Here’s How Much You Need to Earn to Afford to Buy a Home in the U.S.

Wondering whether you can afford to buy a home in your dream city?

Statistics show you’ll likely need to earn more if you’re thinking of buying a house on your own, based on a recent HSH study of 27 U.S. metropolitan areas.

Nationally, to afford a median-priced home at $222,700, a single homebuyer needs to earn an annual salary of $51,114.62.

Do You Earn Enough to Buy a House in Your City?

Buying a home comes with a slew of variables, of course. But the study offers a quick-glance guide to determine whether homeownership could be feasible for you.

The study assumes good to excellent credit, a 20% down payment and a 30-year fixed-rate mortgage at 4% interest.

“Affordable” here means your housing expenses should be no more than 28% of your income. This is in keeping with standard advice to keep your housing costs below one-third.

The study also assumes you’ll be buying a home alone, as it only considers a single salary.

If you bring at least two salaries into the equation and consider the median household income of an area, housing looks a little more affordable — but still often tight.

The median household income across the U.S. is $53,657, according to 2014 U.S. Census Bureau figures.

This lands above the median required salary, but just barely.

If you’re still building credit or starting with a lower down payment, your monthly costs could be significantly higher, making homeownership out of reach.

Even for Americans living within metropolitan areas, the average household income is only slightly higher: $55,855. That falls well below the $61,780 median required salary across all the metro areas covered in this study.

How Much Do You Need to Earn to Afford a Home?

The most expensive area in the country is the San Francisco Bay Area, where the median home price is $781,600. Monthly payments would be $3,453.24, and require a salary of $147,996.19.

With its lower-priced boroughs balancing the soaring costs of Manhattan and Brooklyn, New York is actually cheaper than San Francisco, whose suburbs and East Bay counterparts don’t offer the same balance to the city proper.

A median home in New York, which costs $384,600 with $2,024.64 monthly payments, would require a salary of $86,770.19.

The cheapest area to buy a home is Pittsburgh, where you need to earn just $31,134.50, well below the national median income.

The average home price in the Pittsburgh metro area is just $128,000, which requires a monthly payment of just $726.47.

Cheaper Ways to Buy a House

Before you despair at these numbers, consider your options.

For example, Boston comes out on the higher end, with a $393,600 median home price and $83,151.43 required salary.

But first-time homebuyers might consider the more affordable nearby Melrose, Massachusetts. The city is near a major metro area, has a strong local economy and quality education, but with significantly lower housing costs than Boston.

Also consider forgoing a mortgage altogether when you do buy. Save up and buy your house with cash — you won’t have to worry about interest or a monthly payment.

You might even look into buying your home through a Habitat for Humanity program.

Or maybe buying just isn’t your best bet.

The cost of housing in dense metro areas definitely might make renting a smart option if you want to remain in the city.

If you want to keep from sinking too much money into it, try these tips for negotiating your rent in major cities.

Your Turn: Can you afford to buy a home in your dream city?

Dana Sitar (@danasitar) is a staff writer at The Penny Hoarder. She’s written for Huffington Post, Entrepreneur.com, Writer’s Digest and more.

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This Woman Refuses to Pay Babysitters $15 an Hour. Do You Agree?

When I babysat in middle and high school in the early 2000s, I earned $4-$5 an hour.

Although that wage was fine as a 14-year-old, it hasn’t exactly tempted me to get back into the biz.

But I’m starting to think I should pick up my old profession… apparently the going rate for babysitting is now $15 an hour.

And writer and mother of two Holly Johnson thinks it’s ridiculous.

She discusses her refusal to pay babysitters $15 an hour in a post for The Simple Dollar — and people have a LOT of feelings about it.

How Much Should You Pay Babysitters?

When Johnson first moved to Central Indiana, she was shocked by the number of potential babysitters who quoted her a rate of $15 an hour.

“Most of the high school kids in the area are likely making minimum wage, which currently sits at $7.25 per hour,” she writes.

“Why would a babysitting job — which is almost always a cushier gig than a fast-food or retail job — should [sic] pay twice as much?”

She includes several reasons for her opinion, including the fact kindergarten teachers, who need a four-year degree and license, earn about $16 an hour.

Beyond Babysitter Wages

The comments on Johnson’s post have blown up into a larger conversation about minimum wage, affordable child care — and even the gender wage gap:

“If you cannot afford to pay a sitter a respectful wage of $15/hr — which is standard across the country and higher in big cities, then you should either not go out, move closer to family who will do the job for free, or start a co-op with your friends where you trade sitter hours with each other,” writes Kate Vrijmoet.

“$60 for a four-hour date isn’t too much to ask for considering the job is making sure your children don’t die in your absence,” writes Daniel Yowell.

“Citing other careers that are under paid is in no way a convincing argument (and, if anything, demonstrates a worrisome trend of workers being grossly underpaid in this country).”

Johnson, in a general response, writes:

“I am not against raising the minimum wage and didn’t mean to imply that! At $7.25 it is extremely behind the times, and that needs to change.”

“But I also don’t feel as if a teenager needs to earn a ‘living wage’ for four hours of babysitting. Adults, yes, but not teenagers who are living comfortably with their families and just learning how to work for the first time.”

Though I understand where the commenters are coming from (and definitely think teachers should be paid more), I agree with Johnson on this one: $15 an hour seems like an awful lot to pay a teenager still living under their parents’ roof.

It’s an important job, yes, but many adults supporting their own families don’t earn that much.

And making $15 an hour as a high-school student could set them up for disappointment down the road.

“What message are we sending kids when we pay them real-world wages to babysit our kids?” asks Johnson. “In my eyes, we’re setting them up for unrealistic expectations of what their labor is really worth.”

Your Turn: Do you think teenage babysitters deserve a “living wage”? How much do you pay yours?

Susan Shain, senior writer for The Penny Hoarder, is always seeking adventure on a budget. Visit her blog at susanshain.com, or say hi on Twitter @susan_shain.

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This Company is Letting Employees Work From Home for a Whole Year

A lot of us want to work from home for a whole host of reasons.

I mean, it’s pretty awesome. You can drink as much coffee as you want, without feeling guilty about depleting your office’s K-cup supply.

You can play your music as loud as you want — even if it’s the Backstreet Boys. You can work with your cat on your lap.

And let’s not forget everyone’s very favorite part: You don’t have to wear pants. At least not real ones.

But many women have specific, special reasons to work from home.

In many cases, women are still the primary caretakers of children. And although couples often jointly announce, “We’re pregnant,” it’s the woman’s body alone, of course, that does the work of baby-building.

ICICI Bank Launches Work From Home Initiative for Women

In response, India’s ICICI Bank has launched an initiative called iWork@home.

This program will allow female employees to work from home for up to one year to accommodate a variety of “lifestage needs,” according to Business Standard.

The list of eligible needs includes pregnancy, maternity and medical conditions.

ICICI Bank is also covering extended costs for managers who travel for work and must either bring their young children or secure child care during their absences.

The bank launched the initiative to keep women in these situations from quitting. And even though it’s only been live for a few weeks, the firm has already seen an increase in productivity.

Pretty awesome, right? It probably helps that ICICI Bank CEO Chandra Kochhar is also an MD — and a woman.

How to Work From Home at YOUR Job

Even if your company isn’t quite as forward-thinking as ICICI Bank, you could try convincing your boss to let you work from home. Here’s how.

Otherwise, if you’re passionate about going pants-less during the workday, you might consider packing up your desk and trying one of these ways to make money at home.

You could also start a freelance business so you can set your own rules.

