investments http://www.wisebread.com/taxonomy/term/3930/all en-US 7 Things Financial Advisers Wish You Knew About Retirement http://www.wisebread.com/7-things-financial-advisers-wish-you-knew-about-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-things-financial-advisers-wish-you-knew-about-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/men_tablet_work_579235928.jpg" alt="Men learning what financial advisers wish they knew about retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Wish you had a crystal ball for retirement planning? Most of us do, and for good reason. Even if you're sure you'll have <a href="http://www.wisebread.com/how-much-money-will-you-need-to-retire?ref=internal">enough money to retire</a>, there are no guarantees until you get there. If your nest egg runs short, it will be far too late for a do-over.</p> <p>This is where a financial adviser can help. A financial adviser will know if you're heavy on risk, not diversified enough, failing to maximize tax advantages, or simply not saving enough. They will also make sure to take into account your lifestyle and preferences to ensure you're on the right path to your ideal retirement, and not just following a cookie cutter plan that's not going to be the right fit.</p> <p>We asked financial advisers for some of the most important ideas they wish their clients understood when it comes to money, retirement, and the future.</p> <h2>1. Social Security will be around in some form</h2> <p>]Andrew McFadden, a financial adviser for physicians, says many clients refuse to accept that Social Security will still be around when they retire. This is especially true if they are part of Gen X or Gen Y, he says, since they are decades away from receiving benefits.</p> <p>However short on funds we may be, the Social Security Administration projects the ability to pay around 75 percent of current benefits after the fund is depleted in 2034. This is a key detail, notes McFadden, since many people hear Social Security is going bankrupt and refuse to acknowledge any benefits in their own retirement planning.</p> <p>&quot;It's not all roses, but that's still a far cry from those bankruptcy rumors,&quot; says McFadden. &quot;So lower your expectations, but don't get rid of them altogether.&quot;</p> <h2>2. It's ok to &quot;live a little&quot; while you save for retirement</h2> <p>Russ Thornton, founder of Wealthcare for Women, says too many future retirees sacrifice living now for their &quot;pie in the sky&quot; dream of retirement. Unfortunately, tomorrow isn't promised, and many people never get to live out the dreams they plan all along.</p> <p>&quot;So many people assume they can't really live until they're retired and not working full-time,&quot; says Thornton. &quot;Nothing could be further from the truth. Find ways to experience aspects of your dream life now, whether you're in your 30s, 40s, or 50s.&quot;</p> <p>With a solid savings and retirement plan, you should be able to do both &mdash; save and invest adequately, and try some new experiences that make life adventurous and satisfying now.</p> <p>&quot;Don't accept the deferred life plan,&quot; he says. That future you dream about and plan for may never come.</p> <h2>3. The 4 percent rule isn't perfect for everybody</h2> <p>Born in the 90s, the 4 percent rule stated retirees could stretch their funds by withdrawing 4 percent per year. The catch was, a good portion of those investments had to remain in equities to make this work.</p> <p>The 4 percent rule lost traction between 2000 and 2010 when the market closed lower than where it started 10 years before, says Bellevue, WA financial adviser Josh Brein. As many retirement accounts suffered during this time, it was shown that the 4 percent rule doesn't always work for everybody.</p> <p>It doesn't mean the rule should be thrown out completely though, nor should it still be followed like gospel. In fact, in 2015, two-third of retirees following the 4 percent rule had double the amount of their starting principal after a 30-year stretch. These retirees could have benefited from taking out more than the limited 4 percent, which could have meant an extra vacation each year, or another luxury that they were indeed able to afford.</p> <p>There's absolutely no denying the importance of making your retirement dollars last. But, after a lifetime of working and saving, you also deserve to enjoy those dollars to their full capability.</p> <p>Bottom line, take time to re-evaluate your drawdown strategy every few years and make adjustments as necessary. While you don't want to go broke in retirement &mdash; you also don't want to miss out on all the incredible things this time in your life has to offer.</p> <h2>4. Retirement looks different for everyone</h2> <p>Minnesota financial adviser Jamie Pomeroy says he wishes people would abandon their preconceived notions on what retirement should look like. He blames the financial industry in part for perpetuating the idea that certain retirement planning accounts and products work for everyone. &quot;They don't,&quot; he says.</p> <p>&quot;Some enjoy retiring to the beach, some take mini-retirements before reaching a retirement age, some work part-time in retirement, and some just want to spend time with their grandkids,&quot; he says. &quot;The concept of retirement is dynamic, ever-changing, and defined very differently by lots of different people.&quot;</p> <p>To find the right retirement path and plan for your own life, you should sit down and decide what you really, truly want. Once you know what you want, you can craft a realistic plan to get there.</p> <h2>5. Investment returns aren't as important as you think</h2> <p>According to North Dakota financial adviser Benjamin Brandt, too many people focus too much energy on their investment returns &mdash; mostly because they are an immediate and tangible way to gauge the success or failure of our financial plans.</p> <p>Investment returns should only be judged in the proper scope of a long-term financial plan, and &quot;over decades,&quot; he says.</p> <p>In the meantime, our behavior can make a huge impact when it comes to reaching your retirement goals. By <a href="http://www.wisebread.com/4-quirky-ways-to-spend-less-and-kick-start-saving?ref=internal">spending less and saving more</a>, for example, we can avoid debt and potentially invest more money over the long haul. Those moves can help us retire earlier whether the market performs the way we hope or not.</p> <h2>6. Small changes add up</h2> <p>When it comes to retirement planning, many people feel overwhelmed right away. For example, some people may realize they need $1 million or more to retire and give up before they start.</p> <p>Financial adviser Jeff Rose of Good Financial Cents says this could change if everyone realized how small changes &mdash; and small amounts of savings &mdash; add up drastically over time.</p> <p>&quot;Someone who invests just $200 per month for 30 years and earns 7 percent would have more than $218,000 in the end,&quot; says Rose. &quot;Now imagine both spouses are saving, or that they boost their investments incrementally over the years.&quot;</p> <p>As Rose points out, a couple who invests $500 per month combined and earns 7 percent would have more than $566,000 after 30 years.</p> <p>Looking for ways to save money and invest more will obviously make this number surge. If you boost your contributions each time you get a raise, for example, you'll have considerably more for retirement. Remember even the smallest contributions can greatly add up over the years.</p> <h2>7. Don't forget about long-term care</h2> <p>Joseph Carbone, founder and wealth adviser of Focus Planning Group, says many future retirees are missing one key piece of the puzzle, and that piece could cost them dearly.</p> <p>&quot;I wish many of my clients understood the biggest hurdle from passing wealth on to their heirs is long-term care costs,&quot; says Carbone. &quot;Whether it is home health care, assisted living, or the dreaded nursing home. It is real and it is scary.&quot;</p> <p>According to Carbone, most people have no idea how much long-term care costs and fail to plan as a result. &quot;Even though the average stay is only 2.7 years in a nursing home, the total cost for those 2.7 years could be well over $400,000,&quot; he says</p> <p>To help in this respect, Carbone and his associates suggest working with an attorney who specializes in elder law. With a few smart money moves, families can prepare for the real possibility of using a nursing home at some point. (See also: <a href="http://www.wisebread.com/is-long-term-care-insurance-worth-it?ref=seealso">Is Long Term Care Insurance Worth It?</a>)</p> <h2>One more thing advisers wish you knew</h2> <p>While financial advisers don't know everything, their years of experience make them painfully aware of what lies ahead for those of us who fail to plan. And, if there's one thing financial planners can agree on, it's this: The sooner we all start planning, the better off we'll be.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/holly-johnson">Holly Johnson</a> of <a href="http://www.wisebread.com/7-things-financial-advisers-wish-you-knew-about-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-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/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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/if-youre-lucky-enough-to-receive-a-pension-here-are-6-things-you-need-to-do">If You&#039;re Lucky Enough to Receive a Pension, Here Are 6 Things You Need to Do</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/3-ways-more-money-in-retirement-might-cost-you">3 Ways More Money in Retirement Might Cost You</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-enjoy-retirement-if-you-havent-saved-enough">How to Enjoy Retirement If You Haven&#039;t Saved Enough</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-surprising-truth-of-investing-mediocre-advice-is-best">The Surprising Truth of Investing: Mediocre Advice Is Best</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 4 percent rule advice contributions financial advisers investments long term care planning social security Wed, 05 Apr 2017 08:30:15 +0000 Holly Johnson 1921765 at http://www.wisebread.com Most Popular Ways Americans Spend Their Tax Refunds http://www.wisebread.com/most-popular-ways-americans-spend-their-tax-refunds <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/most-popular-ways-americans-spend-their-tax-refunds" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-492675012.jpg" alt="Here are the most popular ways Americans spend their refunds" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>According to the IRS, the <a href="https://www.irs.gov/uac/newsroom/filing-season-statistics-for-week-ending-feb-26-2016" target="_blank">average tax refund in 2016</a> was $3,053. While we here at Wise Bread generally advise against giving the government a free loan all year, there's no arguing that a tax refund can go to good financial use. But how, exactly do most Americans spend their newfound chunk of change?</p> <h2>What do most people spend on?</h2> <p>Fortunately, the majority of people use their tax refund to pay down debt, save, or invest. In a poll conducted by GoBankingRates, 41 percent of people deposited the money into their savings account and 38 percent used it to pay off debt.</p> <p>More than half of millennials plan to use their refunds for savings and debt repayment. This is a major change from previous years, when the tendency for this age group was to spend on splurge purchases (clothes, video games, new shoes, etc.). Gen Xers are the second group behind millennials most likely to use their refund for debt repayment, and younger Gen Xers (35&ndash;44) are the second most likely behind boomers to fund a vacation. While baby boomers age 65+ are less likely to receive a refund, they are currently more likely to spend it on a vacation or splurge purchase than other generations. Despite more boomers spending on themselves, 42 percent still allocate their refund to savings.</p> <h2>Smart ways to use your refund</h2> <p>If you're getting a tax refund this year, you might be tempted to splurge. While there's nothing wrong with treating yourself once in awhile, your money would be better spent in these smart ways.</p> <h3>Boost your emergency fund</h3> <p>You should have three to six months' worth of expenses saved for a <a href="http://www.wisebread.com/a-step-by-step-guide-to-creating-your-emergency-fund?ref=internal" target="_blank">financial emergency</a>. If your savings account could use some padding, this is the perfect time to save without feeling the burn. Your future self will be grateful for your savviness. (See also: <a href="http://www.wisebread.com/50-smart-things-to-do-with-your-tax-refund?ref=seealso" target="_blank">50 Smart Things to Do With Your Tax Refund</a>)</p> <h3>Pay down debt</h3> <p>According to a GoBankingRates survey, the top source of financial stress for Americans is paying off debt. Fortunately, your tax refund can help ease that stress. Consider using the money to make an extra mortgage or student loan payment, or help tackle your <a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt?ref=seealso" target="_blank">high-interest credit card debt</a>. (See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=seealso" target="_blank">Fastest Way to Pay off $10K in Credit Card Debt</a>)</p> <h3>Invest it</h3> <p>If you already have an emergency fund to fall back on, then consider using your refund to pad your retirement accounts or other investments. You can also begin diversifying your portfolio to mitigate risk and potentially increase your returns.</p> <h3>Invest in yourself</h3> <p>If you've considered taking classes, focusing on your hobbies, getting in shape, or starting a small business, then it might be worth using your refund to fund these ventures. By investing in yourself, you'll continue benefiting from the refund over time.</p> <h3>Make small home improvements</h3> <p>Have you been putting of small fixes around the house? It's time to tackle them now before they turn into a bigger problem. Simple upgrades are not expensive, and can result in a higher resale value and future tax benefits. (See also: <a href="http://www.wisebread.com/10-cool-diy-home-improvements-for-20-or-less?ref=seealso" target="_blank">10 Cool DIY Home Improvements for $20 or Less</a>)</p> <h3>Donate it</h3> <p>If you're feeling financially secure in your own life, consider paying the funds forward. Donating your refund to a worthwhile charity ensures that the money is going to great use. It can also reduce your taxable income for the next tax season. (See also: <a href="http://www.wisebread.com/can-i-write-it-off-as-charity?ref=seealso" target="_blank">Can I Write It Off as Charity?</a>)</p> <h3>Treat it like a paycheck</h3> <p>Figure out how much of your paycheck you allocate to certain expenses each month (food, mortgage, gas, etc.) and treat your tax refund the same. Don't forget to include any debt payments. Just like a typical paycheck, you might even have a small amount leftover to use for something fun.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-cannon">Andrea Cannon</a> of <a href="http://www.wisebread.com/most-popular-ways-americans-spend-their-tax-refunds">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/beware-these-6-phony-irs-calls-and-emails">Beware These 6 Phony IRS Calls and Emails</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-lessons-from-tax-day-to-remember-for-next-year">7 Lessons From Tax Day to Remember for Next Year</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-do-when-your-tax-preparer-makes-a-mistake">What to Do When Your Tax Preparer Makes a Mistake</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-do-if-you-have-a-tax-lien-on-your-house">What to Do If You Have a Tax Lien On Your House</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/make-these-5-money-moves-before-applying-for-a-mortgage">Make These 5 Money Moves Before Applying for a Mortgage</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes debt repayment investments IRS saving money spending habits splurges tax refunds Mon, 03 Apr 2017 08:30:18 +0000 Andrea Cannon 1917304 at http://www.wisebread.com Are Timeshares Ever Worth the Investment? http://www.wisebread.com/are-timeshares-ever-worth-the-investment <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/are-timeshares-ever-worth-the-investment" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-487001458.jpg" alt="Couple learning if timeshares are ever worth the investment" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Despite scams and hard sales tactics that have tarnished the reputation of timeshares, the American Resort Development Association says sales are rising &mdash; and timeshares are attracting increasingly younger buyers. The average age of today's timeshare owner is 39.