taxes http://www.wisebread.com/taxonomy/term/24/all en-US 7 Biggest Ways Procrastination Hurts Your Finances http://www.wisebread.com/7-biggest-ways-procrastination-hurts-your-finances <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-biggest-ways-procrastination-hurts-your-finances" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-621987808.jpg" alt="Woman learning biggest ways procrastination hurts her finances" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Remember those days in college when you'd put off studying until the night before a big exam? You'd stay up all night, desperately trying to cram everything in at the last minute. If only you'd taken the time earlier, you'd have walked into your test rested, calm, and most importantly, prepared.</p> <p>Those bad habits can cost you a lot more in real life if you carry them into the way you handle money. Here are seven situations when procrastination really hurts your bottom line.</p> <h2>1. Investing: Your money has less time to grow</h2> <p>It's one of the basic rules of smart investing: Invest as early as you can and for as long as you can. Some of the most successful investors are those who had relatively modest incomes, but started investing young and stayed in the markets for decades. Compounding interest worked in their favor, and they enjoyed a sizable nest egg later in life. Even a delay of five to 10 years can make a significant difference in how much money you have by retirement. Quite simply, the more you procrastinate, the less money you'll have.</p> <h2>2. Saving: You continue to spend more than you earn</h2> <p>You're aware that you're spending more money than you're bringing in, but you tell yourself that you'll start cutting back after the holidays. The holidays come and go, so then you tell yourself you'll start saving after your big spring break trip. After spring break, you promise you'll start after your cousin's wedding in July. There's always some reason to put off saving, but the best time to start tightening your belt is right away. Devising an arbitrary future start date for financial prudence only means you're spending money you shouldn't in the interim.</p> <h2>3. Debt payoff: Your balances balloon</h2> <p>That credit card bill keeps getting bigger, and it comes on top of your student loans and car payments. You're getting crushed by debt, but it's so overwhelming you can't bring yourself to come up with a plan to tackle it. Every moment you wait to address your debt problem is a moment that allows that debt to grow. Devise a repayment strategy now, before your debt ruins you. (See also: <a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt?ref=seealso" target="_blank">5 Ways to Pay Off High Interest Credit Card Debt</a>)</p> <h2>4. Taxes: You might make a costly mistake</h2> <p>Tax Day seems so far away, but before you know it, it's the middle of April and you haven't even gotten started. You may think your taxes are simple, but rushing through the process increases your chances of forgetting income, missing out on deductions, or making a silly error.</p> <p>No one says you have to file your taxes immediately at the beginning of the year, but at least give yourself a few weeks to file your return carefully. A rush job could mean you pay too much, or you may end up with penalties due to mistakes.</p> <h2>5. Bills: You miss payment deadlines</h2> <p>There are consequences to paying bills late, usually in the form of fees and interest charges. If you're the type of person who doesn't even open a bill until it's nearly due, you're putting yourself at risk of extra expenses.</p> <p>Late fees and interest aren't merely one-time charges. Miss your payments by enough days and it can hurt your credit score, impacting your ability to borrow. It's best to pay bills right away when you get them &mdash; or put them on autopay &mdash; so they don't threaten your finances further. (See also: <a href="http://www.wisebread.com/5-simple-ways-to-never-make-a-late-credit-card-payment?ref=seealso" target="_blank">5 Simple Ways to Never Make a Late Credit Card Payment</a>)</p> <h2>6. Job applications: You don't get that better-paying position</h2> <p>You found a job that you think you'll like, and it pays considerably more than your current one. But instead of applying right away, you wait. And wait. And wait. Before you know it, the position is filled. This is a total wasted opportunity.</p> <p>Yes, applying for a job, reworking your resume, writing cover letters, and going through interviews are all tedious and time-consuming. But when you're stuck sitting at your current gig, underpaid and unhappy, you'll really be kicking yourself for not putting in the work to get yourself unstuck.</p> <h2>7. Raises and promotions: You miss out for another year</h2> <p>It's hard to know the precise time to <a href="http://www.wisebread.com/5-times-you-should-demand-a-raise" target="_blank">ask for a promotion or a raise</a>. Often, we wait until annual review season, but by then, personnel decisions may already have been made. The best thing is to approach the subject sooner rather than later. Your boss may not be in a position to respond right away, but you've planted the seed so they know your wishes.</p> <p>Besides, simply asking for a raise or promotion may force your employer to look more closely at your work, and hopefully recognize what you bring to the table each day. If you wait too long to ask, you may have to wait for an entire budget cycle to get another shot.</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/7-biggest-ways-procrastination-hurts-your-finances">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/8-money-moves-to-make-the-moment-you-get-a-promotion">8 Money Moves to Make the Moment You Get a Promotion</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/the-10-biggest-lies-we-tell-ourselves-about-money">The 10 Biggest Lies We Tell Ourselves About 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/dont-let-outdated-money-advice-endanger-your-money">Don&#039;t Let Outdated Money Advice Endanger Your Money</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-inspiring-people-who-each-paid-off-over-100000-in-debt">5 Inspiring People Who Each Paid Off Over $100,000 in Debt</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/5-surprising-ways-the-rich-get-richer">5 Surprising Ways the Rich Get Richer</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance asking for raise bills debt investing jobs last minute procrastination promotions saving taxes Tue, 23 May 2017 08:00:09 +0000 Tim Lemke 1949205 at http://www.wisebread.com 5 Sobering Facts About Social Security You Shouldn't Panic Over http://www.wisebread.com/5-sobering-facts-about-social-security-you-shouldnt-panic-over <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-sobering-facts-about-social-security-you-shouldnt-panic-over" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-639428420.jpg" alt="Learning social security facts you shouldn&#039;t panic over" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Most people tend not to think about Social Security until they are in a position to collect benefits. Unfortunately, letting Social Security be something you worry about &quot;later&quot; can cause costly problems &mdash; both for you as a beneficiary, and for the program as a whole.</p> <p>Here are five sobering facts about Social Security that you should know now so that you will be prepared for potential issues in the future. (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>1. The Social Security Trust Fund may be entirely depleted by 2034</h2> <p>Social Security is set up as a direct transfer of funds from current workers to current beneficiaries. However, when the taxes coming in to pay for Social Security exceed the expenses for the program, the surplus is placed in the Social Security Trust Fund, where it earns interest. As of 2010, Social Security expenses have exceeded the tax revenue, and the Social Security Administration has had to dip into the Trust Fund in order to pay out all promised benefits. As of 2013, the Trust Fund began losing value, and it is projected to be <a href="https://www.ssa.gov/oact/trsum/" target="_blank">entirely depleted by the year 2034</a>.</p> <p>When the Trust Fund runs out of money, the projected tax revenue will cover only 79 percent of promised benefits. This means anyone who is entitled to a $1,500 monthly benefit will only receive $1,185.</p> <h3>Why you shouldn't panic</h3> <p>While the coming depletion of the Social Security Trust Fund is troubling, the problem is neither new nor imminent. It's also important to note that the United States is the only country in the world that attempts to predict the 75-year longevity of its social insurance funds, which means we are in a position to do something about the anticipated shortfall. Over the next couple of decades, it is likely that our government will make relatively small changes to the Social Security program in order to make up the 21 percent anticipated shortfall that will occur once the Trust Fund has run dry.</p> <p>However, it is smart for current workers to recognize that Social Security should not be heavily relied upon for a financially secure retirement.</p> <h2>2. The average Social Security retirement benefit is $1,360 per month</h2> <p>As of January, 2017, the average benefit for a retired beneficiary is <a href="https://www.ssa.gov/news/press/factsheets/colafacts2017.pdf" target="_blank">$1,360 per month</a>, which doesn't go very far if that is your only source of income. In addition, beneficiaries who are signed up for Medicare Part B (which is the Medicare medical insurance) will see $134 deducted from their Social Security benefit check for the Part B premium.</p> <p>While very few retirees live solely on their Social Security benefits, these benefits do constitute at least half the income of 71 percent of single seniors and 48 percent of couples. And for a whopping 43 percent of singles and 21 percent of married couples, Social Security benefits represent 90 percent or more of total income.</p> <h3>Why you shouldn't panic</h3> <p>What you need to remember is that you have a great deal of control over how much of your budget your Social Security benefit will represent. If you diligently save for retirement, then receiving an &quot;average&quot; benefit of $1,360 will provide a nice financial cushion on top of your retirement portfolio. While $1,360 is tough to live on by itself, having it available on top of your necessary expenditures would be a wonderful supplement.</p> <h2>3. Cuts to Social Security benefits may be coming</h2> <p>President Trump promised during his campaign that there would be no cuts to current payments for Social Security or Medicare beneficiaries. However, although the White House has made it clear that current beneficiaries' payments are safe, it will not rule out the possibility of making cuts that will affect future beneficiaries. Some of the changes that have been proposed include:</p> <ul> <li>Raise the full retirement age for workers who reach age 62 in 2023, gradually increasing it from the current age of 66 to age 69.<br /> &nbsp;</li> <li>Change the formula for calculating benefits for retirees becoming newly eligible in 2023 in phases over 10 years. The changes would slightly increase benefits for below-average earners and slightly decrease benefits for above-average earners.<br /> &nbsp;</li> <li>Beginning December 2018, change the calculation of the cost-of-living adjustment (COLA) to a chained consumer price index (CPI) calculation, which will reduce the amount of money beneficiaries receive in their annual COLA. The current formula for determining the COLA uses something called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W is a useful index for tracking the inflation of all goods, but it does not take into account the fact that many consumers make substitutions when prices go up. (For instance, if the price of beef rises, many consumers will buy chicken or pork instead.) A chained CPI calculation takes these sorts of substitutions into account, so its inflation rate is calculated at approximately 0.3 percentage points lower than the CPI-W rate.<br /> &nbsp;</li> <li>Eliminate the earnings test beginning in January 2019. This test reduces benefits for beneficiaries who are younger than Social Security's full retirement age (currently age 66), are currently receiving Social Security benefit payments, and have income from wages or self-employment that exceed $16,920 per year in 2017.<br /> &nbsp;</li> <li>Eliminate federal income taxation of Social Security retirement benefits as of 2054 and later, phased in from 2045 to 2053.</li> </ul> <h3>Why you shouldn't panic</h3> <p>Although making cuts to future beneficiaries' payments is hardly something to cheer about, we do need to recognize that it is much more important to protect the benefits of current beneficiaries. Since current beneficiaries generally cannot go back to work or cut expenses, they are much more vulnerable to cuts in payments than current workers are. In fact, the proposed switch to a chained CPI calculation for COLA may be burdensome to current beneficiaries, since it has been proposed for December 2018, thereby affecting those who have already retired.</p> <p>What current workers need to do is plan for their Social Security to be an addition to their retirement savings. Then, if these changes and cuts do come to pass, you will not be worried about losing important income.</p> <h2>4. High earners don't pay as much into Social Security</h2> <p>Social Security is paid for through a payroll tax of 6.2 percent for workers and 6.2 percent for their employers, making the total tax contribution 12.4 percent of gross income. However, workers and their employers do not pay Social Security taxes on earnings above $127,200.