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How to Revamp Your Budget for Retirement

Alicia Rose Hudnett — Mon, 25 Jun 2018 08:00:29 +0000

Retirement is a major life adjustment for most people. From figuring out how to spend your days, to determining the best way to manage your personal finances, there are many choices to make.

Once you leave the world of paychecks and the daily 9-to-5 behind you, you may also think you're done with budgeting. At this point in your life, you may believe you've got a good handle on your spending and saving habits, and there's no point to budgeting anymore. But that couldn't be further from the truth. Here's a primer on all the ways your post-work budget needs to change.

Pay yourself and the IRS

The first step of building any household budget is figuring out total income. You now have the task of recreating a paycheck for yourself based on your available income sources. In retirement, that may mean a combination of Social Security benefits, a pension, distributions from IRAs and 401(k)s, and personal savings. You'll simultaneously need to cover your monthly living expenses and continually monitor the total balance of your portfolio.

Your Social Security check will be a set amount each month, and any pensions or annuities you have may also be. Once you've established how much money you'll need on top of those benefits, you can determine how much to take out of your tax-advantaged retirement accounts.

Then there are taxes to consider. You may have the option to have federal income taxes withheld from these payments, and while it's not required that you do so, it will save you the hassle of having to file quarterly estimated taxes. In any case, you'll need to factor taxes into your ongoing budget. (See also: Here's How You Should Budget Your Social Security Checks)

Stop saving for retirement

You've spent your entire pre-retirement life saving and accumulating assets so that one day you'd be able to live comfortably without having to work. Now that you're finally in the decumulation phase, you no longer have to save a portion of your monthly income for long-term goals. Monthly retirement contributions are one line item you can remove from your budget.

Increase your emergency fund

During your working and saving years, it's important that you have enough cash saved to cover a large unexpected bill or a job loss in order to prevent having to take early withdrawals from retirement accounts or take on debt.

In retirement, your need for cash savings may be even greater, but for different reasons. You may not have to worry about something like a job loss, but emergencies can still happen. As your home and vehicle age, you may find yourself needing to make major repairs or replacements. A health care crisis could devastate your finances. If you aren't prepared for major unexpected expenses, you risk wiping out a portion of the nest egg you're meant to be living on for the next few decades.

Remember, unlike your pre-retirement years, the majority of your savings may now be in tax-deferred retirement accounts. As you build your yearly income stream, you'll also be considering your income tax liability, taking into account your portfolio balance and your expected withdrawal rate. What happens to those numbers if you have a large emergency expense one year? Having to take distributions from your retirement accounts during those times may permanently affect the long-term viability of your nest egg, which is why a cash reserve can help support your overall retirement plan.

Standard financial advice recommends that working people build an emergency fund that can cover at least six months' worth of essential living expenses. In retirement, you should strive to save between 12 and 18 months' worth of those living expenses, including annual insurance premiums. (See also: Yes, You Still Need an Emergency Fund in Retirement)

Assess your changing housing costs

Housing is usually the largest household expense in everyone's budget, regardless of whether you rent or own. But after raising families and possibly paying a mortgage for 30 or more years, you may be in a position to either downsize, eliminate your mortgage payment, move to a new location, or a combination of all of these options — which can all meaningfully affect your budget.

As you prepare for retirement and rethink your income and budget needs, carefully calculate what your new housing and associated costs will be. For example, you may think about moving into a smaller apartment or condo in a trendy part of town, but a more expensive location can unexpectedly increase your other everyday living expenses.

Prepare for a possible increase in medical expenses

If you're used to having employer-sponsored health insurance, be prepared to do your homework on Medicare before you retire. Many people are surprised to learn that Medicare does not cover all health care expenses, such as routine vision or dental care. Nor does it cover some assisted living expenses, which may create a huge financial strain if you didn't purchase a long-term care policy when you were younger. And if you're traveling outside of the United States, Medicare typically won't cover any health care related costs you may incur.

Between purchasing various Medicare coverages, like Part D for prescriptions, and perhaps obtaining a supplemental plan to close the Medicare coverage gaps, you may wind up spending significantly more on making sure all of your health needs are properly insured. Crunch the numbers and make sure your new budget takes all of this into account. (See also: How to Make Sense of the Different Parts of Medicare)

Eliminate work-related expenses

Throughout your entire working career, you've probably spent lots of money on various professional and daily work-related expenses. When you exit the workforce, much of that will change as your lifestyle will be different. Things like business attire and dry cleaning, daily transportation and parking costs, or business certifications and professional dues can all be crossed off your budget.

Adjust for an increase in leisure expenditures

When your schedule is completely free and you no longer have a daily commitment to be at work, every day feels like a Saturday. You may find yourself spending money on things you used to do only on the weekends or when you had some time off. Whether it's spending more time eating out, traveling, or participating in hobbies, you may need to adjust your budget for your increased free time.

Consider your gifting choices

If you have children and grandchildren, you may have started thinking about including financial support for them in your retirement budget. In addition to more substantial gifting opportunities that involve legal documents (like a trust), there are other ways to support your family members. Each year, you are able to gift anyone up to the annual gift exclusion, which is $15,000 for 2018, without having to file a gift tax return. A married couple can gift a total of $30,000 to one individual in one year.

And if you are interested in helping to save for a family member's education, you can open and fund a 529 account, which is a tax-favored education savings plan. The same yearly gifting rules apply, but with a 529 account, you are allowed to front-load five years' worth of the 2018 $15,000 yearly amount for a total of $75,000 in one year. Once again, that is doubled for a married couple. (See also: 4 Things You Need to Know About Gift Tax)

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This article is from Alicia Rose Hudnett of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Why Saving Money Is Harder Today

Dr Penny Pincher — Thu, 28 Dec 2017 09:00:07 +0000

With a low overall inflation rate, and declining inflation-adjusted prices on goods such as technology and groceries, you might think that saving money today should be easier than ever. But sadly, that isn't the case. Prices of some of the biggest items in most household budgets have actually gone up faster than income has grown. Skyrocketing costs for key expenses, along with slow income growth, are making it much harder for people to save money now compared to past decades.

According to data from the Bureau of Labor Statistics, the U. S. Census Bureau, and the College Board, here are some of the biggest budget-wrecking expenses that are growing faster than your income.

Education

For many families, saving for college is a huge financial challenge — especially with the rapidly increasing price tag. Building a college savings fund to cover all of the costs is more and more difficult. As a result, more students and families are turning to student loans to make college possible. The average cost for tuition, fees, room, and board at a public four-year university grew 80 percent from 1997–2016, jumping from $11,390 to $20,500.

Health care

The cost of health care and health insurance has shot up in recent years. In some cases, a big medical expense can spell financial trouble: If an illness or injury keeps you out of work, the loss in income can make it even harder to bounce back from a large medical bill. Health care costs spiked 123 percent between 2000 and 2016, growing from an average $2,066 per year to $4,612.

Housing

Purchasing a place to live has gotten much more expensive, with median new home prices growing from $169,000 in 2000, to $307,800 in 2016 — an increase of 82 percent. Expensive housing can result in a budget crunch in several ways. It requires a bigger down payment, which takes a lot of money away from savings at the time of purchase. Monthly mortgage payments are higher, and higher home values also result in higher property tax and homeowners insurance premiums. Higher house prices may drive people to consider renting instead of buying, but the price of renting has also gone up rapidly.

