signs

10 Signs You're No Longer a Personal Finance Rookie

Paul Michael — Wed, 02 May 2018 08:00:10 +0000

How are you doing with your money? Is your checking account flourishing? Do you have a well-stocked savings account, a growing 401(k), and an emergency fund ready to save you from life's unexpected money mishaps? That's great news. These are all signs you're out of the minor leagues and are now a major player in the world of personal finance. Here are a few more.

1. You're not panic-checking your financial accounts

When you are in full control of your finances, you know where your money is going, when it's coming in, and you have a pretty good idea of all your balances at all times. You keep track of your spending and you see the numbers you expect to see when you log into your bank or credit card account.

This is a far cry from the days when checking your accounts was like a horrible game show moment ('Let's see if there's any money behind door Number 1!'). You may not even notice this good habit anymore, but you can feel good knowing those panicky peeks at your balances are over.

2. You never get a huge tax refund (but you don't owe anything, either)

A massive tax refund is not a smart way to manage your money. By overpaying your taxes, you are giving the government an interest-free loan all year while you miss out on investment opportunities and the benefits of compound interest. Finance rookies overpay their taxes because a refund feels like a windfall. The fact of the matter is that money should have been in your paycheck all along.

No one wants to owe money at tax time, but if you calculate your withholdings correctly, you should come out as close to $0 as possible. That means you're taking advantage of every cent you earn throughout the year.

3. You have almost no monthly debt

Most of us are going to carry at least some debt for a chunk of our lives; after all, it's difficult to pay for a home with cold, hard cash. But excessive monthly debts mean that your finances are not as shipshape as they could be.

It's better to buy a car in cash, upfront, than it is to pay a lease or car payment. Credit card debt that lingers for years is a huge drain on your finances. Other loans or monthly debts almost always carry interest, and that means you're continuously throwing money away. If you're living with little to no monthly debt, you have financial freedom; and that means you're no rookie. (See also: The Fastest Method to Eliminate Credit Card Debt)

4. Your credit score is doing really well

When was the last time you checked out your credit score? It's a good idea to do it once a month, because erroneous things can creep up. Now, take a look and see where you are on the credit rating scale.

If you're above 700, it means you're doing great. Above 750, you're doing even better. And if you are in that magic 800+ category, you are considered by all credit agencies to be one of the best customers around. This means you have low debt, you pay everything on time, and you have accounts that date back many years. This is all evidence that you are definitely not a finance rookie. Congrats! (See also: 5 Ways Life Is Amazing With an 800 Credit Score)

5. You're automatically putting money away

Saving money when you can is great, and you should always try and pay yourself first. However, if you have automated this system, you have taken a much bigger step toward financial freedom.

By automating payments to savings accounts, retirement accounts, and an emergency fund, you have prioritized your future. Now, saving isn't just something you do if there is money left over at the end of the month. Instead, saving comes first, and you budget with what's left. It's tougher to do it this way, and it often requires discipline. But it's the best way to go about it. (See also: 5 Ways to Automate Your Finances)

6. You're not living paycheck to paycheck

This is a tough one. The sad state of affairs is that as many as 78 percent of Americans are currently living paycheck to paycheck, according to a poll by CareerBuilder. Wages have stagnated, and the cost of living has risen dramatically compared to income. However, a chunk of that 78 percent are living this way due to a lack of budgeting, discipline, and overwhelming debt. Even people earning over $100,000 a year are living like this, and that's just unacceptable.

If you don't live above your means, don't try and keep up with the Joneses, and don't make rash decisions with your money, you should be able to escape this paycheck to paycheck existence. It's not only bad for your finances, but extremely bad for your health and mental wellbeing. (See also: How to Escape the Paycheck-to-Paycheck Cycle)

7. You have an emergency fund

An emergency fund is just that; a stash of money that can be used for a crisis, such as losing your job, unexpected home repairs, medical care, and even emergency travel. Ideally, this fund should cover at least six months' worth of daily living expenses for you and your family — even more if you have a high-paying job or unique living expenses such as a medical condition.

Socking away a few months' worth of expenses can be daunting, but if you at least have a few thousand dollars put away, you're off to a great start and doing better than the majority of the population. You'll thank yourself when a financial speed bump comes along. (See also: 5-Minute Finance: Start an Emergency Fund)

8. You pay all your bills on time

Have you ever seen people play fast and loose with their bills? They will choose to pay some one month, and others the next. But sooner or later, everyone has to pay the piper. Utilities will get shut off, debt collectors will call, and credit scores will tumble. And, it often costs even more money to put things right. If you pay all your bills on time, every month, you're doing a fantastic job with your finances.

9. You don't make impulse purchases

It takes willpower to shed the 'personal finance rookie' title, and if you are no longer throwing money at purchases without thinking, you have moved beyond that role.

