income http://www.wisebread.com/taxonomy/term/8754/all en-US 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-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/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/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> <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/protect-future-earnings-by-negotiating-the-right-starting-salary">Protect Future Earnings by Negotiating the Right Starting Salary</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/6-ways-to-transition-to-a-new-career-after-30">6 Ways to Transition to a New Career After 30</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-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/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-2 views-row-even"> <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-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/what-to-do-when-your-tax-preparer-makes-a-mistake">What to Do When Your Tax Preparer Makes a Mistake</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <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> </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-10"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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/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-3 views-row-odd"> <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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-surprising-budget-habits-of-wealthy-financial-gurus">5 Surprising Budget Habits of Wealthy Financial Gurus</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/101-tax-deductions-for-bloggers-and-freelancers">101 Tax deductions for bloggers and freelancers</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-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/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/4-ways-couples-are-shortchanging-their-retirement-savings">4 Ways Couples Are Shortchanging Their Retirement Savings</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-reasons-to-claim-social-security-before-your-retirement-age">3 Reasons to Claim Social Security Before Your Retirement Age</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 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-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/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/11-budgeting-skills-everyone-should-master">11 Budgeting Skills Everyone Should Master</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-build-your-best-travel-budget">How to Build Your Best Travel Budget</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/5-day-debt-reduction-plan-pay-it-off">5-Day Debt Reduction Plan: Pay It Off</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-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/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-2 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-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/6-money-lessons-we-can-learn-from-the-easter-bunny">6 Money Lessons We Can Learn From the Easter Bunny</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/stop-making-these-7-basic-budget-mistakes">Stop Making These 7 Basic Budget Mistakes</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/turn-your-passion-into-a-living">Turn Your Passion Into A Living</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/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-4 views-row-even"> <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-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-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-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-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/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/how-to-plan-for-retirement-when-you-re-ready-to-retire">How to Plan for Retirement When You’re Ready to Retire</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/5-important-tax-changes-for-2016">5 Important Tax Changes 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-reasons-you-should-file-your-taxes-as-soon-as-possible">8 Reasons You Should File Your Taxes as Soon as Possible</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-tax-return-mistakes-even-smart-people-make">8 Tax Return Mistakes Even Smart People Make</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-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/stop-making-these-7-basic-budget-mistakes">Stop Making These 7 Basic Budget Mistakes</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-an-all-cash-diet-right-for-you">Is an All-Cash Diet Right for You?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-one-personal-finance-skill-you-must-master-before-all-the-others">The One Personal Finance Skill You Must Master Before All the Others</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 4 Ways Couples Are Shortchanging Their Retirement Savings http://www.wisebread.com/4-ways-couples-are-shortchanging-their-retirement-savings <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-ways-couples-are-shortchanging-their-retirement-savings" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_retired_happy_62784562.jpg" alt="Retired couple shortchanging their retirement savings" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Whether retirement is decades away or if it is knocking on your door, there are some key mistakes that couples sometimes make when planning for their retirement. It's not too late to fix them, and addressing these problems now can potentially stave off issues in the future.