Food

The inflation-adjusted price for food has stayed flat or even gone down over the past 16 years. On average, income growth has kept up with food costs. Yet, spending on food has gone up in many households in recent years. People may be electing for more convenient — and more expensive — food choices as a consequence of working more hours to boost their income. Average food expenditures grew around 40 percent from 2000 to 2016, rising from $5,158 per year to $7,203.

Child care

This cost varies significantly based on location and the type of care, but many families with young children are struggling to find affordable child care. According to a 2016 Care.com and New America report, the average cost of a full-time child care center for a child up to age four is $9,589 per year, which is more than the average cost of in-state college tuition ($9,410). Even in a dual-income household, child care can be an overwhelming expense.

Debt payments

As budgets continue to get squeezed by growing expenses, debt levels have also increased. This can set up a vicious cycle where you have even less money available, which leads to more borrowing to make ends meet.

For example, car prices have been relatively stable when adjusted for inflation, but the amount consumers are borrowing to buy cars has gone up. According to Experian, the average car loan as of 2016 stood at $30,032 with an average monthly payment of $503. Credit card balances and student loan balances are also trending upward, which means bigger payments are due every month, resulting in less money that could go toward savings or other bills.

The overall economic trend is that some of the biggest expenses in many household budgets are growing much faster than income is growing, creating a squeeze that is making it harder and harder to save money.

How to save money anyway

There are two basic approaches to dealing with the financial squeeze of higher expenses and limited income growth: reduce expenses or boost income (or both).

Housing expenses can be reduced by choosing a smaller, less expensive home. Renting a place to live can also be a less expensive option to owning a house. If you are not looking to move, consider refinancing your mortgage to a lower interest rate to reduce your monthly payment. If you rent, you may be able to offer to do some maintenance and upkeep on the property in exchange for a rent reduction. (See also: Watch Out for These 5 Last Minute Home Buying Costs)

One way to reduce health care expenses is to stay as healthy as possible. But you can’t avoid medical expenses forever, so consider using a high deductible health insurance policy with a tax-advantaged health savings account (HSA) to minimize your out-of-pocket health care costs. (See also: 10 Reasons an HSA Is Actually Worth Having)

Meal prep at home is key to keeping your food expenses low. Plan out meals ahead of time so you'll have groceries on hand to cook dinner with instead of going out to eat or ordering takeout. Get in the habit of packing your own lunch instead of going out to eat during the workweek. (See also: 31 Foolproof Ways to Lower Your Grocery Bill)

Minimize debt payments by using balance transfers or debt consolidation loans to reduce your interest payments, allowing more of your payment to be applied to the principal. This will allow you to pay off debts faster for less money. (See also: The Best 0% Balance Transfer Credit Cards)

Finally, cutting expenses may not be enough to tune up your budget to the point where you can save as much money as you would like. Consider boosting your income with a side hustle to bring in some extra money to help keep up with growing expenses. (See also: 14 Best Side Jobs For Fast Cash)

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This article is from Dr Penny Pincher of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Money Conversations Couples Should Have Before Retirement

Dan Rafter — Tue, 05 Sep 2017 09:00:06 +0000

Retirement for you and your spouse is just a few years away. Maybe you're both eagerly awaiting the days when you no longer must commute to work, sit in long meetings, and turn in reports.

But retirement does come with its own challenges, many of them financial. It's important for spouses to have the same expectations of what their retirement years will look like. And it's equally important for each spouse to understand where their income will be coming from and how much money there will be.

Here are five key conversations that couples must have before retirement arrives.

1. What kind of retirement do you both want, and how expensive will it be?

There are many different ways to spend your retirement years. Maybe you want to travel the world. Maybe you'd prefer spending more time with your grandchildren. Your version of a dream retirement might consist of days on the golf course or fishing on the lake.

But what if you have the travel bug, and your spouse would prefer to sit home and catch up on some reading? These are two radically different versions of retirement. And, when it comes to your retirement finances, one is far more expensive than the other.

It's important for you to share your retirement expectations with your spouse before you actually leave the working world. If you both agree that plenty of travel is in your future, you'll need to work hard to make sure you'll have enough retirement dollars to fund these trips. If only one of you wants to spend time traveling or pursuing a more expensive hobby, you'll have to craft a compromise.

2. Where will the money come from, and how much will you have?

As retirement nears, couples must work together on a new household budget tailored to their new life after work. You won't be able to rely on that steady work income after retirement, and Social Security payments probably won't cover all your daily living needs. This makes writing a household budget — and agreeing to stick to it — more important.

Your new budget should list all of your sources of monthly income and all of your expected monthly expenses, including mortgage payments if you still have them, car payments, utility bills, groceries, and entertainment. Once you've listed your income and expenses, including how much of your retirement savings you'll need to dip into each month to cover these expenses, you'll have a clearer picture of how much you can spend each month after leaving the working world. (See also: 6 Ways You Can Cut Costs Right Before You Retire)

3. Where will you live?

Housing expenses can be a challenge after retirement. It's important for couples to discuss where they'll live after leaving the working life behind. Do you want to stay in your current home for as long as possible? The financial ramifications of this will vary depending on whether you've paid off your mortgage or not. It might make more sense to sell your home and move into a smaller condo or apartment. Or maybe you're ready to move into a senior housing facility.

Don't put off conversations about housing. This is one of the most important issues couples face after retirement. (See also: Retire for Half the Cost in These 5 Countries)

4. Will one of you take on a new job or career?

Retirement doesn't always mean that you or your spouse won't continue to work in some way. Some people take on part-time jobs to occupy their time and earn a bit of extra spending money. Others start the new careers that they've always desired. (See also: 6 Great Retirement Jobs)

It's important for couples to discuss their plans for working after retirement. One spouse — or both — holding down a part-time job can make a significant difference in your income and budget after retirement, even if this income isn't essential to covering your daily living needs.

5. How will you handle unplanned expenses?

Unexpected expenses aren't unusual while you're working, with everything from burst water heaters to serious medical problems eating away at your savings. The same unexpected expenses can pop up when you're retired, too. When they do, how will you pay for them?

Talk with your spouse about maintaining an emergency fund that can cover at least six months' worth of your daily living expenses after retirement. If you don't maintain this fund — which you should have had while you were working — one big unexpected expense could wreak havoc on your budget. (See also: 9 Unexpected Expenses for Retirees — And How to Manage Them)

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Here's How You Should Budget Your Social Security Checks

Dan Rafter — Wed, 23 Aug 2017 08:30:05 +0000

The average retired worker earns a monthly Social Security check of $1,360, according to the U.S. Social Security Administration. And for most retirees, Social Security benefits are just one source of income, with many supplementing their checks with money that they've saved in 401(k) plans, IRAs, and other savings vehicles.

This doesn't mean, though, that these Social Security dollars aren't important. The administration says that Social Security benefits represent about 34 percent of the income of the elderly. That's why it's so important for retirees to create a budget for their Social Security benefits and determine the best way to spend such a significant portion of their monthly earnings. (See also: 6 Smart Ways to Boost Your Social Security Payout Before Retirement)

There's always a need for a budget

The first step in determining how to best spend Social Security benefits is to calculate your monthly income from all sources. Then, determine how much of this income comes from Social Security benefits alone. If Social Security accounts for 70 percent of your monthly income, you'll have to be especially careful how you spend it. If it accounts for just 20 percent, you'll have a bit more leeway.

