How to Get Rid of Credit Card and Other Debt With the Debt Snowball Method

Two major methods dominate the debt repayment sphere: the debt snowball and the debt avalanche.

One says you should pay off debts with the highest interest rate first. That’s the debt avalanche method.

The other says to pay off your smallest balances first so that you can enjoy quick victories and build confidence.

That one’s called the debt snowball method, and that’s what we’ll explain in this post.

Does the Debt Snowball Method Really Work?

Popularized by money guru Dave Ramsey, the debt snowball method involves paying off one credit card or loan balance at a time, starting with the smallest balance first.

It’s perfect for people who are motivated by quick wins, but this method has a downside: Those who choose it end up paying more interest long term.

Many people disagree with the concept of paying more interest for quicker wins. Why would you pay off smaller balances and let those interest mongers sit?

Because you’re not an algorithm; you’re a human being. Behavioral economics has shown us that human beings don’t behave like math equations.

When you stare at your credit report and see a list of lenders and credit card companies staring back at you, it should be enough for you to cut up your credit cards, take the UberEats app off your phone and put all of your discretionary income toward paying off debt.

But even with the knowledge, we find ourselves sitting with a $5 latte wondering how we even ended up in the Starbucks drive-thru.

The debt snowball method helps you take the first step… and the next. And the one after that.

How to Use the Debt Snowball Method

If you’re skeptical about paying a little extra interest but know you need quick wins, give the debt snowball a try. Once the plan is in action, you’ll see how negligible that extra interest really is.

Here’s how to conquer your debt with the snowball method in five simple steps.

1. List All Debts From Smallest to Largest

Start by listing all your debts. Then, order them from the smallest balance to the largest. This can be done on paper, a spreadsheet, an app or in a handy-dandy debt snowball calculator.

Include all the debts you want to pay off quickly. We recommend:

• Credit card debt
• Student loans
• Personal loans
• Car loans
• Unpaid medical bills
• Mortgage-related debt
• Any other stuff debt collectors keep calling you about

You can use a site like Credit Sesame to see a full list of what you owe and to whom.

Don’t include debts that are outside of (or approaching) the statute of limitations for responsibility. After a certain amount of time has passed — usually at least three years, but it varies by state — creditors can’t sue you for unpaid debt.

Well, they can attempt to sue you… but the case will be dismissed.

2. Budget to Pay the Minimum on Every Debt

Next, you’ll figure out the minimum due to each debt. A rough estimate will be on your credit report at Credit Sesame, but you’ll want to confirm by checking individual accounts and paper statements.

To start the snowball, you’ll ideally pay the minimum balance across all your debts. If you’re struggling to make those payments, take a look at your budget and see where you can cut back your discretionary spending. Look for ways to earn money on the side.

Try every month to lower your spending and increase your income, because you’ll need that extra money for our next step.

3. Put All Extra Money Toward Your Smallest Debt

Once you’ve budgeted in minimum payments for all or most of your debt, put any extra toward the first loan on the list — the one with the lowest balance.

That means you’ll be paying the minimum plus your designated extra on that debt.

4. Once It’s Paid Off, Add That Total to the Next Smallest Debt

By starting with your smallest debt, you’ll theoretically finish paying the balance off faster than you could have paid any other. But don’t stress if it feels like even the tiniest debt is taking forever to pay off; there’s a learning curve to this, and most people start off slow.

Once you do pay off that smallest debt, take every penny you were putting toward that debt and add it to the monthly payment for your next debt — the second smallest.

That means you’ll be paying the first debt’s minimum payment, the second debt’s minimum payment and your designated extra all toward the second debt.

Pay that amount until the second debt is paid off. Depending on the size and interest rate of your second smallest debt, you could see that debt dry up even quicker than the first.

5. Repeat

Once your second debt is paid off, continue the process with all other debts.

For the third debt, pay the total of the first debt’s minimum payment, the second debt’s minimum payment, the third debt’s minimum payment and the designated extra every month.

It’s a simple concept, but it’s not easy. That’s why little wins along the way are so helpful.

