Social Security recipients who have lost a spouse may be eligible for a higher monthly payout if they switch to survivor’s benefits. But many recipients are unaware of this fact. That ignorance could cost them tens of thousands of dollars over the course of their retirement, according to an audit by the Social Security Administration’s Office of the Inspector General. The audit found that of 100…
A key financial decision people struggle to make is how to allocate savings for multiple financial goals. Do you save for several goals at the same time or fund them one-by-one in a series of steps? Basically, there are two ways to approach financial goal-setting:
Concurrently: Saving for two or more financial goals at the same time.
Sequentially: Saving for one financial goal at a time in a series of steps.
Each method has its pros and cons. Here’s how to decide which method is best for you.
You can focus intensely on one goal at a time and feel a sense of completion when each goal is achieved. It’s also simpler to set up and manage single-goal savings than plans for multiple goals. You only need to set up and manage one account.
Compound interest is not retroactive. If it takes up to a decade to get around to long-term savings goals (e.g., funding a retirement savings plan), that’s time that interest is not earned.
Compound interest is not delayed on savings for goals that come later in life. The earlier money is set aside, the longer it can grow. Based on the Rule of 72, you can double a sum of money in nine years with an 8 percent average return. The earliest years of savings toward long-term goals are the most powerful ones.
Funding multiple financial goals is more complex than single-tasking. Income needs to be earmarked separately for each goal and often placed in different accounts. In addition, it will probably take longer to complete any one goal because savings is being placed in multiple locations.
Working with Wise Bread to recruit respondents, I conducted a study of financial goal-setting decisions with four colleagues that was recently published in the Journal of Personal Finance. The target audience was young adults with 69 percent of the sample under age 45. Four key financial decisions were explored: financial goals, homeownership, retirement planning, and student loans.
Results indicated that many respondents were sequencing financial priorities, instead of funding them simultaneously, and delaying homeownership and retirement savings. Three-word phrases like “once I have…,", “after I [action],” and “as soon as…,” were noted frequently, indicating a hesitancy to fund certain financial goals until achieving others.
The top three financial goals reported by 1,538 respondents were saving for something, buying something, and reducing debt. About a third (32 percent) of the sample had outstanding student loan balances at the time of data collection and student loan debt had a major impact on respondents’ financial decisions. About three-quarters of the sample said loan debt affected both housing choices and retirement savings.
Based on the findings from the study mentioned above, here are five ways to make better financial decisions.
1. Consider concurrent financial planning
Rethink the practice of completing financial goals one at a time. Concurrent goal-setting will maximize the awesome power of compound interest and prevent the frequently-reported survey result of having the completion date for one goal determine the start date to save for others.
2. Increase positive financial actions
Do more of anything positive that you’re already doing to better your personal finances. For example, if you’re saving 3 percent of your income in a SEP-IRA (if self-employed) or 401(k) or 403(b) employer retirement savings plan, decide to increase savings to 4 percent or 5 percent.
3. Decrease negative financial habits
Decide to stop (or at least reduce) costly actions that are counterproductive to building financial security. Everyone has their own culprits. Key criteria for consideration are potential cost savings, health impacts, and personal enjoyment.
4. Save something for retirement
Almost 40 percent of the respondents were saving nothing for retirement, which is sobering. The actions that people take (or do not take) today affect their future selves. Any savings is better than no savings and even modest amounts like $100 a month add up over time.
5. Run some financial calculations
Use an online calculator to set financial goals and make plans to achieve them. Planning increases people’s sense of control over their finances and motivation to save. Useful tools are available from FINRA and Practical Money Skills.
What’s the best way to save money for financial goals? It depends. In the end, the most important thing is that you’re taking positive action. Weigh the pros and cons of concurrent and sequential goal-setting strategies and personal preferences, and follow a regular savings strategy that works for you. Every small step matters!
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This article is from Barbara OâNeill of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:
5-Minute Finance: Create Financial Goals
How to Manage Your Money â No Budgeting Required
You apply for a credit card and the bank sends you one when you’re approved. Whether it’s a Visa, a MasterCard or another type of payment card doesn’t factor into the process. Or does it?
