The Best Places to Invest for Retirement

A reader named KC recently wrote in with a question about investing for retirement:

I’m 28 years old with a wife and a six month old baby. We’ve always been money-conscious, but would really like to focus our efforts. We both have Roth IRAs, but are not satisfied with them. They are heavily loaded, and we weren’t that familiar with them when we were advised to set them up. My question is where you would recommend I go for a long-term investing vehicle? I always hear to go with no-load mutual funds but would like your opinion.

This is a great question. I’ve said it before, and I’ll say it again… Friends don’t let friends pay mutual fund sales loads.

My personal preference when it comes to long-term investing centers is low-cost, no-load mutual funds. When I say low cost, what I’m really talking about is “passively-managed” index funds that seek to match the market as a whole, or some segment thereof.

Now the question is where you go to find low-cost index funds. Here you have three general options:

  1. Mutual fund company
  2. Discount Broker
  3. Automated Investment Service (a.k.a. robo advisors)

Let’s take a look at all three and the pros and cons of each.

Mutual Fund Companies

As for my favorite places to invest, Vanguard is at the top of my list. We also have some money with Fidelity and have been quite happy with their offerings. A third option would be Schwab, who has a bunch of low-cost mutual funds with a low minimum investment of $100.

It’s important to understand that not all mutual fund companies are created equal. Vanguard, for example, specializes in index funds. It also has three tools to make investing easy:

  • Target Retirement Funds: Simply pick the fund that corresponds with the year you plan to retire (e.g., Target Retirement 2060), and Vanguard takes care of the rest. It allocations your investments between stock and bond index funds. And as you near retirement, it shifts more of your money toward safer bonds.
  • Lifestyle Funds: These are similar to Target Retirement Funds in that Vanguard handles the allocation of your money and rebalances your account. Rather than picking a fund based on when you plan to retire, however, you’ll pick one based on the allocation you want between stocks and bonds (e.g., 80/20). This allocation does not change unless you change it.
  • Vanguard Personal Advisor Service: For a fee of 30 basis points (0.30%), Vanguard will manage your investments for you. For those looking for hands-on advice, it’s one of the best deals out there. You do need a minimum of $50, 000 to invest, so this service may be more suitable for those converting a 401k to an IRA.

Fidelity offers similar retirement fund options, although not all mutual fund companies do.

Discount Brokers

A second option is to open an IRA at a good discount broker. This approach is ideal for those that want to invest in individual stocks or ETFs. The major mutual fund companies do offer brokerage services, but they generally don’t compare to the online brokers who specialize in this service. Here are a few of our favorite options:

Robo Advisor

Finally, robo advisors have become an excellent way to invest in both taxable and retirement accounts. These low-cost services make investing easy. They help you select a portfolio that meets your needs. They then automatically rebalance your investments.

These services offer IRA accounts. Two of my favorite options are Betterment and Wealthfront.

Of course, there are other options to consider, such as opening a Treasury Direct account so you can buy Treasury securities such as T-Bills, T-Notes, T-Bonds, Series EE Savings Bonds, Series I Savings Bonds, etc. This will allow you to purchase these securities direct from the Federal government with no middleman.

Just keep in mind that the optimal composition of your portfolio depends on many factors, so you really need to give a lot of thought to your time horizon, risk tolerance, etc. before you make any major moves.


Review of the Discover it Card and Its Cash Back Bonus

Have you heard of the Discover it credit card yet? This highly-rated cash back credit card makes it easy for those with mid-to-high credit to jump on earning great rewards. Plus, it has an interesting matching bonus offer happening right now.

Discover it Card Basics

This card offers a great 5% cash back on bonus categories, which rotate quarterly. You have to activate the categories each quarter in order to earn your cash back, but Discover will send you emails to remind you to sign up.

The 5% Cashback calendar may change from year to year, but generally sticks to a common sense pattern. For instance, they typically offer bonuses from Amazon.com towards the end of the year (think holiday shopping!). Other bonus categories include restaurants, department stores, gas stations, and home improvement stores.

discover-it

Unfortunately, all good things have their end, and the Discover it bonus cash back is no different. Your 5% cash back only applies to the first $1, 500 in purchases for every quarter that you activate your rewards. So, you can get up to $75 per quarter in cash back rewards.