</p> <p>While $127,200 is a pretty significant chunk of change, it does mean that very high earners get a break once they are earning that amount. The reasoning behind this earnings cap is to maintain the connection between contributions paid in and benefits received. Since Social Security benefits are paid progressively, lower-income beneficiaries receive a higher percentage of their pre-retirement income in benefits than do high-income beneficiaries. The more money that high-income earners pay into Social Security, the less of a return they see on their contributions.</p> <p>The progressive nature of Social Security benefits is the reason why it is unlikely that there will ever be a complete elimination of this earnings cap, even though the program could certainly use the funds that such a cap elimination would represent. However, even if we were to increase the earnings cap to $229,500 &mdash; which would return taxation to the same level it was in the early 1980s &mdash; we could make a major dent in the coming benefits shortfall.</p> <h3>Why you shouldn't panic</h3> <p>Although raising taxes is never popular, there is some indication that our government is working to bring the earnings cap closer to early 1980s levels. In 2016, the earnings cap was set at $118,500, which was the same as the 2015 earnings cap. Raising it to $127,200 represents a 7 percent increase.</p> <h2>5. 10,000 baby boomers are retiring every day</h2> <p>Social Security works pretty well when the ratio of workers to retirees is balanced. Unfortunately, the extra-big generation known as the baby boomers is putting the program out of whack. The 76 million members of that generation began reaching age 62 (the earliest you may take Social Security benefits) as of 2008, and they are just going to keep retiring &mdash; at a rate of <a href="https://www.washingtonpost.com/news/fact-checker/wp/2014/07/24/do-10000-baby-boomers-retire-every-day/?utm_term=.56b6dff4374c" target="_blank">10,000 per day</a>.</p> <p>This huge retirement boom could potentially put an enormous burden on our Social Security program, especially considering the increased life expectancy of this generation as compared to their parents and grandparents.</p> <h3>Why you shouldn't panic</h3> <p>While it's true that approximately 10,000 baby boomers are going to be retiring every day until 2034 (when the last of the boomers will reach age 70, which is the latest you would want to start taking Social Security benefits), there is more to this story than just their retirement.</p> <p>First, it's important to remember that we've known the boomers would be retiring en masse for quite some time. Policymakers began to plan as early as 1983, when Congress raised the full retirement age.</p> <p>Second, the boomers are the workers who built up the Social Security Trust Fund, so they will be beneficiaries of the money they themselves contributed through taxes.</p> <p>Finally, as of 2015, <a href="http://www.pewresearch.org/fact-tank/2016/04/25/millennials-overtake-baby-boomers/" target="_blank">millennials had overtaken the boomers</a> as the largest living generation in the U.S. With such a large group of young workers in the workforce, we should be able to handle the financial cost of 10,000 boomers retiring each day.</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/5-sobering-facts-about-social-security-you-shouldnt-panic-over">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/6-smart-ways-to-boost-your-social-security-payout-before-retirement">6 Smart Ways to Boost Your Social Security Payout Before 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/stop-falling-for-these-6-social-security-myths">Stop Falling for These 6 Social Security Myths</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/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits">5 Questions to Ask Before You Start Claiming Your Social Security Benefits</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/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> <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/3-reasons-to-claim-social-security-before-your-retirement-age">3 Reasons to Claim Social Security Before Your Retirement Age</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement beneficiaries benefits facts full retirement age government social security ssa supplemental income taxes trust fund Thu, 04 May 2017 08:00:08 +0000 Emily Guy Birken 1938308 at http://www.wisebread.com Why Saving Too Much Money for a College Fund Is a Bad Idea http://www.wisebread.com/why-saving-too-much-money-for-a-college-fund-is-a-bad-idea <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-saving-too-much-money-for-a-college-fund-is-a-bad-idea" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-544603158.jpg" alt="Learning why saving too much college money is a bad idea" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you have children, you may have a <a href="http://www.wisebread.com/the-9-best-state-529-college-savings-plans?ref=internal" target="_blank">529 education savings plan</a> set up. While it's helpful to save for your kid's college education in advance, there are downsides to saving <em>too</em> much. Here are a few reasons you may want to adjust your contributions and/or revise your college fund strategy.</p> <h2>1. You may make more financial sacrifices than necessary</h2> <p>Unless you're loaded, you're probably making concessions elsewhere in your budget to keep up with contributions to your 529 &mdash; but at what cost? Are you neglecting other necessary payments, like credit card debt, resulting in additional fees? Are you compromising your health by reducing your visits to care providers? Do you have a sufficient emergency fund?</p> <p>Saving for your child's college education is important, but don't put it before any immediate needs. Paid-in-full college tuition is a luxury and privilege, and it shouldn't be your top priority if other aspects of your personal life and finances are affected.</p> <h2>2. Your retirement fund will suffer</h2> <p>If you're putting your child's paid-in-full education before your own later-in-life needs, consider this: You can take out a loan for education, but you can't take a loan for retirement. Millions of students have furthered their educations on their own dime and lived to tell the tale, because they're in perfect condition to work it off after they're spit out into the real world. You, however, may be nearing the time when you may not want or physically be able to work as your kid goes off to school, and that could wreak havoc on your financial future.</p> <p>&quot;If you devote the majority of your family savings to fund college education out of pocket, be prepared to push out your retirement goals,&quot; says registered investment adviser Ryan Miyamoto. &quot;By the time you are starting your family, you are usually thinking about getting serious with your retirement savings as well. These goals end up competing with each other, and with the rapid cost of college education, your retirement will suffer.&quot;</p> <h2>3. You're missing out on tax-exempt withdrawals of your 529 plan</h2> <p>Conservative investors miss out on the biggest benefit of 529 savings plans &mdash; tax-exempt withdrawals. Since tax-exempt withdrawals are only applicable to the gains, if you're using a 529 account to save for college and invest conservatively, your gains will be minimized compared to a growth investor. Having education as a top priority adds fuel to the fire of being conservative; you don't feel like this is your money, but rather your kids', so you irrationally think you want to minimize losses.</p> <p>Adds Miyamoto, &quot;Conversely, if these same individuals were to invest their savings into their own 401(k), the mentality changes; they're willing to take more risk since they view it as their own money.&quot;</p> <h2>4. You will have to pay sizable penalties if your 529 isn't used</h2> <p>You probably have an idea of how much you need to save for your child's education when you open your 529 plan, but whatever that number, it's still just a rough estimate. Your kid may need more than what you think college may cost at his or her time of birth, based on inflation 18 years later plus their choice of college. Let's hope the latter doesn't break the budget &mdash; but it probably will.</p> <p>On the other hand, if you funnel too much money to the account and it goes unused &mdash; for instance, if your scholar attends a relatively inexpensive school (which is normally good news, but not in this case) or decides not to attend college at all &mdash; you're going to kick yourself for not being a little more selfish with your money.</p> <p>&quot;If you overload a particular savings vehicle for college, you run the risk of actually being financially penalized,&quot; explains certified financial planner Greg Knight. &quot;For example, if you save too much in a 529 savings plan without having a drawdown strategy, you will incur income tax and a 10 percent penalty on the earnings portion of withdrawals not used for qualified education expenses. In general, distributions from 529 plans are not taxed provided they are used for qualified educational expenses. However, if you have paid all expenses and still have funds left, as the parent account owner you need to either name yourself as beneficiary and attend a qualified educational program to use the funds tax-free, or have another child or grandchild to name as a beneficiary.&quot;</p> <p>With 529 distributions, a portion is tax-free (as basis) and a portion is taxable (as earnings) unless the distribution is used to pay qualified educational expenses. Without knowing in advance who will use the 529 funds until they are depleted, you run the risk of paying tax and a 10 percent penalty.</p> <h2>5. You don't know if your kid will go to college</h2> <p>Another issue with putting too much cash in one basket is the variable of whether or not your kid will go to college at all. Once they're 18, you can't really make them do anything (unless you're holding financial support over their head), and, let's face it: College isn't for everyone. Having this fund might place undue pressure for them to do something they don't really want to do.</p> <h2>6. Your kid might not appreciate your sacrifice</h2> <p>I'm not suggesting that you shouldn't save for your kid's college education, but perhaps you shouldn't foot the entire bill. At the very least, refrain from telling them how much money is actually available. Plenty of parents want to pay their kids' way through college so they can enjoy the full experience, but that's really just providing them with an excuse to avoid taking on adult financial responsibilities. They may not truly appreciate the value of their education (nor your many years of saving) if they don't have to work for at least part of it themselves.</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/why-saving-too-much-money-for-a-college-fund-is-a-bad-idea">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/5-smart-places-to-stash-your-kids-college-savings">5 Smart Places to Stash Your Kid&#039;s College Savings</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-ways-for-college-students-to-save-loads-of-money">10 Ways for College Students to Save Loads of 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/7-unique-ways-millennials-are-dealing-with-student-loan-debt">7 Unique Ways Millennials Are Dealing With Student Loan Debt</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-9-best-state-529-college-savings-plans">The 9 Best State 529 College Savings Plans</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-ways-college-students-can-save-money-before-class-starts">8 Ways College Students Can Save Money Before Class Starts</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training 529 plans college funds kids penalties retirement funds saving money saving too much taxes tuition Thu, 30 Mar 2017 08:30:15 +0000 Mikey Rox 1915279 at http://www.wisebread.com 11 Secrets You Need to Tell Your Financial Adviser http://www.wisebread.com/11-secrets-you-need-to-tell-your-financial-adviser <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/11-secrets-you-need-to-tell-your-financial-adviser" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-165869622.jpg" alt="Couple sharing secrets they need to tell their financial adviser" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>So you've made an appointment to sit down with a financial adviser and formulate a plan for your future. Are you prepared to talk about your full money situation? In order to truly help you, your financial adviser needs to look at the big picture. That means there can be no major money secrets.</p> <p>Financial advisers will often begin each session by asking a lot of questions that may seem personal. But they'd be negligent if they didn't. In fact, it's their fiduciary duty to learn as much about you as they can in order to advise you properly.</p> <p>Here's a list of secrets you'll need to share with your financial planner if you want the best advice.</p> <h2>1. All of your debt</h2> <p>When you're being crushed under a mountain of debt, you may not want to talk about it. But a financial adviser is perhaps the best person to discuss it with. Your adviser can't craft a sound financial plan for you if they're unaware that a good chunk of your income is going to pay off debt. If you let them know about your full debt situation, however, they may be able to assist you in climbing out of the hole and onto the path toward financial freedom.