</p> <p>According to MarketWatch, the <a href="http://www.marketwatch.com/story/6-things-to-know-before-you-buy-a-timeshare-2015-02-17" target="_blank">average price of a timeshare</a> is $16,000, putting them within financial reach for many consumers. But is buying a timeshare a good investment?</p> <h2>What are timeshares?</h2> <p>The general idea of a timeshare is that a group of people have the right to use a vacation property and they split up the year among them. Usually each timeshare owner gets one week a year.</p> <p>A true timeshare is deeded. You own a specific unit of the property, and you can use that at a designated time every year. You may own it for the rest of your life, for a given number of years, or until you sell it.</p> <p>Another arrangement is called &quot;right to use,&quot; in which you lease a unit on the property from a developer for a certain amount of time over a set number of years (generally 10 to 50 years). You may get a specific unit for either a fixed or floating amount of time. With the floating option, you can pick a week within a certain season of the year, and you have to reserve it in advance on a first-come, first-served basis. A third option that's popular with major resort chains such as Marriott and Hilton is a points club. You buy an allotment of points and can use them for stays at different properties around the world.</p> <p>The cost of a timeshare depends on the location and the property. In addition to buying the timeshare, you'll be responsible for annual maintenance fees and sometimes property taxes. Maintenance fees will likely increase over time.</p> <h2>Benefits of timeshares</h2> <p>The main feature that makes timeshares attractive to some people is predictability; you get a set place to vacation every year. Once you purchase a timeshare, you are guaranteed to have a week (or weeks) at the location where you bought it.</p> <p>An overcrowded market also means you may be able to get a good deal by <a href="http://www.wisebread.com/save-thousands-by-buying-a-timeshare-on-the-secondary-market?ref=internal" target="_blank">purchasing a used timeshare</a> from a current owner. You can find timeshares for sale on the secondary market on sites like <a href="http://tug2.com/timeshare-marketplace.aspx" target="_blank">Timeshare Users Group</a> or <a href="http://www.redweek.com/" target="_blank">RedWeek</a>.</p> <p>In addition, you may find a timeshare more comfortable than a traditional hotel. For instance, many timeshares include a kitchen or kitchenette, which you won't find in most hotel rooms. They may have multiple bedrooms and separate living areas, making them more like an apartment or villa than a hotel.</p> <p>Points clubs and floating timeshares give you the most options, but even a fixed property may offer some flexibility. You may be able to swap with other owners, or rent it to outsiders. Some properties have online portals that facilitate these types of exchanges. Websites such as RedWeek allow you to sell weeks you don't plan on using.</p> <h2>Drawbacks of timeshares</h2> <p>One big disadvantage of a timeshare is that it may limit your vacation choices. To get the most value from your purchase, you need to use the timeshare every year. But if you're tied to one destination, this could get boring.</p> <p>You can get around that by swapping or renting the unit, but it takes some work and you often have to plan months in advance. If you don't like administrative tasks, this could end up feeling like a burden. (See also: <a href="http://www.wisebread.com/10-surprising-ways-to-save-money-on-hotels?ref=seealso" target="_blank">Surprising Ways to Save Money on Hotels</a>)</p> <p>Furthermore, it's almost a given that you will resell a timeshare unit for less than what you paid, because so many people are selling these types of units. The Federal Trade Commission clearly states on its website that &quot;the value of these options is in their <a href="https://www.consumer.ftc.gov/articles/0073-timeshares-and-vacation-plans" target="_blank">use as vacation destinations</a>, not as investments.&quot;</p> <h2>Buy and sell cautiously</h2> <p>When purchasing a timeshare, it's very important that you know what you are buying. Timeshares are often sold using high-pressure sales tactics. As with any major purchase, take the time you need to do research before you buy, and ask lots of questions about what's included and the costs.</p> <p>Often you'll see promotions promising rewards such as a free trip in exchange for attending a timeshare sales pitch, but be ready for relentlessly pushy sales tactics. In an interview with MarketWatch, former timeshare sales rep Dana Micallef warned that salespeople are trained to &quot;Dress it up (as an investment) and promise them [the] world that they can resell it, when the chances of selling it are slim to none.&quot;</p> <p>I attended one of these presentations in Puerto Vallarta when my aunt, a timeshare owner, let me use a free week she couldn't use. I sat through an exhausting three-hour meeting in exchange for one lousy breakfast.</p> <p>This excruciating meal aside, the rest of my stay in the timeshare was enjoyable. I loved having a kitchen &mdash; we definitely saved money by cooking some of our own meals. I also used the resort's amenities such as the tennis court, multiple pools, and gym, which helped make the experience memorable. (See also: <a href="http://www.wisebread.com/6-easy-ways-to-get-free-travel?ref=seealso" target="_blank">6 Easy Ways to Get Free Travel</a>)</p> <p>Be very cautious if you are buying a unit that is not yet completed. Don't make a payment until construction is finished, because you may get ripped off. The FTC recommends that you place the money in an escrow account at a local bank until the property is ready. It also advises putting a &quot;nonperformance&quot; provision in the sales contract stipulating that you'll get your money back if the developer goes bust or defaults before your unit is finished.</p> <p>If you buy a timeshare and later want to sell it, you'll need to be careful, too. Scammers have been known to target timeshare owners, promising them they've got a buyer but demanding you pay filing fees and closing costs first. The buyer never emerges, and then you can't get your money back.</p> <p>If you still want to buy a timeshare knowing all this, make sure you view it as a vacation purchase and not an investment. Shop around before committing your future vacation stays, especially if it's for one particular location.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <p>&nbsp;</p> <div align="center"><a href="//www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fare-timeshares-ever-worth-the-investment&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FAre%20Timeshares%20Ever%20Worth%20the%20Investment-.jpg&amp;description=Are%20Timeshares%20Ever%20Worth%20the%20Investment%3F" data-pin-do="buttonPin" data-pin-config="above" data-pin-color="red" data-pin-height="28"><img src="//assets.pinterest.com/images/pidgets/pinit_fg_en_rect_red_28.png" alt="" /></a> </p> <!-- Please call pinit.js only once per page --><!-- Please call pinit.js only once per page --><script type="text/javascript" async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <div align="center">&nbsp;</div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Are%20Timeshares%20Ever%20Worth%20the%20Investment-.jpg" alt="Are Timeshares Ever Worth the Investment?" 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/amanda-gokee">Amanda Gokee</a> of <a href="http://www.wisebread.com/are-timeshares-ever-worth-the-investment">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/once-in-a-lifetime-experiences-ive-earned-with-credit-card-rewards">Once-In-A-Lifetime Experiences I&#039;ve Earned With Credit Card Rewards</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-airline-miles-secrets-only-frequent-flyers-know">5 Airline Miles Secrets Only Frequent Flyers Know</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/which-credit-card-should-you-use-to-get-free-hotel-stays">Which Credit Card Should You Use to Get Free Hotel Stays?</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-flight-booking-hacks-to-save-you-hundreds">10 Flight Booking Hacks to Save You Hundreds</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-money-saving-travel-gadgets">5 Money Saving Travel Gadgets</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Travel investments points property resale value suites timeshares vacation villas Thu, 23 Mar 2017 09:30:31 +0000 Amanda Gokee 1913750 at http://www.wisebread.com 8 Smart Money Moves to Make in the New Year http://www.wisebread.com/8-smart-money-moves-to-make-in-the-new-year <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-smart-money-moves-to-make-in-the-new-year" 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_savings_545348368.jpg" alt="Piggy bank for making smart money moves in the new year" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Maybe your New Year's resolution is to budget more consistently, save more, or spend less. Maybe it's investing a portion of your disposable income wisely. Whatever your financial objectives are, setting money-minded goals is important to ensure a more prosperous 2017 and beyond. Here are a few ways to build and improve upon the foundation you've already laid.</p> <h2>1. Enlist Professional Help</h2> <p>Guess what? Everybody gets themselves into a financial pickle every now and then &mdash; myself included &mdash; and it's not the end of the world. Don't beat yourself up about it. You can fix this.</p> <p>If you overdid it during the holidays (or even all of last year), identify your missteps so you don't repeat them in the future, and you can formulate a plan of resolve. If finances aren't your forte (though you should make them your forte ASAP), consider consulting an expert.</p> <h2>2. Learn to Cook</h2> <p>I know a staggering number of people who can't cook. Like, if they tried to sauté a few shrimp, you'd probably walk away from the dinner table with hepatitis. I don't understand it &mdash; which is why I harp on those who avoid the kitchen to get in there and learn. Refusing to prepare yourself fresh, delicious meals is just plain lazy.</p> <p>The other problem with not being able to cook is that the alternative is expensive and very unhealthy. For starters, you're at the mercy of the microwave or what's already prepared at takeouts and restaurants &mdash; and more times than not, that food is loaded with fats and sodium. Second, you're paying about three-to-one for ready-to-eat dishes (unless you're buying the worst of the worst from the freezer section) versus what you could make in your own home using store-bought ingredients.</p> <p>Cooking shows on the Food Network and recipes off the Internet taught me a lot of kitchen basics (like how to make sure a chicken breast is thoroughly cooked so I don't poison myself). A friend of mine recently hired a cook from Craigslist to come into his home once a week to help him learn how to prepare standard meals, like pork chops, veggies, and rice. There are plenty of resources available to help you learn how to cook, too. Find them, graduate to adulthood by making your own dinner, and then count all the cash you're saving. Your mama will be so proud.</p> <h2>3. Cut the Fat From Your Expenses</h2> <p>Along with cutting the fat from your diet, you also should look for ways to trim it from your budget. End memberships and subscriptions you don't use, and call your service providers to renegotiate your deals. I shaved $15 per month off my mobile phone bill last year by calling to update my 12-year-old plan. Also, investigate your bank accounts for erroneous fees; you may be paying for something on a recurring basis that you totally forgot about. Commit to shopping less, and saving more when you do need or want to spend. I don't buy anything without a coupon or discount code. Positive personal finance is a way of life.</p> <h2>4. Increase Your Retirement Savings</h2> <p>If there's extra money in your budget at the end of the month, spend it on your future by increasing your retirement savings. If your employer matches 401K contributions, you should at least be maxing them out. If you don't have an employer-sponsored plan, look into a Roth IRA as an alternative.</p> <h2>5. Consider a Balance Transfer</h2> <p>If you're underwater on your credit cards, consolidating that debt onto a <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal" target="_blank">card that allows balance transfers</a> could save you a decent chunk of change. Just make sure you check the fees and pay it off during the promotional period, otherwise interest can revert much higher, making repayment even more expensive. (See also: <a href="http://www.wisebread.com/which-balance-transfer-credit-card-is-the-best-for-you?ref=seealso" target="_blank">Which Balance Transfer Credit Card Is Best for You?</a>)</p> <h2>6. Lower Your Investment Fees</h2> <p>If your finances are already fairly on track, there are still ways you can put more money back into your bank account &mdash; like lowering your investment fees if you play the stock market.</p> <p>Take a closer look at your portfolio, and re-evaluate to see how you can restructure so fees aren't costing you significant amounts in the long run. Now might also be a good time to <a href="http://www.wisebread.com/3-steps-to-getting-started-in-the-stock-market-with-index-funds?ref=internal">consider investing in index funds</a>, the benefits of which include broader market exposure, low operating expenses, and low portfolio turnover.</p> <h2>7. Research How the Trump Administration Will Affect Your Finances</h2> <p>Things are going to change, perhaps significantly, once Trump takes office. The new tax code overhaul alone could affect your finances one way or another. But there are other effects to consider, like rising interest rates, which may reduce the pool of potential buyers of a home sale if you're planning to sell in the near future. The repeal of Obamacare may also alter your budget, depending on what health care alternatives you have. Nonetheless, I recommend researching how the new administration's fiscal plans will trickle down to your own pocket. Hopefully you'll come out ahead, but you should prepare yourself, either way.</p> <h2>8. Just Say No</h2> <p>Make 2017 the year that less is more. Buy fewer retail items, dine out less frequently, limit your alcohol consumption, and learn how to say no to recreational activities that aren't in your budget. You don't have to do or have it all to feel satisfied. Rather, you'll start to experience satisfaction in other ways, like not living paycheck to paycheck because of frivolous spending. You deserve better; give it to yourself.</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/8-smart-money-moves-to-make-in-the-new-year">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/12-personal-finance-skills-everyone-should-master">12 Personal Finance Skills Everyone Should Master</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/looking-on-the-bright-side-how-to-find-a-silver-lining-in-the-current-financial-crisis">Looking On The Bright Side: How to Find A Silver Lining In The Current Financial Crisis</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-financial-decisions-youll-never-regret">8 Financial Decisions You&#039;ll Never Regret</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-money-mistakes-to-stop-making-by-50">5 Money Mistakes to Stop Making by 50</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-manage-your-money-during-a-spousal-separation">How to Manage Your Money During a Spousal Separation</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Frugal Living advice balance transfers budgeting fees financial help investments learning to cook New Year resolutions retirement Mon, 16 Jan 2017 10:00:10 +0000 Mikey Rox 1873728 at http://www.wisebread.com How to Give Your Finances a Year-End Review http://www.wisebread.com/how-to-give-your-finances-a-year-end-review <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-give-your-finances-a-year-end-review" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_paying_bills_168362659_0.jpg" alt="Couple giving their finances a year-end review" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>As one year ends and another begins, it's a natural time for reflection &mdash; financial and otherwise. Here are some suggestions for evaluating your financial progress in 2016, with the hopes of planning an even better 2017.</p> <h2>Net Worth</h2> <p>This is your financial big picture and it makes for a great starting point. In essence, the net worth calculation asks, &quot;How much are you worth?&quot; And the more important question for our purposes: Has your net worth increased or decreased over the past year?</p> <p>Assets minus liabilities (debts) equals your net worth. Calculate the value of all your assets (home, vehicles, retirement accounts, savings, investments, belongings, etc.) minus any liabilities or debt (mortgage balance owed, car note balance, student loans, credit card debt, medical bills, etc.). The difference between your assets and liabilities is your net worth.