الأربعاء، 6 مارس 2019
Family Dollar closing 390 stores; some remaining locations to sell alcohol
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How Much Do You Really Make? It Might Be Less Than You Think
Have you ever looked at what you really make? By that, I mean after the expenses of generating that income and after you’ve paid taxes on it?
After all, even jobs have some expenses, like commuting and clothing, and you don’t get to spend what the taxman takes.
Doing this math is the only way to understand and honestly compare your options. The results might surprise you, especially if you work long hours for a set salary.
A $40,000-per-year job requiring $100 in weekly commuting costs, an annual tax bill of $6,000, and 50 hours of total time each week works out to a rate of just $11.77 per hour in spendable income.
A few years ago, I worked briefly for a temp agency doing construction work. I tallied up the time the job required one week, then deducted commuting expenses and taxes, and it turned out I made just $2.71 per hour. I quit that job quickly.
How to Calculate Your Paycheck
If you’ve ever considered getting a new job, doing freelance work, buying a business or doing anything else to generate income, knowing the real income potential might help you make the right decision. So let’s get started.
Calculate Your Total Work Time
A 40-hour paycheck can involve vastly different amounts of time from one employer to the next.
My experience with that temp agency made this very clear. Like many day-labor outfits, they require employees to show up early and wait for work, which sometimes never comes. You could easily be “at work” for 20 hours to get paid for 10 hours of actual work.
When you think of your unpaid work hours, you might consider only lunch breaks off the clock, but I go further than that. I count every minute from the moment I leave the house. Time is the ultimate currency of life, so I want a true accounting of the hours.
Include all required hours when comparing your income sources. A job next door is not the same as one requiring five hours of commuting per week, even if they pay the same.
Google Maps can provide a good estimate of commuting time to your current or potential workplace. But start the clock when you will actually leave the house, taking into account your good habit of arriving early. Then count all time until you expect to arrive at home again.
Freelancers who work from home might be the most prone to underestimating the total time spent earning their money.
For example, I have no commuting time, but the two or three hours I spend on the first draft of an article is just the start. I also spend time editing second and third drafts, emailing clients, invoicing and writing articles that never sell.
You might easily forget some of these activities. Make sure you include all of the time that is related to your source of income.
Calculate Your Net Pay
To determine how much money you actually take home, deduct expenses. In the case of a business you probably do this already, but jobs have expenses too. They include:
- Commuting costs
- Clothing you wouldn’t otherwise buy
- Childcare
- Ongoing training or educational costs
- Income taxes
- Any other expenditures required to keep the income coming in
The IRS allows a business expense deduction of 53.5 cents per mile for a vehicle, but if you buy used cars and get decent gas mileage, it’s probably less than that. I figure 35 cents per mile for commuting, but make your best guess for your car, and exclude costs you would pay whether you worked or not, like licensing and insurance. Google Maps will also help you calculate the miles to and from work.
Childcare costs can vary greatly, but a 2018 Penny Hoarder survey found that about 82% of parents said they spent $500 or more on monthly child care expenses.
Exclude educational expenses you’ve already incurred. Economists say sunk costs like these are irrelevant to future-based calculations. But include any ongoing educational expenses needed to get or keep a job or business (like annual education required by law for real estate agents).
Income taxes are dependent upon where you live. With a job in Florida you pay no state income tax, but in California you pay a rate as high as 12.3%.
On your federal return, you pay half of your payroll taxes (the employer pays the other half) if you have a job. If you’re self-employed, you pay the whole amount minus deductions (here are 11 deductions for work-from-home freelancers). In either case, you pay income tax at varying rates.
It’s easiest to add up income-related expenses by the year. Then subtract that figure from what you expect to make for the year. Repeat this process for each job, business or other income source you are considering. Then calculate what you get for your time.
Calculating Your Real Hourly Wage Is Just a Start
Here is a simple formula for figuring the spendable income you get for your time:
(Total Income – Total Expenses) ÷ Total Hours Needed to Produce the Income
That gives you an hourly rate — an easy measure by which to compare the job you have with another. You can also compare benefits packages to get a more accurate comparison.
It is just a start, of course. For one thing, it completely ignores whether you like the work. Your hourly pay is just good information, not the whole story. I would happily take a job I loved (there’s no such thing, but just saying) for far less pay than one I hated.
Also, you do have to pay the bills. So you may need to take a $15-per-hour job that’s full time rather than one that pays $20 per hour but is only two days per week.
Still, your time is all you have in the end, so try to get paid more for it. Knowing what you actually make is a good start.
Steve Gillman is the author of “101 Weird Ways to Make Money” and creator of EveryWayToMakeMoney.com. He’s been a repo-man, walking stick carver, search engine evaluator, house flipper, tram driver, process server, mock juror, and roulette croupier, but of more than 100 ways he has made money, writing is his favorite (so far).
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.
The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.
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Best Cash Isa rates this week
If you're a UK taxpayer it's always worth considering a Cash Isa, even though most people can now get some savings interest tax-free.
The personal savings allowance means basic rate taxpayers can earn £1,000 interest tax free without using their Isa, and people who pay the 40% rate can get £500. Read our round-up of the best savings rates to find out more.
But remember that wrapping your money in an Isa means you won't need to worry about a future tax bill because your savings pot has grown and you're earning more than the tax-free threshold.
Everyone aged over 16 can save up to £20,000 in an Isa during the 2017/18 tax year.
Unless otherwise specified, all these banks are individually licenced by the FCA, so your savings will be covered by the Financial Services Compensation Scheme (FSCS) up to £85,000. All interest rates are AER - the annual equivalent rate.
Each week we select our Moneywise Best Buys, highlighting the best Cash Isas on the market.
Top easy access Isas
When picking an Isa, the first thing to decide is whether you want to fix your interest rate or opt for more flexibility with a variable rate. If you want to make additional deposits beyond the upfront opening deposit, or make withdrawals, then a variable rate Isa with easy access is probably most suitable for you.
