real estate agents selling a home Mon, 13 Nov 2017 08:30:15 +0000 Damian Davila 2051607 at http://www.wisebread.com 5 Common Budget Mistakes You Can Fix Right Now http://www.wisebread.com/5-common-budget-mistakes-you-can-fix-right-now <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-common-budget-mistakes-you-can-fix-right-now" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/classic_white_piggy_bank.jpg" alt="Classic white Piggy Bank" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>As a volunteer &quot;budget coach,&quot; I've reviewed lots of people's budgets over the years. No two are exactly the same because people have different incomes, fixed expenses, priorities, and more. That's to be expected. When it comes to budgeting, there's no such thing as one-size-fits-all.</p> <p>However, there are also certain approaches to budgeting that make cash flow management easier and more effective no matter your unique circumstances. Unfortunately, the use of these approaches is all too rare. As a result, here are five of the most common mistakes I see in people's budgets. (See also: <a href="http://www.wisebread.com/10-dumb-little-budgeting-mistakes-you-need-to-stop-making-today?ref=seealso" target="_blank">10 Dumb Little Budgeting Mistakes You Need to Stop Making Today</a>)</p> <h2>1. Not budgeting based on gross income</h2> <p>It's relatively common to find budget recommendations based on <em>net</em> income &mdash; what's left after all the withholding (for taxes) and transfers (for retirement plan contributions) are taken care of. The thinking is that net income is the money that's available to you so that's what you should base your budget on.</p> <p>However, <em>gross</em> income is the purest, most complete view of your income. I prefer to use it as the starting point because some of the withholding and transfer categories are manageable.</p> <p>Take taxes, for example. About 80 percent of taxpayers got a federal tax refund this year and the average amount was $2,851. That's a lot of money you might have preferred going home in your paycheck. If you typically get a big refund, estimate how much you really should have withheld by using the <a href="https://www.irs.gov/individuals/irs-withholding-calculator" target="_blank">IRS withholding calculator</a>. You should also talk to your human resources department about having less withheld.</p> <p>Retirement plan contributions are also manageable. Listing how much you contribute each month can serve as a helpful reminder to think about whether you're contributing enough. Today, when so many workplace plans automatically set employee contribution levels &mdash; and with the default amount usually set at a low 3 percent of salary &mdash; it's especially important to consider whether that's enough.</p> <h2>2. Not putting first things first</h2> <p>Budgeting isn't just about putting all of your monthly income and expenses down on paper. It's about guiding your use of money in a way that enables you to live within your means and pursue the priorities that are most important to you.</p> <p>One reason so many people struggle to build an emergency fund or invest for the future is they haven't made those items priorities. It helps a lot to design your budget with saving, investing, and if this is important to you, giving, at the top of the outgo section.</p> <p>List them first on your budget and subtract them from your income before setting your allocations for housing, transportation, clothing, and all the rest. Trying to take care of these priorities with money that's left over after lifestyle spending usually leaves you with nothing to save, invest, or give. (See also: <a href="http://www.wisebread.com/7-easy-ways-to-build-an-emergency-fund-from-0?ref=seealso" target="_blank">7 Easy Ways to Build an Emergency Fund From $0</a>)</p> <h2>3. Not budgeting for home and car maintenance</h2> <p>One of the best ways to keep your overall housing and transportation costs down is to keep your home and vehicle maintained and to make repairs on a timely basis. That will be a lot easier if you allocate money for those purposes in your monthly budget.</p> <p>When it comes to homeownership, it seems there's always something in need of attention &mdash; from a squeaky door to a leaky faucet to a furnace that doesn't light. Depending on the age and condition of your home, $200 per month is roughly the right amount to budget for maintenance and repairs. If you own a condo or townhome, you should be able to budget less. Make sure you know what you're responsible for and what your association is responsible for.</p> <p>With vehicles, $75 per car per month is about right, but again, it depends on the condition of your vehicle. (See also: <a href="http://www.wisebread.com/bookmark-this-save-money-with-an-easy-to-follow-car-maintenance-checklist?ref=seealso" target="_blank">Bookmark This: Save Money With an Easy to Follow Car Maintenance Checklist</a>)</p> <p>You won't spend these full amounts every month, but some months you'll spend far more. During months when you don't spend your full home or vehicle maintenance and repair budget, don't spend that money on something else. Let it build up, either in your checking account or in a savings account designated for periodic bills and expenses.</p> <h2>4. Not budgeting for periodic bills and expenses</h2> <p>When my family used to live in the Chicago area, I'll never forget the first property tax bill we received. I thought maybe one of our kids had been kidnapped and this was a demand for ransom. Property taxes in Chicago are extremely high.</p> <p>That's an example of a <em>periodic </em>bill or expense &mdash; a cost that doesn't occur <em>every</em> month, but that needs to be paid at <em>some</em> point each year. If you don't plan ahead for these big, irregular expenses, they can be real budget busters. Other examples include insurance premiums, end-of-year holiday gifts, and vacations.</p> <p>Here's what to do. Include one-twelfth of the annual cost of each such item on your monthly budget. Then transfer the total of all of these monthly amounts to a savings account dedicated to these expenses. That way, when the bill comes due, there will be money set aside for it. (See also: <a href="http://www.wisebread.com/pay-these-6-bills-first-when-money-is-tight?ref=seealso" target="_blank">Pay These 6 Bills First When Money Is Tight</a>)</p> <h2>5. Not budgeting for miscellaneous expenses</h2> <p>Having a zero-based budget is a worthy goal. That means income minus expenses equals zero. However, <em>creating </em>a budget where every dollar of income is allocated to a specific outgo category is far easier than <em>following </em>such a budget. No matter how detailed your plan, there always seem to be <em>some </em>expenses that just don't fit into one of your preplanned categories.</p> <p>To cope, set a monthly budget for miscellaneous expenses. But not very much &mdash; $50 is a good limit. If miscellaneous items start running higher than that, see if some of those expenses are similar enough to warrant their own category.</p> <p>Especially if you're new to using a budget, there can be a number of frustrations that make it tempting to quit. Avoiding these five common budgeting mistakes will go a long way toward lessening the frustration factor, and that should help you stay with it.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-common-budget-mistakes-you-can-fix-right-now&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Common%2520Budget%2520Mistakes%2520You%2520Can%2520Fix%2520Right%2520Now.jpg&amp;description=5%20Common%20Budget%20Mistakes%20You%20Can%20Fix%20Right%20Now"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Common%20Budget%20Mistakes%20You%20Can%20Fix%20Right%20Now.jpg" alt="5 Common Budget Mistakes You Can Fix Right Now" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/5-common-budget-mistakes-you-can-fix-right-now">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-budget-items-you-may-be-forgetting">7 Budget Items You May be Forgetting</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-easy-ways-to-build-an-emergency-fund-from-0">7 Easy Ways to Build an Emergency Fund From $0</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-budgeting-skills-everyone-should-master">11 Budgeting Skills Everyone Should Master</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-budget-consistently-without-a-steady-paycheck">How to Budget Consistently Without a Steady Paycheck</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-manage-your-money-no-budgeting-required">How to Manage Your Money — No Budgeting Required</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting bills expenses gross income maintenance money mistakes repairs saving money taxes withholding Fri, 10 Nov 2017 08:00:06 +0000 Matt Bell 2046509 at http://www.wisebread.com Don't Get Audited! How Your Side Gig Needs to Handle Taxes http://www.wisebread.com/dont-get-audited-how-your-side-gig-needs-to-handle-taxes <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/dont-get-audited-how-your-side-gig-needs-to-handle-taxes" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/going_on_a_family_vacation.jpg" alt="Going on a family vacation" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The gig economy is booming. In 2016, a TIME poll found that 45 million Americans offered some kind of good or service through an online platform, whether it was running errands, renting out their homes, or offering rides in their cars. With so many people earning extra income this way, you can bet that Uncle Sam wants its fair share of those earnings. Understanding some basic rules about taxes in the gig economy can help you avoid frustration and penalties.</p> <h2>Renting out your home</h2> <p>At $924 per month, Airbnb hosts command the highest average monthly income out of all others taking part in the sharing economy. Here are some key things to keep in mind if you rent your space. (See also: <a href="http://www.wisebread.com/13-things-i-learned-from-renting-out-my-home-on-airbnb?ref=seealso" target="_blank">13 Things I Learned From Renting Out My Home on Airbnb</a>)</p> <h3>1. The 14-day rule</h3> <p>According to the IRS, if your rental property also serves as your residence, and you rent out the space for no more than 14 days during the year, you don't have to report those earnings as income. Note that you also cannot claim any deductions from rental expenses if you rent for fewer than 14 days per year.</p> <p>Airbnb and similar companies will still report your earnings even if you're under the two-week threshold. But as long as you provide documentation that you meet the 14-day rule, you don't have to include rental income on your federal return. If you do have to report income, use Schedule C or E of Form 1040.</p> <h3>2. Deductible expenses</h3> <p>The IRS allows you to deduct a long list of applicable costs for your rental operation, including advertising, cleaning and maintenance services, utilities, property insurance, and property taxes. Check the rental section on <a href="https://www.irs.gov/publications/p527/ch01.html#en_US_2016_publink1000218979" target="_blank">IRS Publication 527</a> for a full list of eligible expenses.</p> <p>You can deduct 100 percent of direct rental expenses such as fees to Airbnb and rental insurance, and allocate a portion of general expenses such as mortgage interest and utilities. If you only rent out a room that is one-sixth of the size of your home, you can only allocate one-sixth of a general expense.</p> <h3>3. Form 1099-K</h3> <p>When you earn over $20,000 and make over 200 transactions in a calendar year, Airbnb will issue you a Form 1099-K. Airbnb will mail you this form and keep an electronic copy under &quot;Payout Preferences.&quot; This form is an IRS information return used to report certain payment transactions, which improves your voluntary tax compliance.</p> <h3>4. Pay attention to local occupancy taxes</h3> <p>On top of the IRS, you should also keep an eye on state and local government agencies. For example, throughout 2017 the House Finance Committee of Hawaii is evaluating an &quot;Airbnb bill&quot; to collect hotel room and general excise taxes from Hawaii-based short-term and vacation rentals.</p> <h3>5. Report rental losses</h3> <p>In the event that your rental operation goes sour, you can deduct losses up to applicable limits. Let's imagine that you own a $400,000 home and that you spent $400 to get a room ready for rental. However, nobody took you up on your offer. Per the IRS at-risk rule (for property placed in service after 1986), you can write off up to $400,000 in rental losses. So, you can deduct the $400 as a rental loss on your return.</p> <h2>Driving people in your car</h2> <p>Lyft and Uber drivers make an average $377 and $364 per month, respectively. Here are some tax-related pointers to keep in mind when declaring that income. (See also: <a href="http://www.wisebread.com/how-to-make-more-money-as-an-uber-driver?ref=seealso" target="_blank">How to Get a High Rating and Make More Money as an Uber Driver</a>)</p> <h3>1. Keep track of all 1099s</h3> <p>Unlike a full-time employer, Uber and Lyft won't issue you a W-2. Instead, these and other ride-sharing companies issue two types of 1099 forms to most drivers.</p> <ul> <li> <p>Form 1099-K: Includes all payments that you received from customers directly related to driving.</p> </li> <li> <p>Form 1099-MISC: Keeps track of all other non-driving income, such as payments for referrals and other types of bonuses.</p> </li> </ul> <p>While companies aren't required to issue a 1099-K unless you process 200 transactions or more (and make at least $20,000), and they're not required to issue a 1099-MISC unless you make at least $600, Uber and Lyft generally will issue those forms anyway just to remind you to report your income made through ride-sharing.</p> <p>On Uber, access your tax documents by logging in to partners.uber.com and clicking &quot;Tax Information.&quot; On Lyft, look for tax documents in the &quot;Tax Info'&quot; tab of the &quot;Driver Dashboard&quot; of your Lyft app.