</p> <h2>2. Any job loss</h2> <p>It's not always easy to admit you are out of work. But a financial adviser can't help you properly if you don't provide a full picture of your income situation. If you're out of work now, let your adviser know. If you were out of work for a long stretch in the past, let them know that as well. Financial advisers can also help you navigate what to do when your income has been cut, as well as advise you on what to do with old 401(k) accounts and pension money. (See also: <a href="http://www.wisebread.com/if-youre-lucky-enough-to-receive-a-pension-here-are-6-things-you-need-to-do?ref=seealso" target="_blank">If You're Lucky Enough to Receive a Pension, Here Are 6 Things You Need to Do</a>)</p> <h2>3. Family members you support</h2> <p>Do you pay child support? Do you regularly send money to your brother up in Buffalo? Do you have an elderly parent living with you? Your financial adviser will want to know about any money you spend to support other people, even if it's only occasionally or informally. These are expenses that have an impact on your overall financial picture, and are not the kinds of costs that you can easily eliminate.</p> <h2>4. Sizable gifts</h2> <p>You're fortunate enough to be given $25,000 from your generous Uncle Steve, but you feel like it's really not something you want people to know about. After all, who might come knocking on your door now that you have this extra cash on hand? That's understandable, but it's important to tell your financial adviser, because they can offer advice on what to do with the new funds. An unexpected influx of cash, even if it's just a one-time gift, can have a ripple effect on your overall saving strategy.</p> <h2>5. Tax troubles</h2> <p>Have you been diligent about paying your taxes? If not, this is something you'll want to tell your adviser. This goes for late taxes, tax liens on properties, and past audits. The longer you wait to take care of tax problems, the more you may end up paying in penalties and fees. Your financial adviser can help you clean up your tax issues, and will be in a better position to help you plan your future.</p> <h2>6. The status of your marriage</h2> <p>If you're meeting with an adviser, it helps to let them know if you're about to get married, or if your marriage is about to end. Marriage and divorce have all kinds of financial implications on everything from income to taxes to planning for retirement.</p> <h2>7. Your vices</h2> <p>Gambling. Alcoholism. A shopping addiction. We all have our bad habits, but it's important to be aware of those vices that impact your finances. Are you at risk of incurring debt due to a major gambling binge? Is alcohol preventing you from landing steady work? Your financial adviser can't accurately assess your finances if they don't know the situation.</p> <p>According to Doug Amis, a CFP with Cardinal Retirement Planning in Cary, NC, even casual marijuana use is something clients should disclose to planners, because many life insurance companies still test for it.</p> <h2>8. Anything that your kids need to know</h2> <p>Hans Scheil, CEO and owner of Cardinal Retirement Planning, says that his most challenging clients are those who have kept important information from family members. This secrecy can create difficulty in later years, when facing important estate decisions.</p> <p>&quot;What happens with people now is that they develop dementia, or some sort of chronic illness, and they end up needing care,&quot; Scheil said. &quot;This is when all of the family scandals come out.&quot;</p> <p>Scheil says it's important to anticipate what your children and grandchildren may need to know about your estate to avoid strife down the road.</p> <h2>9. Charitable giving</h2> <p>It may seem odd to think of this as something you'd hide, but financial advisers say they've met with clients who have quietly been giving to a cause that their spouse or other loved ones might not agree with. Your donations to charity may not seem like anyone's business, but they can impact your overall savings if you give a substantial amount. A financial adviser can also walk you through getting tax deductions for your charitable donations.</p> <h2>10. Your own lack of financial knowledge</h2> <p>Are you the type who doesn't know an IRA from an IPA? Are you mystified by mutual funds and baffled by bonds? It's OK, your financial adviser is not there to judge you and will likely be more annoyed by any attempt to bluff your way through a meeting. Financial advisers can help you understand the ins and outs of investing and estate planning, so it's useless to pretend to know more than you do.</p> <h2>11. All of your side hustles</h2> <p>When your financial adviser asks you about your income, they want to hear about everything. Not just your day job, but your side work giving piano lessons, your freelance writing, your pottery sales, and even your gambling winnings. You may be hiding this income because you don't want to pay taxes. But your adviser needs to know about this extra income, or else any financial plan they create will be flawed. Moreover, your financial adviser can often give you advice on how to turn a quiet side hustle into a legitimate, profitable business.</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/11-secrets-you-need-to-tell-your-financial-adviser">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/could-a-divorce-improve-your-finances">Could a Divorce Improve Your Finances?</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-manage-your-money-during-a-spousal-separation">How to Manage Your Money During a Spousal Separation</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-biggest-ways-procrastination-hurts-your-finances">7 Biggest Ways Procrastination Hurts Your Finances</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-money-conversations-every-couple-should-have">5 Money Conversations Every Couple Should Have</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-things-i-learned-about-money-after-getting-married">8 Things I Learned About Money After Getting Married</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance debt divorce financial advisers financial planning gambling honesty job loss marriage Secrets taxes Tue, 28 Mar 2017 10:01:05 +0000 Tim Lemke 1915280 at http://www.wisebread.com 5 Common Money Moves That Can Get You Into Legal Trouble http://www.wisebread.com/5-common-money-moves-that-can-get-you-into-legal-trouble <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-common-money-moves-that-can-get-you-into-legal-trouble" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-498121804.jpg" alt="Woman making common money moves that can get her into trouble" title="" class="imagecache imagecache-250w" width="250" height="142" /></a> </div> </div> </div> <p>They seem like minor fibs: We forge our spouse's name on the back of a check. We inflate our monthly income when applying for that rewards credit card. We run a small business from home, and might fib about the size of our office in hopes of getting a tax break from the IRS.</p> <p>These may all seem like harmless white lies. But these seemingly innocent money moves &mdash; and others like them &mdash; can get you into serious legal trouble.</p> <h2>1. Signing Someone Else's Name on a Check</h2> <p>You want to deposit a check into your savings account. The only problem is that check is made out to your spouse, and they're not around. It seems like an easy matter to scribble your spouse's signature on the back of the check and then deposit the money into your joint savings account.</p> <p>But resist the temptation. It is illegal to forge someone's name on a check, even if that person asks you to do it.</p> <p>The same holds true if you want to, say, pay a bill on behalf of an elderly parent. In some cases, if you control this parent's checkbook, it might seem easier to forge your parent's name on the check instead of obtaining your parent's actual signature. This, too, is illegal, even if your motives for forging the signature are good.</p> <p>The odds are high that neither of these forgeries will ever be discovered or reported to the police, of course. But why take the chance?</p> <h2>2. Writing a Bad Check &mdash; On Purpose</h2> <p>It happens sometimes: You drain your bank account while you still have bills to pay. Your bank might have overdraft protection if you unknowingly write a check for more than your balance. But if you write a bad check on purpose, knowing that you don't have enough funds in your account to cover it, that is illegal.</p> <p>If you're caught, you could face a fine and maybe even jail time, depending on the severity of your crime. Even if you're not charged with a criminal act, your bank might charge you a hefty penalty for writing a bad check. And the shops that unknowingly took your bad check may no longer accept your business.</p> <h2>3. Lying on a Credit Card Application</h2> <p>That credit card might come with a tempting <a href="http://www.wisebread.com/5-best-credit-cards-that-offer-bonus-cash-for-sign-up?ref=internal" target="_blank">sign-up bonus</a> or <a href="http://www.wisebread.com/top-5-travel-reward-credit-cards?ref=internal" target="_blank">generous rewards program</a>. Dreaming of all the ways you can put those rewards to use, you decide to fib a bit on your application, in hopes of increasing your odds of qualifying for the card.</p> <p>Guess what? That's fraud. And it's illegal.</p> <p>You might be tempted to inflate your monthly income when applying for a particularly appealing credit card. But resist this temptation. Credit card companies only approve consumers who meet certain financial requirements. If you lie about yours, your credit card provider can pursue legal action against you, including fines and possible jail time.</p> <p>Sure, the odds are low that you'll face these penalties for lying on your credit card application. But avoid all of the risk by being honest about your age, income, and employment when applying.</p> <h2>4. Lying About Your Home Office</h2> <p>One of the benefits of running a small business from your home is you can take advantage of the home office deduction, which can reduce the taxes you pay each year.</p> <p>There's a catch, though: You must use your home office &quot;exclusively and regularly&quot; as your principal place of business. And you can only deduct the exact areas that you use for business.</p> <p>This means that if you use your bedroom as your office, you can't claim its entire area as a deduction, just the corner where your desk and computer sit. If you lie about the size of your home office, and the IRS finds out, you'll be hit with penalties and a higher tax bill.</p> <h2>5. Lying About Who'll Be Living in That Home You're Buying</h2> <p>It's not easy to lie on a mortgage application. Lenders will request copies of your bank statements, paycheck stubs, and tax returns to make sure that you're honest about how much money you make.</p> <p>But there is one lie that's not easy for mortgage lenders to discover: A fib about who will actually live in the home.</p> <p>You might be buying a home with the intention of renting it out as an income-producing property. That's fine, but you have to be honest with lenders about this. That's because lenders typically charge higher interest rates to buyers who are renting out homes instead of living in them. They also might require a higher down payment. By claiming that you will live in the home when you don't plan to, you might be able to land a lower interest rate.</p> <p>This is mortgage fraud, and it is highly illegal. If you're found guilty of committing this crime, you can face hefty fines and several years in jail.</p> <p>Don't take the risk. Instead, be honest and pay those higher fees if necessary.</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/5-common-money-moves-that-can-get-you-into-legal-trouble">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-times-we-are-likely-to-lie-for-money">6 Times We Are Likely to Lie for Money</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-simple-financial-upgrades-you-can-make-during-breakfast">6 Simple Financial Upgrades You Can Make During Breakfast</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-money-moves-you-will-always-be-thankful-for">7 Money Moves You Will Always Be Thankful For</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/10-year-end-financial-moves-you-must-make-now">10 Year-End Financial Moves You Must Make Now</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/will-45-mortgage-rates-jumpstart-the-housing-market">Will 4.5% mortgage rates jumpstart the housing market?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance applications fibs fines forgery getting in trouble illegal lying money moves mortgages taxes white lies Thu, 16 Mar 2017 11:00:07 +0000 Dan Rafter 1906389 at http://www.wisebread.com If You're Lucky Enough to Receive a Pension, Here Are 6 Things You Need to Do http://www.wisebread.com/if-youre-lucky-enough-to-receive-a-pension-here-are-6-things-you-need-to-do <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/if-youre-lucky-enough-to-receive-a-pension-here-are-6-things-you-need-to-do" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-519505869.jpg" alt="Man receiving pension and doing these things" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Pensions are becoming a thing of the past &mdash; so if you're still entitled to one, consider yourself lucky. Once you have a pension, however, what will you do with it? How will you manage it? Here are a few suggestions on how to handle your well-earned windfall.</p> <h2>1. Request an Updated Pension Statement Annually</h2> <p>Call me crazy, but I check my bank account every morning when I wake up. It's all still there each day, but I don't like to take any chances. You need to keep an eye on your pension, too. Granted, you don't need to check in every day, but you should request an update once a year.</p> <p>&quot;Like your Social Security benefits, your pension benefit amounts can change,&quot; explains Brannon T. Lambert, owner of the investment firm Canvasback Wealth Management. &quot;Not only that, but pensions can have several options for payouts, survivor benefits, or cash out options. You want to know every option available to you especially if you are married or have dependents.