The Debt Snowball in Real Life

Sometimes it’s easier to see concepts like this played out in numbers. So let’s try an example. Let’s say you have:

• A Visa card with a $2,000 balance at 18% and a $40 monthly payment.
• A Mastercard with a $7,000 balance at 24% and a $150 monthly payment.
• A car loan with an $8,000 balance at 4.5% and a $285 monthly payment.
• A student loan with a $10,000 balance at 3.86% and a $125 monthly payment.

You’ve cut your expenses and taken on overtime at work, so you have $1,000 each month to put toward debt.

Your minimum payments add up to $600 each month. This means you’ve got $400 extra to put toward your snowball.

Debt No. 1: Months 1-5

The first debt you’ll tackle is the $2,000 Visa. You’ll make the monthly minimum payment of $40 and an additional $400 payment — for a total of $440 each month — while making minimum payments to everything else.

Debt Account	Balance	Monthly Minimum	You Pay
Visa	$2,000	$40	$440
Mastercard	$7,000	$150	$150
Car loan	$8,000	$285	$285
Student loans	$10,000	$125	$125

By putting $440 toward the Visa every month, you can pay that baby off in five months and still have extra to throw to debt No. 2 in month five. One down, three to go!

Since you’ve been paying the minimum on the other three debts, some interest has accrued on them, but not much. After five months, you’re left with approximately:

• $6,950 on your Mastercard
• $6,700 on your car loan
• $9,530 on your student loans

Your monthly minimum payments for those debts will total $560. You still have $1,000 budgeted for debt payments, so your extra will now equal $440. (See how it snowballs?)

The next debt to tackle is the Mastercard.

Debt No. 2: Months 6-19

You’ll make the monthly minimum payment of $150 and the additional $440 payment toward your Mastercard — for a total of $590 per month — while continuing to make minimum payments to the other two.

Debt Account	Balance	Monthly Minimum	You Pay
Mastercard	$6,950	$150	$590
Car loan	$6,700	$285	$285
Student loans	$9,530	$125	$125

At this pace, you’ll have your next debt knocked out 14 months after your first! A total of 19 months is way better than the 137 months Mastercard wanted you to spend making minimum payments.

Nineteen months may not seem that long in the grand scheme of things, but it is when you’re funneling $400 to a credit card company every month instead of taking trips or buying the latest gadgets.

That’s why having that first win after five months is so powerful.

Debt No. 3: Months 20-23

There may have been a lag in the last year, but this is where the snowball picks up momentum.

Assuming you haven’t found more ways to cut costs and haven’t increased your income with any raises or side hustles, you still have $1,000 to put toward your car and student loans each month. Your minimum monthly payments are now $410, leaving you with an extra $590.

You’ll make the monthly minimum payment of $285 plus the additional $590 payment on your car, while continuing to make minimum payments to your student loans.

Debt Account	Balance	Monthly Minimum	You Pay
Car loan	$3,000	$285	$875
Student loans	$8,200	$125	$125

And just like that, in four months, your car is paid off. Remember when it took five months to pay off a $2,000 credit card? Now you can pay off a $3,000 car in four!

Debt No. 4: Months 24-31

Finally, you’ll hit the student loans with the full $1,000 per month until they’re paid off.

Debt Account	Balance	Monthly Minimum	You Pay
Student loans	$7,800	$125	$1,000

And in eight months, 31 months from when you began, you’ll be completely debt-free! That’s $27,000 of debt in two and a half years.

At first, it probably felt like it was going to take 12 years. And if you’d stuck with minimum payments, it would have. But now you’re debt-free with a budget that has an extra $1,000 of discretionary income each month.

Time for a vacation.

Debt Snowball vs. Debt Avalanche

You’ll see that the debt in the above example accrued $2,962 in interest.

The same debt portfolio paid off with the debt avalanche method would be paid off in the same number of payments, but you’d pay approximately $2,797 in interest. This means using the debt snowball method will cost you an extra $165.

However, with the debt avalanche, you’d have to wait over a year for your first debt to be paid off.

So, why choose the debt snowball? It’s about motivation.

If you tackle debt with the avalanche method, you might be paying on that high-interest stuff for a while before you can knock it off your list. It can feel like you’ll never be done paying off debt.

