#tallying up the cost to repair this car which would take All my money as is in undrivable condition

[2024skin]

Up late thinking about her (1979 chevy c10)

[nicosroom]

My Money Snapshot

[Inspired by Corporette]

Location: Ohio, small college town

Age: 29

Occupation: PhD candidate (English)/half-time instructor

Income: $16,000 before deductions

Net worth: $588 (I’m crying)

Current Debt: $12,844

Living situation: Renting with a roommate

Money Philosophy:

I grew up in the “working poor” category. My parents are divorced and my father never contributed much financially. Mom made around $21,000 per year at work and she cleaned houses “under the table” to supplement that. Somehow, we never went hungry, what we ate was relatively fresh and healthy, and she managed to put two of us through Catholic schools for a total of 14 years. I know now that mom is still paying some of those loans and credit card debts and that part of her strategy included not contributing more than the 3% that her employer matched in her 401k. Every time I complain about the financial stress I feel at my salary level, I have to remind myself how comparatively unstressful my financial life is.

I’ve always been poor and I always knew that graduate school/academia is not a lucrative career. I tell myself that if I can make things work at this pay grade, then I’m ready for just about anything. My main strategy is to have a budget, stay in the budget, and save every bit that I can.

Monthly budget

$1000-1100 for the necessities each month. Monthly spending on eating out, entertainment, shopping and other categories varies widely. I also won’t lie... dating someone who makes 4x more money than me helps... I’m fairly frugal on all of these fronts: I buy most of my clothes second hand and I tend to shop seasonally. Spikes in spending occur around the winter holidays when I’m buying gifts and when I am doing traveling. And I also have totally weak, impulsive moments - like the $3 soap sales at Bath & Body works, or that time I spent $110 on bras and underwear on a whim. Anyway:

Rent: $272.50/month

Other living expenses: $130-170/month (electric, internet, phone, renter’s insurance - lower in summer, higher in winter)

Transportation: $332/month (gas, insurance, car payment)

Healthcare: $162/month (health+dental insurance, no vision coverage)

Groceries: $120-150/month ($30/week)

Debt Picture

Student loan: $2000

Car loan: $10,488

I’m a career student & my motto for all the years I’ve been in school has been “follow the money.” I went to college on very hefty scholarships and I only had to take out the $2000 loan to cover housing costs during my first year. For the subsequent three years, I was an RA, so I never had to take loans again. I applied to graduate programs based on the research fit, and when I got my offers, money weighed heavily in the decision. I would have loved to live in Boston as a wee 22-year old, but I wasn’t about to take out loans for a year’s worth of tuition and the living expenses. And to get a PhD while living in Minneapolis, my very favorite city in the US? It would have been such a dream, but for the quite steep difference in stipends and the significant disparity in cost of living compared with Ohio. My only regret on this front is that I haven’t started paying back my tiny student loan. I’ve been able to defer it since I’m in graduate school, which was a great idea when I was a master’s student who didn’t know the first thing about budgeting. But if I had just paid $25/month from the start of grad school the balance would be $0 about the same time I graduate from this PhD program this August. Instead, I’ll be scrambling to pay off the whole balance before my 6 month grace period ends. 

The car loan is less than a year old. I finally broke down and bought a new (by which I mean used) car last summer after really pushing it with the car my parents had bought me in high school. Repairing that car put me into credit card debt more than once and I was getting so stressed about it. It was time. I have a very good credit score, so I qualified for a nice loan rate with my credit union, and to get a better rate I got my mom to co-sign my loan. It’s a popular rental fleet model so there were tons of them on the market, but average miles were high - so when I saw one that was two years old with only a years worth of miles on it at $1000 less than the average price for that make, model, and year, I jumped on it. My payments are $231/month on the 5-year plan. Currently, I’m paying that minimum, but I plan to escalate my payments as my income goes up (I’m on the academic job market now, pray for me). I folded this car payment into my existing budget by giving up solo-living and finding a roommate. When I had my own apartment, very spacious with a huge kitchen and tons of windows/natural light, I was paying about $585 for monthly rent. I hate living with people, but I hated the idea of being trapped in this college town without a car even more - one of my other mantras is “you can do anything for a year.” 

A note on credit cards: I love them. I’m one of those responsible people that charges everything and pays the balance like clockwork every month. This is the only way to make sure you’re actually taking advantage of the cash back/reward perks! Currently, I’m using Capital One’s Venture card and stockpiling airline miles for travel (it has a 40,000 mile sign-on bonus). If you’re good for it, I also recommend one card with a great balance transfer program. For me, when I get into an emergency situation, it makes me feel like I have options. It’s been about 4 years since I’ve had to use my balance transfer card to cover costs ($1400 in car repairs, summer 2015), but at my level, I can’t afford to not have back up plans. 

Savings and Investments

$5,517 Cash

$7,861 Roth IRA + employer mandated retirement account

Retirement: The biggest financial mistake I've made in grad school is that I did not opt into the retirement account offered by the university when I started my M.A. in 2012. When they ask me that “what I wish I had known before I went to grad school” question, this is near the top of the list. I did, eventually, open a Roth IRA and slowly I started to build something. This year, when my graduate funding dried up and they made me a “half-time instructor” the retirement account for public school teachers was mandatory and the contributions are high: 14% of every pay check (annoying, yes, but on the flipside, there is an equally high employer match). While I’m contributing to this, I’ve paused my contributions to the IRA. I’ll roll this money over, either into the IRA or into another state/employer retirement fund when I move on from here. 

Personal savings: I strive for a minimum of $100 per month and frequently do a little more, but each month is different and I consider it a win if I break even. Through most of grad school, I’ve taken on “second jobs” to bolster what I can save (and boost my resume). Both jobs have been through the university, so they limit me to five hours a week. When I max them out, this can be an extra $200-250 each month. 

I took up a new savings challenge this academic year to build on my “play money” savings account (a high yield savings account which my bank labels a “goal setter” account). The challenge involves tallying the “total savings” printed on my receipts each month (i.e. when the grocery store is like “you saved $6″ because of sales and coupons). So, At the end of the month, I put that running total into my goal setter account. Sometimes the total savings are like $26, but others its as much as $171. It’s an interesting challenge because it encourages me to do tedious things, like scroll through all the digital coupons on the grocery store app; but at the same time, I know that the higher that number is usually coincides with a lot of shopping which encourages some self-regulation. 

I initially set my goal at $2500 when I opened the goal setter account in 2014. When I had to dip into the account in April 2018 to pay $930 in car repairs, I finally set plans in motion to buy my car. Since I bought used, I only put 10% down on the car (just over $1200). When I sold my old car for $1000, I put that money right back into the account to start saving for new things...

What I’m saving for now:

travel: to celebrate finally finishing this PhD, I’m hoping to pull off a trip to Europe. Later this year, I’m also turning 30 around the same time that one of my regular professional conferences is meeting in Hawaii. If I can do one or both in the next year, that’d be grand. (As I mentioned, I'm saving up airline miles with my credit card program, too!)

a multicooker: think InstantPot...but more expensive because my dreams all revolve around small appliances that match my stand mixer. 

What I do to be frugal... 

I’ve been frugal my whole life, but a couple of major habits I’ve formed include:

Meal planning and home cooking (read my guide to meal prep here). The money part of that means planning what I eat around maximizing the ingredients I have to buy. I plan meals that use the same ingredients so I’m not spending on an entire bunch of celery and then throwing out 75% of it. Routinization also helps, so my grocery lists stay about the same week to week and the bill relatively predictable - for example, I eat avocado egg salad almost every day for lunch. I know, avocados are not cheap, but I also believe in spending on the things that nourish you––literally and “spiritually.” Roxane Gay once said that she never bought avocados or blueberries when she was a “poor grad student.” Once she started making money, she realized she would buy them because she could afford them, but she also threw them out all the time because she didn’t plan her meals right to actually eat them. The point is, buy the foods that you like/feel good about and build habits around them. It’s not wasted money. That said, I won’t pay more than $1.25 for an avocado!

Second hand clothes shopping, especially for my business casual (it’s amazing what people donate to the Goodwill, barely worn!)

[finderskeepersff]

11.

Walking out behind Bryce in the fitting room “is that a better size for him?” the store assistant asked, grabbing his arm so he can stand in front of the long mirror “yes it is, it fits better” crouching down to him “we finna get your haircut and then you going to look just as fly as me, you like this?” Bryce is a very shy kid, he walked into me hiding “I think it will be fine for him” my family decided to go and see family in Idaho, so they been staying there which is a blessing to me, it only leaves me and Josiah. But then that left Bryce with nowhere to go because Celine is a whore, I felt bad and said to Josiah we splitting duties. At the end of the day he’s my nephew and I want him to grow up right, I am over it now. Celine straight up dropped him off and said she is going to Maimi for a week, Josiah answered the door because if I did, I would have dragged her ass but she thinks she can drop this child off when she wants. We have a family wedding coming up soon so I am buying him some clothes “shall we get them off now?” getting up from my position “come” he held my hand, I don’t think this child talks at all “is this your child?” the store assistant asked and I was quick to say “no, hell no. I mean he’s my nephew, he’s very quiet” walking back into the fitting room, I was actually thinking. Knowing Celine, she probably drank and had drugs with this child. I mean he is normal looking but I don’t think he is right in the mind or he hasn’t had guidance or even love, maybe it’s love. He’s going to be two and he doesn’t speak, he says maybe hi at time and some random shit but that is it “that’s a good boy, you can undress yourself” least he can do it.

I bought him a few more things, I am trying to be a better person. Picking Bryce up and placing him on the counter as the lady tallied the total up “that’s all for you nephew” the lady smiled at Bryce “he is so adorable” Bryce smiled and looked away “he must like you, he don’t smile at many people. I think he already knows beautiful women” the store assistant gasped with the biggest smile on her face “erm, thank you?” she didn’t know what to say “no problem” she looked back at the till “erm that is hundred and thirty six dollars and seventy two cents” digging into my pocket “he’s lucky to have you as an uncle” I chuckled “you think? First time bringing him out, I think he cost too much” passing the assistant the cash “he’s a cutie” taking the bags from the counter “you ever hear that saying? A guy with a child is more of a turn on?” I couldn’t help but laugh “you saying having a child with me I can pull women?” grabbing Bryce to get him down “there is one thing though, I don’t need a child to pull any woman. I can do it on my own” I shrugged, she held out my change “see you around, Zoey” her smile grew, she just bit her bottom lip staring at me “I would ask for your number” licking my lips as I walked off “I’m taken beautiful” I winked at her, I may still be fat but I still got it in me.

Pulling Bryce up onto my lap as we sat down just outside the H&M store we went too, looking at the receipt before I placed it in the bag “you happy now?” he rested his head on my shoulder, I am guessing yes then. I wish my mom was here now, I swear when Josiah walked into the home with this child and said we have him for a week, I wanted to kill him. I was like we have the house to ourselves and we can relax, but no “shall we go and get you some toys now or you want food?” I forgot when he ate now, he ate when I did so I am currently hungry “eat” Bryce said “that’s what I am saying boy! You need to speak to me” I am tired as shit actually. Sofia is childish as shit, she ain’t speaking to me. Her form of punishment but yet texts me goodnight, I don’t understand her at all “you know at first I was like that can’t be him and then I look closer, and it is” looking away from Bryce and up at the person speaking to me “are you stalking me?” the first thing that came out from my mouth “not exactly, I came shopping with my brother. He needs some school shoes” so this is Sofia’ brother, he looks like a pain in the ass but I won’t say that. Looking back at Sofia “how is life treating you? I am her work colleague” I lied “you look like a drug dealer” I opened my mouth and then closed it “wow, is that what you teach him? What does a drug dealer look like exactly?” he’s cheeky “my sister works in a office, you got Rolex and big chains and stuff. I’m right Sofia aren’t I?” looking up at Sofia “is he?” I said to her “Leyton, don’t be cheeky” she didn’t agree with him “it’s like fate brings us together even when you are not speaking to me” she’s just stubborn “how you finding it without me?” I smiled at her “fun” I have to annoy her “I don’t have to deal with your snoring, your constant annoyance. It’s great” she put a finger up at me “well I am glad you’re playing daddy day care” she pointed at me “you mean I am being a good human, you think I am a bad person but I’m not” I wish she would stop being like this with me “Sofia, can I go there and get a cookie? I will be back?” her brother said “erm yeah, hurry up” she made herself comfortable and sat next to me.

“How come you have Celine’ son with you?” Sofia asked “because, I’ve been keeping this away from you, but he’s really my child” Sofia hit my arm “I will kill you” my eyes widened “and your brother calls me the drug dealer, when you want to kill me? Just admit you miss and we can go back to the regular schedule, my parents have gone. The house is mine, ok Celine decided to bring him along but if you don’t stop being hard headed you could be with me” Sofia rolled her eyes “what exactly is going to make you change?” I sighed out “we have spoke on this, I have changed some of it for you. You making me feel I am stuck again, I hate feeling like this. I am sorry I am not normal ok, that is what you want. You can stop speaking to me for a month but nothing will change more, if you love me then love me. You don’t have to love what I do but love me, I did choose you. You know what, this is on you. You can decide on what you want to do” moving Bryce off of my lap “I know what I want but you can’t accept what I am, your friends have the perfect life. I don’t” picking up the bags from the floor, I will let her decide.

Cassius is so silly, he thinks I want him perfect. It was never that, I just want him to be safe, I want a future with him. I love him so much, it’s crazy how in love I am with him. He said his parents are gone so it should be only Josiah here, it’s weird because both of his cars are here, he did say his old car was in repair. I thought I would come and see him myself, show him what I want and that is him. We just need to speak on what we both want, I need to probably be fair to him but I do have something for him, well an idea. Locking my car door behind me, it’s a little late and I have been contemplating on not walking in because what if his parents are here, I don’t want them to attack me but the home looks pretty dead so let me test this. Walking up the path, I will actually kill Cassius if his parents are here. I can deal with Josiah, not his sister though but I will tell her to shut up if she tried to disrespect me. Pressing the doorbell, these are the only black family I know of that their doorbell works, I mean most of the time they don’t. I hope he is home, knowing him he is probably asleep “I wonder who is at the door” hearing Josiah say, stepping back a little as he opened the door “oh” he said “is Cassius here?” seeing Celine’ child here “erm, he isn’t. He went out, he did say he would be back though” it’s late already so where is he “erm, you can come in?” this is what I mean about Josiah he is the sweet twin.

Sitting down slowly, this is weird for me. I mean his parents would’ve probably kicked me out “how have you been?” Josiah finally sat with me, he has been hiding away from me “good, I was just feeding Bryce, that is why I was not here” I judged him too early “how come you and your brother are watching him?” Bryce is very shy “we wasn’t supposed too, Celine just popped up. I did tell my mom and she said if we good then leave us to it, he’s a good kid. He chills with us” he’s actually my cousin “that’s good” I hope Cassius isn’t too long “so how long have you been dating Cassius?” I paused not saying a word “who told you I was dating him? I mean we could be friends?” Josiah laughed “Celine came to the home and sang like a bird, my parents know now and then Cassius admitted to it. I didn’t ever agree to how my twin treated you” I swallowed hard “I chose the wrong twin” Josiah laughed “it’s weird how Jordan never got this calm trait from you guys, Jasmine is a little like Jordan though. I know that” hearing the front door open “you ain’t wrong and that must be him” I hope it is “C!?” Bryce actually speaks “yeah, uncle C is here. Go and get him” he ran off “have you ever though of taking him off my cousin? The child would be better off without her, it looks like she has already destroyed him a little” it’s sad “why ain’t you asleep young one?” that is Cassius “Josiah, wasn’t you supposed to feed and put him to sleep ages ago” Cassius walked in with his nephew in hand “I was busy doing other things but Sofia is here” Cassius stared at me “someone got some balls coming here” Cassius put Bryce down “come” he waved me over to him.

Following him up the stairs “where have you been?” I asked, I had to ask “you want the truth?” I sighed out “I was giving money out to the workers” rolling my eyes “right” I want to hit him, in the face too “so you’re the first girl to enter this room, I didn’t bring any girl home either so it’s a first” he opened the bedroom door “it’s a little messy, don’t touch any of the balled up tissues” pulling a face at him “seriously? At your age, that is nasty” he closed the door behind me, and then quickly ran by me and picked something off of the side table. His bedroom is cute actually “what was that you just picked up?” walking closer inside “oh wow, Cassius” I said in shock “uhm yeah, my graduation picture” he looks so cute “you graduated?” I don’t remember him saying that “yeah, I didn’t get accounting randomly. It was something I wanted to do” he has so many pictures “what about this?” I pointed “that was when my mom made me take professional pictures with our dog, she died now but I miss her. I was like eighteen here” he is so sentimental and he doesn’t even notice it “you look like your dad, a lot actually, feature wise. I didn’t expect this from your room actually. And these boys who are they?” I pointed “Myles and Kyle, my best friends. We was in High School. We started our empire in that place” turning around “Oh right, what did you just move though?” he did move something “just something” he shrugged moving back “you like the Brooklyn Nets then? But show me” he laughed “it’s dumb but yeah I do” he is being annoying “shit is just cheesy, like you know. I like things” he makes no sense, he bought the thing he was hiding forward “I just keep it on the side table, you know. I like pictures, I just wake up and then boom” taking the framed picture “Cassius” staring down at the picture of us on our first date “that is so cute” he kissed his teeth “this is why I didn’t want you to see, everything cute with you” he snatched away the photo from me “you’re s sensitive soul Cassius” he really is “here yes, out there no. I ain’t that out there” he placed the picture back.

If there is only men here, who made his bed “you got a maid in this place?” I asked as I sat on his bed “nope” he answered “then who made your bed?” it’s made well “me, I was locked away I had to make my own thing. I learnt, now I just always keep my things clean but I am going to need you to do something” staring at him waiting for him to say it “close your eyes, I just need to do something” tilting my head a little “no, what is it?” he knows I won’t “fine” he turned around, his back towards me. He opened his closet door exposing a safe within there, he unlocked the safe and I am nosey. I moved a little to look in there “I’ve never seen a gun before” Cassius looked behind him and stared at me “you don’t need too” watching him take the gun out from his jacket “you know I am hating this right now” he turned to me, my heart skipped a beat seeing him hold that gun. He took the clip out and walked towards me “what is it like to be this?” I am interested to know him more, looking up at Cassius. My heart is beating so fast right now, just that gun near me “to be like what? You want to know what it feels like to hold a gun? The clip is out, you can’t hurt anyone” I swallowed hard “it’s ok Sofia, it won’t do anything” I held my hand out, I might as well stop being a scary bitch. He placed the gun in my hand “the clip is here” I am actually holding a gun “wait, did you use this too..” I trailed off, Cassius sat next to me on his bed “nah, this is a new one. Don’t worry about it” I was about to say.