&quot;</p> <h2>2. Weigh Your Payout Options Carefully<strong> </strong></h2> <p>Before the IRS passed a law in 1978 to make self-funded 401Ks possible, many companies provided employees pensions &mdash; a fund that accrued in value over time to ensure that their employees were at least modestly supported through their retirement. That's all but reversed nowadays. In 1979, 28% of all workers were <a href="https://www.ebri.org/publications/benfaq/index.cfm?fa=retfaq14" target="_blank">enrolled with pension plans</a>, whereas only 2% of today's workforce is enrolled. Conversely, between 95% and 98% of employers <a href="http://www.cheatsheet.com/personal-finance/5-best-ways-for-companies-to-improve-401k-plans.html/?a=viewall" target="_blank">offer 401K plans</a>. Go figure.</p> <p>When it's time to receive your pension, the first decision you'll need to make is how you want to receive the money&mdash; which, in turn, raises many important questions. Morgan Christen, CFA at Spinnaker Investment Group in Southern California, explains your options.</p> <p>&quot;Pension planning involves many decisions that are irrevocable; anyone that will receive a pension should learn about all of the payout options,&quot; he says. &quot;Do you want to receive income for your life? Do you want to make sure a spouse is covered should you pass away? If you want to cover a spouse, how much of your benefit do you want that person to receive &mdash; 100%, 75%, or 50%?&quot;</p> <p>These are all things to think about when it comes time to take your pension. Keep in mind that if you want to cover a spouse, you will be taking a reduced amount on a monthly basis &mdash; and if your spouse predeceases you, you may not be able to change course.</p> <h2>3. Investigate the Social Security Offset Provisions<strong> </strong></h2> <p>You may expect a certain dispersed dollar amount each month when your pension begins, but you could be caught off guard if it changes down the road. Your Social Security payments may be the culprit.</p> <p>&quot;Some pensions come with Social Security offset provisions,&quot; Lambert explains. &quot;This means that your pension benefit amount could be one dollar figure initially, but once Social Security benefits begin, your pension will be reduced somewhat depending how much they offset. It could possibly be dollar-for-dollar up to a preset limit. This can come as a big surprise if you are not aware of it.&quot;</p> <h2>4. Research Your Investment Opportunities<strong> </strong></h2> <p>If you want to roll the dice with your pension, that's your prerogative &mdash; but you need to go into any investment situation well-informed of what you're getting into. This is money that needs to last the rest of your life, and you don't want to squander it because of poor decision-making. Do you research and get level with expectations so you're not blindsided by bad news.</p> <p>&quot;When it comes to pensions, many people assume that the managers of the funds will do the investment on behalf of the participants, which is rarely true,&quot; says Justin Kumar, senior portfolio manager at investment firm Arlington Capital Management in Arlington Heights, Ill. &quot;Participants must elect their investment options from the lineup of available funds, but if they do not, they will often be invested in the default option. The problem is that the default is usually some type of cash or money market equivalent funds. Although these funds may be a safer option, they will not participate in market uptrends, leaving participants confused at the end about why they may not have more money.&quot;</p> <p>Furthermore, for those participants with limited investment options, there may be language in the pension plan documents that specifies an age &mdash; such as 55 or 59 1/2 years old &mdash; in which pension funds can be rolled over by a participant into an IRA, thus allowing access to a greater universe of investment possibilities. Participants should consult with their pension consultants and perhaps with an outside adviser to determine the best course of action when making these investment decisions.</p> <h2>5. Avoid Greedy Financial Advisers<strong> </strong></h2> <p>How do you know if a financial adviser has your best interest at heart? Mark Zoril, founder of the retirement-planning firm PlanVision, reveals how to spot the con artist.</p> <p>&quot;As someone evaluates and reviews their options, it is important to understand the pros and cons of taking the pension or transferring it to an IRA,&quot; he says. &quot;Unfortunately, far too many advisers' compensation is directly impacted by what someone does with their pension. Therefore, they are strongly incentivized to convince people of the benefits of cashing out their pension. In fact, a transfer from a pension can be a very strong payday for an adviser.&quot;</p> <p>This applies to so-called &quot;fiduciary&quot; advisers as well.</p> <p>&quot;Many of these advisers promote how they are 'fee only' and offer objective guidance,&quot; Zoril adds. &quot;However, if they charge their clients based upon assets under management &mdash; the most common model of advisers &mdash; they have a huge conflict of interest in providing guidance on this particular topic.&quot;</p> <p>It's important that you seek the guidance of a professional &mdash; perhaps someone you know well in that field, and not someone who's blinded by your potential investment &mdash; regarding your pension plan to fully understand whether or not the advice you're seeking will be influenced by their adviser's compensation. This presents a real risk to your evaluation process.</p> <h2>6. Plan for the Taxes You're Required to Pay<strong> </strong></h2> <p>Your pension is not tax-free. It will be taxed as regular income. You need to plan and save for that bill so you stay in good standing with the IRS. You don't want to spend your golden years in the slammer, do ya?</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <p>&nbsp;</p> <p style="text-align: center;"><a href="//www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fif-youre-lucky-enough-to-receive-a-pension-here-are-6-things-you-need-to-do&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FIf%20Youre%20Lucky%20Enough%20to%20Receive%20a%20Pension%2C%20Here%20Are%206%20Things%20You%20Need%20to%20Do.jpg&amp;description=If%20Youre%20Lucky%20Enough%20to%20Receive%20a%20Pension%2C%20Here%20Are%206%20Things%20You%20Need%20to%20Do" data-pin-do="buttonPin" data-pin-config="above" data-pin-color="red" data-pin-height="28"><img src="//assets.pinterest.com/images/pidgets/pinit_fg_en_rect_red_28.png" alt="" /></a> </p> <!-- Please call pinit.js only once per page --><!-- Please call pinit.js only once per page --><script type="text/javascript" async defer src="//assets.pinterest.com/js/pinit.js"></script></p> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/If%20Youre%20Lucky%20Enough%20to%20Receive%20a%20Pension%2C%20Here%20Are%206%20Things%20You%20Need%20to%20Do.jpg" alt="If You're Lucky Enough to Receive a Pension, Here Are 6 Things You Need to Do" 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/if-youre-lucky-enough-to-receive-a-pension-here-are-6-things-you-need-to-do">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-10"> <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/5-sobering-facts-about-social-security-you-shouldnt-panic-over">5 Sobering Facts About Social Security You Shouldn&#039;t Panic Over</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-things-financial-advisers-wish-you-knew-about-retirement">7 Things Financial Advisers Wish You Knew About 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/6-smart-ways-to-boost-your-social-security-payout-before-retirement">6 Smart Ways to Boost Your Social Security Payout Before 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/stop-making-these-10-bogus-retirement-savings-excuses">Stop Making These 10 Bogus Retirement Savings Excuses</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/6-ways-to-guarantee-income-in-retirement">6 Ways to Guarantee Income in Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement fiduciary financial advisers investment opportunities payout pensions social security taxes Tue, 21 Feb 2017 11:00:11 +0000 Mikey Rox 1894200 at http://www.wisebread.com 15 Retirement Terms Every New Investor Needs to Know http://www.wisebread.com/15-retirement-terms-every-new-investor-needs-to-know <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/15-retirement-terms-every-new-investor-needs-to-know" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retirement_blocks_73115095.jpg" alt="New investor learning retirement terms" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Congratulations! By starting your retirement fund, you've taken one of the most important steps toward a comfortable retirement. But as a novice investor, you may feel a bit overwhelmed with all the available information, including contribution limits, early penalty fees, and Roth 401Ks. To help you make sense of it all, let's review 15 key terms you should know:</p> <h2>1. 401K</h2> <p>The 401K is the most popular qualified employer-sponsored retirement plan in the U.S. The two most common types of 401K plans are the traditional 401K, to which you contribute with pretax dollars, and the Roth 401K, which accepts contributions with after-tax dollars. Earnings in a traditional 401K grow on a tax-deferred basis (you'll pay taxes on the funds when you withdraw them during retirement) and those in a Roth 401K grow tax-free forever, since you've paid taxes upfront.</p> <h2>2. After-Tax Contributions</h2> <p>Only certain types of retirement accounts, such as Roth 401Ks and Roth IRAs, accept contributions with after-tax dollars. When you contribute to a retirement account with after-tax dollars, your retirement funds grow tax-free forever, since you've already paid Uncle Sam.</p> <h2>3. Catch-Up Contribution</h2> <p>Retirement investors who are 50 and older at the end of the calendar year can make extra annual &quot;catch-up&quot; contributions to qualifying retirement accounts. Catch-up contributions allow older savers to make up for lower contributions to their retirement accounts in earlier years. In 2016 and 2017, catch-up contributions of <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-catch-up-contributions">up to $6,000</a> (on top of traditional annual contribution limits) are allowed for 401Ks and up to $1,000 for IRAs.</p> <h2>4. Contribution Limits</h2> <p>Every year, the IRS sets a limit as to how much you can contribute to your retirement accounts. In 2016, you can <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits">contribute up to $5,500</a> ($6,500 if age 50 or over) to traditional and Roth IRAs and <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-contributions">up to $18,000</a> ($24,000 if age 50 or over) to a traditional or Roth 401K. These annual contribution limits to retirement accounts remain unchanged for 2017. If you exceed your contribution limit, you'll receive a penalty fee from the IRS, unless you take out excess moneys by a certain date.</p> <h2>5. Early Distribution Penalty</h2> <p>To discourage retirement savers from withdrawing funds before retirement age, the IRS imposes an additional 10% penalty on distributions before age 59 &frac12; on certain retirement plans. Keep in mind that you're always liable for applicable income taxes whether you take a distribution from your retirement plan before or after age 59 &frac12;. Under certain circumstances, you're allowed to <a href="http://www.wisebread.com/7-penalty-free-ways-to-withdraw-money-from-your-retirement-account">withdraw money early</a> from a retirement account without the penalty.</p> <h2>6. Fee</h2> <p>You've heard that there is no such thing as a free lunch and no retirement plan is exempt from this rule. There's always a cost for the employer or employee, or both. Always check the prospectus from any fund for its annual expense ratio and any other applicable fee. An annual expense ratio of 0.75% means that for every $1,000 in your retirement account, you're charged $7.50 in fees. And that's assuming that you don't trigger any other fees! (See also: <a href="http://www.wisebread.com/watch-out-for-these-5-sneaky-401k-fees?ref=seealso">Watch Out for These 5 Sneaky 401K Fees</a>)</p> <h2>7. Index Fund</h2> <p>An index fund is a type of mutual fund that tracks of a basket of securities (generally a market index, such as the Standard &amp; Poor's 500 or the Russell 2000). An index fund is a passively managed mutual fund that provides broad market exposure, low investment cost, and low portfolio turnover. Due to its low annual expense ratios, such as 0.16% for the Vanguard 500 Index Investor Shares [Nasdaq: <a href="https://finance.yahoo.com/quote/vfinx">VFINX</a>], index funds have become a popular way to save for retirement. (See also: <a href="http://www.wisebread.com/3-steps-to-getting-started-in-the-stock-market-with-index-funds?Ref=seealso">3 Steps to Getting Started in the Stock Market With Index Funds</a>)</p> <h2>8. IRA</h2> <p>Unlike a 401K, an individual retirement account (IRA) is held by custodians, including commercial banks and retail brokers. The financial institutions place the IRA funds in a variety of investments following the instructions of the plan holders. A traditional IRA accepts contributions with pretax dollars, and a Roth IRA accepts contributions with after-tax dollars. An advantage of using a Roth IRA is that it provides several exemptions to the early distribution penalty.</p> <h2>9. 