</p> <p>Are you and your spouse making these retirement mistakes?</p> <h2>Relying on One's Spouse's Retirement</h2> <p>One common mistake that couples make is that they only rely on <em>one </em>spouse's income and retirement savings. While you might be able to live comfortably off one spouse's income now, when you are healthy, you have to calculate just how much you and your spouse will both need in retirement. Hopefully you will both be healthy well into your last years, but plan for the &quot;what ifs.&quot; Have both partners contribute to separate retirement accounts, if you both are working. If one spouse is self-employed or a freelancer, there are still retirement options for them.</p> <p>Even if one spouse does not work, they can still contribute to an IRA account. Carol Berger, CFP&reg;, of Berger Wealth Management, says that spousal IRA accounts are available for married couples who file taxes jointly. Berger says, &quot;This allows a contribution to be made for the nonworking spouse and helps his or her retirement nest egg grow. For example, in 2016, a nonworking spouse can contribute up to $5,500 to an IRA in their name ($6,500 if age 50 or older).&quot;</p> <h2>Putting Your Kids First</h2> <p>There is no doubt that you love your children and that it is easy to put their needs above retirement needs. However, don't delay on saving for retirement for your kids' sake. Saving for retirement should always trump saving for college education. Furthermore, retirement savings should not be dipped into to pay for college.</p> <p>The simple reason is that your children will have access to scholarships, loans, and work to help support them through college. Even if they graduate with a heavy load of debt, they have a long time to pay it off. There are no scholarships for retirement, and I am guessing the last thing you want to do is return to work.</p> <p>&quot;Time does not favor waiting because you lose the benefits of compounding,&quot; says Good Life Wealth Management president, Scott Stratton, CFP&reg;, CFA. &quot;If you put $5,000 into an IRA and earn 8% for 25 years, you'd have $34,242. Invest the same $5,000 10 years before retirement, and you'd only have $10,794. Or to put it another way, if you waited until 10 years before retirement, you'd have to invest $15,860 &mdash; instead of $5,000 &mdash; to reach $34,242.&quot;</p> <h2>Avoiding the Issue</h2> <p>Money is not always the easiest thing to talk about, however, if you avoid the issue, then you will only cause the problem to grow. Sit down with your spouse and talk about your present financial situation. Talk about where you want to be financially in the next year, in five years, and in retirement.</p> <p>If you both agree that you want to spend your retirement traveling and not tied to credit card debt or a mortgage payment, then you need to put in place the right money habits now.</p> <p>You should develop realistic action steps that will help you reach your financial goals a year from now, five years from now, and most importantly, in retirement. That means you might have to tighten your budget and pay more toward debt. Having clear financial goals will also help you stand firm as a couple when it is tempting to refinance the house to redo the backyard. (See also: <a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make?ref=seealso">7 Retirement Planning Steps Late Starters Must Make</a>)</p> <h2>Not Planning for Medical Costs</h2> <p>As discussed briefly above, many couples forget to financially plan for medical costs. It is easy to think, &quot;We won't need that much money in retirement because we won't buy anything or have to care for kids.&quot; However, medical expenses can add up quickly, especially in the last years of life. The cost of caretakers, regular doctor's visits, special medications, and even residency at a hospice can drain retirement savings in a matter of a few years.</p> <p>The worst thing is that many adult children are stuck with the financial burden of their parents' medical costs. Nearly one in 10 people over 40 are considered in the &quot;<a href="http://www.wisebread.com/6-ways-the-sandwich-generation-can-get-ahead">sandwich generation</a>.&quot; This means they are caring for their own children while also caring for aging parents. The Associated Press-NORC Center for Public Affairs Research reports that Medicare doesn't cover the most common types of long-term care and that a nursing home can cost as much as <a href="http://www.apnorc.org/news-media/Pages/News+Media/Poll-Sandwich-generation-worried-about-own-long-term-care-.aspx">$90,000 per year</a>. If retirement funds don't cover the necessary care for aging parents, their children will either have to foot the bill or try to take care of their parents themselves.