Top 10 Cash Advance Loans for 2021
January 14, 2021
According to CNBC, over 40% of adults would have a hard time covering a $400 emergency. And if you own a home, drive a car, or have a family, a $400 emergency will happen at…
The post Top 10 Cash Advance Loans for 2021 appeared first on Crediful.
8 Essential Rules for Surviving Financial Hardship
January 14, 2021
At some point, most people experience an unexpected crisis that shakes their financial world. It could be losing a job, receiving a huge medical bill, or having a car break down at the worst possible time. But surviving a pandemic is a situation you probably never thought you would face.
No matter what challenge you’re facing, you’re not the first.
Along with the public health toll, the COVID crisis has put millions of people out of work. For those struggling financially, here are eight critical rules to help you manage money wisely, stretch your resources, and bounce back from this unprecedented health and economic disaster.
8 rules for managing a financial hardship
Here are the details about each rule to manage a financial setback during the coronavirus crisis.
Rule #1: Accept your situation and use your resources to seek help
The key to successfully navigating a financial setback is to be realistic. If you’re in denial and don’t face money troubles head-on, you can quickly compound the damage.
Instead of focusing on the problem, getting angry, or letting stress overwhelm you, channel your emotions into finding solutions. Start talking about your challenges with people and professionals you trust, such as a money-savvy family member, financial advisor, legitimate credit counselor, or an attorney.
Instead of focusing on the problem, getting angry, or letting stress overwhelm you, channel your emotions into finding solutions.
The following financial associations have certified volunteers who can offer free help and advice:
- National Association of Personal Financial Advisors
- The Financial Planning Association
- Association for Financial Counseling & Planning Education
Rule #2: Get a bird’s eye view of your finances
To fully understand your situation, create a list of what you own and owe; this is called a net worth statement. Compiling your data in one place helps you evaluate your financial resources, make decisions more efficiently, and have essential information at your fingertips if creditors or advisors ask for it.
First, list your assets:
- Cash
- Investments
- Retirement accounts
- Real estate
- Vehicles
Then list your liabilities:
- Mortgage
- Car loans
- Student loans
- Credit card debt
Include the estimated values of your assets, the balances on your debts, and the interest rates you pay for each liability. You could jot down this information on paper, enter it in a computer spreadsheet, or create a report using money management software.
When you subtract your total liabilities from your total assets, you’ve calculated your net worth, which is an indicator of your financial health. It’s not uncommon to have a low or negative net worth when you’re in financial trouble.
RELATED: 10 Things Student Loan Borrowers Should Know About Coronavirus Relief
Rule #3: Understand your cash flow
An essential part of bouncing back from a financial crisis is keeping an eye on your monthly income and expenses. Create a cash flow statement that lists your expected income and typical expenses, such as rent, utilities, food, prescriptions, transportation, and insurance. Again, you can create this report manually or by using budgeting features in a financial program.
Understanding where your money goes is the only way to prioritize expenses and cut all non-essential spending.
Understanding where your money goes is the only way to prioritize expenses and cut all non-essential spending. Making temporary sacrifices will help you recover as quickly as possible with less long-term damage to your finances.
Rule #4: Shop your essential expenses
As you review your spending, it’s an excellent time to comparison-shop your essential expenses. Evaluate your highest costs first, such as housing, vehicles, and insurance, since they offer the most significant potential savings.
For instance, you may be able to move into a less expensive home, purchase or lease a cheaper vehicle, and shop your auto insurance to find better deals. Ask your utility provider about assistance programs that offer energy-saving improvements at no charge.
Rule #5: Communicate with your creditors
If you haven’t been in contact with your creditors, start a dialog with each one immediately. You’ll come out ahead and get favorable treatment from creditors if you are proactive and honest about your financial troubles. Ask them for solutions, such as deferring payments for several months, setting up a reduced payment plan, or refinancing a loan to reduce your financial burden.
You’ll come out ahead and get favorable treatment from creditors if you are proactive and honest about your financial troubles.
Creditors are likely to ask about details regarding your financial situation, so have your net worth and cash flow statements on hand when you speak to them. Be ready to complete any required assistance applications quickly.
