Guide to Managing Finances for Deploying Service Members

Life in the military offers some distinct experiences compared to civilian life, and that includes your budget and finances. The pre-deployment process can feel overwhelming, especially when you’re organizing your money and bills. 

It’s important you provide your family with everything they need to keep you and any dependents comfortable and stable. This means gathering paperwork, making phone calls to service providers, creating new budgets, and organizing your estate. The more you prepare ahead of time, the less you have to worry about the state of your investments and finances when you return home. 

To help make the process easier, we’ve gathered everything you need to know for deployment finances. Read on or jump to a specific category below:

Pre-Deployment Needs

  • Review Your Estate
  • Reassign Financial Responsibilities
  • Update Your Services
  • Build a Budget
  • Prepare a Deployment Binder

Deployment Needs

  • Protect Yourself From Fraud
  • Adjust Your Savings
  • Financial Assistance

Post-Deployment Needs

  • Update Your Budget
  • Pay Off Debt
  • Review Legal Documents

Before Your Deployment

There’s a lot of paperwork and emotions involved in preparing for deployment. Make sure you take plenty of time for yourself and your loved ones, then schedule time to organize your finances for some peace of mind. 
investments, and dependents. It’s an important conversation to have with your partner and establishes:

  • Power of attorney
  • Living will
  • Last will and testament
  • Long-term care
  • Life insurance
  • Survivor benefits
  • Funeral arrangements

Anyone with property, wealth, or dependents should have some estate planning basics secured. These documents will protect your wishes and your family in the event you suffer serious injury. There are several military resources to help you prepare your estate:

  • Defense Finance And Accounting Services’ Survivor Benefit Plan and Reserve Component Survivor Benefit Plan
  • Department Of Defense’s Military Funeral Honors Pre-arrangement 
  • Service Member’s Group Life Insurance
  • Veterans Affairs Survivor’s Benefits
  • The Importance Of Estate Planning In The Military
  • Survivor Benefits Calculator

Servicemembers Civil Relief Act (SCRA) allows you to cancel a housing or auto lease, cancel your phone service, and avoid foreclosure on a home you own without penalties. Additionally, you can reduce your debt interest rates while you’re deployed, giving you a leg up on debt repayment or savings goals. Learn more about the SCRA benefits below:

  • Terminating Your Lease For Deployment
  • SCRA Interest Rate Limits
  • SCRA Benefits And Legal Guidance

 

Build a Deployment Budget

Your pay may change during and after deployment, which means it’s time to update your budget. Use a deployment calculator to estimate how your pay will change to get a foundation for your budget. 

Typically, we recommend you put 50 percent of your pay towards needs, like rent and groceries. If you don’t have anyone relying on your income, then you should consider splitting this chunk of change between your savings accounts and debt. 

Make sure you continue to deposit at least 20 percent of your pay into savings, too. Send some of this towards an emergency fund, while the rest can go towards your larger savings goals, like buying a house and retirement. 

Use these resources to help calculate your goals and budgets, as well as planning for your taxes:

  • My Army Benefits Deployment Calculator
  • My Army Benefits Retirement Calculator
  • Mint Budget Calculator
  • IRS Deployed Veteran Tax Extension
  • IRS Military Tax Resources
  • Combat Zone Tax Exclusions

 

Prepare a Deployment Binder

Mockup of someone completing the deployment checklist.

Illustrated button to download our printable depployment binder checklist.

It’s best to organize and arrange all of your documents, information, and needs into a deployment binder for your family. This will hold copies of your estate planning documents, budget information, and additional contacts and documents. 

Make copies of your personal documents, like birth certificates, contracts, bank information, and more. You also want to list important contacts like family doctors, your pet’s veterinarian, household contacts, and your power of attorney. 

Once you have your book ready, give it to your most trusted friend or family member. Again, this point of contact will have a lot of information about you that needs to stay secure. Finish it off with any instructions or to-dos for while you’re gone, and your finances should be secure for your leave. 

While You’re Deployed

Though most of your needs are taken care of before you deploy, there are a few things to settle while you’re away from home. 
Romance and identity scams are especially popular and can cost you thousands. 

  • Social Media Scams To Watch For
  • Romance Scam Red Flags
  • Military Scam Warning Signs

 

Adjust Your Savings 

Since you won’t be responsible for as many bills, and you may have reduced debt interest rates, deployment is the perfect time to build your savings.

While you’re deployed, you may be eligible for the Department of Defense’s Savings Deposit Program (SDP), which offers up to 10 percent interest. This is available to service members deployed to designated combat zones and those receiving hostile fire pay.

Military and federal government employees are also eligible for the Thrift Savings Plan. This is a supplementary retirement savings to your Civil Service Retirement System plan.

  • Savings Deposit Program
  • Thrift Savings Plan Calculator
  • Civil Service Retirement System
  • Military Saves Resources

 

Additional Resources for Financial Assistance

Deployment can be a financially and emotionally difficult time for families of service members. Make sure you and your family have easy access to financial aid in case they find themselves in need. 

Each individual branch of the military offers its own family and financial resources. You can find additional care through local support systems and national organizations, like Military OneSource and the American Legion. 