401K Loan</h2> <p>Some retirement plans allow you to take a loan on a portion of your available balance &mdash; generally, 50% of your vested account balance, or <a href="https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-loans">up to $50,000</a>, whichever is less. While the loan balance is generally due within five years, it becomes fully due within 60 days from separating from your employer. (See also: <a href="http://www.wisebread.com/5-questions-to-ask-before-you-borrow-from-your-retirement-account?ref=seealso">5 Questions to Ask Before You Borrow From Your Retirement Account</a>)</p> <h2>10. Mutual Fund</h2> <p>By pooling funds from several investors, money managers are able to invest in a wide variety of securities, ranging from money market instruments to equities. Investing in a mutual fund enables an individual retirement investor to gain access to a wide variety of investments that she wouldn't necessarily have access to on her own. Depending on its investment strategy, mutual funds can have a wide variety of fees. So, make sure to read the fine print. (See also: <a href="http://www.wisebread.com/4-sneaky-investment-fees-to-watch-for?ref=seealso">4 Sneaky Investment Fees to Watch For</a>)</p> <h2>11. Pretax Contribution</h2> <p>When you contribute to your employer-sponsored retirement account with pretax dollars, you're allowed to reduce your taxable income. For example, if you were to make $50,000 per year and contribute $5,000 to your 401K with pretax dollars, then you would only have to pay applicable income taxes on $45,000! You delay taxation until retirement age when you're more likely to be in a lower tax bracket.</p> <h2>12. Required Minimum Distribution (RMD)</h2> <p>You can't keep moneys in your retirement account forever. At age 70 &frac12;, you generally have to start taking withdrawals from an IRA, SIMPLE IRA, SEP IRA, or 401K. An RMD is the minimum amount required by law that you have take out from your retirement account each year to avoid a penalty from the IRS. You can use of one of these <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/required-minimum-distribution-worksheets">requirement minimum distribution work sheets</a> to calculate your RMD.</p> <h2>13. Rollover</h2> <p>When you separate from your employer, you generally have up to 60 days to transfer moneys in your previous retirement account to a new retirement account accepting those moneys. This process is known as a rollover. In a direct rollover, the process is automatic; in an indirect rollover, you receive a cash-out check from your previous employer to rollover the moneys to a new qualifying retirement account. (See also: <a href="http://www.wisebread.com/a-simple-guide-to-rolling-over-all-of-your-401ks-and-iras?ref=seealso">A Simple Guide to Rolling Over All of Your 401Ks and IRAs</a>)</p> <h2>14. Target-Date Fund</h2> <p>A target-date fund is a retirement investment fund that seeks to provide higher returns to young investors and gradually reduce risk exposure as they get closer to retirement age. Since the Pension Protection Act granted target-date funds the status of qualified default investment alternative in 2006, these type of funds have gained popularity. About half of 401K participants <a href="https://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&amp;content_id=3347">hold a target-date fund</a>.</p> <h2>15. Vesting</h2> <p>In any retirement account, only money that is fully vested truly belongs to you. While all of your contributions and the matching contributions from your employer to your retirement account are always fully vested, some employer contributions, such as company stock, may follow a vesting schedule. In <em>cliff vesting</em>, you only become fully vested after a certain period of time. In <em>graded vesting</em>, you gradually gain ownership of those employer contributions.</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/15-retirement-terms-every-new-investor-needs-to-know">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/5-important-things-to-know-about-your-401k-and-ira-in-2016">5 Important Things to Know About Your 401K and IRA in 2016</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/the-inventor-of-the-401k-has-second-thoughts-about-your-retirement-plan-now-what">The Inventor of the 401K Has Second Thoughts About Your Retirement Plan — Now What?</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/optimize-your-ira-and-401k">Optimize Your IRA and 401(k)</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/stop-making-these-10-bogus-retirement-savings-excuses">Stop Making These 10 Bogus Retirement Savings Excuses</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/3-ways-more-money-in-retirement-might-cost-you">3 Ways More Money in Retirement Might Cost You</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401k contributions employer-sponsored retirement index funds IRA new investors Roth savings target date funds taxes terms Thu, 17 Nov 2016 11:00:14 +0000 Damian Davila 1834559 at http://www.wisebread.com 7 Money Moves You Will Always Be Thankful For http://www.wisebread.com/7-money-moves-you-will-always-be-thankful-for <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-money-moves-you-will-always-be-thankful-for" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/family_piggy_bank_72948583.jpg" alt="Family making money moves they&#039;ll always be thankful for" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The air is crisp and the time for family, friends, and fun is upon us! But are you ready for the tons of holiday spending and planning ahead for 2017? Read up on these seven money moves you will always be thankful for/</p> <h2>1. Monitoring Your Credit</h2> <p>Whether you've already got a mortgage, cars, and all the trimmings, or you're a young adult with the hopes of buying an asset like a house someday, you'll need to maintain good credit. Everyone gets one <a href="http://www.wisebread.com/how-to-get-a-truly-free-credit-report">free credit report</a> each year, and some credit card companies even give you regular updates on your credit score. I know, we love to remind you of this! But when you're meeting with the realtor and they don't laugh at your borrowing limit, you'll be saying thanks.</p> <h2>2. Negotiating Your Insurance</h2> <p>When shopping around for insurance, it's easy to settle for the first average quote you receive and end it. It's boring! But it really is best to gather several quotes to gain some leverage. If there's a company you prefer, show them the cheaper quote and get them to lower theirs. Also, try to ask yourself which types of insurance you actually need. When you've saved hundreds of dollars per year in insurance costs, it'll be easier to agree to host Thanksgiving at your place next time.</p> <h2>3. Stowing Cash Into a Mutual Fund or ETF</h2> <p>How many ways should you save money? Even if you already have some mutual funds in your 401K, even if you have a vacation savings jar in the kitchen &mdash; you might want to consider stowing some cash from your savings account separately in a mutual fund or ETF. They're steady, the rate is far superior to a savings account, and it keeps you from feeling like your savings can be tapped at any time. It takes some thought and some calculus of weighing the fees and taxes to decide whether to take the funds out. Sometimes we need that bit of a barrier so that we can benefit in the long run. Check out <a href="http://www.wisebread.com/9-top-mutual-funds-for-low-risk-investors">these tips for investors</a>. Your future self will be thanking you down the line.</p> <h2>4. Paying Off High-Interest Debt</h2> <p>Carrying balances on one (or a few) high-interest cards? If you have debt at anything above 10% interest, paying those off should be your priority. The longer you carry those balances, the more precarious the situation gets. And of course, if you were to follow the first point in this list, it would be pretty hard without paying off that <a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt?ref=internal">high-interest debt</a>. Once that's done, you can pass the savings around the table.</p> <h2>5. Building an Emergency Fund</h2> <p>Why wouldn't you want to be covered if a small emergency happened? Consider the emergency fund as your war chest, defending you from calamities such as car accidents, sudden house repairs, a child getting sick, or getting stuck with unpaid jury duty. <a href="http://www.wisebread.com/change-jars-and-8-other-clever-ways-to-build-an-emergency-fund">Even broke folks</a> can start one. Keep it somewhere easy to access, and by all means, never pilfer it for Black Friday. That's what #7 is for!</p> <h2>6. Getting Your Taxes Done Early</h2> <p>Who doesn't want to get their money early? Or get tax stress off their chests? Starting around November, you really should be gathering your receipts and <a href="http://www.wisebread.com/avoid-the-tax-season-rush-with-these-early-prep-steps">setting a tax plan</a> &mdash; whether you need to book an appointment with your accountant, or book some personal time in front of QuickBooks. What easier way to be thankful all the way into the dark of January than knowing a refund check is on its way?</p> <h2>7. Setting a Christmas Budget</h2> <p>Going into Thanksgiving with a shopping list and wondering, &quot;How am I gonna do this <em>and </em>Christmas?&quot; Fix that in the future with a <a href="http://www.wisebread.com/avoid-these-5-common-holiday-budget-pitfalls">Christmas budget set in advance</a>. Even if you're a family who slowly buys gifts for each other year-round, that can creep up. By having a set budget every year, you can check against immediately clicking &quot;add to cart.&quot; Imagine how nice it would be to not feel completely tapped out after the holidays. Just get through Thanksgiving and everything else is gravy.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/amanda-meadows">Amanda Meadows</a> of <a href="http://www.wisebread.com/7-money-moves-you-will-always-be-thankful-for">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/where-to-turn-for-help-when-you-dont-have-an-emergency-fund">Where to Turn for Help When You Don&#039;t Have an Emergency 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/10-money-moves-to-make-before-the-leaves-change">10 Money Moves to Make Before the Leaves Change</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-biggest-ways-procrastination-hurts-your-finances">7 Biggest Ways Procrastination Hurts Your Finances</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/when-to-use-savings-to-pay-off-debt">When to Use Savings to Pay Off Debt</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/its-never-too-late-to-fix-these-5-money-mistakes-from-your-past">It&#039;s Never Too Late to Fix These 5 Money Mistakes From Your Past</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance being thankful credit report debt emergency funds money moves savings taxes Thanksgiving Mon, 14 Nov 2016 09:00:06 +0000 Amanda Meadows 1830894 at http://www.wisebread.com New Job? Don't Make These 7 Mistakes With Your Benefits http://www.wisebread.com/new-job-dont-make-these-7-mistakes-with-your-benefits <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/new-job-dont-make-these-7-mistakes-with-your-benefits" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_shaking_hands_77096849.jpg" alt="Woman making mistakes with new job benefits" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>In September 2016, total nonfarm payroll employment in the U.S. <a href="http://www.bls.gov/news.release/empsit.nr0.htm">rose by 156,000</a>. If you were among those Americans who recently landed a new gig &mdash; or plan on landing one within the near future &mdash; congratulations! But as you get your benefits and retirement planning set up at your new workplace, don't make these seven mistakes.</p> <h2>1. Not Setting Up Your New Retirement Account Before December 31st</h2> <p>Make to sure to set up your new employer-sponsored retirement account before December 31st. Otherwise, you won't be able to reduce your 2016 taxable income by making contributions before Tax Day (April 17th, 2017) or the day you file your federal tax return, whichever is earlier. If you wait until the new year to set up your retirement account, any contributions made before Tax Day will reduce your 2017 taxable income &mdash; and you'll lose the opportunity to reduce your 2016 AGI (Adjusted Gross Income) by any contributed amount.</p> <h2>2. Not Completing a 401K or IRA Indirect Rollover</h2> <p>If you had a balance of less than $5,000 in your previous job's 401K or IRA plan, there is a good chance that you received an automatic cashout with a 20% withholding from your employer for applicable taxes. From the last day of your employment, you have 60 days to put the entire balance of the previous retirement account (including the mentioned 20% withholding!) into a new employer-sponsored retirement account that accepts rollovers. This process is known as an indirect rollover.</p> <p>You'll get that 20% withholding money back from the IRS in next year's tax return. In the event that your new employer's retirement account doesn't accept a rollover from your previous account, consider opening an IRA with a local financial institution before the 60-day deadline. (See also: <a href="http://www.wisebread.com/a-simple-guide-to-rolling-over-all-of-your-401ks-and-iras?ref=seealso">A Simple Guide to Rolling Over All of Your 401Ks and IRAs</a>)</p> <h2>3. Leaving W-4 Forms Alone</h2> <p>Depending on a variety of factors, your old W-4 tax withholdings may not cut it at your new gig. To figure out whether you're withholding too much (or too little), grab all of your latest pay stubs, find a copy of last year's tax return, and visit the online <a href="https://www.irs.gov/individuals/irs-withholding-calculator">IRS Withholding Calculator</a>.</p> <p>After punching in your data, this tool will provide recommendations on how to adjust your W-4 with your new employer to make sure that you meet your tax liability and minimize your refund. There's no sense in over-withholding and expecting a large refund, since the IRS doesn't pay interest while it sits on excess withholdings. That's money better kept in a savings or retirement account, where it can gain interest and compound over time.