Rule #6: Prioritize your debts carefully
Based on guidance from creditors and finance professionals, prioritize your bills and debts carefully. Your goal should be to conserve as much cash as possible without skipping essential payments. Always pay for necessities first: food, prescription drugs, and auto insurance.
Debts related to child support and legal judgments have severe consequences and should be prioritized
Use your net worth statement to rank your liabilities from highest to lowest priority. For instance, debts related to child support and legal judgments have severe consequences and should be prioritized. Keeping up with an auto loan is a high priority if you rely on your vehicle for transportation. Federal student loans are in automatic forbearance through September 30, and the relief may get extended through 2020.
Your unsecured debts—medical bills, credit cards, and private student loans—are lower priorities. Never pay these debts ahead of rent, a mortgage, or utilities when you have a cash shortage.
Rule #7: Don’t let collectors force you to make bad decisions
Prioritizing your debts means some may be paid late or not at all. If a debt collector contacts you about a low-priority debt, such as a medical bill or credit card, don’t allow them to persuade you to pay it before your highest priority bills.
Collectors may try various aggressive tactics, such as threatening to sue you or ruin your credit. A lawsuit could take years, and a creditor is more likely to negotiate a settlement with you. Remember that a creditor or collector can’t send you to jail for civil debts.
If you are behind on bills, that fact is likely already reflected on your credit reports. By the time a collector contacts you, the damage is already done, and paying the bill won’t improve your credit in the short-term.
Rule #8: Take advantage of local and federal benefits
If your income and savings have entirely dried up, use these resources to learn more about local and federal benefits.
- FeedingAmerica.org has a map showing local food banks
- Supplemental Nutrition Assistance Program (SNAP) is the federal food program you may qualify for based on where you live, your income, and family size
- MakingHomeAffordable.gov can help you find a housing counselor or see if your mortgage is backed by the federal government and qualifies for forbearance
- Benefits.gov has a questionnaire that helps you discover the benefits you’re eligible for
- Medicaid.gov is the federal health insurance program you may qualify for based on where you live, your income, and family size
- Healthcare.gov is the federal health insurance marketplace where you may find plans with substantial subsidies if you earn too much to qualify for Medicaid
Financial challenges can cause you and your family to experience a flood of emotions, including anger, fear, and embarrassment. As difficult as it might be to put a financial crisis into perspective, it’s critical. No matter what challenge you’re facing, you’re not the first. There are millions of people who are dealing with COVID-related financial hardships.
Face the fact that your recovery could take a while. Do everything in your power to manage your budget wisely by getting organized, seeking ways to earn more, and spending less. Don’t be afraid to ask for help from creditors, seek free advice from professionals, and take advantage of every local and federal benefit possible.
How to Get Your Kid Started With Investing
January 14, 2021
My daughter recently lost $80 in her bedroom. It’s just gone. One theory is that we accidentally donated it to Goodwill, since she had stored it in an old book and we’d been clearing out a lot of junk. But it got me thinking: What would be a better place to keep money she’s not using?
She’s been bringing in some respectable allowance earnings with the chores she’s taken on recently. Plus, she always receives some money for birthdays, and she doesn’t spend much. Maybe an investment account?
While the investing rules are a little different for minors compared to adults, it’s not hard to get your child started investing. Even if they only make a little money, the experience may encourage them to start investing for retirement early in adulthood, which can set them up for life. Here’s how to show your kid the basics of investing.
Determine what kind of account to set up
Children can set up savings, checking, or brokerage accounts using the Uniform Transfers to Minors Act (UTMA) or the Uniform Gifts to Minors Act (UGMA). All they need is an adult (presumably you) to sign on as the account’s custodian. This means you have to approve what your child does with the money until your kid is of age, which is 18 or 21, depending on what state you live in. Because the funds or investments in a UTMA legally belong to your child, once they’re in this account, they can only be spent for your child’s benefit. You can’t deposit $100 in your child’s UTMA account and later decide you want it back or transfer it to another child.
Setting up a UTMA account is much like setting up any other account. You can walk into a bank or credit union and open one for your child by filling out some paperwork and showing your identification, or you can go online to sign up for one with a firm such as Vanguard.
Your child could also set up a UTMA 529 savings plan. The 529 is a college savings vehicle that has tax advantages, but also comes with restrictions on how it can be spent. More on that below.
