How to Save Money on Healthcare

This website receives compensation for products or services you obtain through the links on this site.

With Obamacare on the chopping block and the Republicans’ new healthcare plan under debate, many Americans are unsure of what their health insurance may look like in 2018. Regardless of what happens to the exchange or the individual mandate, though, there are some pretty basic tips for keeping your health insurance costs low.

healthcare2

What steps can you take to decrease your health insurance costs? These tricks will work whether you’re shopping on the current healthcare exchange, looking at plans on a new exchange next year, or choosing between employer plans.

Bump up that deductible

There’s a reason high-deductible health insurance plans are becoming more popular and prevalent: they can actually be cheaper. Sure, it looks like a lot when you see that you could pay $5,000+ for non-premium healthcare costs in a year. But most people, especially healthy individuals, don’t hit that deductible unless an unexpected health emergency occurs.

As with home and auto insurance, when it comes to health insurance, your monthly premiums go down as your deductible goes up. Choosing a plan with a higher deductible will cut your monthly premiums down.

Basically, you’re taking something of a gamble. By choosing a higher deductible, you’re risking that you’ll pay more in the event of an unexpected health situation or one that requires a high level of care. In exchange, you’re paying less each month for the life of the insurance policy.

Related: The Triple Tax Advantages of a Health Savings Account (HSA)

This can seem like a risky gamble, but if you do the math, high-deductible plans will often take less money out of your pocket even if you max them out!

Let’s say you opt for a plan with a $300 per month premium and a $6,800 deductible. That’s a really high deductible! But if you don’t have any health events for the year, you’re only out $3,600, give or take, in premium payments. If you have a health disaster and pay your out-of-pocket maximum, you’ll pay a total of $10,400.

Compare that to a $730 per month premium on a plan with a $1,000 deductible. You’ll pay at least $8,760 in premiums alone, even if you have no health events for the year. Even after you hit your deductible, you’ll still have to pay co-insurance for care received. So, a true health disaster could still land you at your out-of-pocket maximum, which could have you paying $15,000+ in healthcare costs for the year.

The bottom line: in a year without major health events, choosing a higher deductible plan is the easiest way to save on your healthcare costs. And even if you do have a major health event, the total cost of a high-deductible plan could still potentially be lower.

Understand your policy

One of the best ways to overspend on healthcare is to misunderstand your policy, or not to read it at all. For instance, many policies these days favor primary care doctor visits over visits to ambulatory care clinics. And nearly all policies charge a hefty co-pay for emergency room visits. If your policy is written this way, it will be much cheaper to make an appointment with your primary care physician, even if you have to wait a little longer.

Another issue to understand is pre-approvals. Can you go to a specialist on your own, or do you need your primary care doctor’s recommendation? Be sure you know this before you make specialist appointments.

Resource: How to Get Health Insurance If You’re Self-Employed

Of course, you should always be sure you understand the terminology used around payments. Coinsurance and copayments are NOT the same thing, so be sure you know how your insurance policy works before you start using it.

Choose the right facility and doctor

Again, insurance policies usually favor certain types of clinics over others. Figure out which facilities near you are going to be the most affordable options for emergent and non-emergent healthcare issues. Make a list, and keep it handy so you know where to go when something comes up.

Besides choosing the right type of facility, though, you also need to be sure you’re choosing within the right network. Some of the plans on the healthcare exchange, and even some employer healthcare plans these days, do not have a broad network. And going out-of-network for your healthcare can come with major additional costs. Get to know your network, and be sure your main practitioners and healthcare facilities are in-network for your insurance plan.

News: Yet Another Insurance Giant Pulls Out of Obamacare

Along these lines, you might also save money by going to local low-cost health clinics. If there’s a medical school near you, for instance, a university medical clinic that employs residents may have lower costs than a regular family doctor. If you’re struggling to make ends meet, low-cost clinics may have sliding payment scales to make treatment more affordable.

Use free screenings

One of the best ways to keep your healthcare costs low over the long run is, simply put, to stay healthy. You can keep a better eye on your health when you participate in check-ups and screenings. Luckily, you can get many of these screenings done for free.

Related: How Being Unhealthy Can Impact Your Finances

Right now, Affordable Care Act plans are required to pay for certain annual appointments and screenings at no additional cost to you. If you find that you need or would benefit from additional screenings for certain diseases, pre-diabetes, high blood pressure, or general health and wellness, look up community health fairs in your area. The results from these screenings can help you spot minor health issues before they turn into expensive long-term problems.

Go for generic drugs whenever possible

Some drugs are available in generic form at less than half the cost of the name brand version. On top of this, many major retailers (e.g., Wal-Mart, Costco, Target, and Walgreens) offer $4 prescriptions, and some even offer free antibiotics.

If you’re already on regular medications, talk to your doctor about whether you could switch to generics. Some people respond just as well to these cheaper versions of medications.

Check your bills

It’s easy to assume that your medical bills are always accurate. But if you get a bill and pay it right away without double-checking each line item, you’re doing yourself a disservice. Simple coding errors on your medical bill could mean big overpayments, which no one is likely to catch but you!

So each time you get a bill, go through it carefully. Be sure that all the services represented are ones that you were actually given. And then be sure that the payments and insurance payments for those services line up with your insurance policy.

Push back on treatments, drugs, and tests

Sometimes doctors get into the habit of ordering tests or prescribing drugs because they know patients’ insurance companies will foot the bill. And sometimes, these treatments and tests are completely necessary. But sometimes, they’re not.

As a patient and healthcare consumer, you should never be afraid to push back on medical recommendations. It’s okay to ask your doctor if an upgrade from one older, cheaper medication to a newer, more expensive version is actually necessary. And it’s okay to ask if it’s safe to see if a situation resolves before conducting further testing.

Of course, there’s a balance to be had here. That’s why it’s important to connect with physicians who will listen to you and whose advice you trust.

Find the right primary care physician

With that last point in mind, working with a primary care physician could save you money by preventing worse healthcare problems down the road. A primary care doctor can coordinate your care for ongoing conditions, and help you know when specialist visits are necessary. And a doctor who has adequate appointments for urgent issues can save you by preventing visits to the urgent care center or the emergency room.

And if you’re generally reviewing your insurance policies, see our articles on how to save money on car insurance, how to save money on home insurance and how to save money on life insurance.


The Best Budgeting Tools Out There

This website receives compensation for products or services you obtain through the links on this site.

Are you struggling to stay on your budget? Maybe it’s because you don’t have one in place yet. Or maybe, it’s because keeping track of expenses is just plain tough.

budget2

No matter the reason, there are plenty of amazing budgeting tools available these days, which can make the entire process easy to implement (and stick with). Some are for your smartphone, while others work best on your desktop.

Each of these tools has its own pros and cons, and will fit certain types of budgeters. Here are the top three that I most recommend, and why:

1. You Need a Budget (YNAB)

This is the tool that I use personally, which says a lot as I’m a bit of a passionate budgeter. It’s perfect for money geeks who like to get down into the nitty gritty of the family budget.

