income http://www.wisebread.com/taxonomy/term/8754/all en-US 5 Things to Consider Before Buying a Home When You're Single http://www.wisebread.com/5-things-to-consider-before-buying-a-home-when-youre-single <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-things-to-consider-before-buying-a-home-when-youre-single" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_with_keys_standing_outside_new_home.jpg" alt="Woman With Keys Standing Outside New Home" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's become increasingly common for people to buy a home by themselves instead of as a couple. According to the National Association of Realtors' <em>Profile of Homebuyers and Sellers</em>, new homeowners in 2016 were comprised of 17 percent single females and 7 percent single males.</p> <p>Buying a home is a big undertaking, whether or not you're doing it as a single person. I spoke to Markus Brown, a realtor in Orange County, California, about some things to consider before buying a home by yourself.</p> <h2>1. Understand the risks</h2> <p>As a single person, is it better to pay rent or to own a home? The monthly costs of owning a home may be higher than what you pay in monthly rent when you consider costs like insurance, property tax, maintenance, and higher utility bills. You're also taking on greater risk by taking on a loan. (See also: <a href="http://www.wisebread.com/why-i-choose-to-rent-instead-of-buy?ref=seealso" target="_blank">Why I Choose to Rent Instead of Buy</a>)</p> <p>However, according to Brown, there can be significant advantages to owning a home, the biggest of which is the ability to fix your housing costs in the future. When you own your home on a fixed-rate, 30-year mortgage, you remove unknowns such as your rent going up, being asked to move because the landlord wants to renovate or sell, and more. This allows you to make concrete plans for the future without worrying about housing.</p> <p>If you're planning to stay in the area for several years, you should consider buying a home. &quot;Historically, you need to own for at least five to 10 years before market appreciation helps you to make a profit,&quot; Brown says, &quot;[but] if you're going to be relocated in a year or two, don't buy.&quot;</p> <h2>2. Review your finances</h2> <p>Having only one income to rely on in purchasing a home can stretch you financially, so it's a good idea to go over your finances before considering a home purchase. You'll also want to take steps to <a href="http://www.wisebread.com/5-ways-to-improve-your-credit-score-fast" target="_blank">improve your credit score</a> before buying a home. Consider the stability of your income and whether you have enough savings to see you through if something happens to that source of income.</p> <p>As a single person, you will want to have a large savings buffer, because you won't be able to fall back on another person's income if yours is disrupted. The rule of thumb is that your emergency fund should have at least six months of income &mdash; nine if your income is unpredictable.</p> <h2>3. Calculate the hidden costs</h2> <p>Don't be surprised by the &quot;hidden&quot; costs of owning a home, including the closing costs, property taxes, insurance, possible homeowners association fees, utilities, maintenance, and potential renovations. Factor all these extra costs into your budget before deciding on a home that you can afford. According to Brown, many people think they can buy more than they actually can when all these costs are factored in. (See also: <a href="http://www.wisebread.com/10-hidden-housing-costs-new-homeowners-dont-expect?ref=seealso" target="_blank">10 Hidden Housing Costs New Homeowners Don't Expect</a>)</p> <h2>4. Talk to a mortgage broker</h2> <p>As a single person, it can be more difficult to quality for a loan because you can only count on one income. If it's your first time buying, you may be able to qualify for an FHA loan, which allows you to purchase with a lower down payment (only 3.5 percent down) and lower interest rates, and doesn't require as high of a high credit score.</p> <p>Another option is the HomeReady Mortgage Program through Fannie Mae, which only requires as little as 3 percent down, and allows greater flexibility in qualifying for a loan, including income from co-borrowers, family members who are not on the loan, gifts from family members, and even &quot;boarder&quot; income from a roommate.</p> <p>Talk to a mortgage broker or financial adviser about whether it makes sense for you to pay a lower down payment. You may have to purchase mortgage insurance if you don't put enough money down, so factor those costs into your decision.</p> <p>&quot;Low down-payment loans make sense for people who have a solid job and stable income, but don't have a lot of savings because they've just started out, such as new grads or young couples,&quot; Brown recommends.</p> <h2>5. Choose the right home</h2> <p>In his experience, Brown sees single people going for condos, because the maintenance and chores are simpler and easier to deal with. Brown suggests buying only what you need at the moment and getting a foot in the market, instead of trying to buy a family home when you don't know what you'll need later. Look for a condo in a community that has other working professionals, and allows you to enjoy your single life.</p> <p>However, it's better to buy a two-bedroom rather than a one-bedroom if you can afford it, according to Brown, because it gives you what he calls &quot;future-proofing.&quot; If you lose your job or the economy tanks, you can take on a roommate to help you share the costs. On the other hand, if you get married or have your partner move in, you have enough space for the next step in building your family. Either way, you won't have to sell immediately if something changes in the future.</p> <p>In addition to potential financial benefits, there are a lot of intangible benefits to owning your own home. Pride in your own home, the ability to control things about your living situation that you couldn't control as a renter (such as decorations and renovations), and the feeling of being more settled, are all attractive reasons to buy a home as a single person.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-things-to-consider-before-buying-a-home-when-youre-single&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Things%2520to%2520Consider%2520Before%2520Buying%2520a%2520Home%2520When%2520Youre%2520Single.jpg&amp;description=5%20Things%20to%20Consider%20Before%20Buying%20a%20Home%20When%20Youre%20Single"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Things%20to%20Consider%20Before%20Buying%20a%20Home%20When%20Youre%20Single.jpg" alt="5 Things to Consider Before Buying a Home When You're Single" 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/camilla-cheung">Camilla Cheung</a> of <a href="http://www.wisebread.com/5-things-to-consider-before-buying-a-home-when-youre-single">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/make-these-5-money-moves-before-applying-for-a-mortgage">Make These 5 Money Moves Before Applying for a Mortgage</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-build-equity-in-your-home">How to Build Equity in Your Home</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/everything-a-first-time-home-buyer-needs-to-buy-a-house">Everything a First-Time Home Buyer Needs to Buy a House</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/watch-out-for-these-5-last-minute-home-buying-costs">Watch Out for These 5 Last Minute Home Buying Costs</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-times-buying-a-home-with-cash-is-bad-for-your-budget">5 Times Buying a Home With Cash Is Bad for Your Budget</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing buying a home credit score down payments hidden costs homeownership income mortgages qualifying single Tue, 18 Jul 2017 09:00:09 +0000 Camilla Cheung 1985091 at http://www.wisebread.com 5 Downsides to a Bigger Paycheck http://www.wisebread.com/5-downsides-to-a-bigger-paycheck <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-downsides-to-a-bigger-paycheck" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-600673276_0.jpg" alt="downsides to a bigger paycheck" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Can earning more money ever be a bad thing? If you were to walk into work tomorrow and were told you had received a 25 percent pay increase, you'd be pretty pleased, right? Most of us would be overjoyed, and would immediately start thinking about how the extra money could improve our lives. However, it's definitely worth considering the downsides to a bigger paycheck. Be prepared, or the pay raise could cost you.</p> <h2>1. You start to depend on that big salary</h2> <p>It's a fact that almost all of us fit our lifestyles to our earnings. The more we earn, the more we spend. We upgrade to bigger cars, bigger houses, and commit to larger purchases. We take on more debt, knowing we'll easily pay it off.</p> <p>But what happens if that big paycheck goes away? Layoffs are a part of life, and they happen in almost every industry. What will happen if that money you have come to rely on suddenly goes away? Do you have savings in place to cover yourself for an emergency? You could find yourself having to downsize your whole life because the money you made is simply not available any more. So even if you do get a raise, your best bet is to continue living like you haven't, and socking the rest away, if you can. (See also: <a href="http://www.wisebread.com/you-got-a-raise-now-what?ref=seealso" target="_blank">You Got a Raise! Now What?</a>)</p> <h2>2. With more money comes more responsibility</h2> <p>Most companies will expect something in return for the extra money they have just given you. Yes, you have earned it. Yes, you were probably working above and beyond your current salary to get the raise. But that's the rub. Now you have to work above and beyond the new salary to keep management impressed. After all, if you continue to do what you had done before the raise, it will seem like you're coasting. Or worse, that you're ungrateful for the new salary.</p> <p>Some people find that with the new responsibilities and expectations, plus longer hours, they have actually received a pay cut. For example, 40 hours per week for $2,000 becomes 50 hours per week for $2,300. Yes, it's more money. But the hourly rate has gone from $50 down to $46. These people may actually have been better off without the raise. More money, yes. But at what cost?</p> <h2>3. You're now in the firing line</h2> <p>Make no mistake, when it's time for a company to examine its payroll and look at cost-cutting, the larger salaries come under greater scrutiny. In fact, some companies actually have a threshold, and once you are above it, you are instantly put into consideration for a layoff when the time comes to make cuts.</p> <p>Of course, if you are simply going from $20,000 a year to $25,000 a year, you most likely don't have to worry. But if you get launched from $50,000 a year to $80,000 a year, or thrown into a six-figure salary, you suddenly represent a more significant figure on the balance sheet. Is there anything you can do about this? Make yourself worth it to the company. Sure, you may earn $120,000 a year; but you saved the company twice that in the last six months. Without you, they'd be missing out.</p> <h2>4. You can lose certain benefits and tax advantages</h2> <p>First, don't let anyone tell you that getting a raise could mean you actually take home less money due to the tax brackets. Only the portion of your salary over a certain amount would be taxed at that higher rate.</p> <p>However, you can lose out on certain benefits and tax breaks by earning more money. If you qualified for an apartment based on low income, and then get a raise, you may no longer be eligible to live there. Child tax credits are phased out above specific incomes, and every $1,000 over that threshold <a href="https://turbotax.intuit.com/tax-tools/tax-tips/Family/7-Requirements-for-the-Child-Tax-Credit/INF15610.html" target="_blank">reduces the credit by $50</a>. Education credits and the Earned Income Credit are also means tested, as well as many other benefits. And your ability to contribute to a tax-preferred Roth IRA retirement account diminishes and is eventually eliminated after you make a certain income.</p> <p>It's possible that your pay raise could kick you off the programs you rely upon. Of course, you shouldn't let that stop you from celebrating your own success at work, but just be mindful of your budget.