Maybe you’re a stay-at-home mom looking for a new career, or a college student hoping to make money on a flexible schedule. No matter your situation, the web is the perfect place to explore money-making possibilities. There are plenty of options out there — which you choose will depend on your interests, skills, time availability, and willingness to put in the work.
Here are five legitimate ways that you can make money online in this coming year, and beyond.
As more and more businesses are created online, there is a much bigger demand for virtual help. If you have a computer and a reliable internet connection, you can make money doing work over the web.
One popular way is to be a virtual assistant (VA). A VA is someone who provides administrative support to clients outside of their offices, on an independent contractor basis. VAs can also develop specialties in areas such as marketing, writing, transcription, and more. You can find plenty of VA jobs on websites like Upwork.com. You may need to offer your services for a low rate in order to gain your first few clients. Once you receive training, develop expertise, or just build a solid feedback score, you can begin to charge more.
Another area of virtual work is website usability testing. The leading provider of this service is UserTesting.com. You simply complete tasks on a website while recording your thoughts via a microphone, then submit. UserTesting currently pays $10 via PayPal for each 20-minute video you complete. The availability of tests will depend on your demographics and the quality of your videos.
Related: 33 Great Money-Making Ideas
One more area of virtual work I’d like to discuss is researching. You can actually get paid to answer research questions for businesses. This is probably the most involved way to make money online doing virtual work.
Wonder is currently the leading provider of this service. You have to complete an answer to a sample research request before being accepted as a researcher. After being accepted, how much you make depends solely on how much you’re willing to work. You’ll have access to a dashboard with ongoing requests.
This may seem obvious, but you’ll need to have a quality product. Are you good at knitting and can make fashion scarves? Etsy would be a good website to sell your items. Are you good at finding deals on electronics and want to flip them for a profit? Then eBay would be your best bet. If you feel adventurous and want to have your own new product manufactured, Amazon is a good platform the later sell that product.
When selling items online, positioning is just as important as quality. In addition to having a good product to sell, you have to advertise and place it well. This means that you’ll need competitive pricing, catchy item titles, search-engine optimized item descriptions, and attention-grabbing photos. It’s a good idea to do an analysis of the current market before entering with your items.
Taking online surveys is a tried and true way to make money online. The problem is there are plenty of illegitimate websites that are looking for your personal information and don’t offer actual paid surveys. Here are five legitimate survey websites for you to make money online:
Opinion Outpost – Points can be redeemed for cash via PayPal or for gift cards to top merchants like Amazon.com. You’ll also be entered into a quarterly $10,000 prize draw.
Harris Poll – Points can be redeemed for gift cards to top sites. You’ll also be entered into multiple sweepstakes with prizes ranging from $250 to $10,000.
American Consumer Opinion – Points can be redeemed for cash via PayPal or donated to several different charities.
Swagbucks – Points can be redeemed for gift cards from top merchants. Swagbucks also offers other ways to make money from your online activities, including shopping and watching videos.
Inbox Dollars – Redeem your earned cash via gift cards for top merchants, prepaid Visa cards, or a check. Inbox Dollars also offers ways to make money from your online activities, including playing games and signing up for offers.
Membership to all of these sites is free. You won’t get rich taking online surveys. But if you sign up through enough different websites, you can have an ongoing income stream that provides you with even a few hundred extra dollars each month.
Starting a blog is becoming an increasingly glamorized way to make money online. Although it may seem simple, there’s a lot that goes into creating a profitable blog. You have to write quality content on a regular basis, generate traffic to your blog, and then monetize that traffic.
Three typical ways to make money blogging are: affiliate marketing, display ads, and sponsored posts. To get started with affiliate marketing, sign up with affiliate networks such as FlexOffers.com, ShareASale.com, and CJ.com. These networks should offer affiliate programs for many of the products you want to promote. If you can’t find the product you want to promote on one of these networks, it’s possible that the company may have its own separate affiliate program. You can check on the company’s website, and sign up there instead.
Once you’re accepted into the programs, link to relevant sign up offers in your blog’s content. You’ll receive a commission whenever a sale is completed — the actual terms will vary by company.
Google Adsense is one of the largest display ads providers, and is responsible for many of the banner and in-page ads that you see on the websites you visit everyday. You can customize where these ads appear on your website when you sign up for Adsense. You’ll be paid a certain amount based on the number of views per ad, and an even larger amount for clicks per ad. The more traffic you have, the more money you’ll make in ad revenue.
A sponsored post is an article on your blog that you’re paid to write on behalf of a company, product, or service. It could be a full endorsement or simply linking to their website within the article. You’ll need to disclose whenever you’re paid to write content on your blog, from an ethical standpoint. A couple of websites that connect bloggers with brands for sponsored posts include IZEA and Influence Central.
Once you become popular enough and have grown your site’s traffic, you can even leverage your blog to create digital products or offer consulting services.
If you have basic writing skills and are knowledgeable about a specific subject area (or willing to learn), you can be a freelance writer. There are so many publications on the web looking for qualified writers to produce their content. Here are three excellent websites where you can find new freelance job postings on a daily basis:
Most editors will want you to have some sort of writing experience before hiring you. You can build your portfolio by writing for smaller publications and blogs for free. Once you have a few writing samples, editors will look at you more seriously. Another option is to create a blog around your topic of interest and use those blog posts as your writing samples.
Spend Less: How to Save Money on Groceries
As you can see, there is no shortage of ways to make money online. In today’s day and age, anyone with a computer and internet connection can find a way to earn extra cash from home that fits their lifestyle. While you’ll need to be cautious of scams and dead ends, there are numerous sources for legitimate (and lucrative) web-based income.