Impulse buying should not be confused with taking advantage of a sale on a needed item or even an occasional treat. If you carefully consider the purchase and decide it is one you need or deserve, that's great. The problem arises when you see a 75 percent off sticker and automatically grab the item regardless of whether or not you would ever actually use or need it. In that case, you didn't 'save' 75 percent … you wasted money on the remaining 25 percent. (See also: 7 Effortless Ways to Prevent Budget-Busting Impulse Buys)

10. You have a monthly budget and stick to it

Perhaps the most important item on the list is a monthly budget. In fact, if you adhere to a monthly budget, most of the other habits on this list will follow naturally.

A monthly budget is the linchpin of financial stability. It tells you exactly what money is coming in, what is going out, where it's being spent, and what you can expect to see when you look in your different accounts. By sticking to a monthly budget, you have fewer financial surprises. Even if you're not yet at the point where you can save, you are at least managing the money you have, and that will lead to financial freedom down the road. (See also: Stop Using These 5 Excuses Not to Budget)

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

10 Ways to Spot a Motivated Seller

Carrie Kirby — Fri, 27 Apr 2018 08:30:16 +0000

I love a bargain, especially when it comes to the biggest purchase most of us ever make: a house. But bargains are hard to come by in this seller's market, with low inventory driving competition for houses. Nationwide, prices are up 6 percent compared to this time last year, and in some markets, they're up even more.

In conditions like these, your best bet is to find a motivated seller who wants to close the deal and get what they can, fast. Here are some signs that you may have found one.

1. The listing says so

Some listings come right out and say it: "Motivated seller." Others may imply as much, by stating "Bring all offers" or something similar. (See also: Sell Your House Faster With These 6 House Flipping Tricks)

2. The owner is moving far away

At open houses or during showings, find out as much as you can about the seller. Ask the listing agent why they are selling the house. If the answer is that they got a job transfer to Europe or they are crossing the country to move in with an ailing parent, they're probably not going to have a lot of time for protracted negotiations. Even if the agent doesn't come out and tell you, if it takes them a while to reach the seller for questions, it's a clue that the seller might be far afield.

3. The owner has a change in life status

The same nosy questions might reveal that the seller is getting married or divorced. Same deal: They're not going to want to leave their house on the market for months, waiting for the best offer. If the agent doesn't tell you, look for clues of impending divorce (a subdivided house, half-empty closets) or marriage (seating arrangement charts, wedding veil in the closet).

4. The house is empty

A house that's sitting empty means that the owner has already moved, and is probably now paying mortgage and utilities on two separate properties. If they have been in this situation for a few months, they may be desperate to sell. And they probably have less of an emotional attachment to a home than a seller who is still living there.

5. The house is overcrowded

The inverse of the empty house is the house bursting with furniture and belongings. Two sets of bunk beds in the bedroom? A crib in the master bedroom or on the landing? These people need to get into a bigger house, stat!

6. The house is underused

There are five bedrooms, but only two have beds in them. The family pictures on the wall all include 1980s hairdos or graduation gowns. You have stumbled upon the too-big home of a pair of empty nesters, and if they're anxious to get to their Florida condo, you may be able to strike a deal.

7. The sellers are elderly

Hospital bed in the living room? Bathrooms retrofitted with shower stools and grab bars? Decor made entirely of lacy doilies? All signs that the seller may be on the way to assisted living or a nursing home. The family may need to sell the house as quickly as possible to pay the steep cost of living in such facilities. While buyers willing to pay full price might ask them for repairs they don't want to deal with, a bargain hunter willing to take the place as-is might be welcome.

I bought my current home from a family in this situation, and we were able to get it for asking price instead of bidding above asking, which is the norm in the San Francisco Bay Area market. This strategy is not without its pain, however; due to deferred maintenance over the last few decades that our elderly seller lived here. Six years after the purchase we are still finding water and dry rot damage to repair, and we're saving up for much-needed updates. (See also: 23 Hidden Costs of Buying an Old House)

8. The property is listed by an estate

If you find out that the home's owner has died, you may be able to negotiate a deal. The heirs are probably anxious to wrap up the estate and divide the proceeds. They won't have the same emotional attachment to the home as the owner would have, and they probably don't want to let it sit on the market.

9. The seller is candid

If the seller announces that the basement floods, or the roof leaks and they have no intention of fixing it before the sale, they probably don't have cash to put into the house, and they don't want to waste time waiting for you to find these things out during an inspection. Consider it an invitation to make a deal.

10. There's no curb appeal

Similar to the point above, a yard full of weeds, peeling paint, or any other sign of cosmetic neglect shows that the owner lacks time, money, or both to take care of this property. They're likely quite anxious to get this responsibility off their hands.