</p> <p>Jody Dietel, Chief Compliance Officer at WageWorks says that there is a retirement tool that is often overlooked. A <a href="http://www.wisebread.com/how-an-hsa-saves-you-money">health savings account</a> (HSA) can help cover medical costs. Dietel says, &quot;It's important to understand that there's a place for both a 401K and an HSA. Establishing an HSA gives you the ability to amass savings to be used exclusively for health care expenses and preventing the need to dip into 401K funds for medical-related costs in retirement.&quot;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-eneriz">Ashley Eneriz</a> of <a href="http://www.wisebread.com/4-ways-couples-are-shortchanging-their-retirement-savings">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/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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-despair-over-small-retirement-savings">Don&#039;t Despair Over Small Retirement Savings</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-signs-you-arent-saving-enough-for-retirement">10 Signs You Aren&#039;t Saving Enough for 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/4-reasons-people-dont-retire-early-and-how-you-can">4 Reasons People Don&#039;t Retire Early — and How You Can</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-your-taxes-will-change-when-you-retire">Here&#039;s How Your Taxes Will Change When You Retire</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401k couples expenses health care health savings accounts HSA income IRA marriages medical costs Mon, 14 Nov 2016 10:00:06 +0000 Ashley Eneriz 1830892 at http://www.wisebread.com 13 Crucial Social Security Terms Everyone Needs to Know http://www.wisebread.com/13-crucial-social-security-terms-everyone-needs-to-know <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/13-crucial-social-security-terms-everyone-needs-to-know" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/money_social_security_42928626.jpg" alt="Learning social security terms everyone needs to know" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>All Americans expect to receive Social Security benefits during their retirement years.</p> <p>According to the latest data from the Employee Benefits Research Institute, <a href="https://www.ebri.org/pdf/briefspdf/EBRI_IB_422.Mar16.RCS.pdf">91% of U.S. retirees</a> and 84% of U.S. workers expect Social Security to be a major or minor source of income during retirement. And since about a third of Americans have less than $1,000 saved for retirement, it's not surprising that many expect Social Security benefits to be their major source of income.</p> <p>That's why it's essential you understand these 13 important Social Security terms.</p> <h2>1. Full Retirement Age</h2> <p>Starting at age 62, you become eligible for Social Security benefits. However, you would take reduced benefits if you were to retire anytime before your full retirement age, which for most Americans is now 65 or older.</p> <p>For example, individuals born in 1960 or later have a full retirement age of 67. If a person with a full retirement age of 67 were to start taking benefits at age 62, she would receive a retirement benefit <a href="https://www.ssa.gov/planners/retire/1960.html">reduced to 70%</a>. For every month past age 62 that she waits, she earns about 0.4% more in retirement benefits until she reaches a full 100% at age 67.</p> <p>Depending on your year of birth, your full retirement age ranges from <a href="https://www.ssa.gov/planners/retire/retirechart.html">65 to 67</a>.</p> <h2>2. Delayed Retirement Credits</h2> <p>About 19% of Americans <a href="http://www.bloomberg.com/news/articles/2016-05-13/-i-ll-never-retire-americans-break-record-for-working-past-65">age 65 or older were working</a> during the first quarter of 2016. One possible reason is that working past age 65 to 67 can increase your retirement benefit from <a href="https://www.ssa.gov/planners/retire/delayret.html">5.5% to 8% per year</a>, depending on your year of birth. For every month past your full retirement age that you wait to start receiving your benefit check, you earn delayed retirement credits that boost your full retirement benefit beyond 100%. Going back to the example of the individual with full retirement at age 67, she would receive a monthly increase of two-thirds of 1% for every month that she delays retirement past age 67.</p> <h2>3. Age 64-3/4</h2> <p>Even though you may decide to wait until or past full retirement age to start taking your benefits, you can still apply for Medicare <a href="https://www.ssa.gov/planners/retire/justmedicare.html">within three months of age 65</a> (age 64-3/4) and apply for your retirement or spouse's benefits later.</p> <h2>Medicare Parts A, B, C, and D</h2> <p>People age 65 or older have access to the U.S. health insurance program known as Medicare. This program helps cover health care costs and has several parts.</p> <h3>4. Medicare Part A</h3> <p>This hospital insurance helps pay for inpatient care in a hospital or skilled nursing facility (following a hospital stay), some home health care, and hospice care.</p> <h3>5. Medicare Part B</h3> <p>Medical insurance that helps pay for doctor services and many other medical services and supplies not covered by Part A.