  • Family Readiness System
  • Navy-marine Corps Relief Society
  • Air Force Aid Society
  • Army Emergency Relief
  • Coast Guard Mutual Assistance
  • Military Onesource’s Financial Live Chat
  • Find Your Military And Family Support Center
  • Emergency Loans Through Military Heroes Fund Foundation Programs
  • The American Legion Family Support Network

After You Return Home

Coming home after deployment may be a rush of emotions. Relief, exhaustion, excitement, and lots of celebration are sure to come with it. There’s a lot to consider with reintegration after deployment, and that includes taking another look at your finances. 

 

Update Your Budget

Just like before deployment, you should update your budget to account for your new spending needs and pay. It’s time to reinstate your car insurance, find housing, and plan your monthly grocery budget. 

After a boost in savings while deployed, you may want to treat yourself to something nice — which is totally okay! The key is to decide what you want for yourself or your family, figure if it’s reasonable while maintaining other savings goals, like your rainy day fund, and limit other frivolous purchases. Now is not the time to go on a spending spree — it’s best to invest this money into education savings, retirement, and other long-term plans.

In addition to your savings goals, make sure you’re prepared to take care of yours and your family’s health. Prioritize your mental health after deployment and speak with a counselor, join support groups, and prepare for reintegration. Your family and children may also have a hard time adjusting, so consider their needs and seek out resources as well. 
FTC | NFCC 

The post Guide to Managing Finances for Deploying Service Members appeared first on MintLife Blog.

Source: mint.intuit.com

50 Ideas To Help You Get Out of Debt!

The post 50 Ideas To Help You Get Out of Debt! appeared first on Penny Pinchin' Mom.

When it comes to trying to get out of debt, I’ve seen and heard it all.  From the person who gets three jobs to the guy who sold his dream car – just to make it all happen.  It got me to thinking – what are some of the craziest ideas out there to help you find your way out of debt?

find money to pay off debt

I decided to make a fun post about the craziest ideas people have tried just to try to get their debts paid off.  The funniest thing is that these really do work!  Who knows?  Maybe one of these will inspire you too!

If you are struggling  with paying off your debt, these folks may be able to help:
Call 866-948-5666.

50 IDEAS TO HELP YOU GET OUT OF DEBT

SELL ITEMS

Things are that – just things.  They don’t define us, and they don’t always make us completely happy.  My husband and I sold so many items when we were trying to get out of debt that we were able to raise more than $1,000.  The thing is – I can’t even remember what we sold (which proves that they were things we obviously did not really need).  Here are some unconventional ideas of things you can sell:

1. Hair.  This may sound bizarre, but people will pay for long hair!  Crafters often use it for making dolls, so they will pay to buy it.  You will need to have at least 10″ or more to sell, and the price will vary greatly. You can visit eBay to learn more and get started.

2. Toilet paper / paper towel rolls.  Have you been on Pinterest and seen the number of craft projects which require a paper towel or toilet paper tubes?  They are all over the place!

You can get onto local sites such as Wallapop, Craigslist or even visit eBay and list your products for sale.  It may sound crazy, but it actually can work.

3. Gift cards.  If you get a gift card for any reason, be it a return or even a gift, you can turn around and sell the card.  You won’t get quite face value for it, but you also can at least get paid cold hard cash.

They don’t have even to have the full value on them.  For instance, if you had a $100 gift card to your favorite sporting goods store, but you only have used $26.48, you can still sell your card, and another person can use the remaining balance.

Visit Raise.com to learn more about placing your gift cards up for sale.

4. Daily Deal vouchers.  Did you buy a deal on LivingSocial and haven’t yet redeemed the voucher, you can sell it.

5.  Sell things you don’t need.  Use eBay, Craigslist or LetGo to sell the stuff you do not need anymore.  Go through your home and decide what you need and what you could sell to raise some quick funds to pay off your debt!

 

SIMPLE IDEAS

These are things that just make sense and most people think about…but you may not have thought of every one of them!

6.  Budget.  Of course, it seems this should go without saying, but it is not always obvious. If you don’t have a budget, you have no control of your money.  Learn How to Create a Budget.

7. Coupons.  Start using coupons to save as much as you possibly can at the grocery store.  Then, use the amount you save to pay towards your debt! Read more about How to Use Coupons.

8. Change where you shop.  If you live near an Aldi, start to buy groceries there.  Skip the clothing store and find consignment stores to find gently used clothes.  Read more about How to Shop at Aldi.

9. No more dinners out.  This is a tough one, but it works.  Best of all, its not something you will have to give up forever!  Just think, if you spend $100 or more a month dining out that is more than $1,000 to pay towards your debt in just one year!

If you do have dinner out, skip the soft drinks and go for water instead, which is free!  Make sure you also pass on the appetizers and consider splitting a larger entree to pay less.

10. Give up your hobbies.  If you are an avid golfer, you might give that up for some time and use the monthly dues to pay towards debt.

11. Menu plan.  By planning your meals, you not only know what you will have for dinner, but it also helps you plan your shopping trip.  That ensures you have all you need on hand when you get ready to cook all of your meals – saving you from running to the store for that “one item,” which often leads to more.  Read more about How to Create a Menu Plan.

12. Ask for rate reductions.  Contact your creditors to see if they would lower your interest rate at all. This is not always something that works, but it is definitely worth a few calls to see if it won’t work for you. Learn the tricks to asking for a rate reduction.

13. Avoid paying monthly fees.  If your bank charges monthly fees, ask them to waive them.  If they will not, consider moving to another one which offers free banking.  Even $5 a month is $60 a year that you are giving to them, just to have your account.