</p> <p>If you did this exercise last year, how has your net worth changed over the last 12 months? And what contributed to the changes?</p> <h2>Cash Flow</h2> <p>When it comes to using a budget, there are various tools &mdash; from a paper and pencil budget to the <a href="http://www.wisebread.com/a-comprehensive-guide-to-the-envelope-system">envelope system</a>, and from software to online tools. When trying to motivate people to use a budget for the first time, I often say that the best budget tool is the one you'll actually use. However, for the purpose of a year-end analysis, there's nothing like an electronic tool, whether that means budget software or an online service such as <a href="https://www.mint.com/">Mint.</a></p> <p>For your cash flow analysis, start with the big picture &mdash; total income versus total expenses. Did you live within your means this year?</p> <p>Then do a category-by-category analysis. If you overspent in a certain category, was your budgeted amount unrealistic, or do you simply need to do a better job of managing your spending in that category?</p> <p>Use what you learn from this analysis in crafting your 2017 budget.</p> <h2>Experiential Net Worth</h2> <p>Traditional net worth statements have one big shortcoming, though &mdash; failing to account for investments you've made in positive experiences. <em>Experiential </em>net worth includes things like charitable donations, investments in your or your child's education, or even a memorable family vacation.</p> <p>Sure, these are expenses. However, research shows that spending money on positive experiences tends to make us happier than material things, so it's appropriate to recognize the experiences we <em>invest</em> in each year.</p> <p>To analyze your experiential net worth, focus on some of the ways you've spent money in the past year that led to some of your most positive experiences. This doesn't need to be a highly detailed account. If you gave to charity, for example, you might just list the organization(s) that you donated to as your experience, and maybe include a few details about the organization or how much money you contributed.</p> <p>Keeping tabs on your experiential investments can help you be strategic in planning future spending.</p> <h2>Emotional Net Worth</h2> <p>Emotional net worth is an assessment of how you <em>feel</em> about your current financial situation. While highly subjective, it can still help you analyze your overall financial wellbeing. Are you stressed about debt &mdash; and if so, how much? Do you feel you're making positive progress toward financial goals?</p> <p>Give your emotional net worth an overall rating. Next, jot down some ideas that could help you improve in this area, such as debt reduction, better communication about money with your spouse, or building an emergency fund.</p> <p>Now, take a good look at your year-end financial review. Are you content with what you see? Imagine it's this time next year. What changes will you need to make in 2017 to end up where you want to be?</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/how-to-give-your-finances-a-year-end-review">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/12-personal-finance-skills-everyone-should-master">12 Personal Finance Skills Everyone Should Master</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-smart-money-moves-to-make-in-the-new-year">8 Smart Money Moves to Make in the New Year</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/plan-for-your-wants">Plan for your wants</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-quiet-millionaire-part-2-major-obstacles-to-financial-success">The Quiet Millionaire: Part 2 – Major Obstacles to Financial Success</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/its-10-pm-do-you-know-where-your-net-worth-is">It&#039;s 10 pm: Do You Know Where Your Net Worth Is?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance analyzing budgeting cash flow experiences financial review investments net worth year end review Tue, 03 Jan 2017 10:00:12 +0000 Matt Bell 1865739 at http://www.wisebread.com 7 Last-Minute Ways to Cut Your 2016 Tax Bill http://www.wisebread.com/7-last-minute-ways-to-cut-your-2016-tax-bill <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-last-minute-ways-to-cut-your-2016-tax-bill" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/tax_time_clock_170171888.jpg" alt="Finding last-minute ways to cut your tax bill" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Before you know it another tax season will be upon us. Do your wallet a favor and score all the deductions you can with these last-minute ways to reduce your bill in 2016.</p> <h2>1. Investment Account Balancing</h2> <p>Year-end investment account balancing is a no-brainer. If you have a taxable investment account, you should review your transactions for the year to see if you're in a net capital gain situation. If you are &mdash; says Jacob Dayan, co-founder of tax-relief service Community Tax &mdash; find some losing positions that will offset the gains and liquidate them by the last business day of December.</p> <p>&quot;If you wish to remain invested in these assets long-term, you can buy them back after 30 days,&quot; he adds. &quot;Note that this strategy also works in reverse, with one difference. If you sell a net-gain position, you don't have to wait 30 days to buy it back. In either case, if you have positions involving multiple purchases over time, identify the specific assets you want to liquidate by purchase transaction to give you the greatest tax benefit.&quot;</p> <h2>2. Charitable Donations</h2> <p>'Tis the season to give unto others &mdash; if only for the tax breaks. You have until the end of the year to make charitable donations that will count toward your 2016 contributions for tax purposes.</p> <p>&quot;All charitable donations made to qualifying organizations before December 31 will count toward your 2016 deduction, as long as you itemize your deductions,&quot; says Pennsylvania-based certified public accountant William Ray. &quot;Deductions are generally limited to 50% of your adjusted gross income, although additional restrictions may apply for those in higher income brackets. You may also deduct the current fair market value &mdash; not your original cost &mdash; of noncash contributions made to qualifying organizations. Certain noncash contributions may require additional support or an appraisal, so you should review <a href="https://www.irs.gov/pub/irs-pdf/p526.pdf">IRS Publication 526</a> before claiming noncash contributions.&quot;</p> <p>It's also important to track your volunteer time.</p> <p>Ray adds, &quot;Although you cannot make a deduction for your time, you may claim a deduction for any mileage driven using your personal vehicle ($0.14 per mile) and any out of pocket expenses that are not reimbursed. As is the case with any deduction, documentation and support should always be maintained for all contributions.&quot;</p> <p>Financial planner Andy Yadro details another option for end-of-year giving.</p> <p>&quot;Consider contributing to a donor-advised fund,&quot; he suggests. &quot;You get an immediate tax benefit and your money can be invested with potential to grow. This is a great last minute option for someone who wants to make a donation, but hasn't decided which charity it should go to.&quot;</p> <h2>3. Max Out Retirement Contributions</h2> <p>Were you fortunate enough to get a holiday bonus? Use it to top of your tax-deferred retirement accounts such as an IRA. Even better, kick in a few extra dollars from your regular paycheck. You'll boost your savings while reducing your taxable income. However, be aware of the contribution limits for both types of retirement account.</p> <p>&quot;If you or your spouse are not covered by a retirement plan through your employer, you're both eligible to contribute up to $5,500 each to an IRA ($6,500 if you are over age 50),&quot; Ray says. &quot;You may be eligible to make a contribution, even if you are covered by a retirement plan through your employer, depending on your income.&quot;</p> <p>You also have until April 15, 2017, to make this contribution and still have it count toward your 2016 taxes. However, it's highly recommended that you do not file your tax return until you make the contribution. If you claim the deduction but cannot pay, you'll need to file an amended tax return by April 15, 2017, or pay penalties and interest.</p> <h2>4. Pay Your State or Local Income Tax Bill Early</h2> <p>If you itemize deductions, you can claim a deduction for state income taxes paid during the calendar year. This includes any amounts paid for your 2015 tax liability that were paid in calendar year 2016.</p> <p>&quot;If you consistently owe taxes on your state or local tax returns, paying them early can result in immediate federal tax savings,&quot; Ray explains. &quot;States and localities allow you to make estimated tax payments or prepayments at any time during the year. If you make a payment before December 31, 2016, that payment can be deducted on your 2016 federal tax return. But be careful of overpaying. If you overpay and receive a state or local income tax refund, you will need to claim that as income on your 2017 federal tax return.&quot;</p> <h2>5. Make January's Mortgage Payment in December</h2> <p>One of the joys of homeownership is taking advantage of the various tax breaks the government provides. The biggest of these is the mortgage interest deduction. If you can spare the extra cash, consider making your January 2017 mortgage payment before the end of the year. You'll be able to deduct the mortgage interest on your 2016 tax form. Don't get greedy here, though. Tax law generally prohibits taking annual deductions on &quot;prepaid interest,&quot; so you won't be able to pay February's mortgage bill and claim that for 2016, too. For more on the tax advantages of homeownership, see the <a href="http://www.taxpolicycenter.org/briefing-book/what-are-tax-benefits-homeownership">Tax Policy Center's analysis</a>. (See also: <a href="http://www.wisebread.com/4-tax-deductions-new-homeowners-shouldnt-skip?ref=seealso">4 Tax Deductions New Home Owners Shouldn't Skip</a>)</p> <h2>6. Review Your Health Coverage</h2> <p>If you're covered by a high-deductible health plan, you may qualify for a Health Savings Account (HSA) and contribute $3,350 ($6,750 for a family) to the plan &mdash; all of it tax-deductible.</p> <p>&quot;Many employers now offer high-deductible health plans, meaning employees often have to pay thousands toward a deductible before their health coverage kicks in,&quot; Ray says.</p> <p>To offset this cost, you may qualify for an HSA.</p> <p>&quot;An HSA is basically a 'retirement account for health care' and is becoming more common each year,&quot; Ray continues. &quot;The HSA allows you to contribute to an investment account that can grow tax free over time, while receiving a deduction on your tax return. You even receive a deduction if you don't itemize. The account can then be used to cover qualifying medical costs. Unlike a Flexible Spending Account (FSA), an HSA is 'your money' and can grow over time, rather than being forfeited at the end of the year.&quot;</p> <p>Check with your employer to see if your plan qualifies for an HSA. (See also: <a href="http://www.wisebread.com/11-surprising-things-your-hsa-will-cover?ref=seealso">11 Surprising Things Your HSA Will Cover</a>)</p> <h2>7. Prepay Real Estate Tax</h2> <p>If you foresee a changing income situation, supplement next year's loss with a right-now gain. Yadro suggests prepaying your real estate taxes and taking the deduction now.</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/7-last-minute-ways-to-cut-your-2016-tax-bill">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/can-i-write-it-off-as-charity">Can I Write It Off as Charity?</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/you-should-make-these-11-easy-donations-before-time-runs-out">You Should Make These 11 Easy Donations Before Time Runs Out</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/cleaning-out-for-a-cause-make-a-noncash-tax-deductible-donation">Cleaning Out for a Cause: Make a Noncash Tax-Deductible Donation</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/charitable-giving-get-a-receipt">Charitable giving - get a receipt</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/make-these-5-money-moves-before-applying-for-a-mortgage">Make These 5 Money Moves Before Applying for a Mortgage</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes charitable deductions charity HSA income tax investments last minute deductions mortgages real estate retirement contributions tax bill tax deductions Mon, 26 Dec 2016 10:30:23 +0000 Mikey Rox 1860478 at http://www.wisebread.com 13 Financial Gifts to Give Yourself This Holiday Season http://www.wisebread.com/13-financial-gifts-to-give-yourself-this-holiday-season <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/13-financial-gifts-to-give-yourself-this-holiday-season" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_wrapped_gift_77878153.jpg" alt="Woman giving financial gifts to herself this holiday season" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The holiday shopping season is around the corner. And while the average holiday shopper will dole out more than $800 for gifts, about half will also spend an average of $132 on non-gift items for themselves. Hey &mdash; there's nothing wrong with treating yourself, especially when discounts are steep and shopping centers are extra cheery.</p> <p>But, you might want to consider putting that buck thirty toward something more substantial, such as your fiscal health. Read on for our guide to the top financial gifts you should consider giving yourself this holiday season. We promise, there will be no buyers remorse involved.</p> <h2>1. Boost Your Retirement Fund Contribution</h2> <p>The best time to start investing is now. Case in point: If you start maxing out your IRA contributions at age 25, you will have saved $1.6 million by the time you're 70. But if you were to start at 35, you'd save about half that sum. So whatever the form of your retirement savings, be it IRA, 401K, or 403(b), consider boosting your contribution this holiday season. Even a 1% increase can go a long way to making your golden years more comfortable.</p> <h2>2. Pay Down Your Debt</h2> <p>When it comes to personal debt, even $100 can make a sizable dent. Without a doubt, every little bit counts. Use a <a href="https://www.calcxml.com/calculators/how-long-will-it-take-to-pay-off-my-credit-card">minimum payment calculator</a> to determine just how long it will take your to pay down your credit card debt &mdash; and precisely how much mileage that $100 can get you.</p> <h2>3. Reassess Your Investments</h2> <p>How are your investments faring? Are you on track to meet your earnings expectations? Or do you have too much riskily tied up in a single company's stock? Gift yourself an hour spent reassessing your investments. Rid yourself of risk you can't shoulder and sour gambles.</p> <h2>4. Invest in Professional Advice</h2> <p>In the Internet age, getting good investment advice is easy and affordable. <a href="https://www.wealthfront.com">Wealthfront</a>, which boasts a stable of world-class financial experts that excels in making small money grow, offers free accounts totaling $10,000 or less. And you can open an account with <a href="https://www.betterment.com/">Betterment</a> even if you have no money.</p> <h2>5. Deposit an Extra $100 Into Your Savings Account</h2> <p>It's simple enough: Rather than buy yourself a couple of new sweaters, take that holiday cash and stow it away as savings. And if you think $100 won't make much difference, think again: If you were to sack away an extra $100 quarterly for the next 10 years, you've have an extra $4,000 in your savings account. That's more than the average down payment for a new car.</p> <h2>6. Boost Your Emergency Fund</h2> <p>It's smart to have funds stowed away for the kinds of emergencies life sometimes throws at us. Natural disaster. Illness. Job loss. If you've got an emergency fund, consider funneling some more funds into it. And if you don't, consider setting one up, even if you inaugurate it with a modest $100 investment. It's far better to be prepared than dumbstruck by a bad set of circumstances.</p> <h2>7. Draft a Financial Plan</h2> <p>A third of Americans have taken no steps <a href="https://www.northwesternmutual.com/about-us/studies/planning-and-progress-2015-study">toward financial planning</a>. If you don't have a plan, invest a day to join yourself among the ranks of the minority of Americans who do. It can be as simple as stating your financial priorities and then mapping out what you need to do to achieve them. Yes, it's drudge work. But you stand to benefit greatly by slogging through.