</p> <h2>5. Expect jealousy from some people</h2> <p>With a pay raise comes the chance to buy the things you have been dreaming of. You may upgrade your car, your home, your wardrobe, or your vacation destinations. And some people will take notice of that. Expect snarky remarks like, &quot;Must be nice&quot; and &quot;Wish I could afford to eat out like that.&quot; <a href="http://www.wisebread.com/how-to-rise-above-financial-jealousy" target="_blank">This is jealousy</a>, pure and simple.</p> <p>Anyone who really cares for you will be happy that you have been rewarded for your years of hard work. But if you have a friend or relative who is genuinely upset by your good fortune, perhaps because they can no longer afford to eat where you eat, or take joint vacations, remind them that life is a marathon, and we all run at our own pace. Assure them that their time will definitely come, and point out that you have had to make several sacrifices to get the additional income.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-downsides-to-a-bigger-paycheck&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Downsides%2520to%2520a%2520Bigger%2520Paycheck.jpg&amp;description=Why%20Earning%20More%20Isnt%20Always%20Better"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Downsides%20to%20a%20Bigger%20Paycheck.jpg" alt="5 Downsides to a Bigger Paycheck" 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/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/5-downsides-to-a-bigger-paycheck">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-things-you-should-never-do-after-getting-a-raise">10 Things You Should Never Do After Getting a Raise</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-got-a-raise-now-what">You Got a Raise! Now What?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-earn-more-money-without-working-more-hours">6 Ways to Earn More Money — Without Working More Hours</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/these-10-words-and-phrases-are-keeping-you-from-getting-a-raise">These 10 Words and Phrases Are Keeping You From Getting a Raise</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-simple-steps-to-discovering-your-true-salary-potential">6 Simple Steps to Discovering Your True Salary Potential</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Career and Income Extra Income career tips income make more money pay raise paycheck raise wage increase Fri, 07 Jul 2017 09:01:05 +0000 Paul Michael 1979455 at http://www.wisebread.com 4 Ways to Make Money Doing Household Chores http://www.wisebread.com/4-ways-to-make-money-doing-household-chores <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-ways-to-make-money-doing-household-chores" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/love_to_keep_my_home_nice.jpg" alt="Love to keep my home nice" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When it comes to earning extra money, many well-paying side hustles, such as graphic design, require specialized skills, experience, and pricey software or equipment. The requirements can be a major obstacle to launching a lucrative side gig.</p> <p>However, there are several ways you can make money doing chores you do everyday, for other people. Whether you are a champion at ironing or can always pick the ripest fruit at the grocery store, here are four ways you can make additional income.</p> <h2>Doing laundry</h2> <p>For busy families, the laundry pile can quickly become a mountain. Between work and school, some people struggle to keep up. That means they often scramble to find clothes for the next day. That's a perfect opportunity for you to make money. You can charge families a fee to wash or iron their clothes and do it on your own schedule.</p> <p>One company that connects side hustlers with clients is <a href="http://www.laundrycare.biz/" target="_blank">Laundry Care</a>. Clients pay $35 per bag of laundry, which is about three loads. Contractors take home a percentage of the fee, and can earn extra money for doing additional services like ironing.</p> <h2>Shopping for groceries</h2> <p>If you don't mind the grocery store, you can make up to $25 an hour as a shopper for <a href="https://www.shipt.com/" target="_blank">Shipt</a> or <a href="https://www.instacart.com/" target="_blank">Instacart</a>. Clients place their orders online through the company apps, and shoppers can opt to fulfill orders that fit their schedules. You can take on jobs that work for you. If you're tight on time, you may decide to just complete one or two large orders a week. Or you can take several orders back-to-back when you need the cash. (See also: <a href="http://www.wisebread.com/21-fresh-food-delivery-services-that-can-save-you-big?ref=seealso" target="_blank">21 Fresh Food Delivery Services That Can Save You Big</a>)</p> <h2>Cleaning houses</h2> <p>If you enjoy keeping things clean, you can earn up to $22 an hour cleaning other people's homes. Rather than having a contract with a large, expensive cleaning company, some families prefer to hire someone as needed. And others just need someone for special occasions, such as when they're moving or having a party. You can make a good hourly wage when you have the time.</p> <p>If you have professional cleaning experience, and client references, you can sign up to work as a cleaner through <a href="https://www.handy.com/" target="_blank">Handy.com</a>. Handy will connect you directly with clients and you can select the gigs that match your needs.</p> <p>If you don't have experience, or want to set your own rates, you can set up an account on <a href="https://www.care.com/" target="_blank">Care.com</a>. Families can search for you when they need a cleaner, and Care.com handles the payments and administrative work for you.</p> <h2>Running errands</h2> <p>Whether it's dropping off the dry cleaning or picking up prescriptions, managing and making time for all of life's necessary errands can be difficult. To relieve some of the burden, many professionals hire help to handle those little chores for them. If you have some spare time and don't mind driving or walking around town, you can make extra money without much stress.</p> <p><a href="https://www.taskrabbit.com/" target="_blank">TaskRabbit</a> is one company that connects clients with on-demand help. From furniture assembly to making medical appointments, TaskRabbit workers provide much needed assistance. And depending on the job's requirements, you can make over $20 an hour. (See also: <a href="http://www.wisebread.com/find-a-side-gig-at-these-4-best-micro-jobs-sites?ref=seealso" target="_blank">Find a Side-Gig at These Micro-Job Sites</a>)</p> <p>Another service to check out is <a href="https://postmates.com/" target="_blank">Postmates</a>. Postmates is an on-demand delivery service for meals, office supplies, and more. If someone's phone charger broke and they need a new one, you can make money by picking it up for them and delivering it. You can make over $25 an hour as a Postmates courier.</p> <p>Doing extra laundry or running some simple errands can help you pay off debt or boost your emergency fund, empowering you to build more secure finances.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/kat-tretina">Kat Tretina</a> of <a href="http://www.wisebread.com/4-ways-to-make-money-doing-household-chores">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/7-surprising-ways-to-earn-money-online">7 Surprising Ways to Earn Money Online</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-you-can-earn-18-to-25-an-hour-with-amazon-flex">How You Can Earn $18 to $25 an Hour With Amazon Flex</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-i-make-800-on-month-on-ebay-selling-used-clothes">How I Make $800 on Month on eBay Selling Used Clothes</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-earn-extra-income-with-a-drone">How to Earn Extra Income With a Drone</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-to-earn-extra-money-with-your-car">7 Ways to Earn Extra Money With Your Car</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Extra Income Home chores cleaning earn extra money household chores income making money side gig side hustle Tue, 30 May 2017 08:30:12 +0000 Kat Tretina 1955478 at http://www.wisebread.com Does Your Net Worth Even Matter? http://www.wisebread.com/does-your-net-worth-even-matter <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/does-your-net-worth-even-matter" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-672689634.jpg" alt="Woman wondering if her net worth even matters" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Do you know your net worth? That's how much is left after subtracting your liabilities from the total value of your cash and assets.</p> <p>At first glance, figuring out how much you're worth may seem pointless. You're probably not going to bump Warren Buffett or Bill Gates from their spots on any &quot;World's Wealthiest People&quot; list anytime soon. But no matter how much you earn, knowing your net worth is important.</p> <p>Here are three reasons why monitoring your net worth can help you manage money better. (See also: <a href="http://www.wisebread.com/10-ways-to-increase-your-net-worth-this-year?ref=seealso" target="_blank">10 Ways to Increase Your Net Worth This Year</a>)</p> <h2>1. Your net worth doesn't lie</h2> <p>In our culture, it's easy to convince ourselves that we're doing better with money than we actually are. We can finance nice cars, pay for the latest fashions with plastic, and even &quot;buy&quot; a more expensive home than we can realistically afford. But our net worth tells it like it is, and that can be a very helpful financial wake-up call.</p> <p>In the personal finance classic, <a href="http://amzn.to/2qjAM5i" target="_blank">The Millionaire Next Door</a>, authors Thomas Stanley and William Danko draw an important distinction between people who look wealthy but aren't (they call them &quot;Big Hat, No Cattle&quot;), and those who don't look wealthy but are (where the title of their book came from). If you're going to build wealth, it's far better to be in the latter group.</p> <p>The concept of being unassumingly wealthy is also known as &quot;<a href="http://www.wisebread.com/5-reasons-stealth-wealth-is-the-best-wealth" target="_blank">stealth wealth</a>,&quot; and it's a lifestyle worth striving for. People with &quot;stealth wealth&quot; maintain a high net worth by avoiding dumping their cash into shallow, depreciative purchases. Their modest approach to money management allows them to achieve such dreams as early retirement, entrepreneurship, traveling the world, and more.</p> <p>After calculating your net worth, ask yourself: Do I look wealthier than I am, or am I wealthier than I look?</p> <h2>2. Your net worth shows whether you're making progress</h2> <p>To be sure, there are other ways to define your life and determine whether you're moving forward or backward. Tallying your net worth each year, however, and monitoring the trend that develops can be very helpful. If you're going to build a nest egg large enough to support your family in your later years, you need that trend to be moving in an upward direction.</p> <p>Earning more each year and increasing your standard of living may make you feel like you're getting ahead, but an increase in your net worth will show if you actually are.</p> <p>Of course, there will be occasional down years. The recession of 2007 to 2009 erased a lot of wealth, but those who didn't panic eventually recovered &mdash; and then some.</p> <h2>3. Your net worth helps you pinpoint financial issues</h2> <p>Each time you calculate your net worth (a natural time to do so is at the end of each year), don't just retain the bottom line number. Keep the components.</p> <p>On the asset side, track the value of your home (Zillow will give you an estimate), your retirement savings, other savings, the value of your car(s), and other assets. Then look at changes within each asset.</p> <p>With our household's retirement accounts, I don't just record the balance. I also record how much we contributed each year and how much our investments earned. How much we contribute is much more under our control than the returns we earn. I want to at least make sure we're doing our part. The earnings side is important as well. If you see year after year of meager returns, it's probably time to re-evaluate your investing process.</p> <p>On the liabilities side, track how much you owe on your house and other debts, such as vehicle and student loans. This annual exercise will provide a helpful reminder to perhaps put more focus on getting out of debt or make sure you're on track to be mortgage-free at least by the time you retire.</p> <h2>The big picture</h2> <p>To a great degree, net worth is an &quot;internal&quot; metric. It's mostly about how you're doing now compared to how you were doing last year and the year before.