This is a weird feeling to hold “how do you feel, to hold a gun?” he asked “there is a different feeling to hold such a thing” I mumbled “power” that is the word, Cassius chuckled at me and kissed my cheek “you asked what is it like to be like this, that keeps me safe. Yes it’s power but that is my protection” nodding my head, looking over at him “when you actually aim this, what do you think? What is the first thing to come into your mind?” I am holding this thing like it’s nothing now “it’s either me or him, that is it. It’s either kill or be killed. When I got beaten, the first thing I thought was. I don’t want to die, I never felt that before. I was touching death, so many times it was like touch and go, my niggas rode for me. I owe them, but I wasn’t expecting it. If I was they would all be gone” this is what I hate to know, he means so much to me “did you think of me?” I had to ask “hell yes, this is why you on my side table. You my baby” my heart right now “some of these niggas are dumb, when they shoot. They panic shoot, which is crazy because they shoot everywhere but the person. When I shoot, it’s precision. Always be calm, panic shooting gets you shot” Cassius placed his clip in his lap, wrapping his arm around my shoulder “I always got use to shooting with one hand but learned to work the gun and always shoot to aim. Hold your gun up” he navigated my arm up “so you ready the gun” he cocked it back for me “then when you ready press the trigger” this is a very weird feeling to feel “now you know how I feel, you don’t ever see those people as people that want good for you, you have to blank that out. The person at the other end of this gun is the person that will kill you” moving the gun back, looking over at Cassius “have you killed more then you are letting on? People don’t just make a name for themselves for nothing” he took the gun from me.

He hasn’t answered me, he continued to put his gun in the safe “would it make a difference? I’ve been handling guns since I was fifteen, I’ve hurt many, that is it” he closed the door “you have been doing this for years and still managed to get a degree?” I am shocked “and I paid it all off too, it’s called hard work Sofia. I did my thing, I had homeboys ride for me, those bad niggas rode for me throughout that. It was something I wanted to do, not every drug dealer is stupid. The stupid ones get caught, I only got fucked over because of my brother but I tend to stay away from the term drug dealer because I don’t do the street walking. I may at times help out like I did. But I stopped that, I mean not all of it. I am trying to play this clever, I can’t be just now coming out to niggas like I am legit and I walk out of the office in a suit like I wouldn’t get shot. Pre-Sofia then maybe yes, I wouldn’t care but I do now. I want to change” nodding my head “you said your car was in repair but it’s outside” Cassius laughed “you don’t miss a thing, I didn’t want to say it to you. I am just trying to clean the money, I am selling the car now. I may be losing some of the money but who cares, if I ever get caught with this money, I have a trail on where it came from” I didn’t ever think he played such a big part of this empire he spoke on but he does, I swallowed hard “did you ever think you would be in love?” Cassius shook his head “what is with the questions, nah. Hell no, I think it’s something still so foreign to me, I am learning. I love learning new things anyways, it’s making me care more about me” that is what I want to hear “you said you want to be a father, you think this is a time you would want them to arrive on? At this moment in time?” Cassius shrugged “I ain’t even going to front, you asking lifestyle questions here, what is it?” he isn’t wrong “I just want to know where your mind is at, I want to know your life. What you do, understand it more. And I do, I wanted to give you a chance, I am glad I did” I want to know more “we can talk more, you want to stay over? My parents ain’t back for about a whole week, they just kind of left” I can actually stay here “Can I? I do have work but I would love to wake up to you, I need to get my clothes though” this is everything and more “come, I will drive you” we can talk so much.

Sofia is either bringing her whole wardrobe or she fallen asleep, she is taking so long. How can it be that hard to bring some clothes along, then again women need their make up too. Maybe it was a bad idea because she has taken half hour in her home, I mean I am happy actually I can get a feel for how she will be when we do live with each other. I didn’t plan on letting Sofia hold the gun, I thought she would have ran off as soon as she saw it but she didn’t. I am guessing the time away and her thinking as made her calm down, but she will bring it up about me leaving. Lifting my head forward, hold up is that Sofia’ mom. What on earth is happening here and Sofia has a whole ass suitcase, what the fuck. What do I do, opening the car door. It’s midnight and these two are being loud, what is this. Do I get involved “open the trunk!” Sofia spat, leaning into my car and pressing the button to open it “you! I know you” seeing the woman walk towards me “you! You are a bad man, you and that family of yours and now you are taking her away from me! Your brother hurt my daughter and now you. She is so blinded by you! I know your kind, your face and your name. You’re a criminal” she has been searching me “Mrs Bundy, Sofia’ mom. I ain’t here to do anything, I think you are doing this on your own. What my brother did was him, I got him locked away and I ain’t nothing like him” Sofia got in front of her mother “Mom, you leave him alone. You be quiet and get inside” her mother glared at me “I know men like him, I bet he even knows your deadbeat dad! Drug dealers and gangbangers are alike, you dare get my daughter pregnant like you did Celine I will kill you myself! She will see the truth” Sofia’ mom pushed her own daughter “don’t fucking come home!” this is a mess, what happened to Sofia being quiet getting her shit.

All I am thinking is that, did her mom mean about her not coming home “are you good?” I asked as I stopped at a red light “fine, my mother is just so scorned by men that she doesn’t understand her behaviour pushes me away” I feel bad as shit “I see, did she really mean about you not coming back? What happened?” I don’t understand what went wrong “I let it slip, she assumes I was being with Mia, I am twenty four having to lie. And she was just talking to me and I just let it slip I said he isn’t about to have make-up so I have to pack everything but it came out so naturally. She then went crazy on my ass, it’s like” Sofia paused “it’s like she is waiting for something bad to happen to me to say I told you so” parents are crazy, driving off slowly “Cassius, you want to move? Move away from this place. I have been thinking and planning, not with you but in my head I have” glancing over at Sofia “you want to move to Atlanta?” I said “how do you know?” she said confused “I remember the things you say, I will say one thing. We can’t just up and leave, I would like to check the place out first. But for now, if your mom has kicked you out I will pay for you to be in an apartment. I ain’t saying no, I am wanting to move anyways. I just want to do it properly, work it out properly” I like to know plans, feeling a kiss to my cheek “I love you so much Cassius” that was sweet.

[weditchthemap]

RTW Budget: Detailed Expense Breakdown for 492 Days Abroad

August 18, 2015 - December 24, 2016

492 Days Abroad

Trip Overview

Sylvie and I traveled through 221 cities in 39 countries over 5 continents.  We called hundreds of places our home and slept in more places than most will ever get to in a lifetime.  We slept in hammocks, in trains, in buses, in cars, on boats, in farmhouses, in teahouses, in hostels, in bed and breakfasts, in tents, on cots in the open dessert, in cheap guest-homes, in 5-star hotels, on couches, on a tile floor, on-top a chicken coop, on the ground next to a friendly German girl's bed in Mainz, in attics, in a rented room from an anti-Semitic in Belgium, et cetera, et cetera...

We each took 7 overnight sleeper trains, 26 overnight buses, and 31 flights.  I read 30 books and had 4 haircuts--although only 1 haircut was from a professional.  The other 3 were from my darling Sylvie.  We ate 144 fast-food ice-cream cones, though most were consumed in our first 4 months while in South America.  We bought dozens of new pieces of clothing and threw away/lost/mailed home a little less than that.  We taught English in Vietnam, helped to rebuild an orphanage in rural Nepal, and worked on a vineyard in Mendoza, Argentina.  We hiked quite a few mountain ranges--the largest being the Andes and the Himalayas.

 Our Trip Route Divided into 4 Distinct Legs:

Leg 1: South America

Leg 2: Europe

Leg 3: Indian Subcontinent

Leg 4: Southeast Asia

View Full Size Travel Map at Travellerspoint

Mishaps

We tried to keep records of all our 'mishaps' but I know we forgot most of them.  At last count I had written down 20 of them.  Here are some of them:

ATM card was eaten by machine in small town of Piura, Peru

Had food and supplies stolen from us by a clever monkey in the Bolivian Amazon

A group of children tried to pickpocket Sylvie in La Paz Market - she picked up and they left empty-handed

Nearly stranded at the Bolivian border

Had a collections (inaccurate) on my account and had to deal with that while traveling

My Barclay Master Card was hacked in RIO and had a new one overnighted to me in Lisbon

Got items confiscated at UAE airport and were 'reported' to authorities

Left Kindle behind in Delhi hostel - was later mailed to me in Jaipur, India

Sylvie and I both broke our phones

Electrical surge broke Macbook Air while in Borneo, had computer repaired by sending to Bangkok

Lost credit card/ID in Serbia

Lost Passport while en route to airport in Krabi - had mailed to me in Chiang Rai following week

Sylvie left Kindle behind in Pyin Oo Lwin, Myanmar - RIP Kindle

Ailments

With the exception of being extremely dehydrated for a day in Delhi I never 'really' got food poisoning or sick.  There were times I felt a bit off and am not sure how sick I would have actually gotten but I just popped a very high dose of azithromycin and was fine in a few hours.  I've been to India twice, every country (less the Philippines) in SE Asia, spent a month in Africa and have never had food poisoning.  I eat uncooked street-food every opportunity I get.  I even ate a raw, still-beating, snake heart while in Vietnam without getting even the slightest form of indigestion.  There were 24 instances of being sick while on the trip (the vast majority of them revolving around dear Sylvie).  Here is a tally:

Sylvie:

TD - 11 times 

Fleas - 2 times (possibly more, she loved petting stray animals)

Common Cold - 1 time

Bed Bugs - 1 time

Blister Rash - 1 time

Chest Rash - 1 time

Altitude Sickness - 2 times (1 time was very bad in Cuzco, but at EBC coca tea helped treat)

Scott:

Dehydrated - 1 time

Bed Bugs - 1 time

Common Cold - 1 time

TD - 2 times (took high dose azithromycin both times and warded off all symptoms in 4 hours)

RTW Budget

Notes/Comments 

Budget includes 2 people for the first 461 days and 1 person for the last 31 days.

When there was any uncertainty/fluctuation in exchange rates or prices I rounded up to give a higher than actual estimate to keep the budget extremely conservative.

Every expense was tracked in this budget, even those that are not related to travel.  These expenses--such as the cost of website hosting, VPNs, etc.--were all captured under "Pre-Trip Expense".

The only expenses I had during my time abroad that are not included in this budget are my student loan payments

Though by American standards our type of travel is considered 'budget' we don't truly fit into that category by ex-USA standards.  We met many travelers spending a fraction of what we did.  We ate out most meals, stayed in hotels with a/c fridges and color TVs, and traveled around much more than most backpackers.  Many budget travelers stayed in hostels and cooked their own food (think pasta and sauce).  However we did take buses, trains, and ate at mostly budget-friendly restaurants or street-side carts.  For budget travelers I would say that you can cut our food, lodging, and transportation costs in half.

Sylvie ate meals more regularly than I did.  I was happy snacking on fruit and buying little things from cheaper street-side stalls throughout the day.  We always ate a nice meal for dinner though.

We are not big drinkers so most RTW travelers can expect to pay more on alcoholic beverages than we did.

We took many 'relatively' expensive trips during our RTW (Everest Base Camp, the 'W Trek', 3-day live-aboard SCUBA diving off Similan Islands, Bolivian Jungle trek, 21-day organized Colombian tour, Home-stays in Sapa, Trekking in Hsipaw, Northern Thai Yoga Retreat,  excursion to Borneo w/ associated national park fees and flights, etc).

We also enjoyed splurges many budget travelers couldn't afford to take (We rented a houseboat for 3 days, Stayed at 5-star hotels, took some high class buses/trains, Rented a car for several days, rented a motorcycle for a couple months, got massages frequently, had clothing made, bought extremely rare beer, took cooking classes, went adventure caving, hired private drivers, had food delivery to our hotel room, went to cinemas, saw theatrical productions, indulged in many cafe cultures, etc.)  These are just some of the things that many budget travelers would not consider worth their money.

We spent 3-4 weeks living with free lodging during our three separate workaways--Many budget travelers do less moving around and more workaways.

I've met single travelers living on less than $1,000 a month during their 12 month RTW trip.

I collected over several thousand dollars in sponsored products.  I had most of the gear already but received newer/better products, thus I would not have needed to purchase any of these items.  For this reason I have decided not to include these items in this budget.

Budget Breakdown: 

I decided to break the budget into 4 sections.

Pre-Trip Costs - this includes gear, vaccines, insurance, memberships, transportation to/from US airports

During Trip Costs (Souvenirs) - this includes gifts/souvenirs, non-trip related purchases (non-essential clothing, cosmetics, etc.)

International Travel Costs - this includes travel between countries (mostly airfare but some busing)

Country Specific Costs - this includes all expenses relating to traveling/living within the specified country

1 - Pre-Trip Costs: The majority of Pre-Trip costs are not specific to this RTW trip.  Vaccines, gear, and electronic equipment can/will be used beyond the scope of the trip.  Vaccines and meds can be obtained while traveling and at a fraction of the cost here in the US.  Likewise, gear can be found on Craigslist or during your trip much cheaper than buying new here in the US.  Additionally, we paid nearly $1,500 for the Japanese Encephalitis vaccine, which I would recommend against.  For these reasons I am discounting this portion of the budget by 50% to get a better representation (we will be using all the gear for our next trip).  Therefore I will be using $2,648 for this portion of the budget

2 - During Trip Costs: These purchases are non-essential and not related to travel and will be ignored when calculating the overall cost of our RTW.

3 - International Travel Costs: This portion of the budget shows how affordably one can travel around the world.  Flights, trains, and buses starting and ending within the same country were excluded in this section.  They can be found in the next section.  We traveled through 39 countries, which is many more than most travelers.  This portion of the budget can likely be reduced by traveling through fewer countries.

4 - Country Specific Costs: Once we arrived in a country any/all expenses we faced were placed in this section under the respective country.   Flights and other modes of transportation starting and ending within the same country are found here.  Phone/internet charges, travel-related medicines, visa fees, tours, etc. can be found in this section.  This section is further divided into 8 categories:

Lodging

Food

Transportation

Activity

Alcohol

Visa

Tours/Tips

Supplies/Misc.

So How Much Did It All Cost?

Putting it All Together

Pre-Trip Costs - $2,648

During Trip Costs (Souvenirs) - $0

International Travel Costs - $4,745

Country Specific Costs - $36,414

Total RTW Trip Cost = $43,807 ($89/day)

for less than $45/person/day we traveled very luxuriously around the world

Budget Deep Dive: An In-depth Analysis

Would you expect anything less than an in-depth analysis from a consultant (who is also an engineer)?  Here we go!!

Costs by Country

Below is a table of all the countries we visited, the duration spent in each location, and the total spent.  For simplicity we lumped countries in Western Europe together, as well as countries in Eastern Europe.  A few notes on a per country basis:

Colombia -  We were on an organized tour for the entire time while here.

Ecuador - We were on an organized tour for some of the time while here.  We mountain-biked volcano, took 12 hours (each) of private Spanish lessons, and took a private tour to Isla del Plata.

Peru - We spent 8 days on organized hiking tours to Machu Picchu & Colca Canyon.

Bolivia - We spent 7 days in the Pampas & Rain Forest & 3 days taking a tour of the Salt Flats.

Chile - Much of our time here was hiking through Patagonia

Argentina - We took expensive long-distance bus rides (38 hours), several internal flights, and several organized trips to various glaciers.  Saved money during our 10-day stay working on Mendoza vineyard.

Brazil - Was not here long enough to offset high costs of visas (~$290)

Casablanca, Portugal, and Spain - Spent 14 of the 17 days with parents.  They paid majority of expenses.

Western Europe - Ate out majority of meals & moved around often.  Spent an average of $45/day on food & transportation.  While lodging cost  us an average of $27/day.  We spent the most here, vs any other country, on alcohol ~ $4.50/day on mostly German and Belgium beer.

Eastern Europe - Used Airbnb more often.  Spent an average of $22/day on lodging, $20/day on food, and $17.50/day on transportation.

UAE - Stayed at filthy dorms in both Dubai and Abu Dhabi that still cost us $25/day (and that's after $80 in Airbnb credit and refunds).  Everything was expensive.  Tried to eat cheap but still spent $25.50/day on food.

Nepal - Did not move around much.  Spent 5 days rebuilding orphanage (paid $10/day).  We trekking to Everest Base Camp (rented gear, paid for airfare, hired porter, etc.).  Click here to see trip notes, budget, and planning for Everest Base Camp trek.  Transportation, food, and supplies are higher than typical because of EBC.

India - Most of our activities involved visiting mosques, temples, and forts.  Taj Mahal was relatively expensive.  We hired a houseboat and a crew of 3 for 3 days in Kerala.  We ate out a lot and not always at budget places.  The food was amazing and we wanted to explore as much as we could.

Indonesia - I received my SCUBA certification here.  We took a private excursion to Goa Jomblang Caves, which was pricey.  We also took expensive cooking lessons & surfing lessons.

Singapore - Very expensive.  spend $28/day on food.  Saved money by spending 2 of our 4 nights couchsurfing.

Malaysia - Spent 1 week in Sabah, Borneo and 8 days in Sarawak, Borneo which required a handful of flights.  Food was amazing in this country so we ate a lot.  Adventure Caving and park fees increased our costs more than what you would expect for Malaysia.

Thailand - Spent a lot on SCBUA diving (see liveaboard trip) and ~$840 on a 4-day yoga retreat.  Parents spent 2 weeks with us, which helped offset cost in this country.  I spent my last 31 days renting only 2 places, which also reduced transportation costs in this country.

Cambodia - Angkor Wat and the Elephant Nature Park in Mondulkiri were our largest expenses.

Vietnam - We slept for free during our workaway.  I wanted to try Dog and Cat meat (as well as eat an entire snake in Snake Village outside of Hanoi), which were relatively expensive.  We traveled to the far north, which required extensive transportation.

Myanmar - We spent more money that usual on activities.  We had a private boat for a tour around Inle Lake. We hired a private driver while in Mandalay.  There was a hefty fee to enter Bagan.  We also paid to enter the oldest Buddhist temple in the world as well as hired a private guide to trek through the small villages near Hsipaw.

Monthly Costs

The first 4 months of travel consisted of many organized and expensive tours/excursions (+ remote travel and gear rental for Patagonia, see below).  From January through March we were in Western and then Eastern Europe.  During April we visited Everest Base Camp, which cost us ~$1,400 for just under 2 weeks.  For the remainder of the trip, which we spent in India and SE Asia, we averaged $1,800/month.  The month of August was relatively expensive due to our trip to Borneo, which required 4 flights each plus park/activity fees.  During my last month, which I spent alone, I did not move around much, and took very few excursions, which is why I spent so little.