YNAB has a few great features, including:

  • Easy import – I personally am terrible at remembering to write down expenses, in order to transfer them to a manual budget-tracking option. That’s why I was so excited when YNAB rolled out automatic imports. It’ll bring your transactions over from your bank accounts and credit cards automatically. You just have to import and then categorize them.
  • Unlimited categories – You can set as many custom categories in YNAB as your heart desires, and name them whatever you want. Track your money however suits you best.
  • Rolling totals – YNAB lets you see how much you’ve budgeted in a month versus how much income you’ve brought in. You can also see your average Age of Money. This guages approximately how long money stays in your bank account before you spend it. The longer the better!
  • Rollover budgeting – YNAB is set up to be a zero-based, envelope-style budget. If you overspend in any given category, you’ll need to decide where to take that money from. For instance, if you spend too much on food, you might transfer some money from your clothing budget to cover it. If you under-spend in a category, the leftover funds show up on the next month’s budget.
  • Quick budgeting tools – If you’re anything like me, your budget looks similar from month to month, with some categories varying once in a while. I often use YNAB’s Quick Budget tools to set my budget to be the same for the next month. Then, I can go in and customize the budget by category if certain things need to change.
  • Goal tracking – You can use YNAB to keep track of certain savings and payment goals. This feature isn’t quite as intuitive to use as the rest of its features, though.
  • Budgeting ahead – One thing I used to hate about Mint when I used it was that I couldn’t create a budget for a month before the first of that month. I like to plan ahead and see where we’re going to have to spend money on things like car registrations. YNAB lets you budget pretty much as far ahead as you want. Go ahead and make an annual budget if that floats your boat!

Of course, YNAB isn’t perfect. It’s got some limitations, too, including:

  • Delay on importing transactions. I used to use Mint, where my transactions would show up in the budgeting software just as soon as they were no longer pending with my bank. Sometimes YNAB can take a day or two to catch up on transactions.
  • Cost. YNAB isn’t expensive — just $5 per month. I think it’s well worth it. But if you want a free option, there are plenty of those tools available, too.
  • No investment tracking. If you’re looking for a tool to track your whole financial life, including your investments, YNAB isn’t it. It’s just about your budget and will only track spending and saving.

Who’s it best for?

I would recommend YNAB for budgeters who want to change the way they interact with money and get a better handle on all the details of their spending. It doesn’t have fancy graphics, so you’ll have to be willing to look at the actual numbers rather than a visual overview of your budget. But it’s a very detailed option that has worked well for me.

2. Mint

This is the budgeting software I used to use, and it’s gotten pretty great with recent updates. Mint.com allows you to track bills, and you can also pay them from its interface. It’s primarily a budgeting software, but also allows for investment tracking. It even gives you a free credit score (updated quarterly).

Here’s what’s great about Mint:

  • Auto-import – Once you hook Mint up with your various accounts — including bank accounts, credit cards, and even installment loan accounts — it’ll automatically import transactions from those accounts. Many find it easier than trying to write down all the transactions in a spreadsheet.
  • Visual budgeting – This is an excellent tool for those who like an at-a-glance visual, instead of a bunch of numbers. Mint will give you slidebars for your budget category and your income; when you start to get close to the month’s budget, the bars will change colors to let you know you need to stop spending.
  • Custom categories – Like YNAB, Mint will let you create custom categories for all your budget items, but you can also group them together into broader categories. That way, you can tell how close you are to maxing out on your food spending, but that can include both groceries and dining out.
  • Goal options – With Mint, you can set goals for things like saving for a home or paying down debt. This is handy if you’re working towards specific financial goals.
  • Investment tracking – Mint isn’t as robust as Personal Capital, which we’ll talk about next. But it does let you track your investments and your net worth all in one place. If you’re a beginning investor focused more on budgeting and paying off debt than tracking your investments, this is a nice additional piece.
  • Free credit score – There are loads of places to get a free credit score these days, and Mint is one of them. It offers a score that’s updated quarterly.
  • Alerts – You can set Mint to alert you when you have bills coming up or when you’re over budget on a particular category. Alerts can come by text message or email.
  • It’s free! – Mint doesn’t cost anything. This is because they make money by giving you suggestions on products that you might want to buy.

As you can see, Mint is a really robust option here. But that doesn’t mean it’s perfect. Here are some of the ways it could be better:

  • Some accounts don’t sync. The list of providers with which Mint works well is extensive, but it’s not all-inclusive. Some financial providers simply don’t work with Mint. Others that are supposed to work have trouble downloading transactions. You can add transactions manually, but that’s not as intuitive as it is with YNAB.
  • Categorization isn’t always perfect. Mint’s goal is to let you be hands-off when categorizing your expenditures. But it’s not always correct. Sometimes, you’ll have to change the default category of an item, though it isn’t that big a deal.
  • Goals and budget collide. When you set a goal through Mint, sometimes that goal will be tied to an account that also is part of your budget. So, if your goal is to pay off credit card debt, and you also plan out the card’s minimum payments in your budget, it can get double counted. It’s just a little squirrely, so you have to be careful how you set those up.
  • Ads and emails. Mint sends a lot of emails, and gives you tons of ads on how you can save. This is, after all, how the program makes money. This isn’t a huge deal, but it does get annoying after a while.

Who’s it best for?

Mint is great for those who want a somewhat detailed budget, but don’t need all the nitty gritty that YNAB offers. It’s also excellent if you’re a visual person and like to see charts and graphs, rather than numbers.

3. Personal Capital

What if you’re less budget-oriented and more about your big numbers, like net worth? In this case, Personal Capital might be best for your needs. This software features detailed investment tracking, and it’ll even send you alerts when your portfolio increases or drops. It also has a budgeting component, but it’s not nearly as robust as either YNAB or Mint.

Here’s where Personal Capital excels:

  • Financial dashboard – Personal Capital’s financial dashboard gives you an at-a-glance overview of your entire life. You can track everything from your IRA to your bank account to your mortgage, and Personal Capital will keep track of your net worth and other big financial numbers.
  • Financial analysis – Personal Capital is a little like the robo advisor options that have become so helpful in recent years. You can run your numbers through a variety of quizzes, including an investment checkup and a retirement planner. This will help you figure out where you’re lacking, and what decisions might be best for your needs.
  • Cash flow tools – Personal Capital isn’t a budgeting software, per se, but it does help you look at your cash flow. You can track all your income and expenses, and you can categorize expenses the same as you can with the above-listed softwares.
  • Investment management – Personal Capital will track all of your investing vehicles under the same roof. This makes it easy for them to give you advice on how to manage your entire portfolio — not just the piece of it they manage.
  • Auto import – You can hook Personal Capital up with a variety of financial products, including checking, savings, credit cards, and investment accounts. It’ll automatically download information from those accounts on a regular basis.
  • Free options – You can pay extra for investing advice if you have a high net worth, but the basic version is free.

Where does Personal Capital fall short? I don’t prefer it as a budgeting tool, for one. Here are some of the other cons with the program:

  • Budgeting is less intuitive and detailed. Personal Capital’s Cash Flow Analyzer is good for getting a big picture overview of income and spending. However, I don’t prefer it for a more detailed budgeting process. You can categorize expenses, though I find it less intuitive and less detailed than the other budgeting options.
  • Higher advisor fees. If you don’t have a high net worth, this isn’t an issue for you. But if you’re looking at robo advisor options, Personal Capital’s fees may be a bit higher than other software options in this category.

Who’s it best for?

As a budgeting software, Personal Capital is best for individuals who just need a sky-level overview of their spending. If you’ve already got your spending under control and are just working on tracking investments, it can be a great option.

Which is right for you?

Only you can decide which budgeting software is best for your particular needs and wants. You may want to try each of these options, or even use a combination. For instance, you could use Personal Capital to track your investments and net worth, but use YNAB or Mint for detailed budgeting.