Find out whether you should choose Visa or MasterCard when applying for credit cards and what other information you should know about these companies before selecting a credit card.
The Difference Between Visa and MasterCard
The only real difference that stands between Visa and MasterCard is that your card works on the payment network that the company operates. A Visa card won’t work on MasterCard’s network, and vice versa.
Ultimately, any other differences in cards come from the specific card you have. Not all MasterCard cards are the same, and not all Visa cards are the same.
How Are Visa and MasterCard cards similar?
Visa and MasterCard are both card networks. That means they manage the payment networks on which their cards work, but they don’t actually approve or issueÂ cards to consumers. When you receive a Visa or MasterCard credit card, you get it from a bank such as Chase, WellsFargo or other organizations.
This is in contrast to how cards such as Discover and American Express work. These companies operate payment networks, but they also sometimes issue cards directly.
One benefit of the way Visa and MasterCard work is that they are able to foster much wider acceptance than other credit card companies. Visa’s network is 28 million merchants strong. MasterCard’s network features 30 million merchants. It’s rare that one of the types of cards is not accepted when another is. You’re much more likely to find a merchant that accepts Visa and MasterCard while not accepting Discover or American Express.
Other Similarities Between Visa and MasterCard
Because the specifics of your card depend on what kind of Visa or MasterCard you have, both types of cards offer a variety of options. Here are some of the considerations and options you’ll find whether you choose MasterCard or Visa.
1. Credit scores are required for cards.
The credit card companies don’t decide whether you’re approved for a card or not. It’s the bank sponsoring the card that makes the final call because they’re the one taking the financial risk to extend you credit. Some cards require good to excellent credit scores for approval, while others are approved for individuals with lower credit ratings.
Some banks may even offer credit repair cards for individuals with even lower credit ratings. These tend to have very low credit limits and may come with higher interest rates. Often, cards with the best benefits are approved only for those with good credit ratings.
Find out more about credit scoresÂ and what is typically considered a strong score before you apply for any type of credit card.
2. Rewards cards are an option.
Both MasterCard and Visa work with banks that provide rewards credit cards. These can include:
Travel rewards, such as points toward discounts on hotel stays, airfare, dining or even Uber rides
Store-specific rewards, such as points at retailers like Best Buy or Home Depot
Food and beverage rewards, such as free beverages at Starbucks or discounts at favorite restaurant chains
Cash back earned on each dollar you spend
The type of rewards you earn with your card depend on the card program, which is offered by the banks, and you can find Visa and MasterCard options for all of the above.
You can find some of the best options for rewards and other credit cardsÂ via the Credit.com search tools. That’s true whether you’re looking for MasterCard cardsÂ or Visa cards.
3. Fees can range for each card.
Fees are typically set by the banks and not by Visa or MasterCard. What you pay in over-limit, balance transfer, late fees or foreign transaction feesÂ depends on the bank, the credit card offer and the agreement you sign. Don’t rely on the name on the card, and instead, make sure you fully review the offer before you agree to it so you know what fees you’re on the hook for.
4. Apple and Google Pay are options.
Most MasterCard and Visa credit cards work with smart wallet options such as Apple Pay or Google Pay. This is good news for credit card holders who are worried about the security risks that come with swiping a card. Instead, you can link your card to the app on your smartphone and pay via your phone at any payment station that accepts these methods.
5. Credit card holder discount programs.
If you use a business credit card, you may be entitled to save money on various purchases. Visa offers its Visa SavingsEdge program which features discounts of up to 15% or more on qualifying merchants that are automatically refunded to cardholders’ statements. Participating merchants include gas stations, hotels and car rental agencies.
MasterCard offers its similar Easy Savings program with discounts for qualifying purchases from gas stations, hotels and car repair chains. In both cases, cardholders must enroll their cards to realize these savings.
Can You Choose Your Own Payment Network?
In cases where banks work with both MasterCard and Visa, you may be able to contact your credit card company to ask for a specific network. This is true even if you were already issued a card on one of the networks already.
