Category: Personal Finance

We think homeownership is a big part of the American Dream. But is it? REALLY? Read More...

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John Schneider

America and the world were different in 1931 when James Truslow Adams first scrawled his vision of “the American Dream.”

Indeed, Adams’ sentiment was more idealistic than materialistic. It wasn’t until post-WWII that the American Dream of a rich life full of opportunities included a house.

To be fair, Gerald O’Hara did tell Scarlet that “land is the only thing in the world worth workin’ for, worth fightin’ for, worth dyin’ for, because it’s the only thing that lasts.” It’s easy to see how the beliefs of Adams and O’Hara morphed into a McMansion-bubble-bursting-cog of America’s “too big to fail” economy.

Today we travel more, marry later, have fewer kids, and most of us have 10 jobs even before we turned 40. When our phones broke free from walls, we too broke free. Homeownership peaked in 2004 and is now at its lowest point in 21 years.

If you’re wondering if homeownership is right for you right now, here are nine reasons to rent instead of buy — at least for a little longer.

1. You’re too lazy to pick up a finger to help.

If you’d rather chase Pokemon in your back yard than stop mice from entering your house, or if you’d rather watch House than maintain one, you may be too lazy to be a homeowner.

Houses aren’t reliable. If words like “broke,” “leak,” “patch,” “paint,” “fix,” and “repair” seem less like reasons to roll up your sleeves and more like reasons to kick up your feet, owning a home may not be right for you.

2. You couldn’t help even if you wanted to.

If it’s not possible for you to help because it’s not possible for you to help, homeownership will be an expensive proposition for you. When the faucet leaks and you’re not the guy, or when it’s time to winterize your house and you’re not the gal, you will have to hire someone to take care of business.

As a renter, though, you simply call your landlord to fix the home you don’t own.

3. You’re not sure which direction your life (or relationship, or career) will go.

Even if you aren’t lazy or useless, but you’re surer of who John Snow’s parents are then where you’ll be in one year (let alone five), you might want to rent instead of buy.

Buying a home is expensive. Your agent, the seller’s agent, and Uncle Sam all want their cut. There are fees for home inspection, appraisal, title changes, lender’s origination, and more.

The best means to counterbalance this tab of homeownership is time. But what you if you don’t have the time? Homeownership is a commitment, and it helps to have an idea of where you’re going before you make that commitment.

4. You’re sure as hell things won’t stay the same.

You know those friends who were so much fun and then bought an overpriced home in a cul-de-sac overrun by offspring? You know why they don’t go out anymore? It’s because they’re house poor.

Not only are houses expensive to buy, but they’re also expensive to manicure and maintain. This is why many homeowners become homebodies. If the thought of spending all your free time in your four walls makes you funny, owning a home will be more drama than comedy.

5. You’re contemplating a change in family situation.

9 Signs You Should Rent Instead of Buy

If you and your partner might become the human equivalent of Matryoshka dolls, any home purchase made today could be too small or too large tomorrow.

It’s easy to right-size for your family with rental properties. It’s not that same with purchased properties. Your changing size could mean you need more room to grow sooner than you thought. When the size of your family is firmly settled, it’s time to purchase a permanent settlement.

6. You’re ferociously independent.

If homeownership even remotely feels like living on Wisteria Lane in “little boxes made of ticky-tacky,” surrounded by Joanna Eberhart characters, then homeownership may not be right for you.

Unlike college, you can’t move away from co-dependent neighbors every semester. Even when you do escape, someone needs to take care of your house while you’re gone.

Don’t want to be tied down? Buying a home will tie you down in a way renting never could.

7. You’re too poor.

Notwithstanding the cost of maintenance, most people shouldn’t buy a house with anything less than 20% down on a fixed rate mortgage.

Sure, there are flexible loans, but they weren’t so flexible in 2008 when balloon payments contributed to problems for many homeowners. You can buy a home with less than 20% down, but with risk-based pricing your lender will likely use will charge you a higher interest rate. You will also have to pay private mortgage insurance.

Don’t forget that discussion we already had about being house poor. You don’t want your home to suck up all your disposable income. Run the numbers. It still might be better for you to rent instead of buy.

Run the numbers. It still might be better for you to rent instead of buy.Click To Tweet

8. You aren’t detail oriented.

When was the last time someone you knew bought a nest and didn’t remodel it with the conviction of a 1980s teenager BeDazzling a jacket for her first Madonna concert? The problem with home décor bought at Michael’s is that it looks like it.

Home décor not bought at Michaels increases costs too quickly for the less detail-oriented to care. HGTV-inspired remodels increase home values, but not enough to see a 100% return.

9. Finally, homes suck.

That is, the cost of a home sucks all the money out of your bank account. While homes can be good investments, for the average household they bogart most or all investment options. Investment diversification is integral to investment success.