14. Keep the change.  I always use cash.  I don’t even pay with change.  If the total is $6.42, I hand over $7 and keep the change.  I roll all of this once a year and usually have quite a nice amount saved up.  Best of all – I never miss it!

15.  Overbudget.  This is a fun way to get extra money.  We may budget $300 for groceries every two weeks, but I will do what I can to keep my shopping way under this amount.  Then, I take anything left over at the end of that two weeks and save it (you could use it towards your debt). It’s a fun way to challenge yourself to see how little you can spend!

16.  Change insurance.  Make some calls to find out of you can get a better rate on your auto and home (renter’s) insurance.  You can sometimes find a better deal by bundling or even by increasing your deductibles a bit.

17.  Skip the evening movies.  If you love to visit the movies try the matinee instead!  You can usually pay less by catching the afternoon show. Make sure you pass on the snacks too, as those can add up quickly!

18.  Don’t buy books.  Instead of buying books, visit the library or get free Kindle books.  No need to buy them at all, when there are ways you can get them for free!  Find out more ways to get free books.

 

EXTREME IDEAS

These are ideas which do not work for everyone, but have worked to help others get out of debt very quickly!

19. Stop retirement contributions.  If you are in debt, you might want to take that 15% you were saving for retirement and throw it all towards your debt.  As soon as you are debt free, you can start that contribution again (and maybe even do more than that to other accounts).

20. Cancel cable completely. If you really want to go drastic, you need to take all steps necessary to do so.  Cable can run more than $100 (or even more than $150) per month.  If you can cut out cable entirely, you might quickly free up $100 or more every single month!

21. Sell your car.  If you are leasing a vehicle, that is a simple way to throw money away, as you will never own it.  Turn in the vehicle and then take out a loan to purchase a much older car, where you will pay less per month.  Best of all, you will own it in a few short years!

If you have an expensive vehicle, you can also sell that and then purchase an older car, which will reduce your monthly overhead (and possibly taxes and insurance).

22. Move.  If you are renting or even if you own your home, consider downsizing to pay less each month.  I know many people have opted to sell their home and use any income to pay towards debt, and then they rent until they are debt free.  Then, they save to get the house of their dreams, which they can purchase debt free!

23.  Turn off your home phone.  This can run $30 or more a month.  Just use your cell phone and cancel your home service.

24. Downgrade your cell phone.  Try to reduce the data you use to see if you can’t lower your monthly payment on your cell phone.  Stick with your home internet for most of your data usage, and you can use your phone less and less and rack up the savings.

25.  Swap services.  Instead of paying for babysitting, exchange time with another couple.  You watch their kids for free, and they can do the same for you.  You might be able to swap your tutoring for haircuts or your lawn mowing for handyman repairs.

26.  Make gifts.  Instead of buying people gifts for birthdays and holidays, consider making them yourself.  You could even offer a “service” gift where you will babysit once a month for a year, etc.  Find a way to give from the heart instead.

27.  Budget bill your utilities.  If you can, arrange for budget billing with your services.  This can make it easier to include your budget and will avoid those swings in the summer or the winter when certain utilities may be more expensive.

28.  Drop the gym or country club.  If you have a membership of any sort, just cancel it.  If you work out at the gym, try to find free videos you can follow at home or create your own workout plan. If you like to golf, go with a friend instead of paying for your membership.

29.  No more coffee trips.  Make your coffee at home each morning and cancel that run through the drive-thru.

30.   Take your lunch.  It is great to go out to lunch every day, but pack your lunch, and you’ll ensure you eat up leftovers.  Not only will you waste less food, but you’ll also save a nice chunk of money every month.

31.  Carpool.  Take turns driving to work and save money on fuel and also wear and tear on your vehicle.

32.   Set up no spend months.  This is a tough one, but see if you can go a few weeks without spending anything more than you need to survive.  That means no dining out.  No entertainment.  No clothes.  Just food and fuel and that’s it!

 

MAKE MONEY

This is a bit different than working from home.  These ideas help you make a bit more money just doing things you might already do – like search the internet, shop, etc.  These sites will pay you money to do just that.  Then, turn around and apply anything you make towards your savings.

33. Swagbucks. Use this site to get paid for doing searches and other things you normally do online!  Click HERE to learn more about Swagbucks.

34. Sell crafts on Etsy. If you are good at crocheting, woodworking or anything at all, look at selling your wares on Etsy. It is a simple platform and the costs are very low, which allows you to keep most of what you make from each sale.

35. Rent a room in your home.  If you have a walk-out basement, consider renting out the space to make more money.  Just check with your local laws and homeowner’s association to ensure this is allowed before you jump in to start this one.

36. Sell stocks.  If you have investments, considering selling them and using the proceeds to pay towards your debt.

37. Give music lessons.  If you know an instrument or you can sing, consider selling your time to help teach others.

38. Tutor.  Find your expertise and teach others.  You never know who you might be able to help!

39. Start a blog.  You may not get rich with your blog, but it can turn into a nice stream of income!  Learn more about How to Start a Blog.

40.  Visit garage sales and upcycle.  Find items very inexpensive at a yard or garage sales.  Put in some elbow grease, paint and creativity and turn them into something you can sell for a profit.  Check out flea markets and farmer’s markets for larger items and for places where you can sell your items.