The snowball method lets you see results more quickly — and your list of debts gets shorter. If you’re like many people who have trouble staying focused, those wins can be the boost you need to keep you going.

Dana Sitar is the branded content editor at The Penny Hoarder. Say hi and tell her a good joke on Twitter @danasitar.

Former staff writer Jen Smith contributed to this post.

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.

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Some States Banned Higher Car Insurance Based on Gender. Get a New Quote

If you’re a guy, you’ve probably heard that you’re paying more for car insurance. You see, auto insurance companies often use your gender when calculating your rates.  

And just two years ago, men were paying more for car insurance nationally. That’s because statistically, male drivers are more likely to crash their cars or get busted for DUI. Male drivers die at a rate of 2.5 deaths per 100 million miles traveled, compared to 1.7 deaths for women, according to the Insurance Institute for Highway Safety.

(And speaking as a dude, I can confirm that men are more dangerous behind the wheel. #sorrybutitstrue)

But in the last two years, the statistics have shifted. According to The Zebra, a car insurance comparison site, women are paying more than men for the same car insurance coverage in 25 states.

Perhaps the inconsistent nature of gender as a rating factor is why some states are putting a stop to this practice. California just joined five other states — Hawaii, Massachusetts, Montana, North Carolina, Pennsylvania — in banning the use of gender to set auto insurance rates.

So what does that mean for you? It means that car insurance pricing is changing, so no matter your gender, you should get a new (and free) quote through a site like The Zebra.

What Your Insurance Company Really Cares About

When auto insurance companies are deciding how much money to charge you for coverage, they look at lots of different factors. The big ones include your driving record (watch out for those speeding tickets), your history of filing insurance claims, the value of your vehicle and the amount of coverage you want to buy.

They also look at a bunch of other factors, such as your age, location, education, occupation, marital status, how much you drive and even your credit history, according to the National Association of Insurance Commissioners.

In 44 states and in Washington, D.C., they can also consider your gender.

But when California officials examined this practice, they concluded the insurance industry was “inconsistently” weighing gender, officials found.

Some companies were charging men more. Others were charging women more. With some companies, there wasn’t much difference between the genders. With other companies, there was a big difference.

And that’s exactly the point. Different auto insurance companies will assess your driving risk factors in different ways. That’s why it’s important to regularly shop around.

Take 60 Seconds to Find out if You’re Paying Too Much

A smart way to save money on car insurance is to shop and compare rates twice a year.

“Not only can a lot of circumstances in your life and your car (mileage, age) change in that time, but insurance companies may be changing their pricing as well, and you want to be sure you’re getting the right coverage, service and, of course, pricing to suit your changing needs,” says Alyssa Connolly, the director of market insights at The Zebra.

An online car insurance search engine, The Zebra, offers “insurance in black and white.” It compares your options from more than 200 insurance providers in less than 60 seconds.

Just enter information about your car and your coverage needs, and The Zebra shows dozens of side-by-side quotes from top insurance companies for free.

Most consumers really don’t bother to shop around. According to The Zebra’s 2019 State of Auto Insurance Report, car insurance rates keep increasing, with the average American paying nearly $1,500 a year for coverage.

Out of all the states, Michigan, Nevada and Oregon have the biggest difference in rates between the sexes, with the gender gap ranging up to 6%, according to Connolly.

The takeaway? No matter what state you live in — or how you identify — compare rates regularly.

Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. He pays for auto insurance on two vehicles.

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.

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10 tax changes you need to know for 2019

The start of a new tax year is the perfect time to spring-clean your finances. Check out these tax changes to see whether you’ll be better or worse off in the year ahead

From a state pension rise that will boost retirees’ incomes to a rise in tax for car owners, we list the tax changes that will make a difference to the money you have in your wallet from 6 April onwards.

1 You’re likely to pay less income tax

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From 6 April, most people will pay less income tax. The tax-free personal allowance is set to rise to £12,500 (from £11,850 in the 2018/19 tax year). This is the amount that most people will be able to earn before they pay any income tax. The rise should give basic-rate taxpayers a £130 boost.