</p> <p>If you'd like more context, <em>The Millionaire Next Door</em> has an interesting way of defining &quot;wealthy.&quot; Whereas many people think of someone who has a net worth of $1 million or more as wealthy, Stanley and Danko's definition created more of a level playing field for people across the spectra of age and income: multiply your age times your annual pretax household income, divide by 10, and then subtract any inherited wealth. That, they said, is what your net worth should be.</p> <p>If you have significantly more than that, you have a low-consumption, high-wealth-building lifestyle and you're considered wealthy for someone of your age and income. If your net worth is significantly less than that, you're probably consuming too much of your income and investing too little. (See also: <a href="http://www.wisebread.com/6-money-moves-to-make-if-your-net-worth-is-negative?ref=seealso" target="_blank">6 Money Moves to Make If Your Net Worth Is Negative</a>)</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/does-your-net-worth-even-matter">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-high-is-your-score-on-the-most-important-measure-of-wealth">How High Is Your Score on the Most Important Measure of Wealth?</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/are-your-assets-costing-you-too-much">Are Your Assets Costing You Too Much?</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/these-13-numbers-are-the-keys-to-understanding-your-finances">These 13 Numbers Are the Keys to Understanding Your Finances</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-quiet-millionaire-parts-4-5-building-your-net-worth">The Quiet Millionaire: Parts 4 &amp; 5 - Building Your Net Worth</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-celebrities-with-shockingly-low-net-worths">6 Celebrities With Shockingly Low Net Worths</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance assets cash debts income investments liabilities metric net worth saving money wealth Wed, 17 May 2017 08:00:11 +0000 Matt Bell 1947498 at http://www.wisebread.com 5 Questions to Ask Before You Start Claiming Your Social Security Benefits http://www.wisebread.com/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-511524588 (1).jpg" alt="Couple asking questions before claiming social security benefits" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>According to a 2016 poll conducted by Gallup, 59 percent of retirees rely on Social Security payments as a major source of income. Odds are that you, too, will need Social Security benefits to cover at least <em>some </em>of your living expenses after you retire. Because of this, you'll want these benefits to be as large as possible when retirement actually arrives.</p> <p>Here are five key questions to ask before you start taking your Social Security benefits.</p> <h2>1. Are you willing to take a smaller monthly benefit for the rest of your life?</h2> <p>Taking Social Security benefits before your full retirement age will cost you in the form of a lower monthly payout. This payout will remain at this lower level for the rest of your life.</p> <p>You can determine how much of a hit you'll take claiming benefits early by visiting the Social Security Administration's <a href="https://www.ssa.gov/planners/retire/retirechart.html" target="_blank">retirement planner site</a>. As the site shows, if you start taking your Social Security payments before you hit your full retirement age, your monthly benefit will be lower.</p> <p>How much lower? If your full retirement age is 67 and you start taking your benefits at 62, your monthly Social Security payment will be reduced by about 30 percent. If you start taking them at 64, they'll be lower by about 20 percent. Even if you start taking them one year earlier at 66, they'll still be lower &mdash; by about 6.7 percent a month. And remember, this is for the rest of your life.</p> <p>As you can see, claiming benefits early can significantly reduce the amount of money you receive each month. Let's say you are slated to receive $1,000 a month in Social Security benefits and your full retirement age is 67. If you started taking your benefits at age 62 &mdash; the earliest you can take them &mdash; your monthly benefit would fall to $700.</p> <h2>2. Can you continue working?</h2> <p>While retiring early reduces your monthly Social Security benefits, working past your full retirement age actually increases them.</p> <p>The Social Security Administration says that if you delay receiving your Social Security benefits until you hit 70, your monthly payment will be 32 percent higher than if you had retired at full retirement age.</p> <p>Say your full retirement age is 66, and you'd receive $1,000 from Social Security every month starting at that age. If you wait to start claiming your benefits until you turn 70, your monthly payment would rise significantly to $1,320. You'd just have to determine whether you could hold off on receiving those payments until your 70th birthday.</p> <h2>3. How much have you saved for retirement?</h2> <p>Most people can't survive on Social Security benefits alone during their retirement years. Instead, they rely on a mix of savings from different sources &mdash; everything from 401(k) plans, to IRAs, to annuities.</p> <p>How much you've saved for retirement will play a key role in how early you should take your Social Security benefits. If you've saved a significant amount of money for retirement, you might not need as large a monthly Social Security payment to meet your retirement goals. But if you haven't saved much, you might need that larger benefit payment. At the same time, working for a few extra years might help you boost your retirement nest egg, at least by a bit.</p> <h2>4. How healthy are you?</h2> <p>While there are financial upsides to waiting to claim your Social Security benefits, there are also times when this doesn't make sense. Often, this depends on your health.</p> <p>If you're not healthy, you might need to retire early for your physical wellbeing. And while it's impossible to predict how long you'll live after retiring, if you're suffering from health problems, your post-retirement life might not last as long. Retiring as early as possible, and claiming those Social Security benefits earlier, might then be the best choice. (See also: <a href="http://www.wisebread.com/3-reasons-to-claim-social-security-before-your-retirement-age?ref=seealso" target="_blank">3 Reasons to Claim Social Security Before Your Retirement Age</a>)</p> <h2>5. What kind of retirement do you want?</h2> <p>How do you plan to spend your retirement years? Are you looking forward to quiet days spent with your grandchildren, reading books, and pursuing a hobby? Or do you want to travel the world?</p> <p>If you're looking for a lower-key, less-costly retirement, taking your benefits early &mdash; and receiving smaller Social Security payments &mdash; might make sense. But if you want a busier, more extravagant retirement, holding off until full retirement age, or later, might be the smarter choice.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/3-reasons-to-claim-social-security-before-your-retirement-age">3 Reasons to Claim Social Security Before Your Retirement Age</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-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-sobering-facts-about-social-security-you-shouldnt-panic-over">5 Sobering Facts About Social Security You Shouldn&#039;t Panic Over</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-ways-more-money-in-retirement-might-cost-you">3 Ways More Money in Retirement Might Cost You</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement benefits early retirement full retirement age health Teaser: income social security Mon, 08 May 2017 09:00:08 +0000 Dan Rafter 1940328 at http://www.wisebread.com 6 Reasons It's Never Too Late for a Career Change http://www.wisebread.com/6-reasons-its-never-too-late-for-a-career-change <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-reasons-its-never-too-late-for-a-career-change" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-509227828.jpg" alt="Woman learning it&#039;s never too late for a career change" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Life's too short to spend your workday being unhappy. If you're dreading going into the office, it's time to grab your career by the horns and switch things up. It's never too late &mdash; and here's why. (See also: <a href="http://www.wisebread.com/8-signs-you-should-quit-your-job?ref=seealso" target="_blank">8 Signs You Should Quit Your Job</a>)</p> <h2>1. You shouldn't wake up every morning dreading the workday</h2> <p>I've been my own boss for the past nine years, ditching the nine-to-five grind shortly after moving to Manhattan in 2008. I didn't like working a thankless job every day while I made somebody else better off than myself. I chose a harder road &mdash; it's not easy paying your bills on time when you're responsible for your own income &mdash; but it's provided me a freedom that has facilitated an overall happiness in my life.</p> <h2>2. Your skills may be transferable (or you can learn new ones)</h2> <p>Many people are afraid they're not qualified for a career change, but unless you have a very specific job with specific qualifications, chances are your skills are transferable. But even if what you want to do requires a particular skill that you're lacking, you still may be able to find educational resources to help you learn. (See also: <a href="http://www.wisebread.com/how-to-make-a-major-career-switch-without-going-back-to-school?ref=seealso" target="_blank">How to Make a Major Career Switch Without Going Back to School</a>)</p> <h2>3. You're never too old to start something new</h2> <p>I might sound like one of those motivational posters here, but you're only limited to what you limit yourself to. Perhaps you're hesitant to apply for a certain job because you think you're too old. But it's important to ask yourself first &mdash; too old for what, for whom?</p> <p>You'll never know what the outcome of a situation will be unless you throw yourself into it. You have to apply to a job to know whether or not you're qualified. Every individual brings his or her unique perspective &mdash; and yours may be the one the company is looking for. Either way, it's worth a shot, and certainly better than sitting at home feeling sorry for yourself.</p> <h2>4. It doesn't matter how many years you've invested in your current company</h2> <p>I hate to break this to you, but, in all likelihood, your company will drop you like a bad habit when it no longer has any use for you. As such, you shouldn't feel obligated to stay with an organization just because you've been there forever and they've been good to you. That's great, and you should probably thank them for it, but that doesn't mean you owe them a lifetime of service (especially if you don't have a pension). If you feel like it's time to move on, it's time to move on. Eat the farewell cake, say your goodbyes, and press ahead.</p> <h2>5. You can probably accommodate a change of income</h2> <p>Most of us are looking for upward financial mobility when changing careers, but it's not the end of the world if the job that will make you happy pays a bit less. I'm not encouraging you to send yourself or your family into debt because of it, but if you have the option to downsize your life and reduce your monthly budget to accommodate your new, lower-paying career, by all means do it. Money isn't everything. If you can live just fine with less of it and still wake up with a smile on your face, you're doing something right.</p> <h2>6. Many companies also want to switch things up</h2> <p>The traditional workplace is undergoing massive changes to accommodate modern appetites for flexible hours, less commuting, working from home, and so on. Top candidates take roles at one company for a few years before being offered something more interesting and moving on. Companies no longer expect lifelong service in the way they used to, and these changing attitudes have paved the way for businesses in general to be more flexible in the way they attract talent.</p> <p>All of this means that now, more than ever, it's easier to take the plunge and try a new career.