</p> <h3>2. Deduct applicable expenses</h3> <p>You'll quickly notice in Box 1a of your 1099-K that the reported amount is actually greater than what you received. The reason is that the reported amount in that box includes Uber's commission and other fees. On your Schedule C, Profit or Loss from Business (Form 1040), you can deduct those fees and other applicable expenses. Some examples are:</p> <ul> <li> <p>Bottled water and snacks for your passengers.</p> </li> <li> <p>Business taxes and license costs.</p> </li> <li> <p>Highway tolls.</p> </li> <li> <p>Car cleaning expenses.</p> </li> <li> <p>Car maintenance costs.</p> </li> <li> <p>Gas.</p> </li> </ul> <p>It's a best practice to keep a copy of all receipts so that you can back up your claims. One great way to do so is to open a bank account or credit card and use it solely for driving-related expenses. That way, your monthly statement becomes your monthly expense report. (See also: <a href="http://www.wisebread.com/when-you-should-get-a-business-credit-card-over-a-consumer-card?Ref=seealso" target="_blank">When You Should Get a Business Credit Card Over a Consumer Card</a>)</p> <h3>3. Include mileage in your return</h3> <p>Within your 1099s, you'll also receive a summary for &quot;On-Trip&quot; mileage. For all business miles driven in 2017, you can deduct 53.5 cents per mile. So, if you were to drive 2,000 miles, you would deduct $1,070 (2,000 x $0.535) on your return.</p> <p>You may also deduct additional miles that Uber and Lyft didn't report as long as those miles are directly related to your gig. Some examples are miles that you drove before a ride was canceled or on your way to meet an Uber or Lyft inspector. Keep a detailed log of those miles and include date, time, initial mileage, and final mileage.</p> <h3>4. Consider getting a separate smartphone</h3> <p>An internet-enabled smartphone is a key part of your operation. To make it easier for the IRS to identify what mobile phone expenses are related to your driving, get a new phone and use it exclusively for Uber or Lyft. This way you'll be able to deduct 100 percent of all phone costs, including cost of the phone, monthly charges for voice and data, and any essential accessory (chargers or mounts) from your driving income.</p> <h2>Tips for all side giggers</h2> <p>Whatever your gig, be sure you're keeping up with your taxes.</p> <h3>1. Report all income</h3> <p>From assembling furniture through TaskRabbit to delivering business supplies with Postmates, there are plenty of other ways to make money through the sharing economy. (See also: <a href="http://www.wisebread.com/13-ways-to-make-money-online-that-arent-scams?ref=seealso" target="_blank">13 Ways to Make Money Online That Aren't Scams</a>).</p> <p>All companies have to issue you a 1099-MISC once you make $600. Even when you don't hit that threshold and don't receive a form, report the income on your return. The IRS charges a 25 percent inaccuracy penalty on top of applicable taxes and interest for late payments.</p> <p>If you happen to complete additional tasks or services for a client that aren't tracked on an app or website, it's a good idea to still include them in your income. When you're making the bulk of your income through the gig economy, your federal tax return becomes a key document to prove how much you make per year. This can be useful when applying for a credit card or other form of credit.</p> <h3>2. Make estimated federal and state tax payments</h3> <p>Lessen the tax blow by submitting estimated tax payments throughout the year. Use Form 1040-ES, Estimated Tax for Individuals to submit tax payments up to four times per year. For tax year 2017, you can submit payments on April 18, June 15, September 15, and January 16, 2018.</p> <p>Most states also allow side-giggers and freelancers to submit estimated tax payments. To learn more about your state tax obligations, contact your local <a href="https://www.irs.gov/tax-professionals/government-sites" target="_blank">state tax office</a>.</p> <h3>3. Adjust withholding from your day job</h3> <p>Don't pay more taxes than you have to. If a full-time employer is already withholding taxes from your paycheck, use the <a href="https://apps.irs.gov/app/withholdingcalculator/" target="_blank">IRS Withholding Calculator</a> to adjust how much is taken out. It has been estimated that 75 percent of Americans pay too much in taxes throughout the year. The calculator will provide you suggestions to adjust your withholding so that you meet your tax liability and keep the most out of your day job paychecks.</p> <h3>4. Hire an accountant</h3> <p>Using Schedule C from Form 1040 is a great way to reduce your taxable income, but is also a way to increase your chances of receiving an audit from the IRS. Individuals using Schedule C are more likely than corporations to get an audit. If you're planning to include a very long list of deductions, paying a professional will be worth your while to hedge against a potential audit. You can deduct what your accountant charges you as a business expense, after all.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fdont-get-audited-how-your-side-gig-needs-to-handle-taxes&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FDont%2520Get%2520Audited%2521%2520How%2520Your%2520Side%2520Gig%2520Needs%2520to%2520Handle%2520Taxes.jpg&amp;description=Dont%20Get%20Audited!%20How%20Your%20Side%20Gig%20Needs%20to%20Handle%20Taxes"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Dont%20Get%20Audited%21%20How%20Your%20Side%20Gig%20Needs%20to%20Handle%20Taxes.jpg" alt="Don't Get Audited! How Your Side Gig Needs to Handle Taxes" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/dont-get-audited-how-your-side-gig-needs-to-handle-taxes">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/a-simple-plan-for-saving-up-a-2000-fun-fund">A Simple Plan for Saving Up a $2000 Fun Fund</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-lessons-from-tax-day-to-remember-for-next-year">7 Lessons From Tax Day to Remember for Next Year</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-seasonal-side-hustles-thatll-cover-your-holiday-spending">8 Seasonal Side Hustles That&#039;ll Cover Your Holiday Spending</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-to-earn-extra-money-with-your-car">7 Ways to Earn Extra Money With Your Car</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-freelancers-and-side-giggers-need-to-know-about-income-taxes">What Freelancers and Side Giggers Need to Know About Income Taxes</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Extra Income Taxes AirBnb audits deductions earnings expenses freelance gig economy income IRS lyft sharing economy side jobs Uber Thu, 26 Oct 2017 09:00:06 +0000 Damian Davila 2038890 at http://www.wisebread.com 15 Unexpected Expenses of a New Baby http://www.wisebread.com/15-unexpected-expenses-of-a-new-baby <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/15-unexpected-expenses-of-a-new-baby" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/i_never_thought_i_could_love_one_being_so_much.jpg" alt="I never thought I could love one being so much" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Can you afford to have a baby?</p> <p>You may have calculated obvious costs such as diapers, clothing, food, and day care, but don't be too quick to assume that you've accounted for everything. According to the United States Department of Agriculture, middle income families spend an average $12,980 a year on each kid, and $233,610 in a lifetime, <em>not including college</em>.</p> <p>When I was expecting my first baby, I thought there was no way I could spend that much. I may have been more frugal than most, but I still ran into all kinds of expenditures &mdash; and decreases in income &mdash; that I hadn't anticipated.</p> <p>Watch out for these unanticipated ways a baby may impact your family budget. (See also: <a href="http://www.wisebread.com/24-tips-for-having-a-baby-without-going-broke?ref=seealso" target="_blank">24 Tips for Having a Baby Without Going Broke</a>)</p> <h2>1. A birth that doesn't go as planned</h2> <p>If you have a high-deductible health plan or no health insurance at all, you may have carefully planned for a low-cost birth. That's smart. But one thing I learned from having three babies is that &quot;birth&quot; and &quot;plan&quot; can be oxymorons. So many factors are outside your control, such as when and where your labor begins, whether the baby has any trouble making their big entrance, and what kind of care you and the baby need after the birth.</p> <p>I know couples who planned a homebirth with a midwife, but ended up being transferred to the hospital in an ambulance for a C-section. If you are birthing at home or at a non-hospital birth center, both of which can be great choices, please have a financial plan for what happens if you get transferred. You will be under enough stress on the day of without adding financial unknowns to the mix. (See also: <a href="http://www.wisebread.com/10-newborn-costs-that-took-me-by-surprise?ref=seealso" target="_blank">10 Newborn Costs That Took Me by Surprise</a>)</p> <h2>2. Higher utility bills</h2> <p>When my husband and I were childless, we lived in a San Francisco flat with no central heat and we typically ran our electric wall heaters an hour a day or less.</p> <p>Once we brought home our first child, our electricity bill jumped for two reasons: One, we felt that baby needed a warmer room to sleep in at night, not to mention the fact that I had to leave the cocoon of blankets multiple times a night to feed her. Two, since I took a six-month maternity leave, then left our child at home with a nanny, our apartment was suddenly occupied nearly 24/7 instead of only on evenings and weekends. We ran the heat much more, kept more lights on, and certainly ran more loads of laundry and dishes. If you decide to use cloth diapers, expect your laundry use to increase even more than average. (See also: <a href="http://www.wisebread.com/everything-you-need-to-know-about-cloth-diapers?ref=seealso" target="_blank">Everything You Need to Know About Cloth Diapers</a>)</p> <h2>3. Convenience food</h2> <p>When I stopped working full-time to stay home with my new baby, I expected to make more home-cooked meals. In the long run that was true, but in the early months, I had trouble getting dinner on the table. Like many babies, my infant fussed most in the late afternoon, and often I couldn't put her down without her screaming. Many things can safely be done with a baby strapped to your body, but stirring a dish over a hot stove or putting a casserole in the oven aren't among them.</p> <p>For many households &mdash; especially if both parents work and have limited time between day care pickup and dinner &mdash; bringing home a baby is going to mean also bringing home more pizzas, ordering Chinese, and heating up Trader Joe's fake out. Don't guilt yourself about it; just budget for it.</p> <h2>4. Health care</h2> <p>Your health plan may not charge copays for the well baby visits scheduled frequently during the first year, which is great. But keep in mind that these may not be your only doctor visits. An ear infection may lead to two visits and a prescription. For one of my babies, a cold turned into a hospitalization for pneumonia. Another had frequent chest congestion that necessitated a breathing machine at home.</p> <p>If you have been on a health care plan that only covers major illnesses, you may need to look into a plan that covers more frequent visits before your baby is born.</p> <p>Then there are all the nonprescription supplies that you might buy for minor infant health concerns: baby Motrin, teething gel, a humidifier to ease congestion, medicated cream for eczema or rashes, a high-tech thermometer, so on and so forth. All these things add up, and quickly.</p> <p>Babies have to be taken to the doctor so often &mdash; weekly at first, then monthly, plus sick visits &mdash; that even transportation costs for getting to the doctor may have to be taken into account.</p> <h2>5. Loss of income</h2> <p>The last time I earned a full-time paycheck was 13 years ago. I may never earn one again.</p> <p>My family is an extreme example &mdash; many must and do have both parents return to working full-time within six weeks of birth. But I took six months away from my job after my first birth, some of that time unpaid, and then returned as a part-time worker. While pregnant with my second child, I quit my job altogether. I only began contributing freelance income to the family budget gradually as my kids got older.</p> <p>Even for families where both parents plan to keep working full-time, income may decline. Both parents may pass up opportunities for overtime. Time for side hustles evaporates. Parents may have to take unpaid days off if the baby is sick, or for those numerous well baby visits. (See also: <a href="http://www.wisebread.com/12-side-jobs-for-stay-at-home-moms-and-dads?ref=seealso" target="_blank">12 Side Jobs for Stay-at-Home Moms and Dads</a>)</p> <h2>6. A bigger house</h2> <p>My husband and I brought our first baby home to a 750 square foot, one-bedroom apartment with no immediate plans to move. After all, the American Academy of Pediatrics recommends sharing a room with your baby! We were sure we would be cozy.</p> <p>Unfortunately, we almost immediately felt crowded out by baby equipment, not to mention the fact that there was nowhere to escape to if the baby was crying and one parent was trying to sleep or work. Living in a building with shared walls also became a problem, especially when the baby learned to bang her toys on the floor.</p> <p>Housing accounts for around a third of the expense of raising a child, according to the USDA. If you think you won't move after you have a baby, go to some open houses and ask the sellers why they're moving. Lots of them will tell you it's because their family is growing. And if you don't move after the first baby, you will probably want a bigger place once the second is on the way.