What happens once you’ve maxed out your $1, 500, or when you’re making purchases in non-bonus categories? Well, you’ll get 1% cash back on all other purchases, with no limits. You can redeem rewards for cash back on your account balance at any time, or you can use your rewards, penny for penny, for Amazon purchases.

First Year Matching Bonus

Right now, new cardmembers can get a great matching bonus. Discover will match, dollar for dollar, any cash back earned during the first year of your card membership. So, even if you just max out your $1, 500 bonus category each quarter, that’s a $300 bonus at the end of your first year as a cardholder — you’d get $600 instead of just $300!

And the matching bonus also applies to that 1% cash back, on top of the quarterly categories. So, you could earn even more bonuses in your first year as a cardholder.

No Annual Fee

Unlike many credit cards with 5% cash back bonus categories, the Discover it has no annual fee. This makes it a valuable addition to many wallets.

Introductory APR

This card currently offers a 0% introductory APR on both purchases and balance transfers. The introductory APR on purchases is good for 12 months from account opening. The introductory APR on balance transfers is available for 12 months from the date of the first transfer for any transfers posted to the account by February 10, 2017. The balance transfer fee is 3% for each transfer.

After the introductory period, the standard APR will be 11.24% to 23.24%, depending on creditworthiness. Cash advance APR is 25.24%.

Other Benefits

Discover offers several other cardholder benefits, including:

    • Freeze It Switch:You can easily freeze your card to prevent new purchases or balance transfers on your account. Since you can do this online or through the mobile app, it gives you some peace of mind if you should ever misplace your card. Plus, if you find your card before ordering a new one, you can easily un-freeze your account so you don’t have to wait around for a replacement in the mail.
    • Free Overnight Card Replacement: If you can’t lose your card or it gets stolen, you can get a free overnight card replacement to most U.S. addresses.
    • FICO Score Tracking: Track your FICO credit score online and on your monthly statements for free.
    • Card Monitoring Services: If activity on your card looks sketchy, Discover will call, email, or text you an alert.
    • Late Payment Protection: You won’t pay a late fee on your first late payment with your Discover it card. And you won’t get an APR hike on your account because of late payments, either.
    • No Overlimit Fee: Spend a little too much? No problem. Discover it has no overlimit fee to worry about.
    • No Foreign Transaction Fee: A somewhat unusual trait for a general cash back card, the Discover it doesn’t charge additional fees for transactions made in foreign countries.

The Bottom Line

The Discover it card has good review around the internet for a reason. It offers benefits that many other basic cash back cards don’t, including a 0% introductory APR offer and no foreign transaction fee.

If Discover’s rotating bonus cash back categories mesh with your spending patterns, this card could be a great way to get more rewards where you’re already spending. The 1% cash back on all other purchases isn’t stellar, however. If you’re really looking to squeeze all the cash back rewards possible out of your credit cards, you might look elsewhere for an everyday use card for purchases like groceries and gas.

Still, signing up for the 5% rotating cash back categories is easy. And the first year matching bonus offer going on right now effectively turns that 5% bonus cash back into 10% back, and the 1% cash back into 2% cash back. That’s a great offer for a card with no annual fee!

So, whether you’re looking to pay down credit card debt with a 0% APR balance transfer offer or just want to earn rewards on everyday spending, check out the Discover it card. It may be just what you’ve been looking for.


11 Great Books About Money That Everybody Should Read

Editor’s Note: This post was originally published in 2007. However, we feel that the books listed here are timeless, and still provide a wealth (pun intended) of information. Each and every one of them on this list is still highly recommended, and many of them still hold the top spots for personal finance best sellers.

11-books

I’ve been on a bit of a reading kick lately, so late last week I decided to solicit book recommendations from a few of my fellow bloggers. I asked each of them to recommend one (and only one) financial book, and to also provide me with a sentence or two describing why they chose that particular book. Amazingly, there was very little overlap in their recommendations. The end result was the following list of 11 great books about money.

