British clothing retailer Topshop will close all its U.S. locations, the company announced this week.The 11 American stores are part of a larger group of 23 stores that will be shuttered worldwide, according to Nylon.Topshop has struggled recently and filed for bankruptcy in the U.S. not too long ago. [...]
Source Business - poconorecord.com http://bit.ly/2wk1KLg
الجمعة، 24 مايو 2019
Roth IRA vs. 401(k): A Guide for Anyone Who Wants to Retire Someday
When you’re trying to decide between a Roth IRA vs. 401(k), the personal finance gods often have an easy answer for you: Do both, they decree.
Well, that’s easy if you’re swimming in so much cash that you can go on a retirement savings binge — yet don’t earn enough to disqualify you from contributing to a Roth IRA.
In 2019, someone under age 50 would need to contribute $25,000 to reach the limits for both retirement accounts. Mere chump change, right?
We get it: Most of us don’t have the resources to max out both a Roth IRA and a 401(k).
So when you decide how to allocate your retirement dollars, you have to make tough choices.
What Is a Roth IRA?
A Roth IRA is a type of individual retirement account. That means you, Dear Reader, as an individual, open the account — whether it’s a Roth IRA or a traditional IRA — and decide how to allocate your investments.
What makes a Roth IRA unique compared with traditional IRAs and most 401(k)s is that you fund it with money you’ve already paid taxes on. That means that when you withdraw it, typically once you’ve reached age 59 ½ and have had the account for at least five years, the money is yours tax-free.
Another sweet feature of Roth IRAs: While you generally have to wait to access your earnings, your contributions are yours to take at any time. While we’d never recommend taking money out of a retirement account unless absolutely necessary — and no, a dream wedding or vacation doesn’t count — your Roth IRA contributions can be a source you tap in an emergency.
What Is a 401(k)?
A 401(k) is a retirement account that’s sponsored by an employer. You can’t open a 401(k) on your own.
Unlike a Roth IRA, a traditional 401(k) is tax-deferred. That means you invest part of your paycheck before you’ve paid taxes on it and then pay taxes when you withdraw money in retirement.
A growing number of companies are now offering a Roth 401(k) option, which shares most of the same rules as a traditional 401(k) but is funded like a Roth IRA, with money that’s already been taxed.
What makes a 401(k) — either kind — especially attractive is that many employers will match your contributions — in whole or in part — up to a certain percentage of your earnings.
Whatever the amount, it’s basically free money to pad your retirement savings.
Roth IRA vs. 401(k): The Ultimate Showdown
At this point, the Roth IRA vs. 401(k) question is probably sounding complicated, because they both have some pretty sweet features. Now let’s see how they compare across six categories.
1. Who’s Eligible?
While anyone can open a regular old investment account, not everyone can open a Roth IRA or 401(k). Here are the requirements.
Roth IRA
You don’t need a traditional job to contribute to any type of IRA, but you do need taxable income. A salary, wages, tips, bonuses, and freelance and self-employment income all count. If you’re married but don’t work, your spouse can also set up a spousal Roth IRA for you.
While you can fund a traditional IRA no matter how much you earn, a Roth IRA has income limits. (We’ll get to the contribution limits next.)
For single people, or if you’re head of household or married filing separately:
- If your income is under $122,000, you can contribute the maximum amount.
- If your income is between $122,000 and $136,999, you can contribute an amount that becomes gradually less the higher your income.
- If your income is $137,000 or higher, you’re not eligible.
If you’re married filing jointly:
- If your combined income is under $193,000, you can contribute the maximum amount.
- If your combined income is between $193,000 and $202,999, you can contribute an amount that becomes gradually less the higher your income.
- If your income is $203,000 or higher, you’re not eligible.
401(k)
To contribute to a 401(k), you have to work for an employer that offers a 401(k). However, your employer can exclude you from participating in its 401(k) for certain reasons, such as if you’re under 21 or have worked for the company for less than a year.
Unlike a Roth IRA, a 401(k) has no income limits.
2. How Much Can You Contribute?
Both a Roth IRA and a 401(k) have limits on how much you can contribute — but the limits are much higher for a 401(k).
Roth IRA
The maximum contribution for 2019 is $6,000 if you’re under age 50, or $7,000 if you’re 50 or older. The limits are the same for traditional IRAs. Note that if you have both a Roth and traditional IRA, your total contributions to both accounts can’t be higher than $6,000, or $7,000 if you’re over 50.