Once you determine how important your benefits are to your monthly income stream, it's time to calculate how much of your Social Security check you should devote to each of your main expenses. (See also: 6 Ways You Can Cut Costs Right Before You Retire)

Housing

Ideally, you'll enter retirement without a mortgage payment. But that doesn't always happen. You might choose to rent during your retirement years. Or, maybe you'll spend your retirement years in assisted living.

Housing often remains a significant expense for retirees, with the Bureau of Labor Statistics reporting in March 2016 that seniors age 55 and older spend an average $16,219 a year on housing. Seniors from the ages of 65 to 74 spend an average $15,838.

If you receive the average Social Security check of $1,360 a month, you'll receive $16,320 a year. This means that the average amount that retirees spend on housing would consume most of your Social Security income each year.

It might make sense to devote a set percentage of every Social Security check to help cover your housing expenses. How much that percentage is will depend on how much you are spending on housing. If you live in a home with a mortgage that's been paid off, you obviously won't need to spend as much of your checks on housing as you would if you were still paying a mortgage. If housing is a significant expense, though, you might consider devoting 60 percent or more of your Social Security check to covering it. (See also: 5 Countries Where You Can Retire for $1,000 a Month)

Food

The Bureau of Labor Statistics reported that seniors from the ages of 65 to 74 spend an average $6,303 a year on food. This makes sense: You have to eat, whether you're working or not. Make sure, then, to reserve part of your Social Security check for groceries and meals out.

You do have control over this expense, of course. You can eat out less often and cook at home more, which would reduce your food expenses. But setting aside 20 percent or so of your monthly Social Security check for food should suffice.

Medical expenses

Depending on your health, medical costs could be a significant expense as you age. The numbers from the Bureau of Labor Statistics bear this out. According to the Bureau, adults from the ages of 65 to 74 spend an average $5,956 a year for medical care. The Bureau says that adults 74 and older spend an average $5,708 a year on health care. (See also: How an HSA Could Help Your Retirement)

Health expenses are one cost you have little control over. Sure, you can exercise and eat well. But you might still suffer health setbacks. It's important to reserve at least some of your Social Security check to cover these sometimes unexpected costs.

Consider saving an additional 20 percent of your Social Security benefits for medical spending.

Other costs

If you've been keeping track, those three expenses might eat up your entire Social Security check. Again, this depends on how much Social Security income you receive each month and how much you actually spend on housing, health care, and food. (See also: How Much Can You Afford to Spend in Retirement?)

If you find that these three big expenses do swallow most or all of your expenses, you'll have to dip into your retirement savings and other income vehicles to cover costs such as travel, transportation, entertainment, and any other monthly bills.

Budgeting your Social Security check highlights just how important it is to have multiple income sources at your disposal after retirement. As you can see, Social Security doesn't go that far when it comes to covering the basic living expenses of many seniors.

You do have options, of course. You can scale back your retirement plans, perhaps choosing to travel less and eat in more often. You can also take on a part-time job. That extra income could come in handy to cover the smaller, unexpected expenses that tend to come up. (See also: 9 Easy Ways Retirees Can Earn Extra Income)

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Ways You Can Cut Costs Right Before You Retire

Dan Rafter — Tue, 04 Jul 2017 08:00:10 +0000

Worried about covering your daily living expenses in retirement? You're far from alone. A study released late last year by the Transamerica Center for Retirement Studies found that only a small percentage of U.S. workers are "very confident" about being able to fully retire with a comfortable lifestyle.

If you have some doubts about how you're going to fund your retirement years, there are some steps you can take now, in the years leading up to your retirement, to prepare yourself financially for the day in which you leave the workforce. By reducing these expenses before you retire, you'll give yourself the chance to boost your retirement savings in the last few years before you leave the working world.

You'll also take an important first step toward setting up a post-retirement lifestyle that might, depending upon how much you've saved, require you to cut back on many of the expenses you take for granted today.

1. Housing

The cost of housing, of course, is the biggest financial burden that most people face. Bringing a mortgage with you into retirement can cause plenty of financial stress each month. But even if you are no longer paying off a mortgage, the cost of maintaining a large single-family home can be high.

If you still have a mortgage, it might make sense to pay it off before you leave the working world. If you can't afford to do that, you might consider selling your home. If you have enough equity in your residence, you might be able to use the profits to buy a downsized residence — maybe a condo unit — in cash.

If you've already paid off your mortgage, you'll have more flexibility. If your home requires too much maintenance, or if your property taxes and homeowners insurance are too high, you can sell and move into a smaller residence that requires less maintenance or a condo building that comes with far lower property taxes.

You'll no longer need to worry about living in a higher-taxed area with better public schools, so finding a residence with lower annual property taxes shouldn't be too much of a struggle. And if you purchase a smaller home or condo, your annual homeowners insurance bill won't be as high.

2. Insurance

Now might be a good time to review how much you are spending each year on your insurance.

First, if you no longer have any dependents who'd need financial help after you die, you can drop any life insurance coverage you might still have. That can immediately save you a significant sum of money each year.

You'll no longer need disability insurance, either, after you leave the workforce. Don't drop disability before you retire, but do figure that the cost of this insurance will disappear once you stop working.

You might also look at the deductibles you've set up for your auto and homeowners insurance policies. It makes sense to set your deductibles low when you are working. If you have a deductible of $250 for your auto insurance policy, for instance, you'll have to pay for the first $250 in costs after an accident while your auto insurer will cover anything after that.

But lower deductibles increase the amount you pay in insurance premiums. When you raise your deductibles, you'll pay less for your auto and homeowners' insurance policies. By the time you reach your retirement age, you might have enough saved to cover these higher deductibles, and moving to lower payments for your insurance policies might help you cover your daily living expenses.

3. Credit card debt

One of the biggest burdens on your retirement could be credit card debt. This debt comes with high interest rates — as high as 20 percent or more in some cases — and can grow quickly. If you carry a balance on your cards from month to month, you'll be stuck paying that minimum required monthly payment every time your credit card bills come due.

If you have a lot of credit card debt, it's important to pay off as much as possible as you approach retirement. You can do this using one of three tested approaches: the debt snowball, debt avalanche, or debt snowflake method.

In the snowball method, you list your credit card debts from smallest to largest. You then take any extra money you have and focus on paying off the smallest bill first. Once you've paid off that bill, you'll move on to your next smallest credit card bill and pay that one off.

In the avalanche method, you organize your credit card bills by interest rate, from high to low. You then use any extra money to pay off the card with the highest interest rate as quickly as possible. Once you pay off that card, you then move to the card with the next highest rate.

If if you find yourself struggling to come up with large debt payments, the snowflake method may work well for you. In this strategy, you'll look for ways to shave dollars off of everyday expenses, such as groceries or gas. You'll then use those savings to make small but frequent payments on your credit card debt. Every little bit helps.

4. Your cars

Cars are expensive. Not only do you have to pay for their upkeep and gas, but you also need to insure them. Going from two cars to one or downgrading to a less expensive car can help you dramatically reduce your daily living expenses.

If you can swing it, going from two cars to one will reduce the amount you pay each year in auto insurance. But maybe you can't do this while you are still working. If not, you can still downgrade from a more expensive car to one with lower monthly payments and lower insurance costs.