Coventry Building Society Easy Access Isa 1.50%
Open this account online with a deposit of £1. Rate includes a 0.35% bonus until 31 July 2020.
OakNorth Easy Access Cash Isa 1.45%
Open this account online with £1,000.
Virgin Money Double Take E-Isa Issue 4 1.45%
This Isa from Virgin Money can be opened online with a low initial deposit of £1. Warning though as this account limits withdrawals to two per year. More than this and the bank will cut your rate.
Tesco Bank Instant Access Cash Isa 1.44%
Open this account online with an initial investment of £1. Inlcudes a 0.79% bonus for 12 months.
Shawbrook Bank Easy Access Cash Isa - Issue 5 1.43%
This account pays 1.43% to savers and can opened online. You must have a balance of £1,000 or more.
Best notice account Isas
Notice accounts need you to plan withdrawals in advance, but the rates can be higher than those offered by instant access in some cases.
Charter Savings Bank 95 Day Notice Issue 3 1.45%
This account pays the best rate for tax-free savings with notice access with an interest rate of 1.45% Open online with an initial deposit of £1,000.
Kent Reliance Cash Isa - 60 Day Notice - Issue 16 1.45%
Open this account with an initial deposit of £1,000.
Aldermore 30 Day Notice Cash Isa Issue 7 1.30%
Open this account online with a deposit of £1,000.
Top fixed rate Isas
If you want to secure the interest rate you earn on your savings, and are happy to lock your money away for a set period, then a fixed rate Cash Isa might be for you.
Best one-year Isas
Charter Savings Bank 1 Year Fixed Rate Cash Isa 1.75%
Open this account online for £1.
Shawbrook Bank 1 Year Fixed Rate Cash Isa Bond 1.74%
Open this account online with a deposit of £1,000.
Cynergy Bank Fixed Rate Cash Isa 1.73%
Open this account with a deposit of £500.
Top two-year Isas
Charter Savings Bank 2 Year Fixed rate Cash Isa 1.95%
Open this account online with an initital investment of £1,000.
Shawbrook Bank 2 Year Fixed Rate Isa 1.91%
Open this account online with an initital deposit of £1,000.
Coventry Building Society Fixed Rate Isa (77) 1.90%
Open this account online for £1. The term ends on 31 May 2021.
Best three-year Isas
Coventry Building Society Fixed Rate Cash Isa 2.05%
Open this account online with an initial deposit of £1. Fixed until 31 May 2022.
Charter Savings Bank Three Year Fixed Rate Isa 2.05%
This account can only be opened online and requires an initial minimum deposit of £1. The rate is fixed for 36 months at 2.05%.
Shawbrook Bank Three Year Fixed Rate Cash Isa 1.96%
Open this account online with an initital deposit of £1,000.
Top five-year Isas
Principality Building Society Five Year Fixed Rate Cash Isa 2.13%
This account can be opened online or in-branch and requires an initial deposit of £500. It has a fixed rate of 2.13% for five years.
Shawbrook Bank Five Year Fixed Rate Cash Isa 2.13%
Open this account online for a five-year fixed rate tax-free. Requires an initial deposit of £1,000.
The Family Building Society 5 Year Fixed Rate Cash Isa 2.10%
This account can be opened online for a five-year fixed rate of 2.10%. The account requires a minimum initial deposit of £1,000.
Best Junior Isas
If you're looking to put some cash aside for your kids, Junior Isas are a great way of doing so. These accounts are available to anyone under 18 and tend to offer much higher rates than adult accounts, but there are some restrictions. Read the Moneywise guide to Junior Cash Isas to find out more.
Coventry Building Society Junior Cash Isa 3.6%
Accounts can be opened with a pound in branch, over the phone, online or by post. Interest is paid annually on 30 September. Minimum balance is £1.
Danske Bank Junior Cash Isa 3.45%
Minimum balance is £1. This account is available to all and can be opened over the phone or in Danske Bank's branches across Northern Ireland. Savings are fully protected up to £85,000 by the FSCS.
How are Moneywise Best Buys selected?
We look across as much of the market as possible to find the best deals using industry data from Defaqto.
All our picks are nationally available - online, by post or by phone. We try and pick products that are available to both new and existing customers, but we’ll highlight some offers for existing customers if they’re much better than what else is on offer.
Unless rates are significantly higher than on other accounts, we avoid products that pay an initial bonus (which is normally a euphemism for a rate cut after 12 months), or those with tiered rates (these may not pay the advertised interest rate if your balance rises above or falls below a set amount).
Deals only available to particular age groups or for “additional subscriptions” are also not included.
All these savings accounts are covered by the FSCS unless otherwise specified. We will prioritise deals from UK-based banks. If your bank is licenced by another European country, savings up to €100,000 will be protected, but by the government where the bank is headquartered, rather than the UK authorities.
We reserve the right to use our discretion at all times.
This article was first published on 12 May 2008
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Website Speed Guide
Do you know how slow your site loads?
Website speed needs to be a top priority for all websites in 2019. Why?
Just a one-second delay in loading time results in:
- 16% decrease in customer satisfaction
- 11% fewer page views
- 7% loss in conversions
Amazon says that one second of load lag time would cost them $1.6 billion in sales each year.
So, how fast should your website load? 47% of people say they expect pages to load in two seconds or less and 64% of mobile users expect sites to load in less than four seconds. However, the average loading times for various industries in the United States don’t meet those benchmarks. Take a look at this research from Google:
As you can see, the average website speed for all of these industries is significantly higher than the best practices line.
If you can speed up your website, it will give you a huge advantage over your competitors with slower loading times. You’ll want to aim for your pages to load in three seconds or less. That’s because 40% of visitors will abandon sites that haven’t loaded within three seconds. But obviously, the lower you can get that number, the better.