401(k)
You can contribute up to $19,000 to your 401(k) if you’re under 50, or $25,000 if you’re 50 or older.
Your employer can contribute up to $37,000 or 100% of your salary, whichever is less. But hold up, money bags: The most common employer match is 50% of your contributions up to 6% of your salary.
Your employer may also make you wait to access the money it’s putting in your account, which is known as vesting. The money you contribute will always be yours, but if you leave your job before the vesting period is up, you may not be able to take the money your employer matched with you.
3. How Do the Tax Breaks Compare?
Taxes are a major factor when you’re considering a Roth IRA vs. 401(k). Here are some key differences in how the accounts are taxed.
Roth IRA
If you were hoping to beef up your tax refund, a Roth IRA will leave you disappointed. But remember: Once you withdraw that money at age 59 ½, as long as you’ve had the account for at least five years, it’s all yours tax-free.
401(k)
Suppose you earn $50,000 and contribute $5,000 to a traditional 401(k). Your taxable income for the year is now $45,000. Because you get the tax break upfront with most 401(k)s, you’ll pay taxes when you withdraw your money.
Because you fund a Roth 401(k) with after-tax dollars, it won’t change your taxable income, but you can withdraw your money tax-free when you retire.
Pro Tip
If you expect to pay taxes in a higher bracket once you reach age 59 ½ or if you think tax rates in general will increase, maxing out your Roth IRA is smart because you lock in a lower tax rate.
4. How Do You Invest?
A Roth IRA will give you more flexibility to choose your own investments, but a 401(k) gets points for convenience.
Roth IRA
You can open a Roth IRA through a brokerage firm or a robo-advising service. You could set it up in person if you opt for a brokerage with a brick-and-mortar location or by applying online.
You can invest your Roth IRA money however you want — in mutual funds, individual stocks, bonds and annuities.
If you prefer to choose your own investments, you’ll want to open a brokerage account. Consult with a financial adviser if you aren’t sure what investments to choose. If you prefer a set-it-and-forget-it approach, you’ll probably prefer a robo-adviser, which uses super-smart software, instead of humans, to manage your investments.
You can set up automatic transfers from your bank to make investing more convenient.
401(k)
If your employer offers a 401(k), you may have to sign up for it or you may be automatically enrolled. Most companies let you enroll when you’re hired, though some smaller companies will make you wait as much as a year.
Once you’ve signed up, you’ll have to decide how much to invest and what you want to invest in. Your investment options will be limited compared with your options for a Roth IRA, but you can usually choose from several categories of mutual funds.
You can change the amount you’re contributing and your investment allocations at any time.
Pro Tip
Find lower-cost mutual fund options by checking the fee disclosure statement, which your 401(k) plan is required to send you every year.
5. When Can You Withdraw Your Money?
Your retirement accounts aren’t supposed to be a source of quick cash, so the rules around withdrawing money can get complicated.
In general, the IRS lets you withdraw from both plans without penalty if you experience certain hardships, such as if you become permanently and totally disabled, or if you have out-of-pocket medical expenses that are more than 10% of your gross adjusted income.
Roth IRA
As we said earlier, one of the biggest benefits of a Roth IRA is that you can withdraw your contributions at any time. That can make a Roth IRA a good safety net in case of an emergency.
That said, you’ll typically have to wait until you’re age 59 ½ and you’ve had your account for five years to withdraw your earnings. Otherwise, you’d typically owe ordinary income taxes on your earnings and pay a 10% penalty.
You may be able to withdraw up to $10,000 from your Roth IRA for a down payment or other expenses related to a home purchase if your account is at least 5 years old.
You can withdraw your Roth IRA earnings early and use them for educational expenses for you, your spouse or your child, but you’ll still owe income tax.
401(k)
If you leave your job for any reason between ages 55 and 59 ½, you can withdraw money from that employer’s 401(k) — but not 401(k)s from past jobs — without penalty. But remember: Unless it’s a Roth 401(k), you’ll always pay taxes on 401(k) withdrawals.
After age 59 ½, you can start making 401(k) withdrawals without paying penalties, though most employers won’t allow you to make withdrawals while you’re currently working there.