Because the bank determines APR, terms and rewards programs, there is often no reason to get into this level of detail when requesting a card. However, Visa and MasterCard both do back some benefits associated with their cards, including rental car insurance, buyer protections, extended warranties and travel insurance. If one of these benefits is extremely important to you, it may be worth it to change to the card network that offers the best option.
Regardless of whether you choose a Visa or a MasterCard card, apply for a credit card right here on Credit.com. Need to know your credit score before applying? Find out by signing up for a free Credit.comÂ account.
The post Visa v. Mastercard: How These Financial Tools Are Similar & What Makes Them Different appeared first on Credit.com.
Around 6.1% of employed Americans worked for themselves in 2019, yet the ranks of the self-employed might increase among certain professions more than others. By 2026, the U.S. Bureau of Labor Statistics projects that self-employment will rise by nearly 8%.
Some self-employed professionals experience high pay in addition to increased flexibility. Dentists, for example, are commonly self-employed, yet they earned a median annual wage of $159,200 in 2019. Conversely, appraisers and assessors of real estate, another career where self-employment is common, earned a median annual wage of $57,010 in 2019.
When you work for yourself, you might have to jump through additional hoops to qualify for credit.
Despite high pay and job security in some industries, thereâs one area where self-employed workers can struggle â qualifying for credit. When you work for yourself, you might have to jump through additional hoops and provide a longer work history to get approved for a mortgage, take out a car loan, or qualify for another line of credit you need.
Why Being Self-Employed Matters to Creditors
Hereâs the good news: Being self-employed doesn’t directly affect your credit score. Some lenders, however, might be leery about extending credit to self-employed applicants, particularly if youâve been self-employed for a short time.
When applying for a mortgage or another type of loan, lenders consider the following criteria:
Generally speaking, lenders will confirm your income by looking at pay stubs and tax returns you submit. They can check your credit score with the credit bureaus by placing a hard inquiry on your credit report, and can confirm your debt-to-income ratio by comparing your income to the debt you currently owe. Lenders can also check to see what assets you have, either by receiving copies of your bank statements or other proof of assets.
The final factor â your employment status â can be more difficult for lenders to gauge if youâre self-employed, and managing multiple clients or jobs. After all, bringing in unpredictable streams of income from multiple sources is considerably different than earning a single paycheck from one employer who pays you a salary or a set hourly rate. If your income fluctuates or your self-employment income is seasonal, this might be considered less stable and slightly risky for lenders.
That said, being honest about your employment and other information when you apply for a loan will work out better for you overall. Most lenders will ask the status of your employment in your loan application; however, your self-employed status could already be listed with the credit bureaus. Either way, being dishonest on a credit application is a surefire way to make sure youâre denied.
Extra Steps to Get Approved for Self-Employed Workers
When you apply for a mortgage and youâre self-employed, you typically have to provide more proof of a reliable income source than the average person. Lenders are looking for proof of income stability, the location and nature of your work, the strength of your business, and the long-term viability of your business.
To prove your self-employed status wonât hurt your ability to repay your loan, youâll have to supply the following additional information:
Two years of personal tax returns
Two years of business tax returns
Documentation of your self-employed status, including a client list if asked
Documentation of your business status, including business insurance or a business license
Applying for another line of credit, like a credit card or a car loan, is considerably less intensive than applying for a mortgage â this is true whether youâre self-employed or not.
Most other types of credit require you to fill out a loan application that includes your personal information, your Social Security number, information on other debt you have like a housing payment, and details on your employment status. If your credit score and income is high enough, you might get approved for other types of credit without jumping through any additional hoops.
10 Ways the Self-Employed Can Get Credit
If you work for yourself and want to make sure you qualify for the credit you need, there are plenty of steps you can take to set yourself up for success. Consider making the following moves right away.
1. Know Where Your Credit Stands
You canât work on your credit if you donât even know where you stand. To start the process, you should absolutely check your credit score to see whether it needs work. Fortunately, there are a few ways to check your FICO credit score online and for free.