Consider this carefully, though. If you've paid off your car, it probably makes more sense to live with it for as long as you can. That way, you won't have to worry about monthly car payments. If you are still making payments on it, though, downgrading to a nice but less costly vehicle might be a good way to reduce your daily living expenses even while you're still working.

5. Dining out

The Bureau of Labor Statistics reported that in 2015, the average U.S. household spent $3,008 on restaurant meals and take-out food. This should inspire you to look at how much money you spend each month on eating out.

It's not that you should never eat out. But if you are worried about covering your daily living expenses once you retire, reducing the number of times you dine out at a restaurant is one monthly expense that you can easily control.

Instead of eating out whenever you'd like, try budgeting each month for a certain number of restaurant meals. Then don't break that budget. Doing this before you retire will help build your discipline for the days in which you are no longer working.

6. Entertainment

Going to the movies instead of streaming one at home. Taking several vacations a year. The most expensive cable subscription with the most channels. All that entertainment adds up. You can significantly reduce your expenses before retirement by spending less on entertaining yourself.

You might think you're depriving yourself, but streaming a movie can be just as much fun as going to the theater, and it can save you plenty of dollars. You can even rent movies for free from your local library or through the online rental services that many public libraries now feature. Why not take a break from that big expensive trip for the next few years and take smaller weekend jaunts instead? You can then save the money you would have spent so that you have more to spend in your retirement years.

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Are Your Assets Costing You Too Much?

Tim Lemke — Fri, 06 Jan 2017 11:00:12 +0000

The more assets, the merrier is generally a good philosophy. But there are times when assets can actually be a drain on your financial wellbeing. Some assets cost a lot to possess and don't bring you much in return.

Consider whether these common assets are worth their weight.

Your Home

A home can be one of your biggest assets. It can also be one of your biggest financial enemies. Ideally, you are making payments on your home, building equity, and increasing your net worth as you go. But often, homeowners find that their monthly mortgage payments are hindering their ability to make ends meet. To make matters worse, home upkeep and repairs, electricity, and other utilities may be costing you more than you bargained for. Homeownership is a great goal, but don't buy a home if it will make your life more challenging financially.

Your Cash

It may seem crazy to say that good old cash can work against you. But if you have a lot of it and there's inflation, over time it will lose value. It's great to have a healthy dose of cash on hand, but at a certain point it becomes smarter to invest your money in something with a higher rate of return. If you have large quantities of cash in bank accounts that provide a low interest rate, chances are you are making a financial mistake.

Your Car

You can count an automobile toward your net worth, but you can virtually guarantee it's going to decline in value over time. Add in the cost of maintenance, gas, and insurance, and it's likely that a car is a true drain on your finances. But you need a car to get around, so it's best to look at the true cost of ownership before buying. This means taking into account fuel mileage, reliability history, and the cost of parts and labor.

Your Collectible Items

You've got a Van Gogh hanging in your living room. There's a Mickey Mantle rookie card in your man cave. Your jewelry collection would make Elizabeth Taylor envious. All of these valuable items are nice to possess, until you take into account the expense of owning them. From storage to insurance to the cost of restoration, high-end collectibles can be a financial headache. For example, according to a Wall Street Journal report, managing an art collection could cost you between 1% and 5% of the value of the pieces annually. You may cash in big time if you ever sell these items, but the cost of ownership is high and may not be worth it.

Your Investments

It might seem backward to think of your investments as a drain on your finances, but it can happen if you're not investing in the right way. Are you investing in things that will grow in value over time, or in low-risk things that may be outpaced by inflation? Do you own a property that's costing money to maintain but not bringing in revenue? Are you paying a hefty amount in fees and commissions? Are you paying a high-priced broker or accountant to manage things even though you can probably do it on your own?

Your Life Insurance Policies

Many people don't think of life insurance as an asset, but it can be under certain circumstances. Of course, it's only a good asset for you if you believe the eventual benefit will outweigh the cost. Many life insurance policies are simply not very good — costly premiums, and low payouts.

Your Intangible Assets

Sometimes you have assets that don't really bring you any monetary gain, but may cost you money to obtain or possess. One example of this is a copyright or patent. These are things that may require upfront costs in the form of research and legal assistance, but the financial gain is uncertain. A patent has no real value until you sell it or develop a product based on it. When you acquire these types of assets, it's important to come up with some plan for monetization. Otherwise, they are simply a vehicle for sunk costs.

Your Inventory

If you run a business, any product you've manufactured but have yet to sell is considered an asset. But if you have too much inventory, that could be problematic. Inventory costs money to store. Some items might become obsolete or spoil, and result in no revenue. On the flip side, too little inventory can result in a lost sale. Smart business owners become skilled in inventory management, in which they can properly forecast sales to ensure the proper amount of product on hand.

This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Here's How Much Life in the Big City Will Cost You

Andrea Cannon — Tue, 01 Nov 2016 10:00:15 +0000

So, you got a new higher-paying job in the big city. Now you have to decide whether it's worth making the big move. Fortunately, there's an easy cost analysis that can help you determine if the move is worthwhile.

Cost of Living Calculators

For a better estimate of how much you'll need to earn to maintain the same standard of living, use a cost of living calculator. Once you enter your current income, where you currently live, and where you would like to move, you can see a side-by-side comparison of what it will cost to live in both cities.

Some basic calculators will show how far your salary will go in another city by comparing the price differences of major categories, like housing, utilities, and groceries. There are also more advanced cost of living calculators that will break down everything from what gas costs in the two areas, to how much you pay for coffee and ibuprofen.

For example, say you're living somewhere like Bakersfield, California with an income of $50,000, and you're deciding whether to move to a big metro like San Francisco. So, how much will you need to earn in order to maintain your same standard of living? Using a cost of living calculator, you can see that you would need to be making $81,636. Otherwise, you'll have to get used to a lower standard of living and cut costs wherever possible.

Housing

Generally speaking, the closer you live to downtown, the more expensive the rent, food, and entertainment costs. When you live in a bigger city, it also generally means that you will have a smaller living space. Worst of all, rent just keeps getting more expensive over time. According to StreetEasy's annual New York City Rent Affordability Report, the median rent-to-income ratio in NYC rose from 59.7% in 2015 to 65.2% in 2016. This means that nearly two-thirds of New Yorkers' income is devoted to rent. (See also: The Simple Way to Decide How Much Rent You Can Really Afford)

Higher Income

In most cases, a higher cost of living also means that the area has a higher than average median household income. While you can usually get a more robust starting salary in a large city, you might not want to count on hefty raises. Income growth is lagging behind things like rent increases and cost of living growth, so your expenses may increase in the years to come, but your income might not keep up.

Transportation

In most cases, the closer you can live to work, the better. This will allow you to bike to work, take part in a carpool, use Uber, or even take public transportation.

If you will be taking advantage of public transportation, consider storing or selling your car, so you don't have to worry about parking. Driving can also be a lot more overwhelming for someone moving from a smaller town to a big metro (think Los Angeles gridlock). Look into public transportation options in your new city to determine if you can reasonably live there without a car, and how much you would save by making the change to public transportation. Keep in mind that places that are more walkable, or have better transportation options, are typically more expensive to rent.

Parking

In cities like Los Angeles, New York, San Francisco, and Seattle (to name a few), free parking is basically a pipe dream. With parking meters and paid parking lots as far as the eye can see, it's very unlikely that you'll find free parking. Even if you did find street parking, the posted rules can be very confusing and, in large cities, parking tickets are very common.