Early 401(k) withdrawals usually come with a 10% penalty, along with income taxes.
6. Do You Have to Take Distributions?
A required minimum distribution is IRS lingo for when you’re required to withdraw money.
We know it sounds weird that you’re required to withdraw your own money. But remember: Traditional IRAs and 401(k)s are funded with pre-tax money. The government wants to make sure it gets its cut.
Here are the basics for Roth IRAs and 401(k)s.
Roth IRA
While 401(k)s and traditional IRAs have mandatory withdrawals called required minimum distributions (RMDs), you’ll never have to take money out of your own Roth IRA. After you die, however, your beneficiaries will probably have to take RMDs on the account.
401(k)
The IRS typically requires that you take distributions starting at age 70 ½, although if you’re still working, you may not have to. The exact amount depends on your account balance and life expectancy.
Recap: Roth IRA Pros and Cons
Now that you know the basics of Roth IRAs, it’s quiz time. Kidding. But let’s review the basic pros and cons of a Roth IRA.
Roth IRA Advantages
- You get a tax-free source of income in retirement.
- You have control over how your money is invested.
- You can access your Roth IRA contributions at any time, making it a good safety net.
- It’s a convenient way to save for retirement if you don’t have access to a 401(k) or another employer-sponsored retirement plan.
- You can withdraw up to $10,000 of earnings for a home purchase.
- You may be able to withdraw your earnings early for certain medical or education expenses.
- There are no RMDs.
Roth IRA Disadvantages
- You don’t get a tax break upfront.
- You’ll pay income taxes and a 10% penalty in most cases if you withdraw your earnings before age 59 ½ and if your account is less than 5 years old.
- It isn’t an option for many people with high incomes.
- You can only contribute $6,000 for the year, or $7,000 if you’re over age 50.
- It’s less convenient than a 401(k) because you’re responsible for managing the account.
Recap: 401(k) Pros and Cons
Now, let’s summarize the good and the bad for 401(k)s.
401(k) Advantages
- You get an upfront tax break if you have a traditional 401(k).
- Many employers will match your contributions.
- You can contribute regardless of your income.
- The contribution limits are higher than Roth IRA limits.
- It’s a convenient way to invest because your employer manages the account.
401(k) Disadvantages
- You’ll owe income taxes when you withdraw your money.
- You have fewer investment options.
- You can’t open a 401(k) if your employer doesn’t offer one, and things can get tricky if you leave your job.
- You can’t access your contributions at any time.
- You’re required to take distributions at age 70 ½.
Which Retirement Account Is Right for You?
If your employer offers a 401(k) and offers a match of any kind, your No. 1 priority should be to contribute enough to max out your employer match. Otherwise, you’re missing out on free money.
Once you’ve contributed that amount, putting any excess retirement funds into a Roth IRA could be a better bet because you’ll get the certainty of knowing how much you’re paying in taxes. There’s a good chance you’ll need the tax break even more when you’re on a retiree’s fixed income than you do now.
If you have even more to contribute after maxing out your Roth IRA, you can put it in your employer’s 401(k) to contribute beyond the matched amount.
If you don’t have access to a 401(k) or your employer doesn’t match funds, maxing out your Roth IRA should be your top goal. If you can invest more than the max, you can put your excess funds in your unmatched 401(k) or a regular investment account.
Regardless of whether you prioritize a Roth IRA or 401(k), these are the most important rules for saving for retirement: Start early. Don’t stop. And watch that money grow.
Robin Hartill is a senior editor at The Penny Hoarder.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
source The Penny Hoarder http://bit.ly/2WvuEa1
Hobbies and Hustles
I recently read this great little article by Molly Conway entitled The Trap of Turning Hobbies Into Hustles. In it, she makes the astute point that when you attempt to start earning money from something that’s a hobby, it ceases to be a hobby any more – rather, it starts to seem like work:
I have a friend who is living her dream. She makes and sells leather pocket belts, holsters and ruffle tops for the steampunk/Renaissance Faire/Burning Man crowd. Her designs are worn and enjoyed by thousands of people; she’s created more jobs for Bay Area artists; she’s her own boss — and she hasn’t taken a real day off in roughly eight years. Because that’s what it takes to do what she loves. I admire […] her, but every time I’m tempted to listen to someone who says I should open a restaurant just because I throw a good dinner party, I think of her, and remember that admiration is not the same as envy.