41.  Find holiday work.  When the holidays roll around, many stores hire employees for a short 6 – 8 week period.  Sign up and put in some extra time after your regular job and make some extra cash you can use to pay down your debt.

42.  Become a mystery shopper.  This is a great way to get some things for free.  This is not a way to get rich but is an excellent way to get some of the things you need for free (which allows you more money to pay towards your debt).

43. Become an eBay master.  Purchase items on clearance or at deep discounts and then sell them for a profit on eBay.   You can still offer prices which are less than in the store, but more than you paid.

44.  Ask for a raise.  Don’t be afraid to ask for one.  Make sure you share the additional work or responsibilities you’ve taken on as a reason why.  Or, if it has been a while since you last had a raise, you can mention that too.  It never hurts to try.

45.  Sell an eBook.  If you are an expert in any field, or if you love to write, create a book you can sell on Amazon!

 

MENTAL

While there are things that you can physically do to save or to make money, you need to get your brain into the right mindset too.

46.  Make your goal visible.  If you want to get out of debt so you can afford to save for a vacation, tape a photo of the destination where you see it each day.  It could be on your office wall, bathroom mirror or the refrigerator.

47.  Learn to be happy with less.  Sure, a new TV might be fun to own. It could be enjoyable to go out to dinner.  However, do you need those things?  Probably not.  Find a way to be happy spending time at home spending no money at all, and you’ll realize how much those things don’t matter.

48.  Learn to say no.  You may need to tell friends you can’t go out to dinner.  It may mean telling the kids that they can’t get that treat at the grocery store. You may need to say to yourself that you do not need to grab that afternoon latte.  Learning to say no can easily keep more money in your pocket.

49.  Give more.  This may seem crazy, but it actually works.  When you give more of yourself to others, you feel better.  Best of all, giving is not always financial. It can mean your time or even your prayers.

50. Surround yourself with the right people. If your friends encourage you to spend money, then you might want to distance yourself from them (at least until you can get better control over your finances and self-control).  Find other people who think like you do so that they can encourage and build you up.

There you’ve got it.  Fifty ways to help get you out of debt!  Which are you getting ready to try?

ideas to help find money to pay off debt

The post 50 Ideas To Help You Get Out of Debt! appeared first on Penny Pinchin' Mom.

Source: pennypinchinmom.com

Expert Homebuying Tips for Buying in a Seller’s Market

Buying a house is a big decision, but it can feel especially overwhelming to place an offer on a home less than 24 hours after seeing it for the first time. Plus you’re under pressure to outbid several other buyers — or risk losing the house.

While these circumstances might sound extraordinary, they’re not. With housing inventory nationwide at an all time-low — down 22% from last year according to the National Association of Realtors — it’s no wonder buyers are competing for the same few houses.

I was in this exact position last fall. Here are seven key takeaways from my experience buying in a seller’s market.

Get a Pre-Approval Letter

In order to be competitive in a hot seller’s market, you will need to line up your financing in advance.

Besides all the usual suspects, like saving up for a down payment and improving your credit score, you’ll also want to get a pre-approval letter from your bank. It states that a bank would approve you for a mortgage of a certain amount, and acts as a guarantee to the seller that you can actually afford to buy their house.

This is where it helps to know your budget up front.

“It’s important to understand that the strength of financing is a key consideration a seller takes into account when selecting an offer,” said real estate developer Bill Samuel.

No seller wants to risk accepting an offer that might fall through. Aand since pre-approval letters can take some time to get, have one ready before you find your dream house.

Be Friendly With Neighbors

This might sound crazy, but making a good impression on your new neighbors can actually make a difference when it comes time for a seller to review offers.

Since you’ll likely be visiting the home at least once before making an offer, be prepared to talk to any neighbors you might run into. In close-knit neighborhoods, or ones where people share resources (like an HOA), sellers might care a bit more about the type of person they sell the house to.

If you happen to meet a neighbor when visiting the home, introduce yourself and make a good impression. You never know how much their opinion of you might factor into any final decisions.

Submit an Offer Quickly

After you’ve seen a house, and decided you love it, be prepared to submit an offer quickly— as in, ASAP.

Work with your real estate agent to determine how many other offers the seller already has (or expects to get) and then be prepared to draft something up that day. In our case, we toured our home for the very first time at 11 a.m. on a Monday — it came on the market the evening before — and made an offer by 4 p.m. that same day.

If that sounds fast, it is. But by the time we submitted our offer, the seller already had three others. This is where it helps to have a great real estate agent on your side.

“Having a realtor who can get your offer submitted quickly is crucial,” said Erik Wright, owner of New Horizon Home Buyers. “You want to get your offer in front of the seller first, and make it strong. Purchase price is the obvious factor and in a competitive market, houses often go for over asking price. However, a strong offer has several factors and it depends on what’s most important to the seller.”

Work with your real estate agent to find out what matters most to the seller — is it money, closing quickly, something else entirely? Then make sure your offer addresses their needs.

Minimize Your Contingencies (Within Reason)

Another way to win over your seller (and prevail in any bidding wars) is by keeping your contingencies to a minimum.

Contingencies are the contractual stipulations buyers and sellers must meet before the deal can close. Unsurprisingly, sellers don’t like to have too many of them to deal with. Contingencies can include such things as requesting a seller to make certain repairs, getting a home inspection, or even the fact that you’ll need to sell your old house before being able to buy the new one.