Patagonia Budget

During November and December of 2015 we spend 24 days in Patagonia.  We spend a total of $2,645, which is an average of $110/day.  This includes all tours, supplies, and transportation (many long-distance buses and 3 flights each).  For this calculation I took Santiago, Chile as our starting point and Buenos Aires, Argentina as our ending point.

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Cumulative Total Spend

Below I re-posted the 4 sections I described above, this time including every dollar spent (even the non-trip related expenses)

Pre-Trip Costs $5,295 | During Trip Costs (Souvenirs) $4,708 | International Travel Costs $4,745 | Country Specific Costs $36,414

The country specific charges were the only expenses that were routine, normal, and able to be extrapolated.  For this reason I held the other 3 segments flat and charted the cumulative amount for country-specific costs (see chart below).  This allowed me to trend out/predict--using the slope--the rate of our spending throughout our travels.

You'll notice that the first portion of the chart shows a steep slope, which is due to our 21-day organized tour through Colombia.  The last month flattens out as I slowed down my pace of travel.

Total Daily Spend and Cumulative Running Daily Average

Below is a chart with quite a bunch going on--though I'll walk you through it.  The solid green line represents the money that we spent each day.  The peaks show expensive activities/tours, visa fees, and other various splurges whereas the valleys are representative of days we  spent very little.  The dashed green line is a 4-week running daily average,  which shows the average of the preceding 28 days.  This line is helpful as it averages out the expensive and in-expensive days to yield a more stable line.  Both of these green lines use the axis on the left.

The next two lines use the axis on the right of the chart. The solid red line represents the average daily cost of travel.  Unlike the dashed green line the red line is a running cumulative average, which means all prior days are included.  Our cumulative daily average starts relatively high and decreases with time due to our initial 3-week organized tour in Colombia as well as many of our SA excursions, which were all quite expensive.  However you see that our cumulative running average steadily decreases with time as you would expect since we were spending ~$60 once we left Western Europe.

The Dashed orange line shows the average daily cost of travel by month.

Comparing Daily Costs of Select Countries with Overall Average

The budget I built allowed me to select, from a drop-down menu, the average daily expenses by category of 3 countries that I wished to compare.  I also graphed the overall daily average using info from all countries.  In the example provided below I selected Western Europe, Vietnam, and Myanmar.  Along the left-hand side of the chart is a color-coded key indicating various categories.

In this example you can see that Lodging was our biggest expense in Western Europe while food was our largest expense in both Vietnam and Myanmar.  Food and lodging alone cost us almost $50/day in Western Europe.  Unlike Europe, Vietnam and Myanmar both required visas.

Budget Summary Page

Here is a the summary page for the budget I built.  Please help yourself and download the budget tracker--I only ask for a small donation.

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[andrewdburton]

My plan for purchasing a new car

It's funny. Fifteen years ago, daily personal finance was a chore for me. I didn't understand how to go day to day making smart choices that were aligned with my values. I wasn't even sure what my values were!

Today, things are much easier. Sure, there are challenges. Sometimes I make poor choices. But mostly, what I spend aligns with what I want out of life. (With the caveat, of course, that who I am and what I want shifts over time.)

I'm glad I've developed good habits. Right now, it's keeping me from making a rash decision. For most of 2019, Kim and I have both been fighting the new-car itch. The old J.D. would have succumbed by now. This year's model still does dumb things like spending hours building custom cars on the Mini website, but so far I'm not scratching that new-car itch.

Instead, I've come up with a plan, a path to a car purchase. And Kim has come up with a plan of her own too.

My Plan for Purchasing a New Car

“Look at this,” I told Kim a couple of weeks ago. I carried my laptop over to show her my latest Mini design: a super-powered orange convertible that makes no sense for our lives.

Kim shook her head. “You've got to stop going to the Mini website,” she said. “And you especially have to stop using that build-your-own-car tool. That's dangerous.” She's right.

Earlier this week, as Tally and I strolled through the hills and picked blackberries, I did some serious thinking about if/when I should get a new car. I think I've gained some clarity.

Sure, if I cashed out some of my investments, I could justify making this purchase today. But, as I learned last year, this sort of action carries a huge tax consequence. If I sold investments to buy the car, I'd effectively be paying a 15% premium to make the purchase. I'm not willing to do this.

Plus, it's hard for me to rationalize paying so much for a new car. It's crazy how expensive vehicles are these days. (Do I sound like an old man yet?)

Speaking of being an old man: The one thing that even allows me to consider a new new car is that I'm getting older. I'm fifty. It's highly probable that if I purchased a new vehicle, it'd be the last new-vehicle purchase of my life. (I tend to keep my cars a long time. I can see that at 67 or 70, I'd buy another used car because a new Mini would last me until then.)

While the dog sniffed the roadside for rabbits, I formulated an actual plan for buying a new car. I decided that there are three conditions that would lead me to make this purchase. From least likely to most likely, those conditions are:

Interest rates on auto loans drop low enough for me to justify making payments. As I said, I don't want to cash out my investments to buy a car. My monthly income has reached a level where I could conceivably use part of it to pay for a car, but I don't want to pay a lot of interest if I do. Right now, the U.S. national average for a 60-month loan is 4.21%. That's too high. 0.0% would be low enough, obviously. But at what level would I be willing to take out a loan? I'm not sure. I think 2% may be too high, but 1% is okay.

My current Mini Cooper dies. My car has had a couple of major repairs since 2016, but mostly it runs fine. There's no rush to replace it. But if it were totaled in an accident (heaven forbid!) or if something else major were to go wrong, well then I'd consider moving on to a new car.

I save enough to pay cash for all (or most) of a new vehicle. GRS is starting to make more money. Not a lot — not like in the olden days — but some. I plan to set this aside in a car fund. Meanwhile, whenever I get lump sums, I'll stick that money in the car fund too. (I'm negotiating a project that might give me roughly $15,000 — if it ever happens.)

If any one of these three comes to fruition, I'll do pull the trigger. I'll buy a new car. (Unless, of course, I manage to shake this new-car itch for good. But that's unlikely.) In the meantime, I'll make do with the two vehicles I already own: my 2004 Mini Cooper and my 1993 Toyota truck. I like them both and they run well. They're good enough, you know?

If I could could MINI to sponsor Get Rich Slowly, I could make a fortune, couldn't I? I give them enough free advertising as it is…

Kim's Plan for Purchasing a New Car

Meanwhile, Kim is fighting a similar battle. As much as she cautions me to quit making mock-ups of my dream car, I often walk into the living room to find that she's browsing Craigslist or the Toyota site, looking wistfully at RAV4s.

Last weekend, we spent Sunday evening in downtown Portland for dinner and a Timbers game. As we walked around, she pointed out various compact SUVs. “That one's cute,” she said, pointing at a Subaru of some sort. “I like that color. What model is that? Do you think that's a 2017?”

Between the two of us, we agree that we should have one practical vehicle and one fun vehicle. Our definitions of “practical” and “fun” aren't exactly the same — I'd never buy an SUV, and she wouldn't buy another Mini — but they're close enough. Kim has decided that she's the one who'll pursue practical. For her, that means a compact SUV.

After I told her about my plan for a new purchase, I asked if she had a plan.

“Well, I'm further along in the process than you are,” she said. “You don't have anything saved for a car. I do. I have $15,000. And if I can sell that stupid motorcycle, I should have another $3500. Once I have $20,000 in my Ally account, I'll buy a car.” (Kim loves her Ally savings account. I'm not kidding. She's like a walking, talking ad for Ally — just like I'm an ad for Mini. It's hilarious.)

“You're close,” I said.

“I know,” she said. “That's why I've been looking at cars. I want to find out what's available and how much things cost. Yesterday, I called three local dealerships to ask when the 2019 models will go on close-out. They said they'd call me back in a few months. I hope I have enough saved by then.”

So, Kim's plan is simple: Once she has $20,000 saved, she'll buy a compact SUV. If she can afford a new one and can find one she likes, she'll buy it. Else, she'll buy a recent used model.

In addition, she prefers:

A hybrid or electric vehicle.

The ability to tow a trailer (although we don't own one).

The ability to carry two kayaks (which we do own but don't use because we have no way to get them to the river).

Low road noise.

The ability to listen to podcasts.

Good visibility all the way around.

I think she's going to be surprised when it comes time to buy. I think any modern SUV is going to satisfy her list of requirements. And based on her progress, I'm guessing that sometime this autum or winter, we'll be visting car dealerships to test-drive cars.

Second Thoughts

I know this is the second (third?) time I've written about this same subject in six months. That's because our car situation is taking up a lot of our brainwidth lately. It'll continue to do so until we have some sort of resolution.

I have no doubt that by this time next year, either Kim or I — or both of us — will own a new car. But I'm pleased that we've both resisted the urge to rush out and make a purchase before we're ready. We're taking the time to research what we want (well, Kim is, I guess — I'm just building custom Minis), and we've both formulated plans to save for the purchase.

In the meantime, I should thank all of the GRS readers who have left comments (or sent me email) with tips for getting better deals. (My favorite? Find a part of the U.S. where my chosen car sells poorly. Buy the car there for less, then drive it back to Portland.)

There's a little voice inside my head that says, “J.D., you shouldn't even buy a new car. You don't value cars enough to justify a new one. Just keep buying used vehicles. Look how much you love your 1993 pickup. It only cost $1900!”

That little voice has a valid point. Plus, I don't drive much. I drive maybe three times per week for a total of sixty miles. I make several longer trips each year, though. I'd guess my average annual driving is around 3000 miles.

Wait! I can figure this out! We've been back from our RV trip for just over three years. I know what my end-of-trip mileage was on the Mini. Let me go see what the current mileage is…

In the 1114 days since getting home, I've driven my Mini 14,601 miles. That's an average of 13.1 miles per day (or 92 miles per week), which works out to 393 miles per month (or 4718 miles per year).

Does it even make sense to buy a new car if I'm only going to drive it 5000 miles per year? I don't know. I suspect not. That's why the rational J.D. says, “Buy used.” Or maybe I could do what my buddy Rob Farrington does: Give up car ownership altogether and just use ridesharing.

p.s. Just after publishing this, I read a great article at A Wealth of Common Sense: The Thing That's Probably Blowing a Hole in Your Budget. Ben Carlson notes that the three largest debts in most people's lives are a mortgage, college loans, and car loans. The first two can be rationalized, even for folks who are struggling financially. A new car loan, on the other hand, is tougher to argue. If you're in good financial shape, fine. But if you're not, you shouldn't be borrowing $50,000 to buy a new truck. (See also: Why your luxury car is unlikely to materially boost your happiness.)

The post My plan for purchasing a new car appeared first on Get Rich Slowly.

from Finance https://www.getrichslowly.org/new-car-plan/ via http://www.rssmix.com/

[citizentruth-blog]

Human Toll Grows As The Government Shutdown Continues

"I am asking for assistance to keep a roof over my family’s head. The government shutdown is leaving us unable to pay for all of our bills and rent." "Senate Republicans blocked a stopgap measure to end the partial shutdown on Thursday, the second of two failed efforts to end the longest government shutdown in U.S. history. Senators voted 52-44 on the legislation, falling short of the 60 votes needed to defeat a filibuster," The Hill reported after votes were cast in the United States Senate. The vote came after the White House-backed measure, which included the $5.7 billion for the initial stages of border fencing received less support, failing with a 50-47 tally. The two competing amendments can be read between S327-474 and S474-482 "It would have allowed Deferred Action for Childhood Arrivals recipients and some temporary protected status holders to apply for a three-year extension of some legal protections, but included new restrictions on asylum seekers," The Hill continued. Of note, Donald Trump's administration is responsible for DACA recipients no longer having protected status. While President Trump continues to push for $5.7 billion for a fencing project estimated to cost between $12 - $70 billion, his approval rating continue to drop and federal workers are beginning to feel the strain of going without pay.

Deepak and GoFundMe Team Up

Deepak Chopra and GoFundMe recently teamed together to create a fund to help federal workers affected by the shutdown, "The money raised on this GoFundMe will be distributed to nonprofit organizations across the country that are offering general relief to government workers, including but not limited to, food, counseling, and housing support," reads the beginning of the Government Shutdown Direct Relief Fund which had already raised $421,642 at the writing of this article. "We want to provide a place for people to take action and help someone in need, because, together, we have power to make a difference and provide critical short-term relief. The over 800,000 federal workers furloughed or working without pay don’t deserve this hardship, but we have the opportunity to take action and deliver a message of hope and solidarity," the posting continued encapsulating the struggle many are currently going through.

Federal Workers In Need Of A Helping Hand

The individual stories of federal workers throughout GoFundMe further tell the story of the human toll the shutdown is having on citizens of the United States. The Atlanta Public Schools (APS) share the story of workers in the city affected by the shutdown: We need your help and resources for spouses, domestic partners, and household members of Atlanta Public Schools Employees Impacted by the Federal Government Shutdown. Several hundred Atlanta Public Schools (APS) Employee households are estimated to be impacted by the federal government shutdown and are struggling without their paychecks. APS and the APS Foundation want to help! Please donate to our Go Fund Me to help them during this difficult time. We are grateful for your support!   Angela Kelley of Milwaukee, Wisconsin shares her story: I am a furloughed employee, veteran and single parent raising my 3 year old granddaughter. We live paycheck to paycheck. I have bills, car payment, insurance and rent that are currently due. I have been trying driving Uber to help but I am finding it's difficult due to a knee injury to drive for long periods of time. Being a single parent, I’m in panic mode right now. If you’d like to help, any donations are appreciated.   Jessica Appel writes about the struggle her family is currently enduring: I am asking for assistance to keep a roof over my family’s head. The government shutdown is leaving us unable to pay for all of our bills and rent. I work for an agency that is not getting any pay, not even from the holidays. My boyfriend works in DC where the effects of the shutdown are hurting business and money substantially. We have a two year old son to take care of and it’s extemely scary not knowing if we’ll be able to afford food or even diapers for him. Even with my boyfriend picking up extra shifts we cannot afford our apartment and bills without my usual income to help. My car is in need of repair and currently not working. I can not afford to make those repairs due to not receiving any income at this time. We also have the cost of daycare, taking him out would still cost us two weeks advance notice and the possibility of losing his place to another child and not having the care for him when the government reopens. I’m asking for any assistance to help us get through our bills and rent for this month and next, until we can get back on our feet. Please feel free to share! Anything helps, thank you!   Laura Johnson Clark details the struggle her family is facing: Prayers needed for my sweet girl..Kell is ok but has a serious injury which resulted in two ambulance trips, two hospital stays and a partial amputation of one of her fingers. She already had a broken foot from cheering 10 days ago, and now this. We are devastated to say the least. To top it off my husband who works for the USDOJ has not been paid since Dec 22nd because of the Government shutdown. We are stressed now more than we have ever been and are reaching out for huge prayers and possible donations to help with the medical costs which have already started with the broken foot. Yes there is medical insurance, but the beginning of the year resets all deductibles. The estimated costs for her hand after insurance are approximately 5K. Normally this would be an anticipated expense, but with dwindling savings to cover mortgage and all other living expenses it is something that is a tremendous worry now since there is no anticipated end to the shutdown. At first we thought it would be over before anyone missed a paycheck, but it just keeps going. Anything helps at this point, including prayers and well wishes. Thank you so much to all of you that have donated to this point, it is so very humbling. We love you all.   Alecia Lane, a single mother of two shares her shutdown story: I'm a single mom with 2 boys (ages 12 and 8). We have been impacted by the government shutdown, I thought I was prepared but I wasn't prepared for it last this long especially so soon after Christmas.  It has taken me days to ask for help through GoFundMe.  I haven't struggled like this since I was growing up.  My kids don't know the kind of life I had cause I never wanted them to grow up the way I did.  I've never wanted to tell my kids we can't do this or eat this because I don't have the money.  This shutdown became really real when we missed my first paycheck and we are about to miss the next one.  I am retired Navy and blessed to at least get a retirement check , but I still have bills to cover. I  am normally the one that helps people out, I have given my last to family and friends.  I have opened my home to people in need.  I am hoping someone can do the same for my family. I like to consider myself a strong individual but truth is this shutdown has broke me down. Any assistance that my family and I can get will be much appreciated.  Also any amount over my goal I will pay it forward and help another furlough employee(s).  Thank you in advance for the acts of kindness.   Kyla Daniels tells her story of working without pay during the shutdown: The government shutdown is putting a real strain on my family. Right now I'm forced to work without pay. I wasn't worried about the government shutdown at first, it happened before but being on day 31 makes me nervous for me and family. I'm not getting paid, yet I still get up every morning and burn gas to go to work; I'm paying to go to work... That is not what I signed up for.  A check will come eventually but until then I still have to provide shelter, food, and a substantial way of life for my family . This is not something I ask lightly. There are many others in the same situation I'm in. Any help would be greatly appreciated. Brad Williams explains his situation as a government contractor: My story has been featured on CNN. I hadn't set up this campaign yet at that point. My name is Brad Williams. I'm a married father of two teenagers in Hillsborough, NC, and I'm an IT contractor with the federal government who's been impacted by the ongoing government shutdown. I have only worked two days in total since the shutdown began. Unlike federal employees, contractors will not receive any back pay once the shutdown finally ends; we're at the mercy of our contracting company, and most of us - myself included - simply aren't paid if we don't work. We're an average, everyday middle-class family, and losing income like this, through no fault of our own, has the potential to be catastrophic. We can cut back or eliminate discretionary spending, but our mortgage, car payment, and utility bills are non-negotiable. Additionally, I have a $615 bill for my vehicle registration coming due, and my vehicle needs new tires. I've had to put off my daughter getting braces because of the uncertainty of my health insurance situation as well as simply not having the money to start her treatment. My son is already in the midst of treatment, so we're playing that one by ear; fortunately, we paid for a significant portion of his treatment up-front. I need to fill the financial hole left by Washington's inability to function. I'm looking for another job, but that doesn't happen overnight. Daniel Guerra, a recent graduate of Air Traffic Control Academy tells how the shutdown has disrupted his life: I am an air traffic controller currently working without pay.  I graduated from ATC Academy in September and was assigned to the control tower in St. Thomas, Virgin Islands.   I purchased a Jeep the following month and within the same month it had proven unreliable.  I spent two months on a rental while the Jeep was being worked on but, the issue was not resolved.  Finally, I decided it would be best to ship a vehicle out from back home, another major expense.  Early December I planned a trip for the end of January to go to Florida, just to get off of the island for a few days.  Due to the shutdown, I had to cancel on the trip.  Both Spirit Airlines and JetBlue could not refund me for the tickets. Managing finances for this new career move has been stressful enough as it is, especially on Academy Graduate pay.  The cost of living on the island is quite high and bills are beginning to stack against me.  It is now nearing the second pay period during the shutdown that I will have worked 40hrs and not receive compensation. Any and all help will be greatly appreciated.   If you have any questions for me, please feel free to ask! These and hundreds of thousands of others are suffering through similar hardship as the shutdown draws closer to its 40th day.   Read the full article

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How to beat 8 Sources of monetary Troubles & Complications

Monetary complications and worries happen to Anyone at some time, as well as the anxiety and worry will get for you. Even so, recognizing that there is nearly always a means out will help you not really feel so depressed. You may be able to locate the way out oneself, or else you might have someone else's standpoint to assist you uncover an answer. Down below we’ll teach you how to overcome money difficulties and difficulties and simplicity your anxiety. But, 1 sizing won't in shape all. In the event your problem is beyond the overall support supplied in this article, we’ll also let you are aware of who you'll be able to head over to for more in-depth assistance.