</p> <p>Our family moved out of that one-bedroom flat into a three-bedroom house around the time that our second baby was born. The mortgage is twice what we paid before having kids. (See also: <a href="http://www.wisebread.com/5-easy-ways-to-make-room-for-baby?ref=seealso" target="_blank">5 Easy Ways to Make Room for Baby</a>)</p> <h2>7. A larger car</h2> <p>You do not need to rush out and buy a minivan the moment you see two pink lines on the pregnancy test. However, it can be shocking how much space today's infant seats take up in the back seat. If you've been driving a two-door compact car, you may find yourself wanting something larger after the baby comes. And if you have more than two children, good luck fitting their car seats in the back of any sedan. The first baby saw us upgrade from a two-door hatchback to a Subaru; the third child sent us from the Subaru to small sport utility vehicle.</p> <h2>8. Life insurance</h2> <p>Before having kids, my husband and I didn't worry about life insurance. If I died, my husband would have been able to handle the payments on our condo by himself, and vice versa.</p> <p>But once you have a child, you have to ask yourself what would happen if one parent suddenly died. Your child would likely receive Social Security payments, but would this be enough to keep living where you live, to pay for child care while the surviving parent works, and to save for college? And what if both parents died?</p> <p>Life insurance costs can vary widely depending on your overall health and lifestyle and the specifics of your plan. However, you need to seriously consider this expense once you become a parent. (See also: <a href="http://www.wisebread.com/term-vs-whole-life-insurance-heres-how-to-choose?ref=seealso" target="_blank">Term vs Whole Life Insurance: Here's How to Choose</a>)</p> <h2>9. Child care</h2> <p>Of course, you knew before you had a baby that you weren't going to be able to leave it home alone while you worked. But you probably didn't realize just how much child care would cost. According to a recent NerdWallet study, half of expecting parents thought diapering would be the biggest expense of having a baby, not child care.</p> <p>According to that study, the cost of full-time child care ranges from $8,000 at a day care center to $27,000 or more for a nanny.</p> <p>Even if you had realized that child care would be expensive, you may find yourself paying even more than you'd imagined. For instance, when my first child was born, I hoped I wouldn't need child care because I planned to change my work shift to evenings. That plan collapsed when my boss turned down my request. My second thought was to use a day care center, but I quickly found out that all the centers in my urban neighborhood had years long waiting lists for infant care. Home-based day cares were more affordable and available, but each one I visited had a worrisome condition, such as kids sitting in front of the TV for hours or being left crying in their cribs well after naptime. I finally ended up sharing a nanny with another family, at a cost far higher than I had anticipated.</p> <h2>10. All the cute things</h2> <p>You might think that you won't waste money buying clothes and toys for your newborn. After all, you got all those clothes at your baby shower. Then you meet your baby and realize that she's the most beautiful creature on earth and that beautiful creatures need accessories. After my first child was born, I developed a habit of popping into the Gymboree near my work regularly to see if new styles were in and if anything had gone on sale. This routine did not help our family budget.</p> <h2>11. Feeding</h2> <p>If you're planning on breast-feeding your baby, you might expect that to be free, right? Not exactly.</p> <p>A surprising number of newborns have trouble getting the hang of breast-feeding. You might need to consult a lactation specialist just once to help your infant latch and learn to suck, or you may need multiple home visits. You may need to buy products, such as nipple shields, to help the latch happen. All this struggle may wreak havoc on the mother's body and soul, necessitating anything from nipple cream to doctor visits for mastitis to seeing a counselor.</p> <p>Whether your baby succeeds immediately at breast-feeding or not, you still probably need a breast pump. You'll also likely need a better, more expensive breast pump than you thought. I've tried a lot of them, and trust me, a cheap breast pump will not enhance postpartum life.</p> <p>Many parents end up bottle feeding instead of or in addition to breast-feeding, which brings the expense of formula and bottles. You might even buy a sanitizer for the bottles, an insulated carrying pack for either breastmilk or formula, or a mini fridge for the office or nursery.</p> <p>In the second half of the first year, your baby will start eating solids, an occasion you can mark by purchasing many kinds of organic foods for him to spit onto the kitchen walls, and new feeding gadgets such as suction cup bowls and spoons that hold puree in the handle. Expect to throw away most of the food you purchase, either directly from the container because it went bad before your baby finished it, or after scraping it off the floor, walls, cupboards, and your own clothing.</p> <h2>12. Specialists</h2> <p>Taking care of a baby might sound easy before you try it. After all, humans have been doing this since they lived in caves. If that were true, though, there wouldn't be so many specialists out there ready to help you figure it out for an hourly fee.</p> <p>You might realize after you come home from the hospital that you need a postpartum doula or baby nurse to help you get back up to speed and get a few hours of sleep at night. Many more families than you would imagine consult a sleep specialist to help them figure out how to get their infants to sleep.</p> <h2>13. Baby gear</h2> <p>Before my first was born, I read a book called <em>The Baby Book</em> by a certain Dr. Sears. This book, which embraces attachment parenting, convinced me that I wouldn't need anything but my own arms and maybe a sling to care for my baby. After all, I would never want to turn my baby over to a mechanical device like a swing when I could be cuddling her in my arms.</p> <p>Then I brought the baby home, and I realized that sometimes I needed to use the bathroom or shower or cook dinner. This wasn't really covered in the book. We purchased our first baby swing, a weak little portable model. By the time we had our third baby, I had the most powerful swing on the market downstairs, another swing for upstairs, plus a bouncy seat for the bathroom, two strollers, and countless other pieces of baby gear.</p> <p>Even if you think your baby shower will cover your gear needs, the fact is that you will end up spending money on baby equipment. Don't feel the need to buy every single product that's advertised for babies, but accept the fact that there will be gadgets, and some of them really help.</p> <h2>14. Replacing things that baby wrecks</h2> <p>That sweet thing can't even raise his head; how could he destroy your possessions?</p> <p><em>Just wait.</em></p> <p>My babies have slobbered and mouthed a cellphone into oblivion. They've grabbed fragile things that I thought were out of reach and flung them. They have vomited on strangers and caused me to have to pay for those strangers' meals. They have stretched out the necklines of my shirts while reaching for my breasts. One of them even wrecked an expensive ballpark beer before I got the chance to take a sip by throwing a cleaning wipe into the cup.</p> <p>And oh, the pacifiers. I have surely spent thousands of dollars replacing pacifiers that babies flung out of car windows, dropped in the park, and just disappeared into the baby ether.</p> <p>You really can't have nice things with a baby around. And even your mediocre things will need replacing or professional cleaning more often than you'd expected.</p> <h2>15. Entertainment and education</h2> <p>Before I became a mother, I laughed out loud at a colleague who told me he took his infant to a music class. But when I was on maternity leave with my daughter, the hours began to weigh on me. We needed somewhere to go, and you can only grocery shop so many times per day.</p> <p>We signed up for a baby sign language class and later &mdash; yes &mdash; a baby music class.</p> <p>For the parents, there are also continuing education classes to pay for, such as infant CPR. And if you stay home with your baby, there's the cost of being out and about instead of sitting in an office all day. I found myself spending on things like lattes and lunches with other moms, just because I was out pushing the stroller.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F15-unexpected-expenses-of-a-new-baby&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F15%2520Unexpected%2520Expenses%2520of%2520a%2520New%2520Baby.jpg&amp;description=15%20Unexpected%20Expenses%20of%20a%20New%20Baby"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/15%20Unexpected%20Expenses%20of%20a%20New%20Baby.jpg" alt="15 Unexpected Expenses of a New Baby" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/15-unexpected-expenses-of-a-new-baby">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-manage-your-money-no-budgeting-required">How to Manage Your Money — No Budgeting Required</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stop-making-these-7-basic-budget-mistakes">Stop Making These 7 Basic Budget Mistakes</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-sneaky-vacation-costs-that-add-up-quickly">10 Sneaky Vacation Costs That Add Up Quickly</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-you-should-budget-your-social-security-checks">Here&#039;s How You Should Budget Your Social Security Checks</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-college-expenses-you-arent-saving-for">9 College Expenses You Aren&#039;t Saving For</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Family babies child care day care expenses Food Health hidden costs income infants newborns unexpected costs Tue, 24 Oct 2017 09:00:06 +0000 Carrie Kirby 2039971 at http://www.wisebread.com How Complacency Keeps You From Financial Security http://www.wisebread.com/how-complacency-is-keeps-you-from-financial-security <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-complacency-is-keeps-you-from-financial-security" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/i_need_a_break_0.jpg" alt="I need a break" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Complacency is not taking action even when you know you should. It tends to be an issue when you're not sure why a decision matters, or when you're overwhelmed by the details and options involved in making a decision. Complacency may seem like no big deal, but it can have a very negative effect on your finances. Here's how it can hurt you.</p> <h2>You're getting a poor return on your investments</h2> <p>When you're complacent about how you manage your long-term savings, you can miss out on a lot of returns. If you put off moving your money into an investment or fund, and leave your accumulated savings in a low-interest savings account instead, <a href="http://www.wisebread.com/cash-might-make-you-happier-but-investments-will-make-you-richer" target="_blank">you're losing money every month</a>. You could be adding to your savings effortlessly with passive income, and by not doing so, you're drastically diminishing your future earnings potential.</p> <p>Take an hour or two to learn the <a href="http://www.wisebread.com/how-to-buy-your-first-stocks-or-funds" target="_blank">basics of investing</a>. Then set up an account and get started earning a better return. You can always make adjustments later. In the meantime, your returns will be compounding.</p> <h2>Your lack of emergency savings means more financial emergencies</h2> <p>Complacency might make you feel like you don't need to have an emergency fund. Maybe you haven't <a href="http://www.wisebread.com/6-fast-ways-to-restock-an-emergency-fund-after-an-emergency" target="_blank">rebuilt your fund after a crisis</a>, or maybe you haven't been able to accumulate one at all. When things are going well and your day-to-day life is predictable, an emergency fund might seem unimportant.</p> <p>However, having an emergency fund keeps a small crisis from becoming a big deal. You can't always predict a big expense or income loss; without a plan and some savings, you may end up using a high-interest loan or credit card to handle a financial crisis. That kicks off a fix-it-quick debt cycle, which can leave you backed into an unpleasant financial corner.</p> <p>It can seem difficult to build up an emergency fund, especially if you're already on a tight budget. But even a very small, regular contribution to your savings will add up quickly. Doing what you can is better than doing nothing at all.</p> <h2>You're not adding as much as you could to your retirement savings</h2> <p>Maybe you're not taking full advantage of your 401(k) or haven't yet set up the IRA you've been thinking about. There can be some details to work through, but in the meantime, you're missing out on savings and, possibly, matching funds from your employer. If you're failing to contribute regularly, or putting off setting up a 401(k) and IRA altogether, you're jeopardizing your retirement. You're also missing out on tax breaks that come with these retirement accounts.</p> <p>Not sure where to start? Our <a href="http://www.wisebread.com/bookmark-this-a-step-by-step-guide-to-choosing-401k-investments" target="_blank">step-by-step guide to choosing 401(k) investments can help</a>. If your employer doesn't offer a 401(k), here are <a href="http://www.wisebread.com/5-retirement-accounts-you-dont-need-a-ton-of-money-to-open?ref=seealso" target="_blank">five Roth IRA accounts</a> you can set up on your own that don't require a lot of money to open.</p> <h2>Your big, unnecessary expenses are increasing your debt</h2> <p>At some point, you made a decision to buy the house or the car or whatever it is. Now, you realize it's not really worth it. The expense is more than you can comfortably handle, and you could live without it. But getting away from this payment &mdash; whether it's a lease, a mortgage, or a car loan &mdash; seems impossible, so you just &hellip; don't.