8 Ways to Save for Retirement in your 40s and 50s

I told the story elsewhere of how my wife and I woke up in our late 40s to a harsh realization: our investment cupboard was bare. We were not alone, though. In fact, millions of Americans in their 40s or 50s don’t have nearly enough money saved to retire.

In a recent GAO survey, 29% of households age 55 or older had no retirement savings. Another 23% had a pension, but no additional 401k or IRA.

Retirement Savings Survey

So what can you do if you find yourself in that position? After you shake off the scorn of the self-righteous around you and stop beating yourself up, it is time to get to work. The good news is that there is hope. We managed it, and you can do it, too.

The strategy

There are a few ways to get from where you are to where you want to be, but they all take a little bit of work.

1. Cut

The first step is you have to cut your expenses to the bone. The key number you’re looking to improve is the difference between your income and your expenses. The quickest and easiest way to do something about it is to focus on reducing your expenses.

If you are serious about getting caught up, Step 1 is to put together a budget. List all of your income and expenses, no matter how trivial they may seem. Then, you need to put the knife to the expenses, sparing no holy cows: vacations, eating out, movies, hobbies, smartphones, car(s)… everything has to come under the knife.

The good news is that you are usually at or close to your peak earning years, so creating a surplus is usually a lot easier than for a 20-something. But still, it isn’t going to be easy. Expect pain. Saving and living on a budget is not pleasant, especially if you are not used to it. Doing it to catch up is even less enjoyable. No matter what, this is a MUST.

2. Earn more

Set a target to earn more money. Start small, maybe even just $200 a month. Find things to do like moonlighting, selling off collections, making money online, or monetizing a hobby — the list of possibilities is limited only by your determination to catch up.

Here is an interesting thing many people discover: once you start pursuing opportunities for extra income, the more they present themselves. It’s almost as if they crawl out of the woodwork. Don’t ask me why — all I know is that I experienced it and I hear it from others all the time. Once you start trying to (and succeeding at) earning more, you can begin to set your target higher.

Many also discover that once they start to turn their hobby into an income, they do better than they expected. It often becomes a natural segue into a fulfilling and profitable retirement. But you rarely get there without setting that first extra income goal.

3. Save aggressively

Rather than save what is left over between your income and expenses, save first. Force your costs to match what is left over, and don’t even leave yourself the option to under-save or skip saving altogether some months. If you don’t pay yourself first, chances are you will not get caught up.

Make maximum use of the tax-advantaged funds available to you. My wife and I made our priority maxing out both our IRA and 401(k) contributions. No, it wasn’t easy at all, but desperate times call for desperate measures. Results trump “easy” when you are in the position of playing catch-up. Check out our list of the best places to open an IRA to get started.

On top of the retirement accounts, pay down as much on your home mortgage as possible. That’s the largest monthly expense for almost everyone — once that is gone, your monthly obligation drops significantly.

4. Research social security

I heard from a financial planner that there are 587 ways for married people to file for Social Security. How and when you do it can affect your payout significantly. This is something we didn’t do, and we still haven’t figured out how to do it without involving financial planners who want to sell you annuities.

Some financial planners specialize in social security. They use sophisticated software to figure out the best approach given your specific needs. You’ll find an interview with one such expert here. You can also check out Get What’s Yours — The Secrets of Maxing Out Your Social Security by Laurence J. Kotlikoff, Philip Moeller, and Paul Solman.

5. Plan to work past 62

Many people fixate on 62 because it is the youngest age at which one can begin to collect social security. However, if you have a job, can hold on to it, and are able to work, it will be worth your while to plan on staying for a few more years. The good news is that life expectancy is increasing, and improved health means many more people are capable of working well beyond 62.

However, increased health and longevity can be a double-edged sword. It means we all will probably live longer than the generation which preceded us. In turn, that means that whatever funds you have set aside for your retirement will need to last longer than you anticipated.

Working past 62 not only adds to the fund, but it also postpones the day you begin to draw against it.

6. Change your lifestyle

While similar to cutting expenses, the idea of living on less is meant to be a bit broader. Think of it as Phase 2. You should explore options like going from two cars to one, scaling down your home to the minimum you can live in, etc.