“In a really aggressive seller’s market, a home buyer who has to sell a current property should do so before placing an offer on another home,” said Jason Gelios of Community Choice Realty. “Don’t always assume that the seller will take the highest price. Other conveniences can play a factor in gaining the seller’s attention, especially things like faster closing times and less restrictions.”

While my partner and I didn’t make the highest offer on our house, we did have the fewest contingencies — mainly, we didn’t ask too much of our seller in the way of repairs, or have another house to sell in order to afford the new one.

All that said, there are certain contingencies you should never forgo, and a home inspection is one of them. Getting your home inspected is hugely important, since inspectors will often find things even the sellers weren’t aware of. No matter how much you love a house, don’t be afraid of exercising your right to an inspection.

According to buyer protection laws in most states, sellers are required to report any findings in home inspections to subsequent buyers. In other words, if an inspector finds something wrong with the house, the seller will have to deal with it one way or another— either with you, or the next buyer should you choose to drop out of the deal.

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Make a Generous Earnest Money Deposit

When trying to woo your seller in a competitive market, it helps to make a generous earnest money deposit. An earnest money deposit is a good-faith deposit requested by the seller when you enter into a contract to buy the house and typically run anywhere from 1% to 3% of the sale price of the home.

When deciding how much of an earnest money deposit to include in your offer, keep in mind that whatever amount you give comes off the price of the home (and is returned to you if the deal falls through). In other words, there’s no reason to be cheap. If you can, go slightly above the seller’s requested deposit amount. Even if it’s just a little more than what they’re asking, that gesture of good faith might just be what gets you the house.

A row of houses on a cul de sac in a suburban neighborhood.

Offer Above Asking Price

Wait. Why would anyone make an offer that’s above asking price? Because the competition did it first, and in a hot seller’s market, offering above asking price is often what it takes to even be considered.

Upping your offer may not break the bank as much as you’re fearing. “With interest rates so low these days, offering more than what the seller is asking may not make a drastic difference in your overall monthly payments,” real estate agent Pavel Khaykin of Pavel Buys Houses said.

Let’s say the listing price on your dream home is $320,000 and you’re able to put down a 6% down payment. That leaves you with a mortgage of roughly $301,000. For a 30-year fixed mortgage at an interest rate of 3%, that translates into $1,269 monthly payments. Now let’s say you decide to bid a little higher on the home and offer $10,000 over asking price. This would only bump up your monthly payment (assuming you qualify for that low interest rate) by $42.

Lace Up Your Running Shoes

In a hot seller’s market, you’ve got to be ready to move fast. Often this is more of a change in mindset than anything else. When my partner and I first started looking at homes, we considered ourselves casual buyers — that is, until our dream home came on the market late one Sunday night. From there, things moved quickly. We saw the home, made an offer, were under contract by morning, and spent the next month and a half going through the process of closing on the house.

If you’re serious about finding your dream home in the next few months, the best thing you can do is know what you want from the outset, and get your ducks in a row to make a compelling offer when you find it. Maybe this means making a list of your must-haves in a house, and working to improve your credit score. It might also mean reaching out to a real estate agent before you need one, and getting that pre-approval letter in place.

Although inventory is low, new houses come on the market all the time.

Larissa Runkle is a contributor to The Penny Hoarder.

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

Perch unveils impressive credit building app

Perch is a new mobile app available for iOS that can improve your credit score by incorporating your rent history and recurring subscriptions such as streaming services.

Currently, Perch is only available through the Apple Store. There are some similar offerings out there, but I think this one is better. It’s completely free and it reports to more credit bureaus.

Read more from our credit card experts.

Ask Ted a question.

Rent

Typically, your rental payment history does not appear on your credit reports. That’s a shame, because rent is the largest monthly expense for many households. It would be great if paying your rent on time helped you build your credit score.

There are some existing services that facilitate reporting your rent to the credit bureaus, but they typically charge fees. They can also get complicated, since many require your landlord to respond to the tracking company each month or mandate that they receive your payments through their platform). With Perch, you provide your lease details and grant read-only access to your bank account via Plaid’s secure API. That allows Perch to verify your payment history – without bugging your landlord or forcing you to change your payment method.

Even better, Perch can retroactively add up to 24 months of rental payment history to your credit reports with all three major bureaus. This could jumpstart your credit score in a big way. The company tells me their average customer improves their credit score between 60 and 160 points. And many who were previously unscorable instantly land between 670 and 690 – placing them in the “good credit” category. That’s incredible!

See related: How to pay rent with a credit card

Subscriptions 

Perch also has a novel approach to monitoring subscriptions. Users notify the company which recurring subscriptions they want to include, and Perch provides them with a virtual debit card loaded up to that pre-approved amount. The user pays Netflix, Hulu, Spotify, Apple Music or another subscription service with that virtual card number. They then pay Perch back. Perch reports this virtual card payment activity as an additional tradeline on users’ credit reports (note that Perch currently reports subscriptions to Equifax and TransUnion; it plans to add Experian by July).

See related: I signed up for Experian Boost. This is what happened

I asked Perch founder and CEO Michael Broughton what happens if someone doesn’t pay them back – would that end up hurting their credit score? He said no. Perch really wants to help their users build credit, so it will not place a negative mark on a customer’s credit report in that situation – or even charge a late fee.