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

8 Signs You Desperately Need a New Credit Card

Holly Johnson — Thu, 16 Nov 2017 09:30:05 +0000

There's something to be said for loyalty. But when it comes to credit cards, if you haven't updated your preferred card in years, you could be missing out on benefits, or paying too much in fees. Here are eight signs it's time to go shopping for a new credit card.

1. You aren't earning any rewards

If you're debt-free and using a credit card for convenience but not earning rewards, you are leaving real money on the table. Even a simple, no-annual-fee cash-back card that offers 1.5% back on every purchase could help you rack up free money over months of regular use. But you can do better than that. Some of the best cash-back credit cards offer 2%-6% cash back on bonus categories (supermarkets, gas, dining — everyday spending stuff).

If you're not earning any rewards, you should be, because 1.5% back is absolutely better than nothing.

2. You're earning the wrong type of rewards

Another sign you're not optimizing your credit card use is if you're earning rewards points that you can't really use. A common example of this is when someone clings to their old airline credit card and the idea of earning miles when they haven't flown for years. If this is you, it may be time to switch to a simple cash-back card or even a flexible travel rewards credit card, which lets you earn points you can redeem for travel expenses, cash back, or gift cards. With this strategy (and a new card in your wallet), you'll never be stuck with points you can't use. (See also: Choose the Best Travel Rewards Credit Card with this Guide)

3. The card you use is lacking consumer protections

If you're using credit for convenience but your credit card is strictly bare bones in terms of the benefits it offers, you should definitely shop around. While all cards are different, many of the top rewards credit cards offer special insurance products and shopping protections that can help you save money or protect yourself financially.

These include trip cancellation/interruption insurance, guaranteed product returns, damage and theft coverage for purchases, travel accident insurance, and auto rental coverage. If your card isn't offering these protections and you want one that does, you're probably ripe for an upgrade. (See also: Awesome Credit Card Perks You Didn't Know You Had)

4. You want amazing travel perks

If you haven't traveled a lot in the past but plan to ramp things up in the future, having a credit card that offers travel perks can lead to a more pleasant, convenient experience. Some of the top travel credit cards offer perks like a Global Entry credit, airport lounge access, and annual travel credits to cover splurges like seat upgrades and in-flight meals. (See also: 5 Best Credit Cards with Free Airport Lounge Access)

Most of the time it's best to keep your options open and choose a credit card that allows you to redeem points with a variety of travel partners. But if you have a preference for one particular airline, it's beneficial to get their co-branded credit card. These cards generally offer perks like priority boarding, discounts on in-flight purchases, and free check-in baggage, along with big bonuses for purchasing airfare directly from them. But many of the top travel credit cards charge annual fees, so you should make sure the benefits will outweigh your out-of-pocket costs before you sign up. (See also: Which Credit Cards Have the Best Travel Redemption Value?)

5. Your interest rate is too high

If you carry a balance on your credit card each month, earning rewards should be the last thing on your mind. Any rewards you earn will be wiped out by the interest you'll pay. Instead, your biggest concern should be your interest rate. You should be looking for a card with the lowest interest rate you can find. Not only do some credit cards offer low long-term rates that can save you money, but some cards offer 0% APR on new purchases for up to 21 months.

6. You want to transfer a balance

Besides cards that charge zero interest on new purchases, numerous cards let you transfer balances and pay them off with zero interest for a promotional period. This period may last anywhere from 12 to 21 months.

When you're not paying interest, you can pay more toward the principal of your credit card balance every month, which will help you save money and pay down debt faster. If you have a huge credit card balance with big interest payments, it's definitely worth exploring the upsides of 0% balance transfer credit cards.

Before you do, just make sure to check out any balance transfer fees that will be charged so you can determine whether it's worth it. While a handful of cards let you transfer balances with no balance transfer fees, some charge 3%-5% of your balance for the privilege. (See also: Which Balance Transfer Credit Card Is The Best For You?)

7. You are paying foreign transaction fees.

Whether you're purchasing products and services from foreign countries or you're using your credit card abroad on your travels, you shouldn't be paying a fee to do so. Most cards with annual fees will have zero foreign fees, but there are also no-annual fee credit cards that offer zero foreign transaction fees.

8. You are paying annual fees but not using the benefits

No doubt holding a premium credit card can make you feel like a VIP, and certainly these cards offer a wide variety of exclusive and valuable benefits. Most of the time the value of these benefits far exceed the price of the annual fee, if you add up the face value of all of them, but if you're not actually using them, then you're just paying for the potential access. Far better than chasing rewards is holding onto cold hard cash that you would have shelled out for an annual fee. Check out other outstanding credit cards with no annual fees.