If you are looking at an underfunded retirement, you know you will have to make drastic changes to your lifestyle. The earlier you do that, the less likely a change like this will be traumatic for you.

7. Stop supporting dependents

It may sound callous or cruel, but you may need to nudge a few baby birds out of the financial nest. If your retirement fund is short, it makes no sense to put the needs of children, their families, or other people who should be taking care of themselves before your needs. This is especially true if that would result in you being unable to support yourself.

Once your finances come into line, you can always resume doing nice things for others. However, continuing to support dependents when you are at financial risk is short-sighted.

8. Become knowledgeable about investing

Warren Buffett’s famous rule for investing is, “Don’t lose it.” That, of course, refers to avoiding unnecessary risk. However, when you are 50 with no retirement fund, you have largely forfeited the luxury of picking investments with modest earnings but high security/ You would have been able to enjoy these in your younger years, but it’s a bit too late for that now.

There are investments that have higher returns than the index funds thought of as “safe.” Of course, taking advantage of those requires more than just a passing knowledge. You might think of it as another career…. and in a way, it is. The only way to “not lose it” is to know more than most other people, and that takes time and effort.

The mindset

If this sounds like an uncomfortable topic and strategy, it is. “No pain, no gain” is not just applicable to physical exercise. But if you know it up front, you can knuckle down and get where you want to be.

What got my wife and me through the serious sucking-it-up part of catching up to retirement? It was our view that this was a challenge… a project, even. We never had a woe-is-me attitude. Instead, we looked at it as a difficult goal– not easy, but not impossible, either.

Admittedly, we didn’t have to make emotionally tough choices like cutting back on things for kids or grandkids. We also didn’t have health issues, which can wreak havoc on any plan, normal or catch-up.

We also had a few investments work out unexpectedly well for us. Although there is no guarantee that will happen, I suspect it happens to many people. However, when it does, be sure not to react like I did when I was younger: to celebrate by spending it. When you are in project mode, those windfalls can’t be allowed to disappear. They become crucial building blocks.

Is it easy to catch up to building your nest egg, when you wait ’til late in the game? No. But it is possible — and, in balance, that is at least some good news.


How to Use Up Your FSA Dollars Before You Lose Them

Given that the year’s end is quickly approaching, a lot of you are likely making moves to get your finances in order before 2017. For those of you who have employer-sponsored health insurance plans, you may have contributed to a Flexible Spending Account (or FSA) in 2016. An FSA is a tax-advantaged account offered by employers in conjunction with certain health insurance plans. The idea is to help employees save, and pay, for eligible medical expenses.

fsa-dollars

If you contributed to an FSA in 2016, you may have unused funds that you’re looking to spend. FSA plans are typically “use it or lose it, ” meaning that money not spent on eligible medical expenses will be forfeited at the end of year.

What Are The Rules of an FSA?

We will discuss how to spend your FSA dollars before you lose them. But first, let’s take a look at the official rules of an FSA.

Contributions to an FSA are limited within a calendar year. For 2016, it was $2, 550 and for 2017, it will be $2, 600. This is per person. So if you’re married, your spouse can also contribute $2, 600 into his/her employer FSA this coming year.

Contributions to an FSA are pre-tax. This means that the money is deducted from your paycheck before taxes are taken out. In this way, FSA contributions reduce your taxable income for that year. Employers may elect to contribute funds to your FSA as an additional benefit.

FSAs can only be used for eligible medical expenses. Want to know what qualifies? WageWorks has a comprehensive list of eligible medical expenses for FSA reimbursement. Please note that some items will require a prescription from a doctor. Also, FSA funds cannot be used to pay for health insurance premiums.

Generally, you must use all of your FSA funds by the end of the calendar year if you don’t want to forfeit the balance. There are two exceptions that employers can offer:

  • Employers can offer a grace period of up to 2.5 months, to allow you to incur additional expenses.
  • Employers can allow up to $500 to roll over to the next calendar year.

Your employer can only offer one of these exceptions, not both. Neither is mandatory, either, so be sure to check whether these are even offered at your job.