OK, now that you understand why website speed is so important, it’s time to do something about it. I created this guide of best practices that will help you speed up your website.
So read carefully and make any necessary changes to your site moving forward. Don’t be intimidated by any technical terms that you’re unfamiliar with — I’ve done my best to explain everything in plain English, so it’s easy for everyone to follow along.
Minimize your HTTP requests
HTTP requests are made for each element on your website. I’m referring to things like images, scripts, and stylesheets.
Research shows that 80% of website loading time is related to downloading on-page elements. So for those of you who have lots of these components on your website, you have more HTTP requests.
Using your developer tools settings, you can figure out how many requests your website currently makes. Then, take steps lower that number. Reduce clutter on your website and simplify the design.
You should also eliminate unnecessary redirects. While these are often needed for fixing broken links, they create additional HTTP requests. This will slow down your website speed.
I’d recommend using a tool like Screaming Frog to help you identify all of your redirects. Once they’ve been identified, get rid of the ones that you can live without. Only keep the ones that are absolutely necessary.
Reduce the time to first byte (TTFB)
TTFB refers to the time browsers need to wait before getting data from the server. Simply put, it’s basically how long it takes for a page to start loading.
Your TTFB is comprised of three elements:
- HTTP request time
- Process request time
- Response time
Here’s a visual representation showing how the time to first byte works.
If your website has a fast TTFB, then requests can be delivered to the browser faster. Ultimately, this gets your content loaded for visitors faster.
You should be aiming for a TTFB that’s less than 200ms. Use WebPageTest as a resource to identify your time to first byte.
Just look at the “first byte” column to see where you stand. For those of you who have a TTFB that exceeds 200ms, you’ll need to take steps to improve that number. Here are some common issues associated with slow TTFB:
- Server configuration
- Network issues
- Content creation
- Website traffic
One of the best ways to reduce your TTFB is by enabling browser caching. Make note of that — we’ll discuss how to execute on that concept in greater detail later in this guide.
Make sure your web hosting plan meets your needs
Cheaper isn’t always better. When your website was new, you might have gone with a budget hosting plan to keep costs low. However, as your traffic increases, you’ll need to make sure that your hosting plan is upgraded.
There are four types of web hosting:
- Shared hosting
- VPS hosting
- Dedicated server
- Cloud hosting
The plan you choose and the company you use will impact your website speed. Rather than spending all day discussing the pros and cons of these hosting options, it’s in your best interest to review my guide on everything you need to know about web hosting.
This will give you the information needed to choose the best web host that will speed up your website.
Run compression audits
In order for your website to be as fast as possible, you need all of your files to be as small as they can possibly be. Just make sure that you’re not sacrificing quality, of course.
Smaller files load faster — it’s as simple as that.
I’d recommend running a compression audit with a tool like GIDNetwork to give you a better idea of how compressed files can speed up your website. Here’s what the audit looks like for Quick Sprout.
To test your website, all you need to do is enter the URL and click “check.” As you can see from this audit, Quick Sprout isn’t compressed. The tool also offers a “what if analysis” to show you the benefits of compressing your website.
This chart shows what my website would look like at different compression levels. It tells me that at the fourth level of compression, the size can be compressed to 131 bytes compared to 178 with no compression. The download would also improve from 0.12 seconds to .09 seconds.
These numbers are pretty marginal for my website, which is why I don’t currently have compression enabled. However, some of you might learn that your site can greatly benefit from compressed files after running this audit.
Which brings me to our next point . . .
Compress your files
Let’s say your compression audit looked something like this.
There is a huge difference between no compression and the first level. Those figures continue to improve as we reach level five.
In this scenario, you’d absolutely want to enable compression. Gzip is the industry standard for this practice.
This software locates lines of similar code and then replaces them to make all of your files smaller. It’s ideal for HTML and CSS since those files tend to have lots of whitespace and repetitive code.
Studies from Yahoo say that Gzip compression can reduce response sizes by 70%.
Reduce your images sizes
Visual elements are necessary on your website. Without images, your site will look boring, unprofessional, and probably untrustworthy.
But with that said, images can really slow down your loading times. That’s a big problem for some of you, especially for ecommerce businesses. Why? Well, consider this.
Some of you may have even more than three images per product. Now multiply that number by how many items are available on your website. The figures add up quickly.
Even websites that don’t sell anything need to reduce their image sizes. The average blog post has 3.2 images.
Use a tool like Compressor.io to help you compress your images without sacrificing the quality of them. After the images are compressed, you’ll want to make sure that you’re saving them as the right file type.
For the most part, JPG will be your best option. You can use PNG files for graphics that need to have precise detail, like a logo.
Minify and combine files
Each file on your website will increase the time it takes for a page to load. If your pages have lots of files, they will require additional HTTP requests, which we discussed earlier.
But you can’t just go through and eliminate everything. Then your website will be left with nothing. Instead, just minify and combine them. You can do this for:
- HTML files
- CSS files
- JavaScript files
- Google Fonts
Minification removes unnecessary characters from your files, such as formatting and white space. Basically, it will get rid of anything that isn’t required for your code to function. This ultimately reduces your file sizes.
Combining files reduces the number of HTTP requests by concentrating them into smaller groups. For example, a browser can potentially download six smaller files faster than one giant file.
If you have a WordPress website, your best option is the WP Rocket plugin. This will definitely improve your website speed.
Use asynchronous loading
Now that your CSS and JavaScript files are minified and combined, it’s time for you to optimize the way they get loaded. There are two options:
- Synchronous loading
- Asynchronous loading
Files that load synchronously load one at a time, based on their location on the page. The problem with this is that if one file is taking longer to load, no other files will get loaded until that particular file is complete.
With asynchronous loading, files can load simultaneously. In the event of a file taking a while to load, other elements of your page can still load without any delay.
You can use the same WP Rocket plugin to enable this as well.
Just navigate to the Static Files tab and check off the option for asynchronous loading, as shown above.