</p> <h2>8. Purchase a Book on Finance</h2> <p>Whether it's the stock market or saving for retirement or paying down debt, most of us have a weak spot in our financial literacy. Why not help yourself close that gap by purchasing a book on your weakest link? For inspiration, check out our list of <a href="http://www.wisebread.com/the-8-classic-personal-finance-books-you-must-read">classic personal finance books</a>.</p> <h2>9. Write a Will</h2> <p>The hardest part about will-writing is getting yourself to actually sit down and write it. No one wants to rationalize their own death by taking time out of their life to plan for it. Nonetheless, it's an important tool that can help to ensure that your property and wishes are carried out according to your liking when you're no longer around to dictate. If your finances are uncomplicated, consider creating an online will, which is perhaps the quickest and easiest way to complete the process.</p> <h2>10. Review Your Credit Score</h2> <p>It costs nothing to check your credit score, but the price of ignoring it can be huge. Your credit score determines critical stuff such as your insurance premium rate and your ability to get a loan. If you're unfamiliar with your credit score, it's probably a good idea to take a pause and get acquainted with it &mdash; and then commit to reviewing it annually. (Be on the lookout for any errors, which could be preventing you from getting lower rates).</p> <h2>11. Donate to Charity</h2> <p>It pays to help others in need. Not only can making a charitable donation give you the feel-good fuzzies, it can also <a href="https://www.irs.gov/uac/eight-tips-for-deducting-charitable-contributions">lower your tax bill</a>. Just remember to keep good records.</p> <h2>12. Cash in on Your Credit Card Rewards</h2> <p>Airline miles, hotel rewards, and cash are just a few of the amazing incentives available to those who swipe responsibly. But if you don't use 'em, you lose 'em, so take a moment to assess what rewards you've got, when they expire, and whether now's a good time to cash in. (See also: <a href="http://www.wisebread.com/cash-back-vs-travel-rewards-pick-the-right-credit-card-for-you?ref=internal">Cash Back vs Travel Rewards: Pick the Right Credit Card for You</a>)</p> <h2>13. Review Your Account Statements</h2> <p>Remember all those account statements you've been filing away? Now's the time to actually read and analyze the charges. A bogus charge is a tried and true sign of identity theft, so it'll serve you well to review all your statements thoroughly. Painstaking though it may be, giving your financial records a good read affords you the opportunity to correct any improper service fees that may have been mistakenly docked from your account. If you find a faulty charge, you can get reimbursed from your bank or credit card company. If you don't, then you can rest assured that all is in order. Think of it as a game with no chance to lose.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/brittany-lyte">Brittany Lyte</a> of <a href="http://www.wisebread.com/13-financial-gifts-to-give-yourself-this-holiday-season">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/save-on-christmas-shopping-with-this-clever-gift-card-strategy">Save on Christmas Shopping With This Clever Gift Card Strategy</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-money-moments-that-should-be-on-everyones-bucket-list">8 Money Moments That Should Be On Everyone&#039;s Bucket List</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/unique-ways-to-save-money-in-december">Unique Ways to Save Money in December</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/many-happy-returns-5-tips-for-getting-what-you-really-want-this-holiday">Many Happy Returns: 5 Tips for Getting What You Really Want This Holiday</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-golden-rules-of-personal-finance-everyone-should-know">10 Golden Rules of Personal Finance Everyone Should Know</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance bills charity Christmas emergency funds estate planning gifts Holidays investments paying debt saving money Mon, 07 Nov 2016 09:00:08 +0000 Brittany Lyte 1827215 at http://www.wisebread.com 13 Money Goals You Can Still Reach by 2017 http://www.wisebread.com/13-money-goals-you-can-still-reach-by-2017 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/13-money-goals-you-can-still-reach-by-2017" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/money_2016_78370695.jpg" alt="Finding money goals you can still reach by 2017" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We've passed the halfway point of 2016, and maybe you're down on yourself because you haven't achieved some of your annual financial goals. Life can sometimes derail our money-saving plans &mdash; and that can make you feel like a failure. But the year isn't over yet. So chin up, buttercup! It's never too late to give your money a makeover, like with these 13 money goals that are still attainable by 2017.</p> <h2>1. Increase Your Emergency Fund</h2> <p>Whether you want to increase your fund by $500 or $1,000, there's still time to build your bank account.</p> <p>Ideally, you should have about three to six months' of income in reserves. If you're not in a position to save this much, aim for an emergency fund sufficient to help you get through most unexpected expenses, like a home or car repair. You'll have to make a few sacrifices, such as spending less on entertainment or shopping less, but with five months left in the year, you can hit this goal by saving $100 to $200 a month.</p> <h2>2. Start Planning for Retirement</h2> <p>Your retirement account isn't going to grow itself. The older we get, the more important it is to plan for the future. If you haven't started saving for retirement yet, now's the time to get serious. Talk to your employer about enrolling in the company's 401K plan. If this isn't an option, open an Individual Retirement Account (IRA) through your bank or with the help of a financial adviser.</p> <h2>3. Increase Retirement Contributions</h2> <p>Then again, maybe you're already saving for retirement, but feel now's the time to increase your contribution. Whether you're currently contributing 2% or 5% of your income to a retirement account, set a goal of increasing your contribution by at least 1% before the end of the year.</p> <h2>4. Reduce Expenses</h2> <p>It's easier to attain money goals when you reduce expenses and free up cash. For the next four to five months, eliminate or reduce at least one expense a month. This can include downgrading your cable package or getting rid of cable altogether (it's a common trend these days), using coupons to lower your grocery bill, or riding your bike or carpooling to work a few days a week to save on transportation costs. The savings add up quickly, and before you know it you'll have a bigger bank account.</p> <h2>5. Create a Second Income Stream</h2> <p>Our income isn't always enough to meet our money goals. Rather than complain about your situation, think creatively about ways to increase your income. Working a side hustle a few days a week can generate money to build your savings account, pay off debt, or start saving for retirement.</p> <p>If you're an expert in your field, offer consulting on the side. Or if you have excellent writing skills, look into <a href="http://www.wisebread.com/22-websites-that-will-pay-you-to-write-for-them?ref=internal">freelance writing opportunities</a> and share your knowledge. Don't think your second income stream has to be glamorous, either. If you don't mind odd jobs or getting your hands dirty, you can make extra money around the neighborhood cleaning houses, doing handyman work, or cutting grass.</p> <h2>6. Give Up a Costly Habit</h2> <p>Bad habits are expensive.</p> <p>Before the end of the year, make a concerted effort to eliminate at least one bad habit. This includes things like drinking too much alcohol and smoking, as well as habits that aren't as dangerous to your health but detrimental to your finances. Do you have a routine of stopping for coffee and breakfast every morning on the way to work? If you can eliminate this $5 daily purchase from your budget, you'll save about $25 a week, or $100 a month.</p> <h2>7. Simplify Your Life</h2> <p>Less can be more. If you're tired of clutter or feel the stuff you own takes too much of your time and energy, set a goal to simplify and unload a few possessions. Selling off items can put extra cash in your pocket, plus you can save money on storage fees and free up space in your house, garage, attic, or basement.</p> <h2>8. Give to Charity</h2> <p>It's not too late to make a charitable donation and give back. While you're simplifying and decluttering your life, consider donating a few items to your favorite organization. You'll not only help someone in need, you can write off charitable donations on your tax return and lower your tax bill.</p> <h2>9. Purchase Life Insurance</h2> <p>Life insurance is necessary for everyone, but especially for people with children and other dependents who rely on their income. A policy can cover the cost of a funeral and burial, plus pay off any expenses you leave behind, such as a mortgage and credit cards.</p> <p>There are no hard-and-fast rules regarding the amount of coverage to purchase, but some money experts recommend a policy that's eight to 10 times your income. If you already have a policy, review your coverage to make sure it's adequate for your needs. If you don't have a policy, it's time to get one.</p> <h2>10. Budget Your Money</h2> <p>If you overspend every month and can't get ahead, the problem could be poor budgeting. The truth is, attaining many of your money goals by 2017 will require an airtight budget. You have to know what's coming in and what's going out before you can come up with a plan for your personal finances. Now's the time to put pen to paper and review your income and expenses to determine a reasonable amount to spend in various spending categories, such as food, transportation, entertainment, shopping, etc.</p> <h2>11. Say No to Credit Card Debt</h2> <p>Credit cards are simple and convenient, but they're also a source of pain and suffering if you let balances grow out of control. Before the end of the year, come up with a plan to pay off or pay down at least one credit card. Don't stop until you're debt free. (See also: <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=seealso">How to Get Rid of Interest on Your Credit Card Debt</a>)</p> <p>You can achieve this goal by paying more than your minimums every month. Or negotiate a <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">lower interest rate</a> with your creditors so that more of monthly payments go toward reducing the principal. Since the amounts we owe make up 30% of our credit scores, paying off credit cards also <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">increases your credit score</a>.</p> <h2>12. Automate Your Finances</h2> <p>Paying bills on time also contributes to a higher credit score. Forgetting a due date and paying late can result in late fees, and when bills arrive 30 or more days past due, your credit score suffers. To avoid these situations, automate your finances. Set up automatic bill payments between your bank and creditors and you'll never miss another due date.</p> <h2>13. Check Your Credit Report</h2> <p>Everyone should check their credit reports at least once a year and dispute erroneous information. If it's been more than 12 months since you last reviewed your reports, visit&nbsp;<a href="http://annualcreditreport.com">AnnualCreditReport.com</a> today and get a free copy of your reports from each of the three bureaus. Credit report mistakes and fraudulent activity can drive down your FICO score and trigger credit rejections and higher interest rates on loans and credit cards &mdash; and when you're charged higher interest rates, you pay more for credit.</p> <p><em>What are some of your money goals that you'd like to reach by the end of the year? How do you plan to meet those goals? Let's discuss in the comments below.</em></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/13-money-goals-you-can-still-reach-by-2017">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/its-never-too-late-to-fix-these-5-money-mistakes-from-your-past">It&#039;s Never Too Late to Fix These 5 Money Mistakes From Your Past</a></span> </div> </li> <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-financial-decisions-youll-never-regret">8 Financial Decisions You&#039;ll Never Regret</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/13-financial-gifts-to-give-yourself-this-holiday-season">13 Financial Gifts to Give Yourself This Holiday Season</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-money-moments-that-should-be-on-everyones-bucket-list">8 Money Moments That Should Be On Everyone&#039;s Bucket List</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-personal-finance-resolutions-anyone-can-master">8 Personal Finance Resolutions Anyone Can Master</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance 2016 2017 bad habits clutter credit reports donating emergency funds goals investments nest egg retirement savings simplifying Fri, 12 Aug 2016 09:00:08 +0000 Mikey Rox 1770701 at http://www.wisebread.com Who to Hire: A Financial Planner or a Financial Adviser? http://www.wisebread.com/who-to-hire-a-financial-planner-or-a-financial-adviser <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/who-to-hire-a-financial-planner-or-a-financial-adviser" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/employees_meeting_work_53155048.jpg" alt="Couple deciding whether to hire a financial planner or adviser" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Armed with Internet access and a DIY attitude, many Americans tackle all kinds of projects on their own to avoid paying a professional. When it comes to managing an investment portfolio, creating a detailed estate plan, or handling the sale of several stock holdings, most of us are better off hiring a financial professional. (See also: <a href="http://www.wisebread.com/4-times-you-should-splurge-and-hire-a-pro?ref=seealso">4 Times You Should Splurge and Hire a Pro</a>)</p> <p>Financial literacy varies across generations. For example, only 24 percent of Millennials and 38% of Gen-Xers in the U.S. are able to answer four out of five <a href="https://www.finra.org/sites/default/files/14_0100%201_IEF_Research%20Report_CEA_3%206%2014%20%28FINAL%29_0_0.pdf">financial quiz questions correctly</a>. While the titles <em>financial adviser</em> and <em>financial planner</em> are often used interchangeably, they're not the same! Let's review the difference between a financial adviser and a financial planner, how you can decide which professional you need.</p> <h2>What Is a Financial Adviser?</h2> <p>In simple terms, a financial adviser helps you manage your money. Since most of the time this means managing your investments, a financial adviser has to complete the <a href="http://www.finra.org/industry/series65">Investment Adviser Law Examination</a> (better known as the Series 65 exam) to legally practice the profession.</p> <p>A financial adviser is a broad title within the financial services industry. To specialize in a field, a professional often completes additional certifications. According to the National Association of Personal Financial Advisers (NAPFA), there are <a href="http://www.napfa.org/UserFiles/File/ConsumerServices/2015%20Pursuit%20of%20a%20Financial%20Advisor%20Field%20Guide%20-%20v2015.pdf">more than 100 professional designations</a> within the industry. Here are three examples of financial advisers:</p> <ul> <li><a href="https://www.niccp.com">Certified College Planning Specialist</a> (CCPS): Presents strategies to finance a college education.<br /> &nbsp;</li> <li><a href="https://www.institutedfa.com/">Certified Divorce Financial Analyst</a> (CDFA): Provides specialized accounting, financial, and legal advice in the field of pre-divorce financial planning.<br /> &nbsp;</li> <li><a href="http://icfs.com/certified_income_specialist">Certified Income Specialist</a> (CIS): Seeks to optimize income from retirement accounts.</li> </ul> <h2>What Is a Financial Planner?</h2> <p>A financial planner is a certified professional uniquely qualified to help individuals pull all their finances together, solve financial problems, and make a plan to achieve their financial goals. This particular type of financial adviser is proficient in the areas of financial planning, taxes, insurance, estate planning, and retirement planning.</p> <p>The most popular credential among financial planners is the <a href="http://www.cfp.net">Certified Financial Planner</a> (CFP), which is a rigorous seven-hour long exam only available a couple times throughout the year. Only individuals who have completed college or university-level coursework in major personal financial planning areas qualify to take the CFP exam. In order to retain CFP status, a professional must also complete continuing education requirements each year.</p> <p>Depending on the work history and preferred area of expertise of the financial planner, he may hold additional designations, such as Chartered Financial Analyst (CFA) and Chartered Financial Consultant (CHFC).