fees http://www.wisebread.com/taxonomy/term/253/all en-US The Millennials Guide to Avoiding Credit Card Debt http://www.wisebread.com/the-millennials-guide-to-avoiding-credit-card-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-millennials-guide-to-avoiding-credit-card-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_doing_online_shopping.jpg" alt="Woman doing online shopping" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Americans owe billions of dollars in credit card debt, and the high interest rates that come with it can lead to a debt spiral that is very challenging to overcome.</p> <p>Millennials, having lived through the financial crisis and other economic downturns, appear to be more wary of credit cards than other generations, according to several recent surveys from sources including Bankrate and TransUnion. This wariness is healthy, but it's important for this younger generation to know that credit cards by themselves can be harmless and perhaps even beneficial if used wisely. (See also: <a href="http://www.wisebread.com/why-millennials-should-embrace-credit-cards?ref=seealso" target="_blank">Why Millennials Should Embrace Credit Cards</a>)</p> <p>If you're a millennial, consider these tips on how to use credit cards while avoiding getting into dangerous debt.</p> <h2>Pay attention to interest rates</h2> <p>Sometimes when you're in a financial pinch, you may be relieved to see a new credit card application come in the mail. But it's a bad idea to apply without looking at the terms first. Not all credit cards are created equal, and some have very high interest rates that could cripple you financially. An annual percentage rate of about 15 percent is standard, but some can go well above 20 percent, and it's possible to find rates below 12 percent. Be sure to read the fine print on all cards, and compare rates to find the best card available for you. (See also: <a href="http://www.wisebread.com/best-credit-cards-for-millennials?ref=seealso" target="_blank">Best Credit Cards for Millennials</a>)</p> <p>Also, don't get too enamored with low introductory rates; remember that all introductory rates eventually aren't introductory anymore. If you're struggling to get out of debt, it may be helpful to transfer a balance to a card with a 0% introductory APR, but be aware that rate will jump after a certain amount of time. (See also: <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=seealso" target="_blank">The Best 0% Balance Transfer Credit Cards</a>)</p> <h2>Avoid fees</h2> <p>Some credit cards will charge you an annual fee just to have them. Sometimes, this annual fee allows you to receive special benefits, but the average person should never feel the need to pay money just to have access to credit. You may feel like you've &quot;arrived&quot; because you are spending $550 per year for that platinum card, but it's a silly expense if you're only using the card to pay for lunch and fill your gas tank. These <a href="http://www.wisebread.com/the-5-best-premium-credit-cards?ref=internal" target="_blank">premium credit cards</a> come with many perks and benefits that only benefit certain people. (See also: <a href="http://www.wisebread.com/how-to-decide-if-an-annual-fee-credit-card-is-worth-it-for-you?ref=seealso" target="_blank">How to Decide if an Annual Fee Credit Card Is Worth It for You</a>)</p> <h2>Pay on time</h2> <p>The nice thing about credit cards is that if you pay off the balance every month, on time, you're not charged any extra fees or interest. There's really no down side to using a credit card to buy items and paying the bill in full each month.</p> <p>Paying your bill on time is the number one factor in determining your credit history. Miss a payment, and you are subjecting yourself to late charges and a hefty amount of interest. Additionally, you could see your credit score suffer. (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>Watch the revolving balance</h2> <p>Even if you pay your bill on time every month, your credit score could be hurt if you have a high balance each month. Credit bureaus don't like it when you are bumping up against your credit limit on a regular basis. In fact, as much as one-third of your credit score is based on &quot;credit utilization,&quot; or the amount of debt you have versus the amount of credit you have available. In other words, you should still try to avoid racking up a large credit card bill, even if you're diligent about paying on time. (See also: <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=seealso" target="_blank">This One Ratio Is the Key to a Good Credit Score</a>)</p> <h2>Use them to build credit</h2> <p>When used responsibly, credit cards can help you build a credit history and make it easier to get favorable terms when borrowing money elsewhere. If you are applying for a mortgage, for example, a lender will review your credit score and payment history to determine the rate and size of the loan that you are eligible for. Without a lengthy credit history, lenders may find it hard to give you good terms, or you may be turned down altogether. (See also: <a href="http://www.wisebread.com/5-ways-to-improve-your-credit-score-fast?ref=seealso" target="_blank">5 Ways to Improve Your Credit Score Fast</a>)</p> <h2>Have multiple cards, but be careful</h2> <p>People with high credit scores tend to have more cards than those with lower scores. This is because your credit score is partially based on how much debt you have compared to your overall availability of credit. Since more cards will generally mean more available credit, there is an advantage to having multiple cards. The very, very big caveat to this is that if you have more cards, you have more ability to borrow and rack up debt.</p> <p>Having multiple cards can give you flexibility, because not all cards are accepted everywhere. Additionally, it may be helpful to have credit cards with varying kinds of rewards. There is no universal rule of thumb regarding the optimal number of credit cards, but it's likely that you can get away with having two or three.</p> <h2>Track your spending</h2> <p>One nice advantage to using credit cards is that it will allow you to keep a real-time record of your purchases. If you use cash instead, recording your spending is more of a manual chore.</p> <p>Most credit card companies allow you to check your transactions online and will even categorize your purchases, thus helping with budgeting. If you use credit cards, don't just mindlessly pay your bill when it comes. Take the time to review what you spent during the previous month, and try to identify where you may be able to cut expenditures and boost your savings.</p> <h2>Use your rewards</h2> <p>There's a healthy competition among credit cards to offer rewards to cardholders when they make purchases. Some cards give you cash back. Many offer airline points or other travel rewards. There are cards offering cash back to be used at Disney theme parks, and some that allow you to direct money into retirement accounts.</p> <p>When used responsibly, these credit cards can save you a lot of money. Do some research to find the credit cards with the best rewards for you, and try to stay away from cards with an annual fee, if possible. (See also: <a href="http://www.wisebread.com/6-tricks-to-making-the-most-of-your-reward-miles?ref=seealso" target="_blank">5 Tricks to Making the Most of Your Reward Miles</a>)</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-millennials-guide-to-avoiding-credit-card-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-tell-if-a-credit-card-offer-is-a-good-one">6 Ways to Tell If a Credit Card Offer Is a Good One</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-boost-your-credit-with-a-balance-transfer">How to Boost Your Credit With a Balance Transfer</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-ways-good-credit-is-better-than-a-boyfriend">6 Ways Good Credit Is Better Than a Boyfriend</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/3-easy-ways-to-improve-your-credit-score-during-the-holidays">3 Easy Ways to Improve Your Credit Score During the Holidays</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-things-you-need-to-know-before-taking-out-a-personal-loan">10 Things You Need to Know Before Taking Out a Personal Loan</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Credit Cards balance transfers cash back credit card debt credit score credit utilization ratio fees interest rates millennials rewards Mon, 22 Jan 2018 10:00:06 +0000 Tim Lemke 2086607 at http://www.wisebread.com The Encouraging Truth About How Americans Are Covering the Cost of College http://www.wisebread.com/the-encouraging-truth-about-how-americans-are-covering-the-cost-of-college <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-encouraging-truth-about-how-americans-are-covering-the-cost-of-college" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/stick_with_word_saving_for_college_and_money.jpg" alt="Stick with word Saving for College and money" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The average annual costs for tuition plus room and board have reached an average $45,000 for private colleges and $35,000 for out-of-state-students at public colleges. When students and parents learn about these staggering figures, panic and resignation can set in.</p> <p>But it's important to keep in mind that most people don't pay the full sticker price for college &mdash; and what they <em>do</em> pay tends to come from a variety of sources, not just from savings or loans. Sallie Mae's 2017 <em>How America Pays for College</em> survey casts light on how families afford higher education costs, and may offer some reassurance that one way or another, you, too, can afford college.</p> <p>Here are some of the most interesting findings.</p> <h2>1. Few families pay the highest prices you hear about</h2> <p>Despite those high average costs, Sallie Mae found that the average family paid only $23,757 for college in the 2016&ndash;2017 academic year.</p> <p>Why is this so much lower than the scary averages reported in the news? For one thing, the private schools that charge the highest prices account for a small minority of all college students in America. Sure, Harvard is expensive, but most of us aren't going there. Many students go to community colleges, where the nationwide average for tuition and fees is just $3,347, according to AffordableColleges.com. Some community colleges are even tuition-free. Other students may attend in-state public universities, where College Board reports the average tuition and fees are below $10,000 a year. (See also: <a href="http://www.wisebread.com/what-does-free-college-tuition-really-pay-for?ref=seealso" target="_blank">What Does &quot;Free&quot; College Tuition Really Pay For?</a>)</p> <p>These examples don't include room and board, nor do they include other expenses that students often fail to account for, such as travel to and from school. But even if you factor in those expenses, these costs are a lot lower than the scary headlines would lead you to believe. (See also: <a href="http://www.wisebread.com/9-college-expenses-you-arent-saving-for?ref=seealso" target="_blank">9 College Expenses You Aren't Saving For</a>)</p> <h2>2. Half of students don't pay room and board</h2> <p>According to Sallie Mae's survey, a full 50 percent of college students now live at home with their parents, saving a ton of money on rent and cafeteria food. Even if they contribute to household expenses, the cost is likely to be less than it would be if they lived on their own.</p> <h2>3. Scholarships and grants cover more than you think</h2> <p>Funds that students don't have to pay back, such as federal grants, grants provided by the schools, and scholarships, cover more than a third of the cost of college for the average student. That's the largest funding source, greater than what either parents or students contribute, and it's been on the rise in recent years. In 2016&ndash;17, scholarships and grants covered 35 percent of the average student's costs, while back in 2012&ndash;13, they covered just 30 percent.</p> <p>That 35 percent translates to $8,390 that the average student receives toward college expenses and does not have to pay back. At more expensive schools, especially those with large endowments, the grants from the institution may be much larger.</p> <p>Where do those scholarships come from? Most families &mdash; 87 percent, the survey says &mdash; get one or more scholarships from the college itself. Three out of four students also earn scholarships from companies or community organizations, and 65 percent of students get a scholarship from state or local governments.(See also: <a href="http://www.wisebread.com/how-to-increase-your-childs-odds-of-winning-a-scholarship?ref=seealso" target="_blank">How to Increase Your Child's Odds of Winning a Scholarship</a>)</p> <h2>4. Grandma may chip in</h2> <p>Four percent of the average student's college costs are covered by relatives and friends. That may not seem like much, but it works out to $900 for the average student, which isn't nothing.</p> <h2>5. Parents and students share the load</h2> <p>Parents, don't feel like you've failed if you don't cover 100 percent of your kids' college expenses. Students, don't feel like a leech if you can't handle 100 percent of your college costs on your own.</p> <p>The fact is, in the average family, students and parents each contribute about the same amount to college expenses; 30 percent comes from the student and 31 percent comes from the parent. On each side, that contribution is a combination of savings, earnings, and loans.</p> <h2>6. If you don't feel prepared, you're not alone</h2> <p>Only around four in 10 families say they have a plan to cover all four or more years of undergraduate studies before a student enrolls. Most certainly don't have the entire sum saved up in advance. In fact, between student and parent contributions, only about 34 percent, or $8,000, comes from savings and income. The rest comes from those loans, grants, scholarships, and family gifts mentioned above. (See also: <a href="http://www.wisebread.com/12-surprising-ways-to-get-more-college-financial-aid?Ref=seealso" target="_blank">12 Surprising Ways to Get More College Financial Aid</a>)</p> <h2>7. Most families don't have 529 college savings plans</h2> <p>For better or for worse, use of this tax-advantaged savings vehicle is waning, with only 13 percent of parents of freshmen paying college costs out of a 529 account. Use of these accounts appears to have peaked at 17 percent in the 2012&ndash;13 school year.</p> <p>The lapse in popularity of the 529 program could be chalked up to the lack of planning noted above, or maybe more families are worrying that money they put into 529 plans could count against their kids when they apply for financial aid. However, if you have established a 529 account for your kids, pat yourself on the back, because you're in the virtuous minority. (See also: <a href="http://www.wisebread.com/the-9-best-state-529-college-savings-plans?ref=seealso" target="_blank">The 9 Best State 529 College Savings Plans</a>)</p> <h2>8. Smart students find ways to save</h2> <p>Budget-savvy students know that the cost of college doesn't have to be so high if you work at saving money. Half of students are living with their parents; others are renting textbooks or buying them secondhand, living off campus, and bicycling to class.</p> <p>Budget shopping also comes into play when selecting a college. According to the survey, 69 percent of students eliminated a school due to cost, up from 58 percent in the 2008 survey. This is probably a wise decision. (See also: <a href="http://www.wisebread.com/10-ways-for-college-students-to-save-loads-of-money?ref=seealso" target="_blank">10 Ways for College Students to Save Loads of Money</a>)</p> <p>While past studies indicated that more expensive schools offered a greater return on investment, a more recent study, <em>A Regression Analysis of College Tuition and Mean Income</em>, concluded that's no longer true. Nowadays, once differences in family earnings, race, and test scores are eliminated, there is little difference in earnings between graduates of expensive schools and graduates of more affordable schools. The study suggested that the only variable in colleges that might lead to increased earnings is the expenditure per student, which isn't always highest at the most expensive schools.