And hey, if the business ever gets big enough that you hire your own employees… maybe letting them work from home wouldn’t be such a bad idea!

Your Turn: Would you work from home if you could? Let us know in the comments.

Jamie Cattanach (@jamiecattanach) is a staff writer at The Penny Hoarder. The ability to work from home is like 97% of the reason she became a writer in the first place.

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13 Financial Adviors Share the WORST Financial Mistakes They Have Ever Seen

“You want to do what?”

As a financial planner, I see clients make some pretty bad mistakes. A sad fact of life is that financial mistakes can be made in a heartbeat.

Sometimes, they can be ignorant mistakes. Other times, they are purposefully done without grasping the gravity of the potential consequences.

Let’s say, for example, you have a million dollars as a retiree.

A million dollars sure sounds like a lot of money, but if you’re trying to make that last for the rest of your retirement years, it’s really not enough and that’s why making the smartest choices you can about how to spend that money takes a lot of careful planning and consideration.

My duty is to ensure that my clients don’t make any boneheaded decisionswith their money. Granted, it is their money and they’re the ones who have worked their whole lives to accumulate this valuable nest egg. Still, in good conscience, when I see a client who is about to do something stupid, I must object.

Unfortunately, my objections don’t always work. Sometimes, against all of my efforts, I just can’t get through to them and they go and do something that makes me clench my teeth in anticipation of the dire consequences.

1. The Brand New Retirement Truck

Take, for example, the following story of one of my clients and his brand new Ford F-450 Lariat truck valued at over $60,000. Note: We’re changing the make and model of the truck to protect the client.

My client was retied early than most of his colleagues at the age of 60 but it was a few years before he could start taking Social Security benefits so we want to make sure to manage his portfolio valued at a million dollars as best we could.

We had outlined a retirement budget so we had a pretty good idea of what he could spend. What I didn’t plan for was him informing me that he was going to buy a truck – but not just any truck. He wanted to buy a brand new, Ford F-450 Lariat – a $65,000 truck.

I sat there for a moment in disbelief and wondered if this was a cruel joke. He really wasn’t going to buy a truck, especially out of his retirement account, right? Wrong! He wanted to buy it even though I explained to him that for him to buy such an expensive truck he would have to pull out roughly $86,000 to cover the taxes to pay for it. I even asked the client this question: “Do you really want to pay $86,000 for a truck that’s going to be depreciating the second you drive it off the lot?” To that his answer was, “Yes.” Insert face palm.

To this day, that ranks as one of the worst mistakes my clients have ever made.

Knowing that other financial advisors have shared similar pain (in seeing their clients make horrible mistakes), I asked some of them to share their biggest client money mistakes. Let’s take a look at some of their stories. Note: Some of the personally-identifiable details may have been changed to protect their clients.

2. The Series of Mistakes Before Retirement

Brearin Land, a financial planner and author of BlackBeltofFinance.com, shares an insightful point regarding mistakes that are made during the accumulation phase of life:

As a financial planner one of the worst feelings is having to sit across from a client and tell them they just have no chance of retiring any time soon. I think there will always be one-off cases of bad judgement when it comes down to the homestretch of retirement, whether that is falling for that annuity pitch at a dinner seminar or taking Social Security too soon. But the worst mistakes I see are actually the series of mistakes made throughout the accumulation phase that lead to simply not having enough money to retire on.

Purchasing a home when they should have rented. Buying that car or boat. Building that patio no one uses. Paying for their kids’ education. The worst money mistakes I see are also the most common; people spending their retirement dollars to pay for things they truly can’t afford.

I love Brearin’s point here. Sometimes, the worst financial mistakes are the ones that slowly eat away at your wealth. Also, remember that the less money you have, the less money you can make with that money.

Compound interest is a powerful tool to help you save for retirement. The more money that goes to odds and ends during the accumulation phase, the less money you’ll have to grow.

3. The Retirement Truck, Camper, and Trailer!

Christopher Hammond, a financial advisor and author at RetirementPlanningMadeEasy.com, shares a similar yet more horrifying story than I did regarding some of the choices of two of his clients:

I once had a couple that came to me. They had relatively meager savings for retirement. The husband had just retired and the wife did not work. He retired toward the end of the year, therefore he already had earned a significant amount of income during the calendar year that he would have to pay taxes on. They wasted no time drawing about $80,000 from his 401(k) to buy a honking big pickup truck with a brand new camper to pull behind it.

The year wasn’t over yet and they were ready to pull more funds out to buy another trailer, I think for transporting horses.

Not only was this crazy since their overall savings were pretty meager as it was, but it was also crazy from a tax perspective. This large lump sum withdrawal (on top of the earnings he had already made during the calendar year) put them into a higher tax bracket.

I was thankfully able to talk them out of withdrawing more for the horse trailer until the beginning of the next year, when the retired husband’s income (and hence tax bracket) would be lower.

Ugh, this is pretty bad. At least they listened to some of Christopher’s advice, but still: a truck, camper, and trailer? Granted, maybe they had a lot more money than my client, but that’s sure a lot of vehicles to purchase at the beginning of retirement.

I think we’re starting to see a recurring theme here. When people retire, the temptation is to buy some new, expensive toys. Granted, maybe these folks had a real need for a truck and perhaps a trailer. But there are less expensive ways to acquire these items.

The takeaway here is to make sure you consider the short-term and long-term costs of making big purchases with your retirement accounts before you run out to spend some money. By making huge purchases upon retirement, you may or may not be buying yourself a ticket back into the workforce.

4. The “All In” Retirement Portfolio

Brian D. Behl, CFP^®, CRPC^®, CDFA™, a wealth advisor who can be found at BELR.com, shares about risky a mistake he has seen clients make time and time again:

Unfortunately, I have seen a very concerning client mistake on multiple occasions. A few times we will have a potential client come to us as they are nearing retirement to review their overall plan. As we review their situation we find out, way too often, that they have a very high allocation to company stock. Sometimes the allocation can be over 80% or 90% of their net worth. As it is a company they feel they know very well, they feel comfortable investing in it.

We then begin an education process on portfolio risk and diversification. As they already depend on their employers for their salary, benefits, pension, and potentially retiree health insurance, we explain that it is very important not also have their entire investment portfolio dependent on the same company. We would like to see the allocation reduced to 5% or less of their net worth.

If the company stock has done well this can be a difficult and emotional decision for them. Often, we will model out the returns they need to meet their goals and show that a diversified portfolio can help them do so with significantly less risk. If they do decide to work with us, reducing that risk will be one of our first priorities. If they do not decide to work with us, we still encourage them to take these steps to put themselves in a better situation.

While investing a large portion of your portfolio in company stock is risky when nearing retirement, it’s even riskier to invest in one company’s stock. Yikes.

Make sure to have a diversified portfolio that is appropriate for your circumstances. An experienced financial advisor can help.

5. The Emotional Non-Diversifier

Tony Liddle, an investment advisor who can be found at SarkInvestments.com, shares a devastating story of a man who let his fondness for a company get in the way of a properly diversified portfolio:

A man visited our investment office shortly after retiring from a tech company. He had over $4 million in company stock and no other savings or retirement accounts to his name. He worked for the company most of his life and loved it as if it was family.

From day one, our advice to him was to sell all the stock and diversify. His concern with that advice was that selling all the stock would cost him $600,000 in taxes (regular capital gains of 15 percent). With more attempts to convince the man to sell the company stock, he finally agreed to sell 1,000 shares every week until it made up only 50 percent of his portfolio.