You’ll also see from this screenshot that “Load JS files deferred” is also checked off. This brings me to another best practice for website speed.
Defer loading for JavaScript files
When you defer a file, it means that you stop it from loading until other elements on the page have loaded. By deferring a large file, it helps ensure that the rest of your files load quickly without any problems.
JavaScript files are large and can be deferred.
As I just showed above, it’s easy to accomplish this with just one click if you’re using a plugin like WP Rocket. Otherwise, you’ll have to insert some code into the </body> tag for JS files. It will look something like this:
Personally, I like to avoid manual coding at all costs. So finding a plugin or tool that can do the work for you is definitely easier.
Improve DNS lookups
DNS is short for “domain name system.” This is a server that has a database of IP addresses along with names of various hosts.
When a user types a URL into their browser, the DNS server translates the URL into an IP address, indicating its online location.
Typing the name of a website URL into your browser doesn’t mean much to your computer; it needs to be translated to find the site that you want to reach. Here’s a visual representation of what this looks like, using ubnt.com as the example.
With a DNS lookup, people don’t need to memorize long strings of number combinations. However, sometimes this takes too long.
If your DNS lookup time is too slow, you should look into switching to a new DNS provider that will give you faster service.
Make sure browser caching is enabled
I talked about browser caching earlier when we were discussing TTFB. If you’re not familiar with how caching works, I’ll quickly explain.
Whenever someone visits a new website, all of the elements need to be loaded. These elements get stored in a cache, which is a temporary storage on their hard drive. The next time they go to that website, their browser can load that page without sending an additional HTTP request to the server.
If you have caching enabled, then your website speed will be faster for returning visitors. Check out my list of the best WordPress cache plugins to get this set up on your website.
Install a content delivery network (CDN)
As you know, your website is hosted on a server. Every time someone visits your site, a request gets sent to that server. So if you’re experiencing high levels of traffic, requests will take longer to process, which will slow down your website for these users.
But high traffic is a good thing for your website. The last thing you want is for this surge in visitors to deter those same people from coming back because your website speed is too slow.
The physical location of a user to your server can also impact how fast your website is for them. People who are farther away from the server will experience slower loading times, even if you aren’t having high volumes of traffic at that time.
Content delivery networks solve that problem.
CDNs cache your website on networks of global servers. So when someone requests a file from your website, it gets routed to the server closest to their physical location.
For example, let’s say your origin server is located in Texas, but you’re using a CDN to host your files across the world. If a user in China navigates to your website, their browser can download files from a server somewhere else that’s nearby.
Venture Harbour ran some tests on five pages on their website after they implemented a CDN. These were the results:
- Page 1 — 20% faster
- Page 2 — 37% faster
- Page 3 — 41% faster
- Page 4 — 4% faster
- Page 5 — 51% faster
It’s worth noting that the page that was 4% faster went from 2.06s to 1.97s, so it was already fast to begin with. Overall, Venture Harbour experienced a 30.2% decrease in loading time across their entire website. That’s a huge improvement.
I’d recommend using Cloudflare or StackPath (formerly MaxCDN) to help you set up your content delivery network.
Host videos on external platforms
Videos can definitely add lots of value to your website. In fact, 64% of consumers are more likely to buy products online if they can watch a video about it.
But videos on your website can slow down your loading times if they’re not properly optimized. Let me explain what I mean.
Let’s say you filmed a product demonstration video that you want to add to your website. How do you approach this?
If you’re planning to upload the video directly to your website through a file transfer protocol (FTP) or your WordPress editor, it’s the wrong approach. Doing this means the video will get hosted on your server, which will take up tons of space. Look at how this compares to other file types.
For those of you who are using a shared hosting plan, you’ll be limited in the amount of space you can use. Adding videos to your website this way will push your limits. This can also hinder the user experience. Assuming multiple people want to watch a video simultaneously, servers with limited bandwidth will cause lagging and stoppages throughout the playback.
Instead, upload your videos to a third-party platform, like YouTube.
That platform will host your video; then you can simply embed the video on your website. This method will save you server space and speed up your website.
Uninstall unused plugins
Plugins are a great way to improve the performance of your website. There’s a plugin for nearly everything you can imagine.
I use them as well, and they tend to make my life much easier.
With that said, too many plugins can make your website heavy and slow down your loading times. So it’s in your best interest to only install plugins that you’re actually going to use.
When searching for a plugin, look for all-in-one solutions so you don’t need to get one for every little feature. For example, say you’re looking for the best social media WordPress plugin. Rather than getting one plugin for Instagram, one plugin for Facebook, and one plugin for Twitter, look for one that supports all of these platforms.
Go through your plugins and get rid of ones that you aren’t using. These could potentially be slowing down your website.
Conclusion
The importance of website speed can’t be overstated. Page loading times can make or break the success of your site.
You can’t just launch a website and forget about it. Your loading speed needs to be monitored on a regular basis. Otherwise, you’ll have no way of knowing where you stand, and what needs to be improved.
So what’s it take to have a fast website in 2019?
There isn’t just one thing you can do. Start by following the list of best practices that I’ve identified above.
Don’t get overwhelmed. It’s unrealistic to implement all of these tactics overnight. Start with one or two and work your way down the list.
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Three Rules for Earning Credit Card Rewards Without Harming Your Credit
Have you ever heard of the term credit card “churning?” It’s a process where someone signs up for a bunch of rewards credit card accounts in order to score lucrative sign-up bonuses. These bonuses often include large chunks of rewards points, which can be redeemed for cash or free travel, making the cards and the signup offers very attractive.
Some travel hackers boast of being able to travel for free over and over again, with exotic excursions paid for entirely on the back of credit card rewards. There’s just one problem. If you don’t manage your rewards credit cards properly, they could damage your credit scores.
Fortunately, it is possible to earn credit card rewards without harming your credit. In fact, if you’re smart about your strategy, you might just be able to earn some great rewards and build your credit at the same time. Here’s how.