Whether you’re looking for a book (or two) for yourself, or hoping to pick up a gift for someone else, there’s bound to be something of interest on this list… (more…)


The Triple Tax Advantages of a Health Savings Account

With the rising cost of healthcare in the United States, many are looking for ways to save on medical expenses. Employers are continuing to push healthcare costs onto workers, making monthly premiums higher than ever.

In addition, high-deductible health insurance plans have become increasingly popular. For these reasons, people turn to health savings accounts for savings on medical expenses. Let’s discuss what a health savings account is and explain its triple tax advantage.

What Is a Health Savings Account?

A health savings account, or HSA, is a medical savings account with tax benefits. HSAs can be used for eligible health expenses including medical, dental, and vision. HSAs can’t be used for health insurance premiums, however.

You’re only eligible to contribute to an HSA if you’re enrolled in a high-deductible health insurance plan. High-deductible plans are defined as health insurance plans with an annual deductible of $1, 300 or more for individuals and $2, 600 or more for families in 2017.

1. Contributions Are Tax Deductible

The first tax advantage of an HSA is that contributions are tax deductible. When you contribute to an HSA with after-tax money, you can deduct those contributions on your tax return for savings. You have until the tax deadline of the following year to contribute to an HSA for the current year. For example, you will have until April 18, 2017 to make contributions for the 2016 tax year.

Related: HSAs are One of the Four Savings Accounts that Everyone Should Have

The contribution limits for HSAs in 2016 are $3, 350 for an individual and $6, 750 for a family. For the 2017 tax year, the only change will be that the contribution limit for individual accounts will increase by $50.

In some cases, employers may allow employees to contribute to HSAs with pre-tax dollars through automatic payroll deductions. In this case, the contributions won’t be tax deductible. However, your taxable income will still be reduced throughout the year because of your HSA contributions. Employers can, at their discretion, make contributions to your HSA as an additional benefit.

2. Earnings Grow Tax-free

Did you know you can invest the money in your HSA? Yep, you can invest in mutuals, ETFs, etc.

Let’s say you have $10, 000 saved up in your HSA but have only spent $2, 000 of that balance. The remaining $8, 000 can be invested in the stock market so that it can grow while you’re not using it. Any gains the account experiences are tax-free. You won’t pay tax on the investment earnings.

Learn More: Using Your HSA as a Retirement Investment Vehicle

This is a major tax advantage because of the power of compound interest. Instead of paying taxes on your investment gains, the money will continue to grow. Those investment gains will build up over the years as you continue to contribute to your HSA and let the unused funds grow. If you contribute the max to your HSA each year and continue to have an unused balance, you can see how the account can grow a considerable amount over time. Since HSAs don’t expire, you can use these funds for medical expenses into retirement.

3. Distributions for Qualified Medical Expenses Are Untaxed

When you use your HSA for qualified medical expenses, your money won’t be taxed at that time. For example, if you need to pay for a $20 prescription, you can use your HSA debit card and make the purchase with your tax-free money. Or, you can pay from one of your regular accounts and then reimburse yourself from your HSA for the full $20. In this way, the distributions for qualified medical expenses are untaxed.

Your HSA provider should be able to provide you with a list of qualified medical expenses. Optum Bank, an HSA provider, provides a brief description of some qualified medical expenses as well as some expenses that don’t qualify.

Given the rising costs of medical expenses, especially in retirement, this advantage can result in sizeable tax savings.

Final Thoughts

As you can see, the triple tax advantage of HSAs really adds up. By not paying taxes on contributions, earnings, or withdrawals, you are effectively paying for medical expenses completely tax-free! For this reason, an HSA is a powerful tax saving tool.

HSA contributions reduce your taxable income each year you contribute. The best thing to do is to set up automatic contributions and contribute the maximum amount allowed by the IRS each year. Remember, since HSAs don’t expire, you can use any unused funds all the way into retirement for medical expenses.

Don’t forget that HSAs allow for tax-free investment growth. When you consider how much you’d pay otherwise in capital gains taxes, you’ll see that this is a huge tax benefit. You can choose from a wide range of mutual funds, bonds, etc. to invest your money.

The one drawback is that you’re only eligible for an HSA if you have a high-deductible health insurance plan. If you have determined that a high-deductible health insurance plan fits your needs, then an HSA is a wonderful tool to use.


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?