</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/6-reasons-its-never-too-late-for-a-career-change">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-4-jobs-people-quit-the-most">The 4 Jobs People Quit the Most</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-you-should-quit-your-job">8 Signs You Should Quit Your Job</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-transition-to-a-new-career-after-30">6 Ways to Transition to a New Career After 30</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-jobs-you-may-not-have-considered-but-should">9 Jobs You May Not Have Considered (But Should)</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-ways-working-from-home-can-save-and-cost-you-big">10 Ways Working From Home Can Save (And Cost) You Big</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Career and Income career changes happiness income jobs never too old quitting resigning skills working Thu, 27 Apr 2017 20:00:10 +0000 Mikey Rox 1934993 at http://www.wisebread.com 7 Lessons From Tax Day to Remember for Next Year http://www.wisebread.com/7-lessons-from-tax-day-to-remember-for-next-year <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-lessons-from-tax-day-to-remember-for-next-year" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-546177866.jpg" alt="Woman learning tax lessons she should&#039;ve learned this week" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Cue the sigh of relief: Another tax season has come and gone. Before you kick back and relax, though, take a little moment of self-reflection. Did Tax Day make your stress levels soar?</p> <p>If the answer is yes, it's time to brush up on a few key lessons to take with you into the 2017 tax year. We guarantee you'll be breathing a little easier come next April.</p> <h2>1. Keep track of all your income</h2> <p>Specifically, don't forget about taxes you'll need to pay on any income you earn during the year outside of a full-time job. This includes money from freelance work or self-employment, dividends on investments, interest payments, and even gambling winnings. Be sure to track all of this income so that you're not surprised by a tax bill later.</p> <h2>2. Save all of your paperwork</h2> <p>Make sure you keep careful track of any forms and paperwork necessary to file your taxes. This includes your W-2 or any 1099s, as well as documents from banks, investment firms, and your mortgage company. These forms are usually sent out in February.</p> <p>More immediately, if you make any contributions to charity, you'll need the documentation. If you own a small business, you'll need receipts for all expenses you plan to deduct. If you plan to seek deductions for any unreimbursed medical expenses, you'll need a bill from your health care provider. All of these are important in order to enter accurate information on your tax return. As you gather them throughout the year, set them aside in a file or box that you keep in a safe place.</p> <h2>3. Deductions and credits are your friends</h2> <p>A credit is a straight reduction in your tax bill. A deduction means you reduce the amount of your income that is taxable. Either way, these tax breaks should not be overlooked.</p> <p>You can get a tax credit for having a kid. You can get a tax deduction if you pay interest on your mortgage. You can get a tax deduction for charitable donations. There are even deductions and credits for using energy-efficient appliances or driving a hybrid car. The list of possible deductions and tax credits is massive, and chances are, you qualify for at least a few. Most tax preparers and tax preparation programs will walk you through these deductions and credits to make sure you're getting the maximum benefit. If you haven't paid much attention to potential tax deductions or credits in the past, however, make sure you start this year. It could save you significant money.</p> <h2>4. Understand how tax-advantaged investment accounts differ</h2> <p>In addition to claiming tax credits and deductions, you can reduce your tax bill in advance simply by saving for retirement. If you use a 401(k), traditional IRA, or Roth IRA to build your nest egg, there are considerable tax advantages, and you need to understand the main differences.</p> <p>With a 401(k) and traditional IRA, any money you contribute to your account throughout the year will be deducted from your taxable income now. In some cases, this could move you into a lower tax bracket and save you considerable money on this year's tax bill. With a Roth IRA, money you contribute is taxed now, but you will not have to pay taxes on any investment gains when you withdraw the money at retirement.</p> <h2>5. If you are getting a big return, that's not a good thing</h2> <p>Getting money back on your taxes is certainly better than owing so much to the IRS that you pay a penalty. But if you are getting a considerable amount back after filing your return, you may have had too much taken out of your paycheck and overpaid taxes throughout the year. So in a sense, the government has been holding onto your money interest-free for no reason when you could have been using it for yourself. To make sure this doesn't happen again, ask your employer for a new W-4 and increase the number of exemptions you claim.</p> <h2>6. If you make a mistake, you can amend your return</h2> <p>Tax time can be nerve wracking because people are petrified of making a mistake and having the IRS come after them. But the actual chances of the government knocking on your door are quite low. The IRS simply does not have the staff to audit many individuals, and when they do, they usually target either very wealthy people or people with very complicated tax returns.</p> <p>If you do discover that you made a mistake, you can file an amended return without much hassle. Simply file Form 1040X, Amended Tax Return, along with the corrected (or missing) documents you did not originally file with your return. This happened to me once when I forgot to report some dividend income, and I never had the taxman knock on my door. (See also: <a href="http://www.wisebread.com/the-easiest-way-to-avoid-a-tax-audit?ref=seealso" target="_blank">The Easiest Way to Avoid a Tax Audit</a>)</p> <h2>7. Use your taxes as a learning opportunity</h2> <p>Even with all these lessons under your belt, tax time can still be a tedious and stressful time of year. When all else fails, change your perspective. I personally find the process of doing taxes to be fairly educational. You can see a clear picture of how much money you actually took in during the year, and how much the government takes. The process of finding deductions can be a learning experience as well. If you approach doing your taxes with an attitude of curiosity, you may find the whole process to be less painful.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/7-lessons-from-tax-day-to-remember-for-next-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-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-common-tax-mistakes-we-need-to-stop-making">5 Common Tax Mistakes We Need to Stop Making</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-7-most-common-tax-questions-for-beginners-answered">The 7 Most Common Tax Questions for Beginners, Answered</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-easiest-way-to-avoid-a-tax-audit">The Easiest Way to Avoid a Tax Audit</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/101-tax-deductions-for-bloggers-and-freelancers">101 Tax deductions for bloggers and freelancers</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/i-lost-my-tax-documents-now-what">I Lost My Tax Documents… Now What?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes advice audits credits deductions forms income investing IRS tax lessons tax returns w-2 Fri, 21 Apr 2017 08:00:10 +0000 Tim Lemke 1931721 at http://www.wisebread.com How "Carried Interest" May Affect Our Taxes http://www.wisebread.com/how-carried-interest-may-affect-our-taxes <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-carried-interest-may-affect-our-taxes" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-508011393.jpg" alt="what is carried interest" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>A lot has happened since now-president Donald Trump and candidate Hillary Clinton debated on October 9 at Washington University in St. Louis. If you're like most taxpayers, you probably don't remember the candidates bantering about something called &quot;carried interest.&quot;</p> <p>During the debate, Trump was asked what steps he'd take to make sure that the wealthiest of U.S. taxpayers pay a fair share of taxes. Trump responded by saying that he'd eliminate carried interest. What Trump actually meant, though, was that he would change the way carried interest is taxed. Clinton, too, supported making this change. And so did former president Barack Obama.</p> <p>You can be forgiven if you have no idea what carried interest is. That's because it's something that only benefits the general partners who manage private equity and hedge funds. And most of us can't invest in these private funds because it is so expensive to do so. Investors must usually pony up at least $250,000 to make an investment in one of these funds.</p> <p>Carried interest is one way that the managers of these expensive hedge funds and private equity funds make a profit. But just because carried interest only benefits a select few, doesn't mean that it's not important to the U.S. economy. According to the Tax Foundation, if Congress taxed carried interest as ordinary income, it could <a href="https://files.taxfoundation.org/legacy/docs/TF_Options_for_Reforming_Americas_Tax_Code.pdf" target="_blank">cost the country 2,200 jobs</a>. On the positive side, the Tax Foundation said that changing how carried interest is taxed would also generate about $15 billion during the next 10 years in the form of more taxes sent to the federal government.</p> <h2>What Is Carried Interest?</h2> <p>The best way to understand carried interest is to look at your own investing habits. Say you invest some money in a stock. You hold onto that stock for five years, and its value rises. You then sell the stock and earn a solid profit.</p> <p>That profit is known as a capital gain, and you have to pay taxes on it. But the tax rate for a capital gain is lower than the tax rate for standard wages and income. In general, wages and salary income is taxed at a top rate of 39.6%. Capital gains, though, are taxed at a top rate of 23.8%.</p> <p>You can then see that income made from capital gains is even more valuable than the income you make from your salary.</p> <p>The same basic concept holds true for the managers of hedge and private equity funds. These managers are paid from fees generated by the fund. But they are also paid in carried interest, which is a share of the profits made by the fund. If the fund increases in value, the managers of the fund receive a financial boost in the form of carried interest.</p> <p>Today, carried interest is taxed as capital gain income, not as salary or wage income. Obviously, this is a nice perk to fund managers, who have to pay less in taxes on carried interest.</p> <h2>How Should It Be Taxed?</h2> <p>During the campaign, Trump said that carried interest should be taxed the same way the country taxes ordinary income. Why? Because carried interest is really part of the salary of a fund manager. So why shouldn't it be taxed that way?</p> <p>Others, though, make a different argument. The Tax Policy Center cites the common argument that fund managers should not be viewed as typical workers, but <a href="http://www.taxpolicycenter.org/briefing-book/what-carried-interest-and-how-should-it-be-taxed" target="_blank">rather as entrepreneurs</a>. Entrepreneurs are allowed to treat part of their financial returns as capital, and fund managers should be given the same tax break, according to this argument.</p> <p>Will Congress ever change the way carried interest is taxed? That's probably not a priority right now. And you can bet that most U.S. taxpayers will remain unaware of what carried interest even is.</p> <p>But the topic of carried interest might come up again whenever politicians, financial experts, and policymakers debate how the country can make its tax code fair to everyone.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/how-carried-interest-may-affect-our-taxes">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/101-tax-deductions-for-bloggers-and-freelancers">101 Tax deductions for bloggers and freelancers</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/did-your-parents-give-you-a-whole-life-insurance-policy-heres-what-to-do-with-it">Did Your Parents Give You a Whole Life Insurance Policy? Here&#039;s What to Do With It.