Rule No. 1: Only Charge What You Can Afford
Rule number one when it comes to rewards credit cards is not to charge more than you can afford to pay off in a given month. There are two reasons why this rule is important.
When you rack up more credit card debt than you can afford to pay off each month, you end up wasting money, since you’ll pay some hefty interest charges on the remaining balance. The average interest rate on a general use credit card is north of 17%, which makes credit card debt some of the most expensive debt you’ll ever service. Now you’re paying for your “free” rewards, which kind of defeats the purpose.
If you’re trying to earn a signup bonus, you likely have to meet a minimum spending requirement to qualify for the offer. But, you shouldn’t let that entice you to spend more than you can afford.
There’s another issue, too: When you incur large balances, it will likely harm your credit scores, even if pay them in full.
A significant portion of your credit score is based on the amount of debt you owe as reported on your credit reports. Credit card debt is particularly problematic for your credit score, as it’s highly predictive of elevated credit risk. As a result, if you end up with large balances on your credit reports — even if you pay them in full each month — your credit scores are likely to decline.
Read more: You Can Improve This Part of Your Credit Score Almost Immediately
Rule No. 2: Keep Your Payments Timely
To earn good credit scores, you have to make your payments on time. This rule applies not only to your rewards credit cards, but also to everything else on your credit reports.
The most important factor considered whenever your credit scores are calculated is the presence or lack of bad stuff. I know people like to call this the “payment history” category, but it’s really all about whether or not you have negative information on your credit reports.
A stain on your credit report isn’t the only consequence if you miss payments. If you rack up a ton of rewards points or miles, you stand the chance of losing them if you start missing payments. Card issuers often include forfeiture language in their cardholder agreements allowing them to eliminate your earned rewards if you default.
Rule No. 3: Be Careful How Often You Apply for New Credit
When it comes to opening new accounts, be surgical rather than nuclear. It’s fine to take advantage of a great signup bonus from time to time. Opening new accounts all the time, however, will likely harm your credit scores in two ways:
- Too many newly opened accounts will lower the average age of your accounts. This is a mathematical certainty. It’s also worth about 15% of the points in your credit scores.
- Applying for new credit too often could load you up with a damaging number of credit inquiries. Hard inquiries are the least important factor in your credit scores. However, if you really want elite level scores, like in the 800s (or even a perfect credit score), you can’t have too many inquiries.
There’s nothing wrong with earning a lot of credit card rewards, as long as you manage your accounts properly. Just remember, the ultimate reward is really a good credit score. This will translate into cheaper money throughout your entire credit life cycle, which is likely to span six decades.
Read more:
- Is It Good to Have Multiple Credit Cards, or Will It Hurt My Credit Score?
- The Case Against Airline Miles (and Four Rewards Strategies to Consider Instead)
- The Best Rewards Credit Cards
John Ulzheimer is an expert on credit reporting, credit scoring, and identity theft. The author of four books on the subject, Ulzheimer has been featured thousands of times over the past decade in media outlets including the Wall Street Journal, NBC Nightly News, The Los Angeles Times, CNBC, and countless others. With professional experience at both Equifax and FICO, Ulzheimer is the only credit expert who actually comes from the credit industry. He has been an expert witness in over 230 credit related lawsuits and has been qualified to testify in both federal and state courts on the topic of consumer credit.
The post Three Rules for Earning Credit Card Rewards Without Harming Your Credit appeared first on The Simple Dollar.
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“If You Don’t Like It, You Can Leave”
Let me start things with a story, recently told to me by a friend that we’ll call Tammy.
Tammy has a reasonably well-paying job in a corporate research lab. She’s still paying off student loans and a car loan. She goes out with friends a lot, for meals and for drinks. She basically spends what she earns and enjoys her young, single life.
At work, however, things are a bit tougher. She’s at the first or second rung on a ladder of career progression that can lead to some great places. However, there aren’t a ton of jobs open all the time in her field, and reputation has some value. She’s also living paycheck to paycheck.
What this adds up to is some rather… difficult… treatment from her boss. She is constantly given far more work than she can complete in a reasonable amount of time, meaning that she’s often at work until very late, coming in on weekends, and so on. Her boss ignores her input and suggestions and criticizes everything she does.
This came to a head recently where her boss ordered her to do something she considered borderline unethical and incredibly time consuming for relatively little benefit. She started to argue against it and her boss simply said, “If you don’t like it, you can leave.”
She wanted to leave, but her financial situation made that impossible. She could not afford to cover her combined debt payments and rent for even a month without a steady paycheck. She wasn’t sure if she could easily find new work in her field at all, let alone with any speed.
Her financial situation basically meant that she took that abuse and did the requested task, feeling trapped and feeling absolutely awful about it. She knew that it was going to happen again, and it did, and it has happened regularly since then. She hates going into work, but she feels like she has no other choice.
She asked me for advice, and I gave it to her.
The best – and only – way out of a situation like this is to make yourself as financially and professionally independent of your current job as you can. You need to be able to survive a period out of work without having your finances collapse. You need to be able to easily transition out of your current job into a new one if the current job becomes untenable for some reason.
If you do not have those things in place, then you are handing a great deal of manipulative power to your boss. Your boss has power over your day to day life. Your boss has power over your career. Those are two things you should have power over, not your boss.
Some bosses out there are kind and ethical and treat their employees with respect and dignity. Other bosses will figure out exactly how much power they have and use every ounce of it to squeeze what they want out of you and then discard you when there’s nothing left in the tube. You need to have the power to escape that second kind of boss.
Some workplaces are wonderful supportive places. Others are fraught with politics, with backstabbing and oneupsmanship being the norm. You need to have the power to escape that second kind of workplace.
Even if your workplace currently seems wonderful and your boss currently seems wonderful, it only takes a few management changes to flip the equation. That’s why you should always be financially and professionally prepared for a sudden job change.