</p> <h3>6. Medicare Part C</h3> <p>Also known as Medicare Advantage Plans, Part C plans are offered by private health carriers approved by Medicare and available to Americans enrolled in Part A and Part B with Medicare.</p> <h3>7. Medicare Part D</h3> <p>A drug coverage plan available to everyone with Medicare.</p> <p>While you have a seven-month window starting age 64-3/4 to sign up for Part A, you don't have to enroll in Part B. Depending on when you enroll for Part B and other factors, your coverage may be delayed and you may have to pay a higher monthly premium unless you qualify for a&hellip;</p> <h2>8. Special Enrollment Period (SEP)</h2> <p>Every year has an open enrollment period in which you can enroll in an insurance plan. There are certain life events that qualify you for a Special Enrollment Period. Qualifying events include losing job-based coverage and losing coverage through a family member. For the full list of life events that make you eligible for SEP, visit this section from <a href="https://www.healthcare.gov/coverage-outside-open-enrollment/special-enrollment-period/">HealthCare.gov</a>.</p> <h2>9. Social Security Credits</h2> <p>In 2016, you will earn <a href="https://www.ssa.gov/planners/disability/dqualify2.html">one Social Security work credit for each $1,260</a> of wages or self-employment income. You can earn up to four of these credits per year. The amount of money required to earn one credit goes up every year. Most Americans need to accumulate <a href="https://www.ssa.gov/pubs/EN-05-10024.pdf">40 credits</a> (about 10 years of work) to qualify for Social Security benefits. However, adults and children may require fewer credits to be eligible for other certain types of Social Security benefits, such as...</p> <h2>10. Disability Benefits</h2> <p>Those who can't work due to a qualifying medical condition that's expected to last at least one year or result in death can receive Social Security Disability Insurance (SSDI) benefits.</p> <p>Besides meeting the Social Security Administration's definition of disability, you must also have worked long enough and recently enough to qualify for Social Security disability benefits. Unless you're <a href="https://www.ssa.gov/planners/disability/dqualify8.html">blind or have low vision</a>, you must have earned <a href="https://www.ssa.gov/planners/credits.html">at least 20</a> of your required credits in the 10 years before you became disabled to qualify for disability benefits. For example, if you were born after 1929 and became disabled at age 50, you would require at least 28 credits to qualify for Social Security disability benefits.</p> <p>Certain family members, including your spouse if he or she is age 62 or older or an unmarried child, may qualify for benefits based on your work.</p> <h2>11. Supplemental Security Income Benefits</h2> <p>The Supplemental Security Income (SSI) program pays benefits to <a href="https://www.ssa.gov/pubs/EN-05-10026.pdf">disabled adults and children</a> who have limited income and resources. Qualifying recipients of Social Security disability or retirement benefits can receive SSI as long as they meet the requirements. The online <a href="https://ssabest.benefits.gov">Best Eligibility Screening Tool</a> can help you determine whether or not you or your child are eligible for SSI benefits.</p> <h2>12. Back Payments</h2> <p>Given that there are an <a href="http://www.pewresearch.org/fact-tank/2016/04/25/millennials-overtake-baby-boomers/">estimated 74.9 million Baby Boomers</a> (ages 51 to 69) in the U.S., you can expect that Social Security consistently receives a large number of enrollments. The more paperwork, the longer the time to process your application. So, you'll receive back payments from the Social Security Administration for the months between the date that you applied for benefits and the date you were approved for benefits.</p> <p>There is a mandatory <a href="https://faq.ssa.gov/link/portal/34011/34019/Article/3715/Is-there-a-waiting-period-for-Social-Security-disability-benefits">five-month waiting period</a> for SSDI benefits, so back payments only start once the waiting period ends.</p> <h2>13. Retroactive Benefits</h2> <p>Back payments are available for for both SSDI and SSI benefits, but retroactive benefits are only available for SSDI benefits. Retroactive benefits are the monies that you were already eligible for due to your disability onset date but didn't apply for earlier. Keep in mind that you'll receive no interest on any back payments for SSDI or SSI.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/13-crucial-social-security-terms-everyone-needs-to-know">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/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/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/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-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/why-tax-day-is-april-15-and-other-weird-financial-deadlines">Why Tax Day Is April 15 and Other Weird Financial Deadlines</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement backpayments benefits credits income medicare retroactive social security terms Mon, 10 Oct 2016 10:30:09 +0000 Damian Davila 1808267 at http://www.wisebread.com 9 Threats to a Secure Retirement http://www.wisebread.com/9-threats-to-a-secure-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-threats-to-a-secure-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_holding_hands_88407163.jpg" alt="Couple learning threats to a secure retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Saving and investing for retirement isn't easy. There's a lot that can happen to take you off track, potentially leaving you less money than you hoped for.