</p> <p>Meanwhile, you're paying interest every month and, if your budget is stretched to the limit, you're not saving like you could be. You may be stuck making minimum payments on debt, or failing to proactively maintain your big purchases because you can't afford to do more. The resulting depreciation can diminish the value of your house or car in a hurry, leaving you with less and less value to recover as time goes on. (See also: <a href="http://www.wisebread.com/4-purchases-with-financing-options-that-depreciate-fast?ref=seealso" target="_blank">4 Purchases With Financing Options That Depreciate Fast</a>)</p> <p>Take the first step by finding out how to get out from under this big expense. There may be an option to end the lease early. Maybe you can sell the car and pay off the loan. Or it might be time to get that house on the market and find something more affordable. The sooner you take action, the sooner you stop losing money.</p> <h2>Your ho-hum career is costing you opportunities</h2> <p>Career capital isn't only about what you make in terms of salary; it's also about the skills and experiences you build, which can add to your marketability. If you're bored, disinterested, or otherwise feeling stuck in your job, but you're staying put, you're limiting your future in terms of finances and fulfillment.</p> <p>The more disengaged and unhappy you are in your job, the poorer your performance will be. You're more likely to do subpar work, miss out on opportunities, and be passed over for promotions. Even if you don't love your job, do your best to gain skills and be engaged while you're there; doing so will open up more opportunities for advancement or a complete career change.</p> <p>Meanwhile, start looking for your next move. It might be time to <a href="http://www.wisebread.com/8-ways-a-side-hustle-can-advance-your-career" target="_blank">start a side hustle</a>, network for a new job option, or get serious about starting a business. Don't let time go by and kill your enthusiasm (and your bank account). The sooner you take action, the sooner you can increase your salary and your enjoyment in the work you do.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-complacency-is-keeps-you-from-financial-security&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520Complacency%2520Keeps%2520You%2520From%2520Financial%2520Security.jpg&amp;description=How%20Complacency%20Keeps%20You%20From%20Financial%20Security"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20Complacency%20Keeps%20You%20From%20Financial%20Security.jpg" alt="How Complacency Keeps You From Financial Security" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/annie-mueller">Annie Mueller</a> of <a href="http://www.wisebread.com/how-complacency-is-keeps-you-from-financial-security">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-expect-after-these-5-personal-financial-disasters">What to Expect After These 5 Personal Financial Disasters</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-money-goals-you-should-set-for-the-holidays">10 Money Goals You Should Set for the Holidays</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-money-habits-that-make-you-look-financially-immature">11 Money Habits That Make You Look Financially Immature</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-start-a-family-before-reaching-these-5-money-goals">Don&#039;t Start a Family Before Reaching These 5 Money Goals</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/13-financial-gifts-to-give-yourself-this-holiday-season">13 Financial Gifts to Give Yourself This Holiday Season</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Career Building complacency debt emergency funds expenses inaction investments job laziness Spending Money stalling Fri, 06 Oct 2017 08:30:06 +0000 Annie Mueller 2029863 at http://www.wisebread.com How to Face These 7 Scary Facts About Retirement Saving http://www.wisebread.com/how-to-face-these-7-scary-facts-about-retirement-saving <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-face-these-7-scary-facts-about-retirement-saving" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/how_much_savings_will_you_need_to_retire.jpg" alt="How much savings will you need to retire" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Articles warning about our lack of retirement preparedness are a dime a dozen, and maybe that's part of the problem. We hear the warnings so often that we've become numb to them.</p> <p>Maybe packing the scariest statistics into one article will have more impact and motivate more of us to get in the retirement savings game. That's what this article is designed to do. But brace yourself: The picture isn't pretty.</p> <h2>1. You might not be saving enough</h2> <p>According to the Employee Benefit Research Institute (EBRI), about two out of every five workers today (44 percent) are not saving <em>any</em> money for retirement. None.</p> <p>Even among today's oldest workers &mdash; those closest to retirement &mdash; many have far too little saved for their later years. Among workers age 55 or older, 45 percent have less than $100,000 saved.</p> <p>If these folks really kick their savings into gear &mdash; let's say they end up with $250,000 by the time they finish their career &mdash; that still won't provide much to live on. A standard <a href="http://www.wisebread.com/4-retirement-rules-of-thumb-that-actually-work?ref=internal" target="_blank">retirement rule of thumb</a> says you can withdraw 4 percent of your nest egg every year without having to worry about draining your account before you die. At $250,000, that translates into just $10,000 of annual retirement income. (See also: <a href="http://www.wisebread.com/10-signs-you-arent-saving-enough-for-retirement?ref=seealso" target="_blank">10 Signs You Aren't Saving Enough for Retirement</a>)</p> <h2>2. You might outlive your money</h2> <p>Among the many risks financial planners talk about is <em>longevity risk</em>; the danger of living a long life. It may sound kind of funny to frame that as a risk since most of us would <em>like </em>to live a long life. However, running out of money before you run out of time wouldn't be very funny at all.</p> <p>A man who is 65 years old today can expect to live another 19.2 years, according to the Social Security Administration's Life Expectancy Calculator. A 65-year-old woman can expect to live another 21.6 years.</p> <p>Are you on track to save enough to cover your retirement expenses that long?</p> <h2>3. If you're young, you're probably not saving aggressively enough</h2> <p>Many millennials &mdash; people with the best opportunity to take advantage of compounding interest &mdash; are investing far too conservatively. A 2014 UBS Investor Watch survey found that millennials were almost as likely as baby boomers to describe their risk tolerance as conservative. The same survey found millennials holding over half their assets in cash.</p> <p>When you're young, the riskiest thing you can do with your investments is to play it too safe. Doing so will make it hard to outpace inflation and you'll miss out on much of the growth that compounding can provide. (See also: <a href="http://www.wisebread.com/5-facts-millennials-should-know-about-retirement-planning?ref=seealso" target="_blank">5 Facts Millennials Should Know About Retirement Planning</a>)</p> <h2>4. You can't count on Social Security to fill in much of the gap</h2> <p>As of July 2017, the average Social Security retirement benefit was just $1,325 per month. Even scarier, the Social Security Administration notes that Social Security provides 90 percent or more of the income received by about one in five elderly married couples, and two in five elderly singles.</p> <p>A big part of the problem is that many people claim benefits as soon as they qualify &mdash; age 62. That guarantees the lowest possible monthly benefit. Waiting until full retirement age (67 for anyone born in 1960 or later), or even better, age 70, will boost monthly benefits substantially. (See also: <a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement?ref=seealso" target="_blank">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a>)</p> <h2>5. You shouldn't count on working for pay in your later years</h2> <p>Plan B for a growing number of today's workers is to retire after the typical retirement age of 65. For many, it isn't that they love their job so much; it's that they know they'll need the money.</p> <p>But their aspirations don't match reality. According to EBRI, 52 percent of today's workers <em>expect</em> to retire after age 65 or never retire, whereas just 14 percent of today's over-65 crowd <em>actually</em> retired that late or never retired.</p> <p>In fact, 48 percent of today's retirees left the workforce <em>earlier</em> than planned &mdash; mostly due to health issues or the need to care for a loved one.</p> <h2>6. You may have no idea how much you should be saving for retirement</h2> <p>EBRI found that just 41 percent of all of today's workers have tried to figure out how much they will need to have saved by the time they retire in order to live comfortably. Those that <em>have</em> run the numbers tend to save more for retirement. (See also: <a href="http://www.wisebread.com/this-one-thing-could-be-the-key-to-retiring-rich?Ref=seealso" target="_blank">This One Thing Could Be the Key to Retiring Rich</a>)</p> <h2>7. You may not be able to afford your later life health care costs</h2> <p>A recent Fidelity study found that a couple retiring this year would need $275,000 to cover their health care premiums, copays, deductibles, and out-of-pocket costs for prescription drugs over the course of their retirement. (See also: <a href="http://www.wisebread.com/9-unexpected-expenses-for-retirees-and-how-to-manage-them?ref=seealso" target="_blank">9 Unexpected Expenses for Retirees &mdash; And How to Manage Them</a>)</p> <p>What that figure <em>doesn't </em>include is long-term care, and yet, today's 65-year-olds have a 70 percent chance of needing some type of long-term care before they die, according to the U.S. Department of Health and Human Services. And that care is costly. Genworth's latest annual Cost of Care survey found that a private room in a nursing home cost nearly $7,700 per month in 2016, or over $92,000 per year. (See also: <a href="http://www.wisebread.com/is-long-term-care-insurance-worth-it?ref=seealso" target="_blank">Is Long Term Care Insurance Worth It?</a>)</p> <p>If these scary statistics have convinced you to take action, here are three of the most important steps to take: Run the numbers to figure out how much you should be saving for retirement, make saving a priority, and wait at least until full retirement age before claiming Social Security benefits.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-face-these-7-scary-facts-about-retirement-saving&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Face%2520These%25207%2520Scary%2520Facts%2520About%2520Retirement%2520Saving.jpg&amp;description=How%20to%20Face%20These%207%20Scary%20Facts%20About%20Retirement%20Saving"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Face%20These%207%20Scary%20Facts%20About%20Retirement%20Saving.jpg" alt="How to Face These 7 Scary Facts About Retirement Saving" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/how-to-face-these-7-scary-facts-about-retirement-saving">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-age-milestones-that-impact-your-retirement">6 Age Milestones That Impact Your Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-its-time-to-retire">8 Signs It&#039;s Time to Retire</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-retirement-planning-changes-when-youre-single">7 Ways Retirement Planning Changes When You&#039;re Single</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-overcome-these-4-common-retirement-fears">How to Overcome These 4 Common Retirement Fears</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-tax-day-is-april-15-and-other-weird-financial-deadlines">Why Tax Day Is April 15 and Other Weird Financial Deadlines</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) expenses health care IRA not saving enough outliving money scary facts social security Wed, 04 Oct 2017 09:00:06 +0000 Matt Bell 2030771 at http://www.wisebread.com How to Keep Your Job Hunt From Busting Your Budget http://www.wisebread.com/how-to-keep-your-job-hunt-from-busting-your-budget <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-keep-your-job-hunt-from-busting-your-budget" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/we_are_hiring_sign_530186607.jpg" alt="Learning how to keep a job hunt from busting a budget" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Searching for a new job can be a stressful ordeal. There is always a feeling that you could be doing more to make yourself attractive to employers: more networking, more updates to your LinkedIn profile, more classes to boost your skills. This desire to do more, however, sometimes comes with an urge to spend money on products and services that you may not need.</p> <p>Are you throwing away money during your job search? Here are a handful of things that may not be worth spending money on in your quest for new employment. (See also: <a href="http://www.wisebread.com/dont-forget-about-these-7-job-hunting-expenses?ref=seealso" target="_blank">Don't Forget About These 7 Job Hunting Expenses</a>)</p> <h2>Resume writers</h2> <p>There are many people who offer advice on how to craft your resume to help you land a job. This can be a useful service, but keep in mind that there's also plenty of free advice out there.</p> <p>Before spending a significant amount of money on a resume consultant, do a search of some well-regarded business and career publications to see if they've written extensively on this topic. There are also countless examples online of well-crafted, effective resumes that are easy to replicate.