Instead, Perch relies on proactive measures such as cash flow underwriting and warnings if your account balance falls too low. If you don’t pay, they’ll eventually prevent you from making future purchases. Broughton explained that their liability is very limited because they pre-approve these virtual card purchases and the eligible subscription services tend to charge modest amounts. He assured me that no one can get away with buying $500 Nikes and skipping town.

About Perch

Broughton is a 21-year-old graduate of the University of Southern California. He was inspired to found Perch after he had difficulty securing a loan for a $10,000 tuition shortfall. One of seven children born into a military family, Broughton was the first member of his family to attend college. He’s now assisting others who wish to improve their financial lives. The company’s investors include heavy hitters such as Citi, Sequoia Capital, SoftBank and Y Combinator.

The market is huge. FICO reports that 79 million Americans have subprime credit and another 53 million can’t be scored because they lack a sufficient credit history. Broughton told me Perch’s initial sweet spot is 18-25 year-olds, but he also noted that many older adults could benefit, particularly immigrants and people rebuilding their credit after a misstep. He has big plans for expansion and believes Perch can benefit 100,000 people in 2021. The app formally launched in late January and is onboarding new customers in weekly batches.

See related: How to build credit

Broughton’s ultimate goal is to spread the gospel of financial literacy and credit building. He wants to help people obtain their first credit cards and other financial products. “We want to launch you into the credit world on a better foot,” he said. The way I see it, Perch is off to an excellent start.

Have a question about credit cards? E-mail me at ted.rossman@creditcards.com and I’d be happy to help.

Source: creditcards.com

Why It’s Harder to Get Credit When You’re Self-Employed

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.

Despite high pay and job security in some industries, there’s one area where self-employed workers can struggle — 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

Here’s 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 you’ve been self-employed for a short time. 

When applying for a mortgage or another type of loan, lenders consider the following criteria:

  • Your income
  • Debt-to-income ratio
  • Credit score
  • Assets
  • Employment status

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 — your employment status — can be more difficult for lenders to gauge if you’re 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 you’re denied.

Extra Steps to Get Approved for Self-Employed Workers

When you apply for a mortgage and you’re 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 won’t hurt your ability to repay your loan, you’ll 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 — this is true whether you’re 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 can’t work on your credit if you don’t 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 won’t. 

This is especially true if you’ve had a deposit account relationship with the institution for several years at minimum. Either way, it’s 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 it’s 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 that’s too high might make it difficult to qualify for a mortgage or another line of credit when you’re 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. 

6. Wait Until You’ve Built Self-Employed Income

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 you’ve 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, let’s 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.

As a separate issue, start building your business credit score, which is separate from your personal credit score, early on. Setting up business bank accounts and signing up for a business credit card can help you manage both buckets of your money, separately. 

8. Grow Your Savings Fund

Having more liquid assets is a good sign from a lender’s 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. You’ll 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 you’re 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

Don’t forget the steps you can take to build credit now, if your credit profile is thin or you’ve 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 can’t 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 you’re self-employed and worried that your work status will hurt your chances at qualifying for credit, you shouldn’t 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 you’ve been self-employed for several years, your work status won’t matter as heavily. Keep your income high, your DTI low, and a positive credit record, you’ll have a better chance of getting approved for credit. 

The post Why It’s Harder to Get Credit When You’re Self-Employed appeared first on Good Financial Cents®.

Source: goodfinancialcents.com

Amazon Prime Card offering new Whole Foods card art, limited-time bonus

On Jan. 20, Chase announced a new card design option for the Amazon Prime Rewards Visa Signature card featuring Whole Foods Market art and added a limited-time sign-up bonus offer for those who prefer to shop at Whole Foods in-store.

Amazon has become a leader in grocery shopping during the pandemic, with consumers avoiding grocery stores due to health safety concerns – not to mention the convenience of shopping from a web browser. Amazon Prime members can enjoy speedy free delivery, as well as get access to online shopping at Whole Foods Market and special member deals when shopping in-store.

They can also count on extra savings if they carry the Amazon Prime Rewards card from Chase – or if they’re looking to apply in the next few weeks.

Here’s what you need to know.

Amazon Prime Rewards Visa Signature card

Amazon Prime Card Whole Foods

Our rating: 3.8 out of 5
Score required: Good to excellent
Type of card: Cash back
Spending categories: Amazon, Whole Foods, restaurants, gas stations, drug stores

  • 5% back on Amazon.com and Whole Foods purchases
  • 2% back on restaurant, gas station and drug store purchases
  • 1% back on other purchases
  • $70 Amazon.com gift card upon approval or $100 statement credit after spending $100 at Whole Foods in first 2 months
  • No annual fee

Our take: While the Amazon Prime Rewards card offers excellent cash back on Amazon and Whole Foods purchases, it might not be the best choice for customers who don’t currently have a Prime membership and aren’t looking to subscribe.

A new Whole Foods card design and limited-time offer

Chase introduced a new card design option for new Amazon Prime Rewards cardholders, featuring Whole Foods Market art. New cardmembers with an eligible Prime membership can choose the new design when they apply for the card. If you’re an existing cardholder and would like to switch to the new design option, you can call in to request a new card after Jan. 22.