</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-investments-that-may-soar-during-trumps-term">8 Investments That May Soar During Trump&#039;s Term</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-reasons-an-hsa-is-actually-worth-having">10 Reasons an HSA Is Actually Worth Having</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-ways-more-money-in-retirement-might-cost-you">3 Ways More Money in Retirement Might Cost You</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Taxes capital gains carried interest donald trump fund managers income tax advantages wealthy Mon, 13 Mar 2017 10:30:10 +0000 Dan Rafter 1904507 at http://www.wisebread.com 3 Ways More Money in Retirement Might Cost You http://www.wisebread.com/3-ways-more-money-in-retirement-might-cost-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/3-ways-more-money-in-retirement-might-cost-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-622064048.jpg" alt="Learning how more money in retirement might cost you" title="" class="imagecache imagecache-250w" width="250" height="142" /></a> </div> </div> </div> <p>You might think that there is no such thing as too much money in retirement. After all, without a steady income from working, you need your retirement nest egg to last you throughout your golden years. So more money must be better, right?</p> <p>Well, as The Notorious B.I.G. once said, the more money we come across, the more problems we see &mdash; even in retirement. While I would never discourage anyone from saving as much as they can for retirement, it is a good idea to recognize what kinds of additional problems a large retirement portfolio could cause you.</p> <p>Here's what you need to know about the potential pitfalls of having more money in retirement:</p> <h2>1. You Will Owe Taxes on Tax-Deferred Retirement Accounts</h2> <p>According to the Bureau of Labor Statistics, as of December 2016, <a href="https://www.bls.gov/opub/btn/volume-5/pdf/defined-contribution-retirement-plans-who-has-them-and-what-do-they-cost.pdf" target="_blank">44% of all workers</a> were participating in a tax-deferred defined contribution plan, such as a 401K or an IRA. These types of retirement accounts allow workers to put pretax dollars aside for their retirement, where the money grows tax-free. Once you reach age 59&frac12;, you may withdraw money from such tax-deferred accounts without penalty.</p> <p>The potential trouble comes from the fact that any distribution you take from your tax-deferred account is taxable as ordinary income. This means that you will be taxed on that income in the same way you would be taxed on the same amount of income from a job. Because of the taxes you will owe on your distributions, the money in your tax-deferred retirement account is worth less than the dollar amount.</p> <p>Since many workers anticipate having a lower tax bracket in retirement than they do during their career &mdash; that is, they expect to have a much lower retirement income than career income &mdash; it makes sense to put off the taxes they will pay on the money in their 401K or IRA until after retirement. However, for anyone who manages to create a large retirement portfolio from a modest salary during their career, the tax burden in retirement will be much larger.</p> <h2>2. Required Minimum Distributions May Force You to Withdraw Money You Don't Want</h2> <p>If you put money aside into a tax-deferred account, the IRS will want to see its cut of the money eventually. For that reason, the IRS requires each account holder to begin withdrawing money during the year that he or she reaches age 70&frac12;. There is a minimum amount you must withdraw, and the IRS levies a stiff penalty for failing to do so &mdash; you will owe 50% of the amount that should have been withdrawn.</p> <p>In addition, the required minimum distribution is calculated based on your date of birth, the balance of each tax-deferred account as of December 31 of the previous year, and one of three <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/required-minimum-distribution-worksheets" target="_blank">IRS distribution tables</a>. That means your required minimum distribution must be recalculated each year using your new end-of-year balance from the previous year and your new distribution period according to the IRS distribution table. Getting the amount wrong can be potentially costly, and if you have a great deal of money in your tax-deferred accounts, you will be required to take more money than you necessarily want to access in one year.</p> <p>Don't forget, this required minimum distribution is also taxed as regular income (as we discussed above), so in addition to potentially withdrawing money you don't want, you will also owe taxes on the amount that you are required to withdraw.</p> <h2>3. You Will Be Taxed on Your Social Security Benefits</h2> <p>Many people are unaware of the fact that up to 85% of their Social Security benefits may be subject to income tax in retirement. The higher a retiree's non-Social Security income, the more likely it is that they will owe taxes on their Social Security check.</p> <p>The way the IRS determines whether your benefits are taxable is by calculating something known as provisional income. The formula for determining the provisional income is: One-half of your Social Security benefits, plus all your other income, including tax-exempt interest. (While tax-exempt interest is included in this calculation, tax-free distributions from a Roth IRA are not.)</p> <p>Your provisional income is compared to an upper and lower base amount to determine how much of your Social Security benefits are taxed, if any. If you file as single, then your lower base amount is $25,000. If your provisional income is above that amount, then you owe taxes on 50% of your Social Security benefits. The upper base amount for single filers is $34,000. If your provisional income is above that amount, then you owe taxes on 85% of your Social Security benefits.</p> <p>What this means is that the more money you take from your retirement accounts, the more of your Social Security benefits are considered taxable.</p> <p>For instance, if you are single and you take $38,000 from your IRA in retirement each year, then you are in the <a href="https://taxfoundation.org/2017-tax-brackets" target="_blank">25% tax bracket</a> and you owe taxes on 85% of your Social Security benefits since your income is above the upper base limit. If you decide to withdraw an additional $1,000 from your IRA one year, your additional $1,000 in income will cause $850 more of your Social Security income to be considered provisional income, making it subject to taxation at your marginal tax rate of 25%. You'll owe $462.50 on your $1,000 withdrawal ($1,850 x 25% = $462.50) between your IRA taxes and your Social Security benefit taxes.</p> <h2>More Money in Retirement Is a Good Problem to Have</h2> <p>Though having a large nest egg may cause some headaches after your retirement, it's important to remember that this is a better problem to have than facing retirement <a href="http://www.wisebread.com/10-signs-you-arent-saving-enough-for-retirement" target="_blank">without enough savings</a>. Just recognize that large amounts of money need to be properly managed and you need to stay on top of your financial life post-career. You can handle each of the financial problems that you may see with a larger retirement portfolio, as long as you are aware of them and prepared for them.</p> <p> &nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/3-ways-more-money-in-retirement-might-cost-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/heres-how-your-taxes-will-change-when-you-retire">Here&#039;s How Your Taxes Will Change When You Retire</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-tax-day-is-april-15-and-other-weird-financial-deadlines">Why Tax Day Is April 15 and Other Weird Financial Deadlines</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</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-questions-to-ask-before-you-start-claiming-your-social-security-benefits">5 Questions to Ask Before You Start Claiming Your Social Security Benefits</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-penalty-free-ways-to-withdraw-money-from-your-retirement-account">7 Penalty-Free Ways to Withdraw Money From Your Retirement Account</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Taxes 401k benefits contributions income IRA social security tax brackets tax-deferred Wed, 08 Mar 2017 10:00:10 +0000 Emily Guy Birken 1901333 at http://www.wisebread.com Stop Making These 7 Basic Budget Mistakes http://www.wisebread.com/stop-making-these-7-basic-budget-mistakes <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/stop-making-these-7-basic-budget-mistakes" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-488007222.jpg" alt="Little girl making basic budget mistakes" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Budgets are the foundation of frugal living and personal financial success. Clear and realistic budgets help us better understand our financial picture, rein in irresponsible spending, and develop stronger saving habits. If you're having a tough time sticking to your budget, maybe it's not your willpower that's broken &mdash; maybe it's your budget. Here are seven important budget mistakes you may be making.</p> <h2>1. Not Establishing a Goal</h2> <p>Your budget should be fueled by a crystal clear purpose. Before you make (or remake) your budget, decide exactly what you want to accomplish. Is the goal to get out of <a href="http://www.wisebread.com/the-fastest-method-to-eliminate-credit-card-debt?ref=internal" target="_blank">credit card debt</a>? To save more aggressively <a href="http://www.wisebread.com/10-signs-you-arent-saving-enough-for-retirement?ref=internal" target="_blank">for retirement</a>? To <a href="http://www.wisebread.com/should-you-pay-your-mortgage-off-early?ref=internal" target="_blank">pay off the house</a> five years sooner? Or to simply develop a greater awareness of where your money goes? Having a goal will help you stay on-track and on-budget. (See also: <a href="http://www.wisebread.com/5-tricks-to-beating-budget-burnout?ref=seealso" target="_blank">5 Tricks to Beating Budget Burnout</a>)</p> <h2>2. Skipping Your Retirement Savings</h2> <p>Saving for the future? If it's not part of your budget, it's probably not happening. Make sure that your monthly budget includes a healthy contribution to a money market account, IRA, or 401K plan. It's one the few expenses that will actually pay you back in the long-term.</p> <h2>3. Relying on Inconsistent or Uncertain Income</h2> <p>Funding your budget with tax refunds, year-end bonuses, and other income you're yet to (and may not) receive, is a bad idea. With one little hiccup, your entire financial plan can be thrown into chaos. Instead, focus on regular and reliable sources of income. When you receive extra cash, funnel it into your savings or retirement account. (See also: <a href="http://www.wisebread.com/saving-for-retirement-and-other-long-term-goals-on-a-variable-income?ref=seealso" target="_blank">Saving for Retirement and Other Long Term Goals on a Variable Income</a>)</p> <h2>4. Not Expecting the Unexpected</h2> <p>Emergencies happen. Cars break down, pipes burst, and appliances bite the dust. If your budget doesn't include a savings plan or <a href="http://www.wisebread.com/a-step-by-step-guide-to-creating-your-emergency-fund?ref=internal" target="_blank">emergency fund</a>, it doesn't reflect the realities of life. Avoid blowing your budget or relying on high-interest credit cards when the inevitable happens &mdash; make sure your budget has a line item for what-if's and oh-no's.</p> <p>Most importantly, avoid the temptation to consider this part of your budget negotiable. Often, budgeters will simply pull from the savings column to inflate discretionary spending. As you can imagine, this approach is a slippery slope that can quickly wipe out the best intentions.</p> <h2>5. Ignoring the Small Stuff</h2> <p>Budgets are for major &mdash; and minor &mdash; expenses. If you ignore the $4 coffees, the $12 movie tickets, and the lunches out twice a week, your budget will quickly become more abstract than exact. Monitor and account for each expenditure to get a clear idea of what you're spending and where adjustments need to be made.</p> <h2>6. Making Things Too Complex</h2> <p>When it comes to household budgets, simpler is better. For most budgeters, a basic Excel spreadsheet will do the trick and allow for easy updates. The old-school <a href="http://www.wisebread.com/a-comprehensive-guide-to-the-envelope-system?ref=internal" target="_blank">envelope system</a> is an even simpler and more direct way to way to track and tally monthly expenditures. (See also: <a href="http://www.wisebread.com/easy-budgeting-for-people-who-hate-math?ref=seealso" target="_blank">Easy Budgeting for People Who Hate Math</a>)</p> <h2>7. Designing a Budget That Won't Budge</h2> <p>While budgets are designed to impose limits on spending, they should still offer <em>some </em>degree of flexibility. Certain expenses fluctuate around the holidays, during major life events like weddings and graduations, and even in response to changing weather. If your budget doesn't allow for a little bit of responsible wiggle room, it won't be useful and you'll soon abandon it. Remember, your budget is your creation. It should respond to the needs of your life and be able to bend without breaking.