Whether it’s taking online surveys to make a few hundred dollars or creating a full-blown blog, the potential to make money online is definitely there. It’s up to you to take the necessary steps to start.
What are your favorite ways to earn cash online? Or, if you’re considering trying to make money from home, what are your reasons?
Student loan consolidation is often touted as one of the big perks of using federal student loans. Unfortunately, there are a lot of myths out there about consolidating your student loans. This leads many graduates to assume that consolidating their loans is a great option—or even the only option if they want to get out of making umpteen separate payments each month.
This isn’t to say, though, that consolidation is always a bad thing. In fact, in some instances, it can be a helpful move with your student loans. But before you jump on the bandwagon, make sure you understand all the angles and options.
Myths about student loan consolidation
First, let’s clear up some myths about federal student loan consolidation. These will help you be more educated before you make a decision on how to proceed.
Myth #1: Consolidation is available for all federal student loans
While most federal student loans are eligible for consolidation, they aren’t all eligible. There are also limits on which types of loans can be consolidated into a single Direct Consolidation Loan. For instance, parents may be able to consolidate multiple Parent PLUS Loans into a single Direct Consolidation Loan. But loans made to students cannot be consolidated with loans made to parents.
Loans that can be consolidated include:
- Direct Subsidized and Unsubsidized Loans
- Subsidized and Unsubsidized Federal Stafford Loans
- Direct PLUS Loans (made to students)
- FFEL PLUS Loans
- Supplemental Loans for Students
- Federal Perkins Loans
- Federal Nursing Loans
- Health Education Assistance Loans
- Some existing consolidation loans
If you have loans outside of these categories, including private student loans, you’ll need to look into other options.
Myth #2: Consolidating loans will lower the interest rate
One of the biggest and most common myths about student loan consolidation is that it will lower your interest rate. While consolidating student loans can lower your total minimum monthly payment, it won’t lower your interest rate.
In fact, the interest rate on your Direct Consolidation Loan is a weighted average of the interest rates of your prior student loans. While it might look like your interest rate is lower because your overall rate could be much lower than on some of your individual loans, you’d pay, overall, about the same amount of interest on a consolidation loan under the same repayment plan.
Read About It: 10 Ways to Pay for College Without Going into Debt
Additionally, consolidation loans can be helpful for locking in an interest rate on variable interest rate student loans. Most student loans are made with a fixed interest rate for the life of the loan, though the Department of Education changes interest rates with each school year. But a few loans can still have variable interest rates. When you consolidate these loans, you’ll get a fixed interest rate on the balance of all your loans.
Myth #3: Consolidation is the same thing as refinancing
This myth is related to the last one. Some graduates think that consolidating is similar to refinancing, or that they’re basically the same thing.
In fact, refinancing is something that you can’t do through a federal program. You need a private lender, such as SoFi, to refinance your loans. Refinancing through a private lender can consolidate all your loans into a single loan. It can also reduce your interest rate and offer other benefits. But consolidation through a Direct Consolidation Loan simply combines the balances of your disparate federal student loans into one loan with a single interest rate and payment plan.
Myth #4: You don’t lose any student loan benefits through consolidation
Federal consolidation loans actually do retain many of the same benefits as individual federal student loans, including access to various repayment programs. However, consolidating your loans may result in losing benefits for some of your loans.
For instance, certain forgiveness programs are set up specifically for Perkins loans. Consolidating these loans into a Direct Consolidation Loan will negate the ability to have the Perkins loans forgiven separately.
It’s essential that you understand the benefits available on all of your individual loans before deciding to consolidate them. You may be better off leaving certain loans, such as your Perkins Loans, out of the consolidation process. Luckily, you can decide which loans to consolidate when walking through the federal process, so you can customize consolidation to meet your needs.
Myth #5: Everyone should consolidate their student loans
It’s a common misconception among graduates that consolidating student loans is the best potential option for everyone.
The fact of the matter is that sometimes, leaving loans separate is often the better option. This approach can allow you to pay down your total loan balances more quickly using a snowball or avalanche method, for instance.
For those with excellent credit and employment, refinancing student loans may be a better decision. You can essentially refinance your loans into one lump sum loan, but a private lender may give you a much lower overall interest rate. This will save you money over time.
So what’s best for your needs?
With all these myths floating around, it’s no wonder that deciding whether or not to consolidate student loans is difficult. To decide whether or not you should consolidate your student loans, follow these steps:
1. Check for loan benefits
Before you can decide to consolidate or refinance, you need to understand your individual loan benefits. For which forgiveness programs might you qualify? And how will consolidation affect your eligibility? For which payment programs do each of your loans qualify? And how would consolidation expand or restrict your repayment options? Understanding these answers will help you make a solid decision.
2. Look at your repayment options
You’ll want to examine your repayment options before and after consolidating your loans. The Federal Student Loan Repayment Estimator is helpful here. Put the information for your individual loans into the estimator (or just log in with your student aid PIN to have the estimator automatically pull your information). Then, see what your current repayment options look like.
You can then estimate your consolidated repayment plans. Put your potential consolidation information, including the total loan balance and probable interest rate, into the calculator. Then, see which repayment options open up and what your monthly payments look like.
While you’re looking at this calculator, be sure to look at the total amount you’ll pay for your loans over time under different repayment plans. Consolidating your loans can open up longer-term repayment options, but these will result in paying more interest. Sometimes, this means paying much more over the life of your loan.
3. Consider refinancing
Before you consolidate your student loans, see if you might be eligible for refinancing. Private refinancing could dramatically lower your overall interest rate, which may lower your monthly payment, as well. Or you could choose a lower interest rate and shorter repayment term, leading you to ultimately pay much less over the life of your loans.