</p> <h2>How to Decide What Professional You Need</h2> <p>The main reason why these two titles can be confusing is that every financial planner is also a type of financial adviser, but not every financial adviser is a financial planner. Here are two useful rules to decide which professional to hire.</p> <h3>1. Define the Scope of Your Project</h3> <p>Just like you wouldn't hire an engineer to fix your clogged toilet, you shouldn't hire a full-fledged financial planner to just to buy a couple of bonds. The general rule of thumb is that you should seek the professional who holds the appropriate expertise and qualifications of the services that you require.</p> <p>Consider two scenarios:</p> <ul> <li>A financial adviser focusing on investment management may not be the best match for a client looking for comprehensive estate planning services. A CFP would be more appropriate in this case so that she can structure your finances to meet your financial planning goals.<br /> &nbsp;</li> <li>If you're just trying to decide between several 529 college saving plans, then a CFP may not be necessary and a financial adviser would do.</li> </ul> <h3>2. Decide Whether or Not You Require Fiduciary Duty</h3> <p>Another key criterion to decide between a financial adviser and a financial planner is <em>fiduciary duty</em>. While all financial planners with a CFP designation are legally bound to put their client's interests before their own, not all financial advisers are.</p> <p>Commission-based financial advisers may receive an incentive or kickback for pushing certain products, such as life insurance packages or mutual funds. Check with your prospective financial professional as to whether or not he receives ongoing income from any recommendations or how his fees may affect the success of attaining your financial goals.</p> <p>Fortunately, starting April 10, 2017 <em>all </em>financial advisers handling retirement accounts will be <a href="https://www.dol.gov/ebsa/newsroom/fs-conflict-of-interest.html">required to serve as fiduciaries</a>. Until then, make sure to check for fiduciary duty.</p> <h2>Tips When Choosing a Financial Adviser or Financial Planner</h2> <p>Before you sign a contract, do your homework and determine whether or not your potential financial adviser or financial planner is the most suitable for you.</p> <h3>1. Ask for Credentials and Affiliations</h3> <p>While some salespersons and representatives from insurance and investment companies may appear to provide financial advice and financial planning services, they may have compensation agreements that encourage them to suggest certain investments. Make sure to inquire about the credentials of any financial professional.</p> <h3>2. Verify Credentials and Affiliations</h3> <p>Virtually all governing bodies providing certifications provide a searchable database to look up members. For example, through the <a href="http://www.letsmakeaplan.org/?utm_source=LMAP&amp;utm_medium=header&amp;utm_content=homepage&amp;utm_campaign=header">CFP Board's member database</a> I can see that there are only five CFPs servicing my ZIP code. So, anybody else claiming to be a &quot;financial planner&quot; is lying. Besides confirming credentials, look for any disciplinary action posted on the database. If the professional didn't disclose them in advance, that's a red flag.</p> <h3>3. Review Client Eligibility Requirements</h3> <p>Some financial professionals require you to own a minimum of investable assets. For example, one of the CFPs in my ZIP code requires at least $500,000 in investable assets and another, $2.5 million!</p> <h3>4. Consider Pay Structure</h3> <p>Before entering a contractual relationship with a financial adviser or planner, request a detailed disclosure of all applicable fees. The objective is to spot potential conflicts of interest. Pay close attention to minimum fees for rendered services, commissions from investment products or securities trading, and referral fees from other professionals, such as accountants, insurance agents, and mortgage brokers. (See also: <a href="http://www.wisebread.com/4-sneaky-investment-fees-to-watch-for?ref=seealso">4 Sneaky Investment Fees to Watch For</a>)</p> <h3>5. Ask About Continuity Planning</h3> <p>In other words, &quot;Who would handle my finances if you were to be hit by a bus tomorrow?&quot; After investing so much time in finding the right professional, you don't want to find out that she's retiring next year. Also, inquire if you'll be working with the same financial adviser at all times. If you'll be working with another associate than the one you're interviewing right away or within a few months, request to meet that associate before signing a contract.</p> <h3>6. Inquire If You're the &quot;Typical Client&quot;</h3> <p>You'll get the most out of your financial adviser or financial planner when he's more used to clients at your asset level and financial objective. Working with a &quot;superstar&quot; financial adviser may sound amazing, but may cause a lot of anxiety if you keep being pushed for financial transactions outside your risk tolerance.</p> <h2>The Bottom Line</h2> <p>When deciding on whether to hire a financial planner or financial adviser, ask as many questions as you need to find out if the prospective financial professional is right for you. Finding out as much as possible in advance will allow you to minimize any surprises.</p> <p><em>Have you hired or sought to hire a financial planner or adviser?</em></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/who-to-hire-a-financial-planner-or-a-financial-adviser">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/how-and-why-to-buy-life-insurance">How (and Why) to Buy Life Insurance</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-much-youd-have-today-if-youd-bought-bitcoins-a-few-years-ago">Here&#039;s How Much You&#039;d Have Today if You&#039;d Bought Bitcoins a Few Years Ago</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/12-personal-finance-skills-everyone-should-master">12 Personal Finance Skills Everyone Should Master</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tactics-of-the-rich">Tactics of the rich</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/13-financial-gifts-to-give-yourself-this-holiday-season">13 Financial Gifts to Give Yourself This Holiday Season</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance financial adviser financial literacy financial planner getting help hiring investments NAPFA professionals Mon, 01 Aug 2016 09:30:34 +0000 Damian Davila 1762105 at http://www.wisebread.com 12 Personal Finance Skills Everyone Should Master http://www.wisebread.com/12-personal-finance-skills-everyone-should-master <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/12-personal-finance-skills-everyone-should-master" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/little_girl_dad_000071538069.jpg" alt="Little girl learning personal finance skills everyone should master" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I was happy to see that my son signed up to take a personal finance class in high school next year. I think mastering basic personal finance skills is one of the most important things you can do to improve your happiness and quality of life. But you're a full-fledged adult. If you haven't already, the earlier you start developing and using personal finance skills, the more time you have to reap the benefits.</p> <p>Here is my list of personal finance skills every frugal person should master.</p> <h2>1. Budgeting</h2> <p>Setting and following a budget is probably the most basic personal finance skill, yet only about one-third of people actually have a detailed budget. I went for years without an accurate budget, using my checking account balance as a rough gauge of how much money I had available to spend. Eventually, I realized this was a terrible way to run my personal finances. A detailed budget is necessary to get a handle on where your money is going and to start deciding where you <em>want </em>your money to go &mdash; instead of just watching it go away!</p> <p>Writing out a list of all of your income and expenses is only the first step toward becoming skilled at budgeting. You need to monitor spending and work to stay on track every month. Sometimes unexpected expenses will pop up, and it takes skill to find ways to spend less in other areas to recover and stay on budget.</p> <p>You can get a real budget started by looking at your bank statements and credit card bills from last month and adding up spending by category. I used colored highlighters to mark up my spending into categories such as food, clothing, pets, entertainment, transportation, housing, utilities, etc.</p> <p>Food expenses are especially challenging for me, since food cost varies so much depending on what you decide to eat. In my household, we use a money envelope as a tool to help us stay on our food budget. Every payday, I take out cash for the budgeted amount for food spending, both groceries and dining out. All food spending comes out of the money envelope, so we always know how much is left to spend on food.</p> <h2>2. Negotiation</h2> <p>Negotiation is a key skill to master to get the best deal when buying or selling something, or even getting the best salary and benefits when accepting a job offer. Most people do not like to negotiate. It is easiest to pay the asking price, or accept the amount offered from a buyer or employer. But if you become skilled at negotiation, you can end up with lots more dollars in your pocket instead of in the other guy's pocket!</p> <p>Here are some skills that <a href="http://www.wisebread.com/the-7-laws-of-negotiation">successful negotiators master</a>:</p> <ul> <li><strong>Be willing to walk</strong>. Successful negotiators are willing to walk away if they can't get a good deal. Willingness to walk away gives you the confidence to ask for what you really want and drive a hard bargain. Often, you'll learn things in deals that don't work out that help you get a better deal in the future.<br /> &nbsp;</li> <li><strong>Be reasonable.</strong> Good negotiators understand the market value of what they are negotiating and can understand the deal from the other party's perspective. If you seek an unreasonable deal, you are likely wasting everyone's time and won't end up with anything.<br /> &nbsp;</li> <li><strong>Be perceptive</strong>. They pick up clues from the other party to determine what kind of offer they would accept and use this information to negotiate the best deal possible.</li> </ul> <h2>3. Separating Needs vs. Wants</h2> <p>Do I need a new computer? My kids say that I do. I am using the same computer they used to play games on way back when George W. Bush was in office. I sometimes use my cellphone to look things up while my computer slowly loads a webpage. But I don't need new computer. I can still get everything done with my old computer, including paying bills, updating my budget spreadsheet, and even writing books and articles for extra income.</p> <p>Separating needs from wants is a key personal finance skill. There is almost no limit to bigger, better, and newer stuff that you could decide to buy. The best way to make spending decisions is to become disciplined at distinguishing needs from wants.</p> <p>I like to think about the consequences of not buying something as a tool to distinguish needs from wants. For example, if I don't buy the new shoes I am considering, will I not be able to go to work? Will I miss events for my kids because I don't have any shoes that are acceptable to wear? Will I not be able to exercise safely? At some point new shoes can become a need, but if your old shoes are still doing everything you need your shoes to do, then new shoes are a want.</p> <h2>4. Driving Down Interest Rates</h2> <p>A lot of people carry debt &mdash; the total credit card debt for Americans is set to hit $1 trillion dollars this year. Of course, your best move is to <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">pay off debt as quickly as possible</a> to reduce your interest payments and to free up your money to invest or pursue other opportunities. But while you are paying off debt, it is worth putting in some effort to keep your interest rates as low as possible.</p> <p>The average credit card interest rate is nearly 15%. If you have credit card debt and don't keep an eye on the interest rate, you could easily end up paying 15% or more. Shopping around can almost always result in a better deal. If you have a good credit rating, you can likely find <a href="http://www.wisebread.com/which-balance-transfer-credit-card-is-the-best-for-you?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">a balance transfer offer</a> that will allow you to pay a balance transfer fee of about 3% and 0% interest for a year or more. (See also: <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=article">Best 0% APR Balance Transfer Credit Cards</a>)</p> <p>I count maintaining favorable interest rates as a personal finance skill because you have to keep track of interest rates on your accounts and continuously find <a href="http://www.wisebread.com/is-a-balance-transfer-offer-a-good-deal?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">good deals on balance transfers</a>. This skill can save you thousands of dollars per year on interest.</p> <h2>5. Continuous Investment</h2> <p>People who are financially successful do more than reduce spending and save money. They take the next step and invest money that they free up through smart spending decisions.</p> <p>This investment mentality is what allows the small amount of money you avoid spending to grow into real wealth that can change your lifestyle and allow you the freedom to pursue your interests. Regular saving over time adds up &mdash; even with small investment amounts.</p> <p>Continuous investment requires discipline to keep investing money for the future rather than spending it now. Savvy investors assess what kind of investments to buy and manage their investment portfolio based on economic trends and the performance of their investments.</p> <p>The most important factor in being a successful investor is to make regular investments over the long term and let your wealth grow.</p> <h2>6. Bargain Hunting</h2> <p>Frugal people are known for having good bargain hunting skills. Making a purchase is a challenge to find the way to spend the least amount of money to get what is needed. Bargain hunting usually involves using coupons and shopping around to find the best price.</p> <p>Sometimes buying a used item rather than a new item is the best bargain &mdash; you can save 50% or more buying used instead of new. Items such as tools or vehicles that are useful for years make good used purchases, but technology products often become obsolete so fast that buying new can be the best deal.</p> <p>Buying at the right time can be a key to finding bargains. I am always shocked at how cheap winter clothes and coats sell for in March at clearance sales. I bought most of my winter clothes for 90% off! Keep an eye out for bargains at store closing sales and clearance sales for items you know you will use later.</p> <p>An important part of bargain hunting is deciding on the best item to buy. If you can figure out the least expensive item that meets your needs, and then find the best price on that item, you are on your way to mastering bargain hunting skills.</p> <h2>7. Reuse</h2> <p>There is an old saying &quot;Waste not, want not&quot; that summarizes the personal finance skill of reuse well. If you don't waste anything, you will have plenty and not want for anything. I recently got into a conversation with my father about the oldest clothing item that we are still wearing. I mentioned that I still wear a lot of my 20-year-old clothes I got back in college. My father mentioned that he was currently wearing a shirt that is nearly 40 years old!</p> <p>Reusing things that most people would throw away is a key skill to save money and live well with less. When I was younger, I would always prefer to have new clothes rather than wear old clothes. Now I find comfort from the familiarity of wearing clothes with lots of memories attached to them. It seems like older stuff was constructed better than newer items, anyway.</p> <p>I think a lot of people are in the habit of throwing old things away just because they are old. Learn to keep reusing items until they no longer work, and then use them for something else. When my t-shirts start wearing out, I get sunburned through the holes in the fabric. Is it time to throw the shirt away? No! I use it for a rag.</p> <h2>8. Food Preparation</h2> <p>It is amazing how much restaurant food, fast food, and prepared food items from the grocery store people are buying these days. It does take some planning and work to prepare your own food at home, but you can save a ton of money and eat healthier, too.