</p> <h2>4. Missing the Deadline to Make an Additional Estimated Tax Payment</h2> <p>If the IRS Withholding Calculator were to tell you that you're seriously behind your tax liability, you'll probably need to make amends <em>pronto, </em>lest you end up owing Uncle Sam at tax time. It's to your benefit to make an additional estimated tax payment to reduce or eliminate such a liability. For example, in the event that you know that there is an end-of-year bonus or commission check arriving before January 17, 2017, you have the option to use part of that check to make an estimated tax payment with <a href="https://www.irs.gov/pub/irs-pdf/f1040es.pdf">Form 1040-ES</a>.</p> <p>Make sure to use the IRS Withholding Calculator to estimate the right amount to mail to the IRS with Form 1040-ES and keep a photocopy of both the form and check for your own records.</p> <h2>5. Not Enrolling in a New FSA Plan Within 30 Days</h2> <p>You have up to 30 days from your hire date to enroll in an employer's flexible spending account (FSA). If you miss that deadline, you'll have to wait until your company renews its FSA plan, your plan administrator announces an open enrollment period, or you have a qualifying life event, such as changing marital status or having a baby.</p> <h2>6. Forgetting About Balances in Previous FSA Accounts</h2> <p>You may be so busy training at your new job and completing paperwork that you forget about remaining benefits at your previous employer. Check the rules from your previous FSA account regarding the expiration date of available money once you separate from your old employer. Most FSA plans provide a grace period to use the money, but some of those deadlines may be as early as the end of the month in which you separate from your employer. Unless you use your FSA funds in full by the applicable deadline, you'll lose them all.</p> <h2>7. Going More Than Two Months Without Health Coverage</h2> <p>As you're transitioning from one job to the other, keep an eye on the start and end dates of previous and current health plans. Under the Affordable Care Act (ACA), better known as Obamacare, you owe a fee for any period greater than two months in which you, your spouse, or your tax dependents don't have qualifying health coverage. In most cases, the penalty fee is 1/12 per month of <a href="https://www.healthcare.gov/fees/fee-for-not-being-covered/">2.5% of your household income</a> or $695 per adult, whichever is higher.</p> <p>Being uncovered for only one to two months, qualifies you for a <a href="https://www.healthcare.gov/exemptions-tool/#/results/2015/details/short-gap">short gap exemption</a> and you're not liable for the fee. Find out whether or not you're able to claim a health coverage exemption with <a href="https://www.healthcare.gov/exemptions-tool/#/">HealthCare.gov's Exemption Screener</a>.</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/new-job-dont-make-these-7-mistakes-with-your-benefits">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-6"> <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-health-insurance-benefits-youre-probably-not-using">6 Health Insurance Benefits You&#039;re Probably Not Using</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/left-a-job-do-a-rollover">Left a job? Do a rollover.</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/still-without-health-insurance-here-s-how-much-the-penalties-will-cost-you">Still Without Health Insurance? Here’s How Much the Penalties Will Cost 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/going-without-health-insurance-in-2015-heres-what-itll-cost-you">Going Without Health Insurance in 2015? Here&#039;s What It&#039;ll Cost You</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/5-vital-things-to-remember-when-buying-health-insurance">5 Vital Things to Remember When Buying Health Insurance</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Career Building Insurance Retirement 401 k affordable care act benefits employers flexible spending health care IRA medical insurance new job obamacare rollovers taxes Mon, 31 Oct 2016 10:00:07 +0000 Damian Davila 1822947 at http://www.wisebread.com The Penalty-Free Way to Withdraw Retirement Money Early http://www.wisebread.com/the-penalty-free-way-to-withdraw-retirement-money-early <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-penalty-free-way-to-withdraw-retirement-money-early" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/saving_money_retirement_85578577.jpg" alt="Withdrawing retirement early without any penalties" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's widely know that for most retirement plans, including an IRA and 401K, there is a cost to withdrawing money before you reach 59-&frac12; years of age. Take money out of a traditional IRA or 401K early and you're stuck paying taxes plus a 10% early withdrawal fee. If you withdraw money from a Roth IRA early, you'll have to pay tax on any withdrawn gains.</p> <p>There are some ways to avoid this penalty, including one mechanism that may be unknown to many investors.</p> <p>It's called a SEPP (stands for Substantially Equal Periodic Payment), and it may help some investors access their money early without a cost. The basic idea behind a SEPP is that you can receive regular payments (usually annually) from your retirement account, as long as they are a consistent amount and you do so for a certain length of time.</p> <p>Here are some key things you need to know.</p> <h2>1. You Must Take Withdrawals for at Least Five Years</h2> <p>Once you begin a SEPP program, you are required to make regular withdrawals for five years or until you are 59-1/2, whichever comes last (with some exceptions for disability or market decline). So for example, a person who is 56 must make withdrawals until they are 61. A person who is 45 must continue to make withdrawals for the next 14-1/2 years. Thus, it's generally not a good idea to embark on a SEPP program if you are young. If you stop the program before the required time is up, you must pay the IRS all of the waived penalties, plus interest.</p> <h2>2. Calculating Your Payments Is, Well, Complicated</h2> <p>Okay, so you're required to make regular withdrawals of the same amount of money. But how much should you be withdrawing? There are three main methods of determining this.</p> <h3>The Required Minimum Distribution Method</h3> <p>In simple terms, divide your total account balance by your life expectancy. (The IRS has a table to help you determine this.) Under this method, the amount you withdraw must be recalculated each year and could change.</p> <h3>The Fixed Amortization Method</h3> <p>Under this system, payments are based on the life expectancy of the account holder and a chosen interest rate.</p> <h3>The Annuity Method</h3> <p>To determine payments under this system, divide your account balance by an annuity factor that is based on your age.</p> <p>Generally speaking, the Required Minimum Distribution method is the most straightforward and will result in the smallest payments. This makes it a better choice for investors who do not want to deplete their accounts as quickly. However, payments must be recalculated each year, whereas the other two options only require calculations to be made once.</p> <h2>3. It's Not a Good Idea for an Emergency</h2> <p>There may be times when you are tempted to withdraw from your retirement account to take care of a financial emergency. But a SEPP isn't designed to help you with that. The five-year requirement makes it impossible to make a single withdrawal or even a small series of withdrawals. If you have a one-time emergency, you're better off find other methods to get cash quickly.</p> <h2>4. It Won't Always Work for a 401K</h2> <p>If you're considering using a SEPP to withdraw money from a 401K plan, the IRS requires you to first separate from the employer that maintains the plan. So once again, this is not a decision to make lightly. That said, 401K plans from previous employers are acceptable, as are any rollover IRAs you created from past plans.</p> <h2>5. It Is Not Easily Adjustable</h2> <p>Once you sign up for a SEPP program, there's no way to cancel it before the required time. If you find that your payments are too much, you can change your calculation method to the Required Minimum Distribution method. But this change is only allowed once.</p> <h2>6. You Must Stop Contributing</h2> <p>Once you decide to use a SEPP program, you can't adjust the balance of the retirement account. That means no more adding money to the account and no separate withdrawals. Any change to the account balance could lead to the SEPP being disqualified, in which case you're on the hook for all of the penalties and taxes, plus interest.</p> <h2>7. Withdrawing Money Early Means You Will Have Less Later</h2> <p>It's important to remember that a retirement account is called a <em>retirement </em>account for a reason. Your goal should be to ensure that money in the account lasts for the entire time after you are done working. That could mean decades. So if you are withdrawing money early, understand that you are reducing the amount that will be available to you later in life.</p> <h2>8. You Probably Need Professional Help</h2> <p>A SEPP is not an easy thing to understand or set up yourself. A tax and investment adviser will help you understand if a program is right for your particular situation, and walk you through the steps to determine the proper payments.</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/the-penalty-free-way-to-withdraw-retirement-money-early">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/7-penalty-free-ways-to-withdraw-money-from-your-retirement-account">7 Penalty-Free Ways to Withdraw Money From Your Retirement Account</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-questions-to-ask-before-you-borrow-from-your-retirement-account">5 Questions to Ask Before You Borrow From Your Retirement Account</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/should-you-choose-a-roth-401k-or-a-regular-401k">Should You Choose a Roth 401k or a Regular 401k?</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/15-retirement-terms-every-new-investor-needs-to-know">15 Retirement Terms Every New Investor Needs to Know</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/5-important-things-to-know-about-your-401k-and-ira-in-2016">5 Important Things to Know About Your 401K and IRA in 2016</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401k annuity IRA penalties sepp substantially equal periodic payment taxes withdrawals Tue, 18 Oct 2016 10:30:09 +0000 Tim Lemke 1815050 at http://www.wisebread.com The Real Cost of Moving to Canada (If That's Your Post-Election Plan) http://www.wisebread.com/the-real-cost-of-moving-to-canada-if-thats-your-post-election-plan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-real-cost-of-moving-to-canada-if-thats-your-post-election-plan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_suitcase_bench_3139059.jpg" alt="Woman moving to Canada after 2016 election" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The odds are high that you don't like either Hillary Clinton or Donald Trump. According to an ABC News/Washington Post poll released in late August, 56% of U.S. adults viewed Hillary Clinton unfavorably. The same poll found that 63% said the same about Donald Trump.</p> <p>No matter who wins the presidential election this November, a lot of people are going to be upset. You might even have heard people claiming that they'd flee to Canada if Trump &mdash; or Clinton &mdash; wins. Maybe you've even made this boast yourself.</p> <p>But you might be surprised to learn that life can get costly over the border. Here is a quick look at what you'll pay when you flee to our neighbors to the north after Nov. 8.</p> <h2>Conversion Rate</h2> <p>First, a bit of good news. One U.S. dollar as of Oct. 6 was equal to $1.32 in Canada. So if you head north with $30,000, you'll have a bit more than $39,640 once you cross the U.S./Canadian border.</p> <h2>Taxes</h2> <p>Hate paying taxes in the United States? Well, you won't like it in Canada, either. The Fraser Institute think tank reported that the average Canadian family spent $34,154 in taxes in 2015. By comparison, NerdWallet in 2015 reported that the average American family paid about $14,000 in taxes. That figure, like the Canadian one, includes real estate, income, and sales taxes.</p> <p>That difference looks less imposing when you factor in the U.S.-Canada currency conversion rate. In Canadian dollars, the average U.S. family in 2015 paid nearly $26,000 in taxes. That is still quite a bit lower than in Canada.</p> <p>According to the Fraser Institute, the average Canadian bill for income taxes collected by governments in 2015 was $10,616, while payroll and health taxes came out to an average of $17,160.</p> <h2>Housing</h2> <p>Homes are expensive in Canada. The Real Estate Board of Greater Vancouver said that the average price of a single-family detached home in Vancouver rose to $1.58 million in September. That comes out to about $1.19 million in U.S. currency.</p> <p>And Vancouver isn't the only expensive place to buy a home in Canada. The Toronto Real Estate Board said that the average selling price for all home types in Toronto came out to $710,410 in August (about $537,000 in U.S. dollars).</p> <p>The average selling price for all Canadian homes sold in August of 2016 was $456,722, according to the Canadian Real Estate Association. That comes out to about $345,000 in U.S. currency. In comparison, the National Association of Realtors said that the average sales price for all homes sold in the United States in August was $240,200.</p> <h2>Renting an Apartment</h2> <p>So maybe you'll rent an apartment instead. That's pretty costly, too.</p> <p>According to RentGorilla, the average rent for a one-bedroom apartment in Vancouver in September of 2016 came in at $2,445 a month, equal to about $1,850 in the United States. In Toronto, the average two-bedroom rent was $1,502 the same month, equal to $1,136 in the United States.