</p> <p>Additionally, it's easy to turn to knowledgeable friends and family for feedback before deciding to pay for outside help. A resume consultant may be useful if you really don't feel confident crafting a resume yourself, but most people are able to get by without one. (See also: <a href="http://www.wisebread.com/great-ways-to-improve-your-resume-today?ref=seealso" target="_blank">Great Ways to Improve Your Resume Today</a>)</p> <h2>Costly networking meals</h2> <p>When you are networking, you may feel it necessary to treat a contact to an expensive meal in order to make a good impression. But this is rarely necessary. People are busy, and generally have no desire to set aside an entire lunch hour or evening just to hear you pitch yourself.</p> <p>If someone is willing to help you in your job search, they will be fine meeting over a cup of coffee or even just an in-person chat in their office. Remember that your work history and accomplishments are what matter most in your job search, not your ability to pick up the check for a steak dinner. If you feel the need to make a grand gesture to thank someone for their help, do it after you've landed the job.</p> <h2>Expensive clothes</h2> <p>If you are interviewing to be the CEO, it makes sense to spend some bucks to look right for the job. Most job applicants, however, don't need to spend $3,000 for a custom Italian suit.</p> <p>Sure, you'll want to have appropriate dress clothes and shoes that make you look like a professional. But there's no need to go overboard. Also keep in mind that many employers allow for casual dress. In those situations, you may be able to save money by skipping the suit altogether and wearing tailored, well-fitting clothing. If you don't already have these in your closet, you can buy them for less than $100.</p> <h2>Premium job search engines</h2> <p>Many job boards and career networking sites offer paid services that promise enhanced job listings and the ability to be labeled as a &quot;featured&quot; applicant. These services can come with some bells and whistles that might help you in your job search, but they are not cheap. LinkedIn Premium, for example, starts at $25 per month. These services can't guarantee you'll get a job, and aren't a replacement for having good qualifications and networking.</p> <h2>Costly technology</h2> <p>You may be tempted to go out and get a new computer or smartphone to help you with your job search. Perhaps you think a costly piece of software will enhance your chances of landing a position.</p> <p>In reality, it's rarely necessary to upgrade your technology just to search for jobs. Sure, a reliable computer will help, along with a phone so companies can reach you. But there are many technological solutions that don't cost a dime, including free online software that can help you easily set up a professional website. Besides, the most important component to getting a new job is the most low-tech one there is: you. Your skills, qualifications, and experience are what matter most.</p> <h2>Travel for jobs you don't want</h2> <p>I'm a firm believer that interviewing for a job can be beneficial, even if it's for a job you aren't crazy about. But if you have to incur significant expense to show up, it's probably not worth it. There's no need to hop on a plane and book a hotel for a job that does not interest you, unless you have a strong indication that it could lead to a more attractive opportunity. Even train fare and parking may be a waste of money if you really don't have an interest in the job.</p> <h2>Education or certifications you don't need</h2> <p>It is true that you should never stop learning, and it's never a bad idea to enhance and expand your skill set to give your career a boost. But you need to be thoughtful in what you pursue.</p> <p>Why spend thousands of dollars for an associate degree in accounting when your background is in engineering? Why spend thousands more to be trained in Adobe Creative Suite if you have no real interest in graphic design? Remember, there are many professional &quot;certifications&quot; that are not worth the paper they are written on. Taking some classes or gaining skills can boost your career, but only when they can truly help you, and only when these efforts are properly aligned with your goals and strengths. (See also: <a href="http://www.wisebread.com/are-online-certifications-worth-the-price?ref=seealso" target="_blank">Are Online Certifications Worth the Price?</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-keep-your-job-hunt-from-busting-your-budget&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Keep%2520Your%2520Job%2520Hunt%2520From%2520Busting%2520Your%2520Budget.jpg&amp;description=How%20to%20Keep%20Your%20Job%20Hunt%20From%20Busting%20Your%20Budget"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Keep%20Your%20Job%20Hunt%20From%20Busting%20Your%20Budget.jpg" alt="How to Keep Your Job Hunt From Busting Your Budget" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/how-to-keep-your-job-hunt-from-busting-your-budget">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/job-hunting-with-a-long-employment-gap">Job Hunting With a Long Employment Gap</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/job-search-tips-that-will-get-you-a-job-in-2012">Job Search Tips That Will Get You a Job in 2012</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-ask-for-your-old-job-back-after-leaving">How to Ask for Your Old Job Back After Leaving</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-ace-your-next-coffee-interview">How to Ace Your Next Coffee Interview</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-land-the-job-when-youre-overqualified">How to Land the Job When You&#039;re Overqualified</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Job Hunting certifications expenses job interviews job search meals networking resumes skills travel wasting money Mon, 02 Oct 2017 08:30:16 +0000 Tim Lemke 2029156 at http://www.wisebread.com 6 Ways to Avoid Vacation Debt http://www.wisebread.com/6-ways-to-avoid-vacation-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-to-avoid-vacation-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/travel_cost.jpg" alt="Travel cost" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Vacation is meant to be fun and relaxing. With no office to go into and no stove to slave over, you can enjoy some peace and quiet and forget about life for a while. Unfortunately, many Americans return home to a rude awakening in the form of a big, fat vacation bill. Nearly three-quarters of Americans have gone into debt to pay for a vacation, racking up an average balance of $1,108, according to LearnVest's 2017 Money Habits and Confessions Survey.</p> <p>Fortunately, there are plenty of ways to avoid vacation debt and the havoc it creates. If you're gearing up for a trip but don't want to return home to a nasty bill, here are some steps you can take in advance. (See also: <a href="http://www.wisebread.com/7-fool-proof-ways-to-stay-within-your-travel-budget?ref=seealso" target="_blank">7 Fool-Proof Ways to Stay Within Your Travel Budget</a>)</p> <h2>1. Start a travel savings account</h2> <p>One possible reason Americans wind up with vacation debt could be the fact that more than half of us don't have a travel budget. The LearnVest survey shows that 55 percent of Americans don't factor vacations into their annual spending plans.</p> <p>One of the best ways to ensure you have vacation funds saved in advance of your holiday is to create a targeted savings account just for travel. A travel account allows you to see exactly how much you have to spend on vacation without digging into your regular budget, or worse, going into debt. (See also: <a href="http://www.wisebread.com/how-to-build-your-best-travel-budget?ref=seealso" target="_blank">How to Build Your Best Travel Budget</a>)</p> <h2>2. Carve out some travel savings in your monthly budget</h2> <p>Once you have a travel account, you need to save regularly if you want your funds to grow. Make it easy on yourself by budgeting for travel expenses monthly &mdash; as in, set aside a few hundred dollars (or whatever you can afford) each month as if you were paying a regular bill. By stashing this money in your travel savings account, you help make sure it doesn't get spent elsewhere. (See also: <a href="http://www.wisebread.com/7-easy-ways-to-budget-for-summer-vacation?ref=seealso" target="_blank">7 Easy Ways to Budget for Summer Vacation</a>)</p> <h2>3. Find ways to save on travel</h2> <p>Part of our problem with vacation debt could stem from the fact that we're spending too much on travel compared to our incomes. LearnVest's survey showed that the average American spends around 10 percent of their income on vacations &mdash; meaning an individual who earns $50,000 is spending $5,000 a year on holiday travel. Worse, 39 percent of millennials spend 15 percent or more of their annual income on vacations. (See also: <a href="http://www.wisebread.com/5-steps-to-getting-a-free-or-close-to-free-vacation-in-9-months-or-less-with-credit-cards?ref=seealso" target="_blank">5 Steps to Getting a Free Vacation in 9 Months or Less With Credit Cards</a>)</p> <p>While there's no one-size-fits all way to save on travel, we could all stand to dig a little deeper to find savings. Consider searching for package deals that include both airfare and hotels, for example. Or, vacation closer to home so you can avoid flying altogether. Also check out the many useful <a href="http://www.wisebread.com/the-6-best-vacation-deal-websites?ref=internal" target="_blank">travel deals websites</a> that can help you save money on nearly any trip. (See also: <a href="http://www.wisebread.com/travel-resources?ref=seealso" target="_blank">40 Most Useful Travel Websites That Can Save You a Fortune</a>)</p> <h2>4. Leverage credit card rewards (but only if you're debt-free)</h2> <p><a href="http://www.wisebread.com/top-5-travel-reward-credit-cards?ref=internal" target="_blank">Travel credit cards</a> can serve as a valuable money-saving tool, as long as you don't run a balance on them. If you plan ahead to earn airline miles or hotel points, and pay your bill in full before your due date every month, you can use rewards to supplement your travel budget and save money. (See also: <a href="http://www.wisebread.com/how-to-use-miles-and-points-for-a-big-award-trip?ref=seealso" target="_blank">How to Use Miles and Points for a Big Award Trip</a>)</p> <p>For example, if you cash in frequent flyer miles to pay for your airfare, you can focus on saving for your hotels and food separately. Or, consider driving to a hotel you paid for with points. In that case, you would only be on the hook for travel expenses, activities, and food.</p> <p>Of course, travel rewards are not a good option for people struggling with debt. The key to <a href="http://www.wisebread.com/9-ways-to-use-travel-rewards-cards-to-get-free-trips?ref=internal" target="_blank">using credit card rewards for travel</a> is to never carry a balance. Instead, consider your cards as a thoughtful extension of a planned out monthly budget.</p> <h2>5. Cut your expenses, or try a &quot;spending freeze&quot;</h2> <p>The LearnVest survey found that the most common ways Americans save money for travel are avoiding restaurants, shopping less often, and spending less on entertainment. This is all good news, as &quot;extra&quot; spending categories like dining out and entertainment are often the easiest to cut. But, that doesn't mean you can't look for more ways to save money over time.</p> <p>As you save up for a vacation, you can even <a href="http://www.wisebread.com/how-to-do-a-one-month-spending-freeze?ref=internal" target="_blank">try a spending &quot;freeze&quot;</a> &mdash; an exercise in which you only spend money on absolute essentials for several weeks or months. If you can avoid extra spending for short bursts of time, you can reach your vacation budget goal much quicker.</p> <h2>6. Pick up a side gig</h2> <p>Not everyone has enough wiggle room in their budget to cut out enough to pay for a vacation. Maybe you live in a high-cost area, or perhaps your monthly expenses are unusually high due to debt, child support, or other factors. Either way, it's hard to save for vacation when you're barely making ends meet.</p> <p>If you're struggling to come up with the cash to travel, consider picking up a side hustle or part-time job that leads to additional income. Since the extra cash you earn is in addition to the money you earn at your job, you should theoretically be able to save it for anything you want. (See also: <a href="http://www.wisebread.com/14-best-side-jobs-for-fast-cash" target="_blank">14 Best Side Jobs for Fast Cash</a>)</p> <p>Your side hustle can be anything, although you'll probably earn more if you align it with your career or some skill you already have. If not, you can always try something like baby-sitting, dog-sitting, or housesitting. Mow lawns, drive for Uber, or tutor kids online. Start hustling, and by the time your next vacation rolls around, you'll be ready.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-ways-to-avoid-vacation-debt&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Ways%2520to%2520Avoid%2520Vacation%2520Debt.jpg&amp;description=6%20Ways%20to%20Avoid%20Vacation%20Debt"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/6%20Ways%20to%20Avoid%20Vacation%20Debt.jpg" alt="6 Ways to Avoid Vacation Debt" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/holly-johnson">Holly Johnson</a> of <a href="http://www.wisebread.com/6-ways-to-avoid-vacation-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-financial-resolutions-you-can-conquer-before-new-years">10 Financial Resolutions You Can Conquer Before New Year&#039;s</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-frugal-fall-getaways-you-can-start-packing-for-now">10 Frugal Fall Getaways You Can Start Packing For Now</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-living-on-a-tight-budget-makes-you-happier">How Living on a Tight Budget Makes You Happier</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-pay-it-off">5-Day Debt Reduction Plan: Pay It Off</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-strategies-for-paying-off-debt-when-living-on-a-variable-income">7 Strategies for Paying Off Debt When Living on a Variable Income</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management Travel budgeting expenses saving money side gigs Spending Money vacation debt Wed, 27 Sep 2017 08:30:06 +0000 Holly Johnson 2027163 at http://www.wisebread.com What to Do If You're Retiring With Debt http://www.wisebread.com/what-to-do-if-youre-retiring-with-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-to-do-if-youre-retiring-with-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/old_couple_having_problems_with_their_home_finances.jpg" alt="Old couple having problems with their home finances" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>For a growing number of older Americans, the golden years have been tarnished by debt. If you're retired or will be soon, and too much debt is weighing you down, here are three common sources of senior debt, along with some suggestions for breaking free.