</p> <p>In addition to having basic cooking skills and equipment, having a plan is key to mastering the skill of preparing your own food at home. I know it works best at my house when we make a list of meals and the buy groceries with these meals in mind. Sometimes we even write on the calendar what is for dinner to avoid not coming up with something and ending up with expensive restaurant food.</p> <h2>9. Do It Yourself (DIY)</h2> <p>It seems like everyone that comes to my house to do something charges about $60 to $100 per hour. I try to minimize paying people to come over and try to take care of maintenance and repairs myself instead to save money. I learned to do basic plumbing repairs and installation, including sweating copper pipes with a torch. I can do basic electrical wiring and repairs. Some people in my neighborhood have landscaping companies take care of mowing and weed control, but not me. The more things you can do for yourself, the more money you can save.</p> <p>Develop skills to do work for yourself instead of paying others to do it for you. You'll save money and get a great feeling of satisfaction when you can do the work yourself.</p> <h2>10. Saying No</h2> <p>Saying &quot;no&quot; is often the key to saving time and money. Would you like to subscribe to a magazine you don't want in order to help your neighbor's kid meet a fundraising goal? How about &quot;no.&quot; Would you like to volunteer to drive 20 miles each way to participate in a committee meeting on your day off? Again, &quot;no&quot; works well here. There are times when you might want to contribute your time and money to a worthy cause, but there are many times you feel pressured into taking on something you don't really want to do.</p> <p>Learning to say &quot;no&quot; and not feel bad about it can save you a lot of time, money, and aggravation.</p> <h2>11. Efficiency</h2> <p>Efficiency is the skill of doing as much as possible with the least amount of resources. Efficiency can mean making a single trip to do all of your shopping instead of taking multiple trips. Efficiency can mean driving a smaller vehicle that costs less and uses less fuel every day.</p> <p>Often, efficiency keeps paying back over time. For example, the efficient choice to live in a smaller house results in a lower mortgage payment and lower utility bills year after year.</p> <p>Energy savings is another example of efficiency in action. I spent a few hours and a few dollars to upgrade most of my light bulbs to LED. Due to this efficiency, I save money every month since lighting my house now costs almost nothing.</p> <p>Another form of efficiency is simply having less stuff. Do you really need eight different kinds of cleaning products under your kitchen sink? Having less stuff not only costs less, but less stuff takes less space as well. With fewer things around, it is easier to keep things organized and find what you need.</p> <h2>12. Contentment</h2> <p>I am sure that you can live with less, but can you be happy with less?</p> <p>Contentment is living with a positive attitude and being satisfied for all of the things you have instead of wishing that you had blingy stuff. I drive an 11-year-old car that runs well. It even has leather seats and all wheel drive. What more do I need?</p> <p>People might not get a sense of status from the vehicle I drive, but I am clearly beyond worrying about that. Part of being content with what you have is to stop caring about what other people think. People who know me respect my work and my accomplishments, and I am not really concerned about what strangers think about my car.</p> <p>Contentment means setting your own standard for happiness. This can be difficult to achieve as you look at the photos of expensive vacations, recreational vehicles, and new cars that your friends post on Facebook. It is hard not to want expensive stuff when it seems like everyone else is buying it.</p> <p>But the problem with pursuing happiness by buying expensive stuff is that there is always something else you'll need to buy in order to be happy. As soon as you get back from vacation, it is time to start thinking about where to go for the next one. After your new car isn't the newest on the block anymore, the excitement is gone. Buying happiness is like chasing a mirage. You can't really reach happiness through buying things, but you can spend a lot of money trying!</p> <p>Contentment is about finding happiness in the life you have right now, not the life you could have if only you had more money.</p> <p><em>Which personal finance skills would you master to improve your life the most?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/12-personal-finance-skills-everyone-should-master">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/8-smart-money-moves-to-make-in-the-new-year">8 Smart Money Moves to Make in the New Year</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-frugal-living-skills-i-wish-my-parents-would-have-taught-me">8 Frugal Living Skills I Wish My Parents Would Have Taught Me</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-take-one-vacation-day-and-save-thousands">How to Take One Vacation Day and Save Thousands</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-a-spending-ban-can-help-and-hurt-you">Here&#039;s How a Spending Ban Can Help (and Hurt) 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/4-brilliant-tips-from-smart-mom-rich-mom">4 Brilliant Tips From &quot;Smart Mom, Rich Mom&quot;</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Frugal Living advice budgeting investments needs negotiating saving money skills wants wisdom Wed, 15 Jun 2016 10:30:07 +0000 Dr Penny Pincher 1731280 at http://www.wisebread.com When Location Isn't King: How to Choose Income Rental Property http://www.wisebread.com/when-location-isnt-king-how-to-choose-income-rental-property <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/when-location-isnt-king-how-to-choose-income-rental-property" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_moving_house_000057031510.jpg" alt="Woman learning how to choose an income rental property" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We've all heard the expression many times: &quot;When it comes to making a home-buying decision, the three most important considerations are location, location, location.&quot; But does that same rule apply to <a href="http://www.wisebread.com/turn-your-home-into-a-rental-in-9-easy-steps">rental properties as an investment</a>? Not necessarily. To illustrate, I'll provide an example from my storied past &mdash; in this case, the recent past.</p> <p>About five years ago I spent time looking at rental properties along the New Jersey shore. Over time I narrowed my focus to two neighboring towns &mdash; let's call them &quot;Poshtown&quot; and &quot;Middleville.&quot; Poshtown is a beautiful upscale community with quaint shops, large lots, and manicured lawns. Next door, Middleville is more of a mixed bag, with some very attractive sections, but also other areas crowded with seasonal rental properties often in need of some TLC.</p> <p>Next, I crunched the numbers. I gathered estimates of rental income and expenses for dozens of multi-family units listed for sale in both towns. Then I ranked each property from best to worst based on its monthly cash flow. Properties with the most positive monthly cash flow after all expenses rose to the top of the list. The following chart shows the highest ranked property in each town based on its estimated monthly cash flow:</p> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/Screen%20Shot%202015-12-18%20at%204.57.15%20PM_1.png" width="605" height="451" alt="" />&nbsp;</p> <h2>Why Cash Flow Is King</h2> <p>As you can see, the winner by far was a Middleville property with<em> positive</em> cash flow of $640 per month. By contrast, estimated cash flow for the highest ranked property in Poshtown was negative $1,365 per month. Adding to the rout, there were eight additional properties in Middleville with higher rankings (more positive monthly cash flow) than the highest ranked property in Poshtown.</p> <p>Why were the numbers stacked so heavily against Poshtown? The town's exclusivity added such a high premium to its home prices that rents couldn't make up the difference. Poshtown was a better location, but Middleville was a better investment.</p> <p>The lesson? For rental properties it's all about cash flow, cash flow, cash flow!</p> <h2>Other Factors Worth Considering</h2> <p>Alright, but surely &quot;location&quot; must be the second most important consideration, right? Sorry to disappoint, but in my experience the answer is still no. That honor goes to&hellip;condition, condition, condition. Here's why: If two properties have the same monthly cash flow at the time of purchase, but one requires tens of thousands of dollars in repairs while the other doesn't, then repair costs for the run-down property translate to more negative cash flow. Again, it gets back to the cash flow.</p> <p>Of course, there are other factors to seriously consider when looking into rental properties, and some of them aren't financial. For example, are you handy with repairs and making sure they're done in a timely manner? Are you willing to interrupt your evenings and weekends, even vacations, in order to address property issues? Perhaps most importantly, do you think you could effectively choose tenants and deal with them on a regular basis? If not, then becoming a landlord might not work for you.</p> <p>Before leaving this topic, I'd like to make one more point to illustrate the value of crunching the numbers prior to making a rental property purchase decision. This will require taking a look at two other properties, a $250,000 two-family house and a $150,000 condominium. I learned this lesson years ago when we purchased our first condo rental.</p> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/Screen%20Shot%202015-12-18%20at%204.56.49%20PM_0.png" width="605" height="448" alt="" /></p> <p>In the example above, monthly cash flow at the time of purchase for the two-family is slightly negative and would flip to a positive $1,000 after paying off the mortgage. But notice how negative the condo's cash flow is. It loses $650 per month. Even after paying off the mortgage, which would free up $645, the best you could hope for is break-even cash flow. That's a red flag. I wouldn't buy it.</p> <p>This comparison illustrates the importance of two &quot;all other things equal&quot; factors in determining the attractiveness of rental properties. First, all other things equal, properties with fixed monthly association and/or maintenance fees are more challenging to turn into positive cash flow than those without. Condos, townhomes, and other properties governed by an association typically charge homeowners in the community such fees. These often add up to hundreds of dollars a month,<em> every</em> month.</p> <p>The second factor is, all other things equal, more rental units in a property is better than fewer. You are more likely to achieve positive monthly cash flow with a two-family than a one-family. And a three-family will usually do better than a two-family. Why? Because each additional unit brings in additional income, but not proportionately higher expenses. For example, the price of a three-family (and therefore its monthly mortgage payment) is rarely three times higher than that of a single family on the same lot. Also, property taxes and insurance won't be three times higher for a three-family than a one-family. Nor would monthly maintenance and repair costs.</p> <p>As you can see, rental properties have a different set of rules than those for a single family property used as your primary residence. And the most important of these rules is &mdash; you guessed it: cash flow, cash flow, cash flow!</p> <p><em>Have you considered investing in rental property?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/keith-whelan">Keith Whelan</a> of <a href="http://www.wisebread.com/when-location-isnt-king-how-to-choose-income-rental-property">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/everybodys-wrong-about-how-much-house-you-can-afford">Everybody&#039;s Wrong About How Much House You Can Afford</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-simple-way-to-decide-how-much-rent-you-can-really-afford">The Simple Way to Decide How Much Rent You Can Really Afford</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-buy-a-house-with-a-pool-until-you-can-answer-these-7-questions">Don&#039;t Buy a House With a Pool Until You Can Answer These 7 Questions</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/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-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-hidden-housing-costs-new-homeowners-dont-expect">10 Hidden Housing Costs New Homeowners Don&#039;t Expect</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing cash flow expenses investments location rental properties Tue, 22 Dec 2015 14:00:07 +0000 Keith Whelan 1623601 at http://www.wisebread.com These 13 Numbers Are the Keys to Understanding Your Finances http://www.wisebread.com/these-13-numbers-are-the-keys-to-understanding-your-finances <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/these-13-numbers-are-the-keys-to-understanding-your-finances" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_thinking_money_000059289248.jpg" alt="Woman using 13 numbers to understand her finances" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Understanding a few basic numbers can give you a good picture of your financial health and help you plan your future. You may have seen these terms mentioned in personal finance articles and in the news. Learn what these numbers mean and how to use them to improve your money situation.</p> <h2>1. Net Worth</h2> <p>Net worth is the most important measure of your overall financial health. The calculation of net worth is simple &mdash; in short, subtract everything you owe from everything you have:</p> <p><em>Net Worth = Total Assets - Total Liabilities</em></p> <p>Assets include all property you own (including cars, a home, etc.), savings, investments, and the money in your checking account.</p> <p>Liabilities include credit card debt, student loan balances, mortgage balance, auto loan balances, and other debt. It is possible to have negative net worth if your liabilities exceed your assets &mdash; this is a common situation for new college graduates who have student loan debt and few assets, for example.</p> <p>There are two ways to improve your net worth: Increase your assets, or reduce your debt. Do both simultaneously, and you'll be on your way to improving your financial health quickly.</p> <h2>2. Home Equity</h2> <p>Home equity is a measure of how much of your home you own based on its current value, including improvements and appreciation. Here's how to calculate your home equity:</p> <p><em>Home Equity = Current Market Value of Your Home - Mortgage Balance</em></p> <p>You can see that the calculation of home equity does not include the price you paid for your house. Home equity depends only on the current market value of your home &mdash; in other words, how much would it sell for today?</p> <p>As with net worth, home equity can also be negative in some situations. If your home value declines to less than your mortgage balance, you have negative home equity. This is also known as an &quot;underwater mortgage.&quot;</p> <p>A great way to increase home equity is by doing your own home improvement projects and repairs that increase the value of your home by more than the cost of doing the improvements.</p> <h2>3. Gross Income</h2> <p>Gross income is your total income before taxes and withholdings. If you are an employee, taxes and withholdings are taken out before you get each paycheck. You can find your gross income on your paystub.</p> <p>Most salary offers and salary statistics are given in terms of gross income. This is also the number that you report on income tax forms. Gross income can be confusing for budget planning, since you'll never really have this much money to spend. Use your <em>net income</em> instead.</p> <h2>4. Net Income</h2> <p>Your net income is how much money you get after taxes and withholdings are taken out. This is an important number because this is how much money you have available to work with to pay bills and to save and invest.</p> <h2>5. Market Salary</h2> <p>Market salary is how much you are worth in the labor market, depending largely upon your length of job experience, education, and location. Your market salary may not be equal to your actual salary if you are overpaid or underpaid. You can find your estimated market salary on survey websites (such as Salary.com).</p> <p>It is useful to know your market salary to bargain for a raise or to know when it would be worthwhile to look for a higher paying job.</p> <h2>6. Monthly Expenses (Burn Rate)</h2> <p>Monthly expenses (burn rate) is one of the most important financial numbers, and one that you have a lot of control over. This is the total of your expenses over a month, including housing, food, clothing, and transportation.