</p> <p>In Ottawa, the average two-bedroom rent was $1,235, while in Montreal it stood at $852. Those last two, by the way, are quite affordable, coming out to $934 and about $644 respectively in the United States.</p> <h2>Goods and Services</h2> <p>What about basic necessities, everything from a gallon of gas to a gallon of milk? You'll find that with the conversion factor, prices in Canada are similar to what you'd pay for the same items in the United States.</p> <p>Consider a gallon of gasoline. According to the Expatistan Cost of Living Index, a liter of gas &mdash; which is equal to one quarter of a gallon &mdash; came out to $1.20 in Vancouver. That means a gallon of gas would cost an average of $4.80 in the city. That comes out to $3.63 in U.S. currency, a bit higher than what you'd pay at the pump in most U.S. cities today.</p> <p>Two liters of Coca-Cola, though, come out to an average of $2.48 in Toronto, according to Expatistan. That comes out to $1.88 in U.S. money. A pair of jeans here costs an average of $68, or $51.46 in U.S. currency.</p> <p>In Montreal, a 40-inch flat screen TV costs an average of $509, according to Expatistan. That comes out to about $385 in U.S. money, while a pair of athletic shoes sell for an average of $110 in Montreal, equal to about $83 in the United States.</p> <h2>Cost-of-Living Comparisons</h2> <p>Expatistan compiled its own cost-of-living comparisons between Canadian cities and several in the United States. As you'll see, if you live in higher-priced areas of the United States, you might actually find it cheaper to live in Canada.</p> <p>For instance, the cost of living in Toronto is 9% cheaper than it is in Chicago, according to Expatistan. And it's 32% cheaper to live there than it is in New York City. On the other hand, Toronto's cost of living is 24% more expensive than it is in Omaha and 30% more than in Iowa City.</p> <p>Expatistan estimates that it is 35% cheaper to live in Vancouver than it is San Francisco and 15% cheaper than Seattle. However, it is 15% more expensive to live in Vancouver than it is Wichita and 7% more expensive than living in Columbus. So much like the election, it's really up to you.</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/the-real-cost-of-moving-to-canada-if-thats-your-post-election-plan">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/rent-your-home-or-buy-heres-how-to-decide">Rent Your Home or Buy? Here&#039;s How to Decide</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/the-3-best-cities-with-rent-control">The 3 Best Cities With Rent Control</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/heres-what-your-vote-says-about-your-money-style">Here&#039;s What Your Vote Says About Your Money Style</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-i-saved-enough-for-a-down-payment-while-working-in-china">How I Saved Enough for a Down Payment While Working in China</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/4-ways-being-a-nomad-saves-you-money">4 Ways Being a Nomad Saves You Money</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Real Estate and Housing Canada Clinton conversion rates cost of living election 2016 expats politics renting running away taxes trump Fri, 14 Oct 2016 09:01:03 +0000 Dan Rafter 1812615 at http://www.wisebread.com 9 Costly Mistakes DIY Investors Make http://www.wisebread.com/9-costly-mistakes-diy-investors-make <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-costly-mistakes-diy-investors-make" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_ripping_paper_69469761.jpg" alt="Man making costly mistakes DIY investors make" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>With the right approach and education, it's possible for people to handle their own investments. But it's also easy to make mistakes that could cost you large sums of money in the long run.</p> <p>If you're a do-it-yourselfer, ask yourself whether you're making any of these mistakes below. If so, it may be worth seeking professional advice from a certified financial planner.</p> <h2>1. Trading Without Considering Fees and Taxes</h2> <p>For many investors, it's fun to trade stocks. The actual buying and selling can be a bit of a rush, especially when things are going well. But all of that activity can come with a cost, in the form of transaction fees and capital gains taxes. If you are finding that the returns on your portfolio seem a bit lackluster, it may be because you're investing without taking these costs into account. More experienced investors and financial advisers understand how to avoid extra fees and maximize returns as a result.</p> <h2>2. Getting Emotional</h2> <p>Investing your own money can sometimes be hard on the psyche. You may go through stretches where you see your portfolio shrink. Stocks that you personally selected may not always perform the way you predicted. Markets can be volatile, and not everyone can stomach it. If you find yourself getting stressed out by the investing process or buying and selling based on emotion, you may want to consider having a financial adviser take over the reigns.</p> <h2>3. Not Investing Enough</h2> <p>When you invest on your own, you may only be guessing as to how much you need to save. And it's common for investors to feel a little skittish and invest too little if the market is down. A financial adviser may be more tuned into the appropriate level of risk an investor can take on, and will usually advise a more aggressive approach for someone far out from retirement.</p> <h2>4. Not Diversifying Enough</h2> <p>Most do-it-yourselfers understand the basics of diversification, and will invest in index funds that track the S&amp;P 500 or broader stock markets. And that's perfectly fine. But often, these funds are heavily weighted toward larger companies or certain industries. If you are investing only in basic index funds, you may not have good exposure to international markets or smaller companies, for example. There may be entire industries that will be underrepresented in your portfolio.</p> <p>To achieve true diversification, you can have an S&amp;P Index fund as a base, but should also look for funds and stocks that fill in the gaps.</p> <h2>5. Failing to Rebalance</h2> <p>You may think you're creating a diverse portfolio based on the investments you've selected. But have you checked the balances recently? Over time, portfolios can get out of whack if certain investments are performing better than others. For example, you may think you're investing in 50% large cap, 25% small cap, and 25% mid cap stocks. Until one day, you check your account and realize that small cap stocks make up 40% of the portfolio. Financial advisers will recommend when to rebalance, and offer advice on how to avoid taxes in the process.</p> <h2>6. Trying to Beat the Market</h2> <p>Some investors insist on doing things themselves, because they believe they are expert stock pickers and can beat the performance of the overall stock market. In most cases, they are wrong. Numerous studies have shown that even professional investment managers can't beat the market on a regular basis, and that most investors would be best off with a portfolio of index funds.</p> <h2>7. Falling in Love With Shiny New Things</h2> <p>Do-it-yourselfers can become enamored with whatever the hot stock is at the moment. They go for name brands and flash rather than looking closely at a balance sheet. They also tend to go with what's familiar, rather than doing some research and finding investments that are less well known but of sound quality.</p> <h2>8. Having No Backup Plan</h2> <p>If you are an older DIY investor, do you have a plan for what happens to your investments if you are incapacitated? Are you sharing your investment accounts with your spouse or other loved ones? Many DIY investors are too stubborn to seek help from anyone, and thus run into problems when they are no longer in a position to manage things themselves. It's fine to handle your own investments if you're confident enough to do so, but it's wise to have a plan for how things will be dealt with if you're no longer in charge.</p> <h2>9. Becoming Too Consumed</h2> <p>Realistically, the average person can handle their own investments while checking in only periodically each week. A properly balanced portfolio does not need a lot of maintenance. But investing can be like an addiction to some people, and it's possible to spend hours a day buying and selling and becoming obsessed with the movement of the markets. If you're finding that your investing is having a negative impact on your relationships and other aspects of your life, it may be best to back off and let someone else handle things.</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/9-costly-mistakes-diy-investors-make">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-too-much-investment-diversity-can-cost-you">How Too Much Investment Diversity Can Cost You</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/the-3-rules-every-mediocre-investor-must-know">The 3 Rules Every Mediocre Investor Must Know</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/5-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable Portfolio</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/why-warren-buffett-says-you-should-invest-in-index-funds">Why Warren Buffett Says You Should Invest in Index Funds</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-are-income-stocks">What Are Income Stocks?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment beat the market diversification DIY emotional investing fees financial advisers financial planning portfolio rebalancing stock market taxes Wed, 05 Oct 2016 10:30:08 +0000 Tim Lemke 1805247 at http://www.wisebread.com 9 Smart Money Moves to Make Before the Holiday Season Begins http://www.wisebread.com/9-smart-money-moves-to-make-before-the-holiday-season-begins <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-smart-money-moves-to-make-before-the-holiday-season-begins" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_christmas_shopping_51383450.jpg" alt="Couple making money moves before the holiday season" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Fall is in full swing, and before you know it you'll be battling the throngs during holiday shopping season.</p> <p>It may be make or break for many retailers, but it can also be challenging for consumers if they don't do a little bit of planning. Making just a handful of minor financial and lifestyle moves before Christmas and other winter holidays hit can save you money and aggravation later.</p> <p>Here are nine tips for getting yourself straightened out before the holiday rush.</p> <h2>1. Push Money Into a Savings Account</h2> <p>If you want to avoid racking up more credit card debt, it will help to have some cash set aside to pay for holiday gifts. Consider using an online savings account and making an automatic transfer from your usual checking account each month until the end of November. Even $100 a month saved between now and Thanksgiving will give you $200 (plus a little bit of interest) to spend.</p> <h2>2. Check the Sales Now</h2> <p>We all know about Black Friday sales, but the reality is that stores place deep discounts on items throughout the year. There's no guarantee that a particular product will be at its cheapest on the day after Thanksgiving or any other day leading up to Christmas. Remember that many stores will roll out Veterans Day and Columbus Day sales, and you may find great deals on clothing at the end of summer when stores are looking to unload inventory and bring in fall and winter items.</p> <h2>3. Pay Off Your Credit Cards</h2> <p>Holiday shopping can be a debt creator. The National Foundation for Credit Counseling reported last year that there is a 25% spike in the number of people seeking help with credit card bills in January and February. If you are already paying the minimums on cards or have high debt, the addition of holiday shopping bills can be crippling.</p> <p>High debt can leave you at risk of maxing out credit limits. At the very least, your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=internal">ratio of debt to available credit</a> could rise, thus hurting your credit score. Pay down your current debts now, so that any new debt won't be adding to an existing problem.</p> <h2>4. Find Stores With Layaway</h2> <p>For people who want to avoid credit card debt, layaway can be a great option for holiday shopping. With layaway, you can put an item aside at the store and receive it only when it is totally paid for. Many stores offer layaway months before the holidays, so you can select items now and have them paid off in time. Walmart this year began offering layaway on September 2. Kmart has eight-week and 12-week layaway plans now, and Toys R Us has 90-day layaway contracts. One caveat: Some stores do charge fees for layaway services, so be sure to read the fine print before signing up.</p> <h2>5. Track Down Any Money Owed to You</h2> <p>Have you been diligent about seeking reimbursement for work-related expenses? Have you received all money you've earned from freelance work? Now is the time to assess what outstanding cash is due to you. If money is tight, this could help you afford the gifts you want this holiday season.</p> <h2>6. Max Out Your Retirement Accounts</h2> <p>If you have access to retirement accounts, try to put as much money in them now as you can. You can contribute as much as $18,000 annually into a 401K plan and $5,500 into an IRA. The closer you get to these limits, the better off you'll be in retirement. You have until Tax Day next year to max out these accounts, but it may be best to contribute generously now before holiday expenses hit.</p> <h2>7. Make Sure Your W-4 Is Up to Date</h2> <p>If you work for a company, you probably filled out a W-4 form when you were hired. This form tells the IRS how much in taxes to withhold from your paycheck. But it often needs to be updated, particularly when you have gotten married, added a child to the family, or had a significant change in household income. Now is the time to check your W-4 to see that you aren't paying too much or too little in taxes.