That’s not to say there isn’t joy to be found in turning something you love into your life’s work — it’s just to say that it’s okay to love a hobby the same way you’d love a pet; for its ability to enrich your life without any expectation that it will help you pay the rent.
This hit home for me.
One of the cornerstone elements of our financial turnaround was that I was able to find a side gig that I was eventually able to turn into full time work – and you’re reading it. The Simple Dollar started out as a pet project I did in the evenings in our tiny apartment as I wrote through some of the ideas I was discovering and working through in order to turn our financial life around. It became reasonably popular and, while it never earned enough to make us wealthy, it did earn enough that switching to writing it full time was a real option because it also reduced our child care burden (since I was at home and had a super flexible schedule).
Writing has always been a hobby of mine, and while I was in the “honeymoon period” of my financial turnaround where everything was new and exciting and I was trying all kinds of new (to me) things, it was purely fun to write about those experiences. As time went on, though, I found that what Molly describes above as purely accurate. Suddenly, something that was a hobby to me was making money – which was great – but now it was burdened with deadlines and responsibilities and expectations – which wasn’t good.
Yet, here I am, still writing about personal finance. How did I make that work? How can I still keep writing about personal finance and earning an income at something that was my hobby without being miserable?
I think that what I learned from that transition serves as some powerful advice for anyone looking to turn a hobby into a side gig.
First of all, I had to accept that writing was no longer a hobby, but a profession. Prior to that point, writing was something I purely did for personal fulfillment. I have always loved taking my ideas and putting them down on paper, much like how other people love and are fulfilled by woodworking or crafting or fishing or cooking or whatever. However, it was never something I had to do in order to produce an income for my family. I did it when I had the time and when I had burning ideas inside of me and I did it solely because it fulfilled me.
When you choose to do something for money, particularly when it becomes a source of money that you or your family relies on, that relationship changes. You can no longer do those things when you feel like them. You have to keep at it, regardless of how you might feel at the moment.
Leisure activities are enjoyable because they’re things you want to do and you can do them at whatever level feels right for you. When you have to do those things for a living, that choice of what to do and when to do it goes away. It’s no longer your choice. Even the most successful writers out there, like Stephen King, sign contracts and have obligations for their craft. They can’t simply choose when to write and not do it if they don’t feel like it.
That’s the difference between a hobby and a profession. With a hobby, you want to do it and, if you happen to not want to do it today, that’s okay. With a profession, you have to do it, regardless of whether you want to do it today.
There are days when I wake up and the last thing I want to do is write. I have all kinds of other things I’d love to fill my days with. However, I have an obligation to write, a freelance agreement that I signed that provides income for my family (good) but has stiff consequences if I don’t write (bad).
That change from wanting to do something to having to do something is a serious change and requires a far different approach. It means that it’s no longer your hobby, but your profession, and you have to approach it professionally. You have a set schedule and requirements and it’s no longer the free thing that you used to do.
In the early days, when I did The Simple Dollar for fun, I wrote about whatever I wanted pretty much whenever I wanted. If I didn’t feel like writing, it was fine. Today, I spend several hours a day most weekdays doing some sort of personal finance writing-related activity. There are times when it’s purely fun, but there are a lot of times when I have to do it even though I don’t want to.
So, how do you make that change?
The first thing I figured out was that on the days when I’m feeling in the groove, I need to get as much work done as I possibly can. If there’s a day when the writing comes easy and feels good, I do everything I can to stick with it all day long and all night long, if need be. Once every few weeks, I’ll just tell Sarah that I’m in a groove and I need to ride that groove for as long as it lasts. I often talk about “flow state” on The Simple Dollar, and that’s exactly what I’m talking about here – if I have days where I can get deeply into a flow state and just keep writing and writing and writing, I do it.
What this does is that it gives me breathing room for the days when it’s not working quite so well, when I’m dreading writing or when I can’t get anything to come out. On those days, I can walk away and professionally recharge.
Without that ebb and flow, this whole thing wouldn’t work. If I simply stopped on those good days when I had two or three things completed, I wouldn’t be able to do this. On those days when I really feel motivated and engaged and excited, I have to get as much value out of them as possible.