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fthe-encouraging-truth-about-how-americans-are-covering-the-cost-of-college&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FThe%2520Encouraging%2520Truth%2520About%2520How%2520Americans%2520Are%2520Covering%2520the%2520Cost%2520of%2520College.jpg&amp;description=The%20Encouraging%20Truth%20About%20How%20Americans%20Are%20Covering%20the%20Cost%20of%20College"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/The%20Encouraging%20Truth%20About%20How%20Americans%20Are%20Covering%20the%20Cost%20of%20College.jpg" alt="The Encouraging Truth About How Americans Are Covering the Cost of College" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/the-encouraging-truth-about-how-americans-are-covering-the-cost-of-college">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-save-for-college-using-a-529-prepaid-tuition-plan">Should You Save for College Using a 529 Prepaid Tuition Plan?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-saving-too-much-money-for-a-college-fund-is-a-bad-idea">Why Saving Too Much Money for a College Fund Is a Bad Idea</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/what-to-do-when-you-cant-afford-your-childs-college-education">What to Do When You Can&#039;t Afford Your Child&#039;s College Education</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-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-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-questions-to-ask-before-taking-out-student-loans">6 Questions to Ask Before Taking Out Student Loans</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training 529 plans college costs fees private schools public school room and board sallie mae saving money scholarships student loans tuition Wed, 10 Jan 2018 09:30:06 +0000 Carrie Kirby 2085304 at http://www.wisebread.com 6 Important Things to Look for in a Savings Account http://www.wisebread.com/6-important-things-to-look-for-in-a-savings-account <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-important-things-to-look-for-in-a-savings-account" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/holding_piggy_bank_drawing_front_of_blackboard.jpg" alt="Holding piggy bank drawing front of blackboard" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Having a savings account is important. It's a good place to store your emergency fund, which you&rsquo;d tap if your car unexpectedly needed repairs or you had to weather months without a job.</p> <p>But all savings accounts are not created equal, and there are important factors you should consider before opening one. Here are six features to look for if you are searching for the best possible savings account.</p> <h2>1. Interest rates</h2> <p>The single most important attribute of a savings account is its interest rate, of course. The problem is, interest rates attached to most savings accounts are frustratingly low, with many banks offering a minuscule interest rate of 0.01 percent.</p> <p>You can&rsquo;t grow your money quickly with a rate like that. But the argument has always been that savings accounts aren&rsquo;t the place for stashing money if you want it to grow. Instead, it&rsquo;s a safe place to keep money that you might need to access quickly for an emergency. But if you can find a higher rate, you might as well take it. They&rsquo;re pretty rare. (See also: <a href="http://www.wisebread.com/5-best-online-savings-accounts?ref=seealso" target="_blank">5 Best Online Savings Accounts</a>)</p> <h2>2. No monthly fee</h2> <p>You&rsquo;d think that with such low interest rates, savings accounts wouldn&rsquo;t come with fees. But several banks do, indeed, charge monthly fees to keep a savings account there. Usually, you must maintain a certain minimum balance to avoid those fees.</p> <p>A bank might charge $5 per month if you don&rsquo;t keep at least $300 in your savings account at all times, for instance. Even if you're pretty good about keeping enough funds in your account, why take the chance of incurring a penalty if you ever dip too low?</p> <p>When you&rsquo;re shopping for a savings account, be sure to pick a bank that doesn&rsquo;t charge any monthly fees. These savings accounts are rarely worth the hassle. (See also: <a href="http://www.wisebread.com/are-you-paying-these-6-unfair-banking-fees?ref=seealso" target="_blank">Are You Paying These 6 Unfair Banking Fees?</a>)</p> <h2>3. No minimum opening deposit</h2> <p>Some banks require that you deposit a certain amount of money into your savings account when you open it. Usually, this is a small amount; say $25. This isn&rsquo;t too onerous, especially because you are opening a savings account to actually put money in it, after all.</p> <p>But if you want more freedom to start your savings account with an even lower amount, you&rsquo;ll have to search for accounts that don&rsquo;t require any minimum opening deposit. There are some out there, especially in the form of online-only banks. Just make sure that these accounts don&rsquo;t come with any other fees that might haunt you later.</p> <h2>4. Automatic transfers</h2> <p>Saving money isn't easy. But if you can automate regular deposits into your savings account, you're far more likely to save at least some money each month.</p> <p>You'll want a bank that offers automatic transfers from your checking to your savings account, and make sure that the bank doesn't charge a fee for this service. Even if you set up an automatic transfer of just $50 per month into savings, you'll have $600 after a year. That can add up. (See also: <a href="http://www.wisebread.com/5-ways-to-automate-your-finances?ref=seealso" target="_blank">5 Ways to Automate Your Finances</a>)</p> <h2>5. Mobile check deposits</h2> <p>You just received a check that you'd like to deposit into your savings account. It's a hassle to head to your nearest ATM or bank branch, but mobile deposit solves that. You simply use your bank's app to take a photo of your check &mdash; front and back &mdash; and tell your bank to deposit that check into your savings account.</p> <p>This was once a rare feature. Today, though, it's becoming expected, and it is awfully convenient. Whatever bank is behind your savings account, make sure it offers mobile deposits.</p> <h2>6. Easy withdrawal</h2> <p>What if you need quick access to your savings account to cover a financial emergency in the middle of the night? If your bank has a large network of ATMs in your area, you'll be able to get the money quickly. (See also: <a href="http://www.wisebread.com/6-big-ways-atms-are-changing?ref=seealso" target="_blank">6 Big Ways ATMs Are Changing</a>)</p> <p>Be careful, though, not to use your savings account as if it's actually a checking account. Federal regulations say that you can't make more than six withdrawals from your savings account a month. If you withdraw more, your bank will charge you fees for each withdrawal.</p> <p>Some banks might allow even fewer withdrawals every month. Look into a bank's withdrawal policies before you take out a savings account with it.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-important-things-to-look-for-in-a-savings-account&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Important%2520Things%2520to%2520Look%2520for%2520in%2520a%2520Savings%2520Account.jpg&amp;description=6%20Important%20Things%20to%20Look%20for%20in%20a%20Savings%20Account"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/6%20Important%20Things%20to%20Look%20for%20in%20a%20Savings%20Account.jpg" alt="6 Important Things to Look for in a Savings Account" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/6-important-things-to-look-for-in-a-savings-account">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/switch-to-a-better-bank-in-5-easy-steps">Switch to a Better Bank in 5 Easy Steps</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-things-you-need-to-know-before-taking-out-a-personal-loan">10 Things You Need to Know Before Taking Out a Personal Loan</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-signs-its-time-to-find-a-new-savings-account">4 Signs It&#039;s Time to Find a New Savings Account</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-earn-money-with-your-emergency-fund">How to Earn Money With Your Emergency Fund</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-sales-strategies-your-bank-uses-to-make-money">5 Sales Strategies Your Bank Uses to Make Money</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Banking emergency funds fees interest rates minimum dollar amount mobile deposit savings accounts withdrawals Tue, 19 Dec 2017 09:30:09 +0000 Dan Rafter 2072579 at http://www.wisebread.com Don't Be Fooled by an Investment's Rate of Return http://www.wisebread.com/dont-be-fooled-by-an-investments-rate-of-return <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/dont-be-fooled-by-an-investments-rate-of-return" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/investor_compares_quotes_from_newspaper_and_tablet.jpg" alt="Investor compares quotes from newspaper and tablet" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When you invest, you are looking for return. You want your money to grow over time, preferably at a rate that will allow you to achieve your financial goals.</p> <p>An investment's rate of return can be a deceptive thing, however. The amount of money that an investment has made in the past isn't a guarantee of future returns. Moreover, these returns by themselves don't tell you a whole lot about what you are investing in.</p> <p>Learning how to analyze an investment's returns &mdash; and understanding its limitations &mdash; will help you on the path to financial freedom. Just remember these key facts about an investment's return when examining it.</p> <h2>Short time frames don't tell you much</h2> <p>&quot;Hey, this mutual fund went up 29 percent last year! Woo hoo!&quot; That's great, but what did it do the year before? And the year before that? How has it performed over the last decade? Looking at the rate of return for a single year is not particularly useful, as any investment can have a hot 12 months. To get a sense of how an investment may perform in the future, it helps to have a long record of performance to examine. Fortunately, most brokerages and financial websites have comprehensive information on historical returns, so you're not simply looking at the performance of the last year.</p> <h2>It offers no information on the type of investment</h2> <p>It's great if an investment has a solid rate of return, but that should not be the only consideration when looking to buy shares. If you are buying a stock, you need to ask yourself key questions aside from just looking at performance. What industry does the company operate in? How big is the company? Does it operate internationally? If you're talking about a mutual fund, what is the investment mix? Answering these questions will help you understand whether you already own similar investments, and whether it makes sense to add them to your portfolio.</p> <h2>It's almost useless without context</h2> <p>Let's say you come across a mutual fund that earned a 9 percent return last year. You might think that is pretty good, right? Well, it doesn't look so good when you consider the S&amp;P 500 returned 11.96 percent. Information on returns is only meaningful when it is paired with information about the broader stock market, comparable investments, and specific indexes. A small cap ETF, for example, should be examined alongside the Russell 2000 index. A mutual fund focused on technology should be compared to prominent technology indexes. Fortunately, most brokerage firms and financial websites do provide this, so it's important to analyze market returns using that context.</p> <h2>It does not always factor in all costs</h2> <p>If you purchase a mutual fund or ETF, a certain portion of your investment is taken in expenses and fees. While mutual fund returns are usually reported net of expenses, not every cost is included in this calculation. Many funds have sales charges and commissions (also known as loads) that you pay when buying and selling. Your brokerage firm may also charge a commission to execute the trade. This can reduce your overall return. The good news is that there are many good no-load mutual funds out there, and many can be traded without a commission, depending on the broker.</p> <p>One more caveat regarding costs. Capital gains taxes will also reduce your balance when you sell. Be sure to factor in these costs when examining an investment's rate of return.</p> <h2>It does not offer detail on volatility</h2> <p>Let's say you have a stock that rose in value from $50 to $90 in five years. The annualized return on that stock is 16 percent. But that does not tell you whether the stock's performance has been consistent or wildly up and down.</p> <p>For example, during that five-year period, that stock may have risen 20 percent, then dropped 25 percent, then risen 44 percent, dropped 10 percent, and finally rose 53 percent. That's pretty volatile, and may be outside the comfort zone of many investors even though the overall return is good. To get a better picture of the investment's performance, you need to look at the returns from each individual year, but even that offers no insight into price swings within any given year.</p> <h2>It can't answer the question &quot;Why?&quot;</h2> <p>An investment's rate of return may be the crucial piece of information you need to know before investing, but there's a lot that it doesn't tell you. Perhaps most importantly, it does not offer any insight into <em>why </em>an investment's price moved up or doing during a certain period.</p> <p>Investment values go up and down for a variety of reasons, not all of them related to company performance. Perhaps a retailer saw its shares fall sharply during one quarter due to a series of natural disasters. Perhaps another company saw shares rise dramatically because of hype over its Super Bowl commercial. Returns on investment are crucial to know, but if you are an investor, it's important to do your own homework to understand why a price went up or down. Doing so will help you better understand how an investment may perform in the future.</p> <h2>It gives you no information on fundamentals</h2> <p>An investment's historical rate of return can give you insight into how it might perform in the future. But the company's actual financial performance may be even more important. It's not enough to just examine an investment's return. You should also look at company balance sheets, analyze earnings reports, and look at things like cash flow, debt, and price-to-earnings ratio. This will help you understand whether an investment's price is justified. Examples abound of companies that saw share prices skyrocket based on speculation although earnings weren't there to support it.</p> <h2>It tells you nothing about taxes</h2> <p>Let's say you invested $1,000 in a company stock and it earned an annual return of 9 percent a year over five years. That means you'll end up with $1,450 when you sell, right? Well, not exactly. Remember that unless you are investing in a tax-advantaged account such as a Roth IRA, the government takes its share when you sell. Assuming that you'll be taxed at the long-term capital gains rate of 15 percent, suddenly, that 9 percent annual return became something closer to 7 percent. Keep this in mind when trying to calculate how much money you'll actually walk away with.