Be sure that you understand all the pros and cons of refinancing before you go this route. For instance, you may lose access to flexible repayment plan options. And while many private lenders offer forbearance or deferment in case of job loss, you’re less likely to be able to access these with private lenders than with the federal consolidation program.
Learn More: When to Use Income-Based Repayment
To refinance, you’ll need a decent credit score and a steady income. If you’re not quite there yet, don’t worry. You can always refinance down the road, even if you decide to consolidate now.
4. Make a decision
Once you put all this information together, it’s time to decide what you want to do about consolidating your student loans. If your goal is to retain flexible repayment options, access to forbearance and deferment, and a single monthly payment, consolidation is a good option. If you want to pay off your loans as quickly as possible, private refinancing is likely a better option.
The bottom line here is that federal student loan consolidation isn’t for everyone. Before you take the leap, understand what you’re getting into and weigh all your options. And if you do consolidate, stay open to other future options, including refinancing, down the road.
Savings is a huge part of personal finance. In general, you can always do two things to improve your financial situation: save more and earn more. Although earning more is a lofty goal, income is never guaranteed. But if you have solid savings and have established good spending habits, you can pretty much live on any income.
To understand where you currently are in terms of savings, it’s best to know your personal savings rate. Read further to learn how to calculate your personal savings rate.
What’s Your Personal Savings Rate?
Your personal savings rate is how much money you set aside for savings goals compared to how much money you bring home. In mathematical terms, it’s your total personal savings divided by your total income after tax.
Personal Savings Rate = Total Personal Savings / Total Income After Tax
According to the Bureau of Economic Analysis, the average personal savings rate among adults in the U.S. is 5 percent. Have you calculated yours and do you know how you stack up?
How to Calculate Your Personal Savings Rate
There are three steps in calculating your personal savings rate. In the first two steps, it’s best to make sure you account for all monies possible. You want your rate to be as accurate as possible.
Step One: Calculate Your Total Personal Savings
To calculate your total personal savings, you’ll want to include all money that you set aside for various savings goals. This could be things like:
- Contributions to your emergency fund
- Contributions to short-term savings accounts such as a vacation fund or house down payment
- Contributions to retirement accounts, including employer contributions
- Contributions to other investment accounts
It’s easier to calculate your monthly savings than your yearly savings since goals and contributions can change throughout the course of a year. So it’s best to stick with how much you save in a given month.
Step Two: Calculate Your Total Income After Tax
To calculate your total income after tax, first count how much money you bring home from your day job. Simply add the amount of net income from each paycheck for the month. Next, add in any additional income you receive each month. If you babysit, do freelance work, or own rental property, this additional money should be included in your total income. Make sure to estimate the after tax amount if tax hasn’t been deducted yet.
Step Three: Divide Your Total Personal Savings by Your Total Income After Tax
Once you have your two numbers totaled, it’s time to calculate your personal savings rate. Simply divide the first number (your total personal savings) by the second number (your total income after tax).
You’ll get a decimal number which can be turned into a percentage. Simply move the decimal point twice to the right; and that gives you your percentage.
Personal Savings Rate Example
Let’s take a look at the calculations in action:
- A single person contributes $100 per month to his emergency fund.
- He contributes another $500 per month to short-term savings accounts.
- He contributes $400 per month to his retirement account; and his employer matches half of that at $200 per month.
- He also contributes $200 per month to other investment accounts.
- His take-home pay from his day job is $3,500; and he earns $700 per month from side jobs.
This person’s total personal savings is: $1,400. His total income after tax is $4,200. That gives him a personal savings rate of 0.33 or 33 percent.
What About Debt Payments?
If you are paying off debt, you may be wondering how this factors into your personal savings rate. Unfortunately, debt payments aren’t traditionally considered as part of your total personal savings. So if you’re aggressively paying off debt, it’s natural for your personal savings rate to be lower.
There is no hard and fast rule that states you must follow the specific formula laid out in this article. If you want to include your debt payments in your total personals savings for the purpose of better tracking your finances, by all means do so.
Calculating your personal savings rate is a useful exercise to see how much of your income you’re able to hold onto each month. It’s also a good measure of financial health.
To increase your personal savings rate, first consider contributing more to your retirement account(s). After that, you could allocate more to other savings and investment accounts. (Be sure to use high-yield savings accounts as much as you can!) As your income increases, remember to increase your total personal savings to make sure your personal savings rate doesn’t decrease.
Expensive hobbies can really wreak havoc on your budget. Fortunately, there are frugal hobbies out there that are enjoyable and offer money-saving opportunities. Here’s a list of ten hobbies that save you money plus how you can save money on each one of them:
Fruits and vegetables are great for your diet, but not so nice on your wallet. Produce can easily be the largest category on your grocery bill. Picking up a gardening hobby can help you save money on fruits and vegetables. You can grow your own for a fraction of the price that grocery stores sell them for. What’s more is that most fruits and vegetables have seeds for you to regrow them at no cost!
How to save money on a gardening hobby: Opt for good soil when you shop. It may cost a little more upfront, but it will ensure that your fruits and vegetables grow properly nourished. You can also make your own compost from kitchen scraps rather than buying fertilizer.
Being skilled in sewing/knitting/crocheting will definitely come in handy. These skills serve well in making all kinds of items – from clothing to placemats. You’ll save money on the cost of those items and can also save money on gifts by gifting items you make to friends and family.
If you enjoy cooking, you’re in luck because this hobby can save you a lot of money on an expense that everyone has: groceries. Cooking at home is often less expensive than dining out or ordering takeout. By simply cooking meals at home instead of dining out or ordering takeout, you are making a decision every day to save money.