Why? Nothing makes a hobby-turned-side-gig miserable faster than the days when you’re not engaged at all with your gig but you still have to produce work. You’re going to be miserable and you’re going to not be very productive at all. You are far better off those days simply walking away and recharging or finding other aspects of your work to do. In fact, if you keep doing this, if you keep grinding when the passion is zero, it’s going to become miserable and your quality is going to fall off a cliff and you’re going to lose the whole thing anyway. Trust me – I’ve been there.
if you try to turn a hobby into a hustle, be aware that you’re going to lose a hobby. When you start doing something for money, there starts to be expectations involved with it and you can’t simply pick it up when it feels fun and let it sit when it doesn’t. You have to pick it up every time, and that’s work, not leisure.
There’s nothing whatsoever wrong with that, and work can most definitely bring you joy, but there are times when you have to do it even when you don’t want to. That’s the difference between a hustle and a hobby – a hobby can be put down, while a hustle can’t.
Make absolutely sure that this is something you want to give up as a hobby. If it’s something you genuinely value as a way to escape, as something you can pick up when you want and leave alone when you’re not feeling it, you should think very carefully about whether you want to convert it into a hustle.
Thus, if you do go down this path, you have to find a new hobby. Your old hobby is no longer a hobby. It fills more of your time than you would ever like. That doesn’t mean it no longer brings joy, but what it means is that it no longer serves as a hobby, as something that provides leisure and escape from the routines of your life.
Ten or fifteen years ago, my main hobby was writing. When that went from hobby to side hustle, it no longer fulfilled and refreshed me. It was the thing that sometimes made me need to feel fulfilled and refreshed. I discovered cooking. I discovered hiking. I (re)discovered tabletop gaming. I (re)discovered reading. Those are my hobbies.
Writing, although I still love it, is my work. It is not a hobby. It is not an escape. It is not something I can pick up when I’m excited about it and put down when something else is more compelling at the moment.
I’m lucky in that most days I’m excited about it, but there are most definitely days when I have writing commitments and it’s the last thing in the world I want to do. That’s what makes it work and not leisure.
Finally, turning a hobby into a side hustle generally only works well if you’re utilizing skills and talents you have. If you love to knit, for example, but you’re a mediocre knitter who can turn out good stuff but slowly or bad stuff quickly, it’s probably not a good choice to try to turn knitting into a side hustle. It’s a great hobby, but not a great source of income.
Writing happened to work well for me because I can write reasonably good material (I don’t claim my writing to be great in any way, but I do think I can lay out points and tell a decent story) in large quantity and fairly quickly. That’s a skill, one that I utilize every day.
It’s my belief that turning a hobby into a hustle works best if you have several hobbies, you see a clear path to income with one of them, and you can apply strong skills you already have to that path. That way, you’re not turning your main passion into work and you’re able to do something of value that others will want and appreciate, thus ensuring at least some chance of success.
Good luck!
The post Hobbies and Hustles appeared first on The Simple Dollar.
Source The Simple Dollar http://bit.ly/2WqZrV2
Dear Penny: We Want to Buy a House, but We Have $60K in Debt
Dear C.,
First, you don’t have to decide on paying down debt OR saving for a down payment on a house. You can absolutely split your monthly excess between extra debt payments and your down payment fund.
But based on what you’ve told me, I’m inclined to think that paying down your debt will get you on the path to homeownership faster than saving for a down payment would. My reasoning is twofold.
When you apply for a mortgage, lenders look at your debt-to-income ratio — that is, the percentage of your gross household income that goes toward debt, including a future mortgage payment. Typically, lenders want this number to be 43% or lower, so by paying down debt, you’ll free up more money to use toward a mortgage payment.
The second reason is your credit scores. If you both have scores below 680, you could find it difficult to get approved for a mortgage. A 2016-17 Credit Sesame survey of 600 people who applied for a $150,000 mortgage found that 62% of those with a credit score between 650 and 700 were denied.
Considering that the average down payment assistance amounts to about $12,000, improving your credit to the magic 680 number you need to qualify could give you a huge boost in your goal of becoming homeowners.
Paying down your debt is likely to increase your score because your credit utilization ratio, or the amount of your overall revolving credit you’re using, accounts for 30% of your FICO score. The only factor that’s weighted more heavily is your payment history, which determines 35%.
Because revolving credit is what determines your credit utilization ratio, focus first on paying off your credit cards. Not only will that help you improve your scores, but it will probably save you money, since the average credit card interest rate is above 17%.