A couple of months later the man came back to our office and stopped the systematic selling of the company stock. His reason for doing so was because the stock had risen 10 percent and as his advisors, we had cost him money by selling the stock over those two months. Unfortunately, within eight months the stock had fallen drastically from its high losing 96 percent in value.

The fact that this man knew the tax amount he would have to pay, but saw it as a cost burden rather than as a reward for investing well, was a certain sign that he was destined for trouble. By simply diversifying his portfolio, he could have protected his life savings.

It’s clear that Tony was giving the right advice to his client. Sure, taxes are hard to swallow, but it’s worth lowering the risk of potentially losing most of your portfolio to a drop in stock value.

The lesson here is to do what you must to diversify your portfolio, even if you have to sacrifice pretty heavily to do so.

6. The Devastated Non-Diversifier

Wayne Connors, a portfolio strategist at RetirementInvestor.com, shares a devastating story of a man who didn’t follow sound advice and paid a big price:

A common mistake investors make is becoming too attached to their employer’s stock. This reminds me of a specific client who founded a company and sold it for stock in the company he subsequently began working for.

When I began talking to him he had approximately $15 million in stock and the price per share was around $13. This was a tech company that had a nice run during the late 1990s but now it was the early 2000s and this particular stock’s price was volatile and had fluctuated +/- $2 over the previous month.

We had mapped out a financial plan and had several lengthy discussions about the stock. I advised my client to sell the entire position immediately, pay off his $2 million, 8.5% mortgage note, and invest the rest in a broadly diversified portfolio of institutional class mutual funds.

My client refused to sell the entire position at once since the price had recently dropped by a couple of dollars but agreed to use dollar-cost averaging to get out of the position. He decided that he would liquidate his position over the course of the following 10 days, 1/10th per day.

At the end of this period, around day 14, I called my client to check in, as I had been doing every few days, and before I could say hello to him, he said, “I’m sorry.” I asked, “What do you mean?” He then went on to explain the first three days went as planned but on the 4th day the price fell by about $1, so he decided not to sell and waited for the stock to rebound. Well, it never did. The price on the 10th day was around $11.50. On day 11 it was $9. And, on day 14 when I called, the price had just fallen from $7 to less than $1 and would never recover.

I expected my client to be thankful that I was able to convince him to diversify but instead I received an apology because he neglected to follow the plan and decided not to tell me until that time because he knew I would have instructed him to continue to sell even though the price had gone down.

The only bright side was he did liquidate about $3 million over the course of the first three days so he was able to pay off his mortgage and had a little left over to invest for retirement.

Wow. This financial mistake cost this man $12 million – and it happened over the course of just a few days. This is tragic.

This story is similar to our previous one. Again, the lesson here is to make sure you diversify – even if it costs you something upfront!

7. The Timing of the Market

Taylor R. Schulte, CFP^®, a financial planner who can be found at DefineFinancial.com, shares a heartbreaking story of a relationship strained by the financial markets which resulted in a horrible mistake:

In March 2009 – after the market dropped over 50% from peak to bottom – we had a client call and tell us that his wife was going to leave him if he didn’t liquidate their investment and retirement portfolios. We did our best to coach the client through this difficult time, but ultimately, their request was fulfilled.

I tell this story only to remind people how destructive our behaviors can be to our long-term financial plans during challenging market cycles.

I think this story also shows how important it is for both individuals in a relationship to be educated about the markets and shown how over long periods of time the markets have proven to be reliable.

8. The Fee-Avoiding Fee Payer

Andrew McFadden, CFP^®, MBA, a financial advisor and founder at PanoramicFinancial.com, shares an ironic story of a client who was looking to save some money on investment fees but ended up paying more than they saved:

At a previous firm I worked for, one of our clients had hired us to manage a decent size IRA for him. Over time though, we came to find out that he had even more investable assets outside of our oversight. I’m not sure the specifics about how this particular fact came to light, but it turned out that the client was trying to make the same trades in his other accounts that we were making for him in his IRA.

He was obviously doing this in an effort to save on the asset management fees he was paying us. What he didn’t know was that he was buying the A share of each mutual fund in his other accounts, while we were purchasing the institutional class of each fund. By doing so, he was paying about about six times our annual Asset Under Management fee all up-front just to get into the mutual funds. Long story short, he didn’t save any money. And he wasted a lot of time making those trades on his own.

This really goes to show you that it makes sense to leave the investing up to the professionals – especially if you really don’t know what you’re doing.

Perhaps you can relate to this story. Maybe you’ve tried to save money on something and then thought to yourself, “You know, this just might be a waste of my time.” It’s important to look at the big picture when you’re trying to save money, because sometimes, you might just be shooting yourself in the foot.

9. The Silver-Loving Mr. Garage Door

Jose Sanchez, an investment advisor with RetirementWealthAdvisors.com, shares a story about a man who had a passion for precious metals – in and outside of his portfolio:

A successful, self-employed garage door repairman, passionate about silver, ignored our sage advice for good investment diversification.

In the spring of 2009, shortly after the market hit rock bottom, I met with Mr. Garage Door and reviewed his holdings. Shocked, I discovered that he owned over 50% of his retirement portfolio in silver and had been collecting it out of concern for the global economy since the Twin Towers fell on 9/11.

In addition, Mr. Garage Door shared stories on how he explored the New Mexico countryside in search of precious metals with his handy dandy metal detector – his treasured hobby. He continued to detail all of his findings, and I enjoyed his excitement. He described awesome discoveries including several wedding bands and other valuables found in public parks and on walking trails.

Truly, he was a marvelous story teller and showed me pictures of his most recent findings. I was in total amazement and awestruck by his tenacity and conviction in his hobby. As a professional, I was bothered by his portfolio. It was not easy to bring him down from these high-rising cumulonimbus clouds and warn him of the potential storm that we have in the southwest.

I failed to earn his business that year for investments but he became my client for a basic life insurance policy. I continued to call and message him often, to share interesting articles on precious metals and the value of diversification.

I stayed true to my battle cry and repeatedly suggested that he seek diversification before he loses his gains which started at about $4.54 per oz when he started collecting in 2001. While he felt secure and believed his logic to be sound, time would prove differently. Over the next two years, silver rose from $14.67 an oz to $40.33 in March of 2011. Despite my guidance, he never acknowledged the downpour of the upcoming storm.

After three years of his portfolio hindered by silver’s downfall, most of his incredible gains washed away. At last, he closed the garage door on holding no more than five percent in silver. As you can imagine, I still see him yearly to review his now well-diversified portfolio and enjoy hearing his enchanting stories of his silver findings.

There was little more that I could have done to steer Mr. Garage Door in the right direction, but he chose to ignore the warnings.  We can all appreciate the incredible recent volatility of precious metals and what is sometimes mistaken as a stable investment assets class. Today, silver sits at $13.94 per oz.

Buy gold! Buy silver! Buy precious metals!

Perhaps you’ve heard these late-night infomercials. There is a group of people out there who believe in investing in precious metals because they have more faith in those metals than in a well-diversified portfolio.

Somehow, some of them think that if the economy tanks, precious metals will retain their value. The truth is that precious metals are hyped and probably wouldn’t retain their value in a true economic crisis.

Think about it. What do you need when an economic apocalypse happens? Gold? Silver? No! You’re probably going to need food, water, and perhaps even arms to protect your family.

The recurring advice throughout this article is to diversify. Make no exceptions – even for precious metals.

10. The Tax Time Bomb

Robert C. Henderson, an advisor and president of Lansdowne Wealth Management, LLC, can be found at LWMWealth.com and shares a story about a prospect who needed some serious retirement planning help:

A few years ago a prospect came to me looking for retirement planning help. He was actually in decent financial shape. There were two pensions (husband and wife) and two streams of Social Security, which totaled almost $65,000 in guaranteed annual income. Plus, their house was fully paid for and they lived a fairly modest lifestyle.