Since they’re all free (or have a free trial), you can try each option in your quest for the perfect budgeting tool for your needs..


Should You Be a Full-Time Employee or a Freelancer?

This website receives compensation for products or services you obtain through the links on this site.

According to the Bureau of Labor Statistics (BLS), the rise of the gig economy is the industrial revolution of our time — and we are only at the beginning of the journey. Some one in three Americans already freelance in some capacity, in fact. This includes both those that use it as a side hustle to supplement the 9-to-5, as well as the full-time, self-employed worker.

These freelancers are often described as working portfolio style, with a mixed bag of different, small jobs which shift and evolve over time. So, you might be an actor who also teaches music, or a property developer who has a consulting sideline, for example. Setting up this lifestyle is easier than ever with apps like Uber, Airbnb, Fiverr, and Upwork bringing workers and customers together seamlessly.

gig

But does this new style of patching together a series of small gigs actually trump the steady, corporate life that most people consider ‘work?’

If you’re thinking of seeing how the gig economy might serve you and possibly dipping your toe in this new portfolio lifestyle, you will want to do your research first. Here are some things to think about when weighing up which is best for you: full-time employment or the gig economy.

What’s your attitude toward risk?

Risk in the modern employment climate is an interesting thing. Having one job for life is a thing of the past, so we must all expect and embrace some risk in our working lives. When it comes to comparing the portfolio career with the 9-to-5, though, the question becomes how to manage said risk.

You might think that the portfolio careerists are the ones with the greatest element of risk embedded in their choices. But this is not necessarily the case. If you lose one single freelance gig from a range of several you have running parallel, you still have some work (and income) on which to rely. Compare this to our traditional notion of work, which is much more of an “all or nothing” situation.

Related: How to (Legitimately) Make Money Online in 2017

Of course, it’s not a simple equation. A well-developed career in the gig economy can be just as immune to risk (if not more so) than a more traditional role, at least in a broad sense. However, as a freelance worker, you shift all risk directly onto yourself. In effect, you lose some of the legal rights of employees, as well as the potential redundancy and sick pay available in some full-time roles. These provide at least some protection if things go wrong, so you have to decide what’s more important to have.

Can you manage your money as a freelancer?

As a freelancer, you lose the protective support of a good employer, who might provide some benefits. Moreso, though, you lose the comfort of a regular, guaranteed paycheck.

The blessing, and curse, is that you can manage your work and income on a month-by-month basis. This allows you to take on more work when needed, and do less when you choose… as long as you have a well-developed business and can keep the inquiries flowing.

But from this ever-changing pot of cash, you will still have fixed expenses to manage. You’ll also have considerations such as healthcare and how to manage bills if you can not work for some reason.

Having a flexible income is no challenge for some people, but will make others feel extremely uncomfortable. Budgeting as a freelancer is a whole different exercise compared to managing a cash flow you can predict with certainty. For some, this is a worthwhile trade-off. For others, not so much.

Is variety the spice of your life?

When it comes to the question of variety, there is little competition between an “average,” traditional job and the portfolio lifestyle made possible by the gig economy.

Most freelance workers are what is sometimes known as slashers (as in teacher/writer/coach/gigging musician). These folks find ways to make their interests and passions pay, even if they are extremely varied. Now, this takes time, and an exceptional degree of perseverance and effort. However, it can really pay off for those who seek a different working experience every day.

Resource: How to Make Money With Your Blog

If, on the other hand, you can’t stand the thought of never really knowing what is around the next corner, then a more traditional lifestyle might be a better fit.

What does success look like for you?

Career success is an abstract concept at the best of times. It becomes even more personal when choosing between freelance and permanent work.

In the traditional style of work, success could be measured by salary raises, promotions, and increased responsibility. But with these factors proving less appealing to a millennial workforce, the criteria for “winning” at work is shifting.

While success can be seen as job satisfaction in either working style, a high-achieving portfolio careerist might be someone who works (and earns) less, but has the freedom to travel. Or, at the other end of the freelance and entrepreneurial spectrum, success could be about launching and running your own business. This could be a huge endeavor, one that places higher demands on you than more traditional roles ever would.

Learn More: How to Successfully Negotiate a Raise

Probably the most notable thing about success in the different lifestyle choices? It is a concept far more loosely defined by society at large, especially in a freelance career. If you go this route, you will define your own measure of achievement, and live by your own assessment of what success looks like. The rungs of your ladder of success are not clearly marked, so you’ll need to set your own standards and celebrate your own defined victories.

How important is it to be part of a team?

Because of the very flexibility of freelance gigs, they are often solitary. Even when working in a team, the roles taken by portfolio careerists tend to be short-term or fixed contract. This ends up meaning that integrating fully into a team is difficult, although you will get to meet and work alongside a wide variety of people along the way.

When we spend so much of our waking life at work, it is worth thinking carefully about whether being in the company of colleagues is particularly important to you. While workmates might drive us crazy at times, life without them can be rather lonely.

This is noticeable even when it comes to simple questions such as how to get a specific job done on time and to budget. That is why colleagues are also often some of our closest friends — a privilege that is more difficult to come by as a portfolio worker.

What’s the future of your industry and role type?

If you’re already established in the workforce, the most pertinent question might actually be, “What’s the future of your industry and role type?”

The shape of the workforce has changed dramatically, with roles evolving or being removed at pace. If you’re in an industry where this is a risk, you should consider the options at hand. Leaping into the gig economy isn’t a one-off act for most people, but a gradual shift as interests and needs change. If you have concerns about the longevity of your traditional job, then developing skills which could support you in finding a new role, or establishing a sideline, is a strong idea.

Preparing: How to Build a Flexible Career Plan

If the BLS is right, 53 million Americans have already started their journey into the gig economy. With a staggering range of ways to tap into the freelance opportunities, and an employment environment which remains volatile at best, it’s likely more will join them. The question is, will you?


Building an Emergency Fund

This website receives compensation for products or services you obtain through the links on this site.

I’m sure that you’ve heard this before, but it bears repeating: when you’re getting your financial house in order, your first step should be to build up an emergency fund.

An emergency fund helps you get through financial rough patches in your life — broken washing machines, unexpected medical bills, and the like — without derailing the rest of your financial plan. The keys are to have this fund built up before disaster strikes and to save it for true emergencies.

emergency fund

Here, we’ll talk about how much to save in an emergency fund, how to save it, and when it’s okay to dip into those funds. We’ll also talk about emergency fund alternatives, including a home equity line of credit.

How large should your emergency fund be?

Your emergency fund goal will depend on your individual circumstances. Most financial gurus suggest an emergency fund that will cover three to six months of living expenses, though some are comfortable with less and others recommend more. Still others, such as Dave Ramsey, suggest a tiered approach where you initially set aside $1,000 and then build up a larger emergency fund after eliminating your debts.

If you have other serious financial goals, such as getting out of high-interest debt, the last option may fit your needs best. With that said, your initial emergency fund may need to be smaller or larger, depending on your circumstances.

Learn More: Where Should I Keep My Emergency Fund?

For instance, if you have a family and know that medical emergencies could be more likely to arise, you may need a larger initial emergency fund. If you make more than you spend nearly every month, though, you could divert some of your extra funds to paying for emergencies. So a smaller emergency fund, like $500, could set you up.

What if you’re already out of debt or, at least, don’t have any debts with super-high interest? In this case, you’ll need to decide whether it’s more important to pay off your remaining debts or save more in your emergency fund. This will depend on your individual financial goals, and your tolerance for risk.

