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How to Still Pay Your Bills During a Layoff or When You Miss A Check

The post How to Still Pay Your Bills During a Layoff or When You Miss A Check appeared first on Penny Pinchin' Mom.

More than 800,000 Americans are currently affected by the government shut down. And, while it would make sense to force our congressmen and senators to also not get paid during that time, it just won’t happen.

survive a layoff

Even though you may not be working and getting a paycheck, it doesn’t mean the bills stop.  You still need to feed your family and take care of yourself.

The truth is that a layoff or furlough can happen to anyone at any time. And, if you already struggle to live paycheck to paycheck, not getting paid will certainly increase your stress level.

WHAT DO DO IF YOU MISS A PAYCHECK

First off, if you aren’t getting paid, you need to take a deep breath. I know it is stressful and you are struggling, but it is all going to be OK.

Your first instinct may be to go take out a second mortgage or unsecured loan.  You might be tempted to get some additional credit cards.  And, that retirement account may be calling your name.

Don’t do that.

All you are doing is adding more stress by increasing your debt or tax liability.  Then, when you do start having paychecks again, you end up with more bills to pay.

It may be a short term fix, with long-term consequences.  Just don’t do it.

Go ahead and have a good cry.  Then, wipe your tears and create a plan.

 

1. MAKE SURE YOU HAVE A BUDGET

If you don’t have a budget, there is no time like the present to make one.  A budget is not going to restrict you from spending money.  In fact, it is the opposite.

Your budget shows you where you spend your money.  And, more importantly, where you might be able to cut back. It could mean stopping your gym membership and not dining out.  It could even mean canceling your cable service.

A traditional budget will show the income you bring in.  But, if you don’t have any regular paychecks, how do you do this?  You make your budget with the money you do have.

Don’t include the amount you normally make, but rather, just the amount currently coming in.  If there is no money at all, then create your budget with the money you have on hand.  You need to get everything out of every penny you make.

Your budget is crucial to surviving a layoff, furlough or government shut down.

 

2. COVER YOUR NEEDS

If you look at your budget, there are wants and needs.  A want is cable.  A need is housing.  When there is no money coming in (or less than usual), you must cover your needs.   This means making sure you pay for:

Housing
Food
Clothing
Transportation

Look at your budget and cover these expenses first.  Don’t pay your cable bill if you can’t put food on the table.  Cable is not important right now, but you must feed your family.

Once you cover your basic needs pay other bills in order of importance.  Don’t worry about the credit card bills right now – but pay your utilities.

You can’t pay everyone.  There is no getting around that.  Pay those you need to in order to protect your family.

 

3. SELL THINGS

A simple way to generate some quick cash is to find things you do not need and sell them.  The added bonus is that you get a chance to clean out the basement or the garage.

Use sites such as LetGo or Craigslist to sell big items.  If you have clothing check out ThredUp or Poshmark.  There is always someone who needs something.

 

4. STOP PAYING OFF DEBT

If you are in the midst of getting out of debt, you’ll have to stop — for now.  Getting out of debt can’t be your priority at this time.  You have to make sure you are taking care of your family.

Once your income returns to normal levels, you can pick up your debt snowball right where you left off.  And, if that means the balance had to increase in the short term, so be it.

 

5.  CUT BACK

When you struggle financially, it’s time for some big changes.  The first thing to do is look at your food bill.  See what you can cut from your spending.  Do some searches on Pinterest for very cheap family meals that you can make.

You may also want to check out different grocery stores.  For example, if you live near an ALDI, make a trip there to shop.  You’ll find almost everything you need, at very low prices.  You aren’t sacrificing quality.  You are just making the most of every dollar you spend.

Take a deep look at your budget and get rid of things such as monthly subscriptions like Hulu, gyms, etc.  You can always start these up again when you increase your income.  Once your income returns, you get to add these back in.  These are temporary cut backs just to help you survive this time.

 

6.  MAKE SOME CALLS

It is important to reach out to all of your providers and lenders to let them know you are part of the government shut down, or in the midst of a layoff.  You don’t want to risk getting service shut down due to lack of payment.

While many of them may not be able to make any concessions, they might be able to give you an additional month to pay or not charge a late fee.  But, you will never know unless you ask.  What’s the worst thing that will happen?

Note that during the winter months, utility companies are not allowed to discontinue services, but they can during other times of the year.

 

7. GET A SIDE HUSTLE OR TEMPORARY JOB

When there is no money coming in, you’ve got to find a way to change that.  It may be time to add a side-hustle. It could mean working fast food or getting a job at Walmart.  You just have to find a way to bring in money during this short period of time.

If your layoff or furlough is temporary, you may not be able to get another job. It could be part of the terms of your employment, so it is not an option.  That means you need to try a side-hustle.  It might mean you are an Uber driver or even tutor kids.

 

8.  ASK FOR HELP

Check your local food pantry or church to ask for help.  These organization can provide food and even money to help cover your bills.   You may also have family members who are willing to help by paying for your groceries or covering your electric bill.  But, you have to ask.

You have a family to provide for, so you can’t let your pride get in the way of getting them what they need.

 

WHAT DO WHEN YOU START GETTING PAID AGAIN

Once you are back at work and your income is back to what it was previously, don’t just go back to your spending like before.  You don’t want to struggle again should you find yourself in this same situation.