The amount people earn before they pay higher-rate tax at 40% is also rising from £46,350 to £50,000. This will give higher-rate taxpayers an extra £860 a year and means there will be nearly one million fewer higher-rate taxpayers.

Additional-rate taxpayers will be taxed at 40% for any income between £50,000 and £150,000 and will still be taxed at 45% for income above £150,000. They will be £600 better off over the year.

The government says the changes will give 32 million people in England, Wales and Northern Ireland a tax cut. Visit Gov.scot/publications/scottish-income-tax-2019-2020 for details of income tax bands in Scotland. However, national insurance contribution (NIC) limits have also moved in line with the change in the income tax threshold. 

As a consequence, higher earners will lose half their new-found tax gains as a result of the personal tax allowance rise.

People earning more than £46,350 currently pay 12% NICs on earnings up to that level but only 2% on higher amounts.

From 6 April, they will pay the full 12% rate of NICs on everything up to £50,000, as the upper earnings limit is hiked up. The 2% rate will only kick in on earnings above £50,000.

As a consequence, while tax payable on that slice will be reduced by 20%, NICs will go up by 10%, so the net gain is only 10%.

2 You will automatically pay more into your pension

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Come April, you are likely to see a fall in your wage packet, but don’t worry as the money will go towards your pension.

Under auto-enrolment legislation, minimum contributions employers and staff pay must increase to bring the total minimum contribution to 8%.

Currently, contributions are 2% from the employer and 3% from the employee. This is now set to go up to 3% from the employer and 5% from the employee.

According to Hargreaves Lansdown, this means that someone on an average salary of £30,000 will see their take-home pay fall by £253 a year, while someone on £20,000 will see their net pay drop by £117 a year.

Under auto-enrolment, all eligible employees are signed up to their workplace pensions. Contributions are automatically deducted from their salary and are topped up by an employer contribution and tax relief unless they opt out of the scheme.

3 The state pension will rise by 2.6% in April

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Those on a new state pension – which covers people who reached the state pension age from 6 April 2016 onwards – will see an increase of £4.25 a week or £220 a year. This means the full state pension will be worth £168.60 a week – or £8,767.20 a year – after rising from £164.35 a week, above the rate of inflation. 

Those receiving the basic state pension – which applies to those who reached state pension age before 6 April 2016 – will get an increase of £3.25 a week, taking their pension up to £129.10 a week. This means they will get an extra £169 a year, giving them an annual income of £6,718.40.

The level of the state pension rises every year by 2.5%, the growth in average earnings or by inflation – whichever is higher. Known as the triple lock, it gives retirees a guaranteed rise in income every year.

4 Pension lifetime allowance will rise

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The lifetime allowance will rise in line with inflation to £1,055,000 from April.

This is a limit on the amount of money you can hold in a pension without paying an extra tax charge.

Your pension benefits are tested against the lifetime allowance when you start to draw them from the scheme.

You will only start to pay tax charges when your pension savings go above it. This is 55% if you take the money as a lump sum or 25% if you take it as income. These figures have been set so that the tax paid is broadly the same however you take the money.

5 Inheritance tax on property will fall

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Inheritance tax is paid on an estate – property, money and other assets after any debts or funeral expenses – when someone dies.

It is payable when the assets of an estate total more than £325,000. This is known as the nil-rate band. Any assets above £325,000 are liable to a tax of 40%.

In the new tax year, the main £325,000 allowance along with the 40% tax rate is set to stay the same. 

However, the property nil-rate band is set to rise from £125,000 to £150,000 per person when they leave their home to a direct descendant who can be their child, grandchild, adopted or foster child, or stepchild. This means that in the 2019/20 tax year, your inheritance tax threshold will be £475,000 (£325,000 plus £150,000) if you plan to leave property to your descendants.

On properties worth over £2 million, homeowners will lose the allowance by £1 for every £2 they are over the limit.

6 Probate fees will rise for estates worth more than £50,000

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Grieving families could be hit with bills of up to £6,000 when probate fees go up in April.

Probate fees give legal control to the family over the estate of someone when they pass away.