Asset classes don’t move in tandem and 2008 proved Carlton Sheets wrong. Homes do depreciate. Consider your whole investment portfolio and don’t put your potential home purchase in an investment silo.

I’m a homeowner. But for three of the nine reasons above I wish I wasn’t. Because my husband and I perfectly timed buying our condo just before the market crashed in 2008, it’s been “amusing.”

If you’re considering buying your own home, it’s a long-term investment and, like Bon Jovi songs, not always a bed of roses.

Listen to this related podcast.

Can you rent forever and still be an adult? We think so. Here’s why we love renting.
Can you rent forever and still be an adult? We think so. Here’s why we love renting.

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Your first credit card feels amazing. It’s like getting extra money. Only problem? It’s not. It’s a loan. You need to be on top of things if you use credit cards. Read More...

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Zina Kumok

It’s a simple piece of plastic, but it can help you reach your goals – or destroy your financial life. It’s a credit card. Even though they’re everywhere, you may not know the nitty gritty about them.

Before you decide to get that plastic and use it to rack up untold amounts of debt, you need to know the basics. First of all, it’s vital to understand that we’re not talking about your money here. It’s someone else’s money, and they are loaning it to you. It has to be repaid.

Credit cards can be great tools that lead to rewards and cash back and convenience. But you have to be careful and realistic. Here’s what you need to know about credit cards:

1. Not all credit cards are created equal.

Credit cards are one type of financial instrument that you can use, and they can, like insurance, be part of a well-rounded financial life. Like student loans or mortgages, though, not all credit cards are the same. Here are some examples of different types of credit cards:

  • Travel credit cards: These cards have rewards designed to benefit those who travel often. These protections and perks include no foreign transaction fees, free baggage check, access to exclusive airline lounges, bonus miles when you sign up and more. They can be pretty sweet when you use them right.
  • Cash back cards: Everyone loves cold, hard cash. Cards with cash-back rewards return a certain percentage of your purchases. Some cards offer cash back on all purchases, while some only do so for certain categories, like gas stations and grocery stores.
  • Business credit cards: Business credit cards come with different terms and conditions than personal credit cards, but usually have higher credit limits and different rewards to help those running their own operations.

I have all three types of credit cards and am a big proponent of them. I’ve earned free trips and thousands in benefits by using credit cards responsibly. A couple of my credit cards also give me free access to my credit score, so I can make sure I’m staying on track.

2. They can protect you.

Credit cards get a bad rap for encouraging people to spend money they don’t have. But cards also provide extra support. Many credit cards have fraud protection so you don’t have to pay for any purchases in case your card is lost or stolen.

Credit cards also let you dispute purchases. If you buy something on eBay that comes in damaged, you can dispute the transaction with the credit card issuer. I’ve used this a lot if I’m trying to return something defective or if I was unhappy with a service I received. Some cards also extend warranties for items you buy using the card.

Many cards have no foreign transaction fees, which usually cost 3%. If you go on vacation and spend $500 abroad, you’ll owe $15 in fees. If you rent a car, a credit card often has collision damage coverage on rentals, saving you about $20 a day.

These perks and protections can save your ass, so double-check your benefits. You might be surprised at what’s available – at no extra charge.

3. Always pay your balance.

4 Things You Should Know About Credit Cards

Your credit card statement shows your current balance, your minimum payment, and when your bill is due. The minimum payment is usually a very small percentage of what you owe (less than 5% of your total balance). If you only make the minimum payment, it can take you years to pay off even a small balance because most of your payment goes to interest charges.

For  example, if you have a $500 balance on your credit card with 15% interest and your minimum payment is $15, it will take you 44 months (according to Bankrate’s calculator) to pay off that balance. During that time, you’ll pay $150 in interest.

4. Don’t use them as an emergency fund.

According to Credit Karma, the average credit card limit in 2016 was $9,606. With access to that kind of cash, it can be tempting to think of your card as an emergency fund or backup in case you lose your job.

But that’s not a reason to use a credit card. If you don’t have the money to pay off your credit card balance at the end of the month, you’ll have to pay interest on your balance. The average APR for credit cards is about 15%. That’s a real pain in the ass when you’re trying to get started with a solid financial future.

If you don’t feel comfortable having access to so much money, you can call your credit card company and ask them to lower your credit limit. If you still end up spending more than you’re comfortable with, you may have to cancel your card.

Credit cards have a bad reputation, but they’re like casinos and lottery tickets. You can use them responsibly and enjoy their benefits or find that they lead you to temptation.

If you have a credit card, which one do you have?

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Your dreams coming true… with your crew. Something amazing? It’s time, effort, and money. Read More...

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Harlan L. Landes

You and your closest friends may all share the same aspirations. Maybe it’s a beach vacation together, maybe it’s your own separate businesses, but you’re close because you share some kind of life goal and desire in common.

Squad goals started with those who, unlike Taylor Swift and her entourage, are outside of the mainstream and feed off the group encouragement and support from friends who face the same challenges from society.