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fdont-be-fooled-by-an-investments-rate-of-return&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FDont%2520Be%2520Fooled%2520by%2520an%2520Investments%2520Rate%2520of%2520Return.jpg&amp;description=Dont%20Be%20Fooled%20by%20an%20Investments%20Rate%20of%20Return"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Dont%20Be%20Fooled%20by%20an%20Investments%20Rate%20of%20Return.jpg" alt="Don't Be Fooled by an Investment's Rate of Return" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/dont-be-fooled-by-an-investments-rate-of-return">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-investing-tips-you-wish-you-could-tell-your-younger-self">11 Investing Tips You Wish You Could Tell Your Younger Self</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/want-your-investments-to-do-better-stop-watching-the-news">Want Your Investments to Do Better? Stop Watching the News</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-mediocre-investor-prospered-after-the-market-crash">How One Mediocre Investor Prospered After the Market Crash</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-the-risk-averse-can-get-into-the-stock-market">How the Risk Averse Can Get Into the Stock Market</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment balance sheet bonds fees mutual funds rate of return returns roi s&p 500 stock market stocks volatility Fri, 08 Dec 2017 10:00:07 +0000 Tim Lemke 2068609 at http://www.wisebread.com First Rule of Financial Wins: Avoid Losses http://www.wisebread.com/first-rule-of-financial-wins-avoid-losses <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/first-rule-of-financial-wins-avoid-losses" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/business_financial_opportunity.jpg" alt="Business Financial Opportunity" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The task of accumulating wealth and ensuring long-term financial security is often discussed alongside the idea of winning. And while it's fine to think of financial planning this way, it may be just as important to simply <em>avoid losing</em>. Smart investing involves looking for gains over time, but also escaping costly losses when the market goes down. Let's take a look at some ways we can &quot;win&quot; financially simply by avoiding losses.</p> <h2>1. Avoid overpriced stocks</h2> <p>The last thing you want is to buy a stock and immediately see it take a dive. If you are a young investor with a long time horizon, you can usually get away with putting your money in the market at any time. But it is important for anyone to avoid buying stocks when they are overvalued and perhaps due for a correction.</p> <p>It's tempting to buy a stock if shares have been moving upward, because we all like to invest in companies that are doing well. At a certain point, however, share prices can be too high based on the company's earnings. It's important to learn the basics of how to tell if a stock is fairly valued.</p> <p>A price-to-earnings ratio is an important consideration in valuing a stock. A P/E ratio is the share price divided by earnings-per-share (EPS). A P/E of more than 25 is on the high side, though P/Es vary by industry. Take time to learn what typical P/E ratios are for the sector you're looking to invest in.</p> <p>Another rule of thumb to keep in mind: If a stock has been consistently setting new 52-week highs, it may be due for a pullback.</p> <p>If a company's share prices seem overvalued, it's wise to practice patience or look elsewhere for better value. This will decrease your likelihood of losing money on the investment.</p> <h2>2. Know when to cut your losses</h2> <p>One common piece of investing advice is to stay the course and avoid panicking when shares of stock fall. This is sensible, but it should be balanced with an awareness of when to cut your losses.</p> <p>There's a fine line between being patient and sticking with a dud investment for too long. It's OK to stick with an investment if the company's underlying financials are still strong, but if the company is seeing shrinking profit margins and revenues, or has completely lost its competitive advantage, it may be time to cut and run. In particular, hanging onto investments during major market downturns can result in massive losses that will take years to recover from. Some financial advisers suggest selling an investment if it drops more than 10 percent in a short amount of time. (See also: <a href="http://www.wisebread.com/10-signs-a-stock-is-about-to-tank?ref=seealso" target="_blank">10 Signs a Stock Is About to Tank</a>)</p> <h2>3. Be truly diversified</h2> <p>Most investors know to avoid investing in too much of one thing. Diversification of investments is a key way to avoid a big loss. But sometimes, it's possible to think you are diversified when you aren't. For example, you may think you are diversifying your portfolio by investing in both U.S. based and international stocks. But have you considered that many U.S. companies already have a huge presence internationally? And even if you think you are diversified with various investments and asset classes, many investments still perform similarly, meaning that you're not as diversified as you think.</p> <p>Financial advisers have varying thoughts on the ideal way to diversify. Of course, everyone's portfolio will differ depending on their age, risk tolerance, and projected retirement year. But the basic tenet applies: Don't be too invested in one area.</p> <h2>4. Watch out for investment fees</h2> <p>When you buy and sell stocks and other investments, you'll likely be stuck paying a variety of fees. There are transaction costs for every trade, and maintenance fees and other costs for mutual funds and ETFs. These are costs that are taken out of money you invest, so you not only lose money immediately, but lose out on its potential gains. This can add up to thousands of dollars in the long run.</p> <p>Savvy investors know how to invest well while avoiding high costs. Discount brokerages such as Fidelity and Scottrade allow you to buy and sell stocks for as little as $4.95 per trade. Mutual fund companies including Vanguard, T. Rowe Price, and others have become more cognizant of fees, and are increasingly offering funds with super-low expense ratios. (Generally speaking, it's best look for funds that charge less than 1 percent for expenses.)</p> <p>Keep your costs low when you invest, and you'll find that avoiding these &quot;losses&quot; can boost your gains.</p> <h2>5. Understand when the markets may be due for a dip</h2> <p>It's very difficult to time the stock market, and for young investors, it's a good idea to just invest as soon as you can. But it's also possible to avoid big losses by recognizing when the markets may be due for a correction. If it seems like stocks are priced too high based on their earnings, that's one bad sign. A slowdown in economic growth is another, and you should be wary of a spike in inflation and interest rates, too. It's also worth noting if companies are downgrading their earnings predictions for the upcoming quarter, as that could be a sign that business executives are pessimistic. If you recognize any or all of these signs, it may be worth waiting a while before investing too heavily.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Ffirst-rule-of-financial-wins-avoid-losses&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FFirst%2520Rule%2520of%2520Financial%2520Wins_%2520Avoid%2520Losses.jpg&amp;description=First%20Rule%20of%20Financial%20Wins%3A%20Avoid%20Losses"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/First%20Rule%20of%20Financial%20Wins_%20Avoid%20Losses.jpg" alt="First Rule of Financial Wins: Avoid Losses" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/first-rule-of-financial-wins-avoid-losses">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/9-best-free-financial-learning-tools">9 Best Free Financial Learning Tools</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/15-personal-finance-rules-you-should-be-breaking">15 Personal Finance Rules You Should Be Breaking</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/73-easy-ways-to-save-money-today">73 Easy Ways to Save Money Today</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-financial-perks-of-being-in-your-20s">The Financial Perks of Being in Your 20s</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-online-forums-thatll-help-you-reach-your-financial-goals">9 Online Forums That&#039;ll Help You Reach Your Financial Goals</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance apps budgeting cutting expenses energy efficient fees insurance investing losing saving spending stocks winning Tue, 14 Nov 2017 09:31:09 +0000 Tim Lemke 2053314 at http://www.wisebread.com Autopay Is Great for Money Management — Until It Starts Costing You http://www.wisebread.com/autopay-is-great-for-money-management-until-it-starts-costing-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/autopay-is-great-for-money-management-until-it-starts-costing-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_sitting_at_desk_looking_at_notebook.jpg" alt="Woman sitting at desk looking at notebook" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I'm a big believer in the set-it-and-forget-it lifestyle. I have cleaning products and paper goods delivered to me monthly via an automatic subscription, so I never have to think about whether we're running short on laundry detergent or toilet paper. I've set up automatic transfers to savings and retirement accounts each month, so I never have to think about building my emergency fund and my nest egg. And I have several of my bills automatically paid out of my checking account so I never have to remember a due date. (See also: <a href="http://www.wisebread.com/5-ways-to-automate-your-finances?ref=seealso" target="_blank">5 Ways to Automate Your Finances</a>)</p> <p>Of course, what I love about all of this automation is exactly what makes automation potentially costly: When you don't have to think about something, you might end up forgetting about it.</p> <p>While automatic payments allow you to effortlessly stay on top of your bills and other financial obligations, they can also become a budget leak that you aren't even aware of. Here's what you need to know about the downside to automatic payments, and how to make sure you don't automatically waste your money. (See also: <a href="http://www.wisebread.com/7-ways-auto-payments-can-screw-you?ref=seealso" target="_blank">7 Ways Auto-Payments Can Screw You</a>)</p> <h2>Automatic payment or gray charge?</h2> <p>Automatic bill payments that you've willingly signed up for can be a great way to manage your money and avoid late charges. But some automatic payments are actually what's known in the industry as &quot;gray charges.&quot;</p> <p>These are little recurring automatic payments that you have not necessarily agreed to and do not know about. For instance, I had to deal with a gray charge earlier this year when I realized (after several months had gone by) that I was being charged twice a month for a single digital newspaper subscription service. It turned out that each of my two subscriptions was associated with a different email address, and I had not realized I'd accidentally signed up for the second subscription.</p> <p>I have no one to blame but myself for that unnecessary subscription charge, but most gray charges have much more pernicious origins:</p> <ul> <li> <p>&quot;Free&quot; trials that require a credit card: With this type of gray charge, the merchant is counting on you to forget that you provided a credit card to sign up for a free trial. Once the trial period ends, the merchant charges your card. These types of charges account for nearly half all gray charges.</p> </li> <li> <p>Phantom charges: These gray charges piggyback on an online purchase you did make. With these types of charges, you might be charged for an extra product or service that you didn't request. For instance, a consumer might pay for their credit score without realizing they have also signed up for (and will be charged for) monthly credit monitoring. Phantom fees account for 18 percent of all gray charges.</p> </li> <li> <p>Zombie charges: These types of gray charges are well-named, since they are the automatic payments that simply will not die even after you cancel your subscription or membership. A common example of a zombie charge is the gym membership fee that is charged to your credit card even after you have quit the gym. Zombie charges account for about 6 percent of gray charges.</p> </li> </ul> <h2>The high cost of forgotten automatic charges</h2> <p>According to a study by Aite, gray charges on credit cards accounted for more than $14 billion in 2012, which translated to approximately $215 per cardholder.</p> <p>It's completely understandable how this can happen. Often consumers will agree to a charge without realizing it because they did not read the terms of service. At that point, it's up to the consumer to notice the recurring charge on their account &mdash; and it often takes several months before the cardholder notices. By the time consumers realize what has happened and cancel the service, it often seems pointless to try to reverse the previous months' charges.</p> <p>In addition, the majority of gray charges are perfectly legal, which means it can be next-to-impossible to get previous months' charges reversed. The companies that are using gray charges to pad their bottom lines are counting on the apathy and inattention of the average cardholder, and they unfortunately have the law on their side.</p> <h2>Combating gray charges</h2> <p>There are several options for keeping unnecessary automatic payments from taking a bite out of your budget.</p> <h3>1. Calendar reminders can keep you from paying for &quot;free&quot; trials</h3> <p>The companies that offer &quot;free&quot; trials assume that you will forget when the trial period ends &mdash; and they already have your payment information. The best way to take advantage of free trials is to set up a calendar reminder for the day before the end of the trial. That way, you'll remember to cancel the subscription a full 24 hours before you might get charged.</p> <h3>2. Read through the fine print</h3> <p>Skimming through the terms of service may be no one's idea of fun, but it's a lot better than having to make an angry call to customer service several months later and several sawbucks poorer.</p> <h3>3. Research complaints about phantom charges</h3> <p>Before you buy, Google the company whose product or service you are considering to see if anyone has had trouble with phantom charges from them. Then you'll know what to look for in the terms of service and you can determine if you can avoid charges by unclicking a box &mdash; or just choosing a different merchant, if necessary.</p> <h3>4. Review your statements regularly</h3> <p>Making a monthly date to look over your credit card and bank statements will help you identify gray charges as soon as they occur. You can call to cancel these subscriptions or notify your credit card that you would like to dispute the charge. In many cases, your credit card company will reverse the charges if you can prove that you did not consent to recurring charges.</p> <h3>5. Use apps to monitor your accounts</h3> <p>If you would rather not the spend the time combing over your accounts and canceling unnecessary automatic payments, there are several apps available that will do the work for you. <a href="https://itunes.apple.com/US/app/id1148133022" target="_blank">Clarity Money</a> helps you organize your entire financial life, including helping you to find and cancel unused subscriptions. <a href="http://www.asktrim.com/" target="_blank">Trim</a> identifies recurring payments that can be canceled and will take care of contacting the merchant on your behalf to do so. <a href="https://www.truebill.com/" target="_blank">Truebill</a> notifies you of subscriptions that can be canceled and offers you a one-click cancellation process.</p> <h2>Stay on top of your automatic payments</h2> <p>Automatic payments are a major boon to busy budgeters. But it's important to remember that your automatic payments should be like the cruise control on your car: It can relieve you of a little work, but you can't fall asleep at the wheel. No matter how automated your financial life may be, you need to still keep an eye on things to prevent automatic payments from causing a financial crash.