The most important thing to do is to work on building your emergency fund.  The idea is to build it up to have at least 3 – 6 months worth of living expenses covered.  I know it sounds like a lot.  And, it probably is.

You won’t build it up all at once.  It will take time.  But, you can do things such as sell more items or get a second job.  Even if you start saving just $10 a week, you’ll have saved more than $500 in a year.

surviving a layoff

The post How to Still Pay Your Bills During a Layoff or When You Miss A Check appeared first on Penny Pinchin' Mom.

Source: pennypinchinmom.com

Do College Rankings Matter?

student at college campus mobile

All articles about college rankings should perhaps be read with a grain of salt and primarily through a lens of what matters most to individuals about the college experience and what they’re hoping it will be an investment toward.

Prominent publications and people have conveyed a variety of views about whether college rankings matter:

The editor-in-chief of the Science Family of Journals said no in May 2020. “To any logical scientific observer, the fine distinctions of where schools show up on this (U.S. News & World Report Best Colleges) list are statistically meaningless—but try telling that to a roomful of alumni or parents,” H. Holden Thorp wrote.

Ian Bogost, distinguished chair at Georgia Tech, wrote in The Atlantic in June 2020: “The absurdity of a numerical ranking mechanism for colleges becomes apparent the moment you look at how U.S. News calculates it. The methodology reads like a Dungeons and Dragons character sheet: 8% for class size; 10% for high-school-class standing; 4.4% for first-to-second-year student retention, and so on.”

But just because the consensus leans toward “no” doesn’t mean it should be the last word on anyone’s ultimate decision about where to go to school.

Even U.S. News & World Report says on its best-colleges website: “The rankings provide a good starting point for students trying to compare schools. … The best school for each student, experts say, is one that will most completely meet his or her needs, which go beyond academics.”

What Are the College Rankings?

There is no single, ultimate, etched-in-stone set of college rankings. All over the world, there are entities using a wide array of criteria to appraise universities.

Rather than expecting a “yes” or “no” to the question of whether college rankings matter, it would be more beneficial to understand why “It depends” could be more appropriate.

If you’re aiming for an education from a prestigious school, and money is no object—well, first of all, congratulations and good luck.

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How to Plan a Budget If Your Home Is a Fixer Upper

When your home is a fixer-upper, it can be difficult to even know where to start with a renovation. The list can be overwhelming—fix the patio, change out the mustard yellow carpet, buy furniture, paint the house. With a never-ending to-do list, planning a budget can seem virtually impossible.

By sorting through your list of wants and needs and focusing on essentials, you can outline a budget that won’t keep you up at night. Here are some tips on how to plan a budget for turning your fixer-upper into your first dream home.

How to Plan a Budget If Your Home is a Fixer Upper

1. Sort through the “wants” and “needs.”

Where do you even start with a renovation budget? With a limited fixer-upper budget, it’s essential to make functionality the first priority. When the roof is leaking and your fridge is dead, this is where the budget begins. First, determine what infrastructure items require repair or an essential upgrade, as these are typically big-ticket items. Next, focus on beautifying projects that will reap benefits in the long run, like bathrooms and kitchens. Hold off on budgeting fancy appliance upgrades and expensive decor if you already have working items—these can come at a later time after you take care of all the essentials.

How to Plan a Budget If Your Home is a Fixer Upper

2. Consider purchasing used over new.

Give your budget more flexibility by going for used over new with certain big-ticket items. Used appliances, for instance, can be found in great condition from other remodels or homeowners upgrading to the latest technology. Used furniture is also a fantastic way to keep your fixer-upper budget low. Don’t forget—sofas, vintage chairs, tables and more can be easily reupholstered and refinished. They’ll look brand new for just a fraction of the cost. 

How to Plan a Budget If Your Home is a Fixer Upper

3. Be ready to DIY with a gift card.

As a first-time buyer, there’s a 99 percent chance you’ll be diving into the realm of DIY. Learning one or many DIY skills will not only come in handy with home repairs in the future, but it’s a fantastic way to keep labor costs low. If you’re worried your DIY supply budget will get out of hand, however, shop with a gift card to your local hardware store. That way, you’ll always be working with a fixed amount of money and won’t be tempted to add on any expensive extras. It’s a guaranteed way to keep your budget in check.

How to Plan a Budget If Your Home is a Fixer Upper

4. Get creative.

Fixer-uppers are great hands-on projects, and creative solutions are key for keeping your budget in line. For items like cabinetry that may be in good condition but out of style, get creative with refinishes to bring new life into your space. Give your kitchen a fresh take by painting cabinets in a modern shade, or reface them for a whole new look without the added cost of all-new cabinetry. Replace hardware on cabinetry, furniture and built-ins to make your pieces feel brand new. Even outdated fireplaces, doors, furniture and windows can go a long way with a fresh coat of paint and new hardware. Consider this cheap alternative to help save room in your budget for the fun stuff.

How to Plan a Budget If Your Home is a Fixer Upper

5. Let the professionals help.

Whether you’re starting with the kitchen or diving into a full-scale remodel, don’t be afraid to seek professional help. No matter what your budget, a professional’s advice can help ensure that your renovation has as few hiccups as possible. City codes, minute details and hidden elements can wreak havoc on projects, so let a master guide you through those hurdles instead of trying to blindly tackle them yourself. Don’t let the potential price tag deter you from investing in having expert guidance—many architects and designers have options for paying an hourly rate. This is a great option, especially for fixer-upper and DIY projects, as it allows your plans to be looked over by professionals without the price tag of a full design scope. 