</p> <h2>1. Mortgage debt</h2> <p>One of the tenets of wise money management is to be mortgage-free by the time you retire, ridding yourself of what is likely your biggest expense as you enter what may be a lower- and fixed-income season of life. However, for a growing number of older people, that is not the case.</p> <p>According to the Federal Reserve, about 42 percent of households where the head of household is 65 to 74 years old had mortgage debt (a mortgage or home equity loan) in 2013 &mdash; up from 32 percent in 2004 and just 19 percent in 1992. Many such borrowers refinanced their mortgages in order to take advantage of low interest rates, but in doing so, reset the 15- or 30-year mortgage clock.</p> <p>What to do? If your overall housing costs, including taxes and insurance, take up more than 25 percent of your monthly gross income, consider downsizing. Reducing or eliminating your mortgage and lowering what you pay for property taxes, homeowners insurance, utilities, and maintenance could do wonders for your financial peace of mind. (See also: <a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0?ref=seealso" target="_blank">6 Ways You Can Cut Costs Right Before You Retire</a>)</p> <h2>2. Student loan debt</h2> <p>Much has been made of how indebted today's college graduates are. What's less well known is that the fastest-growing segment of the population with education debt is the 60-plus crowd. Most such borrowers took out loans for their kids or grandkids via Parent PLUS loans, or they co-signed on a student loan and now find themselves responsible for the payments.</p> <p>According to the Consumer Financial Protection Bureau, the number of people age 60 or older with student loans quadrupled between 2005 and 2015 to 2.8 million.</p> <p>What to do? Look into loan consolidation or rehabilitation (if you're behind on the payments). Both are preferable to default, in which case the government could reduce your Social Security benefits in order to collect.</p> <h2>3. Credit card debt</h2> <p>The overuse of plastic isn't just something that plagues the young. According to the National Council on Aging, in 2012, nearly one-third of households headed by someone age 60 or older carried a credit card balance. Are these older households simply living beyond their means? Some probably are, but an AARP survey found that over half the older households with credit card debt put their medical care on plastic.</p> <p>What to do? If your credit card debt is unmanageable, consider contacting a local affiliate of the <a href="https://www.nfcc.org/" target="_blank">National Foundation for Credit Counseling</a>. They may be able to negotiate lower interest rates. In addition, if you haven't done so already, don't put medical bills on your credit card. Instead, see if you can work out a payment plan directly with the medical provider, which may offer more favorable terms. (See also: <a href="http://www.wisebread.com/the-fastest-method-to-eliminate-credit-card-debt?ref=seealso" target="_blank">The Fastest Method to Eliminate Credit Card Debt</a>)</p> <h2>Other ways to ditch your debt</h2> <p>No matter how old you are, an important key to getting out of debt is margin &mdash; creating a gap between your income and expenses so you've got the money to make extra payments on your debts. There are only two sides to the margin equation: income and expenses.</p> <h3>Increase income by picking up a part-time job</h3> <p>By definition, retirement means not working anymore, so the idea of going back to work may not fill your heart with joy. However, even a temporary part-time job can make a big difference in how quickly you get out of debt. (See also: <a href="http://www.wisebread.com/6-great-retirement-jobs?ref=seealso" target="_blank">6 Great Retirement Jobs</a>)</p> <p>Start thinking of where you could work. How about consulting with your former employer, hanging out a shingle as a sole proprietor, or simply picking up some hours at a local retailer?</p> <p>Keep in mind that if you started claiming Social Security benefits before your normal retirement age, earning too much from a part-time job may reduce those benefits. Learn more on the <a href="https://www.ssa.gov/oact/cola/rtea.html" target="_blank">Social Security Administration's website</a>.</p> <h3>Decrease expenses by taking your kids off the payroll</h3> <p>It's common for parents to help their adult children with everything from health insurance premiums to cellphone bills. According to a Merrill Lynch study, nearly 70 percent of people age 55 or older with adult children are doing so.</p> <p>Wouldn't it be easier for you to cut them off if you realized that doing so would not only benefit you, but it would benefit them as well? That's one of the key messages in the classic book, <em>The Millionaire Next Door</em>. Authors Thomas Stanley and William Danko found that adults who receive &quot;financial outpatient care&quot; from their parents tend to become dependent on such help and end up saving and investing less than those who do not receive money from their parents. (See also: <a href="http://www.wisebread.com/are-you-ruining-your-retirement-by-spoiling-your-kids?ref=seealso" target="_blank">Are You Ruining Your Retirement by Spoiling Your Kids?</a>)</p> <h2>There's plenty of time to retire debt</h2> <p>It may be discouraging to find yourself buried in bills at a time of life when you had hoped to slow down and enjoy the fruit of all your years of labor. However, increases in longevity mean you probably still have plenty of time to reap those rewards. What'll make all the difference is how quickly you implement the ideas mentioned above.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fwhat-to-do-if-youre-retiring-with-debt&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhat%2520to%2520Do%2520If%2520You%2527re%2520Retiring%2520With%2520Debt.jpg&amp;description=What%20to%20Do%20If%20You're%20Retiring%20With%20Debt"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/What%20to%20Do%20If%20You%27re%20Retiring%20With%20Debt.jpg" alt="What To Do If You're Retiring With Debt" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/what-to-do-if-youre-retiring-with-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-of-the-fastest-ways-to-go-broke-in-retirement">4 of the Fastest Ways to Go Broke in Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-retiring-with-debt-isnt-the-end-of-the-world">Why Retiring With Debt Isn&#039;t the End of the World</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-red-flags-that-your-retirement-plan-may-be-off-track">4 Red Flags That Your Retirement Plan May Be Off Track</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-couple-paid-off-147k-of-debt-even-while-unemployed">How One Couple Paid Off $147k of Debt (Even While Unemployed)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-happens-to-your-debt-after-you-die">What Happens to Your Debt After You Die?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management Retirement adult children co-signed credit card debt expenses giving money increasing income kids mortgages student loans Tue, 19 Sep 2017 08:00:07 +0000 Matt Bell 2021474 at http://www.wisebread.com How to Find the Savings Strategy That Works For You http://www.wisebread.com/how-to-find-the-savings-strategy-that-works-for-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-find-the-savings-strategy-that-works-for-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/young_woman_with_a_piggy_bank.jpg" alt="Young woman with a piggy bank" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Creating a savings strategy may sound like an odd concept. Saving money seems like a simple task &mdash; one that doesn't require much strategy on your part.</p> <p>But saving money, like any other financial skill, can be set up to either fit in with your psychology, lifestyle, and preferences, or go against them. And just how successful can your savings plan be if your savings strategy doesn't work for you?</p> <p>If you've ever struggled to save money, you might have been using the wrong strategy. Instead of following the same old failed savings path, try a strategy that works for you:</p> <h2>If you like getting something for nothing: Use a change jar or roundup app</h2> <p>When I was in high school, I was the person holding up every transaction by counting out exact change to the cashier, while my friend thought nothing of breaking a $20 bill. For a long time, I thought my friend was bad with money &mdash; until I learned what he did with all the loose change he gathered by breaking bills. Every few weeks, he'd take his change to the bank and deposit the money into a savings account.</p> <p>My friend's habit was an excellent way for him to set money aside. He got to avoid counting out change at every transaction (which he hated doing), and he felt like he was getting a nice financial bonus every few weeks.</p> <p>In 2017, change jars may not be as practical as they were in the 1990s, but you can consider using an app that offers a similar strategy. Apps like Acorns and Qoins recreate the feeling of throwing change in a jar. These apps round your purchases up to the nearest dollar, and use the difference to build your savings account or pay down debt. (See also: <a href="http://www.wisebread.com/everyones-using-spare-change-apps-are-they-really-worth-it?ref=seealso" target="_blank">Spare Change Apps &mdash; Are They Worth It?</a>)</p> <h2>If you like seeing progress toward a goal: Manually transfer your savings</h2> <p>Sometimes, the best motivation to do something is the same one your elementary school teacher offered: gold stars on progress charts. If this describes you, consider manually transferring money to your savings account every payday.</p> <p>This may sound counterintuitive, since so much personal finance advice suggests automating your savings so you don't have to think about it. But if you're someone who feels great about seeing the progress made on a goal, manually transferring your savings will make you excited about doing it in the first place. It will motivate you to stick with it, and maybe even put more money aside.</p> <p>In addition, actually creating a savings chart or other visual representation of your goal will help you stay on track and inspired to find more ways to save. That's because tracking your progress helps build a chain of good habits, and you want to keep that chain going until the good habits become second nature.</p> <h2>If you don't want to think about saving money: Deposit your whole paycheck into savings</h2> <p>Some people have trouble saving money, no matter how hard they try. If this describes you, why not set up your finances so that your money goes into savings <em>before </em>it hits your checking account?</p> <p>Under this system, your entire paycheck is deposited into your savings account on payday. Once a month, you'll transfer the amount you need for your regular expenses and bills into your checking account.</p> <p>When you follow this strategy, you'll automatically spend less than you earn and save money every month without having to think about it. The money has already been saved for you.</p> <p>If you correctly calculated the amount you need to cover your monthly expenses, the money in your checking account should last until the following month. If you are running short before the end of those 30 days, you can decide to move more money from your savings account, or go on a spending ban (make no unnecessary purchases until the next month begins).</p> <p>If you find that you're regularly adding a second transfer near the end of the month to make ends meet, take time to re-evaluate your expenses.</p> <h2>If you want to productively ignore your savings: Automate and use savings apps</h2> <p>Part of the problem with saving money is the fact that it becomes just another financial decision you have make. How much should you set aside? When should you make your transfer? Where will you find the money to put into savings?</p> <p>If you'd rather skip the whole task of saving money instead of answering these questions, then automation is the right savings strategy for you. Setting up an automatic transfer from your paycheck into your savings account means that you don't have to think about putting the money aside. It's a seamless transfer of your money to savings.</p> <p>Digit is one way to do this. Digit is an app that analyzes your cash flow. After syncing your accounts, about twice a week, the app will determine an amount of money ($5&ndash;$50) that is safe to transfer out of your checking account and into an FDIC-insured Digit deposit account. This is a simple way to save money without having to think about it. Digit is free for one month, and $2.99 per month thereafter. (See also: <a href="http://www.wisebread.com/5-microsaving-tools-to-help-you-start-saving-now?ref=seealso" target="_blank">5 MicroSaving Tools to Help You Start Saving Now</a>)</p> <h2>If you have trouble prioritizing yourself: Treat your savings like a bill</h2> <p>Many of us have trouble putting ourselves first, including <a href="http://www.wisebread.com/7-reasons-you-really-need-to-pay-yourself-first-seriously?ref=internal" target="_blank">paying ourselves first</a>. If you're someone who prides yourself on always paying bills on time, but who struggles to prioritize savings, then start treating your savings like a bill to pay.