How to save money on a cooking hobby: You can save money on groceries numerous ways. One way is to shop based on your grocery store’s sales – mainly buying items that are discounted that week. You can also find coupons online for your favorite brands.
Taking pictures is something we all do – but something that few do well. If you happen to be good at and enjoy photography, you can certainly use this hobby to save money. Simply use the photos you take as art in your home rather than buying expensive photos in stores. You can also give photos to family and friends as gifts instead buying them other gifts.
How to save money on a photography hobby: One way to save money is to buy used equipment rather than new equipment. Renting equipment before you buy it can also be helpful to make sure you’re making a sound purchase.
Drawing/painting can be a very therapeutic hobby. It can also save you money in the way that photography saves you money. You can use your final products as art around the house and as gifts to family and friends.
How to save money on a drawing/painting hobby: Your best bet here is to shop during clearance sales. Art stores are notorious for being pricey. So when there are sales, make sure you jump on them.
Crafting is a hobby you can do alone or with others. If you have children, it’s a great hobby to use as bonding time. The items you make can end up as nick nacks around the house or you can sell them for a profit.
How to save money on a crafting hobby: When it comes to buying items to use for crafting, don’t overlook dollar stores. Sometimes you can find top brand products in dollar stores at a fraction of the price.
If you have the skills and interest to design and develop websites, this hobby can both save and make you a lot money. It saves you money because you won’t have to outsource any work that you need done on a potential website; and designers/developers can be very expensive.
How to save money on a web design/development hobby: You can buy domain names on the cheap via GoDaddy. GoDaddy has promotions where you can get a domain name for $0.99 for the first year! From there, use your skills to build all the websites you want.
Thrift shopping is a hobby I used to partake in when I was in college. I would find the most fashionable outfits for nowhere near what the original price tags were. Thrift shopping saves you money with each purchase, as long you don’t buy stuff you don’t need.
How to save money on a thrift shopping hobby: Thrift shopping is naturally a frugal hobby. It requires no cost except the money you spend on the items you purchase. One way to save, however, is to donate your unwanted items to a thrift store. Some thrift stores will give you credit or a discount for doing so.
Reading is one of my favorite hobbies. Not only is it relaxing, it’s educational. Reading saves you money because it’s less expensive than many other hobbies. Besides the minimal cost of books, there aren’t many other expenses that come with the hobby. All the frills like fancy bookmarks or ereaders aren’t necessary.
How to save money on a reading hobby: The one thing that can make reading an expensive hobby is if you buy books often. One way around this is to use your local library to borrow books for free. If you prefer to read books on an ereader, consider getting a subscription service like Kindle Unlimited.
Beer Brewing/Wine Making
Brewing your own beer and making your own wine at home are unique ways to save money and pass time. You’ll also enjoy much fresher drinks than the ones that have been bottled and shelved for months and years.
How to save money on a beer brewing/wine making hobby: To save money on beer brewing, consider growing your own malt rather than buying it. The same goes for grapes for wine making.
Hobbies can be fun and save you money at the same time. What’s more is that there are ways to save on even your most frugal hobbies. With the options mentioned in this article, there’s no reason for you to let an expensive hobby break your budget.
An emergency fund is a cash reserve you set aside to be used for unexpected expenses, or for regular expenses in the event of loss of income. If our lives went exactly as planned, we would never experience things like major home repairs, medical problems, or job loss. Unfortunately, all of these things are a reality and they often come at high costs. That is why it’s so important to have an emergency fund. Before we discuss where you should keep your just-in-case nest egg, let’s talk about how my own emergency fund has come in handy.
The Importance Of An Emergency Fund
Having an emergency fund has come in handy for me multiple times. The first was right after college graduation. I landed a job in the Washington, D.C. Metro area before graduating and was set to start mid-August. I found an apartment nearby, signed my lease, and had everything squared away.
Then, two weeks before I was supposed to start the job, I received a call from my soon-to-be manager telling me that the position had been eliminated. Left with no other job prospects, I decided to move to my new apartment anyway and make things work. My emergency fund kept me afloat for two and a half months until I found a viable job.
My emergency fund is also coming in handy now as I transition careers. In short, an emergency fund is a valuable tool that can keep you going in some otherwise tough situations.
Where Should You Keep Your Emergency Fund?
Given the purpose of an emergency fund, I believe it should be a liquid asset. In other words, you should be able to get your hands on the money quickly when you need it. For this reason, I’m a proponent of keeping your emergency fund in a savings account — whether that be a traditional or a high-yield one.
A traditional savings account linked to your checking account is the safest way to manage your emergency fund. You’ll receive a higher interest rate on the money than if you were to keep it in a regular checking account. Plus, you’ll still have ongoing access to the money by easily transferring it between accounts.
Learn More: Current High Interest Savings Account Rates
High-yield savings accounts offered by online-only banks come with an even higher interest rate on your balance. This makes it a good option for hosting your emergency fund, especially if you have a large balance. Transferring money to your main bank may take a little longer — two to three business days. So, you’ll need to take that into consideration as well.
My emergency fund allocation is mix of both accounts. I have six months of expenses saved in total. The funds are split between a traditional savings account (linked to my checking account) and an online-only, high-yield savings account. Specifically, one and a half months’ worth of expenses is in my traditional savings account. The rest is in the high-yield savings account.
I allocated my emergency fund this way for peace of mind and to take advantage of interest rates. I knew I wanted some money readily available to me the same day; that’s why I have some in the traditional savings account. I also knew I wanted the majority of my emergency fund to be earning a considerable amount of interest while I’m not using it. That’s why I have the rest in the high-yield savings account.
In general, you want to stay away from keeping your emergency fund in taxable investment accounts. This is because you can experience a loss in the value of your money and be subject to short-term gain taxes.