Convenience

Living in a large city means most things will be at your fingertips. For instance, there isn't much that you won't have access to in New York City. However, getting what you want and need is a different story. Living in a small town means quicker trips to the grocery store and general merchandise stores like Target.

In a big city, on the other hand, you have to worry about fighting traffic and finding parking before you even get to the store. Then, there are hordes of people to deal with and long lines at the checkout counter, so small day trips can become much longer and more stressful. Try completing your errands at odd times, like early in the morning or during your lunch break, to beat the crowds.

Entertainment

Living in a big city means there are generally boundless things to occupy your time, such as endless places to eat, shows to watch, people to meet, and free activities to take part in. In a city like San Francisco or New York, you will be exposed to more culture more easily, and can find more fun, free events for the kids.

To better deal with the culture shock, try seeking out social groups and other resources for newcomers to the area. Make a valiant effort after moving to make friends with locals and other transplants so you can quickly become acclimated with the city and what is available to you.

Is It Worth It?

Moving to a large city can be very expensive. The move itself can be a frustrating, expensive undertaking, and once you're there, things like rent, groceries, utilities, health care, and transportation can be much more expensive than what you're used to. Take this into account when you're deciding whether to make the move or not.

The decision on whether it is worth it to make the big move is an entirely personal one. After living in New York City, San Francisco, and Los Angeles, I can attest to the fact that there is nothing comparable to living in a big metro. What you can (and will) experience in a shorter amount of time there is well worth the higher cost of living. However, if you are trying to save more money or contribute more towards your debt, savings, or retirement accounts, you'll need to use a cost of living calculator (at minimum) to determine whether it's worth it for you.

This article is from Andrea Cannon of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Things Americans Spend Too Much On

Mikey Rox — Wed, 26 Oct 2016 09:00:11 +0000

We're all guilty of spending too much money at some point or another. Even when we know the importance of a good budget and have a regular savings routine, we can get off track. Because Americans are big spenders in general, it should come as no surprise that we spend way too much on stuff we don't need — and, interestingly, stuff we do need.

Whether you realize it or not, here are five things you're probably spending too much on.

1. Groceries

We need food for survival, and because food is a necessity, some people never think to calculate how much they actually spend on food on a yearly basis. They don't know if they're spending too much.

There are no hard and fast rules regarding how much we should spend on food every year. But considering how a trip to the grocery store can be just as tempting as walking through a clothing store, there's a good chance that we're spending more than we need.

According to the Bureau of Labor Statistics, a family earning $69,629 in 2015 spent an average of $7,023 on food (includes food at home and away from home), which comes to about $585 a month. The cost of food periodically increases, so we can expect slight increases in our grocery bill. But there are plenty of ways to shave down this number and save.

Clipping coupons, signing up for grocery store loyalty cards, and resisting the urge to stock our carts with stuff we don't need — such as unhealthy snacks — can result in big savings. And if we limit the amount of times we dine out every month, the savings increase.

If you reduce your grocery bill by as little as $20 a week, that's a savings of $1,000 a year. Buying less also makes sense considering how "a four-person family loses about $1,500 a year on wasted food," according to the National Resources Defense Council.

2. Bottled Water

If you're looking for ways to save on groceries, you can start by cutting bottled water from your grocery list. Bottled water has become a necessity in many U.S. households, with many people preferring this over tap water for various reasons. Some people don't trust their city's water supply and others simply enjoy the taste of bottled water.

But our love affair with bottled water is costly. On average, Americans spend about $11.8 billion on bottled water every year, and the average person in American consumes 167 plastic water bottles annually. Given the average cost of $1.45 per bottle, that's $242 a year per person, which is expensive considering how we can purchase a reusable water filter for $30 or $40.

3. Coffee

If you broke the habit of buying coffee every day, you probably think you're saving money — and maybe you are. Brewing your own coffee at home is supposed to save, yet a new study found that Americans are spending more on coffee than ever before, despite drinking less due to single-serve coffee machines.

It's predicted that Americans will spend $13.6 billion on coffee in 2016, which is up from the expected $12.8 billion in 2015. This is primarily due to the fact that more Americans are drinking single-serve cups and paying a premium for this convenience. Using K-cups can cost up to five times more than using a coffee pot. Fortunately, there are ways to save like purchasing a reusable filter for Keurigs and other single-serve coffee pots, as well as skipping the grocery store and buying K-cups from discount stores or online from Amazon and eBay.

4. Housing

Once you're ready to buy a house, you'll seek a property that offers everything you're looking for and more. But getting everything you want comes at a price, and unfortunately, some people buy more house than they can afford.

A competent mortgage lender won't approve a loan for more than you can afford. But if you have excellent credit, some lenders are flexible and they'll allow you to spend a greater percentage of your gross income on housing. But just because you're approved for a particular loan amount doesn't mean you should spend your max.

Whether you're renting or buying, keeping house payments below your means creates more disposable income that can go toward saving a rainy-day fund or paying off debt. According to a 2014 report, millions of Americans spend too much of their monthly incomes on housing — more than 30% of their income. Ideally, house payments should be no more than 28% of your gross income.

5. Weddings

Weddings are a special day. If you stay together forever, this can become one of the best days of your life. But just because weddings are a memorable event doesn't mean you should wipe out your savings or go into debt.

In 2015, the average cost of a wedding increased to $32,641. Some people could argue this is a reasonable amount. But given how nearly one in two marriages in the U.S. ends in divorce, spending this type of cash is a waste of money.

Even if a marriage never crumbles, $32,000 is too much to spend on a day that's only the beginning of your journey together. Rather than begin a marriage in debt or wipe out your savings account, plan an inexpensive ceremony and put the majority of the money toward a home purchase or save it for the future.

This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Ways That Better Paying Job Out of State May Cost You

Samantha Stauf — Thu, 08 Sep 2016 09:30:33 +0000

On the market for a new, higher paying job? Have you expanded your job search across state lines? When contemplating a job that would require you to move to a new state, part of the decision process should be determining how the local costs, public infrastructure, and local school system will affect your financial bottom line.

In some areas of the United States, the increase in salary the job offers might not be enough to offset the added potential living expense. Here are some things to consider.

1. Cost of Living

Before accepting a job in another state, it's essential you don't assume that a higher salary offer in another state will lead to a larger disposable income. Each state has a slightly different cost of living. When you move from one state to another, you can expect slightly different housing, food, utility, healthcare, transportation, and healthcare costs.

If the new job offer is from a state with a significantly higher cost of living, the "raise" might:

Not be as extensive as you expect
Be an equivalent wage
Be a pay decrease.

For example, a $25,000 salary in Boise, Idaho is comparable to a $47,274 salary in Brooklyn, New York. In order to really be considered a raise, individuals that move from Idaho to New York should expect at a little more than a salary of $47,274 a year.

Before accepting any jobs out of state, check this cost of living calculator to ensure that you are actually receiving a raise.

2. Housing

Housing costs, rent, and home ownership can differ significantly from state-to-state. You will want to evaluate how the expected rent or mortgage rates (lower, higher, the same) will affect your potential disposable income.

Moving from Idaho to New York, for example, can lead to a steep increase in potential rent or mortgage costs. Average rent cost increases from $995 (Idaho) to $3,295 (New York).