</p> <h2>8. Do Some Tax Loss Harvesting</h2> <p>If you sold shares of stock at any point during the year, you may be on the hook for capital gains taxes. But you may be able to avoid a tax bill by selling other shares of stock at a loss. In essence, the loss may outweigh the gains. There's nothing wrong with taking the proceeds from a sale and investing right back into the market, as long as you're not investing in the exact same securities. It might make sense to do some tax loss harvesting now, before the holiday rush hits and you forget.</p> <h2>9. Get Your Cars in for Servicing</h2> <p>Wait, what do your cars have to do with the holiday season? Well, car repairs are often a big source of unexpected expenses. And the last thing you want is hundreds or even thousands of dollars in bills right when you're doing the holiday shopping. Get your car in now, and you'll avoid a hefty expense later. Moreover, you'll be less likely to have the car breakdown in unpleasant, winter weather.</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/9-smart-money-moves-to-make-before-the-holiday-season-begins">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-12"> <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/the-simple-holiday-budget-anyone-can-follow">The Simple Holiday Budget Anyone Can Follow</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/flashback-friday-160-gift-ideas-for-everyone-you-know">Flashback Friday: 160 Gift Ideas for Everyone You Know</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/9-smart-reasons-to-last-minute-holiday-shop">9 Smart Reasons to Last-Minute Holiday Shop</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-to-monetize-your-unwanted-gifts">How to Get Rid of Your Unwanted Gifts and Make Money Too</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-big-list-of-money-saving-coupon-codes-for-halloween-2016">The Big List of Money-Saving Coupon Codes for Halloween 2016</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Frugal Living Shopping Christmas debt Holidays layaway retirement contributions sales saving spending taxes Mon, 03 Oct 2016 09:00:05 +0000 Tim Lemke 1803457 at http://www.wisebread.com 8 Times Cash Is Not King http://www.wisebread.com/8-times-cash-is-not-king <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-times-cash-is-not-king" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/ben_franklin_money_74660439.jpg" alt="Learning when cash is not king" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's often said that using cash can be a powerful way to control spending and avoid debt. But cash can be highly overrated. It doesn't grow much in value, it's annoying to carry, and it's hard to track.</p> <p>Here are some times when cash is not all it's cracked up to be.</p> <h2>1. When Interest Rates Are Historically Low</h2> <p>It makes sense to build up an emergency fund of three to six months' worth of living expenses. But when interest rates are super low, like they have been in recent years, any additional cash isn't going to do much for you. Why sit on a pile of cash earning a paltry interest rate and merely racing against inflation, when you can invest and earn a much healthier return? Even billionaire investors like Warren Buffett agree. In a 2014 letter to Berkshire Hathaway shareholders, he wrote that over the long term, cash is actually a riskier investment than stocks, due to the potential of inflation wiping away any gains.</p> <h2>2. When a Company Has Too Much of It On Hand</h2> <p>A company with cash is not necessarily a bad thing, but investors can get ornery when there's too much. If you're a shareholder, you want to see that cash returned to you in the form of a dividend, used for acquisitions or stock buybacks, or reinvested to grow the company's businesses. Apple, which consistently has more than $100 billion in cash on hand, began issuing dividends after facing criticism from investors.</p> <h2>3. When You Want to Track Each Dollar You Spend</h2> <p>For those looking to curb spending and stay out of debt, using cash can be the way to go, as you can only spend what you have in your wallet. The downside, however, is that it's harder to keep meticulous records of everything you've purchased. A big part of money management is understanding your spending patterns, and it's easier to track purchases when you use a credit or debit card and receive statements, either online or on paper. Using cards also makes it easier to use online tools like Mint.com, which can categorize your spending and help you create budgets. Unless you are very conscientious about saving receipts or writing down each purchase, using cash won't help you understand your spending habits.</p> <h2>4. When You Are Traveling</h2> <p>There are some advantages to using cash when on a trip. Cash can be used to tip cabdrivers and bellhops, and is handy for when you shop or eat at places that do not take credit cards. Using cash in a foreign country can also help you avoid fees on debit and credit cards, and it's good to have some for an emergency. But cash is not replaceable. If you lose your wallet with hundreds of dollars in it, you're usually up a creek. And using cash won't get you any reward points on things like hotels, rental cars, or restaurants. Additionally, if you are traveling to multiple foreign countries, it's annoying to accumulate sums of foreign currency that you'll have to exchange back once you get home.</p> <h2>5. When You Loan Someone Money</h2> <p>Cash doesn't leave a record. That's great if you're Walter White and need to launder some money. But if someone borrows money from you, it's best to write a check, or use an electronic transfer that leaves a record. You may be unable to collect a debt if you have no proof that you lent someone money in the first place.</p> <h2>6. When You Get Paid</h2> <p>There may come a time in your life when someone offers to pay you &quot;under the table.&quot; This means that the employer is simply giving you cash for work without consideration of paying taxes. In theory, you can make more money if an employer doesn't pay payroll taxes, but it's also illegal in most cases.</p> <p>When you are paid in cash, you lose out on certain protections and benefits. You have no access to retirement benefits, for example. There's no record of your employment, which means you'd be unable to collect unemployment benefits if you lose your job. A person paid in cash would also not be eligible for disability or workers' compensation benefits. And if they're not paying payroll and other taxes, it can be illegal, which we entirely urge you to avoid.</p> <h2>7. When You Are the IRS or Law Enforcement</h2> <p>According to The Wall Street Journal, the use of cash to evade taxes costs the federal government about $500 billion in revenue annually. Cash, the newspaper notes, helps facilitate &quot;racketeering, extortion, money laundering, drug and human trafficking, the corruption of public officials, not to mention terrorism.&quot; Cash is super for those who are up to no good, but a nightmare for those looking to catch the bad guys.</p> <h2>8. When You Can Use an App</h2> <p>I was out to dinner with friends recently and we needed to split the check. Some of us had no cash. Some did, but only in big bills. It was a nightmare. Luckily, we were able to settle things by using smartphone apps that allow you to transfer money with little more than an email address. Apps such as PayPal and Venmo prevent the need to carry lots of cash, and can even prevent you from stiffing your friends with too much of a dinner bill.</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-times-cash-is-not-king">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/47-simple-ways-to-waste-money">47 Simple Ways To Waste Money</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-dumb-places-you-re-leaving-your-money">6 Dumb Places You’re Leaving Your 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/chinese-money-habits-how-my-culture-influences-my-attitudes-toward-money">Chinese Money Habits - How My Culture Influences My Attitudes Toward Money</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/8-smart-things-to-do-with-your-settlement-money">8 Smart Things to Do With Your Settlement Money</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/sensible-ways-to-raise-cash-for-a-wedding">Sensible Ways to Raise Cash for a Wedding</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Investment Shopping borrowing budgeting cash loaning money racketeering spending taxes tracking under the table Thu, 15 Sep 2016 09:00:05 +0000 Tim Lemke 1793093 at http://www.wisebread.com 4 Ways Women Can Avoid Paying the "Pink Tax" http://www.wisebread.com/4-ways-women-can-avoid-paying-the-pink-tax <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-ways-women-can-avoid-paying-the-pink-tax" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_82779733_MEDIUM.jpg" alt="women can avoid paying extra for the &quot;pink tax&quot;" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Regardless of age, pink has remained the color most identified with the female gender. And it turns out, <a href="http://money.usnews.com/money/personal-finance/articles/2016-02-17/the-pink-tax-why-womens-products-often-cost-more">women pay a &quot;pink tax&quot;</a> on items that are marketed for them. Also, products made and marketed to women are higher priced and sometimes not as well made. All of this <a href="http://www.wisebread.com/5-financial-obstacles-that-are-especially-tough-for-women">makes women begin to see red</a>.</p> <p>In football, they say the best defense is a good offense, and the same can be said when shopping for the best prices. With a calculator as your playbook, here's how you avoid paying the pink tax and save money in the process.</p> <h2>On Toiletries</h2> <p>What is the difference between a three-blade pink razor and a three-blade blue razor? It's not a trick question, but when you see the difference in price, you will feel like you've been pranked. Price is the only difference in gender-based razors. Some razors may offer moisture strips and an extra blade, but you might save more by spending your money on the blue razors and a moisturizing lotion. If you use a women's shaving cream, compare that price with the price of an unscented men's shaving cream.</p> <p>Don't put your calculator away just yet. Wander over to the shampoo and conditioner aisle and compare prices and sizes of shampoos marketed for women and shampoo for men. Often the biggest difference between the two, apart from the cost and size of bottle, is the fragrance. You're going to wash shampoo out and possibly use a conditioner, so is a fragrance really worth the higher cost?</p> <p>Apart from items specifically marketed to menstruating women, <a href="http://www.12news.com/mb/money/business/consumer/call-12-for-action/the-pink-tax-and-how-to-avoid-it/45021187">many toiletries made for men</a> are less expensive, come in larger quantities, and are available in unscented versions that could be used by women &mdash; including deodorant. Simply compare prices and quantity. Your time spent investigating will be well worth it.</p> <h2>On Hair Care</h2> <p>Women are quickly discovering the benefits and savings in visiting the neighborhood barbershop for a haircut instead of a higher priced, fancier hair salon. Most barbershops can easily cut short hair. Check with your selected shop if you have long hair. The barbershop may or may not do styling and colors, but for a quick trim or new bob, you might be surprised.</p> <h2>On Clothing</h2> <p>Women's clothing may require less fabric than men's clothing &mdash; jeans, for example &mdash; but <a href="http://www.wisebread.com/101-ways-to-save-money-on-clothes">they cost a great deal more</a>. If you're handy with a sewing machine or know a good seamstress, you can have most men's clothing tailored to fit and still save money.</p> <h2>On Car Maintenance</h2> <p>It's financially wise for women to learn how to <a href="https://blog.cjponyparts.com/repair-or-replace-infographic/">perform basic car maintenance</a> and emergency repairs like changing a flat tire, but it also gives women the knowledge to know when they are being overcharged at a repair shop. Many technical schools offer classes in basic car maintenance and repair.</p> <p>Knowledge is power, not only when it comes to car repairs, but also in real estate, mortgages, and buying or leasing vehicles. The more you know, the smarter your choices and decisions will be, especially when it comes to avoiding a pink tax.</p> <p><em>Where else can women avoid the unfair &quot;pink tax?&quot; Share with us!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/anum-yoon">Anum Yoon</a> of <a href="http://www.wisebread.com/4-ways-women-can-avoid-paying-the-pink-tax">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/how-to-save-a-ton-by-eating-soup-every-day-and-never-get-bored">How to Save a Ton by Eating Soup Every Day (and Never Get Bored!)</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/4-times-it-makes-sense-to-buy-the-gendered-product">4 Times It&#039;s Worth It to Pay the Pink Tax</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-classic-impulse-buys-we-need-to-stop-falling-for">10 Classic Impulse Buys We Need to Stop Falling For</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/are-you-spending-too-much-on-halloween-this-year">Are You Spending Too Much on Halloween This Year?</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/this-simple-shopping-list-strategy-from-5-meal-plan-will-save-you-big">This Simple Shopping List Strategy From $5 Meal Plan Will Save You Big</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Consumer Affairs Shopping beauty products budgeting feminine products pink tax saving money tampons taxes Thu, 08 Sep 2016 10:30:08 +0000 Anum Yoon 1788320 at http://www.wisebread.com