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fautopay-is-great-for-money-management-until-it-starts-costing-you&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FAutopay%2520Is%2520Great%2520for%2520Money%2520Management%2520%25E2%2580%2594%2520Until%2520It%2520Starts%2520Costing%2520You.jpg&amp;description=Autopay%20Is%20Great%20for%20Money%20Management%20%E2%80%94%20Until%20It%20Starts%20Costing%20You"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Autopay%20Is%20Great%20for%20Money%20Management%20%E2%80%94%20Until%20It%20Starts%20Costing%20You.jpg" alt="Autopay Is Great for Money Management &mdash; Until It Starts Costing You" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/autopay-is-great-for-money-management-until-it-starts-costing-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-fix-your-finances-after-missing-a-payment">How to Fix Your Finances After Missing a Payment</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/6-ways-to-tell-if-a-credit-card-offer-is-a-good-one">6 Ways to Tell If a Credit Card Offer Is a Good One</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-every-new-college-student-should-make">7 Money Moves Every New College Student Should Make</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-simple-ways-to-never-make-a-late-credit-card-payment">5 Simple Ways to Never Make a Late Credit Card Payment</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance automatic payments bills fees fine print free trials gray charges hidden costs phantom charges recurring payments reminders subscriptions Fri, 27 Oct 2017 08:30:08 +0000 Emily Guy Birken 2038888 at http://www.wisebread.com 10 Things You Need to Know Before Taking Out a Personal Loan http://www.wisebread.com/10-things-you-need-to-know-before-taking-out-a-personal-loan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/10-things-you-need-to-know-before-taking-out-a-personal-loan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/hand_giving_and_hand_receiving_money.jpg" alt="Hand giving and hand receiving money" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I recently called my bank to ask about fees for using my debit card on an upcoming international trip. I laughed when the banker followed up by asking, &quot;Are you interested in taking out a personal loan for spending money on your vacation?&quot;</p> <p>There are plenty of good reasons to take out a personal loan, but going on vacation isn't one of them. A personal loan is, in essence, an unsecured loan that you get on the basis of your credit and income &mdash; unlike a mortgage loan or home equity line of credit, which uses your home as collateral. Personal loans have advantages and disadvantages compared to secured loans, so whether you go for one of these when you're in need of cash depends on your individual situation.</p> <p>Here's what you should consider before getting a personal loan.</p> <h2>1. The interest rate may be higher than you expect</h2> <p>When you hear about interest rates in the media, they're often talking about the 30-year fixed rate for a standard mortgage, which has been around 4 percent or lower for a long time now. But a personal loan's interest rate will probably be at least twice that. The reason for the difference: When you refinance your home or take out a home equity line of credit, you're promising to relinquish your home if you can't pay back the debt. That's a bigger risk for you, and less of a risk for the bank, compared to a personal loan. In return, banks give you a low interest rate on secured loans. (See also: <a href="http://www.wisebread.com/the-different-types-of-loans-a-primer?ref=seealso" target="_blank">The Different Types of Loans: A Primer</a>)</p> <h2>2. Your credit score matters more for personal loans</h2> <p>With no collateral, all the lender has to go on is your personal creditworthiness. You can expect the available interest rates to increase steeply if your credit is average or poor, going up as high as 36 percent APR.</p> <h2>3. A personal loan is not a long-term solution</h2> <p>While the typical mortgage is paid off over decades, personal loan terms are typically limited to seven years or less. This can be a good thing, because you should never borrow money for longer than you really need to. But it also means that if you are trying to borrow a lot of money, like for a major home remodel, the payments might be too high for you to keep up with on a personal loan.</p> <h2>4. Banks aren't the only option</h2> <p>As nonprofits, credit unions often offer lower rates and fees than banks for the same personal loan products. Then there are the crop of new &quot;marketplace lenders,&quot; such as SoFi and Prosper, which promise easy, quick online loan approval and good rates, especially to folks with the best credit. This nascent industry has had some bumps in the road, but it's still an avenue worth looking into. (See also: <a href="http://www.wisebread.com/best-lenders-for-personal-loans?ref=seealso" target="_blank">Best Lenders for Personal Loans</a>)</p> <h2>5. Personal loans can be a lifesaver when you need cash quickly</h2> <p>When an urgent financial need rears its head &mdash; a leaky roof, an emergency medical bill, or, heaven forbid, an unexpected funeral &mdash; many people turn to credit cards or payday lenders for help. These lenders can be punishingly expensive, but they may seem attractive because in such situations you just don't have time to sit down and apply for a home equity line of credit or look at refinancing your mortgage.</p> <p>You can get the funds from a personal loan within two weeks of applying online, making it just a little slower than the alternatives and potentially much more affordable. (See also: <a href="http://www.wisebread.com/5-times-personal-loans-may-be-better-than-credit-cards?ref=seealso" target="_blank">5 Times Personal Loans May Be Better Than Credit Cards</a>)</p> <h2>6. Personal loans can save you a lot on debt you already have</h2> <p>One of the most common uses for a personal loan is to <a href="http://www.wisebread.com/5-tricks-to-consolidating-your-debt-and-saving-money?ref=iternal" target="_blank">consolidate existing debt</a>, like credit card balances, student loans, and car loans. You may be able to get a lower interest rate than you were paying on your other debts, and you also have the organizational benefit of having only one bill to pay each month. However, when transferring one kind of loan to another, you should ...</p> <h2>7. &hellip; Be aware of what you may be giving up</h2> <p>Some marketplace lenders heavily market the idea of refinancing student loan debt into personal loans. But before you make a decision like that, you should compare your old loan and new loan carefully, the Consumer Financial Protection Bureau warned in a 2016 release.</p> <p>&quot;[I]n some cases consumers could lose important loan-specific protections by refinancing an existing debt. Specifically, consumers should know that they may sign away certain federal benefits, such as income-driven repayment for federal student loans or service member benefits,&quot; the CFPB said. (See also: <a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans?ref=seealso" target="_blank">8 Valuable Rights You Might Lose When You Refinance Student Loans</a>)</p> <h2>8. You might be better off with a different type of loan</h2> <p>If you're trying to get a better rate on credit card debt while you pay it off, before you commit to a personal loan, shop around to see what else is out there. You may be able to transfer your balance to a <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal" target="_blank">card with a promotional 0 percent interest rate</a>. Another potentially better deal could be <a href="http://www.wisebread.com/this-is-when-you-should-borrow-from-your-retirement-account?ref=internal" target="_blank">taking money out of your retirement account</a> for a short time, especially if you have a Roth IRA. Just make sure to pay back whatever you borrow.</p> <h2>9. Watch out for fees and extras</h2> <p>Some lenders will try to throw in an insurance policy or other extra expenses as you close the loan. You may or may not want an insurance policy to make sure that your survivors aren't stuck with your loan if tragedy strikes, but that's a separate financial decision that you should undertake with research, not just because you're under the impression that it's required for your loan. (If the lender says it is, walk away.)</p> <p>Also, ask the lender if they use the &quot;pre-compute&quot; method to calculate interest, or if they have prepayment penalties &mdash; you should avoid these, because both will punish you if you're able to pay the loan back ahead of schedule.</p> <h2>10. Never get a personal loan to fund certain expenses</h2> <p>One of the nice things about a personal loan is that unlike a car loan or mortgage, you don't have to justify your purchase to the lender. However, there are things you should know better than to borrow for &mdash; whether it's with a credit card, a home equity line of credit, or a personal loan.</p> <p>Don't take out a personal loan to buy an engagement ring; why would you want to start out your relationship with a pile of debt? While some lenders may advertise a personal loan as a &quot;travel loan,&quot; that's another bad idea; once the vacation is over, you have nothing that you could sell to pay off the loan if you need to. Do I need to tell you that you shouldn't take out a personal loan for gambling money? I didn't think so. (See also: <a href="http://www.wisebread.com/never-borrow-money-for-these-5-buys?ref=seealso" target="_blank">Never Borrow Money for These 5 Buys</a>)</p> <p>A more complex question is whether it's OK to use a personal loan for a down payment on a home. The whole point of requiring a buyer to make a down payment is to show that they can afford the home and to help them feel invested in the purchase. So your mortgage lender may not like it if you try to fund the down payment with a personal loan. At the very least, with this method, you'll need to get the loan several months in advance of the purchase. But even then, proceed with caution; adding debt in the form of a personal loan could affect your chances of getting approved for the mortgage at all. (See also: <a href="http://www.wisebread.com/5-money-moves-that-will-ruin-your-mortgage-application?ref=seealso" target="_blank">5 Money Moves That Will Ruin Your Mortgage Application</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F10-things-you-need-to-know-before-taking-out-a-personal-loan&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F10%2520Things%2520You%2520Need%2520to%2520Know%2520Before%2520Taking%2520Out%2520a%2520Personal%2520Loan.jpg&amp;description=10%20Things%20You%20Need%20to%20Know%20Before%20Taking%20Out%20a%20Personal%20Loan"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/10%20Things%20You%20Need%20to%20Know%20Before%20Taking%20Out%20a%20Personal%20Loan.jpg" alt="10 Things You Need to Know Before Taking Out a Personal Loan" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/10-things-you-need-to-know-before-taking-out-a-personal-loan">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-8"> <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/3-easy-ways-to-improve-your-credit-score-during-the-holidays">3 Easy Ways to Improve Your Credit Score During the Holidays</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-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</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-ways-good-credit-is-better-than-a-boyfriend">6 Ways Good Credit Is Better Than a Boyfriend</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-credit-repair-mistakes-that-will-cost-you">8 Credit Repair Mistakes That Will 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/how-a-credit-card-cash-advance-costs-you-more-than-a-purchase">How a Credit Card Cash Advance Costs You More Than a Purchase</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Banking APR balance transfer credit score fees interest rates lenders personal loans unsecured loan Fri, 20 Oct 2017 08:30:10 +0000 Carrie Kirby 2037745 at http://www.wisebread.com 5 Ways to Get the Most From Your Employer’s Automated Retirement Plan http://www.wisebread.com/5-ways-to-get-the-most-from-your-employer-s-automated-retirement-plan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-ways-to-get-the-most-from-your-employer-s-automated-retirement-plan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/arrows_pointing_in_positive_direction_on_401k_statement.jpg" alt="Arrows Pointing In Positive Direction On 401(k) Statement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>An increasing number of companies are automating their 401(k) plans &mdash; automatically enrolling new hires and even automatically choosing investments for employees. If that's true of your employer, don't be lulled into a false sense of confidence. Just because many decisions are being made for you doesn't necessarily mean they're the <em>right</em> decisions. Here's what you need to know.</p> <h2>1. Stay in</h2> <p>The starting point of automated retirement plans is automated enrollment. To not participate, you have to opt <em>out. </em>Don't do that. For the vast majority of employees, participation is a good thing.</p> <h2>2. Invest enough</h2> <p>Most automated plans set employee contributions at very low rates, such as 3 percent of salary, at least initially. Many employees, perhaps assuming that's how much they <em>should</em> be investing, never change their contribution rate.</p> <p>However, 3 percent of salary is almost certainly not enough &mdash; not enough to get the full company match if that's available, and not enough to save adequately for retirement. So, use a free online retirement planning calculator to find out how much you should be saving and set your contribution rate accordingly.</p> <p>If you can't afford to contribute enough right away, see if your company's plan offers <em>auto-escalation</em>, which will automatically increase your contribution rate over time. If it does, signing up would help you follow through on your good intentions.</p> <h2>3. Choose the right investment(s)</h2> <p>Your plan may automatically invest your contributions in a target-date fund. Such funds have many benefits, but also a few features you should watch out for. The primary benefits are that they come with preset asset allocations based on the year of your intended retirement, and they automatically become more conservatively invested as you near your target retirement date. (See also: <a href="http://www.wisebread.com/what-you-need-to-know-about-the-easiest-way-to-save-for-retirement?ref=seealso" target="_blank">What You Need to Know About the Easiest Way to Save for Retirement</a>)</p> <p>The primary thing to watch out for is that not all target-date funds are created equal. Funds from different fund companies all designed with the same target retirement date in mind can have very different stock/bond allocations.</p> <p>It would be best to determine your optimal asset allocation using a tool such as Vanguard's free <a href="https://personal.vanguard.com/us/FundsInvQuestionnaire" target="_blank">Investor Questionnaire</a>. Then choose the target-date fund that most closely matches that allocation. It might be one with an earlier or later target retirement date than your actual planned retirement date, depending on your optimal asset allocation.</p> <h2>4. Don't pay too much in fees</h2> <p>If a target-date fund is the default investment in your 401(k) plan, and if you like the idea of using a target-date fund, you should still check the fund's expense ratio. The lower, the better. For example, with a fund charging an expense ratio of 0.75 percent, you'll pay $7.50 in fees each year for every $1,000 you have invested. If the expense ratio is 0.25 percent, you'll pay $2.50 per year for every $1,000 invested.