With that said, when you do start building a larger emergency fund, you’ll need to look at a variety of factors when deciding how much to save, including:

  • The likelihood that you’ll lose your job. If it’s more likely, save more money.
  • You family’s earning potential. If you’re a two-income family, you may be able to get by with a smaller emergency fund. With one income, you’ll want to save more.
  • Demand in your job field. If you work in a high-demand area where getting re-hired would be simple, you may be able to have a smaller emergency fund. If finding a new job would take a while, build up more.
  • Potential large expenses that you could incur. If you’re a renter, for instance, you may get by with a smaller emergency fund because you won’t have to do any unexpected home repairs. Those are your landlord’s job. But homeowners need larger emergency funds to deal with potential housing problems.

As you can see, figuring out how much you need to save for emergencies can be difficult. When in doubt, though, you can always start on the low end of three months’ worth of expenses, and then work your way up if you feel like you need more.

How Do You Calculate Your Expenses?

One thing to remember, though, is that when we talk about an emergency fund, we’re talking about your expenses, not your budget. Your budget should include things like dining out, traveling, family vacations, clothing, fun activities, home improvements, and more. Your actual expenses, though, don’t necessarily include these things.

In this case, we’re considering your expenses to be your bare-bones budget. If a true emergency required you to stop all unnecessary spending, how far down could you strip your budget? Your must-pay expenses include, in order of importance:

  • Basic, necessary groceries and household supplies
  • Rent or mortgage payments
  • Basic utilities (not including cable, Netflix, etc.)
  • Transportation expenses to get to work or job interviews
  • Child care costs if you need it while you work or job hunt
  • Necessary personal supplies (like toothpaste) and essential clothing
  • Minimum debt payments

Look at your budget, and figure out how much those things honestly cost you on a monthly basis. That’s your one-month emergency fund goal. So if a month’s worth of expenses for you is $2,500, a three-month emergency fund would be $7,500.

How Do You Rebuild Your Emergency Fund After an Unexpected Expense?

How should you build an emergency fund?

Even though deciding on your emergency fund goal can be a bit confusing, the really hard part is actually building up that emergency fund. How do you decide between competing financial goals to save money for your emergency fund? Or where do you get that money from if you’re already living paycheck to paycheck?

For one thing, you should know that it takes time to come up with the money for your emergency fund. It may take you several months or even a year or more, even if you’re disciplined at saving. Several months’ worth of expenses is a lot of money, after all!

But this is definitely a worthwhile financial goal. In fact, having an emergency fund in place can help you more quickly meet other financial goals, like investing or starting a business. Knowing you have some cash padding helps you be more comfortable taking risks, which are essential for growing both personally and financially.

Resource: 31 Greatest Money Rules of Thumb

With all that said, here are some options for building your emergency fund:

  • Build it into your budget. You may have heard of the “pay yourself first” principle. Look at your budget, and decide how much you can afford to put towards your emergency fund each month. Then, set up an automatic transfer to put that amount into a separate savings account each time you get paid. If you never have access to that cash, you’re much less likely to spend it frivolously!
  • Put windfalls into your fund. When you receive a gift of cash or an unexpected inheritance, consider putting that money right into your emergency fund. This is an excellent way to reach your goal more quickly, without the pain of trimming your budget.
  • Stick your tax rebate into savings. Many Americans choose to use their tax refunds to pay for vacation, but you could be smart and save yours, instead. Transfer at least most of the balance into a savings account, and you’ll have an excellent start on your emergency fund.
  • Trim a specific expense. Think of one unnecessary expense you have, like picking up coffee each day instead of making it at home, or dining out. Commit to giving up that expense for a few months, and instead put what you would have spent into your savings account.
  • Use the one and done method. Alternatively, find ways to trim bigger bills, like your mortgage or cable bill. When you cut back on these expenses, put the money you’ve saved straight into your emergency fund.

How Will You Spend Your Emergency Fund?

One of the most difficult things to establish when thinking about an emergency fund is how you’ll actually spend it. What, exactly, constitutes an emergency?

Well, that’s going to depend on your individual circumstances, again. But here are a few things that are and are not a financial emergency:

An emergency is not . . . 

  • A broken TV or other entertainment device. Your TV breaking can seem like an emergency, but it’s not worth dipping into your emergency fund for. Instead, when your TV or computer (that you don’t need for money-making work) breaks, start saving up to get a new one. In the meantime, find other ways to entertain yourself.
  • Lack of planning. So, you forgot to account for all of your auto-paid bills, and you can’t grocery shop this weekend without overdrafting your account? It’s time to dig into the pantry and figure out how to eat for next to nothing while you wait for your next paycheck. It’s not time to tap your emergency fund.
  • Your washing machine breaks. This may or may not constitute an emergency. If you’re in an area with no laundromats and you can’t take your laundry to a friend’s or family member’s house, you may need to fix the machine ASAP. But if you have other options for doing your wash, consider using them while you save up to fix the machine.

An emergency is . . . 

  • You lose your job. This one’s a true emergency. If you lose your job, strip your budget to the bare essentials, and cover spending with your emergency fund while you look for a new one.
  • Your car breaks down. This one is a little like the washing machine, but it’s more likely to be an emergency. If you depend on your car to get to work, tap the emergency fund to cover repairs so you don’t lose your job. However, if there’s public transportation in your area, consider sucking it up and using that, even though it’s less convenient.
  • Your roof is leaking or furnace breaks. Some household issues are true emergencies, especially if they’re safety hazards or will become more expensive and difficult to fix if left alone. Use your emergency funds to pay for these types of repairs.
  • You have a medical or dental emergency. You should definitely pay for medical or dental emergencies, but be sure you budget to cover annual exams and dental cleanings to make these things less likely.

What are Some Other Emergency Fund Options?

So, what happens if an emergency arises before you’re able to save an emergency fund? In this case, you’ve got a few options for covering emergency expenses. None of them is as good as using cash, but they’ll do in a pinch:

  • Interest-free credit card. If you have good credit, you may be able to access a credit card with a 0% interest introductory fee. This can be a good emergency fund, temporarily. Just be aware that applying for and receiving the card will take some time. And you’ll want to repay the balance as quickly as possible.
  • Home equity line of credit. HELOCs still have historically low rates, so you could leave one open while you’re paying off high-interest debt to act as an emergency fund. It’s there if you need it, but you don’t have to use it. Just keep in mind that your home is acting as security in this case, so be sure you handle this debt extra responsibly.
  • Personal loan. Taking out a personal loan can come with high interest unless you have excellent credit. But it can be a way to access quick cash when you need it. Again, though, you’ll want to pay off this debt as quickly as possible after taking it out.

Be sure that if you use one of these other options, you only do it in the absolute most necessary emergencies. Your criteria for tapping into debt should be even stricter than your criteria for spending regular emergency savings. That’s because once you tap into the debt, you not only have to save up for your emergency fund, still, but you also have to pay back the debt.

An emergency fund is definitely an essential piece of a financially responsible life. How will you start saving yours?

 


How Being Unhealthy Can Impact Your Finances

This website receives compensation for products or services you obtain through the links on this site.

You may not think about it, but your health can affect your finances… sometimes in ways you wouldn’t expect. There’s the immediate cost of unhealthy behaviors, such as buying cigarettes or fast food. Then there are the long-term expenses, such as medical care for preventable diseases. Medications, days off of work, increased health insurance premiums — the added costs are wide and far-reaching.