</p> <p>Your burn rate is the amount you are actually spending each month, and there is always room to reduce this number to leave you with more money available to pay down debt or invest.</p> <h2>7. Investment Balance</h2> <p>Good for you if you are regularly contributing to investment accounts. Your investment balance is an important number since this will largely determine if and when you will be able to retire. Check it regularly to determine whether your investment strategy is meeting expectations.</p> <h2>8. Dow Jones Industrial Average (DJIA)</h2> <p>The Dow Jones Industrial Average is the stock market value that is most often reported in the news. This is calculated based on the value of a handful of large company stock prices and is currently around 18,000. The DJIA provides a general indication of the stock market's overall valuation and performance, and may give you a rough indication of how your stock portfolio is performing (assuming it's broadly diversified).</p> <h2>9. Cash Balance</h2> <p>Net worth does not reflect how much of your assets are liquid. For example, if all of your assets were invested in land holdings, you might have a hard time getting cash in a timely manner to buy food or pay your real estate taxes. Access to cash and other liquid assets (assets that can be sold rapidly to get cash) is important to be able to pay expenses.</p> <p>When I ran a small business, I learned that the three most important rules for success were:</p> <ol> <li>Never run out of cash;</li> <li>Never run out of cash; and</li> <li>Never run out of cash.</li> </ol> <p>These three rules apply to personal finance, as well. Make sure to have some cash available at all times to cover expenses that come up.</p> <h2>10. Emergency Fund Balance</h2> <p>Building an emergency fund is a step that many financial planners recommend for people trying to get out of debt. Putting cash into an emergency fund provides a cushion against using credit cards to cover unexpected bills. This practice also establishes the habit of saving money from every paycheck instead of spending it all.</p> <p>How much money do you have available to handle an emergency without running up debt? Experts recommend a minimum of three to six months worth of living expenses.</p> <h2>11. Credit Card Balance and Interest Rate</h2> <p>Many households carry a credit card balance. It is important to keep track of all debt, but credit card debt is especially important, since it usually carries the highest interest rates of any debt, and since it is easy to increase your debt without noticing.</p> <p>If you are paying a high interest rate on your credit card debt, save money by making a <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt">balance transfer to a card with a lower interest rate</a>. Try to reduce expenses so you will be able to pay off credit card balances faster. (See also: <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=seealso">Best 0% Balance Transfer Credit Cards</a>)</p> <h2>12. Monthly Nut</h2> <p>I encountered this unusual term in an entrepreneurship course back in my college days. Your monthly nut is the <em>minimum </em>amount of money you would need to make it through a month. Your monthly nut includes basic housing, minimal food, and other essential expenses after unnecessary spending is eliminated.</p> <p>Your monthly nut is an important number to understand when you are planning to use as much of your income as possible to meet a goal, such as starting a business or getting out of debt as quickly as possible.</p> <h2>13. Inflation Rate</h2> <p>If you want to have enough money to buy the things you need in the future and throughout retirement, you'll need to account for the effects of inflation. Prices tend to rise over time, reducing the purchasing power of money in the future. Historical average for inflation rate is around 3%, but inflation rates in recent decades have varied from over 10% down to the current inflation rate of nearly 0%.</p> <p>For retirement planning, you will want to estimate your expenses, and then scale the expenses up based on the expected effect of inflation over the years.</p> <p><em>What key numbers do you track to monitor your personal finance health?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/these-13-numbers-are-the-keys-to-understanding-your-finances">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/6-celebrities-with-shockingly-low-net-worths">6 Celebrities With Shockingly Low Net Worths</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-manage-your-money-no-budgeting-required">How to Manage Your Money — No Budgeting Required</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-give-your-finances-a-year-end-review">How to Give Your Finances a Year-End Review</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-despair-over-small-retirement-savings">Don&#039;t Despair Over Small Retirement Savings</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-simple-ways-to-split-bills-with-your-spouse">3 Simple Ways to Split Bills With Your Spouse</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance expenses financial health income investments net worth Wed, 09 Dec 2015 18:00:16 +0000 Dr Penny Pincher 1618971 at http://www.wisebread.com Do You Need a Financial Planner? http://www.wisebread.com/do-you-need-a-financial-planner <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/do-you-need-a-financial-planner" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_meeting_accountant_000016565687.jpg" alt="Couple figuring out if they need a financial planner" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you have questions regarding your finances, investments, taxes, or retirement, speaking with a financial planner can provide the answers you need. A certified financial planner (CFP) can help you organize your personal finances and establish a retirement plan. They can also help you make sense of financial problems, whenever they may arise.</p> <p>Most respectable planners will advise you if they think you can handle your finances on your own. However, you can't always count on them to turn you away, which is why we've covered some of the top reasons to hire a financial planner, as well as what to expect once you hire them.</p> <h2>1. You Need to Change Your Retirement Plan</h2> <p>Whether you are <a href="http://www.wisebread.com/6-ways-to-guarantee-income-in-retirement">changing your retirement plan</a>, or haven't started planning at all yet, a financial planner can assist. They can help you develop a plan for financial security both now and into retirement. If you need to save more, they can help you develop a solid plan to increase your savings and contributions. That said, many people are comfortable planning for their own retirement, and if you're investment-savvy enough to do so on your own, a financial planner may be unnecessary.</p> <h2>2. You Need Financial or Investment Advice</h2> <p>If you have trouble organizing your finances and payments, a planner can help you get a grip on it. A financial planner can provide you with investment advice and explain the pros and cons of various investments options. They can also help you develop a strategy for down markets to better protect your money before retirement.</p> <p>All forms of investments and retirement accounts have associated management fees and expenses. If you are unsure of what you're paying for your investments, it's time to speak with a financial advisor. They can explain what your funds cost and can determine if you are spending more than necessary.</p> <h2>3. You Receive a Big Tax Refund Every Year</h2> <p>If you consistently receive a tax refund, you should speak with an adviser about what you owe and what you should be paying. While it may be nice to receive a tax refund at the end of the year, you won't gain any interest on the money when it's in Uncle Sam's possession. Instead, it would benefit you more to receive that money throughout the year. Your planner can help you adjust your tax withholdings so that you aren't overpaying throughout the year.</p> <h2>4. You Got Married</h2> <p>Determining which debts to combine, which debts to pay off, and what you need to do to reach your financial goals as a couple can be very difficult (especially for the newly married). Instead, let a financial advisor deal with the finances and help you organize your spending, debts, and assets. They will help you determine which strategy is right for your taxes, investments, benefits, bank accounts, and personal finances. They can even help you determine what your spouse's retirement plan may be able to offer you.</p> <h2>5. You Are Planning a Big Purchase or Making a Big Change</h2> <p>If you are planning on purchasing a home, or making another large purchase, a professional can help you determine how much you can afford to spend. They can then help you develop a plan to meet your financial goals and afford the home or purchase of your dreams. They can also help you prepare for life's big events, such as an upcoming baby, career change, or new car.</p> <h2>6. You Own a Business</h2> <p>Owning and running a business can be very stressful. Having a planner on your side can help you organize your business expenses and taxes, employee benefits, business investments, and any other financial information related to your business. If you will be buying, selling, or passing on a family business, a financial planner can make sure everything progresses smoothly.</p> <h2>What You Can Expect</h2> <p>One thing that a financial planner cannot provide is a guarantee. All they can do is help you get your financial life in order; they can't make miracles happen. What they can do is help you see the big picture and find ways to create more wealth over time, such as by capitalizing on compound interest.</p> <p>After getting to know you and your financial goals, your planner can help you create a written investment plan to reach them. They will assess all your current assets, liabilities, income, and more to develop a comprehensive plan that you can actually stick to. They can also advise you if you are paying too much for something, saving you even more money over time.</p> <h3>Monitoring Your Progress</h3> <p>Over time, your planner will continue to periodically monitor your progress to ensure you are still on track to meet your financial goals today, tomorrow, and into retirement. They will likely be your trusted financial partner for life because they can help you make wise, informed choices before you make any large financial decisions.</p> <h3>Finding an Advisor</h3> <p>If you can get a referral from a colleague, lawyer, or Certified Public Accountant (CPA), this is usually a good place to start your search for a financial planner. You can also search the <a href="http://www.plannersearch.org/Pages/home.aspx">Financial Planning Association (FPA)</a> and the <a href="http://www.napfa.org/">National Association of Personal Financial Advisors (NAPFA)</a> for a list of potential advisors.</p> <p>There are a number of types of financial planners available to you, including the following:</p> <ul> <li>CFP: Certified financial planners can help you with things like insurance, investments, taxes, retirement, employee benefits, and estate planning.<br /> &nbsp;</li> <li>ChFC: Chartered financial consultants specialize in finance and investing.<br /> &nbsp;</li> <li>CLU: Chartered life underwriters specialize in the finance industry.<br /> &nbsp;</li> <li>CFA: Chartered financial analysts specialize in economics, accounting, portfolio management, and security analysis.<br /> &nbsp;</li> <li>CPA: Certified public accountants specialize in tax issues.</li> </ul> <p>In most cases, a CFP is the right professional for the job, unless you have unusual financial or investment needs.</p> <h3>What Do They Charge?</h3> <p>Each advisor is different and will charge according to the following three basic billing structures:</p> <ul> <li>Fee-only planners: They are paid for their advice only.<br /> &nbsp;</li> <li>Fee-based planners: They earn fees for their advice and commission on the products they sell.<br /> &nbsp;</li> <li>Commission-based planners: They make commission on the products they sell.</li> </ul> <p>Some planners will charge a flat fee, hourly rate, or a percentage of what they are managing. According to CNNMoney, the average financial planner will charge anywhere from $100&ndash;$400 per hour. They may also charge a percentage of your assets if they also manage your money, usually between 0.5%&ndash;2%. If you only need a portfolio checkup every once in a while, then you likely only need a few hours, on a fee-only pay structure. It wouldn't make sense to continue paying an ongoing percentage if you don't need ongoing help.</p> <h3>Can You Do It Alone?</h3> <p>You may not need a financial advisor if you feel confident managing your finances, investments, and retirement accounts on your own. If you enjoy researching your investments and feel confident that you are monitoring your retirement plan well enough on your own, then you likely don't need an advisor.</p> <p><em>Do you have a financial planner? How have they helped you? Please share your thoughts in the comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-cannon">Andrea Cannon</a> of <a href="http://www.wisebread.com/do-you-need-a-financial-planner">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-smart-money-moves-to-make-in-the-new-year">8 Smart Money Moves to Make in the New Year</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-financial-decisions-youll-never-regret">8 Financial Decisions You&#039;ll Never Regret</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-financial-moves-you-will-always-regret">9 Financial Moves You Will Always Regret</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-every-woman-can-take-control-of-her-finances">How Every Woman Can Take Control of Her Finances</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-personal-finance-skills-everyone-should-master">12 Personal Finance Skills Everyone Should Master</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance accountants advisors financial planners investments retirement Fri, 20 Nov 2015 14:00:27 +0000 Andrea Cannon 1614966 at http://www.wisebread.com 15 Ways to Make Money Outside Your Day Job http://www.wisebread.com/15-ways-to-make-money-outside-your-day-job <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/15-ways-to-make-money-outside-your-day-job" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000023241641.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Extra money is great. At a minimum, extra income is more change in your pocket. Beyond that, it can diversify your income sources and make your finances less vulnerable to a disruption.</p> <p>There are many types of non-salary income, but one way they're often divided up is passive versus non-passive. Consider these 12 sources of additional income.</p> <h2>Passive Income</h2> <p>Passive income tends to be investment income: Money you get for letting someone use your money or your stuff. Here are the classic categories of passive income. (By and large, this whole category is only available if you have money to invest.)</p> <h3>1. Interest</h3> <p>Interest is money you get from something like a bond, CD, or savings account, where someone pays you to use your money.</p> <p>Not so long ago &mdash; before the financial crisis &mdash; there were plenty of reasonably safe interest-bearing investments that paid 3%, 4%, or even 5% over inflation. Those days are long gone. Now, CDs or bonds can barely beat inflation, and that's only if you're willing to tie your money up for a long time. Still, interest income can serve as a secondary income stream, and the opportunities are likely to get better in the near the future. (So, be careful about locking up your money for the long term at current rates.)</p> <h3>2. Dividends</h3> <p>Dividends are your share of the income earned by companies in which you own stock, and are also earned from baskets of investments that hold stocks, such as ETFs or mutual funds. Unlike the interest earned on a bond or CD, dividends can rise or fall unpredictably, depending on the success of the firm or the fund. Although some risky companies can pay high dividends, stable companies tend to offer modest returns, typically under 5%.</p> <h3>3. Rents</h3> <p>In theory, rents can be pure investment income, like interest and dividends, but in practice, being a landlord is more like taking on a second job &mdash; you have to find tenants, accept rent payments, keep the building maintained, deal with broken appliances, and so on. You can hire a management company to do that work, but that's an extra expense &mdash; and the income still isn't purely passive, because you still have the work of managing your relationship with the management company.</p> <p>Still, rental income can be an incredibly flexible second income stream. Airbnb, RelayRides, and similar companies now enable individuals to rent out things like spare bedrooms, vehicles not in use, and earn extra income with less effort.