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/kentin-waits">Kentin Waits</a> of <a href="http://www.wisebread.com/stop-making-these-7-basic-budget-mistakes">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-manage-your-money-no-budgeting-required">How to Manage Your Money — No Budgeting Required</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-budget-consistently-without-a-steady-paycheck">How to Budget Consistently Without a Steady Paycheck</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-budgeting-skills-everyone-should-master">11 Budgeting Skills Everyone Should Master</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-of-the-coolest-sayings-about-saving">10 of the Coolest Sayings About Saving</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-financial-basics-every-new-grad-should-know">The Financial Basics Every New Grad Should Know</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting advice emergency funds expenses income Mistakes saving money savings goals Fri, 03 Mar 2017 10:00:09 +0000 Kentin Waits 1900128 at http://www.wisebread.com 9 Ways Your Lazy Habits Are Costing You http://www.wisebread.com/9-ways-your-lazy-habits-are-costing-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-ways-your-lazy-habits-are-costing-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-626262674.jpg" alt="Woman learning how her lazy habits are costing her" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Everyone gets lazy sometimes. We all make excuses as to why we can't or won't do certain things. But is your laziness holding you back from achieving financial freedom?</p> <p>If you're struggling to get ahead or want to supercharge your money situation, it's time to shed your slothful ways. Do any of these lazy habits sound like you? (See also: <a href="http://www.wisebread.com/6-ways-sloth-is-keeping-you-poor?ref=seealso" target="_blank">6 Ways Sloth Is Keeping You Poor</a>)</p> <h2>1. You Pay People to Do Things You Can Do Yourself</h2> <p>You eat out a lot because you don't want to cook. You're paying for a maid service because you can't be bothered to clean your house yourself. Meanwhile you're spending hours a day watching Netflix or playing video games.</p> <p>If you really don't have time because you're spending it all in a productive way, paying someone else in order to maximize your earning potential is fine. Otherwise, buck up and start doing your own chores. (See also: <a href="http://www.wisebread.com/should-you-be-paying-someone-else-to-do-these-7-common-chores?ref=seealso" target="_blank">When Should You Pay Someone Else to Do Chores</a>)</p> <h2>2. You Are Disorganized With Finances</h2> <p>A friend once told me that he lost his homeowners insurance because he was lazy about sorting mail and missed the renewal notice. To get his insurance back, he ended up spending more than he otherwise would have.</p> <p>Being organized with your money takes time and discipline. You need to keep track of where your money is going and where it's held, monitor the performance of your investments, and pay close attention to bills and other obligations.</p> <p>Things like missing bills, late payments, and lost tax forms won't just lead to inconvenience. They can actually <em>cost you money</em>, in the form of fees and perhaps even a ding to your credit score. (See also: <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=seealso" target="_blank">This One Ratio Is the Key to a Good Credit Score</a>)</p> <h2>3. You Won't Go After a Promotion Because You Fear More Work</h2> <p>It's sometimes easy to talk yourself out of moving up to a position of seniority in your company. After all, who wants to deal with additional demands, direct reports, more pressure, and longer hours? But it's also silly to stay in an entry level position simply because you're afraid of taking on more responsibility.</p> <p>It's true that chasing a job just for the money is a bad idea, and not all promotions are worth pursuing. But rarely does an employee receive a big pay raise by staying put. And a promotion can allow you to play a more integral role in an organization's path, rather than just being a cog in a wheel.</p> <p>Moreover, even if you find that a new position is not a good fit for you, you'll be gaining skills and experience that you can use to find the job of your dreams.</p> <h2>4. You Have No Interest in Professional Self-Improvement</h2> <p>Does your employer encourage you to learn new skills? Do they even pay for education and training? If so, then take advantage! In a competitive job market, there's no reason to avoid gaining skills that will make you more essential to your employer. Perhaps you'd benefit from learning to code, or getting training in Microsoft Excel. Maybe <a href="http://www.wisebread.com/11-ways-a-second-language-can-boost-your-career?ref=internal" target="_blank">learning a second language</a> will give you an edge. Maybe you need to go back to school and finish your degree. Don't be afraid to put in the work. Your next performance review &mdash; and pay raise &mdash; will be the proof that it was worth it.</p> <h2>5. You Ignore Your Personal Appearance</h2> <p>We'd like to believe that appearances don't matter, but tell that to the guy who shows up for a job interview with ketchup on his tie. You don't need to wear a Brooks Brothers suit to work everyday, but a lack of care in how you appear can cost you in things like landing a job, getting a promotion or, securing a meeting with an important client.</p> <p>Taking care of your appearance includes dressing well, but also staying in shape. Workers who exercise regularly earn 9% more on average than other workers, according to a study from Cleveland State University.</p> <h2>6. You Have No Interest in Creating a Side Hustle?</h2> <p>You have plenty of free time, but can't stand the idea of using it to do more work. After all, you already have a full-time job, right? But these days, it's not uncommon to take on side jobs in order to achieve financial freedom. Maybe it's earning a little extra doing freelance graphic design work. Perhaps you could drive for Uber, sell handmade pottery, or start a YouTube channel. Having a side hustle cannot only bring you extra income, but perhaps give you the experience you need to find the full-time job you truly want. (See also: <a href="http://www.wisebread.com/15-ways-to-make-money-outside-your-day-job?ref=seealso" target="_blank">15 Ways to Make Money Outside of Your Day Job</a>)</p> <h2>7. You Take the Deal That's in Front of You Rather Than Shop Around</h2> <p>Finding bargains can be hard work. You may have to travel from store to store. You may have to spend time on the Internet researching prices. You may have to be willing to take time to negotiate. It's easy to buy an item at whatever price you first see, but this approach can cost you money over time. You must embrace the challenge of finding the best deal, even if it takes a little more time and energy.</p> <h2>8. You Don't Invest</h2> <p>Your employer offers a 401K but you haven't even looked at the benefit materials. You've heard of terms like &quot;stock market&quot; and &quot;IRA&quot; but haven't taken the time to learn what they mean. You are content to just place any extra money in a bank account with low interest.</p> <p>It may be okay to ignore investing when you have no money to invest. But once you have some money to put aside, your approach to retirement savings shouldn't be lazy, or it will cost you big time.</p> <p>Investing can be intimidating, but it's important to overcome those fears and at least educate yourself. Unless you're already independently wealthy, investing is one of the few ways to achieve financial freedom. So get on it!</p> <h2>9. You Do Invest, But Don't Pay Close Attention</h2> <p>So you signed up for your 401K and are putting aside a certain amount of money for your retirement. That's great! But when was the last time you checked your balances? Have you rebalanced your portfolio recently? Are you paying more in fees than you need to?</p> <p>Investing doesn't have to be complicated. In fact, someone who invests a good amount into a basic index fund and leaves it alone will probably make out quite well. But that's no excuse to be completely lazy. To get the most out of your investments, you need to do at least some amount of baby-sitting to make sure you're on the right track toward your savings goals.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/9-ways-your-lazy-habits-are-costing-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/heres-how-too-many-decisions-costs-you-money">Here&#039;s How Too Many Decisions Costs You Money</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/39-mindless-ways-youre-wasting-money-in-every-part-of-your-life">39 Mindless Ways You&#039;re Wasting Money in Every Part of Your Life</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-shop-with-purpose-and-save-more-money">How to Shop With Purpose — And Save More Money</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/flashback-friday-23-mental-tricks-thatll-help-you-save-money">Flashback Friday: 23 Mental Tricks That&#039;ll Help You Save Money</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/save-100s-next-month-with-these-10-grocery-shopping-tips">Save $100s Next Month With These 10 Grocery Shopping Tips</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Shopping bad habits income investing lazy lazy habits saving money shopping habits side hustle sloth Thu, 02 Mar 2017 10:00:12 +0000 Tim Lemke 1901227 at http://www.wisebread.com You Got a Raise! Now What? http://www.wisebread.com/you-got-a-raise-now-what <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/you-got-a-raise-now-what" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-510329664.jpg" alt="Man got a raise, so now what?" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>So, you got a raise! Now, it's time to start putting that money to work for you. While your first thought might be <em>shopping spree</em>, consider instead these other options that will build your wealth and secure your financial freedom.</p> <h2>Have Realistic Expectations</h2> <p>Your raise may sound like a lot, but once you receive your paycheck, you may be surprised to find how little your take-home pay actually changed. Don't make plans based on a quick mental calculation. Get the actual amount from your paycheck to know how the raise will actually impact you.</p> <h2>Make a Plan</h2> <p>Of course it's okay to reward yourself <em>a bit </em>for working hard and getting a raise. But don't just pocket the extra money and add it to your fun budget. Check your savings, credit card debt, and investments to see which areas can use a boost, and put your raise there. You can decide to put three months' worth to <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=internal" target="_blank">pay down your debt</a>, and then take a one month break to splurge. Consider your financial goals and how every dollar makes a difference toward reaching them.</p> <h2>Increase Your Emergency Savings</h2> <p>In an ideal world, you should have a three to six month cushion in your <a href="http://www.wisebread.com/a-step-by-step-guide-to-creating-your-emergency-fund?ref=internal" target="_blank">emergency fund</a>. If you already have a sizable emergency fund, then you don't need to worry about saving more with your increased income. Otherwise, saving more now will mean less stress later when an unexpected event hits your wallet hard.</p> <h2>Pay Down Debt</h2> <p>Paying off debt should be a priority in your plan to gain financial freedom. It can also help improve your credit score, save on interest, and reduce stress. Consider putting your raise toward debt payments. Even a small amount that you can add to your monthly payments will significantly lower the interest paid and help you pay it off faster.</p> <h2>Increase Your Retirement Savings</h2> <p>Can you put some of that raise into your retirement accounts? Your retirement contribution might also automatically increase as it is usually based on a percentage of your gross pay. Have you at least set your 401K contributions to get the full amount of matching from your employer? If you have an another retirement account, like a Roth IRA, get your annual contribution out of the way.