-> Treinamento Negócio Mobile

1. Detect the Underlying Challenge That is Resulting in the Troubles

The initial step to overcoming financial challenges is to recognize the underlying situation that’s producing the economical challenges. Monetary difficulties are generally a symptom of A much bigger difficulty. To come up with alternatives that operate in the long run, make time to detect the true supply of your financial difficulties. Below are a few common issues to think about:

Your challenge might not be detailed over or it might be additional intricate. Nonetheless, the idea of determining a certain challenge is vital mainly because it is much more very likely to bring about an enduring solution. Just like having a leaky faucet; putting a bucket under is short-term. Deal with the tap plus the leak will end. Deal with fixing the condition that’s causing your cash problems, as an alternative to dwelling on your own stress.

two. Make a Spending plan - Expend Money in a method That assists Resolve the trouble

One of the better weapons for combating financial problems is a price range. A spending plan is often a regular monthly paying program for your cash. Developing a finances is like turning the lights on to locate your way close to a darkish space. You now not really need to wander at the hours of darkness; banging your shins, tripping around the home furniture, and stepping around the Pet dog. Rather, Along with the lights on, you may see what’s taking place and prevent complications ahead of they come about. A finances is effective A great deal the identical way; it guides your spending decisions so you're paying money on what's truly vital that you you. In such a case, you will expend your cash in a way that can help address your financial issue.-> Treinamento Negócio Mobile

Click here to learn more about creating a budget, or try out our budget calculator that guides you through the budgeting process, details out prevalent difficulties, and gives strategies to enhance your funds.

Monitor Your Fees to construct a Spending plan That actually works

When you build your budget, it’s crucial that your expenses aren’t just guesses – they should mirror fact. You might want to ​track your expenses for at least a handful of months (per month is best) to objectively see where you are spending your cash and just how much you’re paying out. Even though chances are you'll Assume you know wherever your hard earned money goes, when most people tally up all their purchases for per month, they tend to be really amazed to note that their paying out doesn’t constantly match up with the things they considered their priorities were being.

Once you’re assured the figures in the spending plan are realistic, it is possible to examine your spending budget critically and seek for places exactly where It can save you money. You’ll wish to talk to yourself such things as: Do I must try to eat out this Significantly? Do I want to invest on enjoyment or hobbies this month? Could I pack a lunch for operate as opposed to invest in one?” Asking on your own these thoughts doesn’t suggest you’re low-cost or limited by your funds. It means that you’ve got bigger matters to accomplish or be concerned about, factors that may be solved by earning some smaller adjustments.

-> Treinamento Negócio Mobile

3. Establish Monetary Priorities to Information Your Expending Alternatives

To overcome economic issues and resolve your complications forever, you need to determine what your priorities are. Some could possibly be obvious-Slash economical priorities, e.g. to pay off your bank cards. Others could possibly be lifestyle-aims, determined by your values, e.g. preserve up for home repairs making sure that your family has a good destination to phone property.Setting distinct priorities on your own can make it easier to make difficult economical choices. Turning priorities (=what’s crucial that you you) into actionable and achievable goals (=Whatever you do with your hard earned money, aka investing options) will let you clear up your money troubles and obtain back on the right track. Your 1st target might be to produce a price range to

get a specific problem under control

. For example, 1 of your respective short term objectives may be to cut back your bills and pay off your smallest charge card harmony. A medium expression objective may be to pay back your charge card financial debt.

4. Detect Compact Techniques You Usually takes to deal with the condition & Accomplish Your Objectives

The answer to monetary problems is often to cut back charges, maximize revenue, or do some mixture of each. This may not be a thing you should do, and you simply’re not alone. The majority of people don’t want to make modifications to their Life-style, but confronted with the selection of ongoing revenue troubles, or earning quite a few little changes to simplicity up on the money strain - many people are match to test. Large modifications are generally Significantly more difficult than little variations so to perform your plans, recognize compact actions you can take to realize them. If you keep functioning into dollars troubles simply because you’re $fifty short each month, then maybe one of one's initially temporary aims might be to pay back a small credit card stability that requires a $fifty minimum amount payment each and every month.

Look here to get ideas of where find some extra money each month, get the card paid out off, then permanently have $50 extra to implement with your budget each month. Nonetheless, if by the point you achieve this objective you’ve acquired to have by without having this $fifty, then use it to accelerate the payment of Yet another financial debt each and every month, and obtain your entire debts compensated off a lot more quickly.-> Treinamento Negócio Mobile

There is definitely a name for this, it really is called the “snowball result” - maintaining least payments on all debts but putting all more money to 1 personal debt for getting it paid off quicker. Once that 1 personal debt is paid out off, you place all the more money toward doing away with another financial debt. It’s a person effective means of paying out debts off quicker.Look for Belongings you Can perform, Even Temporarily, to Help your Predicament

Listed here are more Strategies or ways you are able to look at using to help your financial scenario and alleviate complications:

When you look by your spending plan, request oneself: Do I want this or do I would like it? Will spending this revenue get me nearer to my economic goals or even further away? Can I live devoid of it? Learn more about separating needs from wants.

Do you use bank cards for impulse buys? This tends to contribute to some cycle of ongoing monetary issue and add as much as 50% to everything you purchase. Learn how to reduce or change impulsive spending habits.

Ask yourself if you can downsize everything in your budget or switch to the inexpensive alternative. If auto fees are straining your funds, can you downsize your car, do away with just one motor vehicle (the common individual spends more than $nine,000 annually to have and run a vehicle), just take transit (80% much less expensive than owning a vehicle), or automobile pool? In the event your rent, home finance loan, or house upkeep is bleeding you dry, are you able to downsize to something much more reasonably priced, rent out your basement, rent a home in your house, lease out the space for storing in your garage, or can you take within a scholar for many more earnings?

If personal debt is causing you financial challenges, here are a lot of ways to reduce your debt or here are a dozen of the most effective ways to get out of debt.

Do you may have any assets or toys you may promote to repay credit card debt?

Can you take on a side work or create another supply of income with a little something you know the way to try and do effectively?

Glimpse outside the house the box, talk to on your own tricky queries, invite a trusted Close friend to take a look at your funds and make suggestions, or sit down with a Credit Counsellor and get their suggestions.

Study practical possibilities which will transfer you in the direction of your objectives. A consolidation loan, speaking with a Credit Counsellor, a Debt Management Program, or Various other possibility may be a chance.

When performing any of such is often an unappealing believed, don’t just dismiss them simply because they’ll move you out of the ease and comfort zone. Maintain serious about them and provide them with some thing to consider. Come back to those Tips every so often to check out If you're able to think of a special approach on decreasing your charges or escalating your profits That may just work for you. Don't forget, you’re wanting to get through a tricky a time; you don’t require To accomplish this forever, only to get back again on track. In case you’re actually battling, an experienced Credit Counsellor can be a great, free source of suggestions.

5. Acquire Your Plan to Overcome Money Issues for Good

When you finally’ve come up with some Thoughts for a way to start tackling your money issues and troubles, it is possible to put alongside one another a realistic prepare to perform your ambitions. Some plans could have a timeline of some months; Some others will require an extended timeline, like 24 - 36 months. Produce your aims down, but in addition publish down in which you’re at now in relation to each target. As an example, if a person of your aims would be to pay back a $4,000 debt, Ensure that you write down the current debt harmony and your long run goal of paying this down to $0. You’ll want to include in your system the sum of money you’re likely to spend on this financial debt every month so that you can pay back it off within just your desired time period. For additional help on setting goals, have a look at this. Allow me to share also some tips on setting financial goals with your spouse.

Should you’re actually emotion confused and stressed by your problem, You can even reach out to a non-profit credit counselling agency for help. They may have skillfully skilled Credit & Credit card debt Counsellors who can critique your problem with you, help you set alongside one another a practical price range, and make it easier to think of a strategy to resolve your existing problems and get your funds again on course. Their aid is usually no cost and is always private.

6. Review How Factors are Heading

The last move takes area after you are a number of months into working on your system. Each at the time-in-a-although, consider a few minutes to critique how items are heading. Is your system Performing? Are you currently earning progress towards your aims? Otherwise, you’ll must choose a more in-depth appear to determine why not and alter your approach. Your prepare needs to be practical, or it’s not intending to function. It should also incorporate some stuff you weren’t doing prior to deciding to place the prepare in position.

If you keep undertaking Anything you ended up executing right before, Then you definately’ll proceed to obtain the same outcome as in advance of – difficulties. You’ve bought to carry out a little something different to have a special result.

As you comply with your system and see enhancements as part of your situation, be open to the possibility of wonderful-tuning the program. The moment you start earning some progress, you may uncover you’re undertaking better than you believed, or it's possible you'll think of some new insights. Bettering your approach so that you complete your objectives much more swiftly is sweet so long as your spending plan can manage the alterations and everybody who depends on your own budget is okay With all the a lot more intense tactic.

Avoiding Potential Fiscal Challenges

Sudden monetary problems are bound to crop up in the future - actually, analysis exhibits that 6 in 10 Canadians will experience major life events that will challenge their prior financial plans. The important thing to tackling these troubles should be to be adaptable. Assessment your funds often and make necessary variations. Build up savings so that you can handle unanticipated expenses without the need of likely into personal debt and putting on your own inside of a difficult situation.

Overcoming financial complications and complications isn’t quick, but by placing some crystal clear priorities yourself, pinpointing approaches to obtain these targets, and persevering with the strategy, you could get over the difficulties and concurrently, put an stop into the monetary anxiety.

[carpediempagesite]

35 Money Questions You Need to Know Before 35

By the time you’ve reached your 30s, you’ve probably heard dozens of financial acronyms and terms thrown around—from APRs to IRAs, expense ratios to exchange-traded funds. Yet while the lingo may sound familiar, you might not have a really clear understanding of what the words actually mean or how they apply to your finances. And that can be problematic when you’re trying to make the best decisions with your money.

So we’ve gathered, and answered, 35 questions on a range of financial topics that you’ll want to know by the time you’ve established your career and started building some wealth.

While we’ve started with the basics, we also include more sophisticated terms and topics. Master these, and you can not only sound smart about money, but you’ll be able to make smarter decisions with yours, too.

Basics

1. What’s your net worth?

Your true worth is unquantifiable, my friend. But financially speaking, your net worth equals your assets—cash, property (like your home, car and furniture), your checking and savings account balances and any investments—minus your liabilities, which are your debts and other financial obligations.

To calculate the net worth of your home, for example, you’d take an estimate of its current market value. (You can look at what similar homes in the neighborhood have sold for recently or have a real estate agent make an appraisal.) Next, subtract how much you still owe on your mortgage. If an agent says she could sell your home for about $215,000 and you owe about $110,000 on your mortgage, for example, that’d be about $105,000. The asset value minus your liability (or what you owe on it) equals the net worth.

Why is knowing your total net worth important? It gives you a true financial picture of how you’re doing, and highlights where you could make improvements.

2. What should you include in a budget?

First, add up your essential expenses, such as your mortgage or rent, utility bills, cell phone, food and child care. Then tally your financial obligations, like credit card, auto or student debt payments and savings goals (for emergencies, retirement and anything else you’re working toward).

Then add in “discretionary” expenses, or those that are not absolutely essential but are important to you. Don’t forget to factor in fun—entertainment, weekend trips, whatever you love—because drudging through life with a too-tight spending plan is a recipe for failure.

Grab the FREE Budget

Saving

1. How much should you save in your emergency fund?

Most experts agree that you should have three to six months’ worth of living expenses saved to keep you afloat in the event of, say, a home or car repair or other unexpected expense—or the loss of your job.

Related: Getting Your Emergency Fund Started

2. Where’s the best place to hold short-term savings?

For money you need to be able to access within the next year or two, advisors usually recommend looking for a high-yield savings account. Just be aware that you can only make up to six withdrawals each month.

Unfortunately, you won’t earn much interest on a savings account, as the national average is currently .06 percent. But some banks—like Ally Bank, Synchrony and Barclays—are offering 1 percent or more as of early March, so it’s worth shopping around. “Internet banks often have the [lowest] fees, better interest rates and can be much more convenient,” says Ken Tumin, co-creator of comparison site DepositAccounts.com.

3. What’s the difference between a money market and a savings account?

Both savings and money market accounts are government-insured. But money market accounts are more likely to offer check-writing capabilities and ATM or debit cards (although they are subject to the same six-withdrawals/month limit). MMAs typically have higher interest rates, but also have higher minimum balance requirements. Details vary by account.

4. Where should you put money you’ll need in two to 10 years?

If you need the money in a year or two, “You might start thinking about CDs if you want to maximize your rates,” Tumin says. One-year CDs aren’t offering much more than high-yield savings accounts now. But some two-year CDs are offering 1.5 percent or more.

If you have a longer timeframe, consider investing in stocks and bonds. Just be aware that, while the stock market has historically gone up over time, it can go up or down in the short run. (And, as advisors will caution, past performance doesn’t guarantee future returns.) So while stocks may provide higher growth opportunities than CDs and bonds, you want to allow enough time to ride the downturns out and may consider moving money into more conservative options as your time horizon gets shorter. Investing in a mix of stocks and bonds can also lower your risk.

5. What’s a CD?

CD stands for certificate of deposit, which you can buy from a bank and is guaranteed to pay interest over a designated period of time—usually much more than  a savings account would. A five-year CD from Melrose Credit Union is paying 2.4 percent, for example, while its savings accounts offer rates of just 0.5 percent. The catch is that you can’t touch the money in a CD until the designated time period ends.

“CDs can offer higher rates than savings accounts, but the price you pay is to have less liquidity,” says Tumin. “If you take the money out early, it can cost you several months of interest.”

(This page has been updated to clarify the process for calculating the net worth of an asset.)

Credit

1. What’s a credit score?

A credit score is a three-digit indication to potential lenders of your ability to repay money you borrow. The FICO score is the most widely used, ranges from 300 (womp) to 850 (rock star) and is calculated based on five factors: payment history, credit-utilization ratio, length of credit history, the mix of credit types in use and number of credit inquiries.

2. What’s a good credit score, and why is it important?

An excellent FICO score includes anything from 750 up, and the next rung down—700 to 749—is considered good. However, credit pro John Ulzheimer, formerly of FICO and Equifax, points out, the best score is the one that “gets you approved for the best deal the lender is offering.”

You may qualify for a loan with a good score, but you may need an excellent score to qualify for the lowest interest rates on that loan. Credit card companies and mortgage lenders typically reserve their lowest rates and largest loans for people who have exhibited a quality track record when handling credit.

3. How can I improve my score?

Payment history accounts for the biggest portion of your FICO score—35 percent—so submitting on-time payments is the best way to boost your score. Clearing credit card debt, thereby decreasing your utilization ratio (the amount of debt you owe compared to your total credit limit), is another way to raise your score.

“If you’re able to pay off or pay down your credit card debt, you could see a significant improvement in less than one month,” Ulzheimer says.

4. How can I see what’s on my credit report?

Keeping tabs on your credit report helps to prevent errors and fraudulent activity from going unnoticed and sinking your score. “The only way you’ll find errors on your credit reports is to actually review them,” Ulzheimer says. “The credit reporting agencies don’t have any obligation to correct errors unless you ask them to do so.”

Visit AnnualCreditReport.com to order a free report once every 12 months from each of the major credit bureaus: Equifax, Experian and Transunion. Be sure to review each one, as they may include different information.

Debt

1. What’s an APR?

This acronym stands for annual percentage rate—as in the interest rate credit cards charge on unpaid balances.

Your APR can vary, as it’s based on the U.S. prime rate (set by the Federal Reserve) and whatever additional margin your lender tacks on. APR may also differ depending on transaction: For example, most cards charge different APRs for purchases, cash advances and balance transfers. Your lender may also offer low intro APRs that expire after a specified time period and higher penalty APRs for missed payments.

2. What do you owe, and how much interest are you paying?

To be in control of your money, you need to know exactly how much you owe, including outstanding credit card balances, as well as other debt like student loans, car loans and mortgages.

Not only that, but keep in mind what rate each debt charges, so you can calculate how much you’re paying in interest. (Note: If you pay off your credit card bill each month, you’re not paying interest at all—score!—but you are building credit.)

3. When will you be debt-free?

Knowing your numbers is only half the battle. You also need a solid repayment plan with an end date.

Schedules for repaying mortgages, student loans and auto loans are usually well laid out. If you have low rates, you may not need to bother paying them faster.

Credit cards are another matter. If you only pay the minimums, you’re wasting a lot of money on interest and likely not making a big dent in your principal. Check out a calculator from Bankrate, Credit Karma or MagnifyMoney to see how the timeline changes when you commit to paying more.

4. What’s the difference between debit, prepaid, credit and charge cards?

Drawing funds directly from your checking account with each swipe, “a debit card is essentially a plastic check,” Ulzheimer explains. “A prepaid debit card is cash in plastic form.” Load up the latter with funds and use it until you draw it down to zero.

On the other hand, money tied to credit and charge cards belongs to the bank, and you’re just borrowing it. With the former, the lender allows you to carry a balance—and profits from that graciousness. Charge cards must be paid in full by the due date or you risk incurring serious penalties.

This page has been updated to clarify the formula for calculating an asset’s net worth.

Investing

1. What’s the difference between stocks and bonds?

Stocks give you a share of a public company’s assets and earnings. The value of your shares goes up and down with the company’s financial well-being—and with shareholders’ perception of that company’s well-being. Read: They’re risky, but potentially rewarding.

Bonds are like loans given to an institution. When you buy bonds from a corporation, government or other entity, you’re lending money to be paid back with interest at a specified time. Read: They’re relatively safe as long as the entity stays in business. You can look at how a bond is rated before you buy one to see how risky it is. (“AAA” and “AA” indicate a high credit-quality investment grade.)