3. Transportation

Moving from an area with a good public transit system could significantly increase your expenses. According to the Evolution of the Daily Commute, car bound commuters will spend $1,129 dollars in gas annually to travel to and from work. A good subway, bus, or train system can be significantly cheaper due to the fact you're potentially trading gas and parking expenses for a reasonably priced ticket.

If you are unavoidably car bound, you might consider how the difference in gas prices between states will affect your finances. Moving from Oklahoma to California for example, would increase the amount you pay for gas from $1.39 a gallon to $2.47 a gallon. That can lead to a large extra expense.

In addition, each state has different average insurance rates due to state regulations, and the percentage of uninsured drivers on the road. Moving from a state with low insurance rates to a state with high insurance rates might mean that you won't have as much extra money from that raise as you expect.

4. Quality of K-12 Schools

The quality, success, and financial stability of the local K-12 public schools are not uniform across state or county lines. Depending on where you move, your children could be facing a potential downgrade in the quality of their education and an unexpected extra financial expense that could counteract the positive effect of your raise.

Parents can check out the quality of local schools:

By searching for news of any potential school and school district in Google.
By evaluating the statistic, reviews, and polls of any potential school with Niche's 2016 K-12 School and District Rankings.

Moving to an area where the public schools are failing could inevitably lead families to make the hard decision to either gamble on the poor educational institution or invest time and potentially money to enroll students in a more favorable environment.

5. Quality of Local Colleges

College is expensive. In-state college tuition can be a real money saver. How much college costs depends on the state that you live in. Moving from Wyoming to New Hampshire, for example, could mean that in-state college tuition is suddenly around $10,000 more expensive. Even with a raise, that might be too big of a price hike to reasonably handle.

As an added concern, you should evaluate whether or not you're moving into an area with too many colleges on rocky financial standing. These colleges and universities tend to hike tuition rates, cut back on other amenities, and possibly declare bankruptcy.

Bankruptcy, in particular, can be costly for current students. It can lead to red marks on their official transcripts (if the school closes mid-semester), forcing students to go through another college application process, and face the reality that many of the classes and credits earned won't be recognized by the new college.

6. State Regulatory Guidelines (For Your Industry)

Professional standards are often set not on a federal level, but on a state level. Moving to a new state can either create new opportunities, or limit the opportunities available to you and your significant other. The most far reaching differences can be found in the medical field.

Twenty-two states grant Nurse Practitioners full autonomy to diagnose and treat patients without supervision from physicians. This can allow NPs to open private clinics or grants the ability to apply for a broader range of jobs.
Twenty-five states have entered into a Nurse Licensure Compact (NLC) that allows nurses to practice in any other state that has agreed to join the compact. This can allow individuals to engage in travel nursing or telemedicine. Moving out of or into an NLC state could either shrink or increase professional opportunities.

There are a lot of financial factors that should be evaluated when changing jobs within the same state. When moving out of state, there are even more factors that could affect how the new higher paying jobs will negatively or positively affect your net worth.

Have you taken a job in another state? What was your experience?

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This article is from Samantha Stauf of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Money Moves to Make When You Move Back Home With Your Parents

Sarah Winfrey — Tue, 19 Apr 2016 09:30:29 +0000

Somewhere between 30% and 50% of Millennials are currently living with their parents. While there are a lot of different ways of thinking about this statistic, most of the folks I know who have had to move back home don't feel great about it.

No matter how you frame it, moving home often feels like failure, at least at some point in the process. But if you make the right financial moves from the beginning, you ensure that the process is as painless as possible, and you set yourself up for financial success in the future.

Whether you're moving home because you lost a job, can't find a job, or your job doesn't pay a living wage, take these steps as soon as you can. (See also: 7 Ways Millennials Are Better With Money Than You Are)

1. Know the Financial Expectations

If possible, sit down with your parents before you move home and talk about your mutual financial expectations. Do your parents want you to pay rent? To buy your own groceries or contribute to a household budget? Will you pay any of the utilities while you're living there?

Most people who move home continue to pay the bills that pertain only to them. This includes things like covering your own phone bill, health insurance premiums, and other, similar bills. Some people, though, find that going on their parents' cell phone plan, for instance, is cheaper than having their own.

The point is to hash out these things before you move home and write them down. That way, everyone will be on the same page and it will be easy to ensure that everyone is holding up their end of the bargain. This also allows you to keep some measure of independence and feel more dignified about the whole thing, because you will be able to pay for as much of your own stuff as possible.

2. Set Goals and Make Plans

Moving home can feel like a dead end, but it doesn't have to actually be one. Most young people don't want to live with their parents long-term, which can be a relief both for you and your folks. Before you move in, or soon after doing so, decide how you want to proceed.

This will depend a lot on your current situation. If you're carrying debt, you might want to focus on paying that off before you move out. Or you may want to land a job that pays more, or finish your education.

Having goals will make you feel better about moving home, because you will be able to see your move as a step forward in your overall financial life, rather than a move backwards.

Goals alone are not enough, though. Once you know where you're going, draw up a blueprint for how to get there. Decide which classes you're going to take, start making extra payments on that debt, or begin applying for jobs that meet your criteria.

Not only will this empower you and move you forward, but it will help your parents see that you are a responsible adult, even though you moved back into your childhood bedroom.

3. Agree on Boundaries

While it will be important for you and your folks to hash through all sorts of boundaries, the ones I'm thinking of here are financial in nature. Unless you're in truly dire straights, decide that you will not borrow money from your parents. And even if they won't take your money for rent, find ways to contribute to the household. You can buy food, pay for meals out, purchase cleaning supplies and clean, etc.

Let your parents know what boundaries you're setting. Let them know that you plan to clean the bathrooms every week, that you're available to run errands on the weekends, or that you don't need anything more from them than what has already been agreed upon.

4. Get a Job

This won't apply to folks moving home because they are underemployed but, for everyone else, this is not a free ride. The goal of moving home is to get yourself into a better financial place for later on, so you should be working.

Even if the only job you can get is the one you had during high school, take it. Since you're at home, you probably don't need as much money as you would otherwise, and some income is always better than none. Working will also make you feel better about yourself, and will show both your parents and future employers that you are willing to do whatever it takes to move forward.

5. Pay Off Debt

If you have debt, start paying it off as soon as you can. Moving home can save you quite a bit of money and, instead of putting this toward your own pleasure, take steps to make your financial future brighter. Even if you only have student loans, start putting more towards them every month. A couple of extra payments now can mean huge savings in interest later!

Paying off debt should probably be your first goal upon moving home. Make a concerted effort to pay off as much as possible, and you will feel better about your decision to not live on your own. Even if you have a crappy job, you should be able to make some extra payments when you're saving money on things like rent.

6. Start Saving

Don't have debt? Great! Start saving. If you're not spending money on rent, you should be putting it towards something useful, and an emergency fund (or a move-out-of-my-parents'-house fund) is a great way to feel good about your decision to move home.

If you play your cards right, you can use your time living at home to get a nice little nest egg. That way, you'll be able to cover all of your moving expenses when you move out, and you'll have enough left over for other things that come up (like car problems, paying for a wedding, etc.).

Moving home doesn't have to be a death sentence. Even if you feel like you've failed financially, these moves can set you up for future success. Take the long view and you will be happier with your decision.

Why did you move home? What financial moves did you make when you did?

This article is from Sarah Winfrey of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Avoid These 5 Pitfalls When Moving in Together

Amanda Meadows — Mon, 12 Oct 2015 17:00:44 +0000

Moving in with the person you love is a huge step! In fact, it's so huge that we get too swept up in the excitement to really look at the gritty details. These are five things you should never do when moving in together.