</p> <h2>Refinance Your Loans</h2> <p>With a higher income, you may be eligible for better rates on a personal loan, mortgage, and car loan. You can apply for better loans now or wait for your credit score to increase after you've made some positive changes (such as paying down debt and lowering your debt-to-credit ratio).</p> <h2>Start Investing</h2> <p>It's never too early to pad your wealth with smart investing. These days the startup capital required is minimal. You can start investing with a few hundred dollars. <a href="http://www.wisebread.com/a-guide-to-online-brokers-for-investing-newbies-and-beyond?ref=internal" target="_blank">Online brokerages</a> often have a low minimum with low fees. <a href="http://www.wisebread.com/should-you-trust-your-money-with-these-4-popular-financial-robo-advisers?ref=internal" target="_blank">Financial robo advisers</a> can take a lot of the work out of figuring out what to buy. (See also: <a href="http://www.wisebread.com/4-cheap-easy-ways-to-invest-your-first-1000?ref=seealso" target="_blank">Easy Ways to Invest Your First $1,000</a>)</p> <h2>Have Fun</h2> <p>It won't hurt to reward yourself a bit for a job well done. Have a celebratory dinner or buy an affordable gadget that you've been wanting. You can also start saving toward a vacation or other large purchase.</p> <h2>Prove Your Employer Right</h2> <p>Getting a raise means you've done a good job and deserve to be rewarded for it. Prove your employer right by continuing your positive behaviors, always putting your best foot forward, and looking forward to the next raise. You may also want to write a thank you card, especially if your manager or boss worked hard to get you the raise.</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/you-got-a-raise-now-what">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/5-things-you-must-do-before-you-quit-your-job">5 Things You Must Do Before You Quit Your Job</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/getting-by-without-a-job-part-1-losing-a-job">Getting by without a job, part 1--losing a job</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-improve-your-finances-using-social-media">How to Improve Your Finances Using Social Media</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/turn-your-passion-into-a-living">Turn Your Passion Into A Living</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/wanna-put-away-some-cash-take-a-vacation">Wanna Put Away Some Cash? Take A Vacation!</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Career and Income budgeting debt repayment extra money income job paychecks promotions raise saving money work Wed, 01 Mar 2017 11:00:10 +0000 Andrea Cannon 1898693 at http://www.wisebread.com 3 Reasons to Claim Social Security Before Your Retirement Age http://www.wisebread.com/3-reasons-to-claim-social-security-before-your-retirement-age <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/3-reasons-to-claim-social-security-before-your-retirement-age" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-538053186.jpg" alt="Man claiming social security before retirement age" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>When it comes to Social Security, the usual advice is to hold off on taking benefits as long as possible. While most people could claim benefits as early as age 62, your monthly benefit amount will grow each year that you wait up to age 70. (See also: <a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement?ref=seealso" target="_blank">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a>)</p> <p>However, there are some situations where taking benefits as soon as possible may be the better way to go. Here are three such scenarios.</p> <h2>1. You Need the Money</h2> <p>If you can't find a job, or simply don't have enough savings to live on, claiming Social Security benefits at age 62 may be your only option.</p> <p>Just keep in mind that if you do find a job, there are <a href="https://www.ssa.gov/planners/retire/whileworking.html" target="_blank">limits to how much you can earn</a> without impacting your Social Security benefits. In years when you are younger than your &quot;full retirement age&quot; (65&ndash;67, depending on when you were born), for every $2 you earn above $16,920, your Social Security benefits will be reduced by $1.</p> <h2>2. Longevity Doesn't Run in Your Family</h2> <p>One way to evaluate the impact of claiming Social Security benefits at various ages is to run what's known as a break-even analysis.</p> <p>When you claim as early as possible, your monthly benefit amount will be smaller than it would have been if you claimed later. However, the head start that early claiming provides means that if you claim benefits at a later age, even though the monthly amount is higher, it'll take a number of years before you've broken even with the total amount you would have received by claiming earlier.</p> <p>For example, here's a look at a friend's estimated monthly Social Security benefits and how they vary depending on when he claims benefits:</p> <ul> <li>$1,529 if claimed at age 62</li> <li>$2,273 if claimed at his full retirement age of 67</li> <li>$2,873 if claimed at age 70</li> </ul> <p>If he claims benefits beginning at age 62, by the end of the year that he turns 67, he will have received a total of over $100,000. If he waits until age 67 to begin taking benefits, it will take him until approximately age 78 before his accumulated benefits would overtake the total he would have received if he had started taking benefits at age 62.</p> <p>If he didn't expect to live to age 78, it would make sense to claim benefits earlier. Of course, that's a tough call. Even in families when one or both parents die early, some of their kids live far longer.</p> <p>To find out your own estimated Social Security benefits, create an account on the Social Security Administration's website.</p> <h3>Run Your Own Break-Even Analysis</h3> <p>Unfortunately, there isn't an easy way to run your own break-even analysis. The Social Security Administration used to have a calculator on its site designed for this purpose, but took it down because they felt it was encouraging too many people to claim early.</p> <p>One workaround is to run various scenarios with <a href="https://www.calcxml.com/do/ins07" target="_blank">this calculator</a>. As a starting point, enter your &quot;current age&quot; as 62, enter your estimated age of death in the &quot;retirement age&quot; field, enter the annual age-62 benefit amount in the &quot;your current annual income&quot; field (the SSA website lists benefits in monthly amounts, so be sure to multiply by 12), and then use the &quot;annual salary increase&quot; field to enter an estimated inflation rate (Social Security benefits are adjusted for inflation each year; use a relatively low amount &mdash; somewhere between 1% and 2%).</p> <p>Then run the same analysis, but change your &quot;current age&quot; to your full retirement age and change &quot;your current annual income&quot; to the annual amount of your full retirement age benefit.</p> <h2>3. You Have Plenty of Money Already Saved for Retirement</h2> <p>If you have enough money to live on regardless of your Social Security benefits, that may be another reason to take Social Security benefits as early as possible. You could use the money to invest, buy a <a href="http://www.wisebread.com/is-long-term-care-insurance-worth-it?ref=internal" target="_blank">long-term care insurance policy</a>, or buy a <a href="http://www.wisebread.com/term-vs-whole-life-insurance-heres-how-to-choose?ref=internal" target="_blank">life insurance policy</a>.</p> <p>It's true that you should think very carefully before claiming Social Security benefits at age 62. There's a hefty increase in the monthly benefit amount for each year that you wait. And if you're married, keep this in mind: When you die, your spouse will be able to choose to take the higher of their benefit or your benefit. If you had been the higher earner, by waiting as long as possible before claiming your benefit, that will be very helpful to your spouse once you're gone.</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/3-reasons-to-claim-social-security-before-your-retirement-age">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits">5 Questions to Ask Before You Start Claiming Your Social Security Benefits</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-sobering-facts-about-social-security-you-shouldnt-panic-over">5 Sobering Facts About Social Security You Shouldn&#039;t Panic Over</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement benefits full retirement age income longevity savings social security Wed, 01 Mar 2017 10:30:37 +0000 Matt Bell 1898659 at http://www.wisebread.com The 7 Most Common Tax Questions for Beginners, Answered http://www.wisebread.com/the-7-most-common-tax-questions-for-beginners-answered <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-7-most-common-tax-questions-for-beginners-answered" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-182251590.jpg" alt="Man learning answers to common tax questions" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>It's tax season: That joyous time when you look back on what you earned last year and figure out whether you gave enough of it to Uncle Sam. Think of it as Christmas for the government.</p> <p>If you're new to filing a tax return, the process can seem daunting. The forms have cryptic names. Making a mistake can have serious consequences, whether it's inadvertently paying too much, or paying too little and getting audited. A quick lesson in the basics of filing a tax return might help.</p> <p>Before we begin, a reminder: I'm not an accountant. If you have a question about your individual tax situation that you can't answer by consulting the <a href="https://www.irs.gov/" target="_blank">Internal Revenue Service</a>, ask a professional. (See also: <a href="http://www.wisebread.com/6-great-places-to-get-free-tax-advice?ref=seealso" target="_blank">6 Great Places to Get Free Tax Advice</a>)</p> <h2>1. Do I Have to File a Tax Return?</h2> <p>You may be surprised to learn that not all adults are required to fill out a federal tax form every year. According to the Internal Revenue Service, you could be off the hook if you earned less than $10,000, or if certain <a href="https://www.irs.com/articles/who-has-file-federal-income-tax-return" target="_blank">other criteria</a> were met. However, you may still want to file, because you could qualify for a tax credit that puts money back in your pocket. (More on that below.)</p> <h2>2. Do I Need to Hire an Accountant to File?</h2> <p>No. If your tax situation is simple &mdash; for instance, if all your income comes from your full-time job and your earnings are modest &mdash; your filing process should be straightforward. Of course, hiring an accountant could save you time. The IRS estimates that the &quot;short form,&quot; 1040A, takes about <a href="http://www.dontmesswithtaxes.com/2012/03/22-hours-needed-to-complete-form-1040.html" target="_blank">10 hours to file</a>.</p> <p>If you want to do your own taxes but are worried you'll make a mistake, using a tax prep website can be a good compromise. TurboTax, H&amp;R Block, and TaxAct all offer free versions for simple returns. If your taxes are a bit more complicated &mdash; for instance, if you want to search for possible deductions &mdash; you can get both state and federal taxes filed through these sites for between $40 and $100. (See also: <a href="http://www.wisebread.com/8-ways-to-file-your-taxes-for-free-in-2015?ref=seealso" target="_blank">8 Ways to File Your Taxes for Free</a>)</p> <h2>3. Where Do I Find Tax Forms?</h2> <p>If you file online, you don't need to locate forms &mdash; any of the websites mentioned above will ask you questions and then submit your return online. But if you want to take pencil to paper, you can print out tax forms from the <a href="https://www.irs.gov/" target="_blank">IRS website</a> or pick them up, along with instruction booklets, at a public library or post office.</p> <h2>4. What Money Do I Have to Pay Taxes On?</h2> <p>You have to pay taxes on almost any money you make, whether it's from working, selling something, or even <a href="http://www.wisebread.com/35-bizarre-things-you-can-be-taxed-on?ref=internal" target="_blank">finding buried treasure</a>. That said, there are plenty of exceptions, such as <a href="https://www.efile.com/tax/estate-gift-tax/" target="_blank">most gifts</a>, <a href="http://www.nolo.com/legal-encyclopedia/is-your-personal-injury-settlement-taxable.html" target="_blank">compensation for injuries</a>, proceeds from <a href="https://turbotax.intuit.com/tax-tools/tax-tips/Home-Ownership/Tax-Aspects-of-Home-Ownership--Selling-a-Home/INF12035.html" target="_blank">selling your home</a> (within limits), and investment gains inside certain retirement accounts (you'll pay taxes on the gains inside your IRA eventually, but not now).