If you frequently shop at Whole Foods in-store, the new limited-time introductory offer can also be exciting news for you. Through March 3, new Amazon Prime Rewards Visa cardholders can earn a $100 statement credit after spending $100 in Whole Foods Market stores in the first two months from account opening. Alternatively, they can still choose the standard $70 Amazon gift card offer as a sign-up bonus.

Considering the standard bonus is lower, the new temporary offer might be a better deal. On the other hand, if you avoid shopping in-store or normally use Amazon Fresh for buying groceries, the gift card might make more sense for you.

Should I start shopping at Whole Foods if I have an Amazon credit card?

If you already shop at Whole Foods, the 5% back with the Amazon Prime Rewards Signature Visa and 10% off specially marked items is a good deal. The discounts, though, don’t make Whole Foods cheaper than other grocery stores.

In fact, according to a study from 2019, Whole Foods remains the most expensive grocery store with its prices at 34% above Walmart, which was reported to have the lowest prices overall. If your goal is to save on groceries, Whole Foods is evidently not the best option – even if you carry the Amazon Prime card.

Other cards to consider

The Amazon Prime Card isn’t the only option you should consider if you often shop on Amazon or at Whole Foods.

See related: Which is the best card to use on Amazon.com purchases?

For instance, with the Chase Amazon.com Rewards Visa card, you can get a $50 Amazon gift card upon approval and earn 3% on Amazon and Whole Foods purchases, 2% percent at restaurants, gas stations and drugstores and 1% on all else. If you don’t have a Prime membership and aren’t looking to subscribe, this is a good option, since the card doesn’t require a cardholder to be a member.

If you do have a membership and shop on Amazon a lot, the Amazon Prime card is a better deal. With 5% for purchases made at Whole Foods and on Amazon, 2% at restaurants, gas stations and drugstores and 1% on all else, this card is hard to beat for Amazon and Whole Foods lovers.

If you’re looking for a card to buy groceries, consider the Blue Cash Preferred® Card from American Express, which could save you more than the Amazon Prime Visa at Whole Foods. Why? Blue Cash Preferred cardholders earn 6% cash back at U.S. supermarkets (up to $6,000 in purchases per year, then 1%).

See related: Best credit cards for grocery shopping

Bottom line

You can now stack your rewards at Whole Foods, earning cash back and the limited-time bonus with the Amazon Prime Card, and you can get extra savings from the loyalty program. Whether it makes sense to shop at Whole Foods, even with rewards cards and the loyalty program, is up to you.

Source: creditcards.com

5 Great Ways to Increase Remote Working Productivity

When the COVID lockdowns started, most business owners probably didn't think much about the efficiency of their remote working solutions as long as they were able to keep the lights on. As we head into 2021, we can see that remote working is going to become a permanent feature of our business lives. With more than half of employees reporting frustrations with their remote work solutions, now is a good time to think about getting the best software and apps in to help your team stay productive.

Remember, too, that many of your people will find working at home a very lonely experience and so things like video conferencing can help alleviate the mental health impact of a lockdown.

Let's look at some of the products that are available to help you stay in touch and remain effective no matter what 2021 throws at you!

Workflow boards

One of the things that many people have reported is difficulty in keeping motivated and understanding what needs to happen and when.

When you're in an office, it's easy to simply lean across the desk and ask what is going on. But what happens when your team is all working remotely?

Using Kanban boards like Trello and Asana allows you to posts jobs, tasks, and subtasks and then allocate them to individual staff members or team so that everyone knows where they are and what still needs doing.

Remote access software

Remote access software can have some real benefits for users across the organisation and doesn’t need to be confined to your IT helpdesk.

Modern remote working can give users a virtual desktop, which is the same wherever they log on. A Virtual Private Network (VPN) can also increase security.

Remote access software can also include functionality that enables video conferencing, chat functions, shared word processing, and file sharing, along with resources for troubleshooting in a pinch.

If you’d like to find out more about what it can do for you, check the best options in this excellent remote access software review by Neil Patel.

Remote shared storage

Many companies rely upon having drives readily available to all staff, and when you're all working in the same office, this is a simple matter. But when your team is spread out, then you need to think about organizing remote storage.

Google Drive and Dropbox are probably the most well-known offerings, but there are many more. They all provide you with the ability to have shared drives that are accessible based on your own organization’s security protocol.

Remote storage is a very competitive area, so prices have dropped over the last few years. So in many cases, you are better off subscribing to a best-in-class cloud storage solution (especially if it includes remote access desktops as above) rather than upgrading your on-premise servers.

Business-class video conferencing

For many businesses, this is one area where they just had to get a solution in place quickly so everyone could carry on working. But it really is worth choosing a business-class video conferencing system.

Having a better system makes life easier for your staff, but it also portrays a professional image to your customers and suppliers.

Free systems are great, but they will always come with limitations. Zoom, for instance, limits calls to 45 minutes on its free version. Other free solutions reduce video quality.

With paid solutions, the cost for a group subscription is often very reasonable when compared to the cost of losing even one customer.

Collaboration and sharing tools

When you can just pass files and papers across a desk, life is easy. But if you're miles away from your co-workers, contractors, and customers, how can you possibly collaborate effectively?

Many of the really good systems bundle in storage, video conferencing, Kanban boards and collaboration tools that help your teams act like teams rather than a collection of dispersed individuals.

Obviously, the big player here is Microsoft. But you can get excellent results with apps like Zoho Connect, Winio, and Wire. If you only really want chat capability, then look at Slack.