Aside from a traditional brokerage account, your child could also try a micro-investing account, since they’re likely to be starting with a small amount of money. You can set up a custodial account through Stash or Stockpile — in fact, Stockpile even works with BusyKid, an app that helps families track kids’ chores and pay their allowances digitally.
Besides an investment account, you may also need to open a checking or money market UTMA for your child and link it to the brokerage account, as a way to fund the brokerage account and a place to receive dividends and other proceeds.
Unless they have earned income from working, your kids can’t set up a traditional or Roth individual retirement account. (See also: 9 Essential Personal Finance Skills to Teach Your Kid Before They Move Out)
Figure out what investment vehicles to use
Once their account is set up, kids have access to the same investment products that adults do, such as mutual funds, individual stocks, or exchange-traded funds. Which products they choose depends on their interests, how much money they have to start with, and how actively they wish to invest.
A child who is interested in following one or more companies in the news and making active investment choices may want to buy individual stocks. Look for a brokerage firm with no minimum initial deposit (or a low one) and low trade fees. While this is a concrete and exciting way to start understanding the stock market, make sure that kids understand that for the long haul, many financial advisers recommend investing in funds over individual stocks.
If your child doesn’t have any individual companies in mind, but would like to invest in the market as a whole, a mutual fund such as an S&P 500 index fund is a great way to go. Good ones have low expenses, meaning that your kid gets to keep more of his/her investment. Unfortunately, mutual funds do tend to require minimum investments. For instance, to buy shares in Charles Schwab’s often-recommended S&P 500 index fund, you need to open a Schwab brokerage account with a $1,000 initial deposit. However, there is one way around that: You can also open a Schwab account with a $100 deposit — but you have to deposit an additional $100 each month until the account has a $1,000 balance.
Your child could also buy exchange-traded funds, which work a lot like mutual funds but tend to have lower minimum investments.
Another way to get started with a small initial investment is to use one of the micro-investing apps mentioned above, which split one share of stock or of an ETF and sells the investor a fraction of it. These apps can make getting started very simple for young kids by characterizing investments by category. In exchange for making things this simple for you, these services usually charge a monthly fee; Stash’s is $1 per month.
While your child could also opt to invest in Treasury bonds or certificates of deposit, at today’s low interest rates, this probably wouldn’t be a very exciting way for them to learn about investing.
What about taxes?
Does your child have to pay taxes on their investment gains? Do they have to file their own tax return? The answer to both questions is, "It depends."
If your child’s investment income is less than $1,050, don’t worry about it; you don’t need to report this to the Internal Revenue Service. If the child’s investment income is less than $12,000, the parent can opt to report it on their own tax return, or file a separate return for the child. At more than $12,000, you have to file a tax return for your child.
What rate will your kid pay? Unearned income up to $2,100 will get taxed at between 0 percent and 10 percent, depending on what kind of income it is. After that, your child’s unearned income will be taxed at your rate, no matter if you file separately or together. So don’t imagine that you can save a bundle on taxes by transferring all your investment accounts to your kids — the IRS caught on to that gambit years ago.
If your child chose to put their money in a UTMA 529 plan, they never have to pay federal taxes (and generally not state taxes either) on the earnings, as long as they spend it on qualifying educational expenses, such as tuition and textbooks.
Will investing hurt their chances of getting college aid?
It’s important to note that when it’s time to apply for college financial aid, assets in the child’s name count against them more than assets in the parents’ name. Unless you’re sure your family won’t qualify for financial aid — and outside of the 1 percent, that’s not usually something you can be sure of in advance — encourage your child to choose shorter-term goals for their investment account. They could choose a goal of anything from buying a new Lego set, to a week of sleep-away camp, to their first car.
Again, putting their investments in a 529 plan changes the situation a bit. Even if the child is the account owner, the financial aid officers consider assets in a 529 account a parental asset. This is great, because only about 5 percent of parental assets count against financial aid eligibility, compared to 20 percent of student assets in a non-529 UTMA account.
If your student does invest college savings in their own name, have them spend their own money first before you tap into a 529 plan or any other savings you are holding for their education.