Given these rules, you can see how important it is to accurately plan how much to contribute to your FSA in a given year. The last thing you want to do is lose out on any of your money. So, what if you’ve found that you still have money left over in your FSA after taking care of your medical expenses for the year? Well, there are other things you can do with the money before you lose it.

Things to Buy With Your FSA Dollars

As mentioned, you should take a look at WageWorks’ list of eligible medical expenses for FSA reimbursement. Did you already spend money on some of those, but not realize you could file for reimbursement? Well, now is the time to submit those receipts.

Another website to check out is FSAStore.com. I’ve personally browsed this site to get inspiration on things I could use my FSA dollars for. In fact, this website only sells items that are FSA-eligible.

One thing to watch out for, though, is the prescription requirement. For example, I’ve purchased contact lenses with my FSA funds, later learning that I needed a current prescription in order to do so. Some things I’ve purchased from FSAStore.com include:

  • First aid kit
  • Eye care bundle
  • Travel neck pillow

Here are some other ideas of things you can spend your FSA dollars on:

  • Sunscreen – Do you have a summer vacation coming up next year? Stock up on high quality sunscreen for you and the family.
  • Baby supplies – Are you planning to have a baby in the near future? Buy those necessary items such as an ear thermometer and medicine droppers. You can also purchase prenatal vitamins without a prescription.
  • Home medical devices – If you have a specific medical condition that requires home medical devices, you can use your FSA dollars for that. For example, you could buy a blood glucose monitoring system if you have diabetes, or a blood pressure monitor if you have high blood pressure.

Resource: Flexible Spending Account Rules

Another thing that some people may overlook when it comes to FSA funds is travel for medical care. You can get reimbursed for your transportation to and from medical appointments.

How to Avoid Over-Contributing to Your FSA Next Year

Although contributions to an FSA save you money in taxes, those savings are debatable if you’re rushing at the end of the year to come up with ways to spend the money. Ideally, you’d contribute just enough to use your FSA funds for necessary medical expenses throughout the year.

To avoid over-contributing to your FSA next year, review your spending on medical expenses in 2016. How much money did you spend before you found yourself with extra money left in your account? That’s likely the amount you should set to contribute next year.

The exception is if you plan to have a major medical expense come up in the next year, such as a surgery or birth of a child. In that case, you’ll have to consider things like your annual deductible and copays. Then, you can determine how much more to contribute.

Final Thoughts

An FSA is a great tax-saving tool. If you’re eligible to contribute to an FSA and have been doing so, it’s a good idea to continue. Even if it means that sometimes you’ll contribute a little more than needed, the tax savings are worth it. Given the wide assortment of things that FSA dollars can be spent on, you’ll likely find some use for any unused funds at the end of the year.

Have you ever contributed too much to an FSA? What have been your favorite ways to “use up” your FSA dollars?


Credit Karma to Begin Offering Free Tax Filing for 2017

How do you plan to prepare and file your taxes this year? If you’re like 43% of Americans, you probably did your tax returns from the comfort of your home, maybe even using a service like TurboTax or TaxAct.

credit-karma-tax

Well, get ready because in 2017, there will be a newcomer to the market of tax filing services. Credit Karma has recently announced that it’ll be offering a free tax filing service for the 2017 tax season. From the sounds of it, it’ll be a very strong competitor to the existing services available… not to mention, free.

Before we discuss the details of this new service, let’s take a look at what Credit Karma is about.

Background on Credit Karma

Credit Karma was founded in 2007 by Kenneth Lin to offer free credit scores. Since then, the personal finance company has begun offering full credit reports and has grown exponentially; in 2016, Credit Karma boasted over 60 million members.

Related: 5 Quick Fixes to Improve Your Credit Score

Other notable features from Credit Karma include credit card and loan comparisons, an online advice community, a blog, and numerous financial calculators.

Details on their Free Tax Filing Service

This San Francisco-based company continues to innovate. On December 7, 2016, Credit Karma published a press release announcing its new service, Credit Karma Tax. Credit Karma Tax is a “self-directed tax preparation service” that’ll offer free preparation and filing of federal and state tax returns.

The service will be available for the 2017 tax season to U.S. consumers. It service is made possible by Credit Karma’s recent acquisition of AFJC Corporation, which operated OnePriceTaxes.com – an online tax preparation and filing service.