Their plan was to buy a cottage up in the woods and live there part of the year, and then eventually sell their existing home and move into the cottage full-time. The challenge was that he did not have enough cash to buy the second home, and was not willing to take out a mortgage to buy it. So his plan (which he was pretty determined to follow through on) was to cash out his entire $250,000 pension plan at once to buy the house. So not only would he pay taxes on the entire withdrawal, but because he and his wife were still working and also earning some of their pensions already, it would have kicked their income taxes up into a much higher bracket – as well as phase out their personal exemptions. Between state and federal income taxes, they would have netted closer to $175,000 of the original $250,000, a tax bite of around $75,000. But because all of those funds had been contributed by his employer (it was a non-contributory pension plan), his rationale was that this was “found money” and he wasn’t really giving away his own money.

When it came down to it, I walked him through the various options we had, and what the ultimate costs would be. In the end, we ended up taking out a five-year ARM at around 3.25%, which cost him only about $7,000 a year in interest, and he ended up selling the primary house within 18 months. So by educating him on his options, the pros and cons, and the risks, I ended up saving him over $60,000 and the continued tax deferral of his retirement account.

Paying tax on retirement accounts stinks. But the truth is, sometimes it has to be done. In this case, they found a great outcome, but that doesn’t always happen. Sometimes, there’s an urgent financial need.

The takeaway here is to look at all your available options before you decide to cash out a retirement account. You just might find a better plan.

11. The Tragic Case of a Lack of Insurance

Peter Huminski, AWMA^®, is a wealth advisor and president of Thorium Wealth Management at ThoriumWealth.com and shares a story about a client who didn’t want to increase their insurance policies:

I work mainly with business owners and earlier in my career I had a client who owned a very successful technology company. He had a partner and the two of them worked very well together.

We had done a significant amount of planning for my client but had not been able to help the partner at all. In 2006 we did a complete buy-sell planning agreement for the company that we funded with life insurance. At that time we suggested annual reviews for the policies since the business was experiencing substantial growth and the company’s value was growing about 35% a year.

Initially we funded $10MM of life insurance and by 2009 the company was worth about double that. The partner didn’t want to increase the policies. He didn’t see the need since he was young. Unfortunately in early 2010 the partner was killed in a private plane crash.

Left without his partner my client went to execute the buy-sell agreement but his partner’s widow challenged the buy-sell agreement because the company was worth more than was being offered in the buy-sell agreement. The widow ended up suing and it ended up costing my client millions of dollars and almost put the company out of business. My client did not plan on being in business with his partner’s spouse and because he did not have enough life insurance he was forced to.

The entire tragic situation could have been avoided if they had reviewed the insurance annually and increase it as needed. They were always too busy or didn’t think it was necessary. Not only is proper buy-sell agreement funding necessary, it is vital to proper succession planning if you have partners.

There is an extremely important takeaway here: review your insurance policies on a regular basis! Not doing so can be financially devastating.

It’s a good idea to review your policies once per year around the same time each year. Make it a tradition!

12. The Clients Who Love Their Former Employers’ Stock

David Wilson, CFP^®, AIFA^®, shares how a few of his clients wanted to hang onto their former employers’ stocks and some of the advice he gave them:

Clients are very attached to the stock of companies for which they once worked, which can be a mistake.  

This can be for sentimental reasons, or the thought that they should remain loyal to the company they worked for by owning stock in that company.

The ones that come to mind are clients that held United Airlines and Bank of America.

My client retired from United Airlines with significant holdings in United stock as part of his retirement that he wanted to remain intact. While United Airlines still flies, United declared bankruptcy and wiped out shareholder value. When they reorganized, they issued new shares that did nothing for former shareholders.

Another client acquired Bank of America stock from employment, which was a significant part of her portfolio. Bank of America stock traded in the $50 range in 2006 and later dropped as low as $4 in 2009.

While she would not take my recommendation to diversify, she did take my recommendation to place stop losses on her stock prior to the crash, which saved her a lot of money when the stock plummeted.

If people won’t part with their company stock, I encourage them to use stop losses to help protect their holdings ahead of time. This way, they decide ahead of time and without emotion how much they’re willing to lose if the stock goes against them.

The challenge is to choose a loss limit that allows for some normal fluctuation, yet helps prevent as much downside risk as possible.

The idea of selecting a loss limit is a good one, especially when the client won’t take the advice to diversify well. This is a great takeaway for financial advisors.

13. The Troubling “Investment Opportunity”

Katie Brewer, CFP^®, a financial coach to Gen X and Gen Y with YourRichestLifePlanning.com, shares a story about a client who didn’t consult their financial team before signing up for an investment:

Physicians get pitched a lot of “investment opportunities.” One of my physician clients at a previous firm was pitched a real estate investment that sounded too good to pass up, and he signed on the dotted line before consulting with his financial planning team.

Unfortunately, upon review, it was a highly speculative investment and did not allow him to easily get a return of principal, so he had a good amount of his portfolio tied up in an expensive and speculative investment for quite a while.

The moral of the story is that clients should always read the fine print or get someone else to read the fine print before signing on something that he or she doesn’t understand!

Katie has a good point here. There are a lot of “financial professionals” out there who really just peddle risky investments. Why not talk with a variety of financial professionals to see if an investment makes sense before you buy?

Closing Thoughts

These are no doubt some really bad financial mistakes.

Unfortunately, some people make not just one bad financial mistake, but two or three or four in their lifetime. Even only one can have devastating consequences.

The best advice I can give you is to seek the opinion of multiple financial professionals (except for the bad ones) before you make any large financial decision. Then, make sure you listen to their advice. They just might save you from a world of pain.

This post was originally featured on Forbes.

Source Good Financial Cents http://ift.tt/1W3o7JE

Be Bold: 4 Uncommon Types of Content That Attract Hundreds of Backlinks

If you want great backlinks in the modern SEO world, you need great content.

It’s as simple as that.

Those links improve your search engine rankings and send you droves of referral traffic.

Really, all the posts you read on content marketing come down to two things:

• how to create great content
• how to promote it

They can both get pretty complex when you dive into them.

Here, I want to focus on the first point.

Specifically, I want to talk about what types of content outperform all others.

I get hundreds of emails a day from bloggers asking for links to their latest “epic” guide.

I check out as many as I can, but most aren’t nearly as epic as the creators believe they are. In fact, they’re all almost identical.

If you want to be successful with your promotional efforts, you need to have something truly worth promoting.

That means you have something that’s unique, special, and valuable. And it needs to be something that people care about.

It’s no easy feat, but that’s your goal.

Out of those emails I get every day, 99% contain links to your standard blog post/guide type of content.

I love blogging—I really do—but if you want to stand out, you should also consider creating other forms of content.

There are four in particular that are really effective, and I’ll reveal what they are in this post.

Be warned, though: the reason why these types of content aren’t produced as much as others is because they are much more difficult to create than your standard blog posts.

They will cost much more time and money to produce, but they will also produce exponentially more links and revenue.

They’re not for the lazy, but if you’re ready to put in some work, let’s get started. 

Type #1: Tools rule in terms of value

It’s tough to define what a member of your audience would deem valuable, but it correlates with the usefulness of your offer to them.

Blog posts can be very valuable if they help a reader overcome a big problem.

This very post could be worth tens of thousands of dollars to you if you actually implement the advice. I’d say that’s valuable.