Once you’ve paid down high-interest debt and increased your credit scores, it might make sense to focus more on saving for a down payment.
There are a lot of advantages to having a larger down payment, the most obvious being lower interest rates and monthly payments. But the truth is, people are generally putting less money down than in the past. The median down payment for first-time homebuyers is just 6%, according to the National Association of Realtors.
Regardless of how you decide to prioritize paying down your debt vs. saving for a down payment, you’re smart to think about down payment assistance programs now, rather than when you’re in the frenzy of the approval process. If you haven’t already, talk to a lender now. They can make sure you know all your down payment assistance options and help you clear whatever hurdles stand between you and homeownership.
Robin Hartill is a senior editor at The Penny Hoarder and the voice behind Dear Penny. Write Dear Penny and you might see your question answered in an upcoming column.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
source The Penny Hoarder http://bit.ly/2WndUS4
"It’s cool to have a letters page": Moneywise readers best comments and letters in April 2019
Each month we publish the best comments, emails and letters from our readers the star of which will win a £50 M&S giftcard. Here are the best of April 2019
It’s cool to have a letters page
I picked up Moneywise for the first time recently (March 2019 issue) and I found the magazine to be a great read. It was also very timely, given that I have been considering an Isa recently.
The article on cinema savings was interesting. I did have a Cineworld card, but I just wasn’t finding compelling films to watch on a regular basis. However, with the savings mentioned in the article, such as the Vue savings every Monday, I imagine I’ll save a lot for some time to come (I only really like watching superhero and/or ghost films at the cinema).
The energy-saving article was informative, too. Little things like that really do matter, and I would never have considered those ideas.
And it’s always great to see a letters page in a publication. So many magazines now don’t bother to have letters columns. I think even in the age of internet forums and social media chat, it’s pretty cool to see a letters page. Long may it continue. Overall, a very accessible read, I only wish I had discovered the magazine sooner. Always the way, eh? Finance can risk being a dry subject, but there was absolutely nothing dry about the Moneywise articles. Quite the reverse, in fact.
Very happy to be on board as a new reader.
SP/via email
No time for Cash Isas
Ahead of the end of the last tax year, Moneywise highlighted eight tips to help you avoid losing out on the annual Isa allowance.
In response to this a reader wrote:
I would suggest avoiding all that unnecessary ‘administration’ by simply saying sign up with an investment platform.
That way, you can do it online, no form to fill in every year, no cheques, no messing with banks and a wide range of investments.
Save by regular instalments and you can completely ignore the so-called ‘Isa season’ and all the silly hype around it, as well as gaining from pound cost averaging.
I have no time for Cash Isas either.
DH/via site comments
Moneywise says: We agree with DH, investing online is a simple and effective way to build up a nest egg for the future. However, there is still a place for Cash Isas and savings accounts, especially for shorter-term savings plans.
Why did it take so long to ban exit fees?
In mid-March, the financial regulator the Financial Conduct Authority announced plans to ban the fees on leaving an investment platform.
One reader took issue:
Why do these regulators take years to do the right thing? It should have been done and dusted years ago, including reducing management fees for safe, non-volatile investments that, by definition, don’t get moved around.
How do these managers justify charging the same amount as the more strictly managed ones?
Maybe the regulators will look at this issue, after the current tranche of managers have made their kill at investors’ expense, in 50 years’ time!
MA/via site comments
Cheaper bills – but only for new-build owners
In March, Chancellor Philip Hammond announced plans to ban the use of carbon fuel boilers in new homes after 2025. This drew the ire of many readers. One commented:
So they plan to reduce the bills for those people who can afford shiny new homes…
Meanwhile the existing gas-supply grid will have fewer people using it, but will still need maintaining. The cost of heating and cooking will soar beyond belief for the rest of the population who are unable to buy a new home and are struggling to pay rent and mortgages on properties they cannot afford to retrofit.
If the government has their way, we won’t even be able to cook a meal at a reasonable cost.
LJ/via site comments
Not another firm with a credit card
On 25 March, tech firm Apple announced it was entering the financial services market with the introduction of a credit card that it said would “help customers lead a healthier financial life”.
One reader commented:
I’m sick of hearing the phrase “helping customers take control of their financial lives”.