The fact that Credit Karma is offering e-filing of federal and state tax returns for free is a unique feat. There are many online tax preparation and filing websites and software on the market. But most are only free up until a certain point. They either charge for state tax returns or charge once your federal tax return becomes more complicated than simple W-2s. In the press release, though, Credit Karma’s founder and CEO, Kenneth Kim, is quoted as saying:, “Credit Karma Tax will help people make financial progress, without any trial periods, hidden fees, or gimmicks.”

Given that filing tax returns is mandatory for just about every American, this free service could be a real game changer.

How Credit Karma Stays Free

Credit Karma is committed to always providing its content, tools, and services for free. The company is able to do so because it generates revenue in a different way.

The website features offers for products such as credit cards and auto loans. When a consumer signs up for one of these offers, Credit Karma receives a fee from the issuer of that credit card or loan. These types of affiliate programs are how most websites stay operational, in fact.

Resource: 12 Commonly Missed Tax Deductions

Credit Karma may leverage information in its users’ tax returns in order to generate highly-tailored offers. This would be beneficial to the user, as they would be pointed in the direction of products useful to them and their unique financial situation. It could also potentially generate even more revenue for the website.

Final Thoughts

As mentioned, Credit Karma Tax will be competing with other DIY tax filing services like TurboTax and FreeTaxUSA. Though these other companies are more established and well-known, Credit Karma will still be a strong contender out of the gate.

Many may make the switch to Credit Karma Tax in order to save some money on filing fees. Others may not be ready to leave their previous service to try something new. Either way, it’s good to have yet another option on the market.

There are several notable features that the other existing tax filing services offer, which Credit Karma Tax has not yet mentioned. For example, FreeTaxUSA offers live chat support from a tax specialist. People completing their own tax returns may find that feature valuable enough to warrant paying for their filing.

As another example, TurboTax offers audit defense as an add-on service. This gives people the option to pay extra for representation from a tax professional, in the event that they’re audited by the IRS.

It’s important to note that Credit Karma Tax doesn’t replace a licensed tax professional. Licensed tax professionals have expertise in tax law and IRS processes, and may be ideal if you have a complicated return, filing questions, or just want peace of mind throughout the process.

Choosing to file your own tax returns is a personal choice. If you do prepare your own tax returns, though, Credit Karma Tax may be worth looking into. When you’re sending a stack of money to Uncle Sam, it’s nice to at least save on filing fees.


20 Money Saving Tips for the Holidays (#3 is our secret weapon)

All of us, I’m sure, are busy shopping and planning for gifts for all the people we care about. In the process, though, we need to take some precautions. We don’t want to end up in a situation where we are happy for a month, but are left paying December’s credit card bill throughout the next year.

money-saving

So, here is my list of money-saving tips for the holidays. A lot of us have smart phones and there is an app for pretty much everything. With a little planning, you can save money, reduce stress, and have a fun-filled holiday.