2. What are dividends?

Dividends are periodic payouts of earnings that companies may give to certain shareholders. Typically, they’re paid in cash or additional stock. For investors, they’re a good way to collect some income while still investing for higher returns. Note that dividends may be subject to taxes.

3. What’s the difference between passive and active funds?

Calling an investment fund “passive” or “active” refers to how it’s managed. Passive funds are run with a hands-off approach, and therefore generally come with low fees.

Index funds, for example, are set up to move in tandem with associated indices (like the S&P 500, which tracks 500 of the most widely held stocks on the Nasdaq and New York Stock Exchange) and mirror their returns. Actively-managed funds attempt to beat that benchmark by making a wider variety of investments.

4. What’s the difference between mutual funds and exchange-traded funds?

Because most ETFs track indices, and are therefore more passively run, they tend to charge lower fees. They’re also traded like common stocks at varying prices throughout the day. Conversely, shares of mutual funds are priced based on their net asset value (NAV) once at the end of the trading day.

5. What’s an expense ratio, and what’s a good one?

An expense ratio is how much it costs to run a fund, including fees paid for management, recordkeeping, custodial services and taxes. It’s calculated annually by dividing operating expenses by the average dollar value of the fund’s assets—lowering returns for investors, which is why it’s important to know.

“High fees will erode your profits and significantly impact your portfolio,” says Oklahoma-based Certified Financial Planner Shanda Sullivan. “Especially when you’re saving for retirement, you’re talking about 30 years to 50 years—that’s going to add up. And remember it’s not only the money you’re losing, but it’s also the potential earnings that money could be producing.”

She suggests sticking with funds that have expense ratios below 1 percent, and preferably below 0.5 percent, as well as steering clear of so-called “load” funds, which charge extra at the point of sale.

6. What’s diversification?

Diversification means spreading your investments across a variety of assets, including stocks and bonds, CDs, and cash. For example, for your stock allocation, you want to invest in the U.S. and abroad; in large, medium and small companies; and in fast-growing businesses and more-established firms. Ideally, a well-diversified portfolio includes assets that will go up if others are down.

7. How does compounding work?

Put simply: Compound interest is when your interest earns interest—which helps your money grow at a faster rate than when “simple interest” (interest added only to the principal) is applied. Money invested in the stock market benefits from compounding, which is why it pays to start investing as early as possible.

Retirement

1. What’s a 401(k)?

A 401(k) is an employer-sponsored account where you can contribute a maximum of $18,000 pre-tax dollars in 2017 ($24,000 if you’re 50 and up). There’s a 10 percent penalty for withdrawing money before age 59½.

As an extra incentive to save, some employers match a portion of your contributions, which is essentially free money—so take advantage.

2. What’s an IRA?

IRA stands for individual retirement account. As the name implies, it’s a tax-advantaged option for saving without an employer sponsor. For 2017, you can contribute a maximum of $5,500 of earned income ($6,500 if you’re 50 or older).

There’s also a 10 percent penalty for withdrawing money prior to age 59½—except to use in specific circumstances, including qualified higher education expenses and first-time home purchases.

3. What’s the difference between a Roth and a traditional IRA?

Pre-tax contributions to a traditional IRA may be tax-deductible, depending on your income, filing status and whether you are covered by a retirement plan at work. Roth IRA savings are never tax-deductible, but the money grows tax-free. And you won’t pay Uncle Sam on your withdrawals because the initial contributions are made post-tax.

Sullivan recommends ROTHs over traditional accounts for income-qualifying Millennials. When you’re young, you may fall into a lower tax bracket than you will later in life, so pay the taxman now.

4. How should you save if you’re self-employed?

You can still use IRAs, but considering the contribution limit is $5,500, you should save elsewhere, too. To nab tax advantages, look into a solo 401(k), simplified employee pension (SEP IRA) or savings incentive match plan (SIMPLE IRA).

Sullivan likes the solo 401(k): “The great thing about it is you can contribute the annual amount [up to $18,000 in 2017], and your business can contribute as well. So you can double on contributing.”

5. Should you rollover your 401(k) if you change jobs?

You typically don’t have to rollover your 401(k), but it might be better if you do. Sullivan often recommends moving it to a Rollover IRA because it typically charges lower fees and offers a wider variety of investments than a 401(k). You might also consider rolling the funds into a new employer’s 401(k) to make keeping track easier.

Whatever you decide, “you need to take control of your 401(k) when you leave,” says Sullivan. Especially if it’s less than $5,000, your former employer may try to automatically distribute the funds to you, which will trigger taxes—and penalties—if you don’t roll it over within 60 days.

6. How much should you save for retirement?

You may have heard that you should aim to save 10 to 20 percent of your annual income, but everyone’s goal is different. The important thing is that you know your own answer, and have a plan to reach that magic number. (You can use online calculators, like those on Bankrate, Vanguard and AARP, to calculate how much you need to save.)

If those big numbers are too intimidating, take a deep breath. “I always tell people to just save something—whatever is doable for you—and increase it over time,” Sullivan says.

Insurance

1. What’s the difference between a premium and a deductible?

Your insurance premium is what you pay each month for coverage. If you get health benefits through your employer, they may pay a portion and the rest is deducted from your paycheck.

A deductible is what you shell out for covered services before your insurer starts paying, and it typically does not include copayments—fees you pay for certain services, such as $15 for a doctor’s visit. Both deductibles and copays are considered out-of-pocket expenses, which you should include in your budget.

2. What’s the difference between an FSA and HSA account?

Both flexible spending accounts and health savings accounts are smart ways to save pre-tax dollars for qualified healthcare costs, including copays, prescriptions and other out-of-pocket expenses.

Related: The (Better) Alternative to Expensive Health Care is Here

You’re only eligible for an HSA if you have a high-deductible health plan. In 2017, the minimum annual deductible for an HDHP is $1,300 for individual coverage and $2,600 for family coverage. (FSAs are not tied to a specific health plan.) In 2017, you can contribute up to $3,400 to an HSA if you have individual coverage, and up to $6,750 for a family plan. For an FSA, you can contribute up to $2,600.

Another major difference: While you can carry a balance in an HSA from year to year, letting it accumulate wealth, funds in an FSA have historically been “use-it-or-lose-it.” However, your plan provider may give you a couple months’ grace period to burn through your leftover funds, or the ability to carry over up to $500.

3. What other types of insurance do you really need?

The big ones to consider are homeowners or renters insurance, auto insurance and life insurance, says Michael Barry, spokesperson for the Insurance Information Institute.

If you own your home or car, you’re required to have insurance—for which the minimum mandatory requirements vary depending on your location and specific situation. Renters insurance may seem optional, but “people are increasingly realizing that [it] is essential to protect your personal belongings,” says Barry. (Plus, some apartment buildings do require it.)

Even if you have some life insurance coverage, Barry says a good rule of thumb is to beef up your policy when someone, like a spouse or kids, is financially dependent on you.

Real Estate

1. How much can you comfortably spend on housing?

A general guideline is that housing expenses shouldn’t exceed 30 percent of gross income. But some lenders set that figure in stone, and don’t even consider approving mortgages unless someone’s proposed home-expense-to-income ratio is 28 percent or less. (Others are more generous, but that doesn’t mean you should apply for as much as you’re pre-approved to borrow.)

2. What’s included in PITI?

Your monthly payments go toward the mortgage principal (the actual balance you owe), as well as interest, taxes and insurance. So make sure to budget accordingly.

Taxes and Wills

1. What credits and deductions can you take?

The simplest way to go is to claim the standard deduction, which is $6,300 for a single filer and $12,600 for a married couple filing jointly. But you may be able to deduct more if you “itemize,” which you can do for job-search expenses, medical expenses and charitable contributions—just to name a few.

You may also score savings by claiming a variety of tax credits, like the American Opportunity Tax Credit for up to $2,500 and the Child and Dependent Care Credit for up to $6,000 if you have two or more dependents.

2. When is the right time to create a will?

Create a will as soon as you have stuff worth bequeathing. It’s especially important if you have kids or other dependents to outline your wishes in the event something happens to you.

Also include in your estate planning a financial power of attorney, health power of attorney and advance medical directive, so you know that someone you’ve designated will have a say in what happens (or you’ll have left directions) in case a debilitating issue prevents you from making decisions for yourself.

Sullivan recommends being even more proactive and drafting these documents early on and then updating them whenever life changes—or at least every five years. “Life gets hectic and laying out your end-of-life wishes always gets put on the back burner,” she says. “Don’t leave that burden on your family members.”

This post originally appeared on Grow

Related:

How I Turned My Vices Into Saving

A Nearly Fullproof Way to Hit Your Savings Goals

Why I’ll Never Have a Car Payment Again

The post 35 Money Questions You Need to Know Before 35 appeared first on Money Peach.

35 Money Questions You Need to Know Before 35 posted first on your-t1-blog-url

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35 Money Questions You Need to Know Before 35

By the time you’ve reached your 30s, you’ve probably heard dozens of financial acronyms and terms thrown around—from APRs to IRAs, expense ratios to exchange-traded funds. Yet while the lingo may sound familiar, you might not have a really clear understanding of what the words actually mean or how they apply to your finances. And that can be problematic when you’re trying to make the best decisions with your money.

So we’ve gathered, and answered, 35 questions on a range of financial topics that you’ll want to know by the time you’ve established your career and started building some wealth.

While we’ve started with the basics, we also include more sophisticated terms and topics. Master these, and you can not only sound smart about money, but you’ll be able to make smarter decisions with yours, too.

Basics

1. What’s your net worth?

Your true worth is unquantifiable, my friend. But financially speaking, your net worth equals your assets—cash, property (like your home, car and furniture), your checking and savings account balances and any investments—minus your liabilities, which are your debts and other financial obligations.

To calculate the net worth of your home, for example, you’d take an estimate of its current market value. (You can look at what similar homes in the neighborhood have sold for recently or have a real estate agent make an appraisal.) Next, subtract how much you still owe on your mortgage. If an agent says she could sell your home for about $215,000 and you owe about $110,000 on your mortgage, for example, that’d be about $105,000. The asset value minus your liability (or what you owe on it) equals the net worth.

Why is knowing your total net worth important? It gives you a true financial picture of how you’re doing, and highlights where you could make improvements.

2. What should you include in a budget?

First, add up your essential expenses, such as your mortgage or rent, utility bills, cell phone, food and child care. Then tally your financial obligations, like credit card, auto or student debt payments and savings goals (for emergencies, retirement and anything else you’re working toward).

Then add in “discretionary” expenses, or those that are not absolutely essential but are important to you. Don’t forget to factor in fun—entertainment, weekend trips, whatever you love—because drudging through life with a too-tight spending plan is a recipe for failure.

Grab the FREE Budget

Saving

1. How much should you save in your emergency fund?

Most experts agree that you should have three to six months’ worth of living expenses saved to keep you afloat in the event of, say, a home or car repair or other unexpected expense—or the loss of your job.

Related: Getting Your Emergency Fund Started

2. Where’s the best place to hold short-term savings?

For money you need to be able to access within the next year or two, advisors usually recommend looking for a high-yield savings account. Just be aware that you can only make up to six withdrawals each month.

Unfortunately, you won’t earn much interest on a savings account, as the national average is currently .06 percent. But some banks—like Ally Bank, Synchrony and Barclays—are offering 1 percent or more as of early March, so it’s worth shopping around. “Internet banks often have the [lowest] fees, better interest rates and can be much more convenient,” says Ken Tumin, co-creator of comparison site DepositAccounts.com.

3. What’s the difference between a money market and a savings account?

Both savings and money market accounts are government-insured. But money market accounts are more likely to offer check-writing capabilities and ATM or debit cards (although they are subject to the same six-withdrawals/month limit). MMAs typically have higher interest rates, but also have higher minimum balance requirements. Details vary by account.

4. Where should you put money you’ll need in two to 10 years?

If you need the money in a year or two, “You might start thinking about CDs if you want to maximize your rates,” Tumin says. One-year CDs aren’t offering much more than high-yield savings accounts now. But some two-year CDs are offering 1.5 percent or more.

If you have a longer timeframe, consider investing in stocks and bonds. Just be aware that, while the stock market has historically gone up over time, it can go up or down in the short run. (And, as advisors will caution, past performance doesn’t guarantee future returns.) So while stocks may provide higher growth opportunities than CDs and bonds, you want to allow enough time to ride the downturns out and may consider moving money into more conservative options as your time horizon gets shorter. Investing in a mix of stocks and bonds can also lower your risk.

5. What’s a CD?

CD stands for certificate of deposit, which you can buy from a bank and is guaranteed to pay interest over a designated period of time—usually much more than  a savings account would. A five-year CD from Melrose Credit Union is paying 2.4 percent, for example, while its savings accounts offer rates of just 0.5 percent. The catch is that you can’t touch the money in a CD until the designated time period ends.

“CDs can offer higher rates than savings accounts, but the price you pay is to have less liquidity,” says Tumin. “If you take the money out early, it can cost you several months of interest.”

(This page has been updated to clarify the process for calculating the net worth of an asset.)

Credit

1. What’s a credit score?

A credit score is a three-digit indication to potential lenders of your ability to repay money you borrow. The FICO score is the most widely used, ranges from 300 (womp) to 850 (rock star) and is calculated based on five factors: payment history, credit-utilization ratio, length of credit history, the mix of credit types in use and number of credit inquiries.

2. What’s a good credit score, and why is it important?

An excellent FICO score includes anything from 750 up, and the next rung down—700 to 749—is considered good. However, credit pro John Ulzheimer, formerly of FICO and Equifax, points out, the best score is the one that “gets you approved for the best deal the lender is offering.”

You may qualify for a loan with a good score, but you may need an excellent score to qualify for the lowest interest rates on that loan. Credit card companies and mortgage lenders typically reserve their lowest rates and largest loans for people who have exhibited a quality track record when handling credit.

3. How can I improve my score?

Payment history accounts for the biggest portion of your FICO score—35 percent—so submitting on-time payments is the best way to boost your score. Clearing credit card debt, thereby decreasing your utilization ratio (the amount of debt you owe compared to your total credit limit), is another way to raise your score.

“If you’re able to pay off or pay down your credit card debt, you could see a significant improvement in less than one month,” Ulzheimer says.

4. How can I see what’s on my credit report?

Keeping tabs on your credit report helps to prevent errors and fraudulent activity from going unnoticed and sinking your score. “The only way you’ll find errors on your credit reports is to actually review them,” Ulzheimer says. “The credit reporting agencies don’t have any obligation to correct errors unless you ask them to do so.”

Visit AnnualCreditReport.com to order a free report once every 12 months from each of the major credit bureaus: Equifax, Experian and Transunion. Be sure to review each one, as they may include different information.

Debt

1. What’s an APR?

This acronym stands for annual percentage rate—as in the interest rate credit cards charge on unpaid balances.

Your APR can vary, as it’s based on the U.S. prime rate (set by the Federal Reserve) and whatever additional margin your lender tacks on. APR may also differ depending on transaction: For example, most cards charge different APRs for purchases, cash advances and balance transfers. Your lender may also offer low intro APRs that expire after a specified time period and higher penalty APRs for missed payments.

2. What do you owe, and how much interest are you paying?

To be in control of your money, you need to know exactly how much you owe, including outstanding credit card balances, as well as other debt like student loans, car loans and mortgages.

Not only that, but keep in mind what rate each debt charges, so you can calculate how much you’re paying in interest. (Note: If you pay off your credit card bill each month, you’re not paying interest at all—score!—but you are building credit.)

3. When will you be debt-free?

Knowing your numbers is only half the battle. You also need a solid repayment plan with an end date.

Schedules for repaying mortgages, student loans and auto loans are usually well laid out. If you have low rates, you may not need to bother paying them faster.

Credit cards are another matter. If you only pay the minimums, you’re wasting a lot of money on interest and likely not making a big dent in your principal. Check out a calculator from Bankrate, Credit Karma or MagnifyMoney to see how the timeline changes when you commit to paying more.

4. What’s the difference between debit, prepaid, credit and charge cards?

Drawing funds directly from your checking account with each swipe, “a debit card is essentially a plastic check,” Ulzheimer explains. “A prepaid debit card is cash in plastic form.” Load up the latter with funds and use it until you draw it down to zero.

On the other hand, money tied to credit and charge cards belongs to the bank, and you’re just borrowing it. With the former, the lender allows you to carry a balance—and profits from that graciousness. Charge cards must be paid in full by the due date or you risk incurring serious penalties.

This page has been updated to clarify the formula for calculating an asset’s net worth.

Investing

1. What’s the difference between stocks and bonds?

Stocks give you a share of a public company’s assets and earnings. The value of your shares goes up and down with the company’s financial well-being—and with shareholders’ perception of that company’s well-being. Read: They’re risky, but potentially rewarding.

Bonds are like loans given to an institution. When you buy bonds from a corporation, government or other entity, you’re lending money to be paid back with interest at a specified time. Read: They’re relatively safe as long as the entity stays in business. You can look at how a bond is rated before you buy one to see how risky it is. (“AAA” and “AA” indicate a high credit-quality investment grade.)

2. What are dividends?

Dividends are periodic payouts of earnings that companies may give to certain shareholders. Typically, they’re paid in cash or additional stock. For investors, they’re a good way to collect some income while still investing for higher returns. Note that dividends may be subject to taxes.

3. What’s the difference between passive and active funds?

Calling an investment fund “passive” or “active” refers to how it’s managed. Passive funds are run with a hands-off approach, and therefore generally come with low fees.

Index funds, for example, are set up to move in tandem with associated indices (like the S&P 500, which tracks 500 of the most widely held stocks on the Nasdaq and New York Stock Exchange) and mirror their returns. Actively-managed funds attempt to beat that benchmark by making a wider variety of investments.

4. What’s the difference between mutual funds and exchange-traded funds?

Because most ETFs track indices, and are therefore more passively run, they tend to charge lower fees. They’re also traded like common stocks at varying prices throughout the day. Conversely, shares of mutual funds are priced based on their net asset value (NAV) once at the end of the trading day.

5. What’s an expense ratio, and what’s a good one?

An expense ratio is how much it costs to run a fund, including fees paid for management, recordkeeping, custodial services and taxes. It’s calculated annually by dividing operating expenses by the average dollar value of the fund’s assets—lowering returns for investors, which is why it’s important to know.

“High fees will erode your profits and significantly impact your portfolio,” says Oklahoma-based Certified Financial Planner Shanda Sullivan. “Especially when you’re saving for retirement, you’re talking about 30 years to 50 years—that’s going to add up. And remember it’s not only the money you’re losing, but it’s also the potential earnings that money could be producing.”