2. Apply With a Cosigner
If your credit score or income are insufficient to qualify for credit on your own, you can also apply for a loan with a cosigner. With a cosigner, you get the benefit of relying on their strong credit score and positive credit history to boost your chances of approval. If you choose this option, however, keep in mind that your cosigner is jointly responsible for repaying the loan, if you default.
3. Go Straight to Your Local Bank or Credit Union
If you have a long-standing relationship with a credit union or a local bank, it already has a general understanding of how you manage money. With this trust established, it might be willing to extend you a line of credit when other lenders wonât.
This is especially true if youâve had a deposit account relationship with the institution for several years at minimum. Either way, itâs always a good idea to check with your existing bank or credit union when applying for a mortgage, a car loan, or another line of credit.
4. Lower Your Debt-to-Income Ratio
Debt-to-income (DTI) ratio is an important factor lenders consider when you apply for a mortgage or another type of loan. This factor represents the amount of debt you have compared to your income, and itâs represented as a percentage.
If you have a gross income of $6,000 per month and you have fixed expenses of $3,000 per month, for example, then your DTI ratio is 50%.
A DTI ratio thatâs too high might make it difficult to qualify for a mortgage or another line of credit when youâre self-employed. For mortgage qualifications, most lenders prefer to loan money to consumers with a DTI ratio of 43% or lower.
5. Check Your Credit Report for Errors
To keep your credit in the best shape possible, check your credit reports, regularly. You can request your credit reports from all three credit bureaus once every 12 months, for free, at AnnualCreditReport.com.
If you find errors on your credit report, take steps to dispute them right away. Correcting errors on your report can give your score the noticeable boost it needs.
You typically need two years of tax returns as a self-employed person to qualify for a mortgage, and you might not be able to qualify at all until you reach this threshold. For other types of credit, it can definitely help to wait until youâve earned self-employment income for at least six months before you apply.
7. Separate Business and Personal Funds
Keeping personal and business funds separate is helpful when filing your taxes, but it can also help you lessen your liability for certain debt.
For example, letâs say that you have a large amount of personal debt. If your business is structured as a corporation or LLC and you need a business loan, separating your business funds from your personal funds might make your loan application look more favorable to lenders.
Having more liquid assets is a good sign from a lenderâs perspective, so strive to build up your savings account and your investments. For example, open a high-yield savings account and save three to six months of expenses as an emergency fund.
You can also open a brokerage account and start investing on a regular basis. Either strategy will help you build up your assets, which shows lenders you have a better chance of repaying your loan despite an irregular income.
9. Provide a Larger Down Payment
Some lenders have tightened up mortgage qualification requirements, and some are even requiring a 20% down payment for home loans. Youâll also have a better chance to secure an auto loan with the best rates and terms with more money down, especially for new cars that depreciate rapidly.
Aim for 20% down on a home or a car that youâre buying. As a bonus, having a 20% down payment for your home purchase helps you avoid paying private mortgage insurance.
10. Get a Secured Loan or Credit Card
Donât forget the steps you can take to build credit now, if your credit profile is thin or youâve made mistakes in the past. One way to do this is applying for a secured credit card or a secured loan, both of which require collateral for you to get started.
The point of a secured credit card or loan is getting the chance to build your credit score and prove your creditworthiness as a self-employed worker, when you canât get approved for unsecured credit. After making sufficient on-time payments toward the secured card or loan, your credit score will increase, you can upgrade to an unsecured alternative and get your deposit or collateral back.
The Bottom Line
If youâre self-employed and worried that your work status will hurt your chances at qualifying for credit, you shouldnât be. Instead, focus your time and energy on creating a reliable self-employment income stream and building your credit score.
Once your business is established and youâve been self-employed for several years, your work status wonât matter as heavily. Keep your income high, your DTI low, and a positive credit record, youâll have a better chance of getting approved for credit.
Itâs in the stars. The home of the late astrologer and psychic Walter Mercado in San Juan, PR, is now on the market for $395,000. The legendary Spanish-language television personality, who died in 2019 at the age of 87, delivered his daily horoscopes with panache, often wearing a cape, and was known for wishing his huge audiences âMucho, mucho amor.â
Mercado broadcast to 120 million devoted viewers daily for decades, according to a 2019 museum exhibit that explores his influence. Although he last aired his show from Miami, he kept a home in Puerto Rico.