I am in control of my financial life already and I don’t need apps or an Apple credit card dedicated to a mobile phone.
Come to think of it, that includes any other credit card linked to a phone!
HD/via site comments
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Can we cut capital gains tax on our parents’ house?
Question
After inheriting our father’s half of my parent’s estate in 2009, my sister and I then became co-owners of our mother’s house (they were tenants-in-common). Sadly, she died in October, which means we have inherited her half of the house and plan to sell the property. Both my sister and I own our own homes with our spouses, so are we presuming we will have to pay capital gains tax (CGT) on the gain from 2009 to 2019, taking out the first inheritance of 25% each in 2009 and the second inheritance in 2018 of 50% of its present value?
Is it possible to gift 50% of our share to our respective spouses to double the CGT allowance and reduce CGT liability?
You are correct on all counts. You would incur CGT on the increase between 50% of the house sale proceeds and the initial inherited value in 2009, and then on any increase between the other 50% of the sale proceeds and the inherited value in 2018.
The tax charge would be split equally between you, but the amount you each pay would depend on your respective tax status. You could certainly reduce the CGT by utilising your spouses’ allowances as suggested.
My only proviso would be to ensure that both you and your sister are comfortable with dividing the inherited asset this way. What happens, for instance, if the property does not sell and you are left with four owners who may have differing views on what should happen to it? Are you also comfortable with dividing the sale proceeds four ways?
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Make your home a clutter-free zone
If you find it hard to part with items, then why not enlist the help of a declutterer? You may even be able to recoup the cost – and more – by finding long-lost valuables or by selling big-ticket items on eBay. And if you prefer to do it yourself, pick up a few tips from the professionals
Tidying expert Marie Kondo has captured the imagination of millions around the world with her method for decluttering, known as KonMari. In her Netflix series Tidying Up with Marie Kondo on Netflix and bestselling books, she helps people sort out everything from clothes, books and paperwork to ‘komono’ – miscellaneous items such as make-up and toys – before tackling items of sentimental value, discarding possessions that don’t ‘spark joy’.
But while Marie Kondo is perhaps the best-known declutterer, she is not alone: professionals can be found busily tidying homes across the UK.
What are the advantages of hiring a declutterer?
Professional home organiser Jo Jacob says that sometimes people need the detachment of an outsider to get started.
“Most clients say they don’t know where to start – they’re overwhelmed and strapped for time. I think it comes down to our experience and the fact that we’re not emotionally attached to a person’s things and can encourage them to let go. You can photograph and scan items rather than keep the tangible things,” Jo says.
Jo, who covers the Hampshire, Surrey and Sussex areas, first trained as an interior designer, learning the ropes from Ann Maurice, who presented Channel 5’s House Doctor. She then worked with Dawna Walter, presenter of BBC2’s The Life Laundry, before setting up her own company, Benella.co.uk, in 2005.
She qualified last year as a certified photograph organiser with the Association of Professional Declutterers & Organisers (APDO), and finds this service helpful for relationship break-ups where both people want to keep shared photographs.
“I can digitally scan the couple’s photographs and then present them each with a memory stick,” she adds.
Jane Fern (pictured below), a KonMari consultant in the Manchester area who trained with Marie Kondo in New York, says: “I work with a lot of people who’ve become stuck in their lives, so it’s difficult for them to do the process. I’m there for them, encouraging them and helping them to decide what to keep.
“There is a lot of decision-making during the process but the plan is that by the end, life will be a lot simpler.”
How a declutterer works
A typical decluttering session involves discussing your goals and which area to start, and coming up with a plan, followed by hands-on clearing. Some declutterers will supply bags for charity or provide storage boxes and will remove a car-load for an additional fee.
While the Netflix series shows Marie Kondo instructing clients to pile their clothes on their beds to sort through before she leaves them to it for a week, in reality consultants declutter with you.
There are currently 19 KonMari consultants in the UK, who will have attended seminars and taken practice sessions and an exam before they can set up shop.
While they follow the KonMari method – a system of organising your home and discarding tangible items that do not spark joy in your life – consultants will adapt to individual clients.
Jane says: “You get to know your clients before you start working with them. It may not mean every client taking everything out; some people might need to do it in sections, in smaller chunks, depending on their stamina and the time they’ve got.