What are your must haves for your fixer-upper?
 
 
Kerrie Kelly is a California interior designer who has helped many young couples choose their “first-home-together” decor. Kerrie writes on her design experiences for The Home Depot, offering homeowners ways to save money without compromising design.
 

Source: quickanddirtytips.com

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Value of Reducing or Foregoing Expenses. Small changes in your daily routine can add up to big budget savings. Find out how much.

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Everything You Need to Know About Budgeting As a Freelancer

Could logging in to your computer from a deluxe treehouse off the coast of Belize be the future of work? Maybe. For many, the word freelance means flexibility, meaningful tasks and better work-life balance. Who doesn’t want to create their own hours, love what they do and work from wherever they want? Freelancing can provide all of that—but that freedom can vanish quickly if you don’t handle your expenses correctly.

“A lot of the time, you don’t know about these expenses until you are in the trenches,” says freelance copywriter Alyssa Goulet, “and that can wreak havoc on your financial situation.”

Nearly 57 million people in the U.S. freelanced, or were self-employed, in 2019, according to Upwork, a global freelancing platform. Freelancing is also increasingly becoming a long-term career choice, with the percentage of freelancers who freelance full-time increasing from 17 percent in 2014 to 28 percent in 2019, according to Upwork. But for all its virtues, the cost of being freelance can carry some serious sticker shock.

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“There are many hats you have to wear and expenses you have to take on, but for that you’re gaining a lot of opportunity and flexibility in your life.”

– Alyssa Goulet, freelance copywriter

Most people who freelance for the first time don’t realize that everything—from taxes to office supplies to setting up retirement plans—is on them. So, before you can sustain yourself through self-employment, you need to answer a very important question: “Are you financially ready to freelance?”

What you’ll find is that budgeting as a freelancer can be entirely manageable if you plan for the following key costs. Let’s start with one of the most perplexing—taxes:

1. Taxes: New rules when working on your own

First things first: Don’t try to be a hero. When determining how to budget as a freelancer and how to manage your taxes as a freelancer, you’ll want to consult with a financial adviser or tax professional for guidance. A tax expert can help you figure out what makes sense for your personal and business situation.

For instance, just like a regular employee, you will owe federal income taxes, as well as Social Security and Medicare taxes. When you’re employed at a regular job, you and your employer each pay half of these taxes from your income, according to the IRS. But when you’re self-employed (earning more than $400 a year in net income), you’re expected to file and pay these expenses yourself, the IRS says. And if you think you will owe more than $1,000 in taxes for a given year, you may need to file estimated quarterly taxes, the IRS also says.

That can feel like a heavy hit when you’re not used to planning for these costs. “If you’ve been on a salary, you don’t think about taxes really. You think about the take-home pay. With freelance, everything is take-home pay,” says Susan Lee, CFP®, tax preparer and founder of FreelanceTaxation.com.

When learning how to budget as a freelancer it’s necessary to estimate your income and expenses before setting aside savings for tax payments.

When you’re starting to budget as a freelancer and determining how often you will need to file, Lee recommends doing a “dummy return,” which is an estimation of your self-employment income and expenses for the year. You can come up with this number by looking at past assignments, industry standards and future projections for your work, which freelancer Goulet finds valuable.

“Since I don’t have a salary or a fixed number of hours worked per month, I determine the tax bracket I’m most likely to fall into by taking my projected monthly income and multiplying it by 12,” Goulet says. “If I experience a big income jump because of a new contract, I redo that calculation.”

After you estimate your income, learning how to budget as a freelancer means working to determine how much to set aside for your tax payments. Lee, for example, recommends saving about 25 percent of your income for paying your income tax and self-employment tax (which funds your Medicare and Social Security). But once you subtract your business expenses from your freelance income, you may not have to pay that entire amount, according to Lee. Deductible expenses can include the mileage you use to get from one appointment to another, office supplies and maintenance and fees for a coworking space, according to Lee. The income left over will be your taxable income.

Pro Tip:

To set aside the taxes you will need to pay, adjust your estimates often and always round up. “Let’s say in one month a freelancer determines she would owe $1,400 in tax. I’d put away $1,500,” Goulet says.

2. Business expenses: Get a handle on two big areas

The truth is, the cost of being freelance varies from person to person. Some freelancers are happy to work from their kitchen tables, while others need a dedicated workspace. Your freelance costs also change as you add new tools to your business arsenal. Here are two categories you’ll always need to account for when budgeting as a freelancer:

Your workspace

Joining a coworking space gets you out of the house and allows you to establish the camaraderie you may miss when you work alone. When you’re calculating the cost of being freelance, note that coworking spaces may charge membership dues ranging from $20 for a day pass to hundreds of dollars a month for a dedicated desk or private office. While coworking spaces are all the rage, you can still rent a traditional office for several hundred dollars a month or more, but this fee usually doesn’t include community aspects or other membership perks.