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20 Money-Saving Auto Insurance Discounts
January 14, 2021
If you own a car or truck, you know it can be expensive. Your loan payment, ongoing maintenance, fuel, taxes, and auto insurance can take a big chunk of your budget. According to a 2019 AAA study, the average cost to own and operate a new vehicle was $9,282 per year.
When you consider just auto insurance, the most recent data from the Insurance Information Institute shows that the average cost is $936 per year nationwide. However, where you live significantly affects your rate. New Jersey drivers pay the most, $1,309, and Iowa drivers pay the least, $628 per year.
Many personal attributes get factored into your base car insurance rates that you can't change. They include where you live, if you’re a homeowner, your age, gender, marital status, and credit rating.
Insurance savings are available, but many policyholders don’t know what discounts exist or that they need to ask for them.
However, when it comes to getting auto insurance discounts, you have more control. Insurance savings are available, but many policyholders don’t know what discounts exist or that they need to ask for them.
In this post, we’ll review 20 auto insurance discounts that can easily save you money. What’s available depends on your insurer and the state where you live.
But even if you only qualify for a few insurance discounts, they can add up. Then you can put your savings toward something more rewarding, such as taking a vacation or boosting your emergency fund.
20 Money-Saving Auto Insurance Discounts
See how many of the following discounts you qualify for.
1. Safe Driver Discount
Your driving history plays a significant role in how much you pay for car insurance. It makes sense that auto insurers love safe drivers and are willing to reward them for being claim-free.
If you have a clean record with no moving violations or at-fault accidents over the past three to five years, most insurers typically give you a nice discount.
Potential savings: 10% to 20%.
2. Educated Driver Discount
But what if you don’t have a squeaky-clean driving record? You may be able to redeem yourself by passing an in person or online defensive driving course. Insurers know that boosting your education and skills can make you a better driver.
Potential savings: 5% to 15%.
3. Affiliation Discount
Did you know that belonging to a particular group can qualify you for a car insurance discount? Depending on your insurer, it’s likely that they have hundreds of different partner organizations that allow members to get a break on the cost of car insurance.
They may include alumni associations, education organizations, certain fraternities or sororities, honor organizations, and recreational groups.
Potential savings: 5% to 10%.
4. Occupation Discount
There are also auto insurance discounts if you work in specific industries or occupations, such as being in the military, a teacher, medical professional, or government employee. Also, members of professional associations, such as unions and state bar associations, often qualify for reduced rates.
Potential savings: 5% to 15%.
5. Good Student Discount
An often-overlooked car insurance discount is for students who make good grades. You typically qualify if you’re in high school, college, or graduate school (up to age 26) and have at least a “B” average.
Insurers consider good students less of a risk when they’re behind the wheel. So, parents shouldn’t miss the opportunity to make it more affordable to insure their young drivers.
Potential savings: 10% to 25%.
6. Distant Student Discount
Another way to cut the cost of insurance for students who live away from home, no matter their grades, is to request a distant student discount. It applies if a student lives at least 100 miles away from home and doesn’t have an insured vehicle with them on campus. They’ll be covered when they come home for breaks, but at a reduced rate.
Potential savings: 5% to 25%.
7. Low Mileage Discount
Maybe you’re driving less for a new job or keeping a car in the garage more often. If your driving patterns change, be sure to let your car insurance company know. Vehicles that are on the road less have fewer claims, and that earns you a substantial insurance discount.
Potential savings: 5% to 15%.
8. Usage-Based Discount
Many insurers offer usage-based insurance or UBI, which adjusts your rate based on how you drive. Data may be collected using a device that you keep in your vehicle or that gets reported from a smartphone app.
UBI programs evaluate different driving behaviors such as the time of day you drive, your average speed, how hard you brake and corner, and your mileage. If you’re considered a safe driver, your discount gets applied at renewal.
Potential savings: 5% to 40%.
9. Loyalty Discount
Every auto insurer wants to retain existing customers and give you every reason not to switch. Being loyal to one company for at least a few years often results in substantial savings.
Potential savings: 10% to 25%.
10. Multi-Car Discount
If you have more than one vehicle in your household, insuring all of them with the same company usually gives you a multi-car discount. Insurers offer incentives to make sure they get as much of your business as possible.
Potential savings: 10% to 25%.