  1. Make a budget and stick to it: If you have already made a holiday budget and been saving for it throughout the year, excellent! If not, make a budget now and include everything. While this tip is obvious, it’s amazing how many people end up in credit card debt every January. If you are new to budgeting, check out our guide to budgets for those who hating budgeting.
  2. Make a gift plan: Create a gift plan with the list of all recipients and ideas for gifts. If you don’t have ideas, write down their interests, which might lead you to find something. Include a maximum dollar amount. As with everything these days, there are many apps for creating and tracking a gift list. One of our favorites is the Wunderlist.
  3. Give gifts only for the kids in the family. This may require a frank conversation with friends and family, but it accomplishes two important things. First, it helps you reign in spending during the holidays. Second, it makes the holidays a lot less frantic as you reduce the time you spend shopping.
  4. Comparison shop: Know prices before you get out of the house. If you have to go on a “pre-shopping” trip, so be it. Don’t buy anything on this pre-shopping trip. Just note down the prices for all the gifts in your list and go home. There, you can check the prices online, along with how much it costs for shipping. This will give you a better idea of the price range and the best place to buy. There are several websites that allow you to track the price for the items on your list. I use Camel Camel Camel to track Amazon prices. Don’t forget to get points either using your credit card, or using an app like Checkpoints that offers points for just checking in.
  5. Look for deals and sales: If you are buying online, Google [store name + “coupon”]. You will almost always end up with some coupons for online or in-store purchases. Even if it is just for free shipping, you are saving money. Shop on Free Shipping Day or plan your purchases to meet any minimum order requirements to get free shipping. Make use of the holiday events like the Babys’R’Us first Christmas, to score some free stuff for yourself or to gift. And if you do buy online, use Ebates to get cash back on just about every purchase.
  6. Buy in bulk: For commonly used items like holiday treats or baking supplies, try to buy in bulk along with a neighbor, family member, or a friend.
  7. Homemade gifts: Instead of buying gifts,  make your own.
  8. Don’t be afraid to re-gift: This is a very personal decision. If you feel comfortable with the idea and you have a perfectly good gift that is just not for you, consider gifting it to someone who will make use of it. Save all your receipts in one place in case you have to return something. Apps like Shoeboxed can help you keep your receipts organized.
  9. Give time: Give your time instead of money or a gift. This can be ideal for teenagers and college students who are short on money but can offer elderly relatives much-needed help around the house.
  10. Get a part time job: If you can spare some time, consider getting a part-time job in a department store. You could make some money for the holidays and also make use of the employee discounts for all your gifts.
  11. Wrapping paper: Instead of buying wrapping paper, make your own with your kid’s artwork.
  12. Make ornaments: Similar to wrapping paper, instead of buying expensive ornaments, make ornaments from your kid’s artwork or with some meaningful photos.
  13. Food drives: Instead of office gift exchanges, suggest a food drive where you can bring canned and non-perishable food for the local food bank. This won’t save much money, but at least you are not stuck with buying a lame gift for a coworker you don’t even know very well.
  14. Potluck: For parties (whether you are attending or hosting) suggest potluck instead of one person doing all the cooking and cleaning. It can save serious time and money.
  15. Pick your parties: Attend only the parties that are more meaningful to you. Skip the ones from an acquaintance or coworker you don’t know well. This will save you time as well as money for a hostess gift or bring-along dish.
  16. Plan your vacations: Traveling a day earlier or later can save a lot of money. If you fly, use Google Flights to find the best deals and to be alerted when fares go up or down.
  17. Skimp on outdoor lighting: Consider going easy with the holiday lighting. You can also use LED lights which have significantly lower energy consumption. That way, you won’t get stuck with a humongous power bill in January. You could also change regular bulbs to colored ones to add a festive effect and leave it at that.
  18. Don’t replicate your parents’ festiveness: This is one of the mistakes I make — not with just holidays, but in general. I forget that it took my parents probably 50 years to collect all the stuff they have. I am just starting out, so there is no need to have every conceivable holiday decoration the first time.
  19. Buy throughout the year: It is not possible to do this for this year, but the best time to shop for Christmas is the week after Christmas. That’s when everything Christmas-related goes on clearance. Stock up on stuff that won’t get spoiled — decorations, ornaments, gift wrapping, and even gifts.
  20. Buy gift cards using the holiday deals and give yourself a gift, too: Holidays are a great time to buy gift cards at a discount. I stock up on gift cards for myself during this time, to use the following year. Two great options for discounted cards are Gift Card Granny and My Gift Card Plus.

What are your favorite money-saving tips? Do you have a weakness or do you always plan well?


A Review of the Chase Freedom Unlimited Card

Looking for an easy-to-use rewards credit card that doesn’t make you think twice about bonus categories? One that earns you cash back no matter what you buy, with flexible redemption options? Well, the Chase Freedom Unlimited may be a great option for you.

The Basics

This rewards card offers a flat 1.5% cash back on every purchase. Just spend on the card as usual, and earn rewards on every dollar spent. You can use your accrued cash back in any amount as long as your account is open and in good standing. There’s no cap on the rewards you can earn, and you can even redeem points by the penny, if you’d like.

Bonus Points

Right now, new cardholders can also get an initial signup bonus. Chase is offering $150 cash back when you spend $500 on purchases within three months of account opening. Plus, you could earn an extra $25 bonus when you add an authorized user who makes their first purchase within the same three month period.