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If you want to avoid office rent or dues as costs of being freelance but don’t want the kitchen table to pull double-duty as your workspace, you might convert another room in your home into an office. But you’ll still need to outfit the space with all of your work essentials. Freelance copywriter and content strategist Amy Hardison retrofitted part of her house into a simple office. “I got a standing desk, a keyboard, one of those adjustable stands for my computer and a squishy mat to stand on so my feet don’t hurt,” Hardison says.

Pro Tip:

Start with the absolute necessities. When Hardison first launched her freelance career, she purchased a laptop for $299. She worked out of a coworking space and used its office supplies before creating her own workspace at home.

Digital tools

There are a range of digital tools, including business and accounting software, that can help with the majority of your business functions. A big benefit is the time they can save you that is better spent marketing to clients or producing great work.

The software can also help you avoid financial lapses as you’re managing the costs of being freelance. Hardison’s freelance business had ramped up to a point where a manual process was costing her money, so using an invoicing software became a no-brainer. “I was sending people attached document invoices for a while and keeping track of them in a spreadsheet,” Hardison says. “And then I lost a few of them and I just thought, ‘Oh, my God, I can’t be losing things. This is my income!’”

As you manage the cost of being freelance, consider digital tools and accounting services to keep track of invoices, payments and income.

Digital business and software tools can help manage scheduling, web hosting, accounting, audio/video conference and other functions. When you’re determining how to budget as a freelancer, note that the costs for these services depend largely on your needs. For instance, several invoicing platforms offer options for as low as $9 per month, though the cost increases the more clients you add to your account. Accounting services also scale up based on the features you want and how many clients you’re tracking, but you can find reputable platforms for as little as $5 a month.

Pro Tip:

When you sign up for a service, start with the “freemium” version, in which the first tier of service is always free, Hardison says. Once you have enough clients to warrant the expense, upgrade to the paid level with the lowest cost. Gradually adding services will keep your expenses proportionate to your income.

3. Health insurance: Harnessing an inevitable cost

Budgeting for healthcare costs can be one of the biggest hurdles to self-employment and successfully learning how to budget as a freelancer. In the first half of the 2020 open enrollment period, the average monthly premium under the Affordable Care Act (ACA) for those who do not receive federal subsidies—or a reduced premium based on income—was $456 for individuals and $1,134 for families, according to eHealth, a private online marketplace for health insurance.

“Buying insurance is really protecting against that catastrophic event that is not likely to happen. But if it does, it could throw everything else in your plan into a complete tailspin,” says Stephen Gunter, CFP®, at Bridgeworth Financial.

Budgeting as a freelancer allows you to select a healthcare plan that best suits your employment status, income and relationship status.

A good place to start when budgeting as a freelancer is knowing what healthcare costs you should budget for. Your premium—which is how much you pay each month to have your insurance—is a key cost. Note that the plans with the lowest premiums aren’t always the most affordable. For instance, if you choose a high-deductible policy you may pay less in premiums, but if you have a claim, you may pay more at the time you or your covered family member’s health situation arises.

When you are budgeting as a freelancer, the ACA healthcare marketplace is one place to look for a plan. Here are a few other options:

  • Spouse or domestic partner’s plan: If your spouse or domestic partner has health insurance through his/her employer, you may be able to get coverage under their plan.
  • COBRA: If you recently left your full-time job for self-employment, you may be able to convert your employer’s group plan into an individual COBRA plan. Note that this type of plan comes with a high expense and coverage limit of 18 months.
  • Organizations for freelancers: Search online for organizations that promote the interests of independent workers. Depending on your specific situation, you may find options for health insurance plans that fit your needs.

Pro Tip:

Speak with an insurance adviser who can help you figure out which plans are best for your health needs and your budget. An adviser may be willing to do a free consultation, allowing you to gather important information before making a financial commitment.

4. Retirement savings: Learn to “set it and forget it”

Part of learning how to budget as a freelancer is thinking long term, which includes saving for retirement. That may seem daunting when you’re wrangling new business expenses, but Gunter says saving for the future is a big part of budgeting as a freelancer.

“It’s kind of the miracle of compound interest. The sooner we can get it invested, the sooner we can get it saving,” Gunter says.

He suggests going into autopilot and setting aside whatever you would have contributed to an employer’s 401(k) plan. One way to do this might be setting up an automatic transfer to your savings or retirement account. “So, if you would have put in 3 percent [of your income] each month, commit to saving that 3 percent on your own,” Gunter says. The Discover IRA Certificate of Deposit (IRA CD) could be a good fit for helping you enjoy guaranteed returns in retirement by contributing after-tax (Roth IRA CD) or pre-tax (traditional IRA CD) dollars from your income now.

Pro Tip:

Prioritize retirement savings every month, not just when you feel flush. “Saying, ‘I’ll save whatever is left over’ isn’t a savings plan, because whatever is left over at the end of the month is usually zero,” Gunter says.

5. Continually update your rates

One of the best things you can do for yourself in learning how to budget as a freelancer is build your costs into what you charge. “As I’ve discovered more business expenses, I definitely take those into account as I’m determining what my rates are,” Goulet says. She notes that freelancers sometimes feel guilty for building business costs into their rates, especially when they’re worried about the fees they charge to begin with. But working the costs of being freelance into your rates is essential to building a thriving freelance career. You should annually evaluate the rates you charge.

Because your expenses will change over time, it’s wise to do quarterly and yearly check-ins to assess your income and costs and see if there are processes you can automate to save time and money.