Here are some strategies for doing that.
You should have an emergency fund that covers at least a few months of living expenses. This prevents the immediate financial crisis that occurs if you’re abruptly fired or laid off and it gives you the financial ability to simply walk out the door if your workplace treatment becomes too much to bear.
The easiest way to build this up is to set up an automatic transfer from your checking account to a savings account. Set it up to transfer a small but reasonable amount each week – say, $20 or $50 or $100, depending on what you can afford – and then let it just keep accumulating. Use it for genuine life emergencies, but just let it grow so that the savings account eventually has a few months of living expenses in it. If you transfer $20 a week, that becomes $1,040 at year’s end. If you do $100 a week, that’s $5,200 at year’s end.
You should avoid carrying high interest debt if at all possible. Having a strong financial foundation in your life is key to being flexible enough to move on from a difficult professional position, and there’s nothing more corrosive to a strong financial foundation than carrying high interest debt. Typically, this debt is in the form of credit cards; if you’re carrying a credit card balance, get rid of that balance as fast as you can. After that, start eliminating your other debts in order of interest rate while not building any new high interest debt.
This will probably require some changes to your spending habits. Start by looking at the big bills you pay throughout the year – things like rent, insurance, car payments, and so on. What can you do to lower those bills? In terms of regular expenses, look to cut back on the things that aren’t as important to you by doing things like buying store brand versions of as many regular purchases as possible. The key is to turn just a little bit of overspending into enough underspending that you can start chopping down your credit card debt with extra payments.
You should have a strong professional network. Much of the time, the next big professional step in your life will be aided by someone you know professionally. They’ll help you get a foot in the door. Thus, the more people in your field that you know well, the more likely it is that someone will be able to help you get a foot in the door at the precise moment when you need it.
Obviously, this means establishing real meaningful professional relationships. Start by getting involved in any professional groups in your area. If there are any opportunities to go to conferences related to your career, take those opportunities and use them as a chance to connect with people in your professional peer group. As you start to build relationships, follow up with people and help them when you can, especially when the value to them is much greater than the effort required from you.
You should have a resume ready to go at all times and have it publicly available. Having a correct resume ready to go at all times means that you can immediately respond if an opportunity falls on your doorstep. Having that resume publicly available means that people can find it and help find offers for you without you even lifting a finger, meaning it’s the perfect complement to a strong professional network.
You can start by updating your resume right now with all of the latest information about your career: job history, skills, certifications, and so on. Sign up for a service like LinkedIn where you can share your resume publicly and others can easily find it and contact you if they see something of interest.
You should constantly be looking to have that resume ready for the job you want next. You may have a strong social network and a readily-available resume, but is there anything on it that people will want? You should be taking steps every single day to polish that resume so that it’s ready to help you get the job that you want for the next step in your career, or, at the very least, a job competitive with your own.
The first thing you should do is make sure that you know what the typical requirements are for the job that you desire. Then, put in the effort to make your resume work to fill that position. If at all possible, take advantage of your current workplace’s resources and opportunities to nudge yourself in that direction. If your workplace offers education and certification, take advantage of it. Try to put yourself in positions at work where your work will allow you to build and cultivate skills that will help you take that next career step.
Remember, your overall goal should be to make yourself independent of the job you currently have so that, in the face of bad treatment, you can easily walk away. Life is too short to be in a miserable situation at work, so prepare your financial and professional life so that you don’t have to.
Good luck!
The post “If You Don’t Like It, You Can Leave” appeared first on The Simple Dollar.
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Should I combine my two pensions?
Question
I have a self-invested personal pension (Sipp) with LV=, which has lost money in the past 12 months, despite paying in £100 a month. I also have an Aviva pension through a previous employer, which has gained little over the past year as I no longer pay into it. Should I amalgamate the two to save management fees?
From
While amalgamating pensions can be a good idea in terms of saving on fees and reducing complexity, you need to carefully consider it and take advice if necessary.
By speaking to an adviser, you can get a clearer idea of what you are being charged, so you can make a more informed decision. For instance, you mention you are invested in a Sipp. These products often have access to a wider range of investments than you would get in a standard pension. Are you using this flexibility? If not, you may be paying more than you need to. However, it is not just a case of comparing the fees your providers charge – there are other factors to be taken into account. To begin with, the provider you choose to leave may charge you a fee for transferring your funds so it is worth checking this.
There are also other issues to consider. While it is never good to see the value of your pension decrease in any one year, it is important to note that you are invested for the long term and that from time to time your investments will experience some degree of volatility – it is important not to make decisions based on one year’s investment performance. However, it is worth speaking to an adviser to review whether the investment strategies you are invested in remain suitable for your needs. You can find an adviser through Unbiased.com.
Helen Morrissey is a corporate PR specialist at Royal London
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Invest your Isa money for better returns
If you have five years or more to invest your money and are prepared to take some risk, then this type of investment Isa could be the right choice for you
Cash Isas have always been a favourite among savers looking for a place to build up a nest egg.
Savers shovelled as much as £39.8 billion into them in 2017-18 and they made up 72% of all Isas.
But while Cash Isas are a great place to protect money from tax and can, in some cases, shelter it from the effects of inflation, they are not a very effective place to grow your money.
Interest paid on Cash Isas rarely beats inflation these days, making it hard to grow your pot.
Increasing numbers of savers are turning to Stocks and Shares Isas instead in search of better returns.
While Cash Isas saw the biggest decline last year, with the number of subscriptions down by 697,000, Stocks and Shares Isas rose in popularity with 246,000 more accounts opened in the same period.
Are you ready?
A Stocks and Shares Isa can be one of the easiest and cheapest ways to invest.
Money held in Stocks and Shares Isas tends to go up in value over the long term but can experience volatility where the value rises and falls over the short to medium term.
This is one reason why it is best to invest only if you are planning for the long term – for at least five years.