But many blog posts aren’t actionable even if they’re well written.

On the other hand, tools are almost always useful because they have a specific purpose and use.

How many bloggers or businesses do you know that have created tools for their audiences?

My guess? Not many.

Not only are such tools useful but they are also rare, which makes them even more special.

Let’s look at a few so you have a clear picture of what I’m talking about.

Take a look at the tool from Keywordtool.io:

This was made back in May of 2014.

According to Ahrefs, at the time of writing, it had over 25,700 backlinks, coming from 3,860 linking root domains.

Can you imagine getting this many links from a series of blog posts, no matter how “epic”?

This keyword tool takes a simple concept, but it executes it well. You enter a keyword into the text box, and the tool will generate a list of keyword suggestions based on autocomplete suggestions.

Basically, it goes to sources such as Google, enters your keyword, and then looks at the suggestions that pop up.

If you hire a typical developer, this kind of a tool would take about 2-3 weeks to create and cost around $5,000 (my estimate).

Based on that cost, the creator has been able to get links for 19.4 cents a piece. Or, in terms of linking root domains (LRDs), it’s $1.75 per linking root domain.

And these aren’t low quality links. On top of that, I’m sure he’s been able to sell a good number of premium memberships (a few extra features), while also drumming up some advanced keyword research projects for other businesses.

One more example (a personal one…): If you go to the Quick Sprout homepage, you’ll see the Quick Sprout tool, which you may or may not know about.

It takes your domain name and generates an incredibly detailed SEO and site performance report:

It wasn’t cheap to make. In fact, it cost me over $100,000.

I include it here to illustrate that you can go as big or as small as you’d like with tools.

Small tools that cost a few hundred or thousand can still get a great amount of attention, but bigger tools usually get more.

Even though the tool is free, the leads that it has generated have already produced several times what I paid to have it created.

That’s the most important conclusion here: Tools can be used not only to get backlinks and traffic but to also produce revenue.

Blog posts convert at lower rates, and while they can produce a solid return on investment (ROI), it doesn’t compare to tools.

Are tools perfect? It’s only fair that I tell you about the potential downside of tools as well.

First is the potentially high cost. You’ll need to invest quite a bit before you ever see returns.

Secondly, results are never guaranteed. Not all tools are well received or popular, so you risk creating a tool that your audience doesn’t love.

However, if you really understand your audience and apply lean marketing principles, you can reduce the risk of this considerably.

Type #2: Viral story videos (almost commercials)

I think many people forget that videos and commercials are still a form of content.

Yes, people don’t like most commercials they see on TV, but smart marketers have figured out that there are certain types of ads that people love.

They’ll share these, link to them, and help them go viral.

My favorite example of this is Dollar Shave Club’s ad campaign.

Their first video came out of nowhere and was enough to establish the company as a household name:

This wasn’t a typical commercial about shaving blades, with all sorts of close-ups. You know the ones I’m talking about…

Instead, it’s an immensely entertaining video starring the founder.

They don’t include the standard platitudes that viewers are sick of hearing. Instead, they’re authentic.

I strongly encourage you to watch the full video now, before moving forward:

This video alone has received almost 22 million views along with 9,520 backlinks from 1,760 domains:

It’s true, creating a video like this isn’t cheap.

It will cost tens of thousands of dollars, and that’s why most businesses don’t even attempt it.

However, if you have the budget, it’s a great option. Just remember to also budget for the initial promotion (that hopefully pushes the video viral).

Type #3: High quality images are more valuable than ever before

I’m not sure why this idea did not take off in the past.

It’s not new.

The strategy is to create a whole bunch of custom images that bloggers in your niche would love to use.

Once you do, you let them know about the images and say they can use any of them free as long as they link back to your site, giving it credit.

If you’re a blogger, you know how hard it is to find great custom images, let alone free.

That’s why this is such an easy sell.

But now, I think this strategy is more effective than ever before.

There have never been more bloggers creating content on a regular basis. That’s one factor that raises the demand for images.

Additionally, most of those bloggers are realizing that quality is the most important factor in their success. That applies to both their writing and the images they use. This creates even more demand for high quality images.

If you can provide that, you will be successful.

Stock images suck, go for custom: There are tons of free stock image sites out there with the same old pictures of models dressed up, faking some pose.

There’s a reason why readers hate these: they look fake and unrelated to the content.

You could customize those stock images, but that’s more work than most bloggers are willing to put in.

Your best bet, when using this strategy, is to create a ton of custom images relevant to the topics that bloggers in your niche write about.

Here’s an example of one that I used on one of my past posts:

As you can see, it doesn’t necessarily have to be complex to look nice and enhance the content.

Take image building a step further and make images for stats: One specific approach you could take is to create images, essentially mini-infographics, that summarize important industry stats.

This approach has one huge bonus.

Think about a time when a blogger is searching for a good stat to use.

They head to Google and search for something like:

content marketing challenges stats

A good portion of the time, they will look for good images to include with the stats they find (I know I do):

If they see a good one, they’ll click on it and go through to the page that hosts it:

In this case, that page would be your gallery.

As long as you ask nicely for a link in exchange for the picture, you’ll usually get it.

The big benefit is that it’s easier to rank in image searches than regular results.

On top of the links you get from emailing specific bloggers, you’ll get links naturally from people who find your image gallery through this process.

But don’t rely on image traffic: If you want to control your ROI from this project, you need to promote your gallery to bloggers yourself.

Make as big of a list of bloggers as possible, and start emailing them with a message like this:

Subject: I made a free gallery of custom (niche) images

Hi (name),

I know that it’s tough to find or create great images to use in blog posts, so I thought I’d do something for the (niche) community.

I’ve hired a designer to create a ton of custom images, some of which will probably be perfect for future posts you write. (I can’t use them all myself!)

The only catch is that I’d appreciate a link back to the gallery when you use a picture.

I’ll also be removing each picture once it’s used a few times so that none of them become too common.

If that sounds like something you’re interested in, let me know, and I’ll send you the link.

Cheers,

(Your name)

Type #4: Stats will drive the future

The final type of content that isn’t created as often as it could be is a list of stats.

Good bloggers love stats and will link to a source when they use a particular statistic in their content.

If you collect a ton of stats on different topics in your niche, they will often link to your page as a reference (on top of the original research studies).

For example, in a health niche, you could create stats for things like:

• junk food consumption in 2016
• average amount of protein in diets of different countries
• number of vegans in 2016 (or over the years)
• average minutes of exercise that people get per day

Think of stats that bloggers will be looking for.

To make it even more effective, conduct original research: The real power comes when you conduct your own surveys and data analyses.

Then, when a blogger wants to cite a stat from that research, they will link back to your site every single time.

You can easily get hundreds of links (or many more) if your research provides a useful, interesting result.

One business who does this sort of thing is Buzzsumo.

You may remember them because I wrote a post that summarized their research on over 1 billion Facebook posts.

Since they emailed me their findings directly, I didn’t link back to a specific page on their site. Instead, I just linked to their homepage multiple times, which is even better for them.

While I can’t say exactly how many links that research got them, I can confidently say that it’s in the thousands by now.

That kind of research is difficult, but if you’re willing to put in the effort (and maybe hire a data scientist/programmer), it’s possible.

Conclusion

I warned you, none of these content types are easy to produce—that’s why they’re not common.

However, they all can produce tremendous ROIs.

When done right, each of these types of content can attract hundreds (or thousands) of links and lead to greater profits.

I realize they’re not simple to do, so if you need some guidance, let me know where you’re stuck by leaving a comment below.