</p> <p>From poor financial planning to unexpected events and even nationwide economic woes, here are some of the things that could pose a threat to your secure retirement.</p> <h2>1. Not Investing Enough</h2> <p>It's never easy to figure out how much to invest. After all, you want to make sure you have enough money to deal with your current needs. It's common for people to invest too little, and this can hurt them in the long run.</p> <p>When saving for retirement, it's smart to contribute as close to the maximum each year into 401K and IRA plans. (That's $18,000 for the 401K and $5,500 for the IRA.) If you can't contribute quite that much, at least put enough in to get the company match on your 401K plan.</p> <p>Even a few extra dollars per month into retirement accounts can make a big difference. For example, let's say you have $50,000 in an account and contribute $500 per month for 25 years. Assuming a 7% return, your portfolio would amount to about $677,000. But what if you contributed $1,000 monthly? Then it would hit nearly $1.1 million.</p> <h2>2. Starting Too Late</h2> <p>When investing, time is your biggest friend. The more time you have to invest, the bigger your nest egg can grow. Thus, one of the biggest threats to a secure retirement is failing to contribute to your fund early in life. If you're past 40 years old, you may have only a couple of decades to invest before you wish to stop working, and that may not be long enough to amass the kind of wealth you'll need for a long and comfortable retirement.</p> <p>Let's say you invest $25,000 today and add $1,000 per month until you are 65. If you're currently 45 and get a 7% annual return, you'll have about $625,000 upon retirement. Not bad, but if you had started when you were 25, you'd have nearly $3 million.</p> <h2>3. Raiding Retirement Funds</h2> <p>Retirement accounts such as a 401K or IRA are designed to have money grow more or less untouched until you reach retirement age. You can withdraw money from them, but there's a cost.</p> <p>When you raid these retirement funds, you'll lose the money in penalties, but you'll also lose the potential earnings of the money you take out. Over time, this can cost an investor thousands of dollars.</p> <h2>4. Economic Growth</h2> <p>For decades following World War II, the annual growth rate of the American economy averaged more than 3%, with some years seeing double that. But in recent years, that annual rate has shrunk to barely 2%. In short, the American economy is not growing as fast as it once was, and that has implications for household income, corporate growth, and employment.</p> <h2>5. Possible Entitlement Cuts</h2> <p>Many lawmakers on Capitol Hill have been warning Americans of a looming crisis in entitlement funding. Observers of the federal budget note that unless there is serious reform, Social Security Trust Funds could be depleted within 20 years. This means that for the younger generation, there may not be as much left from the government upon retirement.</p> <p>It's important to note, however, that workers who want to live comfortably after they are done working should not be counting on Social Security to carry them through the end of their life. Someone who saves aggressively and invests wisely should be able to amass enough in a retirement fund to get by even if Social Security benefits are adjusted downward or even eliminated.</p> <h2>6. Declining Pensions</h2> <p>If you currently work for a company that offers a defined benefit plan, you are a rare breed. In recent years, companies have shifted from offering pensions to instead offering 401K plans, in which workers invest on their own. In most cases, they will also get a contribution from their employer, but that's not guaranteed. This doesn't necessarily mean you'll be destitute at retirement, but it does require employees to be much more engaged in their retirement planning.</p> <h2>7. Placing All Your Eggs in One Basket</h2> <p>Even if you are saving aggressively and investing every penny you can, it's possible to end up with less money than you need in retirement. It can happen when your portfolio is too heavily balanced toward a single investment. It's unwise to invest a high percentage of your savings in one company or even one industry or asset class, because one bad day could wipe out a large chunk of your savings. (Consider the plight of Enron employees who lost nearly everything had most of their savings in company stock.)</p> <p>To protect your retirement money, invest in a diverse mixture of stocks in various sizes and asset classes. Buy mutual funds instead of individual stocks, if at all possible.