Walter Mercado’s San Juan, Puerto Rico home (realtor.com)
Stairs with decorative tile (realtor.com)
Living room with artful chandeliers (realtor.com)
Brightly colored walls (realtor.com)
Pool and gazebo (realtor.com)
The property initially landed on the market in September 2020 for $495,000. But with no buyer forthcoming, the price was dropped to $430,000 in December, and subsequently to its current asking price.
We predict that a buyer will be quite pleased with the place.
The listing describes the property as âuniqueâ and located in an âexclusive areaâ of San Juan. It also offers a flexible floor plan, with two separate living accommodations on separate floors.
The first level, entered from a foyer, features three bedrooms, three bathrooms, a living room, dining room, and kitchen. The layout includes an office space with a small kitchen and half bathroom. The interiors are painted bright and cheery reds and yellows. The stairs are covered with decorative tiles. Other details of the 1970 abode include wrought-iron railings, arched doorways, and fanciful light fixtures.
Upstairs, the separate living space includes two large bedrooms, two bathrooms, a small kitchen, two terraces, a living room, dining room, family room, and balcony.
Outside, the grounds include a terrace, pool, gazebo, and patio. The covered carport has room for at least four cars. An electric gate secures the entrance to the property. Other amenities include an electric generator that powers the entire house, as well as security doors and windows.Â
Born Walter Mercado Salinas, the flamboyant entertainer grew up in Puerto Rico, and began delivering his predictions in elaborate costumes on a weekly show on Telemundo back in the 1970s.
Mercadoâs reach expanded in the 1990s, when his show moved to Univision, where he delivered his soulful brand of astrology until 2010. After that, he maintained a public presence through a website and other appearances. He also wrote a horoscope column in El Nuevo Herald, the Spanish-language sister of the Miami Herald.
He is the subject of a 2020 documentary, âMucho Mucho Amor: The Legend of Walter Mercado,â available on Netflix.
Gretchen Garcia with Real Estate Opportunities holds the listing.
The post Puerto Rico Home of the Late Astrologer Walter Mercado Available for $395K appeared first on Real Estate News & Insights | realtor.comÂ®.
Heading off to college is exciting. Really exciting. You finally have freedom! You’re out on your own for the very first time, managing your studies, managing your social life and… managing your finances.
Despite being a big part of your newfound independence, personal finance is a subject you probably won’t find on your course schedule. If you didn’t take a personal finance class in high school and never had money lessons from your parents, you may not know how to manage a checking account as a college student.
“College students have very different needs for their checking account than their parents or other adults,” says Tommy Martin, CEO of Clear Path Financial Planning and a finance blogger at TommyMartin.com. If you live in a different city during the school year than you do during winter and summer breaks, for example, you may be after a bank for which location doesn’t matter.
Ok, so how do I manage my checking account in college, you ask? First, don’t get overwhelmed. Learning how to manage money while in college and getting a handle on checking account basics is simpler than you might think (oh, and the skills will serve you for years to come). Second, you can kick off your checking account education with these tips for managing a checking account in college:
1. Compare checking accounts before signing up
While your college life may center around your school campus, you should consider venturing off-campus to pick the right checking account for your lifestyle.
“Students typically sign up with a bank that’s on campus or close to campus,” says Sahil Vakil, a financial planner and president of MYRA Wealth in New Jersey. However, the nearest bank might not be the one that best fits your needs, he adds.
Instead of picking a bank based solely on proximity, consider all of your options, including banks with off-campus locations and online-only banks.
Martin agrees, saying that learning how to manage money while in college means considering all of your banking options rather than “automatically enrolling or choosing the official school bank just because it has the school logo on it.” There are other ways to show your school pride, after all.