</p> <h3>4. Royalties</h3> <p>Royalties are money that you get for letting someone make more limited use of something that you own. If an oil company operates a well on your land, they'll pay royalties. If a publisher sells a book that you wrote, they'll pay royalties. The possibilities are vast, and in essence include anything people can use &mdash; land, books, photos, patents, trademarks, etc.</p> <p>It's worth noting that most people who sit down to write a book don't end up getting any significant income from it. That's probably even more true of people who sit down to invent something. Still, books, online stock photography, and even less-successful inventions can all generate extra income and diversify your earnings.</p> <h2>Non-Passive Income</h2> <p>Non-passive means you have to get out there and hustle up this extra income in your spare time. Some take a lot of hustle.</p> <h3>5. Working Another Regular Job</h3> <p>For someone working for wages, a second (or third or fourth) job is a classic source of extra income. If you're working for a salary, you'd probably be breaking your employment agreement to work another job, but there are ways to work for pay without breaking the rules. Check with your employer to determine your company's specific policies.</p> <h3>6. Working at an Irregular Job</h3> <p>Not all jobs require a regular time commitment. Some can be done on an ad-hoc fashion, such as:</p> <ul> <li>Casual labor, like a handyman, house painter, gardener, house cleaner, or dog walker.<br /> &nbsp;</li> <li>Freelance work (usually skilled or semiskilled labor done outside the range of regular employment), such as a web designer, photographer, adult education instructor, bicycle messenger, etc. Many occupations that fall into this category require special training, certification, or even licensing.<br /> &nbsp;</li> <li>Seasonal work, such as a department store Santa, sheep shearer, etc.</li> </ul> <h3>7. Service Something That Makes Money</h3> <p>The classic option here is a vending machine. Your investment is modest &mdash; the cost of the machine, and the cost to stock the machine the first time. Your labor is modest &mdash; visiting the machine to restock it and remove the cash.</p> <p>Vending machines used to be a great way to make a modest amount of money, especially if you knew someone who would let you put a machine in a reasonably high-traffic area either for free, or for a piece of the action. You could start small and then buy more machines. Back in the day when coin-operated video games were a thing there wasn't even any restocking needed &mdash; you just went as often as necessary to take out the money.</p> <h3>8. Running a Small Business</h3> <p>Running a small business can be a great way to make money from a source other than your salary. The range of options for small business are infinite. Just for starters, virtually all the &quot;irregular job&quot; items from the previous section could be just as easily arranged as a small business. Instead of painting houses or walking dogs, you start a house painting or dog walking business. Plus, running a business may confer certain tax advantages (deductions, anyone?) which can make it an even healthier secondary income source. The next two ideas can also be structured as small businesses.</p> <h3>9. Sell Something You Make</h3> <p>The list of things you can make and sell is endless &mdash; jellies and jams, soaps, jewelry, garden produce, baked goods, maple syrup, pottery, scarves, etc. I wrote a bit about the line between hobby and small business in my post <a href="http://www.wisebread.com/make-your-hobby-pay-its-way">Make Your Hobby Pay Its Way</a>.</p> <h3>10. Sell Copies of Something You Made</h3> <p>This is a variation on the point above about royalties. Instead of letting another company sell copies of something that you've created in return for royalties, you can sell the copies yourself.</p> <p>The classic case is self-publishing a book, but there are a lot of other possibilities that fall into this category. For example, If you know how to do something, you could create a video teaching how to do it, and then sell it on DVD.</p> <p>This option really lends itself to digital sales, because the cost of production is zero &mdash; ebooks, online video courses, phone apps, etc.</p> <p>It's tough to make much money this way, because there's so much stuff out there already, often for free. Sales are likely to be low, and unless you have a very narrow, very focused niche, you're going to face a lot of competition.</p> <p>Still, this can be a win, especially if you want to create something for your own reasons &mdash; a phone app that does something you want a phone app to do, a drawing that speaks to you, etc. If you're making the thing because you want to, the extra effort to sell copies is quite small, and will probably bring in a little money.</p> <h3>11. Sell Something You Gather</h3> <p>There are still places where it's legal to collect things and sell them &mdash; mushrooms, pine boughs, sea shells, rocks, insects, etc. Success requires access to a place where you can collect, and usually requires more than a little skill in knowing what's worth collecting, and how to sell it.</p> <h3>12. Sell Something You Buy</h3> <p>If you can buy something cheap and sell it for more than it cost, you can make money on the markup. To make a reasonable profit, you usually have to add value in some way. The two classic ways are: Import the item, or repackage a cheap, bulky item into smaller units.</p> <p><strong>Importation</strong>: Say you find something sold overseas that you really like &mdash; a clothing item or a gadget or a tool &mdash; that just isn't a thing in the U.S. You can find the manufacturer, buy a modest quantity at wholesale, import them into the US, and sell them at a markup. Your added value is the capital to buy the stock and the effort handling the complexities of importation.</p> <p><strong>Repackaging</strong>: Almost anything is cheaper in bulk, sometimes a lot cheaper. My wife buys a brand of quilt soap that's good for washing wool. She can get it in 8-ounce bottles for $8 or $9 dollars &mdash; about $17 a pound. The stuff has a single ingredient: sodium lauryl sulfate, the detergent in baby shampoo. If you buy by the barrel, sodium lauryl sulfate costs less than $1 a pound &mdash; highly profitable, even after paying for bottles. Anybody can do the same thing with anything that's cheap in bulk but can be sold for more in reasonable quantities.</p> <h3>13. Teach a Class</h3> <p>If you have some skill &mdash; and if you also have some skill at teaching &mdash; you can make money offering classes. Where I live, people can arrange to teach classes through the park district, recreation center, the local library, YMCA, community college, and at least two different senior organizations. Many of the stores that sell arts or craft supplies also offer classes with local artists and craftspeople as teachers. And if you're adequately entrepreneurial, you don't need to teach under the auspices of some other organization at all. You can find your own students and teach out of a location of your choice.</p> <h3>14. Put Ads on a Website</h3> <p>Creating a blog or static website and putting Google Ads (or other affiliate programs) on it can generate extra income &mdash; just how much depends on the traffic and ad clicks your site generates. It's a competitive space, but if you can produce a quality site with adequate traffic, it may provide a regular source of additional income.</p> <p>If you have some sales skills, you can also market your site to individual companies and get them to buy ads for a lot more money. That's another piece of work, however. It would make your income a little less passive, because now you're a salesman on top of everything else.</p> <h3>15. Create a YouTube Channel or Podcast</h3> <p>If you like making videos, this can be a source of modest income. If making videos seems like a lot of work, you're going to quit before you make any money from Google Ads on your YouTube channel. Still, if you make videos that go viral, there's the potential to make quite a bit of money. Some YouTube stars derive significant income from their videos.</p> <p>Podcasts are a little more complex to monetize, because you don't have the option of just putting ads on the page somewhere; you actually have to include the ad in the podcast itself. On the other hand, the ads are worth more, because the listener is pretty much stuck listening to the ad from beginning to end.</p> <p>There are podcast networks that offer tools to help with creating and making them easy for listeners to find. Some of them also have ad networks, although you'd probably make more money if you did the work of selling your podcast to sponsors.</p> <p><em>How do you earn extra income?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/15-ways-to-make-money-outside-your-day-job">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/8-ways-a-side-hustle-can-advance-your-career">8 Ways a Side Hustle Can Advance Your Career</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-new-income-streams-anyone-can-create">5 New Income Streams Anyone Can Create</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-truths-from-a-mystery-shopper-you-must-read-before-you-get-started">8 Truths From a Mystery Shopper You Must Read Before You Get Started</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-ways-to-earn-extra-cash-when-money-is-tight">9 Ways to Earn Extra Cash When Money Is Tight</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/12-side-jobs-for-stay-at-home-moms-and-dads">12 Side Jobs for Stay-at-Home Moms and Dads</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Extra Income freelancing investments non-passive income passive income selling side jobs Thu, 19 Nov 2015 19:03:04 +0000 Philip Brewer 1615339 at http://www.wisebread.com Watch Out for These 5 Sneaky 401K Fees http://www.wisebread.com/watch-out-for-these-5-sneaky-401k-fees <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/watch-out-for-these-5-sneaky-401k-fees" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/money_nest_egg_000006292825.jpg" alt="Learning which 401K fees to look out for" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>No matter how diligent you are at socking away money into your 401K, you could still be contributing less than you think, thanks to hidden fees and plan costs. According to a study from AARP, about three in five Americans are unaware of how much they're paying in <a href="http://assets.aarp.org/rgcenter/econ/401k-fees-awareness-11.pdf">401K plan fees</a>.</p> <p>Excessive 401K fees can eat away your returns. Let's assume that a worker invests $5,000 every year over a 35-year period in a 401K plan with an annual return of 4.9%. She would end up with $423,000 at the end of period assuming an annual fee of 0.5% of the total balance, and with $345,000 at the end of the period assuming an annual fee of 1.5% of the total balance.</p> <p>To claim back control of your retirement account, here are five 401K&nbsp;fees to look out for.</p> <h2>1. 12b-1 Fee</h2> <p>Owing its name to the Securities and Exchange Commission (SEC) Rule 12b-1, a 12b-1 fee is a charge from a mutual fund to cover marketing, distribution, and administration expenses.</p> <p>The original intent with this rule was to encourage mutual funds to invest in marketing so that more people would buy into the mutual fund. In theory, the more assets that a mutual fund can buy, the better the economies of scale. Unfortunately, the empirical evidence from the SEC shows that mutual funds with 12b-1 fees have higher expense ratios than those without those fees, and that the services rendered to earn the fees don't enhance the fund's performance.</p> <p>By law, 12b-1 fees can range between 0.25% and 1% of a fund's net assets. Given that these fees have shown no benefit to investors, you should try to choose funds that don't charge 12b-1 fees at all. If all your available investment options charge such a fee, go with the one that charges closest to the minimum 0.25%.</p> <h2>2. Redemption Fee</h2> <p>A front-end load is one of many sneaky <a href="http://www.wisebread.com/4-sneaky-investment-fees-to-watch-for">investment fees to watch out for</a>. Front-end load funds have such a bad rap that many investment firms have started advertising no-load fund options.</p> <p>However, there can be a catch. While no-load funds won't charge you for loading shares, those funds can charge you a fee for unloading your shares too soon. Known also as an exit fee, back-end load, or contingent deferred sales charge, a redemption fee is applied to an investor that exits a fund too soon. How soon is too soon? The minimum holding period ranges from 30 days to one year, so make sure to check your fund's prospectus.</p> <p>Here are two useful rules of thumb when evaluating redemption fees:</p> <ul> <li>The average minimum holding period to avoid a redemption fee is 65 days, so avoid funds that require you to hold onto your fund much longer than that. While your nest egg should be a last resort fund, you shouldn't be penalized for accessing your money when in need.<br /> &nbsp;</li> <li>The SEC limits redemption fees to 2%. However, some funds may charge as low as 0.01%. The lower the redemption fee, the better.</li> </ul> <h2>3. Exchange Fee</h2> <p>Diversification is a useful investment strategy to lower your market risk. For example, it's generally better to split your investment into three significantly different assets than to &quot;put all your eggs in one basket.&quot; If one of your investments tanks, you still have two to fall back on.</p> <p>Before you fire up the online dashboard of your 401K and transfer money from one fund to another, check for applicable exchange fees within your retirement plan. Even worse, some 401K plans may tack on additional load and redemption fees when you exchange between funds.</p> <h2>4. Individual Service Fee</h2> <p>On top of your plan's administrative fee, your 401K may incur individual service fees related to features that you opted into. You may incur individual service fees when:</p> <ul> <li>Taking a loan from your 401K account;<br /> &nbsp;</li> <li>Executing participant investment directions;<br /> &nbsp;</li> <li>Opting for a clause to terminate a contract with your employer before the contract's expiration date; or<br /> &nbsp;</li> <li>Choosing an investment option that includes an insurance component (e.g. annuity).</li> </ul> <p>There are many other types of individual service fees. Keep in mind that some individual service fees that are paid indirectly from the investment options you have chosen may not be listed in your quarterly 401K statement.</p> <h2>5. &quot;Other&quot; Fee</h2> <p>Along with those other fees, 401K plans can have a miscellaneous fee category for listing anything that is neither a sales charge nor an account maintenance charge.</p> <p>Some examples of other fees are:</p> <ul> <li>Custodial expenses;</li> <li>Legal expenses;</li> <li>Recordkeeping expenses;</li> <li>Furnishing statement expenses;</li> <li>Toll-free telephone service fees;</li> <li>Transfer agent expenses; and</li> <li>Other administrative fees.</li> </ul> <p>Depending on the terms of your plan, another fee may be a percentage of your assets invested in the fund or a flat fee.</p> <h2>The Bottom Line</h2> <p>Do your due diligence before choosing funds within <a href="http://www.wisebread.com/7-signs-your-401k-is-underperforming">your 401K plan</a>. To get a full picture of your investment options, you need to go beyond their average returns. The two key documents that you need in order to find out more about applicable fees are the Summary Plan Description and the Annual Report.</p> <h3>Summary Plan Description (SPD)</h3> <p>Upon joining the 401K plan, you receive a copy of your SPD. You will receive an updated copy every five years if there are significant changes or every 10 years if there are no changes.</p> <h3>Annual Report (Form 5500 Series)</h3> <p>Every year you should receive a copy. If not, you can examine a free copy from the <a href="http://www.efast.dol.gov">Department of Labor</a>.</p> <p><em>Do you know what fees your 401K is charging you? Are they fair?</em></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/watch-out-for-these-5-sneaky-401k-fees">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-enjoy-retirement-if-you-havent-saved-enough">How to Enjoy Retirement If You Haven&#039;t Saved Enough</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-things-financial-advisers-wish-you-knew-about-retirement">7 Things Financial Advisers Wish You Knew About Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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-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/why-tax-day-is-april-15-and-other-weird-financial-deadlines">Why Tax Day Is April 15 and Other Weird Financial Deadlines</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) Hidden fees investments returns Mon, 28 Sep 2015 13:00:40 +0000 Damian Davila 1568872 at http://www.wisebread.com