</p> <p>Set up a reminder to transfer money to savings on the same day you pay your other regular bills. Making &quot;savings&quot; a bill when you are paying all your other bills makes it feel like a nonnegotiable, which will help you make it a priority.</p> <h2>If saving money bores you: Create targeted savings accounts</h2> <p>If you have trouble getting excited about saving money when there is so much fun stuff you could spend your money on, you're not alone. Having money funneled into a savings account can feel pretty boring if you don't have any specific plans for the cash.</p> <p>You are much more likely to get excited about saving money if you have a set goal for your savings. This is partially due to something known as <a href="http://www.wisebread.com/mental-accounting-why-you-blow-your-tax-refund-but-not-your-raise?ref=internal" target="_blank">mental accounting</a>, which is our tendency to value money differently depending on how it is physically and mentally labeled. You might not hesitate to &quot;borrow&quot; $400 from your general savings account for a couple of tickets to Jay-Z's 4:44 tour &mdash; but taking that money from your new car fund, on the other hand, would hurt.</p> <p>Many online and traditional banks will allow you to create several targeted accounts, each with its own nickname. Taking the time to put a name to each one of your savings goals can help you save more and spend less.</p> <h2>Know thy savings self</h2> <p>Finding the best savings strategy for you starts with understanding your psychology and preferences when it comes to money. Working within those preferences makes saving money a much easier and far more satisfying prospect.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-find-the-savings-strategy-that-works-for-you&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Find%2520the%2520Savings%2520Strategy%2520That%2520Works%2520For%2520You_0.jpg&amp;description=How%20to%20Find%20the%20Savings%20Strategy%20That%20Works%20For%20You"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Find%20the%20Savings%20Strategy%20That%20Works%20For%20You_0.jpg" alt="How to Find the Savings Strategy That Works For You" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/how-to-find-the-savings-strategy-that-works-for-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-manage-your-money-no-budgeting-required">How to Manage Your Money — No Budgeting Required</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-come-up-with-1000-in-the-next-30-days">How to Come Up With $1,000 in the Next 30 Days</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-financial-basics-every-new-grad-should-know">The Financial Basics Every New Grad Should Know</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/youve-been-saving-money-all-wrong-heres-why">You&#039;ve Been Saving Money All Wrong. Here&#039;s Why</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-online-forums-thatll-help-you-reach-your-financial-goals">9 Online Forums That&#039;ll Help You Reach Your Financial Goals</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance apps automated savings budgeting expenses mental biases psychology saving money spare change strategy Mon, 18 Sep 2017 08:30:05 +0000 Emily Guy Birken 2020047 at http://www.wisebread.com Why Your Daily Latte Won't Sink Your Retirement Savings http://www.wisebread.com/why-your-daily-latte-wont-sink-your-retirement-savings <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-your-daily-latte-wont-sink-your-retirement-savings" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/women_friends_enjoyment_coffee_times_concept.jpg" alt="Women Friends Enjoyment Coffee Times Concept" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you pay attention to personal finance literature, you have undoubtedly come across some iteration of the &quot;latte factor&quot; &mdash; the idea that forgoing a daily small luxury will add up to big savings over time. Financial author David Bach coined the term over a decade ago to help consumers better understand the high costs of little luxuries. (See also: <a href="http://www.wisebread.com/9-ways-to-save-money-on-your-cup-of-coffee?ref=seealso" target="_blank">9 Ways to Save Money on Your Daily Cup of Coffee</a>)</p> <p>The personal finance sphere has taken Bach's idea and run with it. In fact, you can't swing a bag of artisan coffee on the internet without hitting an editorial, think piece, or other article explaining how the latte factor is costing you your future.</p> <p>But giving up your daily coffee will not mean the difference between enjoying a comfortable retirement and working until you're 80. There is a lot more going on than just the fact that $5 per day adds up to a great deal of money per year.</p> <p>Here's what most latte factor articles fail to take into account.</p> <h2>Financial shaming can make savers give up before they've started</h2> <p>While David Bach's original intent with the latte factor was to empower consumers to make more mindful choices with their money, his idea has often been used to <em>shame </em>people for their financial choices.</p> <p>Shaming is an unproductive way to motivate a person because it generally backfires. The constant drumbeat of the latte factor can make it sound like the only way to save for retirement (or any other big investment) is to give up daily luxuries. Individuals who feel guilty about their latte habit might decide that it's not worth trying to save for retirement if it means giving up their favorite luxury.</p> <p>The fact of the matter is that people can save money for their futures while also enjoying a daily latte. But the use of shaming language about having little luxuries can make it sound like these financial priorities are mutually exclusive.</p> <h2>Your money psychology can make it tough to see these savings</h2> <p>The latte factor math is unassailable. If you purchase a $5 latte every work day for 50 weeks out of each year, that adds up to $1,250 &mdash; which could certainly be a nice addition to your retirement account.</p> <p>The problem is that the latte factor math assumes that you can keep track of the daily $5 that you are spending. Most people's brains don't work like that. A cognitive bias known as the <em>denomination effect</em> makes people less likely to spend big bills compared to small ones. Five dollar bills can be quite difficult to hold onto, because they seem to be worth so little &mdash; even though the end result of $1,250 is quite big.</p> <p>Adding up those unspent five-spots to put them into a retirement account requires a certain type of money psychology that is exceedingly rare. For most people, refraining from buying a $5 coffee would just mean you spend the money on something else, rather than putting it aside for retirement savings.</p> <h2>It's easier to save money on big costs</h2> <p>People who actually spend $5 every single day on coffee are probably not paying close attention to where any of their money goes. If you are spending money every day on a small luxury, you are probably also spending money regularly on big luxuries &mdash; and those are a great deal easier to cut out than the small ones.</p> <p>Rather than focus on the difficult-to-track $5 holes in your budget, start with ways to reduce the bigger line items in your budget. Are you overspending on housing, food, transportation, entertainment, or utilities? Making a cut in one of those areas will not require you to keep track of small amounts of money to see a big difference, which make them a much smarter place to find extra funds to send to your retirement account.</p> <p>Even if you are a generally frugal person, you don't need to ax your beloved small luxuries to find extra money in your budget. Instead, spend some time thinking about which purchases and experiences are the most enjoyable or meaningful for you. Deciding what you want to spend your money on makes it easier to let go of the spending that doesn't matter as much to you. You'll enjoy your spending more that way, while still having savings to send to your retirement accounts.</p> <h2>Automating your savings allows you to have your latte and drink it, too</h2> <p>One aspect of David Bach's advice that often gets lost in discussions of the latte factor is the importance of automating. Bach suggests cutting out your daily indulgence and setting up an automatic transfer of the savings to your retirement or savings account &mdash; which would solve the whole problem of trying to keep track of those saved $5 bills.</p> <p>However, you don't need to give up your daily luxuries to be able to harness the power of automation. Once you have identified any spending items you're willing to cut, funnel the savings into your retirement account. If a daily latte is your favorite part of your morning ritual, then feel free to keep it and cut something else to automate that savings.</p> <h2>Daily luxuries can help keep you motivated to save</h2> <p>Living on a shoestring is exceedingly difficult. You have to say no to yourself constantly, which can lead to something called the &quot;what the hell&quot; effect. This effect describes how we tend to believe that refraining from spending money is an all or nothing proposition, so the moment we give in to temptation a little bit, we might as well throw our own guidelines out the window: &quot;What the hell, I've already bought myself a latte, I might as well go buy some new shoes!&quot;</p> <p>It's easier to go the distance while saving for retirement if you let yourself have some indulgences. You will no longer feel like the slog to retirement is going to be a daily misery that you might as well rebel against. Instead, your daily latte can make any other sacrifices easier to bear, and help you adjust to a new savings normal. Cutting out the latte on top of anything else can trigger the &quot;what the hell&quot; effect and make it even harder for you to save.</p> <h2>Enjoy your simple pleasures</h2> <p>The latte factor is an important thought exercise, but it should never become a hard-and-fast rule for how to live your life. Building daily luxuries into your life is an important part of enjoying your time, both during your career and after you retire. As long as you are willing to be mindful about your spending in general, you don't need to sacrifice small pleasures to afford retirement.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fwhy-your-daily-latte-wont-sink-your-retirement-savings&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhy%2520Your%2520Daily%2520Latte%2520Wont%2520Sink%2520Your%2520Retirement%2520Savings.jpg&amp;description=Why%20Your%20Daily%20Latte%20Wont%20Sink%20Your%20Retirement%20Savings"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;">&nbsp;<img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Why%20Your%20Daily%20Latte%20Wont%20Sink%20Your%20Retirement%20Savings.jpg" alt="Why Your Daily Latte Wont Sink Your Retirement Savings" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/why-your-daily-latte-wont-sink-your-retirement-savings">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0">6 Ways You Can Cut Costs Right Before You Retire</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-find-the-savings-strategy-that-works-for-you">How to Find the Savings Strategy That Works For You</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-for-retirement-while-caring-for-kids-and-parents">How to Save for Retirement While Caring for Kids and Parents</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-easy-way-to-save-up-a-big-travel-budget">The Easy Way to Save Up a Big Travel Budget</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-its-time-to-retire">8 Signs It&#039;s Time to Retire</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement automated savings cognitive bias cutting costs daily latte expenses Latte Factor psychology saving money shame small luxuries Fri, 15 Sep 2017 08:00:05 +0000 Emily Guy Birken 2019385 at http://www.wisebread.com 8 Signs It's Time to Retire http://www.wisebread.com/8-signs-its-time-to-retire <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-signs-its-time-to-retire" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/senior_woman_relaxing_0.jpg" alt="Senior woman relaxing" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There will come a time when you consider making the shift from worker bee to retiree. But knowing the best moment to stop working is not always easy to determine. How do you know whether your money will last once you stop earning a salary? Is there a &quot;magic age,&quot; when retiring makes sense, or do you just go with a gut feeling?</p> <p>There's no science to knowing when to retire, but there may be some signs to follow. If most or all of these apply to you, maybe it's time to submit that resignation and begin the next chapter of your life.</p> <h2>1. You have enough money for the retirement you want</h2> <p>It's impossible to know precisely how much you'll need in retirement, but there are some basic calculations you can make to see how long your money will last if you stop working.</p> <p>You must first calculate what your annual living expenses will be. Research shows that people tend to spend less as they get older, but be sure to factor in the potential costs of new activities like travel, eating out, and caring for grandchildren. Then, examine how much money you have saved, and what the return on that money might be as you age. Match those numbers up with your expected life span. There are other things to consider, such as whether you plan to draw equity from your home. There are many online calculators that can help you with these figures.</p> <p>Generally speaking, if you take the annual expenses you expect and multiply them by 25, you'll be in the ballpark of what you need to retire comfortably. Once you are approaching this number, it may be a sign that you can stop working. (See also: <a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0?ref=seealso" target="_blank">6 Ways You Can Cut Costs Right Before You Retire</a>)</p> <h2>2. You must collect distributions from your retirement plan</h2> <p>If you have a 401(k) or IRA, there comes a point at which you are required to take distributions. For most people, this age is 70-&frac12;. You can delay taking 401(k) distributions until after you stop working, but not for the money in a traditional IRA. If you are being forced to take distributions, there's not much incentive to continue working.