You also want to avoid using your credit card as an emergency fund. If you don’t have the money to pay the balance in full by the due date, you’ll have to pay interest on that amount.
Of course, there are exceptions to the rules. If you live in a dual-income household and have enough money in other cash accounts, you may be able to use your credit card to bail you out of a tough financial situation. This is only if you know you’ll have the money coming in to pay the bill when it comes. If you’re single or the sole provider in a family, relying on your credit card becomes a lot more risky.
Experts say you should have three to six months of expenses saved in an emergency fund. That should be enough to cover you in the event of a job loss, medical problem, or series of unexpected bills.
Of course, everyone’s financial situation is different. Some may need more and some may need less. You can use HelloWallet’s Emergency Fund Calculator to help you determine how much you should have saved in your emergency fund.
In addition to being a safety net, an emergency fund also provides peace of mind. For that reason, it’s important to keep it somewhere that gives you that sense of security. For me, having some of it in a traditional savings account and the rest in a high-yield savings account works out to be the best allocation.
Take some time to consider your financial situation and determine what’s best for you.
What has been your best option for tucking away an emergency fund? Do you save a full three to six months? Less? More?
Some people argue that having multiple credit cards is a sign of financial well-being. Others argue it’s a sign of poor money management. There’s no golden rule as to how much plastic you should carry, but before you apply for your second, third, or umpteenth credit card, you’ll want to read this article.
There are varying opinions about having multiple credit cards. Here are some advantages and disadvantages to consider:
Advantages of Having Multiple Credit Cards
Lower Credit Utilization Ratio = Higher Credit Score
As you know, there are five things that make up your credit score: new credit, credit mix, length of credit history, amounts owed, and payment history. Having a low amounts owed in comparison to your total credit available — or having a low credit utilization ratio — is associated with a higher credit score.
You’ll have a higher total amount of credit available when you have multiple credit cards, thus making your credit utilization ratio go down. In this way, you could experience an increase in your credit score. The key here is not to let your spending creep up along with your available credit.
Specialized Rewards Programs
If you have one credit card, you are limited to the rewards that come with that specific card. There isn’t one card that offers top-notch rewards in every category. For this reason, it’s beneficial to have multiple credit cards if you want to maximize your rewards.
You can sign up for different credit cards that offer specialized rewards programs. Want 3% cash back on gas purchases? There’s a card for that. Want higher-percentage rotating rewards categories? There’s a card for that, too. You can choose as many cards as you’d like to mix and match your spending habits with the best rewards programs.
If you have one credit card that you use for absolutely everything, an act of fraud could be devastating. The perpetrator would have access to all your accounts. When you place a freeze on your credit card, you’ll be without that method of payment until a new one gets issued.
If you have multiple credit cards that you use for multiple purposes, an act of fraud becomes less devastating. You can simply change your information on the affected accounts to one of your other credit cards, while the one that was compromised gets replaced.
Disadvantages of Having Multiple Credit Cards
Potential For Overspending
When you have multiple credit cards, the potential for overspending is real. This seemingly obvious point really shouldn’t be overlooked.
If you have four cards with credit limits of $2,000, $5,000, $10,000, and $15,000, you have the potential to spend $32,000! Although purchasing power is good, it can get you in real hot water if you take advantage of it and don’t have the money to pay your balances. Credit card debt is something you want to avoid if possible because interest rates can be very high.
Difficult to Manage
Managing different statement due dates can be a task on its own. Let alone keeping track of balances, and making sure you don’t spend too much on any one card. That’s why some argue against having multiple credit cards — it can become complicated!
When you have just one credit card, you know when the bill is due each month. You know exactly what your credit limit is and how much you spend on it. It’s just easier to manage overall.
Higher Risk of Fraud
Generally speaking, the more places you have your personal information, the higher your risk of identity theft. Having your information with three credit card issuers instead of one, for example, can put your information in greater danger of being hacked.
In addition, the more credit cards you have, the more chances there are for one of them to go missing and be used by an unauthorized user. Credit card companies are pretty good about not leaving you liable for unauthorized purchases. But the headache that comes with fraud is enough to make one steer away from having multiple credit cards.
How many credit cards you have will ultimately come down to personal preference. If you’re excellent at managing bills and sticking to a budget, having multiple credit cards to take advantage of specialized rewards programs may be the way to go. If you’re new to credit or haven’t had the best history with spending, you may want to stick with having a single credit card. Just make sure you take into consideration the pros and cons mentioned here.
I have not met anyone who is not busy anymore, including kids and retired folks. The always-on-the-run lifestyle has provided increased incomes and career growth for a lot of people. For many of us, though, it has also cost a lot of money.
When I was super busy, I didn’t have the time or the energy to deal with anything other than my demanding office work. We think as long as we are being productive instead of being lazy, it should work out in our favor. Realistically though, how much is being so busy costing us? And how much of it is worth it?
High cost of being too busy
A lot of businesses make good money by counting on us being busy and not following up. Here is a list of things that I am guilty of, just due to being too busy:
- Home/car maintenance: We are new homeowners. I can see how demanding maintaining a home can be. It is so easy to postpone the maintenance because we don’t get any immediate benefits. Delaying/skipping maintenance can cost quite a bit of money. I know this personally from experiences with my car’s maintenance. My car has this stupid design where the glove box has an open back, where it opens into the car hood. I had a pencil in the glove box that fell into the hood. I didn’t notice it until it started making a rattling noise. I meant to take it to the shop to get the car checked. But I was too busy. By the time I got my car to the repair shop, the little pencil had already damaged my AC fan and some other components. Cost: $900.