As long as you don’t have this card and haven’t received a new cardmember bonus for the Freedom Unlimited in the past 24 months, you’ll qualify for this bonus.

Introductory Rates, Too

This is could be a great card if you’re looking to get out of debt with a balance transfer. It’s also a good option if you want to make a big ticket purchase and spread out payments without paying interest.

Why? This card currently offers a 0% introductory APR on both purchases and balance transfers for 15 months. The latter has a 5% or minimum $5 balance transfer fee, whichever is greater.

Since you can pay 0% APR for more than a year while netting cash back and bonuses, this could be a great deal. You won’t earn cash back with a balance transfer, of course, so it is a better option if you’re looking to finance a large purchase, like new appliances for your home. Pay the purchase off in 15 months or less, and you’ll have secured free financing plus some great cash back rewards. Transferring higher-interest debt to the card and paying it off with 0% over 15 months is also a great idea, though. It just depends on your needs.

After the introductory period, APR goes up to 14.24% to 23.25%, based on creditworthiness and varying with the prime rate. As with most credit cards, this one has a higher APR for cash advances.

Other Details

The Chase Freedom Unlimited comes with other standard benefits, including:

  • Zero Liability: You won’t be held responsible for unauthorized charges made to your card, so long as you report the questionable charges within the appropriate time frame.
  • Chip-Enabled Security: These cards now come with a standard chip security, which gives you more peace of mind when using them out and about.
  • Purchase Protection: Get up to $500 per claim/$50, 000 per account in purchase protection against theft or damage. This applies to purchases made on the card within the past 120 days.
  • Price Protection: If you find a lower price advertised in print or online on an item within 90 days of purchase, Chase will reimburse the difference for up to $500 per item or up to $2, 500 per year.
  • Car Rental Damage Waiver: Get additional insurance for rental cars when you charge the rental to your Chase Freedom Unlimited card. This insurance applies to rentals both within the U.S. and abroad, and carries theft and collision coverage secondary to personal insurance.

Who is this card for?

If you’re looking for a balance transfer card, this one would be a great place to begin. Even those with middle-of-the-road credit may get approved, which is great if you’re looking for a 0% introductory APR balance transfer offer to pay off debt and raise your credit score.

Alternatively, as we’ve mentioned, this card is a good option if you need to finance a big-ticket purchase but don’t want to pay interest. The 0% introductory APR on purchases is a great deal, especially since you can still get the 1.5% cash back and bonus cash back on your purchase.

The Chase Freedom Unlimited card isn’t going to give you spectacular cash back on any purchases, unlike other cards that have 3% or even 5% cash back categories. If your goal is to get the most possible rewards for your spending, this isn’t the credit card for you.

However, if you’d like to have a credit card that’s easy to use for everyday expenses, and gives you some cash back to boot, this may be worth looking into. It’s also a great backup if you’re looking to diversify your rewards. This way, you can make the most of your bonus categories on other cards (making travel-related purchases on a high-earning, travel rewards card, for example), while still getting decent cash back for your everyday purchases.


How to (Legitimately) Make Money Online in 2017

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.

Virtual Work

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.

Sell Items

Selling online is a great way to make money. There are plenty of existing marketplaces with large customer bases, such as Esty, eBay, and Amazon, to name a few.

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.

Online Surveys

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.

Blogging

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.

Freelance Writing

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

Final Thoughts

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?


Should You Consolidate Your Federal Student Loans?

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.

Resource: Options for Reducing Your Student Loan Payments

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.


How to Calculate Your Personal Savings Rate

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:

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.

Final Thoughts

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.


Can You Find a Hobby That Actually Saves You Money?

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:

Gardening

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.

Sewing/Knitting/Crocheting

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.

How to save money on a sewing/knitting/crocheting hobby: The best way to save money on this hobby is to find free or low-cost thread and yarn. You can do so on sites like Freecycle or Craigslist.

Cooking

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.

Photography

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

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

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.

Web Design/Development

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

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

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.

Final Thoughts

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.


Where Should You Keep Your Emergency Fund?

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.

Final Thoughts

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?