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

Stop Ignoring These 11 Financial Cries for Help

Tim Lemke — Mon, 04 Jan 2016 12:00:03 +0000

It's easy to delude yourself into thinking you have your financial house in order. You've got a roof over your head and food on the table, after all. But the truth is that many of us are living on the edge financially, especially when it comes to the use of credit cards.

If any of these seem to apply to you, consider taking a hard look at your finances so you get back on track.

1. You're Hit With Bank Account Fees Each Month

Getting charged by your bank for not meeting a minimum balance is annoying, but such fees should be avoidable if you're diligent about saving. If you find that you're constantly below the threshold where you'll be charged a fee, it's time to take some action. You can start by examining where your money is going and cutting out extraneous spending. (See also: Banks Still Offering Free Checking)

2. You're Over 30 With No Retirement Savings

If you've gone the first decade of your work life without putting a single penny aside for retirement, you're putting your future self at financial risk. While it's not too late to build a large nest egg, you don't want to wait much longer. Consider these numbers: A person who sets aside $10,000 a year at age 25 will have about $2.3 million, assuming a market return of 8% annually. If you start at age 30, you'll have $1.5 million. But if you wait until you're 35, that number dips to barely over $1 million. Start saving as soon as you can.

3. You Rarely Pay More Than the Minimum on Your Credit Cards

If, at the end of each billing cycle, you find that you never pay your credit card bill in full (and often pay nothing more than the minimum), that's a problem. You can't get rid of debt by adding to it, but that's what happens when you only pay a portion of what's owed. To stop this cycle, begin aggressively paying down the credit cards with the highest interest rates and work from there. (See also: When Should You Do a Balance Transfer to Pay Off Credit Card Debt?)

4. You Keep Borrowing From People to Make Ends Meet

At first, it's $50 from your folks. Then a little more. Then you keep asking people to "spot you" a few dollars, but rarely pay them back. It's no shame to seek financial help if you're going through a tough spell, but if this is a routine part of your life, it's time to assess your overall situation. Your friends and family are there for you if you have an emergency, but they're not going to keep lending or giving you money just to help you get through each day. Next time you ask them for help, ask for help in finding a better paying job, or for some budgeting tips.

5. Your Credit Cards Get Declined

Perhaps you're at the supermarket and try to pay with one credit card, but it's declined. So you simply pay with another one and act like it's no big deal. But it is a big deal. Often, it means you are over your credit limit, which means you've maxed out what you can borrow that month. And simply getting another credit card isn't solving the problem. If you've had a card declined due to high spending, perhaps it's time for some serious budgeting work.

6. You Frequently Ask for Increases to Your Credit Limit

It's not necessarily bad to ask for a credit limit increase, but once you reach a borrowing limit of a few thousand dollars a month, there should be no need to raise the ceiling further. If you are frequently calling credit card companies to raise that limit, ask yourself whether you have a debt and spending problem.

7. Creditors Keep Calling

You may feel like bill collectors are your enemy, and your instinct is to hide from them. But the only way to get them off your case is to pay what you owe, or at least negotiate to pay a portion so they'll leave you alone. Every call from a creditor should be a warning bell that you don't have your financial act together. Now is the time to develop a plan to pay your debts and avoid letting this happen in the future.

8. Your Credit Score Is Low

Don't ignore the score! Perhaps it's just a number, but it's an important number. If your credit score is below 700, you may find it hard to secure a loan with a solid interest rate. Anything under 650, and you may find it difficult to borrow at all. Work to get the score higher by using credit cards responsibly and paying bills on time. This will have an enormous impact on what you pay for a home, car, or other major purchases.

9. You Can't Wait for Payday

When you have savings and are keeping your spending under control, you should be only vaguely cognizant of when your next paycheck is coming. If you are paying bills at the last second — or late — because you need to wait for payday, that's a red flag. And if you're taking costly advances on your paycheck, that's even worse. You must work hard to earn more and spend less to stop the paycheck-to-paycheck cycle.

10. You Can't Wait for Your Tax Return

We all like getting a little money back from Uncle Sam each spring, even though it's always been our money and we've been loaning it to the government all year. If you are desperate for that tax return check to come, that's a sign that you're living too close to the financial edge. What if you don't get as much back as you expect, or even owe money?

11. You And Your Partner Are Constantly Fighting About Money

Even financially stable couples have arguments about spending and saving. But if you're having these kinds of fights all the time, that's a red flag. Perhaps you can't get your partner to keep their spending under control. Perhaps you don't agree on what the saving priorities should be. This is not just a financial red flag, but may be a red flag for your relationship, as well. You and your partner should work together to tackle the biggest sources of financial stress, particularly when it comes from high levels of debt. If you can't get on the same page, an independent marital or financial counselor might be able to help.

What financial cries for help are you failing to heed?

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