</p> <h2>8. Funding College Instead of Retirement</h2> <p>It's never a bad idea to save money to contribute to your children's education. There are several vehicles including 529 plans that allow you to invest money tax-free toward college. But many investors become so focused on saving for college that they fail to contribute enough to their own retirement fund.</p> <p>Remember that it's possible to <em>borrow </em>money for college, but you can't borrow money to fund your retirement if you find you're lacking in funds when you're done working. Ideally, you'll be able to amass enough money to fund college and your retirement comfortably. But if you have to make a choice, pay your future self first, then contribute to the college fund.</p> <h2>9. Being Poorly Insured</h2> <p>You may feel like nothing bad will ever happen to you. You are young and healthy. You're a safe driver and you live in a nice neighborhood. So you skimp on things like health, auto, and homeowner's insurance. You may think you're saving money, but you're at serious risk for big financial loss if you get seriously ill or have a serious accident.</p> <p>Being uninsured or underinsured can leave you struggling to make ends meet, placing retirement savings on the back burner. You may even have to raid your retirement accounts to pay the bills. It's wise to perform an insurance assessment to determine if you have the proper level of insurance to protect yourself financially.</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-threats-to-a-secure-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/your-401k-in-2017-heres-whats-new-for-you">Your 401K in 2017: Here&#039;s What&#039;s New for You</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-tell-if-your-401k-is-a-good-or-a-bad-one">How to Tell if Your 401K Is a Good or a Bad One</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-your-retirement-is-on-track">8 Signs Your Retirement Is on Track</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-best-online-brokerages-for-your-ira">5 Best Online Brokerages for Your IRA</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-lessons-from-tax-day-to-remember-for-next-year">7 Lessons From Tax Day to Remember for Next Year</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement college Economy education funds income insurance investing late start pensions risk stocks threats Fri, 07 Oct 2016 09:00:06 +0000 Tim Lemke 1807026 at http://www.wisebread.com 4 Ways to Buy a House Without a Mortgage http://www.wisebread.com/4-ways-to-buy-a-house-without-a-mortgage <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-ways-to-buy-a-house-without-a-mortgage" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_moving_boxes_87205321.jpg" alt="Couple finding ways to buy a house without a mortgage" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Although mortgages are a common way to purchase a home, you can only get one if you qualify. The qualifications include an acceptable credit score, a sufficient down payment, and meeting a bank's income and employment requirements. And let's not forget, every mortgage charges interest, which increases how much you pay in the long run.</p> <p>The good news is that a mortgage isn't the only way to purchase a house. If you think outside the box, you can possibly pull off a home purchase without a costly loan.</p> <h2>1. Live Off One Income</h2> <p>Some people like the idea of paying cash for a house, but don't think it's a reality. If you're a two-income household, one method for getting a home without a mortgage involves living off a single income for a few years.</p> <p>If you and your partner work and earn a decent salary &mdash; and live in an affordable area &mdash; you might be able to save enough for a cash purchase by keeping your life as simple as possible and subsisting off one income. This approach allows you to save 100% of the other person's take-home salary. So if you both earn $30,000 a year, rather than maintain a lifestyle requiring $60,000 a year, live frugally and save the other half of your combined income. In six years, you'll have approximately $180,000 cash for a home purchase.</p> <p>Of course, living simpler is much easier said than done. To make it work, consider renting out a room in your house or apartment to help cover expenses, or you can rent a room from family or friends. Other options include skipping vacations, spending less on entertainment, and sharing a car. These are sacrifices that pay off in due time.</p> <h2>2. Sell Your Home and Purchase Another One</h2> <p>If you're thinking about downsizing and you have plenty of equity in your current home, another option is selling your home, taking the profit, and moving to a location with a lower cost of living.</p> <p>This works if you're currently living in an expensive area but thinking of moving to a location where you can get more house for your money. Let's say you sell your current home and walk away with a profit of $150,000. This could be exactly what you need to pay cash for a new property in a different part of the country.