Take advantage of trials

What works for some people may not work for you and your company. But the good news is that pretty much every system mentioned here has some form of free trial.

The best advice is to take the developers up on their offer and test these solutions out. Get feedback from your employees and take into account how easy the apps are to use, the support available, and of course, the annual cost.

Don’t be swayed by attractive-sounding initial reductions. If the system is good, you’ll be using it for a long time. It is much more important to get the right features for you rather than buying something that isn't well-suited to the task because the developer was offering a half-price sale.
 

Source: quickanddirtytips.com

Second Home vs. Investment Property: What’s the Difference?

skynesher / Getty Images

You hear these terms thrown around all the time: Second home, investment property, vacation home, rental property. But is there any real difference among them? And does it even matter what you call it?

As it turns out, there are some very big differences between second homes and investment properties, especially if you are financing it.

“Both are fantastic ways to build wealth over time by capturing the appreciation of a real asset,” says Tony Julianelle, CEO of Atlas Real Estate in Denver. However, “both come with inherent risks and expenses that should be carefully considered when making a purchase.”

As with any real estate transaction, you’ll want to do your homework and make a smart choice for your wallet, no matter which path you go down. We chatted with experts to get the scoop.

What is a second home?

A second home is just that: a second property where you and your family spend time, away from your primary home. You might also hear a second home referred to as a vacation property. You may rent it out for a few days each year on Airbnb or VRBO, but you primarily use it yourself.

Buying a second home makes financial sense if there’s one particular vacation spot you visit regularly. Why spend a fortune on hotels or Airbnb when you can own your own piece of paradise that will hopefully appreciate in value over time?

“Let’s say you live in San Francisco, but you are an avid skier in the winter and like to hike in the summer,” says Rachel Olsen, a real estate agent in California. “If you spend many weekends and vacations in Lake Tahoe, it may make sense to purchase a second home there.”

What is an investment property?

An investment property, on the other hand, is one that you purchase with the explicit intention of generating income. The investment property could be right next door to your own home, or it could be in another state—it doesn’t really matter. You’ll be playing the role of landlord, with long-term or short-term renters paying cash to stay in the home.

“Never forget that an investment property is all about the Benjamins,” says Lamar Brabham, CEO and founder of financial services firm Noel Taylor Agency. “The entire point is to turn a profit. No emotions, no affection.”

Before making an offer on an investment property, you’ll want to crunch the numbers to make sure it’s a solid investment. Similarly, consider what factors will be important to prospective tenants (e.g., access to public transportation, good schools, parking, and low crime rates).

How to finance a second home or investment property

If you’re paying cash, you can skip this section. But if you need a mortgage for your new property, you should know that financing a second home or investment property is very different from financing a primary residence. And, while mortgages on second homes and investment properties have some similarities, there are also some key differences.

  • Interest rate: You can expect to see a higher interest rate for both second homes or investment properties than for primary homes. Why? Because lenders view those transactions as riskier. If you get into a tight spot with money, you’re far more likely to stop paying the mortgage for your second/investment property than for your primary home.
  • Qualifying: Whether you’re buying a second home or an investment property, you might need to do some extra legwork in order to qualify for that second loan. Your bank may require you to prove that you have healthy cash reserves (so it knows you can afford both mortgages). It’ll take a long, hard look at your overall financial situation, so be sure everything is on the up and up before you apply.
  • Down payment: Depending on your situation and the lender, you might also need to bring a larger down payment to the table for an investment property or second home, typically 15% to 25%. Again, this is because the bank wants a bigger cushion to fall back on in case you default.
  • Rental income: If you’re buying an investment property, your lender might allow you to show that anticipated rental income will help cover the mortgage payments. However, proving how much rental income the home will generate can be complicated. Prepare to pay for a specialized appraisal that takes into account comparable rents in your area.
  • Location: Your lender may require a second home to be 50 to 100 miles away from your primary home. An investment property, however, can be anywhere in comparison to your primary home, even next door.
  • Taxes: Federal income tax rules are different for vacation homes and investment properties. Generally, you’ll treat your second home just as you would your first home when it comes to taxes—if you itemize, you can deduct the mortgage interest you paid up to a certain limit. (The rules vary if you rent out your second home for part of the year.) If you own an investment property, you get to deduct the mortgage interest, plus many of the expenses that come with operating a rental business, but you also have to report your rental income, too.

Why it’s important to not confuse the two

It’s important that you’re totally clear about the difference and not use the terms “second home” and “investment property” interchangeably. Some people try to pass off their investment property as a second home to get more favorable financing, but you should never do this.

If you lie on your loan application, you could be committing mortgage fraud, which is a federal offense.

Your lender’s underwriting team is aware of this possibility, so don’t try to pull the wool over their eyes. They’ll take the big picture into account when deciding what loan terms to offer you, says real estate attorney David Reischer.

“A single-family residence by a lake that is located in a completely different state from the borrower’s primary residence is much more acceptable to be categorized as a second home by a bank underwriter,” he says. “A multifamily-unit property with rental income in an urban area is likely to be treated as an investment property.”

Bottom line: Keep everything aboveboard, and you won’t have to worry about a thing.

The post Second Home vs. Investment Property: What’s the Difference? appeared first on Real Estate News & Insights | realtor.com®.

Source: realtor.com