</p> <p>If the default fund's expense ratio is on the high side (to give you a point of reference, Vanguard charges just 0.16 percent for its 2040 target-date fund), see if your plan gives you access to a brokerage window. If so, you should be able to choose a target-date fund from among many fund companies, which should enable you to choose a lower-cost fund. (See also: <a href="http://www.wisebread.com/watch-out-for-these-5-sneaky-401k-fees?ref=seealso" target="_blank">Watch Out for These 5 Sneaky 401K Fees</a>)</p> <p>Another option is to see if your plan offers index funds, which typically have very low expense ratios. If so, consider using such funds to build a portfolio that matches your optimal asset allocation. You may be able to do so using as few as three funds.</p> <h2>5. Keep your hands off the money</h2> <p>Some companies with automatic retirement plans are finding that many participants are surprised by how quickly money has built up in their accounts. Surprise is quickly followed by a desire for that money, which is then followed by a loan.</p> <p>It would be far better to remember what the money is for (retirement!) and keep your hands off. One of the key ingredients for successful investing is time. Pulling money from your account, even temporarily, gives it less time to compound. Plus, if you borrow against your account and then leave your employer &mdash; whether by your choice or your employer's &mdash; you'll have to repay the entire loan, usually within 60 days.</p> <p>Automation has been very effective at driving up participation rates in 401(k) plans, which has been beneficial for thousands of people. However, to get the most out of your employer's automated plan, make sure the automated choices are truly the best choices for you. If they're not, don't be afraid to make some manual changes.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-ways-to-get-the-most-from-your-employer-s-automated-retirement-plan&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Ways%2520to%2520Get%2520the%2520Most%2520From%2520Your%2520Employers%2520Automated%2520Retirement%2520Plan.jpg&amp;description=5%20Ways%20to%20Get%20the%20Most%20From%20Your%20Employers%20Automated%20Retirement%20Plan"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Ways%20to%20Get%20the%20Most%20From%20Your%20Employers%20Automated%20Retirement%20Plan.jpg" alt="5 Ways to Get the Most From Your Employer&rsquo;s Automated Retirement Plan" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/5-ways-to-get-the-most-from-your-employer-s-automated-retirement-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-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-traps-to-avoid-with-your-401k">7 Traps to Avoid With Your 401(k)</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-face-4-ugly-truths-about-retirement-planning">How to Face 4 Ugly Truths About Retirement Planning</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/bookmark-this-a-step-by-step-guide-to-choosing-401k-investments">Bookmark This: A Step-by-Step Guide to Choosing 401(k) Investments</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-easiest-ways-to-catch-up-on-retirement-savings-later-in-life">7 Easiest Ways to Catch Up on Retirement Savings Later in Life</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-things-you-should-know-about-your-401k-match">7 Things You Should Know About Your 401(k) Match</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) automated retirement plans contributions expense ratios fees loans target date funds Wed, 18 Oct 2017 08:30:06 +0000 Matt Bell 2037239 at http://www.wisebread.com 9 Common Mistakes You're Making With Your Checking Account http://www.wisebread.com/9-common-mistakes-youre-making-with-your-checking-account <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-common-mistakes-youre-making-with-your-checking-account" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/working_at_home_0.jpg" alt="Working at home" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Most of us think about our checking account in only one way: Is there enough money in it? While that's certainly the most important piece of the puzzle, there are plenty of other things to consider to ensure that you're getting all the bangs for your bucks. Beware of these common, costly mistakes you might be making with your checking account.</p> <h2>1. Maintaining a lower balance than you need to cover your expenses</h2> <p>Your top concern regarding your checking account should always be that you have enough money in there to cover your expenses &mdash; even more so if you subscribe to direct deposit and/or autopay services. By engaging in the latter, you're essentially putting machines in charge of your finances, which, while convenient, are not always accurate. If you don't have enough money to cover your bills, you know what happens &mdash; you dip into the negative and you're slapped with insufficient funds or overdraft charges, further dragging you into the red. This oversight also can affect your credit score if you miss the payment for 30 days or more. (See also: <a href="http://www.wisebread.com/the-pros-and-cons-of-autopay?ref=seealso" target="_blank">The Pros and Cons of Autopay</a>)</p> <p>The best you can do for yourself is to commit to keeping your bills covered by your checking account and staying on top of your auto-deposit payments to maintain a positive and accurate balance.</p> <h2>2. Keeping more money than you need in your checking account</h2> <p>Keeping enough money in your checking account to cover your expenses should be your main focus, but you also may be doing yourself a disservice by keeping too much money in that account. It's a balancing act, for sure &mdash; but if your surplus can benefit you someplace other than your checking account, you need to move it.</p> <p>Says Michael Banks, founder of personal finance blog The Fortunate Investor, &quot;Money that sits in a checking account accumulates very little in interest. [Some banks], however, offer investor checking accounts that allow you to invest your checking account funds to maximize growth. You don't need to invest all of your money, and it's easy to keep two accounts and transfer as much into your investing account as you feel comfortable with; but the more you invest the more you stand to gain in the long run.&quot;</p> <p>If the idea of an &quot;investment&quot; account gives you anxiety, then consider <a href="http://www.wisebread.com/choosing-a-retirement-account-whats-available-and-what-s-best-for-you" target="_blank">opening a Roth IRA</a> or at least finding a <a href="http://www.wisebread.com/5-best-online-savings-accounts?ref=internal" target="_blank">high-yield savings account</a> instead.</p> <h2>3. Limiting your access to in-network ATMs</h2> <p>When I first moved to Manhattan, there were only a handful of my bank's in-network ATMs on the entire island, none of which were near my apartment. I was never close enough to one when I needed cash, so the fees added up quickly (some out-of-network ATMs charged up to $5 per transaction). This went on for a few months before I wised up, did my research on the most abundant ATM locations in New York City, and switched banks. If you're banking someplace and the ATM locations are prohibitive to you, consider banking elsewhere; you could save a bundle in time and fees. (See also: <a href="http://www.wisebread.com/8-ways-to-make-sure-you-never-pay-an-atm-fee?ref=seealso" target="_blank">8 Ways to Make Sure You Never Pay an ATM Fee</a>)</p> <h2>4. Paying fees just to have a checking account at a particular institution</h2> <p>Some banks charge a monthly checking account fee if you don't keep a minimum balance in it &mdash; say $1,500, for example. If you don't like keeping excess funds in your checking account, it does not make sense to pay a premium to bank with an institution that charges you for moving money around. Another option you have is opening a free checking account at a credit union.</p> <p>According to a 2016 Bankrate survey, 76 percent of credit unions offer free checking accounts. This is good news in a time when free checking at banks continues to decline almost every year. The survey also noted that an additional 22 percent of credit unions are willing to waive their monthly fee for meeting certain requirements such as signing up for direct deposit or paperless statements. (See also: <a href="http://www.wisebread.com/are-you-paying-these-6-unfair-banking-fees?Ref=seealso" target="_blank">Are You Paying These 6 Unfair Banking Fees?</a>)</p> <h2>5. Spending without checking your balance</h2> <p>Do you know exactly how much money is in your checking account right now? What about a close estimate? If the answer is no, you're not staying on top of your money well enough &mdash; and you definitely shouldn't be pulling out your debit card when your balance is in flux. Before you make a purchase that you even think could compromise your balance, log into your account (easy to do with your mobile app; I log into mine with a fingerprint), and manage your money wisely.</p> <h2>6. Ignoring your transaction history</h2> <p>You need to stay on top of what payments are being deducted from your checking account, even if they haven't actually been deducted yet. Continuing to spend when payments are pending could spell disaster.</p> <p>&quot;Check your account every couple of days to ensure transactions have been posted,&quot; advises Natasha Rachel Smith, personal finance expert at TopCashback. &quot;Be aware of holds on your account as a result of a retailer or merchant requesting authorization of a purchase. For example, gas stations and hotels could put a hold on your account until the actual transaction clears, so be mindful of these transactions when viewing your available funds. I also recommend checking on your transactions for fraudulent charges and reporting them as soon as possible.&quot;</p> <h2>7. Not subscribing to overdraft protection</h2> <p>Banks typically charge a $35 overdraft fee, and it's important to keep that in mind when you know your checking account is getting low. You also should fortify your account with overdraft protection if it makes sense for you. (See also: <a href="http://www.wisebread.com/9-ways-to-avoid-overdraft-charges?ref=seealso" target="_blank">9 Ways to Avoid Overdraft Charges</a>)</p> <p>&quot;Although opting out of overdraft protection can be ideal to not get hit with overdraft fees on debit card purchases, your bank can still charge you non-sufficient funds fee for checks and bill payments that can be comparable to an overdraft fee,&quot; Smith explains. &quot;It is ideal to opt out of overdraft protection when you have a savings account with the same bank. Typically, if you have both, the overdraft fee is less. If you choose to opt in to overdraft protection, always be cautious so you avoid the charge.&quot;</p> <h2>8. Assuming that every debit charge is legit</h2> <p>Once a week I go through my checking accounts to make sure all the debit charges are legit. There have been a few occasions where I've noticed an error &mdash; a fraudulent charge, a subscription I canceled, an incorrect amount charged for an expense that I authorized, or a price hike in my existing memberships. If I didn't do my due diligence and address these errors, nobody else would have. Check in on your money to make sure the numbers are correct.</p> <h2>9. Linking to online retailers you know nothing about</h2> <p>It's becoming more and more common &mdash; especially around the holidays &mdash; for shoppers' financial information to be compromised by a security breach. I'm not going to tell you to stop shopping online altogether, because that's just impractical, but I will urge you to be more responsible in where you spend your money and save your banking information.</p> <p>First, make sure the website is secure. The &quot;https://&quot; distinction designates a secure site, opposed to the more common &quot;http://&quot; protocol identifier for sites that don't require any user information.</p> <p>Second, use common sense. While it's not impossible for well-known retailers with an arsenal of security resources to get hacked, it's much more likely to happen to the small-potatoes shops that can't afford top notch security. Of course, these smaller retailers don't have as much to offer hackers in the way of identity theft. But in any case, use your best judgment when providing your financial info online to prevent being a victim. (See also: <a href="http://www.wisebread.com/5-dangers-of-mobile-banking-and-how-to-avoid-them?ref=seealso" target="_blank">5 Dangers of Mobile Banking &mdash; And How to Avoid Them</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F9-common-mistakes-youre-making-with-your-checking-account&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F9%2520Common%2520Mistakes%2520Youre%2520Making%2520With%2520Your%2520Checking%2520Account.jpg&amp;description=9%20Common%20Mistakes%20Youre%20Making%20With%20Your%20Checking%20Account"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/9%20Common%20Mistakes%20Youre%20Making%20With%20Your%20Checking%20Account.jpg" alt="9 Common Mistakes You're Making With Your Checking Account" 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/9-common-mistakes-youre-making-with-your-checking-account">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/avoid-bank-fees">Avoid Bank Fees</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-signs-its-time-to-find-a-new-bank">5 Signs It&#039;s Time to Find a New Bank</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-reasons-your-card-got-declined-and-how-to-fix-it">7 Reasons Your Card Got Declined (And How to Fix It)</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/charged-with-an-overdraft-fee-get-your-money-back">Charged With an Overdraft Fee? Get Your Money Back!</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-credit-repair-mistakes-that-will-cost-you">8 Credit Repair Mistakes That Will Cost You</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Banking atms autopay checking accounts debit fees insufficient funds Mistakes overdraft transaction history transfers Tue, 17 Oct 2017 09:00:06 +0000 Mikey Rox 2035900 at http://www.wisebread.com 6 Ways to Tell If a Credit Card Offer Is a Good One http://www.wisebread.com/6-ways-to-tell-if-a-credit-card-offer-is-a-good-one <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-to-tell-if-a-credit-card-offer-is-a-good-one" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/young_woman_at_home.jpg" alt="Young woman at home" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Credit cards can be a powerful tool for your finances if you use them wisely. In order to do that, though, you need to know exactly what you're getting into with each credit card. Here's what you should look for to determine if a credit card offer is good or not.</p> <h2>1. Look for the lowest interest rate</h2> <p>Saying &quot;low interest rate&quot; and &quot;credit card&quot; in the same sentence is almost paradoxical; credit cards are high-interest loans, which is why carrying a balance on them is such a bad idea. However, within the limited world of credit card interest rates, you want to go as low as possible.</p> <p>Credit card interest rates can range from 13 percent all the way up to 22 percent. You'll want to consider two interest rates when you look at a credit card offer: the introductory interest rate, and the annual percentage rate that kicks in once that introductory period is over. (See also: <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards?ref=seealso" target="_blank">The Best Low Interest Rate Credit Cards</a>)</p> <h2>2. Consider the introductory interest rate</h2> <p>Sometimes it's worthwhile to take a card with a higher APR if it also provides a longer, lower introductory interest rate. It depends on how you plan to use the card. For instance, if you're going to make a big purchase on a card and pay it off within a few months, you might want to get the card with the 0 percent introductory interest rate for 15 months, even though its annual rate is higher than another offer.