UNHEALTHY

Curious how your lifestyle may be affecting your bank account? Let’s take a look at two leading unhealthy habits that cost you money: smoking and poor diet.

Smoking

Smoking is the leading cause of many diseases such as lung, mouth, and throat cancer. Not only is it bad for your health, it’s bad for your wallet, too.

According to findings summarized by Rutgers University, the net worth of a typical non-smoker was found to be twice that of a typical heavy smoker. Light smokers fare slightly better, typically having a net worth of about 50% less than their non-smoking counterparts.

One explanation for the gap in the net worth of smokers versus non-smokers is that smokers will ultimately have more expensive, and more frequent, medical expenses due to their smoking habit. The ongoing (and high) cost of cigarettes also sets smokers further back financially, compared to non-smokers.

Employers are increasingly adopting health promotion policies to improve the health of their workforce. For example, some employers require employees who identify as smokers to pay higher health insurance premiums. Other employers have smoke-free workplace policies that prohibit smoking on their premises altogether. In states without smoker-protection laws, it’s within an employer’s legal right to not hire a smoker or fire an employee for violating the smoke-free workplace policy.

Learn More About High Deductible Health Insurance Plans

Quitting smoking can save you up to $70 per week (at $10 per daily cigarette pack). This equates to over $3,500 in yearly savings. Think about what you could do with that much extra cash! Would you establish a solid emergency fund? Fund your IRA? Perhaps, you’d finally take your family on that exciting vacation you’ve always wanted. An extra three or four thousand dollars each year could go a long way for many folks.

Saving on the cost of cigarettes is just the tip of the iceberg when it comes to the benefits of quitting smoking, too. You’ll improve your overall health and decrease your likelihood of developing certain cancers, which are costly diseases to treat.

Poor Diet

There’s a reason that personal finance gurus often advise that you trim the “eating out” expenses first, when looking to whittle the expenses: fast food and restaurant meals cost a lot more than home-cooked meals. Of course, the difference in cost becomes greater the more people you have in your family. By simply cooking more meals at home, you can cut back on unhealthy food additives like salt, fat, and sugar, while saving money in the process.

Eating a poor diet can also contribute to weight gain, causing you to become overweight or obese. Being overweight or obese comes with more negative consequences than just ill-fitting clothes. Namely, it can affect your life insurance rates or whether your life insurance application is approved or denied altogether. Underwriters use height/weight tables to evaluate your health rating. If you’re overweight or obese, you could be offered higher life insurance rates than someone in a more healthy weight range, even with all other factors being equal. If your health rating is too low, you could even be denied life insurance from that provider.

Related: How Much Life Insurance Do You Need?

Having a proper diet, and making other healthy lifestyle choices, can increase longevity. People who live longer are able to take advantage of compound interest longer. As a result, their investments can grow more over time. Living to 90 instead of 80, for example, gives you 10 more years to accumulate wealth and pass on larger assets to your survivors.

Final Thoughts

If you’ve been engaging in unhealthy behaviors but weren’t aware of the financial repercussions, now’s the time to make a change. The great thing about making lifestyle changes is that you can make them gradually and still see an effect. You don’t have to jump into it all in one day, but making small changes bit by bit is still a step in the right direction.

Not only will you improve your health and finances, but you could also improve the lives of people around you. Quitting smoking reduces the amount of second-hand smoke your loved ones experience. Making more meals at home teaches the other members in your family about healthy eating as well. Before you know it, you’ll have padded your bank account and improved your whole family’s health.


What Does TaxAct Have to Offer for 2017?

This website receives compensation for products or services you obtain through the links on this site.

Tax season is upon as, and many are in the market for a preparation software to file their own tax returns. You may have heard of TaxAct before, as you filed in past years. In 2017, though, they’ve made quite a few changes to improve their software, mobile app, and support… ultimately giving you a better tax filing experience.

taxact

Here’s an overview of what TaxAct has to offer in 2017:

What’s New for 2017?

In 2017, TaxAct launched a new addition to its tax filing products, called the BluPrint Financial Assessment. BluPrint Financial Assessment provides financial guidance and savings information all year-round. With this assessment, customers receive a complimentary analysis of their tax return off the bat. Then, throughout the year, they receive additional insight on ways to reduce their tax bill next year and save for the future.

TaxAct has also implemented some enhancements to its other existing features:

  • Expanded W2 import options – TaxAct now has the ability to import W-2 forms straight from employers for over 75 million Americans. TaxAct online customers can also import PDF files of their W-2 forms.
  • Redesigned mobile app – TaxAct Express, the mobile app, gives customers an easy way to complete simple tax returns from their mobile phones or tablets. On the app, customers can also take a picture of their W-2 forms and upload it directly into their returns.
  • Personalized income interview – TaxAct has streamlined its online interview process to make it faster and easier for customers to file their tax returns.
  • Unlimited support – All of TaxAct’s products now offer unlimited phone and email support no matter which edition you purchase.
  • Prior year online return access – All TaxAct customers can now access their previously filed tax returns for the past seven years.

How Much Does TaxAct Cost?

The cost of TaxAct varies depending on the product level you choose as well as whether you choose to file online or via desktop download. Here are the current prices for TaxAct’s products:

Free Plus Premium
Online $0 for federal and state filing; $10 for optional prior year import $20; $30 state additional; prior year import included $35; $30 state additional; prior year import included
Desktop Download $0 for federal; $25 state additional; $5 for optional prior year import $40 for federal and state filing; prior year import included $55 for federal and state filing; prior year import included

Keep in mind that the prices on TaxAct’s websites are constantly changing as new promotions are released. You may be able to find sales or coupons for TaxAct during tax season on sites like RetailMeNot or Groupon.

The Free edition is recommended for simple 1040EZ and 1040A filers. The Plus edition is recommended for itemizers, homeowners, and investors. The Premium edition is recommended for those who are self-employed, freelancers, or contractors. Fun fact: the Plus edition is TaxAct’s most popular product.

What Are the Features?

TaxAct touts itself as the system to beat the system. By claiming to make “unfair advantages” — such as clever tax breaks and shrewd deductions — accessible to all, TaxAct is branded to appeal to the everyday taxpayer.

All TaxAct tax filing products share a few common features:

  • 100% accuracy and maximum refund guaranteed
  • W-2 form import
  • Unlimited tax and technical support by phone and email
  • Low price lock, even if you decide to file later
  • Personalized financial assessment

Related: This Year’s Cheapest Online Tax Software

Beyond that, there are some features that are unique to only the Plus or Premium editions. For example, on both the Plus and Premium editions, you have access to the following advanced features:

  • Saving optimization through hundreds of potential deductions and credits
  • Reporting of stocks and other investment income
  • Itemized deductions
  • Reporting of rental property income
  • Donation Assistant, which lets you import or enter charitable donations

Lastly, the Premium edition offers two features not currently available on the Free or Plus editions. These include reporting of business and farming income as well as maximization of business deductions and depreciation.

How’s the Support?

TaxAct offers support via phone and email. On its website, TaxAct states that emails will be responded to within three business days. Since that’s a long time to wait, most people will probably resort to phone support if they need to contact TaxAct. The downside here is that their phones aren’t staffed 24/7. The phone support hours are as follows:

  • Monday – Friday: 7AM – 9PM CT
  • Saturday: 8AM – 6PM CT
  • Sunday: 10AM – 5PM CT

However, on the last day to file taxes this year (April 18, 2017), TaxAct’s phone support will be extended to 12AM CT.