Currently, a flat fee of £215 applies in England and Wales – or £155 if you use a solicitor – on estates above £5,000.

The threshold is set to be lifted to £50,000 from April – lifting 25,000 estates out of fees a year, according to the Ministry of Justice. However, if the estate is above this you will see a rise in probate fees. Estates valued between £50,000 to £300,000 will be charged £250, going up to a maximum £6,000 for estates worth more than £2 million.

Those with larger estates could see costs soar. According to figures from wealth management firm Quilter, a £500,000 estate would pay more than 10 times the current fee at £2,500 while those in the top tier will pay 3,771% more.

The government says that for those who do pay, around 80% of estates will pay £750 or less.

The changes will not apply in Scotland and Northern Ireland, which have their own probate fees.

7 Low-paid workers could get a pay rise

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The national living wage, the statutory minimum for workers aged 25 and over, will increase by 4.9% to £8.21 an hour from April. This 38p rise means workers on the minimum wage will see their wages rise faster than the rate of inflation – boosting wages by around £700 a year on average.

Rates for younger workers will also increase above inflation and average earnings. Those aged 21 to 24 will see the minimum wage climb from £7.38 to £7.70, while 18- to 20-year-olds will see a rise of 25p to £6.15 an hour. For people aged 18 and below their money will go up by 15p to £4.25. The minimum wage for apprentices is also increasing from £3.70 to £3.90.

8 The amount you can save in a Junior Isa is rising

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Isa limits are set to remain the same in the 2019/20 tax year at £20,000. The good news is that the Junior Isa (Jisa) limit is going up in line with CPI inflation from £4,260 to £4,368.

If you have a child, or grandchild, aged under 16 they can have a Jisa. All gains are tax-free, but any money paid in cannot be accessed until the child turns 18.

9 Car tax will cost more for most motorists

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The bad news for drivers is that car tax will go up in April.

The amount of car tax you pay in the UK depends on when you bought your car and the specific emission levels.

Vehicle Excise Duty (VED) was first introduced in 2017 as a replacement for the flat-rate tax system and is based on CO2 emissions. Cars registered before April 2017 will see an increase of up to £15 a year if they produce emissions over 150g/km, bringing the total tax paid to £530 a year. Only electric vehicles and those producing less than 120g/km of CO2 will not have to pay more.

However, for new cars registered after 1 April 2019 the VED rate will rise by up to £65 if the vehicle has CO2 emissions over 255g/km, bringing their annual car tax to £2,135.

Cars registered after 2017 will also have to pay a higher VED. For petrol and diesel cars the standard rate is going up from £140 to £145, while for hybrids its going up from £130 to £135.

You can find out more about how much you should pay for car tax at Gov.uk/vehicle-tax-rate-tables.

10 Buy to let will become less profitable

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Mortgage tax relief for buy-to-let landlords is gradually being phased out since new rules were introduced in the 2017-18 tax year.

From 6 April, landlords can only deduct 25% mortgage interest payments from their rental income – down from 50% in the previous tax year.

The changes are being introduced gradually year by year and by April 2020 landlords won’t be able to deduct any mortgage interest payments from their rental income. After this, landlords will only be able to claim a 20% tax credit on mortgage interest.

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The Advantages of Stealth Wealth and How to Practice It

I’m almost positive that if you met me on a typical day, your idea of my net worth based on your first impression wouldn’t be a high one. Most of the time, in the late fall through early spring, I’m wearing a hooded sweatshirt and blue jeans. They’re usually fresh and clean and in pretty good shape (I save my raggedy clothes for wear around the house), but they’re pretty plain and unassuming. On cold days, I usually wear a fairly worn Carhartt coat, something that’s pretty standard for adult men near where I live.

I usually drive a used minivan, about five years old, so you wouldn’t pick that out as a car driven by someone making a lot of money. It’s not a fancy model and has an unassuming grey color.

You won’t find me at the local country club or anything like that.

In short, I don’t really do anything at all to give off any signs of financial security or wealth in my day to day life. Rather, if anything, I give off signs of the opposite. I don’t wish to appear offensive in public, but I genuinely don’t want to appear as though I’m in good financial shape, either. Rather, I just try to appear clean and comfortable and approachable.