</p> <p>The key here, of course, is to be sure you stick to your plan and pay off the balance before the introductory term is up. Be aware, too, of factors that could cause that introductory rate to go away sooner than expected; one missed or late payment, for instance, might cause the 0 percent interest rate to turn into that 19 percent interest rate you really want to avoid. (See also: <a href="http://www.wisebread.com/6-things-you-might-miss-in-your-credit-cards-fine-print?ref=seealso" target="_blank">6 Things You Might Miss in Your Credit Card's Fine Print</a>)</p> <h2>3. Look into the points and perks</h2> <p>Some people use credit cards to their advantage by accumulating reward points or other perks. If you're smart with your credit card use and pay off your balance monthly, that can be a good plan.</p> <p>But it's only worth the trouble if the points or perks are things that have value for you in real life. If you travel frequently, for example, a credit card that gets you <a href="http://www.wisebread.com/the-best-credit-cards-for-hotel-deals-and-rewards" target="_blank">hotel room discounts</a> and <a href="http://www.wisebread.com/5-best-co-branded-airline-credit-cards" target="_blank">better airfare</a> can be a great deal. Shop around for the best points-per-purchase ratio so you get the most return for your dollars spent. (See also: <a href="http://www.wisebread.com/top-5-travel-reward-credit-cards?ref=seealso" target="_blank">The Best Travel Reward Credit Cards</a>)</p> <p>And, of course, you'll need to be aware of any fine print that might keep you from accumulating those points or perks. For example, are there particular types of purchases that don't count for credit card rewards? If so, can you still use your credit card enough on other, valid purchases to accumulate the rewards you want?</p> <h2>4. Check out their protective policies</h2> <p>Identity theft is a very real issue, and you'll want to know that any credit card you use has good security measures in place to prevent it from happening. You should also look for a card that will protect you and your assets in the case of identity theft or fraudulent purchases. What are their terms for protecting your identity, and what action will they take if your card is lost, stolen, or used fraudulently? (See also: <a href="http://www.wisebread.com/10-awesome-credit-card-perks-you-didnt-know-about?ref=seealso" target="_blank">14 Awesome Credit Card Perks You Didn't Know About</a>)</p> <p>Most legitimate credit card companies offer fraud protection, but don't assume that's so. Read the fine print to be sure that the card you're considering will cover any fraudulent charges. Will they require you to provide proof of any kind in order to receive reimbursement?</p> <h2>5. Check out all possible fees</h2> <p>Are there hidden fees for every possible scenario? It's standard for a credit card to come with fees for late or missed payments, of course. How much are these fees, and when are they assessed? Do the fees increase if you accumulate more than one? Are there unexpected ways in which you could end up accruing fees? There may be fees for particular types of transactions (such as <a href="http://www.wisebread.com/how-a-credit-card-cash-advance-costs-you-more-than-a-purchase" target="_blank">cash advances</a> or <a href="http://www.wisebread.com/7-important-things-you-should-know-about-balance-transfer-cards" target="_blank">balance transfers</a>). Look for a card offer that designates the fees it will assess and the amount for each one so you can be sure to avoid them. (See also: <a href="http://www.wisebread.com/5-best-credit-cards-with-no-balance-transfer-fees?ref=seealso" target="_blank">The Best Credit Cards With No Balance Transfer Fees</a>)</p> <h2>6. Consider all potential use limits</h2> <p>How you plan to use the card is a big factor in which the credit card offer can benefit you the most. For example, if you want a credit card to use while traveling, you'll need to make sure the card is accepted at most places where you are going, and has <a href="http://www.wisebread.com/smarter-security-and-no-foreign-transaction-fees-the-best-credit-cards-to-use-while-on-vacation?ref=internal" target="_blank">no foreign transaction fees</a>. If, on the other hand, you want a credit card for your child to use at college, you might prefer a card with a lower credit limit and a more forgiving interest rate. (See also: <a href="http://www.wisebread.com/4-important-ways-college-students-should-use-credit-cards?ref=seealso" target="_blank">4 Important Ways College Students Should Use Credit Cards</a>)</p> <p>Consider how you'll use the card and search for an offer that gives you the maximum benefits for the precise use you have in mind. Knowing how you'll use a credit card is key to using one wisely, and remember: In all cases, paying off the balance as quickly as possible is key to keeping more money in your pocket. (See also: <a href="http://www.wisebread.com/travel-perks-you-didnt-know-your-credit-card-had?ref=seealso" target="_blank">12 Travel Perks You Didn't Know Your Credit Card Had</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-ways-to-tell-if-a-credit-card-offer-is-a-good-one&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Ways%2520to%2520Tell%2520If%2520a%2520Credit%2520Card%2520Offer%2520Is%2520a%2520Good%2520One.jpg&amp;description=6%20Ways%20to%20Tell%20If%20a%20Credit%20Card%20Offer%20Is%20a%20Good%20One"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/6%20Ways%20to%20Tell%20If%20a%20Credit%20Card%20Offer%20Is%20a%20Good%20One.jpg" alt="6 Ways to Tell If a Credit Card Offer Is a Good One" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/annie-mueller">Annie Mueller</a> of <a href="http://www.wisebread.com/6-ways-to-tell-if-a-credit-card-offer-is-a-good-one">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-11"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-good-credit-is-better-than-a-boyfriend">6 Ways Good Credit Is Better Than a Boyfriend</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-credit-repair-mistakes-that-will-cost-you">8 Credit Repair Mistakes That Will Cost You</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-things-you-need-to-know-before-taking-out-a-personal-loan">10 Things You Need to Know Before Taking Out a Personal Loan</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/3-easy-ways-to-improve-your-credit-score-during-the-holidays">3 Easy Ways to Improve Your Credit Score During the Holidays</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/should-you-buy-a-car-with-a-credit-card">Should You Buy a Car With a Credit Card?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance balance transfers credit card offers fees fine print interest rates introductory offers late payments perks points rewards Tue, 10 Oct 2017 08:30:10 +0000 Annie Mueller 2031628 at http://www.wisebread.com Bookmark This: A Step-by-Step Guide to Choosing 401(k) Investments http://www.wisebread.com/bookmark-this-a-step-by-step-guide-to-choosing-401k-investments <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/bookmark-this-a-step-by-step-guide-to-choosing-401k-investments" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/real_estate_agent_working_with_client_online.jpg" alt="Real estate agent working with client online" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's no secret that 401(k) fund options are notoriously opaque. While target-date funds provide convenience to investors, they often come with higher fees than alternative investment vehicles, have highly variable returns, and aren't a good fit for many retirement savers. Let's simplify things, and review a low-stress strategy for building a solid two-to-three-fund portfolio for your 401(k).</p> <h2>The downsides to target-date funds</h2> <p>Designed to gradually adjust your investment mix as you approach retirement age, target-date funds have exploded in popularity since their designation as qualified default investment alternatives by the 2006 Pension Protection Plan. The upsides of target-date funds are that they're easy to select (96 percent of Vanguard plans make it the default investment option), they automatically rebalance, and they offer appropriate investment diversification. (See also: <a href="http://www.wisebread.com/what-you-need-to-know-about-the-easiest-way-to-save-for-retirement?ref=seealso" target="_blank">What You Need to Know About the Easiest Way to Save for Retirement</a>)</p> <p>However, all that convenience comes at a high price. A 2015 review of over 1,700 target-date funds by FutureAdvisor determined that their average expense ratio (the annual fee charged to shareholders to cover operating expenses) was a relatively high 1.02 percent, meaning that you'd pay $51 every year for every $5,000 in your balance. Assuming an average investment return of 7 percent per year, you would miss out on an extra $4,998 in retirement savings over a 30-year period.</p> <p>On top of high fees, some target-date funds' returns barely cover their high annual expense ratios. The same review of 1,700 target-date funds pointed out that the lowest five-year average annual returns were 2.9 percent. (Returns are expressed net of expense ratios.) As of September 2017, 2.9 percent is not that much higher than the rate of a five-year CD at a credit union.</p> <p>Here's a better alternative to target-date funds.</p> <h2>Your guide to choosing your 401(k) investment options</h2> <p>In his 2013 letter to Berkshire Hathaway shareholders, Warren Buffett (aka The Oracle of Omaha) provided an investment strategy that would &quot;be superior to those attained by most investors who employ high-fee managers.&quot; Buffett recommended putting 90 percent of one's investments in a very low-cost S&amp;P 500 index fund, and the remaining 10 percent in short-term government bonds. This is the same advice that he has set in his will. (See also: <a href="http://www.wisebread.com/the-5-best-pieces-of-financial-wisdom-from-warren-buffett?ref=seealso" target="_blank">The 5 Best Pieces of Financial Wisdom From Warren Buffett</a>)</p> <p>More and more 401(k) plans are offering passively managed index funds that track a benchmark, such as the S&amp;P 500. And for good reason: The Vanguard 500 Index Investor Shares Fund [Nasdaq: VFINX] has an annual expense ratio of 0.14 percent, just a $7 annual fee for a balance of $5,000. That's $44 in annual savings when you compare it to a target-date fund with a 1.02 percent annual expense ratio.</p> <p>Worried that this approach doesn't provide you enough diversification? Think again: An index fund tracking the S&amp;P 500 is investing in 500 large-cap companies. That's as diversified as you can get. (See also: <a href="http://www.wisebread.com/how-too-much-investment-diversity-can-cost-you?ref=seealso" target="_blank">How Too Much Investment Diversity Can Cost You</a>)</p> <p>Let's use Buffett's advice to build your 401(k) plan's portfolio.</p> <h3>Step 1: Check your plan for a U.S. equities index fund</h3> <p>There is a good chance that your 401(k) plan offers a low-cost S&amp;P 500 index fund. Buffett personally recommends an S&amp;P 500 Vanguard index fund. Vanguard is an investment management company known for having very low fees compared to competitors, especially on its index funds. In 2016, close to 60 percent of Vanguard plans offered an index core giving you access to broadly diversified index funds for U.S. stocks. In truth, you can do just as well with other index funds tracking the S&amp;P 500, such as the Fidelity 500 Index Investor [Nasdaq: FUSEX] and the Northern Stock Index [Nasdaq: NOSIX].</p> <p>In the event, that you don't have access to a low-cost index fund tracking the S&amp;P 500 through your workplace 401(k), you have two action items. First, see if your plan offers another large cap index fund (one investing in large U.S. companies based on a market index). This type of fund normally invests at least 80 percent of its assets in securities within its benchmark index, such as the Fidelity Large Cap Stock Fund [Nasdaq: FLCSX] and the Vanguard U.S. Growth Fund [Nasdaq: VWUSX]. Second, contact your plan administrator and request adding a low-cost S&amp;P 500 index fund.</p> <h3>Step 2: Check your plan for a fund of short-term investment-grade bonds</h3> <p>Just like there are index funds for investing in equities, there are also index funds for investing in bonds. For example, there is the Vanguard Short-Term Investment-Grade Fund [Nasdaq: VSFTX], which has an annual expense ratio of 0.20 percent, or $10 in fees for a balance of $5,000.</p> <p>Don't have access to such a fund? Look for a low-cost fund giving you the most exposure to high- and medium-quality, investment-grade bonds with short-term maturities, including corporate bonds, pooled consumer loans, and U.S. government bonds. Why short-term maturities? Short-term bonds tend to have low risk and low yields, ensuring that one portion of your nest egg remains stable at all times &mdash; something you'll really benefit from during any recessions.</p> <p>Then, request that your plan administrator add a low-cost index fund for domestic bonds.</p> <h3>Step 3: Allocate 90 percent to the equities index fund and 10 percent to the bonds index fund</h3> <p>Now you're ready to rebalance your portfolio. Using your online portal, look for an option that says &quot;exchange funds&quot; or &quot;transfer money between funds&quot; to move your nest egg dollars from your existing investments into the equities index fund and bonds index fund. (Note: Depending on your plan rules, including vesting rules, you may not be able to move 100 percent of your balance until a certain date. In that case, move everything that you can and the remaining once it becomes eligible.)</p> <p>Exchange your entire 401(k) balance and allocate 90 percent of that amount to the equities index fund and 10 percent to the bonds index fund. Confirm your transaction.</p> <h3>Step 4: Adjust your future contributions</h3> <p>To keep future contributions going into the right place, adjust your paycheck investment mix so that 90 percent of withholdings go to the equities index fund and 10 percent go into the bonds index fund.</p> <p>If your 401(k) offers an automatic rebalance feature, opt-in for it so that your portfolio is automatically readjusted to the 90/10 without you moving a finger. If your 401(k) doesn't offer that feature, plan to manually rebalance your account once a year.</p> <h3>Step 5: Revisit the 90/10 allocation at important life changes</h3> <p>Marriage. Birth of your first child. Purchase of your first home. Being able to start making catch-up contributions. Reaching age 59 1/2. These and more critical milestones in your life may require you to adjust your 90/10 allocation. As you get closer to retirement age, you should gradually shift from a growth strategy (selecting funds that exhibit signs of above-average growth) to an income strategy (picking funds that provide a steady stream of income) so that you hold fewer stocks and more bonds. The beauty of a target-date fund is that is does all of this for you automatically as you age. Without one, you'll need to stay on top of this occasional rebalancing yourself.</p> <h2>The bottom line</h2> <p>One of the main reasons that your 401(k) will perform better is that you're minimizing fees. If you were to allocate 90 percent of a $5,000 401(k) balance into the Vanguard 500 Index Investor Shares Fund [Nasdaq: VFINX] and 10 percent into the Vanguard Short-Term Investment-Grade Fund [Nasdaq: VSFTX], you would just pay $7.30 in annual fees. That's $43.70 in annual savings over putting the entire $5,000 in a target-date fund with a 1.02 percent annual expense ratio. It doesn't sound like a large amount of savings, but compounded over the years it can add up to thousands of dollars more in your retirement fund.