But your squad goals are like your own goals. You have to put the time and the effort in if you want to see things happen. If your squad doesn’t have Taylor Swift or Waka Flocka Flame at the center, chances are you’ll all have to work equally hard.

Squad Goals: Save Up to Make Them Happen

Is your squad even healthy?

Before we get started, let’s address the fact that some groups of friendships aren’t entirely healthy. Your close friends or colleagues should be supporting each other, not secretly jealous and vindictive of each other. Leave the passive-aggressive behavior out of it.

Your crew should not be a clique, and you better not bully each other or other people. Get rid of any negative attitudes right now, before you decide to work on your squad goals.

Now, let’s start at the beginning.

What are your squad goals?

Squad Goals: Save Up to Make Them Happen

Vacations can be a blast when you go with your squad. If you’re going to get LIT, who else would you rather be with than your besties? I still dream about taking all of my friends on a cruise. One day, we’ll make that happen.

If some kind of trip is part of your squad goals, start planning now. Clear your calendars. Get recommendations for places to stay.

How about creating something? Have you and your closest friend always wanted to open a store to sell custom jewelry for toddlers? “Bling Babies” can still happen! Start the process: read some books and talk to store owners.

Are online businesses part of your group’s plans? Rather than working together on one plan, your squad goals could involve each of your friends working along on their own separate paths. With everyone working towards different goals, set aside some time to check in with each other. Support each other’s goals. Keep each other on track.

Everyone in the group can use their own skills, talents, and superpowers to help everyone else.

Being each others’ “accountability partner” is easy. So here’s the hard part: the money and the effort.

What do your squad goals cost?

Squad Goals: Save Up to Make Them Happen

Some goals take time and effort. Some take money. And a lot of goals take a combination of all of the above.

So when you plan, write down exactly what you need in order to make your dreams come to life. If the main requirement is time and effort, start prioritizing your life so you can bring your goals closer to you. Spend less time on things that matter less and more time moving you and your squad closer on the right path.

If money is the priority for living out your goals, take an honest look at where you are financially and where you need to be. If it’s far off, it could call for some drastic measures if you want to reach your goals within your own lifetime.

There are two sides to ending the day with more money. The first is the simpler of the two sides, but it may not always be the easiest. You just have to earn more money.

If you have a job, are you maximizing your income there? Can you take on more work to earn more cash? Have you asked for a raise recently? How about overtime?

Let’s say you’re maxed out at work. Do you take a second job? Make a career change? Start looking around for a new job that offers better incentives (like bigger paychecks)? You have to start considering these options.

The other side of growing your stash is being careful about spending. There’s only so far you can go before you’re living on the street, but maybe there are some expenses you can cut out. If you consciously make decisions about spending, keeping your squad goals in mind, you would be in a better place for keeping some money in your pocket.

So now that you’re saving money for your squad goals, how do you keep it organized and on track?

Open up a special bank account.

Squad Goals: Save Up to Make Them Happen

You could keep your squad-goal-money in a jar in your kitchen. But you’d probably be tempted to take some out once in a while for last-minute outings with your squad. Outings that have nothing to do with your real squad goals.

A safer place — safer from you and your own meddling — is the bank. Goal-oriented saving is the new thing for banks, especially those that are trying really hard to make their stodgy financial institutions more relevant to people like you.

We’ll list a few options here as examples. We’re not endorsing any company over any other. These companies are not advertisers or sponsors, so we are just sharing a couple that we have had experience with at Adulting.tv.

SmartyPig

SmartyPig. SmartyPig was one of the first “banks” to offer a savings account in a way that is designed for goals. It’s not a bank itself, but it works with a bank behind the scenes. Sign up online and name your goal and the date you’d like to withdraw your money to spend for that goal. This is where I saved up for a camera for my photography business-slash-hobby.

Don’t worry, you don’t have to stick to the date or the goal if something in your life or your squad changes. Something always does, right? With all these accounts, you can take your money out at any time for any reason.

CapitalOne360

Capital One 360. Years ago, this account’s predecessor pioneered the idea of multiple savings accounts for different goals. You can put money into several accounts, and name each one after a specific goal. This is where I had my “emergency fund” and my “saving for a new car fund.”

That’s all you need. Not only will these places store your money until you’re ready to pay for making your squad goals happen, they’ll also pay you income. It may be just a little right now, but these are interest-paying accounts, so your balance will grow even without adding more of your own money in.

Pretty good deal, right?

Start saving now, and before you know it, you and your crew will be taking selfies on the moon. (How’s that for a squad goal?)

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How much do you trust your S.O.? Do you trust him or her with ALL of your money? Read More...

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Miranda Marquit

In every serious relationship, you reach the point where you need to talk about money. This is one of the pivotal discussions you will have with a potential partner.

Part of this money talk involves discussing whether or not you will combine finances. This is a tough decision and one you have to decide on for yourself, based on how you and your partner feel about money.