I call this “stealth wealth,” and it’s a tactic I really picked up on early in my financial turnaround, mostly from reading the book The Millionaire Next Door by Thomas Stanley and William Danko. One of the big themes of that book is that actually being a millionaire – in other words, having financial security – is often not associated with appearing like a millionaire. In other words, there’s a lot of value in being more stealthy regarding your financial situation.

The core underlying principle behind “stealth wealth” is to stop worrying about what other people think. Rather than aiming to impress others, you simply aim to be comfortable around others and encourage them to be comfortable around you. I don’t worry about whether I’m going to impress them with what I’m wearing or driving or my hairstyle or the gadget in my pocket. Rather, I figure they’ll make up their own mind about me, and I’d rather they make up their mind based on my actual personality than about some pretense that I’m holding up.

This “stealth wealth” strategy offers a ton of benefits.

First of all, “stealth wealth” means you’re not spending much money at all on keeping up appearances. I don’t buy expensive clothes, just comfortable ones that are well made and fit me well and that are clean when I go out in public. I don’t spend a whole lot on personal grooming aside from soap and shampoo and a razor blade to keep clean shaven (because I find a beard that doesn’t end up being a tangled nasty mess is more work than being clean shaven). I keep my hair cut quite short, so I don’t have to deal with hair care costs. I drive a used car that I keep clean, but it’s nothing fancy. I just don’t spend a whole lot of money on appearances.

Another factor for me is that “stealth wealth” means I spend a lot less time on such things, too. I don’t spend time shopping for clothes – rather, I have a couple of default outfits that I just replace items with regularly. My hair is short, so I don’t spend time on hair grooming. I usually shave while showering and it takes less than a minute a day. I buy cars for reliability so I know they’re just going to work, and when I stop feeling utterly confident in my car, I’m usually shopping for a new one because it’s about to become very expensive in terms of repair bills.

Another notable factor is that I find that I’m most likely to actually be received well in social situations if I feel comfortable, and when I’m aiming to impress, I don’t feel comfortable. I find the most success if I dress comfortably and cleanly in unassuming but comfortable clothes, I’m clean and reasonably well groomed, and I feel good (meaning I’ve been eating well lately and have been getting adequate sleep). Social success happens when you truly feel comfortable, and I feel most comfortable when I’m unassuming.

Yet another big factor in the “stealth wealth” strategy is that I don’t appear to be a person with a lot of money, so I’m not typically targeted for things like “investment opportunities.” Back when I did dress nice all the time, I didn’t have any more real social success (in fact, I probably had less), but I found that people would sometimes come up to me and want to discuss “investment opportunities” which were mostly scams. I’m not sure whether it was being more unassuming and comfortable or what, but I find that such situations occur far less frequently than before. I guess I must not look like an Amway salesperson (or target) these days. I also haven’t been approached by family members for loans in many years – again, I think that part of the reason is that I don’t dress to impress any more.

It’s worth noting, of course, that if part of your career path involves being “dressed for success” in the community you live in, this may not work for you. However, many people in many career paths do not need to “dress for success” in the community (though they may need to in the workplace).

Here are some of the principles I live by when it comes to “stealth wealth.”

First of all, I buy items based entirely on what’s genuinely useful to me, not what others might think of it. I don’t worry about what they think of it. Rather, if someone asks, I can just give a genuine and honest answer – I have this item because it’s useful to me, and I can list the honest reasons for that. That type of honestly leads to lots of meaningful conversations and interactions. I don’t feel like someone is digging into a “false front” with me, ever.

My wardrobe consists mostly of clothes that are comfortable and well made. I don’t dress in rags, but I don’t dress up, either. Most of the time, in the summer, I’m either wearing a plain cotton t-shirt and blue jeans or khaki shorts, depending on the weather. In the winter, I’m usually wearing jeans and a hooded sweatshirt. All of those are well-made items, with good stitching and sturdy, and they largely fit me well (some of my clothes are a little big because of recent weight loss). I have nicer clothes depending on the occasion, but those are my default clothes.