TaxAct doesn’t offer live chat support. But they do have a comprehensive knowledge base of articles on everything from how to review your tax return to how to file an extension.

Unlike many of its competitors, TaxAct doesn’t offer an audit protection or audit defense add-on. Its audit assistance consists of a set of dedicated pages in its knowledge base.

Resource: What to Do If You Get Audited

What Are the Refund Options?

If you’re expecting a refund, you can receive it one of three ways:

  • Direct deposit to a bank account
  • Direct deposit to an American Express Serve Prepaid Debit Account
  • Paper check

TaxAct also gives you the options to use your refund to purchase U.S. Savings Bonds in $50 increments or apply it to next year’s estimated taxes.

You can have your TaxAct product fee deducted from your refund as well.

The Verdict

TaxAct has made some new improvements to its products this year that make them worth considering for preparing your taxes. Namely, the expanded W-2 form import options and the prior-year online return access can save you time while preparing your return.

Where TaxAct falls short is on its support. The lack of live chat and the limited phone availability can negate any time savings offered by the new features.

Given that TaxAct has a totally free edition, it may definitely be worth looking into if you have a simple tax return.


Everything You Need to Know About Renter’s Insurance

This website receives compensation for products or services you obtain through the links on this site.

If you rent your home, you may be wondering what protection you have in the event of vandalism or a natural disaster. Renter’s insurance is designed to provide financial coverage for renters, since homeowner’s insurance and landlord’s insurance typically don’t cover things like a tenant’s personal property.

Despite this, only 37% of renters currently have renter’s insurance. Let’s take a look at the details of renter’s insurance, and discuss why you need it if you are currently renting.

What Is Renter’s Insurance?

Renter’s insurance is a policy that provides protection benefits to tenants who live in housing that they don’t own. It typically provides personal property coverage, liability coverage, and coverage for living expenses if the housing becomes unlivable. In the event of things like vandalism, fire, or theft, the policy will cover your eligible expenses associated with the damage.

Many rental properties require tenants to have rental insurance. Homeowner’s insurance and landlord’s insurance typically don’t cover the renter’s personal property. They also rarely cover any damages caused by the tenant. This is where renter’s insurance comes in.

It’s more of a protection benefit for the renter than it is for the homeowner. Should something happen, like a fire, the renter can seek to have his/her personal property replaced via the insurance policy. Otherwise, they could be up the creek without a paddle for anything damaged or destroyed.

Should the renter accidentally cause damage to a nearby unit, renter’s insurance can also cover the expenses associated with fixing the housing that was damaged.

Why Do You Need Renter’s Insurance?

Because renter’s insurance is usually inexpensive compared to other insurance policies, it’s generally a wise investment. The alternative, of course, is not having renter’s insurance… which would make you responsible for replacing all of your belongings in the event of a natural disaster. It would also make you responsible for covering 100% of your living expenses, should your housing become unlivable for any reason.

With renter’s insurance, you have a sense of financial security. There are many things that can wrong with housing. Think of renter’s insurance as something that gives you peace of mind and makes it less likely for you to have to use your own money in the event of something bad happening to your housing. In general, it’s better to have insurance and not need it than to not have insurance and need it.

What Does Renter’s Insurance Cover?

Personal property coverage helps cover the cost of replacing your belongings, should they become unexpectedly damaged or stolen. Standard renter’s insurance, also known as an HO-4 policy, covers your personal property in these 16 events:

  1. Fire
  2. Windstorm
  3. Explosion
  4. Riot or civil commotion
  5. Damage caused by aircraft
  6. Damage caused by vehicle
  7. Smoke
  8. Vandalism
  9. Theft
  10. Volcanic eruption
  11. Falling object
  12. Ice, snow, or sleet damage
  13. Damage from artificially generated electric current
  14. Freezing
  15. Accidental discharge or overflow of water or steam
  16. Tearing apart, cracking, burning or bulging of a steam or hot water heating system, an air conditioning system or an automatic fire-protective system

Learn More: Renter’s Insurance Doesn’t Cover Floods!

Liability coverage helps protect you in the event that you are held legally responsible for the damage to another person’s property. It also covers you for injury to a person while they are in your housing. For example, if your child throws a ball through your neighbor’s window and the replacement costs $400, that’s something renter’s insurance would cover. Another example is if someone slips and falls in your home, that person’s medical bills are covered under your renter’s insurance.

Coverage for living expenses helps pay for your additional housing in the event that your rental becomes unlivable. This could happen for many reasons. Let’s say a fire destroys the structure of the property. You could live in a hotel until the property is rebuilt. Renter’s insurance would help pay for that hotel bill. Renter’s insurance would also help pay for additional costs that come with living outside your rental, such as the increased cost of food.

How Much Does Renter’s Insurance Cost?

The average annual cost of renter’s insurance in the United States is $187. The cost varies by state and insurance company. It’s always best to shop around when buying any sort of insurance policy. You want to get the most coverage at an affordable price, without compromising quality of service. State Farm currently has the biggest market share in the renter’s insurance industry and is well-rated. Allstate is another large and very respected insurance company.

One way to save on renter’s insurance is to pay annually instead of monthly. Many insurance companies offer a discount when you pay one lump sum each year, rather than making monthly payments towards your policy. Another way to save is to buy multiple insurance policies from the same company. Many insurance companies will offer a discount when you get both auto insurance and renter’s insurance, for example.

Related: Deducting Losses from Theft, Fire, or Other Disaster

How much personal property you decide to protect is an important consideration to make. You don’t want to overestimate the value of all your property because you’ll pay higher premiums. You also don’t want to underestimate the value of your personal property and be left to replace certain items on your own in the event of an actual disaster.

Some insurance companies will also let you choose your deductible from a small range. The lower your deductible, the higher your premiums will be.

Final Thoughts

While renter’s insurance helps protect you in several ways, it’s important to know what renter’s insurance doesn’t cover. Renter’s insurance generally doesn’t cover the actual building you live in — the landlord’s homeowner’s insurance is designed to protect the structure itself. You, the tenant, are responsible for covering your personal belongings, as well as any damage that occurs to other properties or other people as a result of your negligence while living in the housing.

With that being said, renter’s insurance is still worth it for all that it does cover. By providing personal property coverage, liability coverage, and coverage for living expenses in the event that your housing becomes unlivable, renter’s insurance is a good investment at generally less than $300 per year.


Things to Consider When Applying for a Credit Card

This website receives compensation for products or services you obtain through the links on this site.

Whether you’re applying for your first credit card or your tenth, there are key factors you should always consider. These include things like your credit score, income, and what you want out of a credit card.

Your Creditworthiness

The first thing to consider when applying for a credit card is your creditworthiness. Creditworthiness is a lender’s judgment on your ability to pay back money that you borrow. The better you rank, the wider range of credit cards you’ll be able to get.

As you can imagine, your credit score plays a major factor in determining your creditworthiness. So, it’s important to know your most current score when applying for a new card. You can find out your credit score in a number of ways, including:

You have multiple credit scores, and each can vary slightly. Knowing a general range of your credit scores is ideal to figure out how your credit ranks (poor, fair, good, or excellent).

Learn More: 5 Quick Fixes to Improve Your Credit Score

Your credit score isn’t the only thing lenders look at when determining your creditworthiness. Another important factor is your income, more specifically your debt-to-income (DTI) ratio. How much debt you have compared to how much you earn reveals how much more debt you can reasonably take on. Having a low DTI ratio increases your likelihood of getting approved for a credit card, and makes it easier to get a credit limit increase.