- Not exploring other opportunities: How many of us have time to look for better career opportunities while we are working a demanding job? Even if we are unhappy, we are frequently too tired to do anything about it. It might not be always about a higher-paying job, but how many of us explored other hobbies or other business ventures that would have been more fulfilling?
- Not cancelling unnecessary subscriptions: I am sure I am not alone in this. I had a couple of magazine subscriptions for much longer than I wanted only because it auto-renewed, and I didn’t take the time to call to cancel or look for the login information to do it online.
- Not shopping around: These days it has become a routine every six months to check whether I am getting the best rates for my car insurance, home insurance, cable/internet and phone. If not, negotiate with the current company or switch to a new one. It will take only 10-15 minutes for each one and as a recurring expense can save a lot of money.
- Not asking: This might not be just being busy, but a combination of lack of time to research what is the fair price for a product or service, fear or embarrassment to enter into a negotiation and procrastination. We can save a lot of money by simple asking for a better price. We don’t do that because we never have the time to research prices and are never confident when we ask.
- Not paying attention to deadlines (Zero-percent financing expiration, credit card bill due date, etc.): Zero-percent financing sounds like a sweet deal when we get it, but the company is counting on us to get on with life and forget about it when the deal expires or not paying attention to the fine print that says “if you miss the payment one month, the 0 percent will become 25 percent”. Missing the payment for just one month will negate any and all benefits of a zero-percent deal. My personal guilt is mail-in-rebates. An estimated 60 percent of the rebates go unfulfilled. And then there are people who forget to deposit the check. Mail-in-rebates are a marketing tactic that relies purely on people being busy, unorganized or lazy.
- Not planning properly: Another one of my failures — we eat out more due to being too busy to cook rather than enjoying a restaurant. We are trying to change this now, but still have a long way to go. Buying a plane ticket or booking a hotel during the peak season at the last minute due to lack of planning can also cost a pretty penny.
- Not taking care of our health: Quite a few of us are too busy to exercise. So we pay for a gym or buy the latest model treadmill to workout at home, we try it out for a few days/weeks, and then life happens. We let the gym membership continue or the treadmill add to our clutter because we don’t want to accept any sunk cost or we are too busy to put it up for sale.
- Not trying to understand retirement/investing: One of my friends didn’t sign up for his 401k for three whole years — a fund which gave a 5 percent match — because he didn’t “have time to read up on that stuff”. We choose the wrong investments or pay someone hefty fees to tell us what to invest in, all because we lack the time to educate ourselves on what is right for us.
- Not looking for the best ways to make our money work for us: I am not talking about the rate chasers but there are still a lot of people who pay a high fee for a simple checking account just because they have not done the research to see if there is any better option out there. Are you paying for your checking account when there are free alternatives? Are you getting the best rate for your savings?
- Not taking time to understand all the benefits that we are eligible for: We get a LOT of free benefits from places that we already pay for — like city parks, libraries, credit card benefits, workplace benefits and insurance company benefits. My credit card company and insurance company both offer a lot of discounts for places that I use regularly. My library provides free access to quite a few magazines. Lot of companies these days are providing perks like free/discounted gym membership, spa access, commuting benefits, etc. We have to take some time to see what we are eligible for and make the most of it.
- Wasting money due to disorganization: When we moved recently I found two or three of the same item not because we merged households but when we really needed something we couldn’t find it, so we went ahead and bought another one!
Most of these things can be fixed by spending a little time organizing and planning. Some areas might be costing you more than others. You can prioritize, outsource or skip stuff that is not worth much to you. The main point is to evaluate and make a conscious decision on what is best for your family.
What about you? How has your busy lifestyle affected your finances? How do you handle these “holes” in your wallet when you are too busy?
When it comes to finances, it’s important to be organized. Organization keeps you on track with your goals, makes it easier to budget, and helps you stay sane during tax time.
One part of your finances that can messy, if not organized properly, is your savings. With so many different things to set money aside for, it’s best to split it up. My favorite approach is having multiple accounts for various purposes. Here are four types of savings accounts that I think everyone should have:
An emergency savings account, or “emergency fund”, is the most important savings account you should have. It’s meant to bail you out of tight situations, in which you would’ve otherwise needed to go into debt.
There are countless circumstances where emergency savings come in handy. Here are a few examples:
- Job loss
- Home repairs
- Car repairs
- Natural disaster
- Death in the family
- Large medical bill
It’s recommended that you have three to six months of expenses in your emergency savings account. If you live in a dual-income household and have no dependents, you won’t need as big of an emergency fund as someone who lives in a one-income household and has dependents.
The best place to keep your emergency savings is in a high-yield savings account. This is liquid enough for easy access and still earns you a little bit of interest while you’re not using it. There are quite a few online banks that offer high-yield savings accounts, including Synchrony Bank, GS Bank, Ally Bank, and Capital One 360. As of November 2016, their rates ranged from 1.05% down to 0.75%.
Once you’ve saved enough in your emergency savings account, it’s time to establish your short-term and long-term savings goals. Short-term savings goals are meant for things you plan to purchase/spend money on within the next five years. For some, that might be a vacation, a wedding, a car, a house, a new TV, or new furniture.
Money for short-term goals shouldn’t be invested in the stock market. It’s too volatile for a period of savings under five years. Instead, consider saving your money in a high-yield savings account, a certificate of deposit (CD), or money market account. All three of these options offer you a small return on your money but the security that your money will not lose value in such a short amount of time.
One note about CDs: your money is tied up in the account for a period of time, and usually can’t be touched without incurring a penalty fee. (Ally Bank offers a No Penalty CD option, but it includes a lower interest rate.) Only choose a CD if you’re sure you won’t need to dip into the money for anything during the length of time you have your money in the account.