My goal is to wear comfortable clothes that wear very well so I can get lots of use out of them. I want to wear clothes that I feel good in, not to impress other people, but just to feel genuinely comfortable. I don’t feel comfortable in dress clothes. I feel comfortable in a clean well-made cotton shirt and jeans, so that’s what I wear.

Since I’m buying relatively inexpensive garments that last for a lot of washes, my wardrobe is really inexpensive, but I feel comfortable in public. I’m never overdressed, but I’m never really underdressed, either. I’m comfortable, and that makes me feel better about being social.

I drive a used car, but not a rusty beater. Again, I value having a reliable car, and when a car starts to turn toward the “rusty beater” end of the spectrum, it’s time to replace it. At the same time, I don’t drive anything showy. It’s a typical car, one that really isn’t noticed, and that’s how I want it. It does not give off vibes of wealth, but it doesn’t really give off any other impression, either.

I keep my appearance low maintenance, but clean. I keep a short hairstyle – very little day to day maintenance – and don’t have a beard, as I just shave daily in the shower. I practice normal hygiene so that I appear clean and smell fine. This doesn’t require a lot of hygiene products.

We live in a modest home. We could afford a nicer home, but our current home perfectly fits our needs and it would attract attention to our financial state that I don’t want. Our home is decorated and furnished using a similar mindset – simple and comfortable. I want people to feel comfortable coming over and feel completely comfortable when they’re here, not afraid they’re going to commit some social faux pas but not feel disgusted either.

In short, we buy things that meet our own needs, and our only consideration of what others might think is in line with the “golden rule.” I want people I meet in public to be clean and comfortable, so I aim for that myself. I want guests in my home or in my car to feel comfortable, not uncomfortable due to the niceness nor the shabbiness, because that’s how I want to feel when I’m a guest. In the end, what impresses me about people is character and friendliness and ability, not the clothes they wear or the house they have or the car they drive.

The end result? I probably have the healthiest social network I’ve had in my entire life. I feel like I have a place in my local community and in several smaller subgroups. I’m not approached for “investment opportunities” or other such nonsense. People don’t ask me for loans because they think I have wealth.

Things are right where I want them to be.

Good luck!

The post The Advantages of Stealth Wealth and How to Practice It appeared first on The Simple Dollar.

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Dear Penny: Is a Cheap Scooter a Good Replacement for My Broken-Down Car?

Dear J.,

This scooter sounds like more work than it’s worth. But let’s explore it.

On paper, a scooter may sound like the perfect way to zip around town. In many areas, you can easily and comfortably get away with being car-free thanks to the advent of ride-hailing services, public transit and the increased prevalence of bike lanes.

But you’ll still have to lug groceries, take the dog to the vet or travel with additional humans on occasion.

Once you add up the cost of the scooter, scooter insurance and those additional trips that must be made by traditional car, does it make more sense to just get another car? A car with four wheels that can go on the highway without topping out at 35 mph?

If this was a solution to needing wheels but not being able to afford an entire car, I’d say go for the scooter. Estimates for the cost of car ownership range from $8,000 to $12,000 per year when you add up payments, insurance, gas and all the rest, which means anything less than that is a win.

But you’re playing with the idea of getting a shiny new scooter for just a few months of use. If you were committed to a lifestyle change for the long term, you’d buy the new scooter and love the heck out of it. You never would have thought about writing in to ask about it.

You’re talking about the temporary. And the temporary sounds like novelty more than practicality.

Let’s say you are thinking about scooter life as your forever life. I’d still advocate for the used one to start out as you get your scooter legs and build up your confidence on the road. With a new scooter, you’ll likely want collision insurance, which can dramatically drive up the cost of insuring it.

I commend the toe-dip into a car-free lifestyle, but a yearlong stopgap does not a lifestyle make.  

So start low (on price and engine size), start slow (wear a helmet, my friend) and build up to a shiny new two-wheeler if you find it truly suits your lifestyle.

Have a tricky money question? Write to Dear Penny and you might see your question answered in an upcoming column.

Lisa Rowan is a personal finance expert and senior writer at The Penny Hoarder, and the voice behind Dear Penny.

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.

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