There are advantages.

When you combine your finances, you truly form a partnership. Everything goes into a big pot. All your money. All your partner’s money. You pay your bills from the big pot. You set up joint savings and investment accounts. When you combine finances, it can have a big impact emotionally. You truly feel like one entity. It’s practically impossible to feel detached when you are sharing your finances.

Combining your finances can also simplify matters. You don’t have to worry about who’s putting what into the joint account for household expenses, and you don’t have to divvy up the bills or worry about whether or not your partner is actually paying his or her “fair” share. With combined finances, it all goes to the same place, and you only have to worry about paying from one account.

Finally, with combined finances, it’s all on the table. You can both see what’s happening with the money, and you both have equal access to it. A lot has been written about financial infidelity. (Go ahead, search it on Google. I’ll wait. Checked it out? Seen that it’s a real problem for some people? Awesome.) While combining finances can’t totally eliminate the problem, the reality is that it’s much harder for someone to hide his or her money issues when the S.O. has just as much access to everything.

For many couples, this is the way to go. In fact, during my marriage, we had combined finances. We had a big pot, what’s-mine-is-yours-and-what’s-yours-is-mine, approach. It made things simple during the marriage, but a bit of a PITA during the divorce.

But there are downsides, too.

One of the biggest issues with combining your finances is that you lose some of your autonomy. You don’t have complete control over your money; you need to consult with someone else before you make certain decisions. If you still like to have that measure of control over what you spend, and how you use your money, combining finances can be scary as hell.

When you separate your finances, you can also create a formula for deciding who pays for what. There are many ways to do this. In some cases, the person who makes the most might cover the biggest expenses, while the other person takes care of the smaller household costs. If you make close to the same amount of money, it can make sense to split everything down the middle.

Another way to separate determine your bills is by using a percentage. If one of you makes 70% of the money, you pay 70% of the shared expenses, while the other pays 30% of the household costs. Once those shared costs are covered, each of you gets to keep what’s left to use how you want. However, when you have separate finances, you each pay from your own account.

Keeping things separate can also provide protection. What happens if you aren’t sure about how your bae handles money? You can better protect your own financial situation by avoiding combining accounts. Your partner can’t raid your account if it isn’t shared. If you think your partner spends too much and you want to keep him or her from draining your resources, separate finances can make sense. Keeping things apart protects you.

Finally, separate finances are easier to manage in the event of a de-coupling. My ex and I had to go through our shared accounts and assets and divvy them up at the end of the marriage. On top of that, as I looked back on some of the purchases he made with our joint money, I was a little bitter.

While we are on good terms, and I care deeply for my ex, the reality is that combining finances and the aftermath left a sour taste in my mouth. Things are fine now, but they were a bit unwieldy for a while. Keeping things separate would have made things easier. In a world where many of these romantic relationships, whether or not they are marriages, come to an end, combined finances may not be the best choice.

How about making a compromise?

It’s possible to create a hybrid model. I know many successful couples who employ this method. Rather than keep things completely separate, they have some joint accounts. For shared expenses, like housing costs and paying for kids’ activities, you can open a joint account. Each of you contributes a pre-determined amount of money. You pay your shared expenses from the shared account.

Everything else, however, is separate. You have the feeling of working toward a common goal, but you also keep some things separate. This method can work for shared goals like saving up for a down payment on a home, going on vacation, or making a major purchase together.

When you use this plan, you maintain separate accounts. You can buy gifts for each other and make them true surprises. You also obtain limited protection. While there is no way to keep your honey out of the joint account, the bulk of your money is safe from pillaging in your own accounts. A friend of mine was fortunate that he used the hybrid model when his wife drained the joint account and then asked for a divorce. She couldn’t access his account and take that money, too, ahead of time.

How you manage your money is up to you. Have a talk about it, figure out what you’re comfortable with, and make a plan from there.

What do you think about combining finances? Is this something you are comfortable with?

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Start with this list. Focus on the essentials. Read More...

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Harlan L. Landes

My last semester of college was during the fall months, and for the first time, I was living on my own, and not in a college dorm and not with my parents. No roommates, either, though that singular, private living situation wouldn’t last too long.

This apartment was a few miles off campus, past the entrance to the interstate highway, where rents were much cheaper. That’s exactly what I needed. My last responsibilities at college were student-teaching and preparing for my senior recital, the capstones to my music education degree. So I was still a student — a student without a job for at least a few months, without money being earned, and I don’t even remember how I was able to afford my rent.

The living situation was a big change from the dorm rooms in the preceding years. Everything is provided in the dorms — paid for along with tuition, naturally, but students never had to worry about outfitting rooms with basic furniture. At least a bed and a desk.

Somehow, I owned a bed and mattress. I have no memory of where they came from.