You can save for short-term goals and long-term goals at the same time. Two examples of typical long-term goals are college and retirement. Saving for long-term goals usually involves investing your money in the stock market, since you have more time to ride out the volatility.
Saving for a child’s college education can be done in many forms. One way is through a 529 plan. A 529 is a tax-advantaged savings plan, which is meant to encourage parents (or grandparents, extended family, etc) to save for their children’s future college costs. Returns on money in 529 plans are not subject to federal tax, as long as you use the money for college expenses. All states offer 529 plans, and you aren’t restricted to enrolling in the one that’s offered by your state.
Another way to save for a child’s college education is through a regular investment account. This may be a good idea if you’re not sure your child plans to go to college. You can simply invest money in an index fund with any brokerage.
Learn More: 7 Clever Ways to Pay For Your Kid’s College
Saving for retirement can be done in many forms as well. One of the easiest ways is to put money in an employer-sponsored retirement account. This will either be a 401(k) or 403(b) plan. Money is contributed to these plans pre-tax, which lowers your taxable income.
Another way to save for retirement is through an individual retirement account, whether that be a traditional IRA or a Roth IRA. These are good options if your employer doesn’t offer a retirement plan and you want to save on your own.
One Perspective: Save for Retirement Before You Save for College
The last type of savings account everyone should have is a health savings account. This doesn’t necessarily have to be an HSA, which you’re eligible for when you have a high-deductible health insurance plan. It can also be an FSA (Flexible Spending Account), which you typically get when you have a regular health insurance plan.
It’s important to have some type of health savings account because medical expenses are virtually unavoidable. Between co-pays and deductibles, medical bills can easily add up and cost you a lot. Having a dedicated account for medical expenses will be useful in helping you stay on budget and not dip into your emergency savings.
Learn More About Using an HSA to Save For Retirement
There’s no magic number as to the amount of money you should save each year for medical expenses. That will depend on how healthy you are, any medical conditions you have, and how much protection you feel comfortable having.
We all have different goals in life, some short-term and some long-term. It’s important to have savings accounts that match those goals. In addition, having an emergency savings account is crucial to making sure you stay on track with those goals and making sure that an unexpected expenses doesn’t impede your progress.
A health savings account may not be something we all think about, but it’s important to have one. If you use an HSA or FSA, those accounts come with tax benefits. If you don’t have access to either of those accounts, it’s still important to save for medical expenses, even if it’s just in a regular savings account.
No matter where you choose to tuck your money away or what you allocate it for, one important point remains across the board: save as much as you possibly can. It’s better to have it waiting there when, and if, you need it than to rack up debt for extra expenses.
Frequent travelers looking to cash in rewards for their travel purchases may want to check out the Barclaycard Arrival Plus™ World Elite MasterCard®. This card offers great miles, which can be easily redeemed for travel statement credits. It also has a great bonus offer going on right now, making it even more enticing for new cardholders.
Barclaycard Arrival Plus™ World MasterCard® Basics
This is a card geared for travelers, especially those who don’t want to mess with bonus or rotating categories. Unlike many travel credit cards, it doesn’t give you extra rewards for travel-related purchases. Instead, it simply lets you use the rewards you earn on everyday purchases towards travel-related expenses.
So, how does it work? Well, with this card, you get 2 miles for every $1 spent on any purchase. There are no expirations or caps. You can then redeem those miles for credits towards qualifying travel purchases made on your card within the past 120 days.
Your miles can also be used for a generic cash back statement credit or gift cards, but their redemption value plummets when used in this way. You can redeem miles for statement credits and gift cards starting with 5,000 miles for $25. Or you can redeem 10,000 miles for $100 toward a qualifying travel purchase. Essentially, miles are worth twice as much when redeemed for travel-related purchases.
Luckily, Barclaycard defines “travel” pretty broadly. As long as the merchant in question is using the right code, you can redeem your points at full value for purchases from airlines, hotels and motels, timeshares, campgrounds, car rental agencies, cruise lines, travel agencies, discount travel sites, trains, buses, taxis, limousines, and ferries.
To summarize: Spend on the card. Get 2 miles for every $1 spent. Make travel-related purchases. Cash in your miles for credit on those travel-related purchases.
When you spend at least $3,000 on this card in the first 90 days after opening, you’ll get 40,000 bonus miles. That’s enough for a $400 travel statement credit. Plus, when you redeem your miles for travel-related purchases, you’ll get 5% miles back to use on your next purchase.
In other words, when you cash in those 40,000 bonus miles, you’ll get 2,000 bonus miles back to use towards your next travel redemption. This makes it easier to keep a bank of miles going continuously, which you can use each time you travel.
Other Fees and Benefits
This card comes with an $89 annual fee, which is waived the first year. It carries additional benefits, including:
- 0% Introductory APR: This introductory APR applies to any balance transfers made within 45 days of account opening. You’ll pay no APR on these balance transfers for 12 months. Balance transfers carry a fee of 3% or $5, whichever is greater.
- Chip Technology: Keep your purchase more secure at terminals around the world with chip technology.
- Free FICO® Score: Log into your Barclaycard account, and you can get access to your current FICO score for free. You’ll also get email alerts when your FICO® score changes.
- MasterCard® World Elite Services: This concierge service gives you personal assistance with travel-related needs, and offers access to luxury travel benefits.
- No Foreign Transaction Fees: A must-have any time you travel internationally, this card offers no foreign transaction fees on any purchases made while you’re in another country.
- Travel Accident and Trip Cancellation Insurance: This service will reimburse any nonrefundable fees if your trip is interrupted or cancelled for a covered reason, and if your tickets were purchased with your Barclaycard Arrival Plus™.
Who is it for?