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“A lot of the time, you don’t know about these expenses until you are in the trenches, and that can wreak havoc on your financial situation.”

– Alyssa Goulet, freelance copywriter

Have confidence in your freelance career

Accounting for the various costs of being freelance makes for a more successful and sustainable freelance career. It also helps ensure that those who are self-employed achieve financial stability in their personal lives and their businesses.

“There are many hats you have to wear and expenses you have to take on,” Goulet says. “But for that, you’re gaining a lot of opportunity and flexibility in your life.”

The post Everything You Need to Know About Budgeting As a Freelancer appeared first on Discover Bank – Banking Topics Blog.

Source: discover.com

How to Copy Warren Buffet’s Biggest Investment of 2020

When Warren Buffet invests, people pay attention. His biggest investment of 2020 might surprise you — and you can do it, too.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

Why a Family Should Make Major Financial Decisions Together

The post Why a Family Should Make Major Financial Decisions Together appeared first on Penny Pinchin' Mom.

Whether or not you have the option to stay at home with your children or choose to work full or part-time, making major financial decisions with your partner or spouse can make a huge difference in your self-esteem and deepen your trust in each other. Having an equal voice in the big decisions, backed by the solid knowledge of what your joint investments and accounts hold, is a smart mom move.

Don’t be scared of the words “major financial decisions.” Keep reading. I’ll be gentle.

Don’t let fear guide you

Nothing used to make me more nervous than the idea of talking about money. And it’s not because I have a lot of it, quite the opposite. When I was single, I always paid my bills, but rarely on time. I racked up interest on my credit cards, wasting money I couldn’t afford to give away. I didn’t file my taxes for ten years, which cost about $5,000 to clean up.

I was at war with money. So, I was more than happy to hand over the management of the family finances to my partner as soon as we combined households.

This was a mistake. It wasn’t wrong for any nefarious reason. My ex-husband remains one of my best friends. Simply put, it was a missed opportunity. But, for someone with a less trustworthy partner, handing over responsibility could lead to a major disaster.

Making decisions means sharing responsibility

Let’s start with the best-case scenario. You and your partner have a good stable relationship. Money is okay. There’s enough coming in that you aren’t really worried about any of the basics. But who sits down and pays the bills?

If it’s you, then you know how much the taxes are and the utilities and the mortgage or rent. Maybe you balance out what you allow yourself to purchase at the grocery store by what you know is in the family checking account.

But, if your partner doesn’t know the cost of living, what’s to stop them from ordering an expensive new gadget. Maybe they make more money than you bring in, and they are super excited about the new iPhone.

Sounds like a tense situation brewing.

A new piece of electronics is tiny as far as major purchases are concerned. But spending nearly (or even over) $1,000 for the latest smartphone can set back a family making an average income when an out-of-pocket medical expense pops up in the same month. And, with a family, that’s bound to happen.

If both partners know the family’s finances, purchases can be coordinated and saved for. That’s the first step to bigger things, like buying a home, paying for college, and figuring out what kind of retirement you can look forward to.

How to get started with family finances

Talk about it. It’s family meeting time. Say you want to pay the bills or share them. I know couples who pass the responsibility of paying the bills back and forth every six months. They have a joint checking account and set up all the bills in an online payment system that needs to be monitored. Find a method that works for you.

You might think you are really good at saving money, because you only buy sale items, but that’s small potatoes. If you expand your thinking to future savings and layout purchases in a spreadsheet, you might have fun planning how much you can save in a month and a year. Then you get to plan what to do with those savings at your next family meeting.

For example, once you save $1,000, you can begin to think about opening an investment account, like an IRA, for retirement, or you could invest in stocks on your own.

Stuff happens: be prepared

No one wants to think about death, divorce, or disability. But, moms with kids stand to lose the most when these things happen. Knowing the state of your family’s finances ahead of time will save you time and stress when you can least afford to waste either.

Even the most civilized divorce is a tense process. To serve or answer a divorce summons you have to know every last detail of your own and your partner’s income, expenses, and investments.

Do you know how much your partner has squirreled away for retirement? Have a talk about what kind of future you want to have together and what expectations you have for your children. You don’t just get what you ask for; you get what you plan for, too.

And, if an accident happens, your husband or wife would want you to be OK. If you and your partner don’t know each other’s bank information and logins, exchange them as a shared trust exercise. It’s good practice, in case of an emergency and necessary should something terrible occur.

Take care of yourself

My college sociology teacher told the women in my class something I’m going to pass on to you.

Get your own bank account and credit card, separate from your partner’s. Pay bills on a credit card that you know you can fully pay off on a monthly basis so that you can build your own credit.

You never know when your credit score could become what saves your family from a disaster, like homelessness. And if you get used to making small and medium-sized financial decisions together, you’ll be ready for the really big things.

Build confidence

After your initial discomfort dissipates, you’ll find that having your family’s financial facts at your fingertips gives you confidence. When you don’t know how much you have and how much you spend, then your partner is your banker. And no matter how much love you share, money will always be a power issue.

A family financial meeting once a quarter or twice a year will save you from answering to your partner about your credit card bill or wondering why your debit card isn’t working.

By Nic DeSmet

The post Why a Family Should Make Major Financial Decisions Together appeared first on Penny Pinchin' Mom.