</p> <h2>3. Get an Investor</h2> <p>Then again, maybe you're not looking for a primary residence, but rather an investment property. Getting a mortgage for an investment property is tricky. Many lenders require a higher credit score for investment properties, plus you'll need a higher down payment and cash to fix up the property.</p> <p>What you can do, however, is seek out an investor to cover the expense of buying and improving the home. Some investors will pay cash for properties and provide funds to rehab the property. Once you fix up and flip the home for a profit, you split the proceeds with your investor.</p> <h2>4. Use Seller Financing</h2> <p>If you can't get a traditional mortgage loan, seller financing is another option. This can work if your credit score is too low to qualify for traditional financing, or if you have a short employment record and can't qualify for a bank mortgage. Even if you have enough income to qualify for a home loan, most banks require at least 24 months of consecutive employment before approving an application.</p> <p>Sellers who offer seller financing are more flexible. You sign a promissory note saying you'll repay the loan and then the seller signs over the deed to the house. You become the owner of the house, but the seller is the bank, so you'll make payments to the seller every month. Since you're the legal owner, you can still sell or refinance the property.</p> <p>This type of financing typically has a short-term of three to five years with a balloon payment for the remaining balance due at the end of the term. Seller financing gives you time to improve your credit or financial situation so you can refinance into a traditional mortgage, at which point the seller gets their money.</p> <p>But while this mortgage alternative can work in theory, the hardest part is finding a willing seller. Not all sellers will agree to this type of financing. The ideal seller is someone who has plenty of home equity and zero mortgage.</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/4-ways-to-buy-a-house-without-a-mortgage">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-8"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/score-your-dream-home-with-the-perfect-offer-letter">Score Your Dream Home With the Perfect Offer Letter</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-house-hunt-without-leaving-your-couch">How to House Hunt Without Leaving Your Couch</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-things-millennials-can-do-to-buy-a-house-within-the-next-decade">5 Things Millennials Can Do to Buy a House Within the Next Decade</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-things-you-need-to-know-when-renting-to-own-a-home">5 Things You Need to Know When Renting-to-Own a Home</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-only-5-rules-of-home-buying-you-need-to-know">The Only 5 Rules of Home Buying You Need to Know</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing buyers financing house hunting income investor mortgages new house sellers Thu, 06 Oct 2016 10:00:06 +0000 Mikey Rox 1805233 at http://www.wisebread.com How Much Personal Finance Info Should You Share? http://www.wisebread.com/how-much-personal-finance-info-should-you-share <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-much-personal-finance-info-should-you-share" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_shocked_face_71844019.jpg" alt="Woman learning how much personal finance info she should share" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Money is one of those topics that is not often discussed freely. In fact, it is common for people to disguise how much money they really have.</p> <p>But then there are a few people who are happy to say exactly how much money they make without holding anything back. Some people even post their income and net worth updates on the Internet every month! Is there a benefit to freely sharing personal finance information?</p> <h2>What Can Go Wrong When Sharing Too Much About Your Finances</h2> <p>There are some good reasons people tend to avoid disclosing details when talking about money. Much like the usual sensitive topics of religion and politics, open conversations about money can result in friction and even damaged relationships. If you reveal how much money &mdash; or debt &mdash; you really have, you can make people uncomfortable or even lose friends.</p> <p>People have a strong sense of fairness about money, and sharing financial details can highlight inequity and cause hard feelings: &quot;Why does that person make more than me when I work harder?&quot; Sensitivity about salary fairness is accentuated among people who work for the same employer.</p> <p>When you reveal your financial details, you may unintentionally hurt someone's feelings and sense of self-worth. Let's say that in a moment of truthfulness, you decide to reveal how much you make to a close friend. Imagine how disappointed your friend would feel if he/she makes a lot less than you. On the other hand, imagine your dismay if your friend surprises you by revealing that she makes a lot more than you. Discussing your income can spark feelings of dissatisfaction that can last for a long time.</p> <p>Money can divide people into &quot;us&quot; versus &quot;them.