She suggests sticking with funds that have expense ratios below 1 percent, and preferably below 0.5 percent, as well as steering clear of so-called “load” funds, which charge extra at the point of sale.

6. What’s diversification?

Diversification means spreading your investments across a variety of assets, including stocks and bonds, CDs, and cash. For example, for your stock allocation, you want to invest in the U.S. and abroad; in large, medium and small companies; and in fast-growing businesses and more-established firms. Ideally, a well-diversified portfolio includes assets that will go up if others are down.

7. How does compounding work?

Put simply: Compound interest is when your interest earns interest—which helps your money grow at a faster rate than when “simple interest” (interest added only to the principal) is applied. Money invested in the stock market benefits from compounding, which is why it pays to start investing as early as possible.

Retirement

1. What’s a 401(k)?

A 401(k) is an employer-sponsored account where you can contribute a maximum of $18,000 pre-tax dollars in 2017 ($24,000 if you’re 50 and up). There’s a 10 percent penalty for withdrawing money before age 59½.

As an extra incentive to save, some employers match a portion of your contributions, which is essentially free money—so take advantage.

2. What’s an IRA?

IRA stands for individual retirement account. As the name implies, it’s a tax-advantaged option for saving without an employer sponsor. For 2017, you can contribute a maximum of $5,500 of earned income ($6,500 if you’re 50 or older).

There’s also a 10 percent penalty for withdrawing money prior to age 59½—except to use in specific circumstances, including qualified higher education expenses and first-time home purchases.

3. What’s the difference between a Roth and a traditional IRA?

Pre-tax contributions to a traditional IRA may be tax-deductible, depending on your income, filing status and whether you are covered by a retirement plan at work. Roth IRA savings are never tax-deductible, but the money grows tax-free. And you won’t pay Uncle Sam on your withdrawals because the initial contributions are made post-tax.

Sullivan recommends ROTHs over traditional accounts for income-qualifying Millennials. When you’re young, you may fall into a lower tax bracket than you will later in life, so pay the taxman now.

4. How should you save if you’re self-employed?

You can still use IRAs, but considering the contribution limit is $5,500, you should save elsewhere, too. To nab tax advantages, look into a solo 401(k), simplified employee pension (SEP IRA) or savings incentive match plan (SIMPLE IRA).

Sullivan likes the solo 401(k): “The great thing about it is you can contribute the annual amount [up to $18,000 in 2017], and your business can contribute as well. So you can double on contributing.”

5. Should you rollover your 401(k) if you change jobs?

You typically don’t have to rollover your 401(k), but it might be better if you do. Sullivan often recommends moving it to a Rollover IRA because it typically charges lower fees and offers a wider variety of investments than a 401(k). You might also consider rolling the funds into a new employer’s 401(k) to make keeping track easier.

Whatever you decide, “you need to take control of your 401(k) when you leave,” says Sullivan. Especially if it’s less than $5,000, your former employer may try to automatically distribute the funds to you, which will trigger taxes—and penalties—if you don’t roll it over within 60 days.

6. How much should you save for retirement?

You may have heard that you should aim to save 10 to 20 percent of your annual income, but everyone’s goal is different. The important thing is that you know your own answer, and have a plan to reach that magic number. (You can use online calculators, like those on Bankrate, Vanguard and AARP, to calculate how much you need to save.)

If those big numbers are too intimidating, take a deep breath. “I always tell people to just save something—whatever is doable for you—and increase it over time,” Sullivan says.

Insurance

1. What’s the difference between a premium and a deductible?

Your insurance premium is what you pay each month for coverage. If you get health benefits through your employer, they may pay a portion and the rest is deducted from your paycheck.

A deductible is what you shell out for covered services before your insurer starts paying, and it typically does not include copayments—fees you pay for certain services, such as $15 for a doctor’s visit. Both deductibles and copays are considered out-of-pocket expenses, which you should include in your budget.

2. What’s the difference between an FSA and HSA account?

Both flexible spending accounts and health savings accounts are smart ways to save pre-tax dollars for qualified healthcare costs, including copays, prescriptions and other out-of-pocket expenses.

Related: The (Better) Alternative to Expensive Health Care is Here

You’re only eligible for an HSA if you have a high-deductible health plan. In 2017, the minimum annual deductible for an HDHP is $1,300 for individual coverage and $2,600 for family coverage. (FSAs are not tied to a specific health plan.) In 2017, you can contribute up to $3,400 to an HSA if you have individual coverage, and up to $6,750 for a family plan. For an FSA, you can contribute up to $2,600.

Another major difference: While you can carry a balance in an HSA from year to year, letting it accumulate wealth, funds in an FSA have historically been “use-it-or-lose-it.” However, your plan provider may give you a couple months’ grace period to burn through your leftover funds, or the ability to carry over up to $500.

3. What other types of insurance do you really need?

The big ones to consider are homeowners or renters insurance, auto insurance and life insurance, says Michael Barry, spokesperson for the Insurance Information Institute.

If you own your home or car, you’re required to have insurance—for which the minimum mandatory requirements vary depending on your location and specific situation. Renters insurance may seem optional, but “people are increasingly realizing that [it] is essential to protect your personal belongings,” says Barry. (Plus, some apartment buildings do require it.)

Even if you have some life insurance coverage, Barry says a good rule of thumb is to beef up your policy when someone, like a spouse or kids, is financially dependent on you.

Real Estate

1. How much can you comfortably spend on housing?

A general guideline is that housing expenses shouldn’t exceed 30 percent of gross income. But some lenders set that figure in stone, and don’t even consider approving mortgages unless someone’s proposed home-expense-to-income ratio is 28 percent or less. (Others are more generous, but that doesn’t mean you should apply for as much as you’re pre-approved to borrow.)

2. What’s included in PITI?

Your monthly payments go toward the mortgage principal (the actual balance you owe), as well as interest, taxes and insurance. So make sure to budget accordingly.

Taxes and Wills

1. What credits and deductions can you take?

The simplest way to go is to claim the standard deduction, which is $6,300 for a single filer and $12,600 for a married couple filing jointly. But you may be able to deduct more if you “itemize,” which you can do for job-search expenses, medical expenses and charitable contributions—just to name a few.

You may also score savings by claiming a variety of tax credits, like the American Opportunity Tax Credit for up to $2,500 and the Child and Dependent Care Credit for up to $6,000 if you have two or more dependents.

2. When is the right time to create a will?

Create a will as soon as you have stuff worth bequeathing. It’s especially important if you have kids or other dependents to outline your wishes in the event something happens to you.

Also include in your estate planning a financial power of attorney, health power of attorney and advance medical directive, so you know that someone you’ve designated will have a say in what happens (or you’ll have left directions) in case a debilitating issue prevents you from making decisions for yourself.

Sullivan recommends being even more proactive and drafting these documents early on and then updating them whenever life changes—or at least every five years. “Life gets hectic and laying out your end-of-life wishes always gets put on the back burner,” she says. “Don’t leave that burden on your family members.”

This post originally appeared on Grow

Related:

How I Turned My Vices Into Saving

A Nearly Fullproof Way to Hit Your Savings Goals

Why I’ll Never Have a Car Payment Again

The post 35 Money Questions You Need to Know Before 35 appeared first on Money Peach.

35 Money Questions You Need to Know Before 35 syndicated from your-t1-blog-url

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35 Money Questions You Need to Know Before 35

By the time you’ve reached your 30s, you’ve probably heard dozens of financial acronyms and terms thrown around—from APRs to IRAs, expense ratios to exchange-traded funds. Yet while the lingo may sound familiar, you might not have a really clear understanding of what the words actually mean or how they apply to your finances. And that can be problematic when you’re trying to make the best decisions with your money.

So we’ve gathered, and answered, 35 questions on a range of financial topics that you’ll want to know by the time you’ve established your career and started building some wealth.

While we’ve started with the basics, we also include more sophisticated terms and topics. Master these, and you can not only sound smart about money, but you’ll be able to make smarter decisions with yours, too.

Basics

1. What’s your net worth?

Your true worth is unquantifiable, my friend. But financially speaking, your net worth equals your assets—cash, property (like your home, car and furniture), your checking and savings account balances and any investments—minus your liabilities, which are your debts and other financial obligations.

To calculate the net worth of your home, for example, you’d take an estimate of its current market value. (You can look at what similar homes in the neighborhood have sold for recently or have a real estate agent make an appraisal.) Next, subtract how much you still owe on your mortgage. If an agent says she could sell your home for about $215,000 and you owe about $110,000 on your mortgage, for example, that’d be about $105,000. The asset value minus your liability (or what you owe on it) equals the net worth.

Why is knowing your total net worth important? It gives you a true financial picture of how you’re doing, and highlights where you could make improvements.

2. What should you include in a budget?

First, add up your essential expenses, such as your mortgage or rent, utility bills, cell phone, food and child care. Then tally your financial obligations, like credit card, auto or student debt payments and savings goals (for emergencies, retirement and anything else you’re working toward).

Then add in “discretionary” expenses, or those that are not absolutely essential but are important to you. Don’t forget to factor in fun—entertainment, weekend trips, whatever you love—because drudging through life with a too-tight spending plan is a recipe for failure.

Grab the FREE Budget

Saving

1. How much should you save in your emergency fund?

Most experts agree that you should have three to six months’ worth of living expenses saved to keep you afloat in the event of, say, a home or car repair or other unexpected expense—or the loss of your job.

Related: Getting Your Emergency Fund Started

2. Where’s the best place to hold short-term savings?

For money you need to be able to access within the next year or two, advisors usually recommend looking for a high-yield savings account. Just be aware that you can only make up to six withdrawals each month.

Unfortunately, you won’t earn much interest on a savings account, as the national average is currently .06 percent. But some banks—like Ally Bank, Synchrony and Barclays—are offering 1 percent or more as of early March, so it’s worth shopping around. “Internet banks often have the [lowest] fees, better interest rates and can be much more convenient,” says Ken Tumin, co-creator of comparison site DepositAccounts.com.

3. What’s the difference between a money market and a savings account?

Both savings and money market accounts are government-insured. But money market accounts are more likely to offer check-writing capabilities and ATM or debit cards (although they are subject to the same six-withdrawals/month limit). MMAs typically have higher interest rates, but also have higher minimum balance requirements. Details vary by account.

4. Where should you put money you’ll need in two to 10 years?

If you need the money in a year or two, “You might start thinking about CDs if you want to maximize your rates,” Tumin says. One-year CDs aren’t offering much more than high-yield savings accounts now. But some two-year CDs are offering 1.5 percent or more.

If you have a longer timeframe, consider investing in stocks and bonds. Just be aware that, while the stock market has historically gone up over time, it can go up or down in the short run. (And, as advisors will caution, past performance doesn’t guarantee future returns.) So while stocks may provide higher growth opportunities than CDs and bonds, you want to allow enough time to ride the downturns out and may consider moving money into more conservative options as your time horizon gets shorter. Investing in a mix of stocks and bonds can also lower your risk.

5. What’s a CD?

CD stands for certificate of deposit, which you can buy from a bank and is guaranteed to pay interest over a designated period of time—usually much more than  a savings account would. A five-year CD from Melrose Credit Union is paying 2.4 percent, for example, while its savings accounts offer rates of just 0.5 percent. The catch is that you can’t touch the money in a CD until the designated time period ends.

“CDs can offer higher rates than savings accounts, but the price you pay is to have less liquidity,” says Tumin. “If you take the money out early, it can cost you several months of interest.”

(This page has been updated to clarify the process for calculating the net worth of an asset.)

Credit

1. What’s a credit score?

A credit score is a three-digit indication to potential lenders of your ability to repay money you borrow. The FICO score is the most widely used, ranges from 300 (womp) to 850 (rock star) and is calculated based on five factors: payment history, credit-utilization ratio, length of credit history, the mix of credit types in use and number of credit inquiries.

2. What’s a good credit score, and why is it important?

An excellent FICO score includes anything from 750 up, and the next rung down—700 to 749—is considered good. However, credit pro John Ulzheimer, formerly of FICO and Equifax, points out, the best score is the one that “gets you approved for the best deal the lender is offering.”

You may qualify for a loan with a good score, but you may need an excellent score to qualify for the lowest interest rates on that loan. Credit card companies and mortgage lenders typically reserve their lowest rates and largest loans for people who have exhibited a quality track record when handling credit.

3. How can I improve my score?

Payment history accounts for the biggest portion of your FICO score—35 percent—so submitting on-time payments is the best way to boost your score. Clearing credit card debt, thereby decreasing your utilization ratio (the amount of debt you owe compared to your total credit limit), is another way to raise your score.

“If you’re able to pay off or pay down your credit card debt, you could see a significant improvement in less than one month,” Ulzheimer says.

4. How can I see what’s on my credit report?

Keeping tabs on your credit report helps to prevent errors and fraudulent activity from going unnoticed and sinking your score. “The only way you’ll find errors on your credit reports is to actually review them,” Ulzheimer says. “The credit reporting agencies don’t have any obligation to correct errors unless you ask them to do so.”

Visit AnnualCreditReport.com to order a free report once every 12 months from each of the major credit bureaus: Equifax, Experian and Transunion. Be sure to review each one, as they may include different information.

Debt

1. What’s an APR?

This acronym stands for annual percentage rate—as in the interest rate credit cards charge on unpaid balances.

Your APR can vary, as it’s based on the U.S. prime rate (set by the Federal Reserve) and whatever additional margin your lender tacks on. APR may also differ depending on transaction: For example, most cards charge different APRs for purchases, cash advances and balance transfers. Your lender may also offer low intro APRs that expire after a specified time period and higher penalty APRs for missed payments.

2. What do you owe, and how much interest are you paying?

To be in control of your money, you need to know exactly how much you owe, including outstanding credit card balances, as well as other debt like student loans, car loans and mortgages.

Not only that, but keep in mind what rate each debt charges, so you can calculate how much you’re paying in interest. (Note: If you pay off your credit card bill each month, you’re not paying interest at all—score!—but you are building credit.)

3. When will you be debt-free?

Knowing your numbers is only half the battle. You also need a solid repayment plan with an end date.

Schedules for repaying mortgages, student loans and auto loans are usually well laid out. If you have low rates, you may not need to bother paying them faster.

Credit cards are another matter. If you only pay the minimums, you’re wasting a lot of money on interest and likely not making a big dent in your principal. Check out a calculator from Bankrate, Credit Karma or MagnifyMoney to see how the timeline changes when you commit to paying more.

4. What’s the difference between debit, prepaid, credit and charge cards?

Drawing funds directly from your checking account with each swipe, “a debit card is essentially a plastic check,” Ulzheimer explains. “A prepaid debit card is cash in plastic form.” Load up the latter with funds and use it until you draw it down to zero.

On the other hand, money tied to credit and charge cards belongs to the bank, and you’re just borrowing it. With the former, the lender allows you to carry a balance—and profits from that graciousness. Charge cards must be paid in full by the due date or you risk incurring serious penalties.

This page has been updated to clarify the formula for calculating an asset’s net worth.

Investing

1. What’s the difference between stocks and bonds?

Stocks give you a share of a public company’s assets and earnings. The value of your shares goes up and down with the company’s financial well-being—and with shareholders’ perception of that company’s well-being. Read: They’re risky, but potentially rewarding.

Bonds are like loans given to an institution. When you buy bonds from a corporation, government or other entity, you’re lending money to be paid back with interest at a specified time. Read: They’re relatively safe as long as the entity stays in business. You can look at how a bond is rated before you buy one to see how risky it is. (“AAA” and “AA” indicate a high credit-quality investment grade.)

2. What are dividends?

Dividends are periodic payouts of earnings that companies may give to certain shareholders. Typically, they’re paid in cash or additional stock. For investors, they’re a good way to collect some income while still investing for higher returns. Note that dividends may be subject to taxes.

3. What’s the difference between passive and active funds?

Calling an investment fund “passive” or “active” refers to how it’s managed. Passive funds are run with a hands-off approach, and therefore generally come with low fees.

Index funds, for example, are set up to move in tandem with associated indices (like the S&P 500, which tracks 500 of the most widely held stocks on the Nasdaq and New York Stock Exchange) and mirror their returns. Actively-managed funds attempt to beat that benchmark by making a wider variety of investments.

4. What’s the difference between mutual funds and exchange-traded funds?

Because most ETFs track indices, and are therefore more passively run, they tend to charge lower fees. They’re also traded like common stocks at varying prices throughout the day. Conversely, shares of mutual funds are priced based on their net asset value (NAV) once at the end of the trading day.

5. What’s an expense ratio, and what’s a good one?

An expense ratio is how much it costs to run a fund, including fees paid for management, recordkeeping, custodial services and taxes. It’s calculated annually by dividing operating expenses by the average dollar value of the fund’s assets—lowering returns for investors, which is why it’s important to know.

“High fees will erode your profits and significantly impact your portfolio,” says Oklahoma-based Certified Financial Planner Shanda Sullivan. “Especially when you’re saving for retirement, you’re talking about 30 years to 50 years—that’s going to add up. And remember it’s not only the money you’re losing, but it’s also the potential earnings that money could be producing.”

She suggests sticking with funds that have expense ratios below 1 percent, and preferably below 0.5 percent, as well as steering clear of so-called “load” funds, which charge extra at the point of sale.

6. What’s diversification?

Diversification means spreading your investments across a variety of assets, including stocks and bonds, CDs, and cash. For example, for your stock allocation, you want to invest in the U.S. and abroad; in large, medium and small companies; and in fast-growing businesses and more-established firms. Ideally, a well-diversified portfolio includes assets that will go up if others are down.

7. How does compounding work?

Put simply: Compound interest is when your interest earns interest—which helps your money grow at a faster rate than when “simple interest” (interest added only to the principal) is applied. Money invested in the stock market benefits from compounding, which is why it pays to start investing as early as possible.

Retirement

1. What’s a 401(k)?

A 401(k) is an employer-sponsored account where you can contribute a maximum of $18,000 pre-tax dollars in 2017 ($24,000 if you’re 50 and up). There’s a 10 percent penalty for withdrawing money before age 59½.

As an extra incentive to save, some employers match a portion of your contributions, which is essentially free money—so take advantage.

2. What’s an IRA?

IRA stands for individual retirement account. As the name implies, it’s a tax-advantaged option for saving without an employer sponsor. For 2017, you can contribute a maximum of $5,500 of earned income ($6,500 if you’re 50 or older).

There’s also a 10 percent penalty for withdrawing money prior to age 59½—except to use in specific circumstances, including qualified higher education expenses and first-time home purchases.

3. What’s the difference between a Roth and a traditional IRA?

Pre-tax contributions to a traditional IRA may be tax-deductible, depending on your income, filing status and whether you are covered by a retirement plan at work. Roth IRA savings are never tax-deductible, but the money grows tax-free. And you won’t pay Uncle Sam on your withdrawals because the initial contributions are made post-tax.