It also makes sense to build up a cash buffer for life’s inevitable emergencies first, before locking up cash in investments. As a rule of thumb, it is wise to have three months of outgoings held in cash – just in case.
Once you have this in place, you could consider investing.
Why use an Isa?
There are several taxes associated with investing, but a Stocks and Shares Isa shelters your money from all of these.
Firstly, some investments pay interest, such as government and corporate bonds or rental income from some property funds. There is no tax to pay on this income if the investments are held in a Stocks and Shares Isa.
Secondly, any dividends paid by your investments are tax free if held in an Isa. The annual dividend allowance for investments not held in an Isa was slashed in the 2018/19 tax year to £2,000 from £5,000, so it is even easier now to be hit by the tax if you don’t use an Isa.
Thirdly, an Isa shields your investments from capital gains tax on your investment growth. Capital gains tax is payable on investments that have increased in value when you come to sell, on anything over £11,700.
Money saved in a Stocks and Shares Isa is protected by the Financial Services Compensation Scheme (FSCS) up to £50,000 in the event of an investment product provider going bust. However, it does not cover losses from the underlying stock market investments.
Is it very different to a Cash Isa?
Moving from building up a nest egg in a Cash Isa to putting money in a Stocks and Shares Isa can be quite a transition.
With a Cash Isa, you know exactly how much money you have and can expect to have at any one time.
The value of a Stocks and Shares Isa is never crystalised until you sell your investments. You can check its value at any time, but it can change from one day to the next.
Investors need to be able to reconcile themselves to the fact that their investments can fall in value, but that by the time they want to access them they hopefully will have risen overall.
How do you open one?
Opening a Stocks and Shares Isa is simple and has never been easier.
You will need to pick an investing platform and there are increasing numbers available, catering for anyone from those who want someone to pick their investments for them to those who would like full control.
Pick a platform that allows you the type of control you are after, that offers good customer service and that allows you to buy the range of investments you want.
You can use a Stocks and Shares Isa to buy bonds, company shares and funds, but investing platforms vary in what they offer.
For beginner investors, Moneywiserecommends using funds as these allow you to spread your risk across a greater number of holdings.
Many investing platforms have recommended lists of funds, which can be a good starting point.
Moneywise also has a list of First 50 Funds for Beginners, which we believe can form the basis of a good portfolio for first-time investors (see here for the updated list).
How much will I pay in fees?
One of the most crucial factors to consider is price. Each fund applies a charge to investors and you will also pay platform fees to the company you use to invest.
Costs can quickly erode your returns; an extra percentage point paid in fees can cost you tens of thousands over the long term.
Examples of major platforms include AJ Bell Youinvest, Charles Stanley Direct, Hargreaves Lansdown and interactive investor (Moneywise’s parent company). Each charges a fee, which is usually a fixed fee or a percentage of your Isa’s total value.
Are there other alternatives?
Lifetime Isas are another way of investing, of particular value to those saving towards their first home or retirement. Read this to see how they work.
Innovative Isas are the newest type of Isa and since 2016 have allowed investors to hold peer-to-peer (P2P) investments within an Isa.
These can offer considerably higher returns than Cash Isas, but they also come with greater risk.
Your cash is at risk if the platform goes bust and you are not protected by the FSCS as you would be with a Cash Isa.
P2P is also a relatively new product and has yet to be tested in a major financial downturn.
In a downturn, loans are more likely to default and returns fall. It remains to be seen how different P2P investments stand up against this type of environment.
Some platforms do have some safeguards and provisions in place to mitigate against this in part.
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New job, old pension? It’s time to review the situation
Evaluating your pension may be the last thing on your mind when changing jobs. But new schemes can offer both opportunities and drawbacks. Here are the key questions to ask yourself and your new employer.
Getting a new job is the ideal time to take stock of your existing pensions to see what investment you already have and to gain a clear idea of where you are going.
“It is not something we like to look at, as we think of pensions as being at the end of our lives. But it is a good opportunity to think about the kind of income we would like in retirement,” says Melinda Riley, head of policy pensions guidance at the Single Financial Guidance Body.
The first few weeks of a new job is the best time to get your pension savings in order before you let things slip.
“No one jumps out of bed in the morning because they want to sort out admin. It makes sense, then, to deal with it in the first week in a new job before the real work starts and when you’re already handling admin with your new employer,” advises Ed Monk, associate director for personal investing at Fidelity International.
What scheme do I currently have?
First of all, check whether you have a workplace pension with your previous employer, as you may have been automatically enrolled in one when your started working for them.
When you leave, you should be sent a statement of benefits. If it doesn’t turn up within a couple of weeks, ask for one. The statement should include a current value of the account and the transfer value. Find out if there are any penalties for transferring the pension to a new scheme or any additional charges.
Work out whether you hve a scheme that pays a guaranteed income based on your salary or one that pays out based on the overall contributions made by you and your employer (so defined benefit or defined contribution). Also make sure your pension provider has up-to-date contact details, especially your address. The same applies if you have a personal pension.
What are my new pension arrangements?
The law requires every employer to automatically enrol UK workers into a workplace pension scheme if they are at least 22 years old, under state pension age and earn a minimum of £10,000 a year. The scheme may be referred to as a company or occupational pension.
Find out from your new employer what the arrangements are, as you may have to buy into the scheme if you want to transfer your existing pension across.
Some schemes also have restrictions, which mean you have limited time to transfer a pension into the new scheme – often a year.
“For your new pension, most employers these days have clear guidance on what you need to do and a process to help you set up contributions, increase them over time and select investment choices for your money,” says Mr Monk.
“These will include default choices if you don’t feel confident making investment decisions, so you don’t have to worry about making any big mistakes. Bear in mind that some schemes have a window for you to set contributions and investment choices – miss it and you might have to wait for next year.”
Should I leave or transfer it?