“I will always talk to clients about doing the whole process because what generally happens is that they’ll sort out a room or a cupboard and in a very short time it’s back to how it was because there is no real change [in behaviour]. It’s that lifetime change, making that big leap to knowing that everything has a home.”
Consultants may also have their own take on organising. Jo says that while she credits Marie Kondo for making tidying more popular, she feels the decluttering guru’s KonMari method sometimes goes too far. For example, while the method rules out keeping clothes you won’t wear again, she believes sometimes it’s OK to store some clothes in the attic.
“If you have a girl aged nine or 10, for example, what about when she gets older? She may like to have some of your clothes or wear them for a fancy-dress party.”
“I found £125 worth of gift vouchers and cash”
Jo Jacob (pictured right) was asked to help tidy a chest of drawers in the hallway for a single mum with three young children in Hampshire.
“She’d recently started her own business, so things were busy. It was a ‘mess mountain’, with the kids dumping things on it whenever they went through the front door,” Jo explains.
As well as finding £125 worth of gift vouchers and cash, Jo helped sort out the paperwork, getting the information her client needed to make a claim for mis-sold PPI.
How can it save you money?
One way declutterers can save you money is by finding valuables among the mess. For example, Jo has found cash and important paperwork for one client (see box below) and has sold items on eBay.
“I once found three shipwreck coins in their original packaging, which the owner wanted to give away. But I said: ‘Do you think it could be worth something? Let’s look it up.’ I eventually sold the coins for £400 on behalf of my client. They couldn’t believe it,” she says.
Beverly Wade of Cluttergone.co.uk, which covers most of England and north Wales, says: “We can give advice on what you want to sell. I would suggest getting a box together of expensive items [over £100] and see what price they are achieving on eBay. Always try to sell big-ticket items that are in demand first in case you run out of steam.”
You may also find once things are in order you are less likely to waste money buying items you don’t need .“I had a client who had seven rolls of Sellotape," says Jane. “You buy a present, want to wrap it, but can’t find the Sellotape so you buy a new one. It’s like that with many items – we tend to overbuy because we can’t find the things we need.”
One of the most difficult areas to declutter is paperwork – but organising documents can pay off.
Beverly adds: “I know the deadline for making PPI claims is approaching, but this is an area where we can help. If I notice that a client is paying a lot of insurance on their credit cards, I will suggest that they phone their bank to make a claim. I’ve worked with someone who claimed back a few thousand pounds.”
Choosing the right person
When choosing an organiser, you need to feel comfortable about someone going through personal, and often sentimental, items. Phone them first to find out how they work and whether you have a rapport. To hire someone with the right experience, a good starting point is APDO’s search tool (Apdo.co.uk/find-an-organiser)or Konmari.com/pages/consultants. APDO members will hold professional indemnity and public liability insurance. KonMari consultants work as individual business owners, so check first.
How much it costs depends on where you live and the declutterer’s level of experience but expect to pay at least £35 an hour for a minimum three-hour session.
Storage solutions
While it is tempting to buy boxes, the aim is to reduce clutter rather than store it. Make use of old shoe-boxes, and if you do need to buy containers, these can be found fairly cheaply at Ikea, Lakeland and Dunelm.
Do it yourself
If you don’t want to hire a consultant, you can always have a go yourself. If you need inspiration, you could try some background research. If you have Netflix, Tidying Up with Marie Kondo will inspire you (Netflix has a free 30-day trial), while her book Spark Joy (£7.41, Amazon) offers a more in-depth guide. You can also listen to free podcasts – such as Declutterhub.com in the UK and Sparkjoypodcast.com, which is produced by two KonMari consultants in the US.
5 tips to make cash from your clutter
- Sell items on eBay or hire a professional eBay seller, such as Cleanupyourclutter.co.uk and Stuffusell.co.uk, to list it for you.
- Trade in old mobile phones and tablets – check out sites such as musicMagpie.co.uk or Mazumamobile.com.
- Sell unwanted gift cards and vouchers for cash at online sites such as Cardyard.co.uk or Zapper.co.uk (gift cards only).
- Trade in old books, CDs, DVDs, LEGO and electronic games for cash at Zapper or musicMagpie.
- Sell broken or unwanted gold jewellery – take it into a reputable jeweller for a valuation and check online reviews before selling it via a cash-for-gold company or on eBay.
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Source Moneywise http://bit.ly/2EtiSTa
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