&quot; The Occupy Wall Street movement with dividing lines drawn at the 99% versus the 1% is a dramatic example of this. It can be hard to relate to someone if you think they are in a different economic situation and that they do not face the same problems and issues that you are dealing with. Imagine if you suddenly learned your friend who you see as a peer makes twice as much income as you. This may impact your relationship since you know your friend has options and financial resources that are not available to you. Your friendships may be stronger if you do not know how much your money your friends make.</p> <p>If you reveal that you have a lot of debt and/or little savings, others may think that you are not competent with money and may assume that you are not competent at other things as well. Some people feel that borrowing money to buy things you don't really need is irresponsible, especially when they are forgoing such purchases in order to pay down debt and achieve financial independence. Discussing money freely may bring up differences in philosophy about saving and spending that can make it harder for people to relate to each other.</p> <p>Once you reveal personal finance details, it is impossible to put the toothpaste back in the tube. Once your secret is out, your financial privacy has been lost and there is no way to get it back.</p> <h2>Why Do Some People Reveal Everything?</h2> <p>Even with all of the downsides to revealing financial details, some people are eager to share full details of their personal finances. Why?</p> <p>Some people use &quot;full financial disclosure&quot; as a way to keep themselves accountable and motivated to improve their financial situation. If I had to publish my income and net worth every month, I can see how this would make me focus on getting the numbers to look as good as possible. Plus, I wouldn't want to have to explain any embarrassing purchases or debt. Publishing financial information to help stay on track is sort of like participating a weight loss program where you share a list of everything you eat with your group. You are less likely to slip up if you know you will have to share your setbacks with the world.</p> <p>Some people share their financial details to get attention &mdash; and money. Personal finance bloggers know that sharing their income and financial details publicly can generate traffic to their blog. People are curious to see how much money other people make and how they spend it. I find it fascinating to look at other people's expenses so I can look for areas where I could improve my own budget. Some personal finance blogs are set up with a stated monetary goal and readers can track the blogger's progress toward the goal over time. Sharing intimate financial details on a blog helps build a following which generates income from advertising.</p> <p>Another benefit of full disclosure is that you don't have to worry about keeping secrets. You can speak freely about money without worrying about something slipping out. If you reveal your financial details to others, they are more likely to share their details with you. You might learn lessons from their experience that you can use to improve your own finances.</p> <h2>How Much Should You Share?</h2> <p>How much personal finance information should you share? The right answer for you depends on your comfort level with your financial situation and what you hope to accomplish by sharing. I see little benefit to sharing my personal finance information and lots of potential drawbacks. I could always change my mind and decide to share later, but for now I am keeping my personal finances personal.</p> <p>One of the biggest problems with sharing personal finance details is that once you share, your information is out and there is no way to get it back. You won't be able to get people to forget that number if you change your mind later and regret sharing it.</p> <p>In the end, your finances matter much more to you and your family than to anyone else. Others may be curious, but your money situation doesn't directly impact anyone outside your family very much. Most people have more to lose than to gain by freely sharing their financial details.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/how-much-personal-finance-info-should-you-share">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-9"> <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-money-conversations-every-couple-should-have">5 Money Conversations Every Couple Should Have</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-things-i-learned-about-money-after-getting-married">8 Things I Learned About Money After Getting Married</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/is-six-figures-really-that-much">Is Six Figures Really That Much?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-you-are-more-than-your-credit-score">7 Reasons You Are More Than Your Credit Score</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-couples-fight-over-money-and-what-to-do-about-it">Why Couples Fight Over Money and What to Do About It</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Lifestyle debts friendships income information oversharing privacy relationships Tue, 27 Sep 2016 09:00:07 +0000 Dr Penny Pincher 1800653 at http://www.wisebread.com