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fbookmark-this-a-step-by-step-guide-to-choosing-401k-investments&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FA%2520Step%2520By%2520Step%2520Guide%2520To%2520Choosing%2520Investments.jpg&amp;description=A%20Step-by-Step%20Guide%20to%20Choosing%20401(k)%20Investments"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/A%20Step%20By%20Step%20Guide%20To%20Choosing%20Investments.jpg" alt="A Step-by-Step Guide to Choosing Investments" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/bookmark-this-a-step-by-step-guide-to-choosing-401k-investments">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/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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-the-risk-averse-can-get-into-the-stock-market">How the Risk Averse Can Get Into the Stock Market</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-make-sure-you-dont-run-out-of-money-in-retirement">How to Make Sure You Don&#039;t Run Out of Money in Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-traps-to-avoid-with-your-401k">7 Traps to Avoid With Your 401(k)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-things-you-need-to-know-about-investing-in-company-stock">7 Things You Need to Know About Investing in Company Stock</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement 401(k) bonds equities expense ratios fees index portfolio rebalancing s&p 500 short-term bonds target-date funds Warren Buffett Thu, 21 Sep 2017 08:31:06 +0000 Damian Davila 2023013 at http://www.wisebread.com Here's What's Included in a Home's Closing Costs http://www.wisebread.com/heres-whats-included-in-a-homes-closing-costs <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/heres-whats-included-in-a-homes-closing-costs" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/coins_spilling_out_of_a_glass_bottle.jpg" alt="Coins spilling out of a glass bottle" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Taking out a mortgage isn't free. You can expect to pay 2 percent to 5 percent of your home's purchase price in closing costs, the fees that everyone from lenders to title insurers charge to originate your loan. If you're buying a home for $200,000, for example, you can expect to pay between $4,000 and $10,000 in closing costs. (See also: <a href="http://www.wisebread.com/8-ways-to-reduce-mortgage-closing-costs?ref=seealso" target="_blank">8 Ways to Reduce Mortgage Closing Costs</a>)</p> <p>At least three business days before you close on your mortgage loan, your lender will send you the closing disclosure. This form lists exactly how much you'll pay each month for your mortgage, when your payments begin, and what your interest rate is.</p> <p>The closing disclosure also lists your closing costs, giving you the chance to review them before you sign any documents at the closing table.</p> <p>Here are some of the costs you might find listed on your closing disclosure.</p> <h2>Appraisal</h2> <p>Before your lender will loan you mortgage dollars, it wants to make sure that the home you are buying is worth what you are paying for it. To determine this, it will send an appraiser to your property to determine its value. You'll have to pay for the appraiser's work. You can expect this to cost about $400.</p> <h2>Escrow</h2> <p>Most lenders will require you to open an escrow account when you take out a mortgage. Under such an arrangement, you will pay extra money with each mortgage payment, with some of that money funneled into your escrow account. Your lender will then use that money to pay your property taxes and your homeowners insurance bills on your behalf when they come due.</p> <p>Typically, your lender will require that you make two to three months of your homeowners insurance and property tax payments at closing to start off your escrow account. So, if you must pay $500 every month for taxes and insurance, you'd have to prepay $1,000 to $1,500 at closing.</p> <h2>Origination fee</h2> <p>The origination fee is one of the bigger closing costs you might pay. This fee covers the costs that your lender incurs when originating your loan. You can expect this fee to be about 1 percent of your home's purchase price. For a $200,000 home, that comes out to $2,000.</p> <h2>Lender's policy title insurance</h2> <p>This insurance policy protects your lender in case the title insurance company made a mistake in its title search and you later discover that there are liens against your home. This can happen if a past owner failed to make property tax payments. This title insurance is not optional. Costs vary depending on your state, but you can expect to pay about $1,000 for this insurance.</p> <h2>Owner's title insurance policy</h2> <p>This form of title insurance protects <em>you </em>if someone comes forward with a claim that they have an ownership stake in your home. This is usually an optional fee. You can expect to pay about $600 to $1,000 if you choose to purchase this insurance. (See also: <a href="http://www.wisebread.com/yes-you-need-home-title-insurance-heres-why?ref=seealso" target="_blank">Yes, You Need Home Title Insurance &mdash; Here's Why</a>)</p> <h2>Title search</h2> <p>Before you close your loan, the title insurance company handling your closing will search the records of your new home. The goal is to make sure that no other individual or government body has an ownership claim against the property. This search usually costs from $100 to $250.</p> <h2>Underwriting fee</h2> <p>Before it approves you for a mortgage, your lender pulls your credit, verifies your income, and verifies your employment to make sure that you can afford your monthly payment. This fee covers those costs. This fee can vary widely, but expect to pay about $150.</p> <h2>Title settlement fee</h2> <p>A title insurance company will run your loan closing. The title settlement fee is what they charge for doing this. This fee can vary greatly, which is why it pays to shop around for a title insurance company. Your real estate agent might recommend a title insurance company, but you can still shop around for one on your own.</p> <h2>Credit report</h2> <p>When you apply for a loan, your lender will run your credit. Your credit reports list such important numbers as what you owe on your credit cards, whether you've made any late auto loan payments, and whether you've lost a home to foreclosure. Your lender will charge about $50 to $80 to pull your credit.</p> <h2>Flood determination fee</h2> <p>A third-party provider will determine if your home is in a flood zone. You'll have to pay this fee even if your home is located nowhere near water. It's not a costly fee, though, usually running from $10 to $20.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fheres-whats-included-in-a-homes-closing-costs&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHeres%2520Whats%2520Included%2520in%2520a%2520Homes%2520Closing%2520Costs.jpg&amp;description=Heres%20Whats%20Included%20in%20a%20Homes%20Closing%20Costs"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Heres%20Whats%20Included%20in%20a%20Homes%20Closing%20Costs.jpg" alt="Here's What's Included in a Home's Closing Costs" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/heres-whats-included-in-a-homes-closing-costs">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/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</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-mortgage-details-you-should-know-before-you-sign">5 Mortgage Details You Should Know Before You Sign</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/yes-you-need-home-title-insurance-heres-why">Yes, You Need Home Title Insurance — Here&#039;s Why</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-ways-to-qualify-for-a-mortgage-with-a-small-downpayment">5 Ways to Qualify for a Mortgage With a Small Downpayment</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-only-5-rules-of-home-buying-you-need-to-know">The Only 5 Rules of Home Buying You Need to Know</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing appraisal charges closing costs credit reports escrow fees homeownership insurance lenders loans mortgages title Fri, 01 Sep 2017 08:30:05 +0000 Dan Rafter 2012628 at http://www.wisebread.com 6 Age Milestones That Impact Your Retirement http://www.wisebread.com/6-age-milestones-that-impact-your-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-age-milestones-that-impact-your-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/piggy_bank_with_happy_birthday_party_glasses.jpg" alt="Piggy bank with Happy birthday party glasses" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Legally significant ages seem to cluster early in life &mdash; you can drive at 16, vote, smoke, and enlist at 18, and drink at 21. After that, you might think that there are no more important age milestones to reach.</p> <p>But there <em>are</em> more important milestones you'll reach as you near retirement. Here are the important ages that can impact your retirement, and the reasons why they were chosen.</p> <h2>Age 50 &mdash; Take advantage of catch-up contributions</h2> <p>IRAs and 401(k) retirement plans are tax-advantaged, which means you receive a tax-break by contributing to them. For traditional IRAs and 401(k)s, you contribute pretax income, which means you lower your overall tax burden for the year, and the money grows tax-free. With Roth IRAs and 401(k)s, you contribute post-tax dollars, and the money still grows tax-free. Since high income earners could potentially avoid paying any taxes at all if they simply contributed a large enough portion of their income, there are limits to the amount of money you can contribute each year. As of 2017, you can contribute an annual total of $5,500 to an IRA and $18,000 to a 401(k).</p> <p>However, there is something called a catch-up provision for anyone over age 50. If you've reached your half-century mark, you can contribute an additional $1,000 to an IRA (for a $6,500 total contribution) and an additional $6,000 to a 401(k) (for a $24,000 total contribution). Taking advantage of these catch-up provisions can help you to make sure your retirement is more secure.</p> <h2>Age 59&frac12; &mdash; Take penalty-free withdrawals from tax-sheltered accounts</h2> <p>Since you fund traditional IRAs and 401(k)s with pretax income, every withdrawal you make will be taxed at your ordinary income tax rate. But if you try to withdraw money from either of these types of accounts before you have reached age 59&frac12;, then you will also owe a 10 percent early withdrawal penalty on the amount you withdraw, in addition to the ordinary income tax.</p> <p>You are not required to take withdrawals as of age 59&frac12; &mdash; that is just the earliest age that you are allowed to do so without incurring a penalty.</p> <p>You might be wondering why 59&frac12; is the magic number. Congress decided to use this age because life insurance actuarial tables consider you to be 60 years old once you have reached age 59 and six months, and at the time that the rules were put in place, 60 was a relatively common age for retirement.</p> <h2>Age 62 &mdash; Take early Social Security retirement benefits</h2> <p>Social Security beneficiaries reach eligibility as of age 62. This is the very earliest that you can access your benefits from Social Security, although taking your benefits the moment you've blown out 62 candles is not necessarily a good idea.</p> <p>Social Security changes the benefit amount based on whether you retire before or after your full retirement age. This means the longer you wait, the more money you will see in your benefit checks &mdash; to the tune of about an additional 8 percent per year. If you take benefits before hitting your full retirement age, your payments will be permanently reduced. (See also: <a href="http://www.wisebread.com/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits?ref=seealso" target="_blank">5 Questions to Ask Before You Start Claiming Your Social Security Benefits</a>)</p> <p>These early benefits have been around for quite some time. Early retirement at age 62 was introduced for women only in 1956, and the option was extended to men in 1961. Women were offered this benefit first because of the concern for widows without an income, although it became clear that men were also very interested in the option of taking early benefits.</p> <h2>Age 64 and 9 months &mdash; Enroll in Medicare</h2> <p>The initial seven-month enrollment period for Medicare spans from the three months before your 65th birthday, through the month of your birthday, and the three months following your birthday. Enrolling during this period means you will pay no fees or penalties for enrollment, and enrolling within the three months before your 65th birthday means that you will have Medicare coverage starting on the first day of your birthday month. Enrolling during your birthday month or afterward will result in a delayed start for coverage.</p> <p>If you miss the initial enrollment period for Medicare, you can still sign up during the general enrollment period between January 1 and March 31 of each year, and your coverage will begin July 1 of that year. However, there is a late penalty for missing your initial enrollment period. For Medicare Part A, your monthly premium will increase by 10 percent for twice the number of years that you could have had Part A but didn't sign up.</p> <p>If you miss the initial enrollment period for Part B, you will have to pay the late enrollment penalty for as long as you are a Medicare beneficiary. The monthly premium will increase by 10 percent for each full 12-month period that you were eligible for Part B but did not sign up.</p> <h2>Age 66 or 67 &mdash; Reach full Social Security retirement age</h2> <p>Your full retirement age is the point at which you receive your full benefits from Social Security. When Social Security was first enacted, 65 was chosen as the retirement age. In 1983, to deal with the coming demographic shift that would occur when baby boomers started to retire, Congress gradually increased the full retirement age from 65 to 67, based on birth year:</p> <table> <tbody> <tr> <td> <p><strong>Birth Year</strong></p> </td> <td> <p><strong>Full Retirement Age</strong></p> </td> </tr> <tr> <td> <p>1943-1954</p> </td> <td> <p>65</p> </td> </tr> <tr> <td> <p>1955</p> </td> <td> <p>66 and 2 months</p> </td> </tr> <tr> <td> <p>1956</p> </td> <td> <p>66 and 4 months</p> </td> </tr> <tr> <td> <p>1957</p> </td> <td> <p>66 and 6 months</p> </td> </tr> <tr> <td> <p>1958</p> </td> <td> <p>66 and 8 months</p> </td> </tr> <tr> <td> <p>1959</p> </td> <td> <p>66 and 10 months</p> </td> </tr> <tr> <td> <p>1960 and later</p> </td> <td> <p>67</p> </td> </tr> </tbody> </table> <h2>Age 70&frac12; &mdash; Begin taking required minimum distributions</h2> <p>When you put money into a tax-deferred account like a traditional IRA or 401(k), you don't have to pay taxes on that money until you withdraw it. While this helps your tax burden during your career, you do need to remember that Uncle Sam will want his cut eventually.</p> <p>This is why the IRS requires each account holder to begin withdrawing money during the year he or she reaches age 70&frac12;. There is a minimum withdrawal you must take, and failing to take out the minimum means the IRS will take 50 percent of the amount you should have withdrawn.</p> <p>To figure out your required minimum distribution (RMD), you need to calculate it based upon the balance of each of your tax-deferred accounts as of December 31 of the previous year, and the correct IRS distribution table. These tables calculate life expectancy based upon your age and give you a number (corresponding to the number of years they expect you to live), by which you will divide your balance to determine your RMD.</p> <p>It may seem that 70&frac12; is an arbitrary number, but there is a lot of thought put into this milestone age. The IRS makes a distinction between people born in the first half of the year, and those born in the second half. If your birthday falls between July 1 and December 31, you don't officially have to take an RMD until the year you turn 71. This means that those with birthdays in the first half of the year take their first RMD the year they turn 70, and those with a later birthday take their first RMD the year they turn 71 &mdash; which averages out to 70&frac12;.