And that’s the only furniture I had in this apartment. Well, besides the bed, I had a television on the floor in the living room. I didn’t even have blinds or curtains on the patio door. If it didn’t come with the apartment, I didn’t have it. And nothing came with the apartment.

As a result, the place wasn’t exactly ideal for entertaining guests. I had no visitors so I wasn’t too concerned about the state of my domicile. All I needed to be able to do was sleep — which I did — and practice — which I sometimes did.

Maybe I had a lamp.

What would have been helpful to me is a guide that explains exactly what you need or should have in your first apartment, whether you have roommates or not.

Here is that guide. I’ve listed what you need, ranked in order of importance, by room. Many of the furniture items can be found on a budget. Always check second-hand stores or Craigslist.

You need these items for your bedroom.

1. Mattress. This is the most basic item. You need to be able to sleep relatively comfortably. A mattress will do the trick. If you’re on a budget, air mattresses can be quite comfortable these days, and much less expensive than a fancier typical mattress. A step up might be a futon. Unlike just about everything else, I would not buy this item on Craigslist or used at a thrift store.

2. Lamp. Shine some light in the bedroom. You’ll be thankful for illumination, especially in the winter when the sun sets early.

3. Alarm clock. Well, you probably have one on your smartphone. You may be living in your own for the first time and not sure how you’re going to pay rent, but I’m sure you’re managing your phone just fine. But having a real alarm clock as a back-up has saved me many times.

4. Window curtains. The one place where you don’t want neighbors peeking in is your bedroom. Maybe your place comes with blinds, and if so, curtains are further down on the list, but still good to have.

5. A bed. If you want to prop your mattress up a little higher than floor-level, you’ll need a bed. I lived in one apartment without a bed, though, so it is possible to get by without one.

You cannot have a bathroom without these.

1. Toiletries. Expect to brush your teeth every day. Grab all the basics including toilet paper, mouthwash, toothbrushes and toothpaste, soap, shampoo, shaving items, and a first-aid kit or at least adhesive bandages (Band-Aids).

2. Towels. Drip-drying takes far too long. You can get by with one, but two would be better. Feeling fancy? Get one of those towel hooks that fit over the bathroom door.

3. A shower curtain. Most apartments won’t come with one. Shower curtains can be inexpensive, and they give you privacy and added safety in the bathroom. You may need to buy curtain rings separately. You may even need to get your own curtain rod.

4. A plunger and toilet brush. One is for cleanliness and the other is to prevent a big mess.

Let’s go into the kitchen. Who’s cooking?

1. Dishware and silverware. No need to get fancy here. My first set was inherited from a friend. A few plates, a few bowls, forks, spoons, butter knives, and if you’re ready, a sharp knife set.

2. Pots, pans, a spatula, a ladle, a slotted spoon, a regular spoon, oven mitts, and a can opener. Unless you plan to order in every day and every night, you’ll be cooking. No need to get anything fancy here unless you really love spending time in the kitchen. Just the basics will suffice.

3. Dish soap, napkins, and paper towels. And if you have a dishwasher, dishwashing detergent.

4. Trash can. You need at least one in your apartment, and if you do have only one, it should go in the kitchen.

Not everyone has a living room, but here’s what you would need.

1. Something to sit in. In my first apartment, this was the floor. Somehow I managed, but it wasn’t ideal. You can find at least a cheap chair. I eventually upgraded — in my third apartment — to a cheap sofa from IKEA.

2. Curtains or blinds for the windows or patio/balcony door. Again, privacy is the main concern here, and some type of covering might be required by your lease.

3. A television stand or mount. These days, fancier people are mounting televisions on walls. In my first apartment, I got by with leaving the TV on the floor.

4. A coffee table. Again, I didn’t have one until later in my adult life, but this is a basic piece of furniture that separates the barely-adults from the mostly-adults.

Beyond these items, everything else could be considered a luxury. Chances are good that you won’t be in this apartment for a long time. You can upgrade and add items one at a time. Living in comfort is a process, and when you first move out on your own, there’s no expectation that you have the best-decorated and best-outfitted apartment among your friends.

Save the money now. Take care of your necessities and put away any cash you have left over. You can take your time and ignore the pressure to have everything in your life and your living environment together immediately.

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A single hospital visit can bankrupt you. What happens if you total your car and can’t afford a new ride? Make sure your assets are covered. Read More...

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Zina Kumok

The idea of insurance doesn’t necessarily jive with the mindset of a young person. It took me way too long after college to really get serious about insuring my stuff. What’s life without a little risk, right?

In reality, that mindset doesn’t usually last through the first emergency or disaster that strikes while you’re uninsured. It’s easy to laugh it off when you’ve been lucky, but one bad day teaches you the importance of making sure you cover your assets.

Being a fully functioning adult requires that you be ready to protect what’s yours.

Why insurance is important.

Insurance is like wearing a helmet while you’re biking. You may not need it, but you’ll be glad you put it on when you take a tumble.