11. Bundling Discount
In addition to insuring more than one vehicle, getting different types of coverage with the same insurer is known as bundling or a multi-line discount. Many insurers cover more than just cars. You could get auto and homeowner, renters, or life insurance with the same company and score savings.
Potential savings: 5% to 15%.
12. Paperless Discount
Some insurers offer a discount if they don’t have to mail paper documents, such as your policy description and bills. Merely electing to be a paperless customer can qualify you for a small discount. You can get your information by email or an online account.
Potential savings: 3% to 5%.
13. Full Payment Discount
Instead of making monthly or semi-annual auto insurance payments, paying your entire annual premium upfront may qualify for savings.
Potential savings: 5% to 10%.
14. Automatic Payment Discount
Also, signing up for automatic premium payments using automatic withdrawals from your bank account can help you save a small amount.
Potential savings: 3% to 5%.
15. Online Quote Discount
Some auto insurers offer a discount if you sign up for a policy after getting an online quote. You could shop directly on a carrier’s website or an aggregator site, such as Bankrate.com.
Potential savings: 5% to 10%.
16. Switching Discount
Just like your existing auto insurer wants to keep you, others want to entice you. A switch or transfer discount is a promotional offer that cuts your rate for a time after you sign up with a new carrier.
Potential savings: 5% to 15%.
17. New Car Discount
If you purchase a new vehicle or one that’s less than three years old, many auto insurers offer a discount. Newer cars typically have modern safety features that reduce the likelihood that you’ll make a claim.
Potential savings: 5% to 10%.
18. Anti-Theft Discount
Car insurance companies want to help you prevent car theft, so most offer discounts for having any device, feature, or system that helps keep criminals away from your car. They could be factory-installed or an after-market product that you install.
Examples of systems that may lower your insurance rate include a GPS-based location system, such as OnStar, or a theft recovery system, such as LoJack. VIN etching, which is a permanent engraving of your vehicle’s identification number on the windshield and windows, may also qualify you for a discount.
Potential savings: 5% to 20%.
19. Safety Features Discount
Cars with modern safety features, such as anti-lock brakes, airbags, and rear-view cameras, are less likely to get in an accident and cost an insurer. So be sure to let them know every on-board safety device in your vehicle.
Potential savings: 5% to 30%.
20. Mature Driver Discount
If you’re at least age 55 and pass an in-person or online defensive driving course, you can qualify for a discount. Insurers know that maintaining good driving skills reduces your risk and makes you less likely to file a claim. Most insurers offer a mature driver discount in many states.
Potential savings: 5% to 30%.
Understanding Auto Insurance Discounts
The savings you get from auto insurance discounts are typically capped. For example, an insurer may only allow a total discount of 40% off your base premium, even if you qualify for multiple discounts.
You don't have to wait until your auto insurance policy is up for renewal to compare quotes.
Also, it’s important to remember that not all discounts are applied to your rate automatically. You may have to ask for discounts that an insurer wouldn’t know you qualify for, such as getting a new job or having a driver in your family who qualifies for a good student discount. And not every insurer may offer all of the discounts we’ve covered.
Auto insurance prices vary from company to company, and they can even change from month to month. You don't have to wait until your auto insurance policy is up for renewal to compare quotes. So, if you haven’t reviewed your car insurance lately or it’s been a while since you’ve shopped policies, you may be leaving money on the table.
What Is Gap Insurance, and What Does It Cover?
January 14, 2021
When purchasing or leasing a new car, you have several insurance coverage options. When selecting coverage, you will likely know if you want to have collision coverage or not, but will you know what gap insurance and whether to select that … Continue reading →
The post What Is Gap Insurance, and What Does It Cover? appeared first on SmartAsset Blog.
How to Avoid the Financial Blunders People Make in Their 20s
January 14, 2021
Nobody’s perfect with their money. We all slip up. These are the biggest blunders 20-somethings make â and how they can redeem themselves.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
What Health Insurance Doesnât Cover: Your Guide
January 14, 2021
Insurance of any kind can be confusing, but when it comes to medical insurance, itâs really tricky to tell whatâs covered and what isnât. Whether youâre shopping around for a new plan or recently just got on a new health insurance plan, itâs good to know the ins and outs of your health insurance coverage […]
What Health Insurance Doesnât Cover: Your Guide is a post from Pocket Your Dollars.