Sullivan recommends ROTHs over traditional accounts for income-qualifying Millennials. When you’re young, you may fall into a lower tax bracket than you will later in life, so pay the taxman now.

4. How should you save if you’re self-employed?

You can still use IRAs, but considering the contribution limit is $5,500, you should save elsewhere, too. To nab tax advantages, look into a solo 401(k), simplified employee pension (SEP IRA) or savings incentive match plan (SIMPLE IRA).

Sullivan likes the solo 401(k): “The great thing about it is you can contribute the annual amount [up to $18,000 in 2017], and your business can contribute as well. So you can double on contributing.”

5. Should you rollover your 401(k) if you change jobs?

You typically don’t have to rollover your 401(k), but it might be better if you do. Sullivan often recommends moving it to a Rollover IRA because it typically charges lower fees and offers a wider variety of investments than a 401(k). You might also consider rolling the funds into a new employer’s 401(k) to make keeping track easier.

Whatever you decide, “you need to take control of your 401(k) when you leave,” says Sullivan. Especially if it’s less than $5,000, your former employer may try to automatically distribute the funds to you, which will trigger taxes—and penalties—if you don’t roll it over within 60 days.

6. How much should you save for retirement?

You may have heard that you should aim to save 10 to 20 percent of your annual income, but everyone’s goal is different. The important thing is that you know your own answer, and have a plan to reach that magic number. (You can use online calculators, like those on Bankrate, Vanguard and AARP, to calculate how much you need to save.)

If those big numbers are too intimidating, take a deep breath. “I always tell people to just save something—whatever is doable for you—and increase it over time,” Sullivan says.

Insurance

1. What’s the difference between a premium and a deductible?

Your insurance premium is what you pay each month for coverage. If you get health benefits through your employer, they may pay a portion and the rest is deducted from your paycheck.

A deductible is what you shell out for covered services before your insurer starts paying, and it typically does not include copayments—fees you pay for certain services, such as $15 for a doctor’s visit. Both deductibles and copays are considered out-of-pocket expenses, which you should include in your budget.

2. What’s the difference between an FSA and HSA account?

Both flexible spending accounts and health savings accounts are smart ways to save pre-tax dollars for qualified healthcare costs, including copays, prescriptions and other out-of-pocket expenses.

Related: The (Better) Alternative to Expensive Health Care is Here

You’re only eligible for an HSA if you have a high-deductible health plan. In 2017, the minimum annual deductible for an HDHP is $1,300 for individual coverage and $2,600 for family coverage. (FSAs are not tied to a specific health plan.) In 2017, you can contribute up to $3,400 to an HSA if you have individual coverage, and up to $6,750 for a family plan. For an FSA, you can contribute up to $2,600.

Another major difference: While you can carry a balance in an HSA from year to year, letting it accumulate wealth, funds in an FSA have historically been “use-it-or-lose-it.” However, your plan provider may give you a couple months’ grace period to burn through your leftover funds, or the ability to carry over up to $500.

3. What other types of insurance do you really need?

The big ones to consider are homeowners or renters insurance, auto insurance and life insurance, says Michael Barry, spokesperson for the Insurance Information Institute.

If you own your home or car, you’re required to have insurance—for which the minimum mandatory requirements vary depending on your location and specific situation. Renters insurance may seem optional, but “people are increasingly realizing that [it] is essential to protect your personal belongings,” says Barry. (Plus, some apartment buildings do require it.)

Even if you have some life insurance coverage, Barry says a good rule of thumb is to beef up your policy when someone, like a spouse or kids, is financially dependent on you.

Real Estate

1. How much can you comfortably spend on housing?

A general guideline is that housing expenses shouldn’t exceed 30 percent of gross income. But some lenders set that figure in stone, and don’t even consider approving mortgages unless someone’s proposed home-expense-to-income ratio is 28 percent or less. (Others are more generous, but that doesn’t mean you should apply for as much as you’re pre-approved to borrow.)

2. What’s included in PITI?

Your monthly payments go toward the mortgage principal (the actual balance you owe), as well as interest, taxes and insurance. So make sure to budget accordingly.

Taxes and Wills

1. What credits and deductions can you take?

The simplest way to go is to claim the standard deduction, which is $6,300 for a single filer and $12,600 for a married couple filing jointly. But you may be able to deduct more if you “itemize,” which you can do for job-search expenses, medical expenses and charitable contributions—just to name a few.

You may also score savings by claiming a variety of tax credits, like the American Opportunity Tax Credit for up to $2,500 and the Child and Dependent Care Credit for up to $6,000 if you have two or more dependents.

2. When is the right time to create a will?

Create a will as soon as you have stuff worth bequeathing. It’s especially important if you have kids or other dependents to outline your wishes in the event something happens to you.

Also include in your estate planning a financial power of attorney, health power of attorney and advance medical directive, so you know that someone you’ve designated will have a say in what happens (or you’ll have left directions) in case a debilitating issue prevents you from making decisions for yourself.

Sullivan recommends being even more proactive and drafting these documents early on and then updating them whenever life changes—or at least every five years. “Life gets hectic and laying out your end-of-life wishes always gets put on the back burner,” she says. “Don’t leave that burden on your family members.”

This post originally appeared on Grow

Related:

How I Turned My Vices Into Saving

A Nearly Fullproof Way to Hit Your Savings Goals

Why I’ll Never Have a Car Payment Again

The post 35 Money Questions You Need to Know Before 35 appeared first on Money Peach.

35 Money Questions You Need to Know Before 35 posted first on your-t1-blog-url

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Thoughts on Owning a Lexus After 9 Months

Ever wondered what type of cars us financial bloggers drive? If so, you’re in for a treat today :)

My man MP from MustachianPost.com just collected data from over 20 different bloggers on what they’re riding these days, and why, and was kind enough to let us debut it on Rockstar Finance yesterday. Check it out when you get a chance!

The Cars of Personal Finance Bloggers

Some of the bloggers featured are Joshua Becker from Becoming Minimalist, Brandon from Mad Fientist, Justin from Root of Good, Jesse from YNAB (his car was my favorite surprise, especially considering he founded a budgeting company! ;)), the Financial Samurai, Mr 1500 Days, Paula from Afford Anything, The Frugalwoods, Physician on Fire, and Jason Fieber from Free At 33 – formerly Dividend Mantra.

You may be surprised what frugal people rock ;)

And if you haven’t been reading this blog for more than 9 months, you may be surprised what I drive too. In a nutshell, I went from this:

(1993 “Frankencaddy” – 90,000 miles, fully paid off, side hustle king!)

To this:

[2008 Lexus RX-350, 80,000 miles, car loan]

All in a span of a couple of weeks and totally unplanned, haha… I wrote about the whole thing in depth here (Bye Bye Frankencaddy, Hello Car Payments!), but the short version is that I needed a bigger, more reliable, car as I was taking over responsibility of driving my little nuggets around every day, and out of all the cars we looked at this was the only one that *excited me* enough to want to spend any money. I don’t really care about labels or how fancy/expensive things are, but stuff I consume DOES need to make me happy. And as long as I can afford it, it’s fair game.

The beauty of personal finance, eh?

Anyways, it came down to picking up a used minivan or a used luxury car (both around the same price, interestingly enough) and, well, for once I splurged and picked up the fancier one. I did wish I had more time to search for a cheaper and privately owned model vs snatching it from Carmax, but outside of that I’ve surprisingly had little regrets. In fact, I’m actually MORE in love with it than the day I took it home!

It’s been about 9 months now since owning it, so today I thought I’d share my thoughts so far. While hopefully not losing any more of you in the process :)

(The day I blogged about this purchase broke the record for the most unsubscribes ever here! HAH!)

We’ll start with the items that shocked me the most…

#1. A luxury car feels damn good to be in!

I know everyone (including myself) likes to say “a car is just a car and it gets me from point a to point b”, but the truth of the matter is that some just feel nicer to be in! You may not need or want a luxurious ride, but they’re definitely not all made the same. And never again will I assume people are buying them simply for “status.” I know many are, but there’s something to be said about the quality too. I’m just hoping I haven’t screwed myself from ever owning a hoopty again, haha…

#2. I’ve got more swagger than usual.

I don’t know if this will shock you as much as it did me, but I actually feel more confident riding around in this thing. I don’t know why that is, and I know I probably shouldn’t, but in all honestly I do. I just feel GOOD driving it around town, and even more so when I step into it for the first time of the day! Now granted, I also felt pretty pimp’ish rolling out in my Caddy too, but there’s a nuanced difference in the type of swaggership going on here, haha… How do you put a cost on that when factoring stuff in? ;)

#3. My charitable giving has skyrocketed

Tell me the truth: if you see a fancy car rolling up to a street corner and a homeless man is there asking for money and the driver turns a blinds eye, what’s the first thought that goes through your mind? Be honest! Mine? “What an a-hole!” “You can afford that car but can’t afford to dish out a few dollars? Come on now….”  Haha… Now what if this same car that rolled up was a beater? ;)

Obviously there are a TON of factors as to why someone does or doesn’t give out money, and I’m clearly in no position to judge, but for me personally, I just find it MUCH harder to *not* give when I’m sitting in a car that’s not at all a necessity. And if I had to guess, I’d say my charitable given has at least tripled since buying this car. Whether on the street corners or in life in general. Who would have guessed that??

In fact, this same period of ownership has also seen me finally get our philanthropy project up and running too after all these years!! Which has already helped give out over $5,000! Now perhaps it’s purely coincidental, but then again who knows… All I do know is that I’ve become much more charitable since picking up this ride and it’s nice.

#4. Expensive $hit still breaks :)

Going down to the not-so-shocking list, no matter what car you drive – old, new, expensive, cheap, fancy, boring – all cars require maintenance. Now some are more quality made and will last longer than others, but at the end of the day no car stays alive without some good ol’ TLC.  And not surprisingly, TLC costs a lot more on luxury cars vs standard ones.

I’ve already had to do oil changes, regular scheduled maintenance, and lately all new tires due to some bare threads I knew about when first picking it up, as well as a nice tire popping when some asshat left razor blades in the middle of the road, ugh. All things that come with the territory of car ownership, but all things that cost more typically with a luxury car than not. This area I don’t like so much ;)

(Also – as VIP as they treat you at the Lexus dealerships, and they def. treat you well!, it’s definitely not worth the mark up as I found trying to experience it for the first time… yikes)

#5. Expensive $hit has too many fancy buttons!

If I gave you a dollar for how many times my dang tire pressure light comes on, you’d have $15 already. I’m all for smart technology and keeping me in the loop, but my goodness does it seem a bit too much at times. Anytime the temperature changes drastically that tire gauge goes bananas over here… It even goes off when my *spare* tire needs air! Haha…

I miss the days where I just chalked it up to the car “being old” and carrying about my business ;) Though that’s probably not the smartest route to take either, and leads us to the next thought…

#6. I’m taking MUCH better care of this car than any others.

I’ve only owned one newish car before – a new-to-me Toyota Highlander back in the day, with chrome rims and all! – but even then I only did the bare minimum and was stressed any dang time new car repairs needed to be done. Which actually tells you something good right there – if you can’t afford the repairs, you can’t afford the car!!

But in this more-mature phase of mine, over 8 years since owning that car, I’m quick to act like an adult now and actually face the music anytime something needs attention. I still cringe every time and don’t enjoy it, but these days the precious cargo I drive around are much more important than the cash. So I suck it up and get stuff taken care of in a more timely manner. I’ve also since learned that I require a mechanic who I can ask a billion and one dumb questions too and not get laughed at! ;) I hate not knowing if I’m getting ripped off or not!

#7. Lots of you reading this right now also have a Lexus RX :)

The last thing I’ve learned was that, despite oodles of people hating me for this and leaving my site,  many others shared that they HAVE THE EXACT SAME CAR!! Which is fantastic! And I appreciate all of you who reached out to tell me so during the apocalypse too. (Though more of you emailed me on the side vs publicly stating it ;))

I started a tally so I could share the total numbers, but it seems I lost it all and could only find one of the messages I saved which coincidentally also came from a $$ blogger! Per Grant from Millennial Money:

“I have a 2007 and I love it. Best car ever. I bought mine off someones lease and it only has 61,200 miles on it. I live in the city and only drive like 1,200 miles a year, so I plan on driving it for at least the next 20+ years! One of my life goes is to never get rid of that car”

BOOM! So frugal or not, it always feels good knowing you’re not alone, haha…

And that’s where we stand at least now with the Lexus experience :) Will I regret it later and come back singing a different tune? Perhaps. But so far so good, and I look forward to seeing how many miles I can rack up on this thing before it runs into the ground…

I’m going for 218,000 so I can bet out the attendees of Camp Mustache! (Nice find, Gwen!)

What car you rollin’ in these days?

********* PS: Here’s that list of bloggers’ cars again if I haven’t scared you away yet: What 21 financial bloggers drive. They’re def. more in line with what you could expect, haha…

Thoughts on Owning a Lexus After 9 Months posted first on http://ift.tt/2lnwIdQ

[heliosfinance]

Thoughts on Owning a Lexus After 9 Months

Ever wondered what type of cars us financial bloggers drive? If so, you’re in for a treat today :)

My man MP from MustachianPost.com just collected data from over 20 different bloggers on what they’re riding these days, and why, and was kind enough to let us debut it on Rockstar Finance yesterday. Check it out when you get a chance!

The Cars of Personal Finance Bloggers

Some of the bloggers featured are Joshua Becker from Becoming Minimalist, Brandon from Mad Fientist, Justin from Root of Good, Jesse from YNAB (his car was my favorite surprise, especially considering he founded a budgeting company! ;)), the Financial Samurai, Mr 1500 Days, Paula from Afford Anything, The Frugalwoods, Physician on Fire, and Jason Fieber from Free At 33 – formerly Dividend Mantra.

You may be surprised what frugal people rock ;)

And if you haven’t been reading this blog for more than 9 months, you may be surprised what I drive too. In a nutshell, I went from this:

(1993 “Frankencaddy” – 90,000 miles, fully paid off, side hustle king!)

To this:

[2008 Lexus RX-350, 80,000 miles, car loan]

All in a span of a couple of weeks and totally unplanned, haha… I wrote about the whole thing in depth here (Bye Bye Frankencaddy, Hello Car Payments!), but the short version is that I needed a bigger, more reliable, car as I was taking over responsibility of driving my little nuggets around every day, and out of all the cars we looked at this was the only one that *excited me* enough to want to spend any money. I don’t really care about labels or how fancy/expensive things are, but stuff I consume DOES need to make me happy. And as long as I can afford it, it’s fair game.

The beauty of personal finance, eh?

Anyways, it came down to picking up a used minivan or a used luxury car (both around the same price, interestingly enough) and, well, for once I splurged and picked up the fancier one. I did wish I had more time to search for a cheaper and privately owned model vs snatching it from Carmax, but outside of that I’ve surprisingly had little regrets. In fact, I’m actually MORE in love with it than the day I took it home!

It’s been about 9 months now since owning it, so today I thought I’d share my thoughts so far. While hopefully not losing any more of you in the process :)

(The day I blogged about this purchase broke the record for the most unsubscribes ever here! HAH!)

We’ll start with the items that shocked me the most…

#1. A luxury car feels damn good to be in!

I know everyone (including myself) likes to say “a car is just a car and it gets me from point a to point b”, but the truth of the matter is that some just feel nicer to be in! You may not need or want a luxurious ride, but they’re definitely not all made the same. And never again will I assume people are buying them simply for “status.” I know many are, but there’s something to be said about the quality too. I’m just hoping I haven’t screwed myself from ever owning a hoopty again, haha…

#2. I’ve got more swagger than usual.

I don’t know if this will shock you as much as it did me, but I actually feel more confident riding around in this thing. I don’t know why that is, and I know I probably shouldn’t, but in all honestly I do. I just feel GOOD driving it around town, and even more so when I step into it for the first time of the day! Now granted, I also felt pretty pimp’ish rolling out in my Caddy too, but there’s a nuanced difference in the type of swaggership going on here, haha… How do you put a cost on that when factoring stuff in? ;)

#3. My charitable giving has skyrocketed

Tell me the truth: if you see a fancy car rolling up to a street corner and a homeless man is there asking for money and the driver turns a blinds eye, what’s the first thought that goes through your mind? Be honest! Mine? “What an a-hole!” “You can afford that car but can’t afford to dish out a few dollars? Come on now….”  Haha… Now what if this same car that rolled up was a beater? ;)

Obviously there are a TON of factors as to why someone does or doesn’t give out money, and I’m clearly in no position to judge, but for me personally, I just find it MUCH harder to *not* give when I’m sitting in a car that’s not at all a necessity. And if I had to guess, I’d say my charitable given has at least tripled since buying this car. Whether on the street corners or in life in general. Who would have guessed that??

In fact, this same period of ownership has also seen me finally get our philanthropy project up and running too after all these years!! Which has already helped give out over $5,000! Now perhaps it’s purely coincidental, but then again who knows… All I do know is that I’ve become much more charitable since picking up this ride and it’s nice.

#4. Expensive $hit still breaks :)

Going down to the not-so-shocking list, no matter what car you drive – old, new, expensive, cheap, fancy, boring – all cars require maintenance. Now some are more quality made and will last longer than others, but at the end of the day no car stays alive without some good ol’ TLC.  And not surprisingly, TLC costs a lot more on luxury cars vs standard ones.

I’ve already had to do oil changes, regular scheduled maintenance, and lately all new tires due to some bare threads I knew about when first picking it up, as well as a nice tire popping when some asshat left razor blades in the middle of the road, ugh. All things that come with the territory of car ownership, but all things that cost more typically with a luxury car than not. This area I don’t like so much ;)

(Also – as VIP as they treat you at the Lexus dealerships, and they def. treat you well!, it’s definitely not worth the mark up as I found trying to experience it for the first time… yikes)

#5. Expensive $hit has too many fancy buttons!

If I gave you a dollar for how many times my dang tire pressure light comes on, you’d have $15 already. I’m all for smart technology and keeping me in the loop, but my goodness does it seem a bit too much at times. Anytime the temperature changes drastically that tire gauge goes bananas over here… It even goes off when my *spare* tire needs air! Haha…

I miss the days where I just chalked it up to the car “being old” and carrying about my business ;) Though that’s probably not the smartest route to take either, and leads us to the next thought…

#6. I’m taking MUCH better care of this car than any others.

I’ve only owned one newish car before – a new-to-me Toyota Highlander back in the day, with chrome rims and all! – but even then I only did the bare minimum and was stressed any dang time new car repairs needed to be done. Which actually tells you something good right there – if you can’t afford the repairs, you can’t afford the car!!