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-age-milestones-that-impact-your-retirement&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Age%2520Milestones%2520That%2520Impact%2520Your%2520Retirement.jpg&amp;description=6%20Age%20Milestones%20That%20Impact%20Your%20Retirement"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/6%20Age%20Milestones%20That%20Impact%20Your%20Retirement.jpg" alt="6 Age Milestones That Impact Your Retirement" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/6-age-milestones-that-impact-your-retirement">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/what-every-retirement-saver-should-know-about-required-minimum-distributions">What Every Retirement Saver Should Know About Required Minimum Distributions</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/three-of-the-toughest-decisions-youll-face-in-retirement">Three of the Toughest Decisions You&#039;ll Face in Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-easiest-ways-to-catch-up-on-retirement-savings-later-in-life">7 Easiest Ways to Catch Up on Retirement Savings Later in Life</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-states-with-the-lowest-taxes-for-retirees">7 States With the Lowest Taxes for Retirees</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) ages catch-up contributions fees IRA milestones penalties required minimum distributions rmd social security taxes Wed, 23 Aug 2017 08:00:08 +0000 Emily Guy Birken 2007140 at http://www.wisebread.com What You Need to Know About Homeowners' Associations http://www.wisebread.com/what-you-need-to-know-about-homeowners-associations <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-you-need-to-know-about-homeowners-associations" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/handing_over_the_key_from_a_new_home.jpg" alt="Handing Over the Key from a New Home" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When my husband and I were thinking about <a href="http://www.wisebread.com/5-reasons-you-shouldnt-buy-a-house-yet" target="_blank">buying a house</a>, we toured a lovely home that was on the lower end of our budget. It was gorgeous. It had high-end appliances and the owners had completely updated it. We couldn't believe the price, or that it had been on the market for weeks.</p> <p>We told the realtor we were interested and were ready to make an offer and that's when she told us that the house was part of a homeowners association (HOA). She pulled out a massive binder with the HOA's rules, including what kind of grass we could plant, what kind of fencing was permitted, and what colors we could paint our home.</p> <p>Finally, she dropped one more bomb: The monthly HOA fee was a staggering $600 a month. We quickly gave up any idea of buying that home, but it was a well-learned lesson.</p> <p>Our experience isn't unique. HOAs are increasingly common, and they can be costly. Here's what you need to know about HOAs before buying a home. (See also: <a href="http://www.wisebread.com/how-to-deal-with-a-rude-neighbor?ref=seealso" target="_blank">How to Deal With a Rude Neighbor</a>)</p> <h2>HOAs can be costly</h2> <p>HOAs are residential governing bodies that provide certain services to the owners in the community. They are most commonly seen in condominium complexes or townhome communities, but some single-family home neighborhoods may have an HOA, too.</p> <p>HOAs can be very expensive. According to Investopedia, the average monthly HOA fee is $200, yet it can easily reach as high as $700 a month. That amount is completely separate from your mortgage payment, taxes, and homeowners insurance. An HOA can dramatically increase your monthly housing bill.</p> <h2>HOAs vary from community to community</h2> <p>In some communities, HOAs provide many valuable services. They may cut your lawn, maintain building exteriors, provide a community pool, and set rules about community appearance.</p> <p>Other HOAs are more bare-bones; they may only maintain common areas and you're responsible for your own landscaping. Because they can vary so widely from community to community, it's important to do your research and understand what's included in your fee.</p> <h2>HOAs may affect your mortgage application</h2> <p>When you're ready to buy a home, you will need to include the home's information in your mortgage application. Besides factors like your income, down payment, and the home's sale price, the mortgage lender will also ask you about HOA fees.</p> <p>Mortgage companies will include the HOA cost in their evaluation of your application. If the HOA fee worsens your debt-to-income ratio, they won't give you a loan.</p> <h2>What happens if you fall behind on HOA payments?</h2> <p>Depending on where you live, the consequences for falling behind on your HOA payments can be severe.</p> <p>When you first miss a payment, your HOA may charge you a late fee. If they still don't receive payment, they may send your debt to collections, which can damage your credit report. They can also ban you from using community amenities, such as the neighborhood pool or fitness center, until you pay what you owe.</p> <p>An HOA can also file a lien on your property. That means if you sell the home, the HOA gets their share before you get any of the money from the sale.</p> <p>Some states also allow an HOA to evict homeowners if they become delinquent on their payments. And in some areas, they can even foreclose on your property.</p> <p>These consequences can have long-lasting effects, and can cost you thousands in late fees, interest charges, and even legal fees. That's why it's so important to ensure the HOA payment is well within your budget before buying a home.</p> <h2>Do your research</h2> <p>Buying a house is a huge decision. Besides factors like price, school district, and taxes, make sure you research the community's HOA and its rules. Depending on your area, your HOA fees can add thousands to your housing costs and can cause plenty of headaches.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fwhat-you-need-to-know-about-homeowners-associations&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhat%2520You%2520Need%2520to%2520Know%2520About%2520Homeowners%2520Associations.jpg&amp;description=What%20You%20Need%20to%20Know%20About%20Homeowners%20Associations"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/What%20You%20Need%20to%20Know%20About%20Homeowners%20Associations.jpg" alt="What You Need to Know About Homeowners' Associations" 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/kat-tretina">Kat Tretina</a> of <a href="http://www.wisebread.com/what-you-need-to-know-about-homeowners-associations">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/why-you-should-be-saving-big-with-bi-weekly-mortgage-payments">Why You Should Be Saving Big With Bi-Weekly Mortgage Payments</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/house-hunting-these-features-will-save-you-big-over-the-long-haul">House Hunting? These Features Will Save You Big Over the Long Haul</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/23-hidden-costs-of-buying-an-old-house">23 Hidden Costs of Buying an Old House</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-best-neighborhood-features-for-new-families">5 Best Neighborhood Features for New Families</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/youre-ready-to-make-an-offer-on-a-house-now-what">You&#039;re Ready to Make an Offer on a House: Now What?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing amenities buying a house community debt to income ratio expenses fees HOA homeowners association homeownership house hunting mortgage Wed, 09 Aug 2017 09:00:06 +0000 Kat Tretina 1986885 at http://www.wisebread.com 8 Surprising Ways Confidence Can Hurt Your Investments http://www.wisebread.com/8-surprising-ways-confidence-can-hurt-your-investments <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-surprising-ways-confidence-can-hurt-your-investments" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/strong_man_self_confident_young_entrepreneur.jpg" alt="Strong man, self confident young entrepreneur" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There may come a moment when you feel like you have this investing thing all figured out. You've made some great stock picks and your portfolio is going gangbusters. But are you letting your confidence get the best of you and your investments?</p> <p>Being confident is OK. You need some confidence in yourself to invest in the first place. But being too cocky can lead you to make bad investment choices, and have a blind spot to your own weaknesses. Here are some of the ways confidence may actually hurt your investments.</p> <h2>1. You develop a selective memory</h2> <p>Maybe you bought shares of Facebook when they were trading below $25, and have made a killing on the investment since. You like to hold up that one purchase as proof of your genius as an investor. But are you forgetting about the other investments that didn't do so well? On balance, are you really any smarter than anyone else out there?</p> <p>Don't let your memory of one great decision delude you into thinking you have a special gift as an investor. Doing so can make you believe that every stock will eventually turn out to be a winner, even if there's no rational basis for your confidence.</p> <h2>2. You have too much faith in the market</h2> <p>While it's true that history shows the stock market has gone up consistently over time, it's still important to protect your investments against a possible downturn. As you get older and approach retirement age, consider shifting some investments into less volatile instruments, such as bonds, even if you believe the market will continue to go up.</p> <p>It's also important to avoid being too optimistic about markets in the short term. If you're investing money that you need in a year or two, the stock market may not be the best place to put it. Having faith in the market is crucial to building wealth over time, but protecting your investments against a down period is also part of the formula for success.</p> <h2>3. Your portfolio is not properly balanced</h2> <p>So you've had some great success with some of your investments, and decide to buy more shares of those that have done the best. There's nothing wrong with buying a lot of something if it performs well for you, but it's important to keep your overall portfolio from getting out of whack. This means not being too heavily invested in one particular stock or group of stocks.</p> <p>Ideally, your portfolio should have a nice mix of stocks from various industries, sectors, and asset classes. Depending on your retirement age, mixing in some bonds and dividend stocks may also make sense. You may fall in love with a certain investment, but you should not let it dominate your portfolio. Diversification is key to mitigating risk. (See also: <a href="http://www.wisebread.com/the-basics-of-asset-allocation?ref=seealso" target="_blank">The Basics of Asset Allocation</a>)</p> <h2>4. You're taking on too much risk</h2> <p>Investing is not without risk, and you must be comfortable with that if you plan to accumulate wealth over time. But don't be too tempted to take on extra risk just to chase higher returns. It's one thing to invest heavily in stocks, but it can be financial suicide to go after notoriously volatile investments, or to engage in risky practices like trading on margin or buying and selling options.</p> <p>The best approach is to build a portfolio that roughly performs in line with the whole stock market, ensuring that you'll likely make money over time but will avoid catastrophic downturns that wipe out your whole savings.</p> <h2>5. You never check up on your investments</h2> <p>For most people, it's not necessary to check your investments every day and obsess over every movement in the markets. But you don't want to completely ignore your investment accounts, either. Even if you are invested in simple, reliable things like index funds, an occasional check-in is usually a good idea. (See also: <a href="http://www.wisebread.com/the-4-best-investments-for-lazy-investors?ref=seealso" target="_blank">The 4 Best Investments for Lazy Investors</a>)</p> <p>Without a checkup, you may be unaware that certain investments are underperforming. You might allow your portfolio to become unbalanced, leaving you under- or over-invested in some areas. You may be left unaware of company sales or mergers that result in changes to your investment mix. Don't get cocky; the stock market has gone up reliably over time, but your investments still need some tending to from time to time.</p> <h2>6. You trade too often</h2> <p>Let's face it: Buying and selling stocks can be fun. And when you feel confident in your stock picking abilities, you'll feel the urge to trade stocks frequently. You may even feel like you can &quot;time&quot; the market. But trading frequently has financial consequences.</p> <p>First, if your stocks are in a taxable brokerage account, you'll end up paying tax on any gains when you sell. Second, most brokerage firms charge a commission for every trade. These expenses can put a dent in the value of your portfolio.</p> <h2>7. You miss out on popular, but well-performing investments</h2> <p>Imagine there's a hot stock that everyone is buying. But you stay away, because you think everyone else is dumber than you. Your confidence got in the way of rationally examining an investment on its merits rather than being influenced by the decisions of others. Buying a stock just because it's popular is silly, but so is refusing to buy it for the same reason. (See also: <a href="http://www.wisebread.com/7-everyday-things-that-are-surprisingly-awesome-investments?ref=seealso" target="_blank">7 Everyday Things That Are Surprisingly Awesome Investments</a>)</p> <h2>8. You hold on to investments too long</h2> <p>Years ago, you bought 100 shares of OmniCorp and it netted you a massive return in the first year. You still have some of those shares, but the company has since been struggling, and may even declare bankruptcy. But still, you refuse to cut your losses and sell, because you made so much money from this stock early on. You are utterly convinced the company will turn things around, despite all evidence to the contrary. This is a dangerous mentality to have, and can cost you plenty in the long run.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F8-surprising-ways-confidence-can-hurt-your-investments&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F8%2520Surprising%2520Ways%2520Confidence%2520Can%2520Hurt%2520Your%2520Investments.jpg&amp;description=8%20Surprising%20Ways%20Confidence%20Can%20Hurt%20Your%20Investments"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/8%20Surprising%20Ways%20Confidence%20Can%20Hurt%20Your%20Investments.jpg" alt="8 Surprising Ways Confidence Can Hurt Your Investments" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/8-surprising-ways-confidence-can-hurt-your-investments">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-youre-a-helicopter-investor-and-how-to-stop">8 Signs You&#039;re a &quot;Helicopter Investor&quot; (And How to Stop)</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-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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-an-etf-isnt-right-for-you">8 Signs an ETF Isn&#039;t Right for You</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-costly-mistakes-diy-investors-make">9 Costly Mistakes DIY Investors Make</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-simple-ways-to-conquer-your-fear-of-investing">4 Simple Ways to Conquer Your Fear of Investing</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment arrogance confidence fees rebalancing risk stock markets stocks taxes trading Wed, 26 Jul 2017 08:00:17 +0000 Tim Lemke 1988261 at http://www.wisebread.com