2. Learn about checking account fees and rewards
Vakil and Martin both say a tip for managing a checking account in college is to consider an account’s fees before signing up. Costly fees can eat into your savings and spending money, which can be a blow for students who are not working full-time. When you are choosing a checking account in college, consider fees for:
Monthly maintenance (essentially keeping your account open)
Minimum balance (not maintaining one)
Online bill pay
Replacement debit cards
Martin says a checking account with no minimum balance requirement or minimum number of transactions could be a good fit for students. “It allows them to focus on their education” instead of worrying about incurring penalties, he says. “Even a $5 fee on a checking account with $60 in it can be devastating.”
Costly fees can eat into your savings and spending money, which can be a blow for students who are not working full-time.
Martin also suggests finding an account that has a large network of no-fee ATMs located across the country to better manage your checking account as a college student. “Especially if you’re going to a school in a different state, the local bank from home might wind up costing you a lot in terms of ATM fees,” he says. If your parents plan to wire you money, find an account that doesn’t charge incoming wire fees, Martin adds.
While fees should be a focus when you are learning how to manage money while in college, don’t forget about incentives. You may be able to find a checking account that actually helps you grow your balance by paying interest or offering a cash back rewards program.
“If you have to pay for books or supplies, at least you can get some cash back and use it for a free dinner,” Martin says. Discover Cashback Debit, for example, offers 1% cash back on up to $3,000 in debit card purchases each month.1
Luckily, you don’t need to take Banking 101 to figure out your funds, and tech makes tracking your balance and account activity easier than ever. Most banks let you log in to your account online (don’t get distracted in class!), and with a bank’s mobile app you can transfer money to friends, pay bills, deposit checks and check your balanceâall while you’re on the go.
Knowing your balance at all times is a tip for managing a checking account in college because it can help you avoid overdrafts and insufficient funds fees. It can also help you forecast your income and expenses to ensure you’ll have enough money to cover future costs. Surpriseâthat’s budgeting!
There’s no one-size-fits-all budgeting program or system, though. You can go old-school and track your budget on a printed-out budget sheet, or you can go tech-savvy with a budgeting and spending app. “What’s best for you is the one you’re actually going to use,” Martin says.
If you learn how to manage money while in college and make a practice of maintaining your budget, the habit will follow you after graduation.
âCollege students have very different needs for their checking account than their parents or other adults.â
4. Secure your account
One of Vakil’s tips for managing a checking account in college is to make sure your account stays secure. Create a unique account name and password that you use only for your checking account, and never share your credentials.
Vakil says you can also enable two-factor authentication if your bank offers it and you’re looking for another way to improve the management of your checking account as a college student. “This additional layer of protection safeguards your sensitive financial data and strengthens the security of your account by requiring two methods of verifying your identity.”
For example, if you log in to your account from a new device, you may be sent a text message with a code that you’ll need to enter to access your account.
5. Keep an eye out for debit card holds
No matter where you bank, a merchant may place a hold on funds in your checking account when you use your debit card. Generally, a hold is placed for travel-related purchasesâsuch as at rental car companies, hotels and gas stationsâand used by merchants to protect against fraud and errors.
“Holds on a debit card can make it tricky for you to manage your finances,” Vakil says. For example, “when you rent a car, the car rental company might put a $500 hold on your account. If the balance in your account was $550, now you can only use another $50.”
Being aware of holds can be particularly important if you are managing a checking account as a college student and tend to have a low account balance.
If a merchant will be placing a hold, it will generally post a sign to notify customers. The hold will typically be removed after the funds are transferred to the merchant from your financial institution, typically within three to four days.
Knowing when a hold will be placed, the amount of the hold and how much money you have in your checking account can help you manage your checking account as a college student by avoiding overdrafts and missed bill payments due to insufficient funds.
6. Don’t let one mistake throw you off track
If you can learn how to manage a checking account as a college student, and more generally, how to manage money while in college, you can lay the groundwork for a solid financial future. Checking account mistakes may occasionally happen (oops, I didn’t budget enough for that spring break trip), but don’t let them discourage you to the point of apathy. Instead, try to continually expand your knowledge and practice healthy financial habits.
1Â ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as VenmoÂ® and PayPal, who also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries. Venmo and PayPal are registered trademarks of PayPal, Inc.
The post 6 Tips for Successfully Managing a Checking Account in College appeared first on Discover Bank – Banking Topics Blog.