There are generally three pension options when you change jobs. You can leave your old pension where it is, move it to your new employer’s workplace pension scheme or transfer it into a personal pension arrangement.
“Transferring it might not always be in your best interest, particularly if it is a defined benefit scheme with a guaranteed final salary income,” says Andrew McCombe, independent financial adviser (IFA) of Go IFA.
You can have as many pensions as you like, so you can freeze your old pension and join another scheme with your new employer.
Equally, a pension can follow you throughout your career and you can transfer it as many times as you move jobs although there may be costs for moving your money.
“It’s also really important that you don’t give up valuable features of an old scheme, such as a guaranteed annuiy rate which would allow you to buy a higher level of income when it comes time to retirement. But if your new scheme is offering better terms – similar or the same investments for a lower annual charge, and without giving up valuable benefits – then you may wish to transfer your money to your new scheme if this is possible,” Mr McCombe adds.
If you have a large pension that comes close to the lifetime allowance of £1.03 million, it can be advantageous to have access to separate pensions containing less than £10,000 because these can be accessed without triggering a potential tax charge.
Do I need to increase my contributions?
Benefits within pensions are so varied that it can be difficult to compare like for like and to know if you are moving from a better to a worse scheme, but it is always advisable to contribute more if you can.
“If you have been promoted, you should think about contributing more to your pension scheme. That way, you don’t notice that you are missing it. Your employers may match these contributions too,” says Ms Riley.
You should always aim to maximise pension benefits particularly the amount an employer will match.
“It’s normal for employers to match your contributions up to a certain level, so make sure you contribute at least enough to max out their contribution, and more if you can afford it,” says Mr Monk.
Should I have multiple pension pots?
You may be someone who prefers to track all of their money in one place and have one pension, but there is also no harm in hedging your bets and having several schemes.
“As long as you know where they are and what charges are on them, there is nothing wrong with having several pensions,” says Ms Riley.
Alternatively, you can bring old work pensions together in your own Self-Invested Personal Pension (Sipp). By doing this, you will be able to see all your pensions in one place, which means you are less likely to lose track of your savings and will be encouraged to increase contributions when you can.
How is my short-term health?
An important consideration is your health and family circumstances, particularly if you are concerned about dying before retirement.
Make sure you understand how much your scheme will pay out on your death as this may affect whether you transfer it or not.
Defined benefit schemes are much reduced on your death as you are no longer paying into the pension whereas defined contribution, workplace or personal pensions may pay out more to your family.
Personal pensions can be passed down the generations and are generally not subject to inheritance tax so are a good way of securing your family’s financial future. Make sure your expression of wishes nomination form is up to date, so the correct person/people receive any death benefits.
Do I need financial advice?
As a starting point, talk to your company’s HR department if they have one and also contact your current pension provider, so it can talk you through your annual pension statement.
Never accept advice from a cold-caller as cold-calling about pensions is now illegal. If you receive an unwanted call from an unknown caller about your pension, get as much information you can and report it to the Information Commissioner’s Office.
The Pensions Advisory Service offers free and independent advice (see box left for details) and you can find a useful tool to trace lost pensions at Gov.uk/find-pension-contact-details
An independent financial adviser can also talk through your best options, understand your schemes in detail and spot ways of maximising contributions to gain tax relief.
In order to transfer a defined benefits pension with a value over £30,000, you must take advice from a financial adviser. Before contacting them, make sure they are registered with the Financial Conduct Authority.
“It’s such a small amount that I’ll take a lump sum once I’m 55”
Software engineer Alistair Stead, age 41, (pictured) did not start saving for a pension until he was auto-enrolled on his workplace pension in his mid-30s.
When he eventually left his job to become a chief technology officer at a larger company, he said it was unclear what would happen to his workplace pension.
“It took about four to six months for the paperwork to come. I automatically assumed the pension would just transfer. I thought there would be a simple form to fill in rather than me taking on the relationship with the pension provider.”
Alistair, from Market Harborough, in Leicestershire, eventually discovered that he had three options: transfer the pension to his new provider, extract the pension as a cash lump sum or leave it in the existing scheme. He says: “I left it. It’s such a small amount that it wouldn’t make a lot of difference to my new pension if I transferred it. At some point [after age 55], I’ll take the lump sum and use it for the house or the kids.”
“I missed the deadline to transfer my pension”
Hilary Scott (pictured) was caught out by time restrictions when she changed careers, which meant she couldn’t transfer one pension pot to another.
The 48-year-old from Northampton left her job on newspapers to become a university lecturer in her late 30s.
“I had a pension for about 13 years with my previous employer but I got really confused because I was also in a sharesave scheme and would get lots of letters about both the savings and the pension after I left. I had a huge pile of documents that I had intended to sort out once I’d settled into the new job.”
By the time Hilary realised that she needed to transfer her old pension into her new employer’s scheme, she had missed the deadline.
“It all got so complicated and I was getting different accounts from both pension schemes, which were arguing with each other about equalisation related to changes in pension ages for men and women.
Documents were getting mislaid at both ends and I was trying to sort it out on and off for two years. In the end, I gave up.
“I think it is so important that people pay attention to their pension from the moment they start working. But instead, we get caught up in more immediate financial worries like paying rent, mortgages, insurance and general monthly bills. Pensions feel like a long way off, so it’s easy to ignore them.
“I effectively have two pensions now: one that just sits there doing nothing and one that is active with my university job. What is even more galling is that the sharesave scheme, which I also put to one side, became completely worthless when my previous employer recently declared bankruptcy. I kick myself for not sorting it all out sooner.”
Further information
The Pensions Advisory Service Pensionsadvisoryservice.org.uk — 0800 011 3797
Financial Services register Register.fca.org.uk
Unbiased (for independent financial advisers in your area) Unbiased.co.uk— 0800 023 6868
LILY CANTER is a personal finance writer who writes for publications incuding The Daily Telegraph, The Guardian and The TImes
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