“Having quality auto, health, renter or homeowner, and life insurance is vital to protecting yourself and your family — or your future family — from the unexpected,” says blogger Eric Rosenberg of Personal Profitability.

But choosing an insurance company is hard work. First, decide what coverage you need. If you need both renters and car insurance, can you choose the same company and save money with a multi-policy account?

The two most important factors with insurance are the premium (how much you pay each month) and the deductible (how much you pay to file a claim and receive money from your insurance company). Your car insurance premium may cost $100 a month with a $500 deductible.

That means if you get into an accident and do $600 worth of damage to your car, you’ll have to pay the $500 deductible before your insurance covers the rest.

Car insurance.

Most companies offer a multi-car discount for families with more than one automobile. Premium rates vary based on how much coverage you have, so don’t base your judgment solely on how much you’ll pay each month.

For example, coverage for uninsured or underinsured drivers is optional, but often a good idea. When I got hit by an uninsured driver, my car suffered $3,000 worth of damage. My insurance company handled everything because I’d opted for that extra coverage.

This is a common theme in every area of insurance: risk tolerance. You need to toe the line between how much you’re willing to pay monthly, and how comfortable you are with the risk of being caught uninsured. In an ideal world, we could all afford comprehensive coverage in every area, but the real world is a little more restrictive.

Renters insurance.

Lee Huffman, who owns several rental properties, says he always recommends renters insurance to his tenants. Most renters policies cost less than $20 a month, but can reimburse you in case your valuables are stolen or damaged.

“As a rental property investor, we remind our renters that the landlord’s insurance covers the building only,” he says. “It does not cover any of the personal items of the renters, nor does it cover the renter in case someone gets hurt and tries to sue them.”

Take pictures of your most prized possessions and keep receipts for anything valuable. Those will help if they’re lost or damaged and you need to file a claim.

Health insurance.

The Affordable Care Act requires that you have health insurance or pay a fine. This year the fine will be 2.5% of your income or $695 per adult — whichever is greater. For example, if you have an adjusted gross income of $40,000, your fine will be $1,000.

One hospital visit can bankrupt you when you don’t have health insurance. You are your most valuable asset, so make sure that’s covered. Millennials in good health are often fine purchasing a high-deductible plan and paying a smaller premium. You can use a Health Savings Account in conjunction with your high-deductible plan for even better results.

Life insurance.

This type of insurance is vital if there’s someone relying on your income, like a spouse or child. If your spouse dies, can you afford to live without them? Can you pay the mortgage by yourself? Can you raise your child on one income? Single parents should consider purchasing life insurance so their children will have protection in case they pass away.

Rosenberg recommends term, not whole, life insurance for millennials. The younger you are when you purchase a policy, the cheaper it will be.

“You are never as young and healthy as you are today, which is the best time to lock in a 30 year policy,” he says.

Don’t let the unexpected ruin your finances. Cover your assets with the right insurance and you can shore up your finances from disaster.

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It feels really great to save money, so do that. Read More...

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Sandy Smith

Some people think that being frugal is the same as being cheap.

It’s not.

Being frugal is a lifestyle. Being cheap is a quality.  Neither is better than the other; they’re just both very different.  Being cheap is also considered a negative quality when in reality it’s another way of being financially responsible.

Being frugal ≠ cheap.

The difference between the two is that being cheap means you probably won’t spend money on anything of extreme value and you won’t pay for high quality. You are most likely to buy the item at the lowest cost.  And that’s O.K.  Being frugal means you plan where to spend your money and you don’t mind spending on quality as long as you’re getting the best deal possible.

Being frugal may also have a negative tone because frugal people are often considered cheap.  That’s a big misconception and, like I said, neither one is bad.  In fact, if everyone in the world lived a little more frugally and let themselves be cheap once in a while we would all probably have more savings and less debt.

Frugal = self control.

No one says that counting pennies isn’t smart. Well maybe they do, but they’re wrong.  If you take the time to compare prices, shop around, and really think twice before spending money, you have incredible self-control. That’s never a bad thing.

Avoiding impulse purchases and overspending (even on necessities) is a smart way to live because it makes sure you live within your means. It also helps you stay away from using credit cards just to make ends meet every month.

It may take more effort to say no to your favorite cookies at the supermarket because you don’t really need them or skip buying those new shoes because they aren’t on sale, but your bank account with thank you for the savings.

Saving is a natural high.

Think about the last time you saved $1.00 on bananas or $100 on a hotel room. Didn’t you feel great?  I know I did.  Saving money, even $0.50, is a great feeling. It means your hard earned money is going to work for you instead of you working for it.  Think about how much extra cash you would have in your pocket each month if you stretched every dollar to its possible limit.

Saving money is natural high and the only way to get that buzz is to spend less than you earn and buy things at lower prices than you planned.  Living on a budget is great, but living below budget is even better.

Use apps to make a grocery list to avoid impulse purchases and sign up for mailing lists to get weekly flyers. Find the lowest prices on everything from milk to bedroom furniture.