Source: pennypinchinmom.com

Investing With the Business Cycle

man reading newspaper

A “business cycle” refers to the periodic expansion and contraction of a nation’s economy. Also known as an “economic cycle,” it tracks the different stages of growth and decline in a country’s gross domestic product, or economic activity.

business cycles . Each business cycle is dated from peak to peak or trough to trough of economic activity.

During the expansion phase of the business cycle, GDP increases and the economy grows. This phase tends to be significantly longer than the contraction phase. Since 1945, the average expansion has been 65 months, while the average contraction has lasted 11 months, according to a congressional research report. Features of expansion periods include:

•  GDP growth rate of 2-3%
•  Inflation around 2%
•  Unemployment between 3.5-4.5%
•  Bullish stock market
•  Increased demand for goods and services
•  Interest rates move higher
•  Job creation
•  Stock prices usually increase
•  Increased wages
•  Increased real estate values

As economic growth slows down, an economic contraction begins as the nation enters a recession. GDP growth dips below 2% in this phase.

Companies that have taken out loans may struggle to repay them, so they have to lay off workers and slow down production. As workers lose jobs, they have to cut down on spending. This creates a cycle of economic decline. Features of contraction periods include:

•  GDP growth falls below 2%
•  Decreased demand for goods and services
•  Interest rates move lower, making it easier to borrow money
•  Loss of jobs, increased unemployment
•  Reduced wages because people need jobs so they’re willing to work for less, and companies can’t pay as much
•  Stock prices usually decline
•  Real estate values plateau or decline

Stage 1: Recession

One definition of a recession is two consecutive quarters with a decline in real GDP. A recession could actually be defined more broadly as a period where there is significant decline in economic activity throughout the entire economy.

During this stage, GDP, profits, sales, and economic activity decline. Credit is tight for both consumers and businesses due to the policies set during the last business cycle. This leads to shifts in monetary policy that lead to a recovery phase. It’s a vicious cycle of falling production, falling incomes, falling employment, and falling GDP.

The intensity of a recession is measured by looking at the three D’s:

•  Depth: The measure of peak to trough decline in sales, income, employment, and output. The trough is the lowest point the GDP reaches during a cycle. Before World War II, recessions used to be much deeper than they are now.
•  Diffusion: How far the recession spreads across industries, regions, and activities.
•  Duration: The amount of time between the peak and the trough.

A more severe recession is called a depression. Depressions have deeper troughs and last longer than recessions. The only depression that has happened thus far was the Great Depression, which lasted 3.5 years, beginning in 1929.

Stage 2: Early Cycle

Following a recession, there tends to be a sharp recovery as growth begins to accelerate. The stock market tends to rise the most during this stage, which generally lasts about one year. Interest rates are low, so businesses and consumers can borrow more money for growth and investment. GDP begins to increase.

Just as a recession is a vicious cycle, a recovery is a virtuous cycle of rising income, rising employment, rising GDP, and rising production. And similar to the three D’s, a recovery period, which includes Stages 2-4, is measured using three P’s: how pronounced, pervasive, and persistent the expansion is.

Stage 3: Mid-Cycle

This is generally the longest phase of the business cycle, with moderate growth throughout. On average the mid-cycle phase lasts three years. Monetary policies shift toward a neutral state: Interest rates are higher, credit is strong, and companies are profitable.

Stage 4: Late Cycle

At this stage, economic activity reaches its highest point, and while growth continues, its pace decelerates. Monetary policies become tight due to rising inflation and low unemployment, making it harder for people to borrow money. The GDP rate begins to plateau or slow.

Companies may be engaging in reckless expansions, and investors are overconfident, which increases the price of assets beyond their actual value. Late cycles last a year and a half on average.

What Industries Do Well During Each Stage?

Historically certain industries have prospered during each stage of the business cycle.

When money is tight and people are concerned about the economy, they cut back on certain types of purchases, such as vacations and fancy clothes. Also, when people anticipate a coming recession, they tend to sell stocks and move into safer assets, causing the market to decline.

Basically, industries do better or worse depending on supply and demand, and the demand for certain products shifts throughout the business cycle. In general, the following industries perform well during each stage of the business cycle:

Recession

•  Healthcare
•  Consumer staples
•  Utilities
•  Bonds

Early Cycle

•  Information technology
•  Financial sector
•  Industrial sector
•  Consumer sector
•  Stocks and bonds
•  Real Estate
•  Household durables

Mid-Cycle

•  Information technology
•  Stocks
•  Energy and materials
•  Media

Late Cycle

•  Commodities such as oil and gas
•  Bonds can be a safe haven
•  Index funds

Who Should Invest With the Business Cycle?

Business cycle investing is an intermediate-term strategy, since it isn’t as short-term as day trading but not as long-term as buy and hold strategies. Each stage of the business cycle can last for a few months to a few years.

the best strategy for beginner investors.

However, more experienced investors might choose to shift at least a portion of their portfolio along with the business cycle. Business cycle investing can also be a good option for younger investors because they will have more opportunities to take advantage of the ups and downs of future cycles.

Understanding the business cycle can also help people make decisions such as when to buy a home or search for a job. It’s usually best to purchase a home, start a business, or look for a job in the early to mid-stages of the cycle.

The Takeaway

No business cycle is identical but history shows there can be a rough pattern to which industries do better as the economy expands and contracts. Investors can take cues from which stage of the business cycle the economy is in in order to allocate money to different sectors.