But in this more-mature phase of mine, over 8 years since owning that car, I’m quick to act like an adult now and actually face the music anytime something needs attention. I still cringe every time and don’t enjoy it, but these days the precious cargo I drive around are much more important than the cash. So I suck it up and get stuff taken care of in a more timely manner. I’ve also since learned that I require a mechanic who I can ask a billion and one dumb questions too and not get laughed at! ;) I hate not knowing if I’m getting ripped off or not!

#7. Lots of you reading this right now also have a Lexus RX :)

The last thing I’ve learned was that, despite oodles of people hating me for this and leaving my site,  many others shared that they HAVE THE EXACT SAME CAR!! Which is fantastic! And I appreciate all of you who reached out to tell me so during the apocalypse too. (Though more of you emailed me on the side vs publicly stating it ;))

I started a tally so I could share the total numbers, but it seems I lost it all and could only find one of the messages I saved which coincidentally also came from a $$ blogger! Per Grant from Millennial Money:

“I have a 2007 and I love it. Best car ever. I bought mine off someones lease and it only has 61,200 miles on it. I live in the city and only drive like 1,200 miles a year, so I plan on driving it for at least the next 20+ years! One of my life goes is to never get rid of that car”

BOOM! So frugal or not, it always feels good knowing you’re not alone, haha…

And that’s where we stand at least now with the Lexus experience :) Will I regret it later and come back singing a different tune? Perhaps. But so far so good, and I look forward to seeing how many miles I can rack up on this thing before it runs into the ground…

I’m going for 218,000 so I can bet out the attendees of Camp Mustache! (Nice find, Gwen!)

What car you rollin’ in these days?

********* PS: Here’s that list of bloggers’ cars again if I haven’t scared you away yet: What 21 financial bloggers drive. They’re def. more in line with what you could expect, haha…

Thoughts on Owning a Lexus After 9 Months published first on http://ift.tt/2ljLF4B

[carpediempagesite]

35 Money Questions You Need to Know Before 35

By the time you’ve reached your 30s, you’ve probably heard dozens of financial acronyms and terms thrown around—from APRs to IRAs, expense ratios to exchange-traded funds. Yet while the lingo may sound familiar, you might not have a really clear understanding of what the words actually mean or how they apply to your finances. And that can be problematic when you’re trying to make the best decisions with your money.

So we’ve gathered, and answered, 35 questions on a range of financial topics that you’ll want to know by the time you’ve established your career and started building some wealth.

While we’ve started with the basics, we also include more sophisticated terms and topics. Master these, and you can not only sound smart about money, but you’ll be able to make smarter decisions with yours, too.

Basics

1. What’s your net worth?

Your true worth is unquantifiable, my friend. But financially speaking, your net worth equals your assets—cash, property (like your home, car and furniture), your checking and savings account balances and any investments—minus your liabilities, which are your debts and other financial obligations.

To calculate the net worth of your home, for example, you’d take an estimate of its current market value. (You can look at what similar homes in the neighborhood have sold for recently or have a real estate agent make an appraisal.) Next, subtract how much you still owe on your mortgage. If an agent says she could sell your home for about $215,000 and you owe about $110,000 on your mortgage, for example, that’d be about $105,000. The asset value minus your liability (or what you owe on it) equals the net worth.

Why is knowing your total net worth important? It gives you a true financial picture of how you’re doing, and highlights where you could make improvements.

2. What should you include in a budget?

First, add up your essential expenses, such as your mortgage or rent, utility bills, cell phone, food and child care. Then tally your financial obligations, like credit card, auto or student debt payments and savings goals (for emergencies, retirement and anything else you’re working toward).

Then add in “discretionary” expenses, or those that are not absolutely essential but are important to you. Don’t forget to factor in fun—entertainment, weekend trips, whatever you love—because drudging through life with a too-tight spending plan is a recipe for failure.

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Saving

1. How much should you save in your emergency fund?

Most experts agree that you should have three to six months’ worth of living expenses saved to keep you afloat in the event of, say, a home or car repair or other unexpected expense—or the loss of your job.

Related: Getting Your Emergency Fund Started

2. Where’s the best place to hold short-term savings?

For money you need to be able to access within the next year or two, advisors usually recommend looking for a high-yield savings account. Just be aware that you can only make up to six withdrawals each month.

Unfortunately, you won’t earn much interest on a savings account, as the national average is currently .06 percent. But some banks—like Ally Bank, Synchrony and Barclays—are offering 1 percent or more as of early March, so it’s worth shopping around. “Internet banks often have the [lowest] fees, better interest rates and can be much more convenient,” says Ken Tumin, co-creator of comparison site DepositAccounts.com.

3. What’s the difference between a money market and a savings account?

Both savings and money market accounts are government-insured. But money market accounts are more likely to offer check-writing capabilities and ATM or debit cards (although they are subject to the same six-withdrawals/month limit). MMAs typically have higher interest rates, but also have higher minimum balance requirements. Details vary by account.

4. Where should you put money you’ll need in two to 10 years?

If you need the money in a year or two, “You might start thinking about CDs if you want to maximize your rates,” Tumin says. One-year CDs aren’t offering much more than high-yield savings accounts now. But some two-year CDs are offering 1.5 percent or more.

If you have a longer timeframe, consider investing in stocks and bonds. Just be aware that, while the stock market has historically gone up over time, it can go up or down in the short run. (And, as advisors will caution, past performance doesn’t guarantee future returns.) So while stocks may provide higher growth opportunities than CDs and bonds, you want to allow enough time to ride the downturns out and may consider moving money into more conservative options as your time horizon gets shorter. Investing in a mix of stocks and bonds can also lower your risk.

5. What’s a CD?

CD stands for certificate of deposit, which you can buy from a bank and is guaranteed to pay interest over a designated period of time—usually much more than  a savings account would. A five-year CD from Melrose Credit Union is paying 2.4 percent, for example, while its savings accounts offer rates of just 0.5 percent. The catch is that you can’t touch the money in a CD until the designated time period ends.

“CDs can offer higher rates than savings accounts, but the price you pay is to have less liquidity,” says Tumin. “If you take the money out early, it can cost you several months of interest.”

(This page has been updated to clarify the process for calculating the net worth of an asset.)

Credit

1. What’s a credit score?

A credit score is a three-digit indication to potential lenders of your ability to repay money you borrow. The FICO score is the most widely used, ranges from 300 (womp) to 850 (rock star) and is calculated based on five factors: payment history, credit-utilization ratio, length of credit history, the mix of credit types in use and number of credit inquiries.

2. What’s a good credit score, and why is it important?

An excellent FICO score includes anything from 750 up, and the next rung down—700 to 749—is considered good. However, credit pro John Ulzheimer, formerly of FICO and Equifax, points out, the best score is the one that “gets you approved for the best deal the lender is offering.”

You may qualify for a loan with a good score, but you may need an excellent score to qualify for the lowest interest rates on that loan. Credit card companies and mortgage lenders typically reserve their lowest rates and largest loans for people who have exhibited a quality track record when handling credit.

3. How can I improve my score?

Payment history accounts for the biggest portion of your FICO score—35 percent—so submitting on-time payments is the best way to boost your score. Clearing credit card debt, thereby decreasing your utilization ratio (the amount of debt you owe compared to your total credit limit), is another way to raise your score.

“If you’re able to pay off or pay down your credit card debt, you could see a significant improvement in less than one month,” Ulzheimer says.

4. How can I see what’s on my credit report?

Keeping tabs on your credit report helps to prevent errors and fraudulent activity from going unnoticed and sinking your score. “The only way you’ll find errors on your credit reports is to actually review them,” Ulzheimer says. “The credit reporting agencies don’t have any obligation to correct errors unless you ask them to do so.”

Visit AnnualCreditReport.com to order a free report once every 12 months from each of the major credit bureaus: Equifax, Experian and Transunion. Be sure to review each one, as they may include different information.

Debt

1. What’s an APR?

This acronym stands for annual percentage rate—as in the interest rate credit cards charge on unpaid balances.

Your APR can vary, as it’s based on the U.S. prime rate (set by the Federal Reserve) and whatever additional margin your lender tacks on. APR may also differ depending on transaction: For example, most cards charge different APRs for purchases, cash advances and balance transfers. Your lender may also offer low intro APRs that expire after a specified time period and higher penalty APRs for missed payments.

2. What do you owe, and how much interest are you paying?

To be in control of your money, you need to know exactly how much you owe, including outstanding credit card balances, as well as other debt like student loans, car loans and mortgages.

Not only that, but keep in mind what rate each debt charges, so you can calculate how much you’re paying in interest. (Note: If you pay off your credit card bill each month, you’re not paying interest at all—score!—but you are building credit.)

3. When will you be debt-free?

Knowing your numbers is only half the battle. You also need a solid repayment plan with an end date.

Schedules for repaying mortgages, student loans and auto loans are usually well laid out. If you have low rates, you may not need to bother paying them faster.

Credit cards are another matter. If you only pay the minimums, you’re wasting a lot of money on interest and likely not making a big dent in your principal. Check out a calculator from Bankrate, Credit Karma or MagnifyMoney to see how the timeline changes when you commit to paying more.

4. What’s the difference between debit, prepaid, credit and charge cards?

Drawing funds directly from your checking account with each swipe, “a debit card is essentially a plastic check,” Ulzheimer explains. “A prepaid debit card is cash in plastic form.” Load up the latter with funds and use it until you draw it down to zero.

On the other hand, money tied to credit and charge cards belongs to the bank, and you’re just borrowing it. With the former, the lender allows you to carry a balance—and profits from that graciousness. Charge cards must be paid in full by the due date or you risk incurring serious penalties.

This page has been updated to clarify the formula for calculating an asset’s net worth.

Investing

1. What’s the difference between stocks and bonds?

Stocks give you a share of a public company’s assets and earnings. The value of your shares goes up and down with the company’s financial well-being—and with shareholders’ perception of that company’s well-being. Read: They’re risky, but potentially rewarding.

Bonds are like loans given to an institution. When you buy bonds from a corporation, government or other entity, you’re lending money to be paid back with interest at a specified time. Read: They’re relatively safe as long as the entity stays in business. You can look at how a bond is rated before you buy one to see how risky it is. (“AAA” and “AA” indicate a high credit-quality investment grade.)

2. What are dividends?

Dividends are periodic payouts of earnings that companies may give to certain shareholders. Typically, they’re paid in cash or additional stock. For investors, they’re a good way to collect some income while still investing for higher returns. Note that dividends may be subject to taxes.

3. What’s the difference between passive and active funds?

Calling an investment fund “passive” or “active” refers to how it’s managed. Passive funds are run with a hands-off approach, and therefore generally come with low fees.

Index funds, for example, are set up to move in tandem with associated indices (like the S&P 500, which tracks 500 of the most widely held stocks on the Nasdaq and New York Stock Exchange) and mirror their returns. Actively-managed funds attempt to beat that benchmark by making a wider variety of investments.

4. What’s the difference between mutual funds and exchange-traded funds?

Because most ETFs track indices, and are therefore more passively run, they tend to charge lower fees. They’re also traded like common stocks at varying prices throughout the day. Conversely, shares of mutual funds are priced based on their net asset value (NAV) once at the end of the trading day.

5. What’s an expense ratio, and what’s a good one?

An expense ratio is how much it costs to run a fund, including fees paid for management, recordkeeping, custodial services and taxes. It’s calculated annually by dividing operating expenses by the average dollar value of the fund’s assets—lowering returns for investors, which is why it’s important to know.

“High fees will erode your profits and significantly impact your portfolio,” says Oklahoma-based Certified Financial Planner Shanda Sullivan. “Especially when you’re saving for retirement, you’re talking about 30 years to 50 years—that’s going to add up. And remember it’s not only the money you’re losing, but it’s also the potential earnings that money could be producing.”

She suggests sticking with funds that have expense ratios below 1 percent, and preferably below 0.5 percent, as well as steering clear of so-called “load” funds, which charge extra at the point of sale.

6. What’s diversification?

Diversification means spreading your investments across a variety of assets, including stocks and bonds, CDs, and cash. For example, for your stock allocation, you want to invest in the U.S. and abroad; in large, medium and small companies; and in fast-growing businesses and more-established firms. Ideally, a well-diversified portfolio includes assets that will go up if others are down.

7. How does compounding work?

Put simply: Compound interest is when your interest earns interest—which helps your money grow at a faster rate than when “simple interest” (interest added only to the principal) is applied. Money invested in the stock market benefits from compounding, which is why it pays to start investing as early as possible.

Retirement

1. What’s a 401(k)?

A 401(k) is an employer-sponsored account where you can contribute a maximum of $18,000 pre-tax dollars in 2017 ($24,000 if you’re 50 and up). There’s a 10 percent penalty for withdrawing money before age 59½.

As an extra incentive to save, some employers match a portion of your contributions, which is essentially free money—so take advantage.

2. What’s an IRA?

IRA stands for individual retirement account. As the name implies, it’s a tax-advantaged option for saving without an employer sponsor. For 2017, you can contribute a maximum of $5,500 of earned income ($6,500 if you’re 50 or older).

There’s also a 10 percent penalty for withdrawing money prior to age 59½—except to use in specific circumstances, including qualified higher education expenses and first-time home purchases.

3. What’s the difference between a Roth and a traditional IRA?

Pre-tax contributions to a traditional IRA may be tax-deductible, depending on your income, filing status and whether you are covered by a retirement plan at work. Roth IRA savings are never tax-deductible, but the money grows tax-free. And you won’t pay Uncle Sam on your withdrawals because the initial contributions are made post-tax.

Sullivan recommends ROTHs over traditional accounts for income-qualifying Millennials. When you’re young, you may fall into a lower tax bracket than you will later in life, so pay the taxman now.

4. How should you save if you’re self-employed?

You can still use IRAs, but considering the contribution limit is $5,500, you should save elsewhere, too. To nab tax advantages, look into a solo 401(k), simplified employee pension (SEP IRA) or savings incentive match plan (SIMPLE IRA).

Sullivan likes the solo 401(k): “The great thing about it is you can contribute the annual amount [up to $18,000 in 2017], and your business can contribute as well. So you can double on contributing.”

5. Should you rollover your 401(k) if you change jobs?

You typically don’t have to rollover your 401(k), but it might be better if you do. Sullivan often recommends moving it to a Rollover IRA because it typically charges lower fees and offers a wider variety of investments than a 401(k). You might also consider rolling the funds into a new employer’s 401(k) to make keeping track easier.

Whatever you decide, “you need to take control of your 401(k) when you leave,” says Sullivan. Especially if it’s less than $5,000, your former employer may try to automatically distribute the funds to you, which will trigger taxes—and penalties—if you don’t roll it over within 60 days.

6. How much should you save for retirement?

You may have heard that you should aim to save 10 to 20 percent of your annual income, but everyone’s goal is different. The important thing is that you know your own answer, and have a plan to reach that magic number. (You can use online calculators, like those on Bankrate, Vanguard and AARP, to calculate how much you need to save.)

If those big numbers are too intimidating, take a deep breath. “I always tell people to just save something—whatever is doable for you—and increase it over time,” Sullivan says.

Insurance

1. What’s the difference between a premium and a deductible?

Your insurance premium is what you pay each month for coverage. If you get health benefits through your employer, they may pay a portion and the rest is deducted from your paycheck.

A deductible is what you shell out for covered services before your insurer starts paying, and it typically does not include copayments—fees you pay for certain services, such as $15 for a doctor’s visit. Both deductibles and copays are considered out-of-pocket expenses, which you should include in your budget.

2. What’s the difference between an FSA and HSA account?

Both flexible spending accounts and health savings accounts are smart ways to save pre-tax dollars for qualified healthcare costs, including copays, prescriptions and other out-of-pocket expenses.

Related: The (Better) Alternative to Expensive Health Care is Here

You’re only eligible for an HSA if you have a high-deductible health plan. In 2017, the minimum annual deductible for an HDHP is $1,300 for individual coverage and $2,600 for family coverage. (FSAs are not tied to a specific health plan.) In 2017, you can contribute up to $3,400 to an HSA if you have individual coverage, and up to $6,750 for a family plan. For an FSA, you can contribute up to $2,600.

Another major difference: While you can carry a balance in an HSA from year to year, letting it accumulate wealth, funds in an FSA have historically been “use-it-or-lose-it.” However, your plan provider may give you a couple months’ grace period to burn through your leftover funds, or the ability to carry over up to $500.

3. What other types of insurance do you really need?

The big ones to consider are homeowners or renters insurance, auto insurance and life insurance, says Michael Barry, spokesperson for the Insurance Information Institute.

If you own your home or car, you’re required to have insurance—for which the minimum mandatory requirements vary depending on your location and specific situation. Renters insurance may seem optional, but “people are increasingly realizing that [it] is essential to protect your personal belongings,” says Barry. (Plus, some apartment buildings do require it.)

Even if you have some life insurance coverage, Barry says a good rule of thumb is to beef up your policy when someone, like a spouse or kids, is financially dependent on you.

Real Estate

1. How much can you comfortably spend on housing?

A general guideline is that housing expenses shouldn’t exceed 30 percent of gross income. But some lenders set that figure in stone, and don’t even consider approving mortgages unless someone’s proposed home-expense-to-income ratio is 28 percent or less. (Others are more generous, but that doesn’t mean you should apply for as much as you’re pre-approved to borrow.)

2. What’s included in PITI?

Your monthly payments go toward the mortgage principal (the actual balance you owe), as well as interest, taxes and insurance. So make sure to budget accordingly.

Taxes and Wills

1. What credits and deductions can you take?

The simplest way to go is to claim the standard deduction, which is $6,300 for a single filer and $12,600 for a married couple filing jointly. But you may be able to deduct more if you “itemize,” which you can do for job-search expenses, medical expenses and charitable contributions—just to name a few.

You may also score savings by claiming a variety of tax credits, like the American Opportunity Tax Credit for up to $2,500 and the Child and Dependent Care Credit for up to $6,000 if you have two or more dependents.

2. When is the right time to create a will?

Create a will as soon as you have stuff worth bequeathing. It’s especially important if you have kids or other dependents to outline your wishes in the event something happens to you.

Also include in your estate planning a financial power of attorney, health power of attorney and advance medical directive, so you know that someone you’ve designated will have a say in what happens (or you’ll have left directions) in case a debilitating issue prevents you from making decisions for yourself.

Sullivan recommends being even more proactive and drafting these documents early on and then updating them whenever life changes—or at least every five years. “Life gets hectic and laying out your end-of-life wishes always gets put on the back burner,” she says. “Don’t leave that burden on your family members.”

This post originally appeared on Grow

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