1. Don't Avoid Organizing Your Stuff Before the Move

This is one of the most useful things you can do to avoid fights about belongings down the line. You must be willing to self-edit (and to help your partner self-edit) before schlepping all your stuff into a new place where it may not all fit. Clean house and decide which items of yours are most important to keep, so you can make room for the new items you'll acquire as a cohabiting couple.

Remember these key categories: Keep, Sell, Donate, and Toss. Keep items such as any clothing you have actually worn in the past year, or big ticket furniture items you can't spare. Sell items of some value that are either redundant or no longer needed. Donate items like new clothing you haven't worn in the last year, shoes, books, and anything not worth taking time to sell on Craigslist or a yard sale. Toss pretty much everything else! Let your partner have a veto option.

2. Don't Reject Your Significant Other's Red Flags

This can range from extremely small to extremely big issues. To some, a loud snore could potentially be a deal breaker; but harboring an addiction to pills could go undetected for years before finally moving in with someone. It comes down to how well you know each other. What are your partner's triggers and soft spots, and will you be able to work around them?

For some, a series of talks is all you need to answer questions like, "How will our work schedules mesh?" Or, "Can we share a bedroom or do we need separate spaces as well?" Or, "Who will be in charge of the bills?"

There are also elephants in the room that you must address. For example: If your significant other has a child, you will need to be a part of the child's life. Is that something you're ready to do?

Another example: If your partner has a disability, how will it affect your responsibilities to them and the home?

Maybe you're the one with a lot red flags. Don't react defensively – deeply consider your partner's needs and decide if they are workable for you. You can't just hope it will all fall into place.

3. Don't Assume Finances Will Work Themselves Out

Finances are the largest source of stress and arguments in every household. Yours will not be an exception. While you're not legally obligated to each other's money, you do need to share some pertinent information with your significant other before you set up your household system. Are you in massive debt? Are you terrible at managing bills?

If you're the organized one who has their bills set up on auto-pay, you're probably going to be the one to shepherd the other into a better system. Try setting up an automatic monthly transfer from your partner's bank account to yours to ensure you get their share of the rent and bills on time. Don't think of this as babysitting; think of this as an investment of your time and expertise into avoiding future fights when the lights suddenly get shut-off!

4. Don't Let One Person Do All the Housework

This is a tough one that inevitably happens to most new couples. Whoever gets sick of staring at the unending tower of dirty dishes first is ultimately the one who cleans them. That's not fair, but it's really easy to get stuck into imbalanced patterns like this when living together.

Have a discussion, before moving in, about housekeeping equality. Who takes out the trash? Who does the dishes? (Hint: if you don't own a dishwasher, I suggest it's whoever didn't cook the meal.) Who fixes the bookcase when it starts to teeter? These are tasks that have nothing to do with gender or who earns more money. It's usually whoever can do it with the least amount of goading. If neither of you wants to clean, agree to split the cost of a monthly cleaning service and never fight about dusting again.

5. Don't Pretend You're Married

This is a hard one. Many people see shacking up as a stepping stone to marriage, and for many, it is. This is a great time to test each other's willingness to compromise, generosity with belongings, and emotional, sexual, and financial compatibility on an everyday level. This is all invaluable.

But it doesn't mean that you're married. Avoid forming unhealthy, codependent habits with him or her. Your stuff doesn't belong to your partner, nor theirs to you. You have a choice in every decision that doesn't necessarily have to include your partner. You can hang in there and try to make a relationship work, but you can always leave if it isn't going well. That's the whole point, isn't it?

Did you fall into any of these traps when you moved in with a significant other?

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This article is from Amanda Meadows of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Big Purchases You Should Make by 30, 40, and 50

Amanda Meadows — Thu, 07 May 2015 13:00:08 +0000

It used to be that major purchases such as a house or a car were rites of passage into adulthood. Sure, times are changing, and the new generation isn't buying all the things their parents did. But there are some things you probably can't avoid buying. Here are the big purchases most of us should make by ages 30, 40, or 50.

By Age 30

By the time we reach 30 we've turned the corner from the youth to adulthood, and our possessions show it.

A Car

As more people choose to live in cities, and use mass transit or ride-sharing apps, it's become less necessary to own a car. That said, many of us still have a lifestyle that requires owning a set of wheels. If this is the case for you, by the age of 30, you probably should have purchased a car by yourself for yourself. (See also: The Joy of Buying a New Car: 9 Car Buying Tips)

A Real Bed

This is something everyone avoids for years. Millenials have bought and sold cars well before buying a new bed for themselves. Once you are old enough to live on your own, an ugly used frame propping up a decades-old (and filthy) mattress just won't do. A more comfortable bed will help you sleep better, and sleeping better will improve your overall health, which will cost you less in the long run. It's one of the best investments you can make in your 20s. Now that one can buy affordable and comfortable mattresses online, there's no excuse anymore!

By Age 40

What lies around the corner from age 30? A nest and a family of one's own.

A Home

This can be the most emotional purchase you'll ever make, especially in areas of the country where it's virtually impossible for the average person to afford a home. For those of us who want to own our own home, working toward buying before age 40 is a worthy goal. It's wise to start making sound decisions in your 20s and 30s that will keep your financial state healthy, such as building your credit, in anticipation of a home loan.

Home Appliances

Not every home, whether bought or rented, will come equipped with everything you need. As you get older, you'll probably grow tired of washing your dishes in the sink, or going to the laundromat like you did in your 20s. Eventually, you'll break down and buy a refrigerator, dishwasher, a washer/dryer set, or woodworking tools for the garage. Make sure you do your comparison homework in order to get the best appliance deals.

By Age 50

By now the roots are set deep and the big purchases are behind us, but there are a few big buys that mark time's passage.

Life Insurance

As you get older and have children, you'll want to be covered for whatever may happen. By age 50, you'll almost definitely want to consider life insurance — well before you develop any chronic health issues or are old enough for premiums to skyrocket. Think about what you need from your life insurance and start planning your beneficiaries' financial future. (See also: Universal Life Insurance and Whole Life Insurance: A Comparison)

Contractor Work

At this point in your life, making renovations on your bathroom or kitchen, adding on to your home, or re-landscaping your backyard is common. In fact, some renovations nearly pay for themselves over time. If you've never hired a contractor, you'll need to create a budget and detailed timeline, along with a cash buffer for incidentals, accidents, and hotels if you cannot stay in the home at a certain point. Extra frugal? It's also worth considering DIY renovations.

Which major purchases do you think signify life milestones?

This article is from Amanda Meadows of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Simple Ways to Live Rent-Free

Mikey Rox — Mon, 16 Mar 2015 08:00:06 +0000

We all need a roof over our heads and a place to sleep at night. Living with mom and dad is an obvious way to live rent-free, but you might prefer your privacy and independence. Fortunately, there are other tricks to score free rent that don't involve getting help from your folks. Here are five of them.

1. Work With an Accommodations Company

Contact hostels or private hotels and negotiate free rent in exchange for working for them on a part- or full-time basis. Some larger chains won't agree to this arrangement, but it doesn't hurt to ask. If a hotel or hostel has vacancies, or if it's understaffed and looking for ways to cut costs, the manager may consider your proposal. You can work in a variety of roles depending on your skill set, ranging from housekeeping to administrative tasks.