One great way to invest and keep track of the market is using an online investing app like SoFi Invest®. The investing platform features both active and automated investing.

For help getting started, SoFi has a team of professional financial advisors available to answer questions and offer guidance.


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Digital Assets—The Digital Assets platform is owned by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, http://www.sofi.com/legal.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOIN20172

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Source: sofi.com

How to Make Tough Decisions as a Couple

Marnie and Tom live in a nice suburb in the Midwest with their two young children. Marnie’s mother, Elaine, lives about an hour away.

When the kids were babies, Marnie's mother used to drive to Marnie and Tom's every day to see her grandkids and help out. But lately, Marnie's mother's health has been declining, so she can’t drive over anymore.

One day Marnie gets an idea: What if she and Tom sell their house and move closer to her mother? Then the kids would be able to see their grandmother more often. Plus, Marnie would be able to keep a closer eye on her mother in case her health gets worse. Seems like a perfect solution.

There’s only one problem—Tom doesn’t want to move. Tom likes the neighborhood they’re in. He thinks he and Marnie paid too much for their house, but other than that he’s very comfortable.

Tom says no.

Tough decisions and zero-sum situations

Faced with big decisions like this, a couple will ordinarily try to compromise. But in this case, there’s really no half-way. Economists call this kind of thing a zero-sum situation. Someone’s going to win, and someone’s going to lose.

For over thirty years, I’ve watched couples struggle with zero-sum problems. Some more successfully, and some less so.

Some classic zero-sum problems for couples involve whether or not to move—often for one partner’s career—and whether or not to have another child. But there are lots of others.    

For thirty years, I’ve watched couples struggle with zero-sum problems. Some more successfully, and some less so. Today, we’re going to talk about what works, and what doesn’t, when you’re faced with one of these situations.

Three ways not to make tough decisions as a couple

 First, let’s talk first about what doesn’t work. There are three main approaches that don’t work. Unfortunately, most couples try all three:

Mistake #1 – Trying to convince your partner they'll be better off

The first mistake is to try to convince your partner that they’ll be much happier if they do things your way. In Marnie’s case, this might involve demonstrating to Tom all the wonderful things about the neighborhood she'd like to move to. Wouldn't Tom be better off there? 

No one likes to be told they’ll be happier if they just do things your way.

 Here’s the problem: No one likes to be told they’ll be happier if they just do things your way. It's better to assume each person has good reasons for feeling the way they do. And that those reasons aren’t likely to change. In couples therapy, we call this "staying in your own lane."

Mistake #2 – Suggesting there's something wrong with your parnter for disagreeing

The second thing that doesn’t work is to suggest there’s something wrong with your partner. Otherwise, they'd see it your way. If only they were less anxious, less obsessive-compulsive, less oppositional, less stuck in their ways, or less damaged by unresolved childhood trauma. Then they’d surely agree with you!

A lot of people get sent to my office for therapy by their spouses for just this reason. Believe me when I tell you, it doesn’t work.

A lot of people get sent to my office for therapy by their spouses for just this reason. Believe me when I tell you, it doesn’t work. It usually just leads to a lot of bad feeling.

Mistake #3 – Appealing to your partner's love

The third thing that doesn’t work is to appeal to your partner’s love and insist that if they really love you as much as they say they do, they’ll give you what you want. Almost every couple tries this.

Marnie is no exception.

“Tom,” she says, one night as they're getting ready for bed, “Don’t you see how I can’t sleep at night worrying about my mother? I can't stop thinking about how she’s missing out on so much of our kids’ lives. Can’t you see what this is doing to me? Don’t you love me?”

 “The answer’s still no,” says Tom. “And it has nothing to do with whether I love you or not.”

I'd be inclined to agree. Just because you love someone, that doesn't mean you're responsible for giving them everything they want. 

A better way to make tough decisions as a couple

The good news is there’s a much better method. There are three steps involved.

Step One:  Let’s make a deal

In business, this would be a no-brainer, right?  You’d never ask someone to give you something you want for free. Instead, you’d find out what their price is.  

In marriage, it’s the same thing. The main question is: What’s going to motivate the other person to do a deal?

Let’s see what happens when Marnie tries this approach.

One night in bed, just before they turn off the lights, Marnie turns over to face Tom.

“Tom, what can I give you to make you agree to move?” she asks.

Tom is silent.

“A promise to never complain ever again about you watching TV?”

Tom smiles. “It’s going to cost a lot more than that,” he says.

Marnie thinks some more. “How about if I agree to spend every Thanksgiving and Christmas with your family?”

Tom shakes his head. But now Marnie has the idea. She’s not asking for favors anymore. She just wants to do this deal.         

“I'll do all the cooking and cleanup three times a week,” she says. "And we spend Thanksgiving and Christmas with your family."  

Tom raises an eyebrow. Now he knows she's serious. "Let me think about it,” he says, and turns off the light.

Time for Step Two.

Step Two:  The $64,000 Question

The following night, Tom is sitting at his laptop paying bills. Suddenly it hits him. “Marnie,” he says, “I think I see a way to do this. If we’re going to move, let’s get a smaller house and start saving money again. What do you think?”    Marnie’s actually been hoping for a bigger house. It’s painful to hear that this is what Tom wants. But hey, now he’s named his price. That means he’s in the game.