Creditors may also consider your assets when you apply for a credit card. If you have assets such as a savings or investment account, this is attractive to creditors. It demonstrates you have money you can liquidate in the event you’re unable to pay your bill with your regular income.

What to Look for in a Credit Card

Regular interest rate. Although many credit cards come with introductory interest rates as low as 0%, it’s important to know what the regular interest rate on the credit card will be once the introductory period is over. Introductory periods usually last between 6 and 12 months. After that, you could be stuck with an interest rate of up to 20% if you’re not careful! Having a credit card with a low interest rate (something like 13%) can save you a lot of money in the event you’re unable to pay your balance in full.

Fees. Common fees to look for include: annual fees, balance transfer fees, foreign transaction fees, and late payment fees. It’s easy to avoid paying annual fees by simply not apply for credit cards that charge them. Sometimes, though, the annual fee could be worth it depending on what rewards are offered.

Balance transfer fees are charged when you move debt to a new credit card. Make sure the balance transfer fee doesn’t negate your savings on interest. For those who travel often, watch out for foreign transaction fees, which can range from 1% to 3% of your purchases overseas. You can easily avoid late payment fees by paying at least the minimum payment by the due date. Some credit cards offer forgiveness for your first late payment.

Qualifications for sign-up bonus. Whether it’s in the form of miles, points, or cash, a credit card sign-up bonus can be a huge financial boost. There’s usually a required amount of spending within a certain timeframe in order to qualify for the sign-up bonus. Make sure you’re able to meet those qualifications before you apply for the credit card if you’re after the sign-up bonus.

Resource: The Best Credit Cards of 2017

Rewards. Credit card rewards can be very financially beneficial when paired with your spending habits. For example, a credit card that rewards you for gas purchases is great if you drive often. If you travel often, a card that offers points in the form of miles would be incredibly convenient. Since the accrual rates for points, cash, or miles varies depending on the credit card, knowing your spending habits will help you decide which form of rewards is best for you.

Final Thoughts

Once you have a general idea of your creditworthiness and what you want out of a credit card, it’s time to start applying. Applying for new credit can cause your credit score to temporarily decrease a little, since inquiries affect your credit score. So if you’re about to buy a home or lease a car, applying for a credit card might not be the best idea right now. It’s best to apply for a credit card when you don’t have any big financial events impending.


Rebuilding Your Savings After An Emergency Expense

This website receives compensation for products or services you obtain through the links on this site.

Few of us are strangers to unexpected expenses. A financial emergency can occur at any given time, no matter how diligent and prepared you think you’ve been. Whether it’s a sudden job loss, large medical expense, or major home repair, life throws obstacles at us that sometimes come at a large cost.

This is why those in the personal finance realm preach heavily on the importance of an emergency fund. This money stash can help you when an unplanned expense pops up, without your having to dip into things like retirement accounts or lines of credit. If you prepare and have an emergency fund ready, it can lessen the pinch of these sudden bills.

So, what if you’ve spent a great deal of money on a financial emergency recently, pulling from (or even depleting) your cash stores? Here’s what you can do to quickly and effectively rebuild your savings:

Create a Bare Bones Budget

A bare bones budget is a budget reduced to the minimum spending you need to survive and still maintain your financial responsibilities. After a financial emergency, this stripped budget is necessary for several reasons.

For one, it lets you know exactly how much income you need in order to get by and what your burn rate will be if your income doesn’t match up. A bare bones budget also lets you know how long your emergency fund will last, so you can adequately plan if it’s in danger of running out.

To create a bare bones budget, you’ll need to itemize your current expenses just like you would when creating a normal budget. At first, make sure you include everything from rent/mortgage to groceries to occasional shopping. Then, eliminate all expenses you can go without, such as restaurant dining or other entertainment spending.

A bare bones budget typically includes the following:

  • Housing and utilities
  • Gas or public transportation fare
  • Groceries
  • Cell phone plan
  • Personal care items (toiletries, prescription medications, etc.)
  • Child care expenses (day care, babysitting, school tuition, etc.)
  • Debt (minimum payments only)
  • Insurance premiums

A bare bones budget normally doesn’t include things like:

  • Entertainment (movie tickets, magazine subscriptions, Netflix/Spotify subscriptions, etc.)
  • Dining out or takeout meals
  • Vacations
  • Non-essential shopping (clothing, cosmetics, etc.)
  • Cable TV
  • Gym memberships

No two bare bones budgets are equal. Some people may have more categories on their essentials list, depending on their circumstances.

It’s important to be honest about needs versus wants. You may think your morning stop at the coffee shop is a necessary part of your routine, but be honest with yourself. You’ll need to be realistic in order to get a true assessment of how much money you need to survive and stay afloat each month. It’s bare bones for a reason; it’s not supposed to be comfortable.

Identify Areas for Additional Savings

After you’ve created a bare bones budget, you can take it a step further and identify areas for additional savings. This will make your money last longer, and help you rebuild your savings faster. Here are three examples of things you can do:

Housing: Housing is usually people’s largest monthly expense. There are multiple ways to save money on housing. The extent you can go for savings will depend on your individual circumstances. One option is to get a roommate, or rent out a room through Airbnb. If you have the space, this option can reduce your housing expense by half or more!

Another option is to move in with relatives. Of course, these options won’t work for everyone — namely people who have children or don’t have any close relatives nearby. If the opportunity presents itself, however, you should seriously consider it. Saving on housing can help you get ahead on your finances very quickly.

Coupons: There are coupons for just about everything nowadays. Two categories that offer a lot of savings via coupons are groceries and personal care items. If you match your grocery shopping with your grocery store’s weekly ad and manufacturer coupons, you can snag a considerable amount of savings.

You may need to look around to find the best deals on things like toiletries. The best deal could be at a pharmacy, wholesale club, or retail store, depending on the sales cycles.

Debt: As previously mentioned, you should only be paying the minimum payments on your debt when using a bare bones budget. You can even call your credit card issuer to ask for a lower minimum payment if needed. No, this is not ideal for paying down your debt, but that’s not the short-term goal right now — rebuilding your emergency fund is.

Another thing you can negotiate is the interest rate on your credit card. Simply call your credit card issuer, explain your situation, and ask for a reduction in interest rate. You’d be amazed at how cooperative credit card issuers can be if you’re a loyal cardholder.

As these additional savings add up, you’ll find it easier to rebuild those accounts that you depleted during your financial emergency.

Identify Additional Money-Making Opportunities

There are only so many ways to save money. To really speed up the process of rebuilding your savings after a financial emergency, consider finding ways to make extra money, as well. Here are three ideas:

Get a part-time job: Getting a part-time job is one of the simplest ways to make extra money. You’ll have set hours for a certain hourly rate (probably minimum wage). It may not be the most enjoyable way to spend your free time, but it’s worth it if you need a reliable way to make extra money while you rebuild your savings. Some examples of part-time jobs you can find include:

  • Cashier at a grocery store
  • Sales associate at a department store (especially during holiday seasons)
  • Pizza delivery person
  • Restaurant wait staff
  • Babysitting
  • Car wash attendant

Freelance: If you have a highly desirable skill, freelancing is another way to make extra money. You can do anything from writing to photography to graphic design. You may even find that you enjoy your freelance work so much, you continue to do it even after you’ve reached your savings goal.