The Barclaycard Arrival Plus™ World Elite MasterCard® is for those with great credit and frequent travel plans. While it doesn’t offer 5+ miles per $1 spent, like some cards, it also doesn’t have caps or category restrictions to worry about. The 2X miles back rewards on all purchases make it easy to rack up rewards without thinking about it. And the redemption process lets you shop for the best travel deal while making the most of the rewards that you have earned.
If your goal is to squeeze the most rewards out of every single purchase, this card may not be for you. Or it may be your go-to backup card when making purchases that fall outside of other cards’ bonus categories. But if you’re looking for a no-brainer way to earn rewards that you can easily redeem for any type of travel, the Arrival Plus may be the card you need.
This card’s balance transfer offer shouldn’t be ignored, either. If you’re working your way out of credit card debt, a year-long 0% introductory APR offer is great. Especially since this card also offers great rewards on purchases, which you can use while you’re getting out of debt or after you’ve paid off the transferred balance.
Like the sound of the Barclaycard Arrival Plus World Elite MasterCard? Learn more about the card and apply for it here.
More and more people are deciding to finance the purchase of their cars. According a study conducted by Experian, 84.9% of new cars were purchased with financing in 2015. In 2016, that number rose to 86.3%.
To further demonstrate the increasing amount of auto debt we’re in, the study found that the average loan amount on a new car has increased also – from $28,711 in 2015 to $30,032 in 2016.
If you’re part of these statistics, you may find yourself in a situation in which your monthly payments are too high for your budget. That’s when refinancing a car loan comes into the equation. This often reduces your monthly payments, and may make it easier to pay off the note faster. Here’s how to go about refinancing a car loan.
When to Consider Refinancing a Car Loan
Before we discuss how to refinance a car loan, we should talk about when you should. It’s important to consider your circumstances and determine if refinancing a car loan is, in fact, the right decision for you.
Here are a couple of situations in which it makes sense to refinance your vehicle’s note:
Your credit score has increased. If your credit score has increased since you took out the loan on your car, you may qualify for a lower interest rate. Lowering your interest rate by even just 2% can save you a lot of money in the long run. Let’s take a look at an example.
Let’s imagine you have an existing car loan for $15,000 for 36 months, at 5% interest. Your current monthly payment is $449.56. Now, say your credit suddenly increased and you refinanced your loan. You took out a new loan for the $15,000 but at only 3% interest, for the same 36 months. Your new monthly payment would be $436.22.
You would save a little bit of money each month, which you could then tuck away or use to pay off the loan even sooner than 3 years. But the real savings comes in over the life of the loan.
If you paid off the original 5% loan over the scheduled 36 months, your total payout (and therefore the total cost of the car) would be $16,184.16. But if you refinanced at 3% interest and paid it off as scheduled? The total cost would drop to $15,703.92. Simply lowering your interest rate by 2% would save you $480.24. Plus, if you used the monthly savings to pay extra on your loan, you’d save even more in interest over the life of the loan.
Interest rates have decreased. If your credit score is the same but interest rates have decreased over the years, it may be worth looking into refinancing. The example above still applies. Just this time, the market is in your favor regardless if your credit score has changed.
On the flip side….
There are times when you shouldn’t refinance a car loan, no matter how tempting it may be. These include:
Your loan has a prepayment penalty. If your existing car loan has a prepayment or early termination penalty, it may not make sense to refinance. You’ll want to make sure the savings outweigh the fee. For example, if the prepayment fee is $500, your savings in the above example wouldn’t warrant incurring the penalty.
You’ll extend your loan’s term. In general, it’s best to avoid extending your loan’s terms. For example, if your current loan’s term is 36 months, refinancing to a 60 month term is generally a bad idea. Although this will lower your monthly payments, you’ll likely end up paying more in interest.
How to Refinance a Car Loan
If you reviewed your situation and determined that refinancing is right for you, there are a few ways to go about the process.
You’ll apply for an auto refinance loan which is used to pay the existing balance on your current car loan. Your car is used as collateral for the new loan. The new car loan has a fixed interest rate with fixed monthly payments for a specific number of months.
The application process is straightforward. You’ll simply go to your bank of choice and provide three sets of information:
- Personal – This includes things like your date of birth, home address, and other information that verifies your identity.
- Financial – This includes things like employment status, monthly income, and other information that verifies your ability to pay the loan.
- Auto – This includes things like the year of your vehicle, remaining loan balance, and other information that will determine the terms of your new car loan.
At the end, you’ll sign loan closing documents. You’ll also have the option to set up automatic payments from your bank account.
Where to Refinance a Car Loan
Big banks are a good first choice when you want to refinance a car loan. Some big banks to consider are:
- U.S. Bank offers rates as low as 2.49%.
- Capital One offers rates as low as 2.49%.
- Bank of America offers rates as low as 2.99%.
(All rates shown are current as of November 1, 2016)
You can also use car loan services such as CarsDirect and MyAutoLoan. These services connect buyers with lenders and give you the tools and information you need to choose the best lender for your situation.
Before heading to the bank to refinance a car loan, it’s important to consider your financial situation and the terms of your current loan. These two factors may determine that refinancing your car loan isn’t right for you. In other instances, it may make the best financial sense.
When going through the actual process, you’ll want to make sure you have all the documentation needed: personal, financial, and auto. You have multiple options when it comes to where you refinance your car loan. You can use services like CarsDirect and MyAutoLoan to shop around. Or you can go straight to a big bank like U.S. Bank, Capital One, or Bank of America.
Either way, make sure that it is the right financial decision for you, now and in the future. And if you do manage to save yourself some money on a refi? Use it to pay off some debts or pad your emergency fund, and double up on the financial smart moves. Good luck!
Have you refinanced, or are you thinking about refinancing, your car?
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