Being frugal gives freedom.

When you save money on one thing you can spend that money somewhere else.  Paying less for everything in your life opens doors for new opportunities.  Maybe being frugal helps you take an overdue vacation. Perhaps your frugal choices give you the new roof your house desperately needs. Maybe frugality helps pay off your student loans faster to avoid interest charges.  Whatever the reason, living on less helps you do more.

If you need motivation to save more money and live more frugally, make a list (or dream board) of all the things you want to do in life.  Prioritize these items realistically and start saving towards your number one goal.  You may even want to open a separate bank account to watch your savings grow.  Remember that every dollar saved is another step towards your goal.

All thanks to being frugal.

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Do you have a true concept of what is “real” about money after college? Read More...

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Zina Kumok

I had plenty of money in college. I was rolling in it. My parents had given me a credit card so I could charge anything I needed, like groceries, utility bills, oil changes, and more. They paid my rent and didn’t ask questions when I spent more than $250 a month on food.

I worked during college, too – sometimes two jobs at once. Those jobs helped me buy what I wanted (which was a lot). If you’ve ever been to a college town, you know that there’s a plethora of shopping options nearby. Within a five-minute walk, I could access boutiques, vintage shops, and record stores.

If I wanted food, I could get anything delivered. Even if I had a fridge full of groceries, I’d get pizza, pad thai, or fried chicken delivered to my house. In a given month, I’d spend more than $100 on eating out.

I never told myself “no.”

That is, until I graduated.

Welcome to the real world.

The summer following graduation, I had an unpaid internship and a part-time job. For the first time, money was tight. I was paying my own rent that summer and commuting an hour one way (this is back when gas was close to $4 a gallon).

Suddenly, I had to reign in my spending. I said no to going out and shopping. I read blogs about couponing, cooking cheap meals, and getting free stuff.

That summer was a wake-up call. I couldn’t keep spending the same way. When I finally got a full-time job and started being totally responsible for all my bills, I realized how important it was to budget. I was only making about $28,000 a year, and after bills and student loan payments, there was hardly anything left.

Even though my budget was cramped, I decided I wanted to pay off my student loans early. I started tracking every dollar religiously. I was now saving money with the same intensity that I had spent money in college.

I found freebies, coupons, and special deals. I shopped at Aldi — my favorite discount grocery store — and stocked up on the essentials. I avoided eating out and always brought my lunch to work, even when it was Chef Boyardee ravioli.

In 2012, I created my blog to chronicle my debt payoff progress. I wanted to see if I could actually pay off my debt in three years. I thought my blog could serve as inspiration to anyone else trying to do the same thing.

A year after I started my first job after graduation, I got a new job and a small pay raise. When my rent went down, I put the difference toward my loans. Any time my expenses decreased, I just added that money toward my debt.

When my then-boyfriend and I moved with another friend, my rent was cut in half. Again, I put the amount I was saving toward paying down my student loans. That year, half of my paycheck went toward my debt. In November 2014, I made my last student loan payment.

Friends and family members started asking how I paid off my loans so quickly. I directed them to my blog, where I had written about my debt payoff journey. But soon I decided that I wanted to create one simple place where people could go and learn how to pay off their own student loans.

That’s why I created the Student Loan Knockout: A 20-Day Journey to Debt Freedom, my self-paced online course where you can learn the steps I took to become debt free. There are action items for each module and basic steps you can follow. This is not a course for finance experts. It’s for people like you feeling overwhelmed by your student loans and wondering where to turn.

In the real world of money after college, you need to make tough choices and get serious about your budget. Even though the road to debt freedom was filled with sacrifice, being debt free feels sweeter than any shopping spree or take-out meal.

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Do you want to make the most of today’s money for tomorrow? Make it rain for your future self. Read More...

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Miranda Marquit

One of the best times to set aside money for the future is now, while you’re young and compound interest can work longer in your favor.

Even if you think you don’t have enough money to invest, the truth is that you probably do. And one of the best things about using accounts that offer tax-free investment growth when your young is that you pay taxes at a lower rate.

If you want to make it rain later, the right planning now is the way to go.

Roth IRA

The Roth IRA is a solid choice when you have your first job. (There is also a Roth 401(k), so if your company offers a retirement plan, ask if there is a Roth version.)

With a Roth account, you make your contribution after taxes are taken out of your paycheck. However, this isn’t such a bad thing when you consider that right now you’re probably making very little anyway. Your taxes are lower than they might be later on.

A Roth account is all about the tax-free investment growth. When you withdraw money, you don’t have to pay taxes on it like you do with a “regular” retirement account. The longer you invest in a Roth IRA, and the longer the money grows, the bigger your benefit later on because you have the potential for more gains the longer you grow your account.

It’s a huge deal to not have to worry about paying taxes when you withdraw from your account.