Sell unwanted items: Selling unwanted items is a quick way to bring in cash when you need it. Some things you can sell are clothing, electronics, unused furniture, and artwork. Craigslist is one established website where people go to sell and buy items from other people.

There are also plenty of mobile apps like OfferUp and LetGo that facilitate local sales between people. Be sure to also search Facebook — many neighborhoods and even counties have private yard sale pages you can request to join. In addition, you can sell things online and ship them via eBay (this works best for smaller items).

There’s another benefit to making extra money besides reaching your savings goal faster. It also creates more financial security and gives you peace of mind. If you have that financial buffer, you don’t have to worry as much about not being able to meet your budget each month.

Protect Yourself From Another Financial Emergency

After a financial emergency happens, the last thing you’ll be thinking about is the occurrence of another one down the line. There will be so many other immediate things on your plate that you may forget that you still need to protect yourself from falling into an even deeper financial hole.

This is a risky situation to be in. It’s important, especially at times like this, to make sure you do what you can to prevent further financial damage.

What I’m talking about here is insurance. Insurance is your safety net from falling into debt when catastrophic events occur. For example, car insurance protects you from the financial repercussions from an accident harming another vehicle or person. Renter’s insurance will help you replace your personal belongings in the event of fire or vandalism. Health insurance covers a large portion of your medical bills, should you need to see a doctor or enter the hospital.

It’s easy to think that these insurance policies aren’t necessary, especially if you haven’t experienced a situation in which you needed one of them in a while. But having an accident without them can put in you in a desperate situation.

As tempting as it may seem, don’t remove insurance policies from your bare bones budget. Remember that you can always find additional money-making opportunities if you’re struggling to meet your budget.

Example: Rebuilding Your Savings After a Major Car Repair

Although difficult, rebuilding your savings after a financial emergency is definitely possible.

Let’s take a look at Julie’s situation, as an example. Julie’s car began experiencing some noticeable wear and tear after she owned it for about 10 years. The engine needed to be replaced. Since driving is Julie’s only method of commuting to work, she needed to get the repair completed right away. It set her back $3,000, which was her entire emergency fund.

The first step Julie took in rebuilding her savings was to reduce her spending to a bare bones budget. She evaluated her expenses and eliminated the things she didn’t need, such as her Hulu subscription and nail salon visits (saved: about $60 a month). The next thing she did was overhaul her spending on food. She stopped eating out at restaurants and started grocery shopping based on weekly sales (saved: about $175 a month). At the same time, she started looking for part-time work and soon landed a weekend job as a cashier at a local retail store (earned: about $500 a month). She put all her additional savings and extra income into her savings account. After several months, Julie was able to replenish her emergency fund to the full $3,000.

Spending $3,000 on a single car repair would be financially devastating to a lot of people. By being realistic and staying focused, Julie was able to turn a tough situation into a more manageable situation.

Final Thoughts

Rebuilding your savings after a financial emergency takes persistence. Finding ways to trim your budget and make extra money are two important parts of the process.

Remember not to skip out on insurance just because you’re in a tough situation! Being uninsured only creates more possibilities for financial havoc.

Most of all, stay hopeful. Taking a large financial hit is difficult for anyone. With time, you’ll be able to replenish your savings and feel secure again.


How to Prepare to Shift Into a New Career

This website receives compensation for products or services you obtain through the links on this site.

Whether you’re driven by practicality or passion, the reality is that for many of us, career change is “the new normal.” This trend is largely due to a potent combination of a volatile employment landscape, and an increasing number of innovative ways that we can strike a new balance between work and life. All of this combined means that more of us than ever will switch careers during our working lifetimes.

career shift

As a coach, I have worked with dozens of clients who are seeking positive change in their careers. But the fact that career change is becoming more common on a global scale doesn’t necessarily mean it’s any easier for individuals going through this transition. Moving from a tired day job — even to something that fits our passion more closely — is an exciting, but daunting, challenge.

Related: How Much Can You Save By Working From Home?

If you’re thinking of shifting to a brand new career, here are some pointers to help you on your way.

Know Your ‘Why’

There are as many reasons for wanting to shift careers, as there are people making that transition. It’s a unique journey for each of us, and the driving force will be personal to you.

Changing careers can be challenging, and most often it’s a marathon rather than a sprint. There will be times when you doubt your decision or your ability to follow through. This is where knowing your ‘why’ comes into play.

Before you really start to make the transition to a new career, invest time in figuring out what motivates you. This should revolve around the reasons you are moving towards your new career, rather than the factors making you want to shift away from your previous field.

What is it about the new work that makes you excited? Why are you passionate about the change? How does it fit with your vision of yourself in five (or even ten) years’ time? What will your life look like once you achieve the transition?

Be Prepared With a Flexible Career Plan

Find a meaningful way to answer these questions. This could mean writing your thoughts in a journal or creating a visual image (such as a moodboard of pictures) to help you remember your ‘why.’ It will also serve to drive you on when your motivation starts to slow.

Take Time to Plan

It’s unlikely that your career change will happen overnight. Think realistically about the steps you will need to take and how you can mitigate risks along the way.

Learn More: Are You In a Dead-End Job?

For many people, this will involve stashing away extra savings to rely on during the switch. It could mean taking extra training opportunities and researching the types of roles you might qualify for. Brainstorm the areas you need to research and the questions you will need to answer before you can truly move forward with your plans. Then, break down the actions into manageable steps, creating a timeline you can live with.

Don’t try to do this alone — it’s a perfect time to expand your network into your new field. Find some people who have already achieved the type of change you’re aiming for, and ask their advice. The internet is the perfect place to research and hook up with the right people if you don’t have them in your direct circle already. Try career change blogs, for example, like the helpful advice on hand from the Career Shifters team.

Alternatively, you could consider getting a coach to help you with your planning or joining a career change support group which you might find locally or through meetup.com.

Rewrite Your Career Story

If you’re looking for a new job in a different sphere, chances are your resume will need a radical overhaul. Don’t be tempted to just tweak your existing documents. If you want to be taken seriously in a new industry, you need to make sure your resume turns heads for the right reason.

Research It: How to Build Your First (or Just Your Best) Resume

Research is your friend here, with many job hunters sharing their resumes online. By reviewing the type of resume posted by others looking for a similar role, you can select the style and content highlights you need to use. This will probably mean you need to cut out some of the detail of your previous roles. Then, you can frame what you achieved in a way that entices your new audience.

Try to read your resume through the eyes of a recruiter from your new industry. How can you show your transferable skills in their best light?

Don’t forget: rewriting your career story is as much about what you believe of yourself as it is about the words on your resume. You need to make a mental switch to view yourself differently — to “promote” yourself into your new role.

If you aspire to be a personal trainer or an artist, then consider yourself as such. It’s much more powerful than telling yourself you’re an accountant who dreams of being a designer, or a teacher who does some coaching “on the side,” for example. Visualization and positive affirmations can be very powerful and will come out in your job search and interview process.

A Personal Account: How I Cut My Spending In Half to Take a Job I Loved

The journey to a new career takes courage and imagination. It draws on your practical planning skills, as well as your personal drive and passion. There’s no single right way to go about the transition, but there’s plenty of help out there for those looking to make a change.

If you’re struggling to see where your current career path will lead you, then maybe it is time to consider a new route. Use the building blocks above, and don’t be afraid to ask for help from others. You can begin to tailor-make your new career as soon as today.

If you’ve considered shifting careers but held back, why? What is your biggest concern?