Source Quick Sprout http://ift.tt/21W6y1v

Questions About USDA Loans, Roof Repairs, Disneyland, Wedding Gifts and More!

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. USDA loan for second house
2. Disneyland advice
3. Life insurance policy loans
4. Emergency roof repair
5. Specific non-bank mortgage
6. Student loans and bad credit
7. Health insurance challenges
8. Home equity for stock investing
9. Why Remember the Milk?
10. Debt payoff and credit report
11. Using windfall for car purchase
12. Size of wedding gift

Over the next several months, it seems like my family will be attending a wedding practically every weekend. Many different friends and family members are tying the knot in coming months.

The first wedding on that schedule occurred just this past weekend. We attended a lovely wedding of one of my wife’s cousins and his new bride.

One of the things I’ve come to find interesting about weddings is the different choices that the bride and groom make for the ceremony and reception. This time, both the wedding and reception were held at a very nice winery, featuring a free wine bar and a bottle of wine with the bride and groom on the label for each wedding attendee.

The thing is, weddings are always a balancing act. The more you spend on the wedding and reception, the nicer it is going to be without a doubt. However, at the same time, the more you spend on the wedding and reception, the less money you have for your married life.

I’m of the viewpoint that I wish every married couple whose wedding I attend would have the cheapest wedding possible. I would far rather have the bride and groom start off on a wonderful life together with as much money in hand as possible.

At the same time, Sarah and I were once a bride and groom ourselves, and we remember what it was like having so many friends and family coming together to celebrate our union. We wanted the experience to be wonderful and hopefully memorable for every other attendee. At the same time, we didn’t really want to bankrupt ourselves, either.

In the end, it’s a balancing act.

This message goes out to brides and grooms everywhere. Most of the guests at your wedding are there to see you get married, not to appreciate a lot of flashy stuff at the reception. We’re there because we love and appreciate the two of you and want to see you launch your life together in a joyful fashion. Whether you have a glitzy reception or a barn dance, we’re still going to be happy to be there.

Because, in the end, the day is about you two, not about stuff, not about flashiness, not about glamour.

Q1: USDA loan for second house

I am a single mom looking to buy a house. I currently own a house with a family member but need to find other living arrangements so we can sell. Would I qualify for a USDA loan to buy a house for my daughter and me before we sell the other house? I found a house but have no money for a down payment.
– Nina

I assume that you’re referring to the USDA’s Single Family Housing Guaranteed Loan Program, which “assists approved lenders in providing low- and moderate-income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas. Eligible applicants may build, rehabilitate, improve or relocate a dwelling in an eligible rural area. The program provides a 90% loan note guarantee to approved lenders in order to reduce the risk of extending 100% loans to eligible rural homebuyers.”

The first question is whether or not you’d qualify for the loan due to income eligibility. The income eligibility requirements are spelled out in this document. If you are, then it likely comes down to finding a lender that’s involved with this program and simply applying for it.

I would suspect that you would probably not qualify for a second loan without the kind of guarantee that this loan provides, but given that you are intending to sell the house as soon as you can, my guess is that you’ll be able to get this kind of guaranteed loan. However, you simply won’t know until you apply for it, so I’d give it a shot.

Q2: Disneyland advice

Hello! I am a college student writing a report on Disneyland prices and have come across your website looking for a breakdown on how the “average American family” SHOULD be spending their money. From there, I want to compare it to how that family could or could not budget to accommodate Disneyland Passport prices for their entire family. Do you have any suggestions or sources I could refer to? Thank you!
– Millie

I assume that Millie is referring to this article where I walked through how the average American spends their money. From that article:

“The average American household earns $63,784 before taxes, which amounts to bringing home $51,100. From that amount, they spend $9,004 on transportation, $6,602 on food (of which $2,625 is spent at restaurants and $3,977 is spent on food eaten at home), $5,528 on insurance and pensions, $1,604 on clothes, $2,482 on entertainment, $17,148 on housing, $3,631 on health care, $1,834 on cash contributions (donations and legally required spousal and child support), and $3,267 on other expenditures.”

Millie seems to want to compare this to a Disneyland Annual Passport, for which the entry level option is $599 per person per year. The average American household consists of 2.54 people according to the US census, so you’d want to round that to three such passes. That would add up to $1,797 per year.

So, could you find $1,797 in that annual budget? That’s less than the annual amount spent on entertainment in the average budget, so I’d suggest yes. The average cable bill is $100 per month, for instance, so just cutting cable alone pays for two of these passes. Cutting back on a couple meals per month of eating out could make up the rest of the money easily.

The real question is what kinds of tradeoffs would a person wanting this kind of Disney annual pass be willing to make? It certainly can be done, but you’d have to trade off some things.

Q3: Life insurance policy loans

What are good insurance companies to purchase life insurance from that provide policy loans?
– Lauren

Pretty much any company that offers cash-value whole, universal, or variable universal life policies will offer you the capacity to borrow against those policies. However, these policies generally won’t have any significant value to borrow against for years, as you can rarely borrow more than the value you’ve built up in the policy.

To put it simply, just opening a policy doesn’t give you the ability to start borrowing. You have to build up some value in that policy, which takes years, and then borrow against that value. Pretty much any insurance company allows this.

However, if you want to have the freedom of having life insurance on yourself or a loved one and also have more cash in hand right away, you’re better off getting a term life insurance policy. You’ll make much smaller payments for the value of the insurance, which will leave more cash in your pocket with which you can do other things (such as pay down other debts).

Q4: Emergency roof repair

I need help desperately. I am in need of a roof for my home, the City has given me less than 30 days. After that I am facing fines, prosecution, etc. I am married. My husband’s credit is about 645, while mine is 600. He makes about $45,000 annually I am on disability. I don’t know where to start, I am scared and intimidated since I have been turned down before. Any advice would be grealy appreciated.
– Karen

It looks to me like you are seeking to borrow money in order to repair the roof on your home because your current home roof is not up to city code.

My usual suggestion in situations like this is to start saving and doing much of the work yourself. Given your disability situation and the emergency nature of the work, that doesn’t seem like it will apply here. So, you’re going to have to look at financing.

Given that you seem to have lived in the home for a while, you may want to consider a home equity loan for this. If you’re using home equity, that generally means that you don’t have to have great credit in order to get the loan, as you’re putting up your home as collateral on the loan. If I were you, I’d check with a local credit union or two and see whether or not they would approve such a loan for a roof repair.

If you don’t have much equity in your home, meaning that you have a mortgage on which you still owe most of the value of your home, you might be eligible for a FHA Title 1 Property Improvement Loan, which is described here. If you’re turned down for a home equity loan, this is another route to consider which might be really good for your situation. You can call the FHA at (800) 767-7468 for more info on this program.

Q5: Specific non-bank mortgage

I just found an article you did on nonbank mortgages and we are in the process of obtaining a loan through Carrington Mortgage, but have been reading nothing but bad reviews on them and possible fraudulent activities. Have you heard anything on this nonbank that you can share with us before we close this month? Not worth taking a chance. Thank you so much!
– Irene

From what I’ve read, Carrington seems to be one of many lenders who operate just fine if you make your payments regularly, but can be difficult to work with in the event that everything doesn’t go smoothly. After reading through a large pile of their reviews, it seems to me that when people start falling behind on their mortgage, Carrington doesn’t work well with them, but for people who stay up to date, there’s rarely a problem.

Many of the negative reviews I’ve read tend to involve people who have fallen behind on their loans and have found Carrington difficult to work with when that happens. Often, the reviewers don’t directly state this, but it is clear in many of the stories if you pay attention to the details.