</p> <p>Getting paid in cash, making money doing something illegal, or working without documentation do not exempt you from paying taxes on the money you make.</p> <h2>5. Will I Get a Refund?</h2> <p>Most employers take money out of your check week after week, all year. Because no one knows exactly how much you're going to owe the IRS until the year ends, this withholding is merely an estimate. Once you work out your taxes, it may happen that the money taken out of your check every week turned out to be too much. If that happens, the IRS will refund the difference.</p> <p>On the other hand, if it turns out that the money withheld was less than your tax liability, you will have to send the IRS a check.</p> <p>Just because you got a refund last year doesn't mean you'll get one this year. Things change; for instance, if you made more money this year, you might have moved to a <a href="http://www.wisebread.com/tax-brackets-explained?ref=internal" target="_blank">higher tax bracket</a>, causing you to owe more.</p> <p>Moreover, getting a huge tax refund isn't necessarily a great thing. While receiving a fat check is always fun, what this really means is that you gave the government an interest-free loan all year. If you get a large refund this year, you should look into having the amount taken out of each paycheck reduced so that it doesn't happen again next year.</p> <h2>6. What's the Difference Between a Deduction, an Exemption, and a Credit?</h2> <p>All three are ways the tax code allows you to reduce the tax you owe.</p> <p>For the average taxpayer, an exemption and a deduction are practically the same thing: They both reduce the amount of your income that counts toward your taxable total. The most well-known exemption is for your children: For 2016, everyone gets to subtract $4,050 from their income for a dependent child living in the home.</p> <p>We get tax deductions for <a href="http://www.wisebread.com/heres-how-to-deduct-charitable-donations-on-your-taxes?ref=internal" target="_blank">charitable donations</a> we make, <a href="http://www.wisebread.com/what-if-the-mortgage-interest-deduction-went-away?ref=internal" target="_blank">mortgage interest</a>, and for some work-related expenses, among many other things. For example, if you earned $50,000 this year, donated $2,000, and spent $1,000 looking for work, your taxable income would be $47,000 (minus any other exemptions and deductions you have).</p> <p>Tax credits are subtracted directly from your tax bill, not your income. For instance, if your tax bill for the year is $5,000, but you can claim a $4,000 tax credit, you only have to pay $1,000.</p> <p>One of the most important tax credits to know about is the <a href="https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/eitc-income-limits-maximum-credit-amounts" target="_blank">earned income tax credit</a>, a benefit for working people with low-to-moderate income. Qualifying families can receive between $3,373 and $6,269, depending on their number of qualifying children (or $506 for no qualifying children). The best part is, if your credit is more than you owe on taxes, you'll get the balance back as a &quot;refund.&quot;</p> <p>For instance, say you and your spouse owed $5,000 in taxes in 2016, but you qualified for the maximum credit of $6,269. The IRS would send you a refund check for $1,269 &mdash; plus any taxes that had been withheld from your paychecks. This is why it may be a very good idea to file a tax return even if you didn't earn enough for it to be required.</p> <h2>7. What If I File Late?</h2> <p>If you're not going to be able to submit your tax return and any tax owed by the deadline (in 2017, it's April 18), you should at least <a href="http://www.wisebread.com/filed-an-extension-heres-what-you-need-to-know?ref=internal" target="_blank">file for an extension</a> by that date. If you were expecting a refund, being late on submitting your forms isn't a big deal. But if you end up owing a payment, the IRS will charge late fees every month &mdash; so don't delay.</p> <p>Of course, it's never too late to pay money you owe to the IRS. If you failed to file or to pay what you owed in past years, you can file a &quot;back tax return&quot; now. If less than three years have gone by, you can even <a href="https://www.irs.gov/businesses/small-businesses-self-employed/filing-past-due-tax-returns" target="_blank">claim refunds for past years</a>.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/the-7-most-common-tax-questions-for-beginners-answered">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/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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/get-your-money-sooner-by-starting-2016-tax-prep-now">Get Your Money Sooner by Starting 2016 Tax Prep Now</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/top-three-tax-facts-to-know-for-2016">Top Three Tax Facts to Know for 2016</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-tax-return-mistakes-even-smart-people-make">8 Tax Return Mistakes Even Smart People Make</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes beginners deductions earned income tax credit exemptions filing income IRS questions refunds tax returns withholdings Fri, 17 Feb 2017 10:00:18 +0000 Carrie Kirby 1890385 at http://www.wisebread.com How to Manage Your Money — No Budgeting Required http://www.wisebread.com/how-to-manage-your-money-no-budgeting-required <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-manage-your-money-no-budgeting-required" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-599767404.jpg" alt="Woman learning to budget her money without a budget" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>The basics of creating and maintaining a budget are deceptively simple: Determine how much of your money comes and goes each month. Easy peasy, right?</p> <p>Wrong. If you don't have the time, inclination, or skills necessary to keep careful track of your finances, the &quot;simple&quot; tasks that make up budgeting are anything but easy.</p> <p>But money management is a necessary part of financial health, whether or not you commit to creating and following a traditional budget. Thankfully, there are several options available to the budget-averse who need to get a handle on their finances. Here are three ways to manage your money &mdash; no budgeting required.</p> <h2>1. Have Your Paycheck Deposited Into Savings, Not Checking</h2> <p>Instead of having your entire paycheck deposited into your checking account, have it sent to savings. Once a month, transfer the amount you need for expenses and bills into your checking account. You'll automatically spend less than you earn and save money every month without having to draft up an actual budget.</p> <p>If you correctly calculated your monthly expenses, the money should last until the next transfer. If you are running short before the end of the month, you can decide to move more money from your savings account, or go on a financial fast (that is, make no purchases until the next month begins). If you find that you're constantly adding a second transfer near the end of the month to make ends meet, it's time to evaluate your expenses. Find the sweet spot that allows you to cover your expenses without dipping multiple times into your savings.</p> <h2>2. Follow the 50/20/30 Rule<strong> </strong></h2> <p>Senator Elizabeth Warren, along with her daughter Amelia Warren-Tyagi, introduced the 50/20/30 budgeting rule in their book <a href="http://amzn.to/2koYERZ" target="_blank">All Your Worth</a>. This proportional budget recommends that you divide your income into three buckets:</p> <ul> <li>50% should go toward essential expenditures like rent or mortgage, groceries, utilities, child care, and the like.<br /> &nbsp;</li> <li>20% of your income should go toward savings and/or financial goals, such as retirement savings, a down payment for a house, or your child's 529 college account.<br /> &nbsp;</li> <li>30% of your income should go toward your &quot;lifestyle&quot; expenses &mdash; i.e., the unnecessary purchases you make because you want them. These expenses include things like travel, entertainment, dining out, luxury items, etc.</li> </ul> <p>You can easily follow the 50/20/30 rule without having to specifically follow a budget. Create targeted accounts for each of your spending categories. When you receive your paycheck, have 20% of your income automatically transferred into a savings account or investment account, and have another 30% automatically transferred into a separate checking account. When you make a nonessential purchase, use the debit card associated with your 30% checking account, so that you can never be in the position where you've accidentally spent your rent money on a weekend to Vegas.</p> <p>Finally, the 50% that remains in your primary checking account should cover your essential spending &mdash; although it's always a good idea to maintain an emergency fund just in case. (The 20% transfer into a savings account can help you <a href="http://www.wisebread.com/change-jars-and-8-other-clever-ways-to-build-an-emergency-fund?ref=internal" target="_blank">create an emergency fund</a> in the first few months of adopting this system.)</p> <h2>3. Let an App Do the Work for You</h2> <p>If you know that thinking about money will always be the last item on your to-do list, then you are a good candidate for an automatic savings or budgeting app. These three apps allow you to productively ignore your money.</p> <ul> <li><a href="https://digit.co/" target="_blank">Digit</a> is a free program that syncs with your accounts in order to analyze your cash flow. About twice a week, the program will determine an amount of money (between $5 and $50) that is safe to transfer out of your checking account and into an FDIC-insured Digit deposit account. This is a safe way to save money without ever having to think about it.<br /> &nbsp;</li> <li><a href="https://www.levelmoney.com/">Level Money</a> syncs with your bank account, calculating how much money will be available in your account after accounting for upcoming bills, recent purchases, and the savings goals you have created in the app. With those calculations, Level then gives you an estimated amount that is safe for you to spend that day, that week, and that month. Like Digit, Level Money is free.</li> </ul> <ul> <li><a href="http://www.getpennies.com" target="_blank">Pennies</a> is an iPhone app that requires a little more hands-on approach. If you don't mind some more direct involvement in your budgeting, this one is worth a try. Pennies asks you to set a budget amount for various types of spending, such as monthly fun money, weekly food spending, monthly transportation costs, etc. You will enter in the start date, the length of the budget term, and the amount available to spend, and you will need to enter each purchase you make into the app. Pennies then shows you how much money and time is left in each budget. Pennies costs $2.99 in the App Store, and has no other fees.</li> </ul> <h2>Money Management Doesn't Have to Hurt</h2> <p>Just because you've never held onto receipts or willingly opened an Excel spreadsheet does not mean you can't have a good handle on your money. Consistency is the key to good money management, so finding a system that works for you is the most important part of keeping track of your finances.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/how-to-manage-your-money-no-budgeting-required">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/the-financial-basics-every-new-grad-should-know">The Financial Basics Every New Grad Should Know</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-apps-for-busy-working-parents">The 5 Best Apps for Busy Working Parents</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-apps-that-make-budgeting-fun-no-really">7 Apps That Make Budgeting Fun — No Really!</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stop-making-these-7-basic-budget-mistakes">Stop Making These 7 Basic Budget Mistakes</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/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> </ul> </div> </div> </div> </div><br/></br> Personal Finance Budgeting 50/20/30 rule apps expenses income money management not budgeting paycheck saving money tools Mon, 06 Feb 2017 11:00:10 +0000 Emily Guy Birken 1885693 at http://www.wisebread.com