Health Savings Account

If you want to level up your tax-free investment growth, consider opening a Health Savings Account (HSA) and contributing regularly.

The HSA offers a unique chance to invest because your contributions are made before taxes, so you get a tax deduction. Later, if you withdraw the money for qualified expenses, you don’t have to pay taxes on that money, either. Money in the HSA is truly tax-free — as long as you use it for qualified health care costs.

You can’t immediately invest the money in the HSA, though. Most of the time, you can only invest after your account balance exceeds $2,000. If you make regular contributions, you will get to that point and be able to enjoy tax-free growth.

In order to qualify, you need to have a high-deductible health care plan. As long as you don’t have really high health care costs, this type of plan can be great. It’s usually less expensive than other plans, and you can put your savings in the HSA.

I like to think of my HSA as a health care retirement account. I don’t actually use it now. Instead, when I am older, I’ll withdraw from my Roth IRA for income, and use the HSA to pay for medial co-pays and other medical costs. It will all be done with money that I won’t have to pay taxes on.

Now is the perfect time to start putting your money to work for you. Your taxes are likely the lowest they will ever be, and you can keep your expenses small, too. Focus on tax-free investment growth today, and you’ll be more likely to enjoy financial freedom later.

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How does your credit score relate to your credit report? Here’s what you need to know. Read More...

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Casey Bond

There are various stages of adulting.

Putting on real pants every day and having something green in the fridge is generally considered Level 1. At some point, you graduate to Advanced Adulting and start thinking about things like getting a credit card and maybe even buying a house. That’s when the concept of credit becomes part of your life.

That’s when the concept of credit becomes part of your life.

Your credit profile – a history of your behavior borrowing and repaying money – will impact you in pretty much every way. From getting loans and credit cards to finding a place to live, the health of your credit is really important.

In all honesty, the credit system is rigged. You are expected to go into debt in order to prove you’re financially responsible. Who made up these rules, anyway? But whether you like it or not, understanding how your credit is tracked and measured – primarily via your credit reports and scores – will help you play the game right and save as much money as possible.

Without finding yourself drowning in debt.

Let’s start with your credit report.

A credit report is the documentation of your history as a borrower, prepared by a credit bureau and supplied to lenders. It tracks all your personal and financial data, such as where you’ve lived and worked, your Social Security number, your financial accounts, payment history, credit inquiries, accounts sent to collections, bankruptcies, and more.

Generally, the bad stuff on your credit report will stay on it for about seven years. Bankruptcy will remain for about 10. After that, it falls off your report. You can’t control what shows up on your credit report as long as it’s accurate, but you can request that any errors be fixed.

That’s why it’s important to keep an eye on all your credit reports (yes, you have multiple). The best way to monitor your credit reports for errors or fraud is to visit the ONLY website approved to provide credit reports at absolutely no cost. Annualcreditreport.com allows you to access your credit reports from the three major credit bureaus – Experian, Equifax, and Transunion – once per year for free.

Like I mentioned, it’s a good idea to review these reports regularly. The process is not going to be enjoyable (it’s a report, after all) and you’re going to try really hard to put it off.

Please, just do it. Spotting an error or fraudulent account could make all the difference in whether you’re approved for that next card or get a good rate on a mortgage.

Ok, so then what is a credit score?

Credit reports contain a ton of information. You have to spend time reading through what’s there in order to get a sense of the overall health of your credit.

But if you’re a lender dealing with thousands of applications every day, you don’t have time for that. So the credit score was invented in order to give a quick snapshot of a borrower’s creditworthiness.

You actually have dozens of credit scores, all calculated according to different models. However, they all pretty much take into account the same things, even if the algorithms are slightly different.

FICO is the most common credit score lenders look at. The possibilities range from 300 to 850. Here’s how it’s calculated:

  • Payment history (whether you pay your bills on time): 35%
  • Credit utilization (the amount of debt you owe in comparison to available credit): 30%
  • Length of credit history (how long you’ve been using credit): 15%
  • Credit mix (how diversified your credit accounts are): 10%
  • New credit (how often you’re applying for new accounts): 10%

Your credit scores float up and down depending on your credit activity, which is normal. Over time, however, you want to have scores as high as possible.

It’s important to note that, while you can check your credit reports every year for free, your reports do not include your scores. There are paid services you can use to see your credit scores from the major bureaus, as well as receive credit monitoring and fraud protection services.

You can also use sites like Credit Karma, Credit Sesame, and Quizzle to see your scores for free. However, you’ll generally get your “D-list” credit scores here and not your more “official” FICO score. My credit score sometimes shows a difference of nearly 100 points, depending on what source I use.

Use these sites to gauge your overall credit health, but take them with a grain of salt. No two scores will ever be the same, anyway.

The world of credit is definitely confusing, but you don’t have to stress about it too much. As long as you borrow responsibly, always pay your bills, and keep an eye out for errors and fraud, you should be just fine.

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