This isn’t altogether uncommon in the lending industry, especially if you go with “nonbank lenders.” The honest truth is that they’re designed to put minimal amount of effort into each customer in order to keep costs as low as possible, which means that when things are smooth and you don’t need customer service, they’re fine, but when things run into difficulty, they often don’t have adequate customer service personnel or policies to provide the help that many people expect.

Personally, I don’t find saving a small percentage on my home mortgage to be worth dealing with a financial institution that has difficult customer service when I actually need their help, but for some people who are confident in their ability to repay, the savings may be worth it.

Q6: Student loans and bad credit

I have a question about student loans if you are able to help. We need to take out loans for our daughter. We do not have a cosigner or most likely do not have a very good credit score. I am worried she will not be able to get student loans or enough to of them to college. Any guidance would be appreciated.
– Neal

Student loan companies are typically fairly flexible in situations like this. However, to obtain the loans, it is likely that your daughter will have to be the one taking out the loan with you as cosigner. In a nutshell, it will be her loan, not yours.

You can commit to helping her with the payments when she graduates if you so choose, of course. That’s a decision amongst the three of you.

Remember, though, that the most cost-effective way to get a four year degree is to take care of the general education requirements at a community college instead of attending university the first two years, saving those years for the classes specifically required by the major. You’ll end up saving a ton of money doing things that way, plus it gives you a two year window to improve your credit.

Q7: Health insurance challenges

I have a question about health insurance. I have social security but no green card yet. I signed up with [a specific health insurance provider], got insurance through them but i am very disappointed in them. Their claims are not real. After my hospital visit I got stock with many bills that were uncovered, even though they said they would be covered. I’ve tried to get them to mail me my benefits and I’ve been unsuccessful. They never respond or call back. I just found out that many claims have been filed against them. I would like to change them and get a better health insurance company but open enrollment is now closed and I am not sure if in November i can change this company due to the fact that I am not a resident yet. bAny advice on how to change this company or what options would I have?
– Bianca

If what you say is true, your health insurance company may not be living up to the requirements that they’re under in the Affordable Care Act. This sounds really shady to me, anyway.

My suggestion to you would be to contact your state’s health insurance exchange directly and spend the time to talk through your situation with them in detail. This may take some time and will probably provide some documentation.

If you can show that they’re not living up to the requirements of the ACA, you may be granted an exception that will allow you to change providers immediately. That’s the path I would take.

Q8: Home equity for stock investing

Would it make sense to get cash out on a home refinance and invest in the stock market?

I got a 3.125% rate on my house and if I can get 7-8% return in the stock market, it seems like that would be a win.

We just refinanced and took $30,000 out for a kitchen remodel but decided to hold off on that.

Am I missing something?
– Shawn

The problem here is that the stock market is really volatile, while your “investment” in your home mortgage is not only stable as a rock, but the “gains” are in the form of post-tax money while you’ll have to pay taxes on the stock gains.

For example, let’s say you bought into the S&P 500 on January 1, 2000. On that day, the value of that index was 1425.59. What was the value nine years later? 865.58. Yep, over the course of nine years, the value dropped by about 40%.

Now, imagine if at that point you suddenly needed that money back. You withdraw out that money and you have only about 60% of your original value. It’s not going to help you solve your problem.

Of course, not every period is going to go down like that. Some periods will go up even more than 7%. There’s also the factor that the stocks will be paying out 2% (or so) of their value to you each year in the form of dividends.

The problem with stock investing is that the 7% annual return isn’t remotely steady. One year, it might be 15% or 20%. The next year might be a loss of 40%. It’s only over a lot of years that it begins to approach a 7% average annual return, and there are many years and multi-year periods where it is a loss.

Stock market investing does not make sense for the average investor unless they have a very long term goal and they intend to stick with that goal. If you’re just investing to hope to “make more money” over the next few years, this is a disastrously bad idea.

Q9: Why Remember the Milk?

Trent, why are you transitioning from “Todoist” back to “Remember the Milk” as your task tracker of choice? What are the features in “Remember the Milk” that you value and don’t have in “Todoist”?
– Stephen

I have been a Remember the Milk user for many, many years. Aside from a handful of features, it was pretty much the perfect task manager for me. The biggest feature I’ve always wanted them to have was subtasks, which basically means I could add a task to my to-do list and then add “steps” to that task that I could check off one at a time, but it never had that feature.

Eventually, I found Todoist, which had that subtask feature, but it was missing lots of little things I had become used to in Remember the Milk. With RtM, I knew all of the keyboard shortcuts; with Todoist, I had to start over and slowly relearn them.

When Remember the Milk added subtasks in their recent revision, I took a long look at the two programs and decided that my familiarity with Remember the Milk and slight preference for how it was organized was worth switching back, at least for me.

At this point, RtM is very close to my “perfect” task management tool. I know the keyboard shortcuts. It does exactly what I want it to do. Part of this, of course, is aided by many years of familiarity.

I’d encourage people wanting to try out a task management tool to try them both. They’re both excellent tools. RtM just fits my personal idiosyncrasies better.

Q10: Debt payoff and credit report

If I have a past debt and I go pay it off and they offer me a lower amount just so I will pay it off, will that still be as paid off on my credit report or will it report something else and not look good on my credit report (like a charge off or partial payment)?
– Emily

It depends on whether you pay it off in full or not. If you negotiate a partial payment, it will appear like that on your credit report.

Having said that, a partial payment along with an indication that the account is settled is far better on your credit report than an open unpaid account. Your credit score will rebound nicely, though it might not reach a really high number for a while.

The best way to avoid the “partial payment” ding is to pay off the debt in full, but a negotiated settlement might be a better overall result for your financial situation.

Q11: Using windfall for car purchase

My father recently passed away and I will be getting his life insurance and pension. I really want to get myself a new or newer vehicle. I was wondering would it be better to out right purchase it or if it’s possible to finance should I take that route making a big down payment and use the left over money that I would have used to purchased the vehicle with outright to make the payments?
– Vincent

For starters, do not buy a brand new vehicle. That’s one of the worst financial moves you can make. Driving a new car off the parking lot means an immediate loss in value of thousands of dollars because you’re simply never going to be able to resell it for its new value.

A much better approach is to shop around for late model used cars. These are typically cars that have come off of a lease or are cars traded in by someone who is in a frantic upgrade cycle on their cars (and throwing many thousands of dollars a year down the tubes).

Your best approach, if you have the cash, is to just pay for it in full. The only exception to that is if you have never had any debt at all and haven’t established any sort of credit history. If you have a credit card in your wallet or a student loan, you’re better off just paying this car off in full if you have the means.

Q12: Size of wedding gift

My son’s future in-laws are giving them $15000 towards their wedding. Does that indicate how much we should give as a gift? We had come up with an initial figure of $5000 before we knew their amount. Only child. We earn in the low to mid $100,000s.
– Ana

Do not worry in the least about what your son’s future in-laws are giving them as a gift. That should not be part of your consideration at all in terms of a gift. You do not know the financial situation of your in-laws or what their reasoning might be or what their arrangements with their daughter might be. You also have no reason to try to “keep up” with them.

Give your child the gift you were planning on giving them. That gift was truly from the heart and doesn’t put you or your child in an uncomfortable situation.

It’s worth noting that I can’t even imagine having received that large of a gift upon getting married. That is far more than I personally would have expected to receive from anyone.

Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.

The post Questions About USDA Loans, Roof Repairs, Disneyland, Wedding Gifts and More! appeared first on The Simple Dollar.

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Where’s the Cheapest Place to Buy Groceries?

We’ve all gotta eat.

And it inevitably eats into our budgets.