To me, this looks promising. Marnie gets something she wants very much. And she pays for it, fair and square. Same thing on Tom’s side.

Marnie thinks for a minute.  

“Let’s see what we can find,” she says.

Step Three: The Price is Right

Now comes the fun part.

The following Sunday, Marnie and Tom drop the kids off with her mother and start house-hunting in earnest. After a few weekends, they find a house they both like well enough. It breaks Marnie’s heart to be downsizing, but it was the only way to make things work. And it helps that once they find a place Tom likes, Marnie gets him to agree to new cabinets and closets.

Decision making builds strong relationships

 A good deal will have both of your dreams in it. That’s important, because it means you’re both fully in. You never know how a move like this is going to work out. If it goes well, you both share the satisfaction. If not, you share the blame.

A good deal will have both of your dreams in it.

One sign of a good deal is that in the end, neither of you got everything you wanted. The final result didn’t look exactly like what either of you originally had in mind.

But hey, isn’t that the case with anything creative? Eventually you have to face reality. And in a couple’s relationship, reality often takes the form of the person next to you in bed.

Sometimes life brings you to a fork in the road, where no compromise is possible. When that happens, assume you’ll need to do some serious deal-making—as if your relationship depended on it. Which in fact, it will.

Eventually, you have to face reality. And in a couple’s relationship, reality often takes the form of the person next to you in bed.

As Yogi Berra famously said, “When you come to a fork in the road, take it!”

In the long run, how you settle the issue may matter more than which fork you take.

Source: quickanddirtytips.com

5 Neglected Expenses That Can Ruin Your Vacation Budget

Vacation Budget

5 Neglected Expenses That Can Ruin Your Vacation Budget

With the weather warming up, summer vacation isn’t too far away. If you haven’t already, it’s time to start a vacation budget and account for everything you’ll be paying for that week.

After all, you don’t want to have to cut your relaxation time short because you forgot that you actually have to pay for gas.

But there are other financial surprises too, ones that perhaps you don’t think very much about when sitting down to create your budget. Here are a few that maybe you have not taken into account just yet, but absolutely need to.

Let Mint.com help you create the perfect vacation budget. Click here to get started!

Parking

Despite free public parking not being a popular idea among money-hungry companies for a while now, a lot of us still forget that we have to pay for the damn thing. This may be a few bucks or a few dozen bucks, but either way you can’t forget it when budgeting for your vacation.

Do the research to find out the charges for each place you’re staying or going to. Going to see a ball game? How much does the park charge to park? Going to take the train into the city? How much do they charge and, if need be, how much does valet parking cost?

Add those up, and you might be surprised how much not actively driving your car can run you.

Wi-Fi

These days, Wi-Fi is just about everywhere, and just about everydiv uses it. While the airport Wi-Fi might be free, the hotel you stay in might want a few bucks extra for use of their signal. This is especially true in nice, upscale hotels, where Wi-Fi access could run you $10-$20 a day.

So either annoy your family by checking into some rinky-dink motel, where Wi-Fi is free but everything is roach-ridden and moth-eaten, or factor in the money necessary for Junior to use his iPad on the coziest bed he’s ever slept on.

The Food Bill

Even though it’s part of our daily lives, many people don’t think about food when punching out their budget. And if they do, they vastly underestimate how much stomach fuel actually costs.

This goes for vacations as well. You should find out what restaurants in the area typically charge, so you don’t get blindsided by the high cost of steak. If you’ve rented out a house with a kitchen and fridge, take some time to deduce how much you and your family spend on food at home.

Then, take that total and add a bit more to the food budget. It’s vacation time, after all, and for many, relaxing and unwinding means more burgers and s’mores than during a regular workweek.

Checked Bag Fees

If there’s one thing all travelers can agree is pure evil, airlines charging people to check in their bags has be it. Some airlines, such as Southwest, will let customers get away with some checked bags for free, but expect to fork over $25 or more for each additional one.

Checked bag fees need to be part of your budget every time, because it’s never, ever going away. Airlines make too much money off of it to abandon it simply because we don’t like it.

Either pack minimally, ensuring that you can get away with nothing but carry-ons and maybe one or two checked bags, or put a couple hundred bucks aside in the budget for the over packers in your family.

Vacation Budget Plan

Spontaneous Activities

There was an episode of Full House where Danny Tanner attempted to script the family’s Hawaiian vacation to the letter — every activity planned ahead of time, strict time limits on said activities, and naturally every penny accounted for.

This almost never happens. Vacations aren’t nearly that organized, and you will have some unpredictable moments, not to mention costs that you didn’t see coming. Maybe your children see an ad for horse riding trails and immediately start begging you to let them ride the horsies.

Sadly, horsies aren’t cheap, but this is a vacation, so why not let them indulge?

The trick is to not indulge too much. Don’t do everything that sounds fun, because the inevitable overdraft charges on your bank account won’t be very fun. Leave enough room in your budget for unplanned, spontaneous activities, and stick to that window as closely as you can.

This way, you and your family will have a great, fun vacation, and you won’t still be paying for it months and months later.

Mint.com can help create a complete vacation budget just for you and your family. Click here to sign up and start!

The post 5 Neglected Expenses That Can Ruin Your Vacation Budget appeared first on MintLife Blog.

Source: mint.intuit.com