</p> <h2>3. You can collect the maximum in Social Security</h2> <p>The government incentivizes people to retire later by offering them more money from Social Security if they wait longer to collect it. You can begin collecting benefits as early as age 62, but those benefits will be higher if you wait longer. Those approaching retirement age can get full benefits if they wait until age 67, and may get additional credits if they wait until age 70. If you're already getting the maximum benefit from the government, perhaps it's a sign that you're ready to retire for good. (See also: <a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement?ref=seealso" target="_blank">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a>)</p> <h2>4. Your expenses are the lowest they've been in years</h2> <p>Your house is completely paid off. The kids are out of the house and college is paid for. You're not yet at the point where you have high medical expenses. Your cost of living hasn't been this low in decades. Sure, you may have big ticket things you want to pay for (travel, for example), but your day-to-day existence no longer requires a bi-weekly paycheck. It's still important to assess whether you have enough saved to last, but if you've downsized your lifestyle to a super-low level, it may no longer be necessary to keep working.</p> <h2>5. You no longer get any pleasure from work</h2> <p>We've all heard stories about older people who continue working simply because it makes them happy. Often, working gives them purpose and a sense of satisfaction that can't be replaced in retirement. But what if you're not one of these people? What if the work itself isn't rewarding, and you find yourself drained rather than energized by it? Then it may be time to consider retiring, assuming that your financial ducks are lined up well. Life is too short to work at an unsatisfying job if you don't have to.</p> <h2>6. Your health is starting to decline</h2> <p>In a perfect world, you will be healthy and spry enough to take advantage of all that retirement can offer. You will be perfectly able to handle that long bike tour through the south of France, and those backpacking trips on the Pacific Crest Trail. You'll have energy to spend time and keep up with your grandkids. But, if you are starting to see your health fade, perhaps it's time to stop working before you're unable to enjoy retirement the way you wish.</p> <h2>7. Your spouse wants you to</h2> <p>If your significant other is done working and has an urge to begin the next chapter of their life, perhaps it's that time for you as well. Many of the happiest retired couples are those that retire at the same time, and make post-work plans together. How fun is your spouse's retirement going to be if you're still schlepping into the office every day? (See also: <a href="http://www.wisebread.com/5-money-conversations-couples-should-have-before-retirement?ref=seealso" target="_blank">5 Money Conversations Couples Should Have Before Retirement</a>)</p> <h2>8. You are confident in your post-work plans</h2> <p>Many people continue working because they honestly don't know what they'd do otherwise. But if you have mapped out your retirement life, have a good sense of how you'll fill your days, and feel excited about what you want to do, that's a sign you may be ready to retire. If work is actually preventing you from moving forward on your plans, maybe it's time to think seriously about stopping work, assuming you are also ready financially.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F8-signs-its-time-to-retire&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F8%2520Signs%2520Its%2520Time%2520to%2520Retire.jpg&amp;description=8%20Signs%20Its%20Time%20to%20Retire"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/8%20Signs%20Its%20Time%20to%20Retire.jpg" alt="8 Signs It's Time to Retire" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/8-signs-its-time-to-retire">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-face-these-7-scary-facts-about-retirement-saving">How to Face These 7 Scary Facts About Retirement Saving</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-age-milestones-that-impact-your-retirement">6 Age Milestones That Impact Your Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/three-of-the-toughest-decisions-youll-face-in-retirement">Three of the Toughest Decisions You&#039;ll Face in Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-expensive-mistakes-of-the-newly-retired">9 Expensive Mistakes of the Newly Retired</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/these-5-expenses-will-probably-cost-you-a-lot-less-in-retirement">These 5 Expenses Will Probably Cost You a Lot Less in Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) downsizing expenses Health leisure required minimum distributions saving money social security working Thu, 14 Sep 2017 08:00:06 +0000 Tim Lemke 2020506 at http://www.wisebread.com How to Budget When You Rely on Cash Tips http://www.wisebread.com/how-to-budget-when-you-rely-on-cash-tips <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-budget-when-you-rely-on-cash-tips" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/waitress_preparing_bill_at_cash_register_in_restaurant.jpg" alt="Waitress Preparing Bill At Cash Register In Restaurant" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you work in the service industry, the majority of your income likely comes from tips &mdash; and that can present difficulty when trying to budget your money responsibly. But just because it's not easy doesn't mean it's impossible. You can keep your cash flow in check if you have the right tools and systems in place.</p> <h2>Track every dollar you make</h2> <p>The first step to getting on track financially &mdash; even when your tips fluctuate from shift to shift &mdash; is to account for all of the cash you make over a period of time. You won't get a good idea of what to expect from month to month from just a couple weeks' worth of income, so it's best to monitor your tips over an extended period, ideally two to three months. This sampling should provide a decent basis on what you can expect to average throughout the year given that your place of employment is relatively consistent in terms of traffic. It may be a better idea to sample a slow period so you have a real bottom line as opposed to an inflated sense of income during a rush like the holidays.</p> <p>Natasha Rachel Smith, personal finance expert at TopCashBack.com, offers a suggestion to put this plan in place.</p> <p>&quot;Write down how much you make in a journal or spreadsheet after every shift for 10 weeks to get an idea of your average weekly income,&quot; she says. &quot;Although that amount will fluctuate depending on the economy, low or high seasons, and service quality, by averaging 10 weeks' worth of pay you can get a fairly reasonable and realistic idea of your typical earnings.&quot;</p> <h2>Create (and stick to) a budget based on goals</h2> <p>Once you have an idea of how much you can expect to bring home on average per month, it's time to budget your income so all your bills are paid on time &mdash; and so you're not stressed out and trying to scrounge up cash for a car payment at the last minute. To do this effectively, says finance expert Kevin Gallegos, vice president of Phoenix operations for Freedom Financial Network, create a budget based on goals.</p> <p>&quot;Whether your goal is to save on weekly grocery bills, have time to train for a marathon, save for retirement, or take a vacation to China, write down the goals and build your budget with the goals in mind.&quot;</p> <p>In the budget, be sure to include a line item for savings in the &quot;expenses&quot; area, and treat it as a mandatory item to be paid. But, it can also be a variable expense &mdash; establish a percentage of your take-home pay that you'd like to put toward your goal after every shift.</p> <p>&quot;Ten percent or more is ideal,&quot; Gallegos says, &quot;but if it's less than that, choose the number and stick to it.&quot;</p> <h2>Start a system for envelope budgeting</h2> <p>An easy way to delegate your funds to the bills you need to pay &mdash; especially if you don't want to make daily deposits to your checking account (which I don't recommend anyway because the only agency who will benefit from that paper trail is the IRS) &mdash; is to start a <a href="http://www.wisebread.com/a-comprehensive-guide-to-the-envelope-system?ref=internal" target="_blank">system of envelope budgeting</a>. With this system, you add the regular cash you earn to envelopes designated for specific expenses, like rent, groceries, and student loans. By divvying up your cash after each shift, you can see in real-time how much you've saved and how much you still need to contribute to cover your general life expenses. This is also a good way to cut back on your &quot;extra&quot; expenses because live tracking will keep you informed on whether you can spare the money or not.</p> <h2>Separate your singles if you can afford it</h2> <p>If you can afford it, and provided you aren't only paid in this denomination, tuck away all one-dollar bills into a jar or container instead of spending them.</p> <p>&quot;Dollar bills will accumulate faster than change and it will give you a jar-fund to use when low on money or for the small, fun things in life,&quot; Smith says.</p> <h2>Look for patterns to keep your finances balanced</h2> <p>After a while, you'll be able to observe patterns in your income &mdash; a slump during the winter months or an uptick around a holiday, for instance &mdash; as well as determine a typical monthly minimum income level. By minding these patterns and building your budget around them, your finances should stay fairly balanced throughout the year so you're not stuck in the lurch because you were naive to expectation.</p> <p>Gallegos suggests holding on to receipts and keeping a spending log.</p> <p>&quot;Many people find it eye-opening to see how much they spend each day,&quot; he says. &quot;It's very similar to writing down everything you eat when trying to lose weight. Review carefully on a weekly basis to spot areas where you can cut back, and to become more familiar with your spending patterns.&quot;</p> <h2>Establish a &quot;floating fund&quot;</h2> <p>Another idea of Gallegos' that you may not have heard is the &quot;floating fund,&quot; which establishes an absolute baseline of sufficient savings to cover expenses such as quarterly estimated self-employment taxes and an emergency fund.</p> <p>&quot;Common wisdom suggests keeping six to nine months' living expenses in an emergency fund at all times,&quot; he explains. &quot;This fund then can also serve as a 'floating' fund to pull from during leaner times, for replenishment as income increases. It's key to think of the funds in this way &mdash; not just to pull from, but to replenish.&quot;</p> <p>You will need to train yourself to pull from &mdash; and replenish (the hard part!) &mdash; these funds on a regular basis to make this work.</p> <h2>Send financial windfalls directly to savings</h2> <p>When you earn or receive extra money &mdash; from a large event you work, a gift, or even a yard sale that you host &mdash; get in the habit of saving rather than spending that extra money. If you make this standard protocol whenever you come into unexpected cash, your savings will increase quicker.</p> <h2>Don't make any major financial commitments</h2> <p>The last thing you want to do if your income fluctuates is overextend yourself unnecessarily. Business can decline unexpectedly or you could lose your job altogether. These unfortunate circumstances can put you in a precarious predicament financially &mdash; perhaps even driving you into a deep debt situation that could impair your life for many years into the future.</p> <p>&quot;Stay away from accruing debts or taking out loans if you're living on a tip-based income,&quot; Smith advises. &quot;This is because your earnings are unpredictable and you could find one bad week creates a financial avalanche, simply because you didn't make enough money to cover a car payment or a credit card's minimum repayment.&quot;</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-budget-when-you-rely-on-cash-tips&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Budget%2520When%2520You%2520Rely%2520on%2520Cash%2520Tips.jpg&amp;description=How%20to%20Budget%20When%20You%20Rely%20on%20Cash%20Tips"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;">&nbsp;<img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Budget%20When%20You%20Rely%20on%20Cash%20Tips.jpg" alt="How to Budget When You Rely on Cash Tips" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/how-to-budget-when-you-rely-on-cash-tips">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/everything-you-need-to-know-about-switching-to-the-cash-only-lifestyle">Everything You Need to Know About Switching to the Cash Only Lifestyle</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/managing-your-short-term-money">Managing Your Short-Term Money</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-an-all-cash-diet-right-for-you">Is an All-Cash Diet Right for You?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-simple-journal-may-be-the-fix-for-your-finances">This Simple Journal May be the Fix for Your Finances</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-7-things-every-frugal-person-should-have-in-their-wallet">The 7 Things Every Frugal Person Should Have In Their Wallet</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting cash emergency fund Envelope system expenses floating fund goals paying bills service industry tips windfalls Wed, 13 Sep 2017 08:30:11 +0000 Mikey Rox 2019306 at http://www.wisebread.com