I’ve complained time and again about how wealthy I’d be if I didn’t need to eat. Imagine what I could spend all that money on!

Probably mostly traveling. But then again, trying new food is one of my favorite parts of traveling…

But I digress.

How to Buy Groceries on a Budget

Since we’re probably (hopefully) not going the way of Soylent Green anytime soon, you’re going to need to budget for food.

But why not spend as little on this necessity as possible?

As it turns out, you could be getting a way better deal on those recurring grocery items… just by driving a block or two further.

That’s because different retailers offer different prices on grocery items, even if they’re in the same neighborhood.

To figure out your best option to buy those must-have items, we hit the streets and compared prices on 10 common grocery items.

We hit big-box Walmart, crunchy-yet-cheap Trader Joe’s, as well as Publix — a stand in for whatever “vanilla” regional grocer you frequent.

Here’s what we found out.

Eggs

For the purposes of this post, I compared the prices for a dozen large white eggs.

You could probably save a bit more buying the large 30-packs available in some stores. But if you don’t go through all those eggs in time, it’ll be a waste regardless.

At Publix, you’ll pay $2.39 for a dozen large white eggs. Compare that with Trader Joe’s’ $1.49 — and Walmart’s surprisingly high $2.57 carton.

Note: Walmart price-matches local competitors, but the policy states it has to be an “identical” item — so a different brand of eggs might not cut it.

Winner: Trader Joe’s

Milk

I compared prices for a quart-sized container of milk.

If you want milk really fresh, you should be consuming all of it within three days of opening the container. And a gallon is a lot of milk.

A quart was $2.50 at Publix, but just $1.87 at Walmart. Trader Joe’s came in last at $3.99 — but organic was the only option.

Winner: Walmart

Bread

Bread was similar to milk, a lovely coincidence for items so frequently purchased together — especially before impending snowstorms.

A regular-sized white loaf was $1.89 at Publix, but just $1.58 at Walmart.

To upgrade from the nutritional void of white bread, Publix multigrain costs $2.69 and Walmart’s wheat is $1.68.

The cheapest loaf at Trader Joe’s was $3.99 — but they were all fancy with mixed-in nuts and seeds and things.

Winner: Walmart

Peanut Butter

Show me a home without peanut butter, and I’ll show you a sad home, indeed.

Unless you’re allergic to nuts. In that case, please, please don’t buy peanut butter (more for me)!

Publix had one-pound cans of JIF for $2.99.

Trader Joe’s had versions as low as $1.99, but they looked as if they might be on sale. The next-cheapest version was $2.99, and wasn’t a big-name brand like the ones I saw in other stores. So if you’re a particularly choosy mom, this might not work for you.

Walmart had a one-pound can of JIF for $2.58.

Although Trader Joe’s had the lowest one, I don’t know if that’s a stable price point… so this one’s a bit of a toss-up.

Winner: Potentially Trader Joe’s; Walmart as a runner-up

Bananas

Bananas are an awesome fruit for a whole slew of reasons, not least because they come in their own packaging.

Oh yeah, and they’re delicious, nutritious and cheap.

Publix and Walmart tied with bananas priced at $0.59 per pound. Trader Joe’s charges per banana — $0.19 each.

If there are three to four bananas in a pound, Trader Joe’s’ price is about $0.66 per pound. The price looks awesome, but it’s only better if you just want one or two bananas.

Full disclosure: I didn’t hand-weigh bananas, and I calculated the $0.66 using a pretty unlikely bunch size of 3.5 bananas. What’re you gonna do?  

Winner: Walmart/Publix

Cereal

I don’t know about you, but I grew up eating Cheerios for breakfast, so that’s the cereal I chose to compare.

P.S. Slice up a banana on top of your next bowl. Thank me later.

Publix had an 8.9-ounce box for $3.59 or an 18-ounce box for $4.49.

Trader Joe’s 15-ounce box of “Joe’s Os” was $1.99.

Walmart’s generic 2-pound, 7-ounce version was $5.98. The real deal was $3.53 for an 18-ounce box or $3.98 for a 21-ounce box.

Working out all the math, the very best deal is the Trader Joe’s cereal, at 13 cents per ounce.

Walmart’s generic version comes in next at 15 cents per ounce.

But if you want real Cheerios, your best bet is Walmart’s big box at 18 cents per ounce. Publix’s small box is forty cents per ounce. Are those Cheerios made of gold?

Winner: Trader Joe’s if you’re not picky; Walmart if you are

Pasta

What food can even compete for cheap, easy and delicious dinner on the fly?

Publix’s Barilla pasta was $1.69 per pound.

Trader Joe’s’ spaghetti went for just 99 cents per pound.

And at Walmart, spaghetti was $1 per pound on rollback… or $2.92 for a family-sized three-pound box, or $0.97 per pound.

Winner: Walmart if you want to buy in bulk; Trader Joe’s if you’re just looking for a regular-sized box of spaghetti.

Chicken Breast

If there’s one ubiquitous meat in American kitchens, it’s boneless, skinless chicken breast.

Here’s how it’s priced at these three stores — I looked for the cheapest version, so this isn’t the organic, free-range, “happy” meat you may want to buy.

Publix’s chicken breast was $3.49 per pound, and it was $2.69 at Trader Joe’s. Finally, Walmart’s chicken was $3.09 per pound.

Winner: Trader Joe’s

Coconut Oil

As you may know, coconut oil has many wonderful uses — and it’s a healthy fat for everything from sauteeing veggies to popping popcorn.

Publix’s 29-ounce can was $5.99.

Trader Joe’s’ was also $5.99… but for 16 ounces and only organic options.

Walmart had 30 ounces for $6.64, or 14 ounces for $3.98.

Winner: Publix led at 20 cents per ounce

Coffee

If there isn’t coffee in my kitchen, I’m not capable of mornings. Here’s where to get it cheapest.

Publix’s big 1-pound, 14-ounce canister of Maxwell House was $9.97.

Trader Joe’s only carries their own proprietary roasts, which I’d argue are significantly nicer than Maxwell. But the cheapest one I saw was $5.99 for a 12-ounce package (or $14.99 for a 28-ounce one).

Finally, Walmart’s large Maxwell House canister was just $6.93.

Winner: Walmart, unless you’re a coffee snob like me

The Verdict

Here’s how the stores stacked up their wins:

• Publix/Regional Grocer Option: 1.5

• Trader Joe’s: 3.5

• Walmart: 5

But in the long run, choosing a grocer really depends on how you shop and what you’re getting.

If you’re a singleton, shopping only for yourself and eating mostly lean meat and produce (hi!) — or if eating organic is important to you — Trader Joe’s might be a good option.

Hint: Trader Joe’s has really, really good affordable wine options.

But if you’re cooking for a family and need bulk items in large supply, Walmart is probably the more convenient, cost-effective way to go.

For the best results, do your own comparison.

Make a list of the items you consistently need, then hit your local shops — a regional grocer, a value market like Aldi or Trader Joe’s, and a big-box store like Walmart or Target. Or, if you’re willing to pay the annual fee, maybe even a warehouse store like Costco or Sam’s Club.

Write down the price and amount of each item, then divide the price by the amount to find out the price per ounce or unit.

Depending on how far out of your way and how much extra time it’d take, it might be worthwhile to make a couple of different grocery trips to get the best deal on your staples.

Your Turn: Which grocery store do you do most of your shopping at? Have you considered taking multiple trips? Let us know in the comments!

Jamie Cattanach (@jamiecattanach) is a junior writer at The Penny Hoarder. She also writes other stuff, like wine reviews and poems.

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