2. Home Share With an Elderly Person

Some elderly people live alone, and because of their age or health, they get behind on housework and home maintenance. If you have the skills and time, offer to home share with an elderly person on a temporary basis. In exchange for free rent, you agree to tasks such as cleaning, cooking, running errands, or handling repairs and maintenance. It's a win-win, since you provide your elderly roommate with companionship and assistance around the house, while you save money toward your financial goals. If I were actively seeking rent-free accommodation, this is totally a situation I'd pursue. I love elderly folks, and elderly folks love me. We'd watch our soaps, make fresh sandwiches for lunch, take afternoon naps, and get all gussied up for church bingo. Sounds like my idea of paradise.

3. Live in Your Van or RV

It might get a little cramped inside, but if you're serious about saving money for whatever reason, living in your van or RV for several months to a year (or longer) can really build your savings. This is especially true if you can park the vehicle on a friend or relative's property for free. Almost all RVs are equipped with small kitchens and bathrooms, so it's easier to be self-sufficient. On the other hand, if you live in a van, you'll need to borrow a friend or relative's kitchen or bathroom, unless you're planning to eat out for every meal or shower at the gym before work.

4. House-Sit for Free Rent

Some people are nervous about leaving their home and pets for days while out of town, so they ask a friend or relative to house-sit or check on the property. But what you may not realize is that some career house-sitters don't pay a dime for rent.

"House-sitting in return for a free retreat is growing in its popularity as more and more home and pet owners enjoy having the freedom to choose their sitter and having peace of mind that their fur family are kept in their own environment," says Rachel Martin, co-founder of TrustedHousesitters.com.

You might not receive compensation for house-sitting, so you'll need an income source to cover other monthly expenses such as food, transportation, entertainment, and so on. However, it's a fair trade-off, considering you're able to stay in someone's home without paying rent or utilities.

5. Find a Job That Includes Accommodations

This is similar — but not identical — to my first suggestion. If you have the appropriate skills, look into employment opportunities that include free accommodations. You can work as a live-in nanny for a family who needs assistance caring for their children. Some boarding schools employ full-time resident advisors who live inside dormitories to supervise students. If you have experience in property management, some apartment complexes give employee rent discounts, and apartment managers can often even live in a unit for free. (Heck, I wouldn't mind being a modern day Mr. Furley.)

Have you legitimately lived rent-free? What did you do? Tell us your story in comments!

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This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Best Money Tips: The Home Edition

Ashley Jacobs — Tue, 22 Jul 2014 19:00:06 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some of the best articles around the web on everything related to your home!

Can You Really Afford to Live in Your Dream City?

Mardee Handler — Fri, 11 Apr 2014 08:24:15 +0000

It finally happened. You've been offered a job in the city of your dreams. Or you're coming up on retirement. Or you're just sick and tired of the Midwest winters. Before packing up your belongings, however, consider these five factors to avoid having your dream move turn into a financial nightmare. (See also: How to Save on a Long-Distance Move)

A Dollar in Boise May Not Buy as Much in Dallas

To get a better handle on how living expenses — from groceries to a visit to the dentist — vary from city to city, use a free online Cost of Living comparison calculator. This tool will also give you an idea of what your income needs to be in order to maintain the same style of living.

The factors that make some cities more affordable than others varies. Kiplinger's compilation of the cheapest cities in the U.S. cites shows low grocery prices for some, low housing costs for others, and low medical fees in others. As Kiplinger's points out, however, cheaper living often goes hand in hand with less healthy economic conditions. (See also: Awesome Cheap American Cities)

Determine How Much It Will Really Cost to Hang Your Hat

Most financial experts agree that housing costs should represent 30% of your gross annual income. But to play it safe, some say to increase that to 35% to cover all the "a-la-carte" costs that come on top of the mortgage payment or rent — property taxes, utilities, assessments, or building/neighborhood amenities, like swimming pools or workout facilities.

Property taxes can be a significant factor affecting the cost of owning a home or condo. New York residents contribute the highest percentage of their income to property taxes, followed by New Jersey, Connecticut, California, and Wisconsin. On the flip side, Wyoming residents pay the least percentage (6.9%) of their income to property taxes. Alaska, South Dakota, Texas, and Louisiana round out the lowest property tax states, according to 24/7 Wall Street.

In addition, potential homebuyers need to consider maintenance costs, building or community assessments, and repairs (often hard to predict). Snow removal may not be a factor if you're moving to Phoenix, but your air conditioning costs may skyrocket compared to what you paid in Minneapolis! (See also: Costly Things New Homeowners Don't Prepare For)

Homeowner's insurance is required by most mortgage lenders. Average homeowners insurance rates are higher in states prone to extreme weather conditions or with higher building costs.

If you're planning to rent, ask the property manager or landlord which utilities or building amenities are not included in the rent, and make sure your budget allows you to comfortably cover these expenses.

Chart Your Commuting Course — and Costs

How do you plan to get to and from work, the grocery store, or the movie theater and what will it cost? The Housing + Transportation Affordability Index (searchable by city) factors transportation costs into the equation with its recommendation that your combined housing and transportation costs should be no more than 45% of your monthly income.

Looking for a place where you can walk, bike, or take public transportation to work? Check Walk Score's rankings of the best cities to live car-free.

If driving is your preferred (or only!) commuting option, take a look at how fuel prices stack up with the help of GasBuddy's gas price heat map or its list of average gas price by city.

Parking can put additional strain on your monthly budget — or not, depending on where you plan to live and work. A parking spot in a Chicago high rise could set you back $200 to $500 per month, but far less in Milwaukee, just 90 miles to the north. BestParking offers a searchable database of parking costs by city to give you a general idea, but be sure to check with individual buildings, which may vary widely in fees. And don't forget the vehicle permit stickers required by many cities.

Be Prepared for the Unexpected

Unforeseen expenses for homeowners come in many forms, from a leaky faucet to a leaky roof — and everything in between. Where you live can impact repair costs. The national average cost to hire an electrician is $380 per project, but only $213 in Myrtle Beach, and $398 in Seattle, according to Home Advisor. Any repair can put a strain on your wallet depending on the cause and the potential ripple effects.

Renters are not immune to the unexpected. Renter's insurance — often required by the landlord or apartment management company — is always advised. Sure, if the roof leaks, the landlord will fix it, but what about your computer, clothes, and other personal property? Renters insurance not only covers personal effects, but often covers living expenses should your apartment become uninhabitable due to a fire or natural disaster. Generally very affordable, renters insurance can start as low as $10 per month depending on your coverage. (See also: Saving Money on Home Repairs)

As the saying goes, "The best laid plans of mice and men often go awry." In this economy, that could mean your job.

If your dream city is a thriving employment mecca versus a job desert, you'll find yourself with more options if your company downsizes or your position is eliminated. MuniNet Guide provides a snapshot look employment trends by metro area. (Note: I am the managing editor of MuniNet Guide.) When considering the health of the employment environment, check both unemployment rate trends (which should be heading down) and employment growth rates (which should be heading up).

Do Your Homework

We are fortunate to live in times where information is more readily available than ever before. Take full advantage of state, city, and county websites, which can provide valuable information and links to help you research a move to your dream city. Being financially prepared can make your dream become a prudent reality.

Have you moved to another city or burg? Were you surprised by the cost difference (up or down) versus your old home town?

This article is from Mardee Handler of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: