Discover customers, rejoice — your bank just added the extremely popular Zelle, a digital payment network similar to Venmo that lets you send money directly from a Discover checking, savings or money market account. Best of all, the person on the receiving end doesn’t have to bank with Discover to receive the funds: Zelle lets you to send funds to almost any U.S.-based bank. All you need is an email address or a phone number.
“The main advantage for Discover customers is the convenience, speed and ease-of-use to send and receive money between almost any U.S. based bank account. Discover also does not charge any fees to send or receive money using Zelle. In addition to being easy and fast, customers can take comfort in the fact that their account information is protected and not shared with recipients, since all they need to share is their phone number or email address,” said Discover publicist Sarah Grage Silberman in an email to The Simple Dollar.
Need to be reimbursed for picking up the tab on your card? Zelle can do that. Waiting to be paid back for picking up groceries for your roommate? Zelle can do that, too.
“We understand the need to be able to quickly and easily transfer money, particularly when you’re on the go and using your mobile device. Adding Zelle to our banking platform now allows our customers to easily send money to their family, friends and the people they trust in minutes, which means you can split your rent, pay your landscaper and send your daughter a gift of money directly into her bank account, all with just a couple of clicks through your Discover mobile app or online account center,” Grage Silberman said.
This news comes on the heels of another big change for Discover. Back in June, the banking giant announced it was removing all fees across its deposit products, making banking cheaper for their customers. “This account feature, available to Discover customers, supplements a long list of features that help to make banking more convenient and seamless, like Freeze it for debit cards, no fees and access to over 60,000 no-fee ATMs,” Grage Silberman said.
There are a ton of benefits to using Zelle, including:
But while Zelle may often work to send money to family and friends, there are some caveats to take note of. You shouldn’t send money through Zelle unless you know the person on the receiving end, and if you use your savings or money market account to transfer funds, be aware that the transactions will count toward the federal limits for those types of accounts (six per month).
“While Zelle is a great way to easily and quickly send money to people that you know and trust, we recommend customers don’t use Zelle if they don’t know the person or aren’t absolutely sure they will get what they paid for,” Grage Silberman said. “We also want to mention that our customers can send money through Zelle from their Discover checking, savings or money market accounts, but sending money with Zelle from either their Discover savings or money market accounts will count towards the federal law limits of six transactions for the month.”
For more information or to get started with Zelle, log in to your Discover banking app or visit zellepay.com/get-started.
The post Discover Bank Just Added Zelle, the Venmo Killer appeared first on The Simple Dollar.
You’ve got receipts bursting out of your wallet. You’ve scribbled down financial goals on a random sheet on paper you can no longer find. You’ve forgotten the limit you gave yourself for grocery shopping this month.
If any of that sounds familiar, your financial life could probably use a little organization.
A budget binder can help you corral all the important documents regarding your spending, debt, savings and more. It’s the old-fashioned, pen-and-paper way to stay on track of your money.
A budget binder is precisely what it sounds like. It’s a binder where you store your budget and other relevant financial information, like your loan payoff strategy or your sinking funds tracker.
Having all the goods in one place means you don’t have to scramble to find, say, a record of last month’s spending to make adjustments to next month’s budget.
You can customize your budget binder to include whatever money management tools you’d like. Some suggestions are:
You can buy premade personal finance planners, or you could get creative and make your own.
Supplies you’ll need (or that may come in handy) are:
After gathering your supplies, you can get started on making whichever budget sheets are crucial to your money management system. You’ll want to have enough so you can use your budget binder to keep track of your money for the entire year. Using dividers for each month will keep you organized.
There’s an entire subgenre of personal finance bloggers who create printable budget sheets, either as templates you purchase or as free downloads.
Do a Google search for “free budget printables” to use or for inspiration to create your own.
If you’re creating your own budget sheets from scratch, it doesn’t have to be Pinterest perfect. You don’t need graphics skills or access to a color printer. As long as your budget sheets are clear and work for you, that’s what’s important.
Keep your budget binder in a place where you’ll see it frequently, like on your dresser where you dump your purse or wallet at the end of the day. It’s not enough to just create a budget binder. Writing in it regularly and reflecting on your financial decisions are what will transform your money situation from chaotic to under control.
Nicole Dow is a senior writer 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.
Everyone loves to get a great deal. That’s why it’s worth it to shop around to get the best possible rate for web hosting.
However, finding the cheapest web hosting plans isn’t always easy.
It’s common practice in the web hosting industry for providers to advertise really low introductory rates. But in order to get the lowest possible monthly rate, you’ll have to pay up-front and in-full for at least a year.
Basically, the longer your contract terms are and the more you pay upfront, the cheaper your monthly rates will be. It’s also worth noting that your rates could double or even triple when it comes time to renew your plan. The best price will always be for your first contract.
So you can’t just take the advertised rates at face value. What might sound like affordable web hosting initially, could end up costing you much more than you anticipated.
The word “cheap” doesn’t mean the same thing to everyone. A friend of yours could recommend a hosting plan that’s cheap to them, but way out of your price range.
Plus, the cheapest option isn’t always the best option. Some hosts have low rates but provide terrible service. This will end up costing you more money in the long-term.
That’s what inspired me to write this guide.
I’ve taken all of these factors into consideration to identify the most affordable web hosting plans that are worth using. All of the options in this guide are shared hosting plans, which will always be the most cost-effective way to host your website, regardless of the provider you choose.
Whether you’re looking for month-to-month plans, annual options, or the best possible rate, you’ll be able to find the best web hosting provider for your website below.
For those of you who don’t want long-term contract commitments, you’ll need to find a web hosting provider that offers month-to-month pricing. These prices will be a bit higher than the cheapest advertised rates, but you won’t be locked in for multiple years.
If you’re looking for an affordable web hosting option, DreamHost is a top provider to consider. More than 1.5 million websites worldwide are hosted by DreamHost. They have an outstanding reputation, so don’t assume that their low rates are a reflection of their quality.
DreamHost offers month-to-month web hosting plans starting for less than $5 per month.
There are no setup fees and no strings attached. You can cancel whenever you want without committing to more than one month at a time. These are two of the most straightforward low-cost plans in the industry.
Both plans come with a free website builder, WordPress pre-installed, and a free SSL certificate.
Email comes free with the Shared Unlimited plan and starts at $1.67 per month with the Shared Starter plan.
I like DreamHost because their customer service team is 100% in-house. They don’t outsource agents like other web hosting companies. However, the trade-off is that live chat and email support is only available for 16 hours per day.
With that said, DreamHost has an extensive knowledge base of FAQs and guides making it easy for you to find help on your own.
Not only are you able to sign up month-to-month, but you’ll also be refunded if you’re unhappy. DreamHost has an industry-leading 97-day money-back guarantee. Check out my complete Dreamhost review for more details about them.
Hostinger isn’t the most well-known name in the hosting industry, but they offer affordable web hosting with month-to-month contracts.
Here is an overview of Hostinger’s monthly rates:
The biggest difference between the three options is the server resources and the number of websites that can be hosted. The available disk space is 10 GB, 20 GB, or 30 GB, depending on the plan you choose.
The Single Shared Hosting plan has 100 GB of bandwidth and it’s good for one website. The Premium and Business plans have unlimited bandwidth and up to 100 sites can be hosted.
All three plans have a 99.9% uptime guarantee, 24/7/365 customer support, and an easy-to-use website builder.
I like Hostinger because their service is reliable and they don’t force you to commit long-term. However, the month-to-month plans do not come with lots of freebies and extras. These are some of the add-ons that you’ll want to consider:
At a minimum, I’d recommend the SSL certificate and daily backups. These are both pretty standard must-have features in web hosting. The Cloudflare CDN is a good value as well.
A2 Hosting is known as one of the fastest web hosting providers in the industry. So the fact that you can get affordable month-to-month pricing from such a reputable provider is a great option.
The monthly rates offered by A2 Hosting are a bit different compared to the providers that we’ve seen so far.
A2 gives a discounted rate off of the first month of the month-to-month contract. The renewal rates for each subsequent month are higher, but still affordable enough to fall in the cheap web hosting category. Let’s take a closer look at the pricing for these plans.
If you’re in the market for cheap web hosting, then you probably won’t consider the turbo plan, since it renews for $26 per month. Although this plan will give you the fastest speeds.
A2 Hosting offers a free SSL certificate with all three plans. However, you’ll need to pay an extra $4 per month if you want a dedicated IP. Site builders, backups, spam protection, and Cloudflare cost extra as well.
Another reason why I recommend A2 Hosting is because they provide cPanel control panel. This feature will make it much easier for you to manage your hosting experience.
HostGator’s entry-level rates are a bit higher than some of the other month-to-month plans that we’ve reviewed, but they are still one of the best cheap web hosting providers in the industry.
In terms of the value, one of the reasons why I like HostGator so much is because the month-to-month rates are exactly the same as the 3-month contracts and 6-month contracts.
So for those of you who don’t want to commit, even for a few months, there’s no reason to.
At first glance, the $10.95 starting point may seem high, but it’s really not the case.
Are there cheaper options available? Yes. But when you factor in the setup fees and renewal rates of those other providers beyond the first month, $10.95 is still very affordable.
The fact that there is only a $1 difference between the Hatchling and Baby plans is another bonus. In my mind, this pricing structure makes it a no-brainer for you to sign up for the Baby plan.
Even if you only have one domain right now, being able to add more down the road without switching plans is worth the extra $1 per month.
Additional features like SiteLock monitoring, professional email, SEO tools, and daily backups will cost you extra.
HostGator has 24/7/365 support via phone, email, and live chat. They offer instant account activation without any setup costs as well as a 45-day money-back guarantee.
SiteGround is another top name in the web hosting industry. They have a great reputation and host websites all over the world.
Their month-to-month pricing is a bit unique. SiteGround offers a low rate for the first month, advertised as a trial. Then the rate increases for each subsequent month.
All trials have a one-time setup fee, which actually makes the trial more expensive than the other months. This is a bit unusual, but it shouldn’t be a reason to turn you away from using SiteGround’s month-to-month plans.
Here’s a deeper breakdown of their pricing:
Truthfully, the GoGeek plan price point probably falls outside the range of what most people would consider “cheap” for web hosting. But with enough resources to accommodate roughly 100,000 monthly visits, it’s a great option for a larger website that needs affordable web hosting.
For those of you who are starting a new website, you should be fine with the Startup plan.
If you’re willing to commit to a web hosting plan for at least one year, you’ll get a cheaper monthly rate if you pay for 12 months upfront. These plans will take more out of your pocket initially but save you money in the long-run.
iPage has been around for more than 20 years. They are known for website builders and affordable web hosting. More than one million websites use iPage for hosting services.
I recommend iPage because their annual pricing rates are cheap and straightforward.
As we’ve already seen, other hosting providers offer multiple plans at varying price points. The pricing depends on features and resources.
But iPage pricing is based solely on your term length. Then you can customize your plan with additional products.
The base price for an annual web hosting plan is $2.99 per month, which translates to an upfront total of $35.88 for the year.
Here are some of the additional features that you can add to customize your plan:
Most of you won’t need all of these. But you’ll probably want to add-on the domain privacy and added security at a minimum. That would bring your upfront annual total to $65.82.
iPage offers a free SSL certificate and a 30-day money-back guarantee for its annual plans as well.
Overall, iPage has some of the most affordable annual web hosting plans in the industry. Read my full iPage review for more on them.
We already reviewed SiteGround’s month-to-month pricing. But their annual rates are appealing enough for me to mention them again here.
In most cases, web hosting providers give you better discounts for longer contract terms. But SiteGround offers the same monthly rate for 12-month, 24-month, and 36-month contracts.
You’ll still have to pay upfront, but you don’t need to commit for three years to get the best rate.
So if you know that you want to use SiteGround for at least one year, these annual rates are much more affordable then the month-to-month options that we discussed earlier.
More than 2 million websites across the globe trust Bluehost for web hosting. Since launching back in 2003, Bluehost has become one of the best and most well-known hosting providers in the industry.
Bluehost plans are pretty unbeatable when you compare the price to the performance and quality of service that you’re getting in return.
Let’s take a closer look at the annual rates for Bluehost shared hosting plans.
In terms of affordable web hosting, most of you probably won’t need or want the Pro plan.
But the Basic plan is a great option for a new or small website.
If you have the budget to spend a little bit more, the Plus and Choice Plus plans are offered at the same price for the first year. So I’d recommend Choice Plus, as it comes with extra benefits like site backups and domain privacy.
Just be aware that all of these plans renew at higher rates after the first year. The renewal rate for Choice Plus is $16.99 per month ($203.88 per year) compared to $12.99 per month ($155.88 per year) for the Plus plan.
For an extra $4 per month, I’d still lean toward Choice Plus as the best value.
All plans come with a free SSL certificate and unmetered bandwidth. The basic plan has 50 GB of storage, and the other three have unlimited SSD storage.
Bluehost also offers $100 in advertising credits for Microsoft Advertising as well as $100 in credits for Google Ads. The free advertising can balance out some of your hosting costs. Read my full Bluehost review for more info about them.
The web hosting plans offered by InMotion are great for small business owners. So if you’re looking foe cheap small business web hosting, these are the plans that you should consider:
Again, you need to pay upfront to lock in these annual rates.
Most entry-level plans limit you to host just one website. But the Launch plan from InMotion allows you to host two sites.
All plans come with unlimited disk space, unlimited bandwidth, unlimited email, security suite, marketing tools, and a free SSL certificate.
InMotion has a free one-click installer for more than 400 apps as well as one-click data backups and restores.
Another reason why I recommend InMotion is because of their 90-day money-back guarantee. This assurance should make you feel more comfortable about paying for a year in-full when you sign up.
While InMotion does have some add-ons like a dedicated IP and backup management, the plans seem to have more basic features included then some of the other providers out there. Learn more about them by reading my in depth InMotion hosting review.
When most people hear the GoDaddy name, they automatically associate it with domain registration. But GoDaddy is also a reputable and affordable web hosting provider.
GoDaddy’s hosting plans are a great option for website owners that don’t want to spend a fortune to host their websites. Here’s an overview of the annual pricing offered by GoDaddy.
As you can see, GoDaddy has an option for varying budgets.
In most cases, the majority of you wouldn’t need to look beyond the Ultimate plan. This choice will give you enough features and resources even if you’re expecting heavy traffic to your complex site.
All plans come with unlimited disk space, except for the Economy option, which has 100 GB. Memory ranges from 512 MB to 2 GB, depending on the plan you select.
I like GoDaddy because they make it easy for you to scale your resources if you’re outgrowing your existing plan.
GoDaddy’s renewal rates after the first year are very reasonable as well. Other hosts will double or triple renewal prices, but GoDaddy only adds on an extra $2 per month for annual renewals. The Maximum plan actually renews at the exact same rate.
This pricing structure makes it easier for you to calculate your hosting costs long-term.
To get the absolute cheapest monthly rates available, you’ll need to lock in a contract for more than one year. This will cost you more money upfront, but save you in the long run.
Here are some of the most affordable long-term plans offered by the providers on our list above.
In addition to locking in the lowest available rates, you’re also delaying your renewal upcharges.
If you know that your site will be up and running for at least a few years, a long-term contract will offer the most value. Just make sure you sign up for a plan with a money-back guarantee, so you can opt-out at the beginning if you’re unhappy.
Web hosting costs aren’t always transparent. You can’t just look at the advertised rate on a website and assume that’s what you’re going to pay.
No matter which hosting provider you use, there are other costs that you need to be aware of. In addition to your base rate, these are the factors that contribute to your actual hosting costs.
Whether you commit to one month, one year, or four years, your first contract will always be your best offer. But you need to understand what you’re going to be paying when your contract expires.
Let’s look at an example, using iPage, which has the lowest annual rates on our list.
The introductory pricing rate for a 12-month contract, paid in-full, is $2.99 per month. So your base hosting cost is $35.88 for the first year. However, iPage annual plans renew at $9.99 per month, so you’ll be paying a $119.88 base cost for each subsequent year.
Hosting providers are always changing their introductory offers. It’s common to see prices slashed around the holidays, like Black Friday or Cyber Monday. But with that said, I wouldn’t recommend waiting until you see an offer like that to start your website.
If you’re short on cash and don’t want to commit, then month-to-month hosting plans might be more appealing to you. But shorter contract terms translate to higher monthly rates.
For example, HostGator’s entry-level pricing starts at $10.95 per month with no long-term commitments. This will cost you $131.40 over the course of the year, which is very affordable.
However, if you lock in that same exact plan for 36 months and pay upfront, the monthly rate drops to $2.75. So you’ll get three years of web hosting for $99 total. That’s less than the cost of one year at the month-to-month rate!
You’ll have to weigh the pros and cons here. The downside of locking in a long-term contract is that you lose the flexibility to change your plan if you’re unhappy or outgrow your resources.
With that said, I’d still lean toward locking in the best long-term deal you can find. You can always continue using your same hosting plan even if you change domain names.
Most web hosting providers will offer extra features built-in to the base cost of your web hosting plan. Some providers offer more than others. Although the price of a plan typically reflects the number of add-ons you’re getting.
In addition to web hosting, common add-ons, freebies, and extras include:
The list goes on and on. It’s important to take all of this into consideration.
One plan may look more appealing at face value, but you’ll have to pay extra for basic features. Whereas another provider may have higher base prices, but deliver more in terms of extras and freebies.
As your website scales, you’ll eventually need to look beyond the cheapest web hosting option. At some point, your traffic and website will exceed the limits of an entry-level shared plan.
The next logical step is to upgrade to VPS hosting or a cloud hosting plan.
While this may not happen for several years, you should take a look to see what types of upgrades are offered by various web hosts. Ideally, you’ll want to choose a provider that will make it easy for you to upgrade to another type of web hosting.
So review those upgraded plans so you can budget and calculate your hosting costs accordingly for the long term.
You don’t need to spend a ton of money on web hosting, especially if you have a new or small website. But finding the best cheap web hosting provider can be difficult because the rates depend on so many different factors.
I do not recommend choosing a web host based solely on price. You also need to factor in the quality of the service that you’re getting.
If your site crashes or goes down, you want to make sure that your hosting provider is available to fix the situation immediately.
Here’s a recap of the most affordable web hosting plans that I would recommend:
The first thing you need to do is decide if you want a month-to-month plan, annual plan, or long term contract. Then you can evaluate the host based on features, resources, and customer service.
So if you’re in the market for cheap web hosting, these are the providers you should consider.
In addition to using this guide to find the best plan for your needs, you can also use it to calculate your actual hosting costs.
One of the first big issues that people often face when they start taking their finances seriously is the “unusual month.”
An “unusual month” is one in which there’s a big bill of some kind that isn’t one you face on a typical month. Maybe it’s the property tax bill or an annual insurance bill. Maybe it’s a completely unexpected thing, like a car breakdown. Whatever the case may be, an “unusual month” can really wreck someone’s financial progress, especially when one’s turnaround is in the early stages.
Of course, identifying an “unusual month” means that you have to have some grasp on your spending in the first place. Getting your own spending in order should be the first step in this process. If you have little grasp on where your money goes in a normal month, you should spend some time tracking your expenses. I’m personally in favor of doing it manually with a pocket notebook because I think that process of writing things down makes it more real and tangible, but there are a lot of ways to track your expenses, such as automated tools like Mint or more manual tools like You Need a Budget.
Tracking your expenses gives you a very good picture of where your money is actually going and what areas you should cut back on. It can also reveal how much you should have left over at the end of the month so that you can start intentionally using that money for financial progress rather than just spending it thoughtlessly in the moment.
Once you’ve got your finances somewhat in line, what can you do to handle unusual months? Here’s the best advice I have.
It’s not uncommon for people who are just starting to turn around their financial life to hit a big bump in the road and get very down on themselves and the prospect of a financial turnaround.
They were making great progress for a month or two and then, bam, something happened that derailed all of that progress, and that can feel bad. It can feel hopeless.
Rather than giving into hopelessness and giving up on your progress, consider the following.
Where would you have been had you not spent these last few months improving your financial state? Whatever the thing was that caused the “unusual month,” it would have been far more devastating had you not spent the last few months getting things in better shape. This is not a setback. You would strictly be worse off now than if you hadn’t put in any effort over the last few months. You might look like you’re in the same place where you started, or even worse, but where would you be if you had done nothing at all?
This is a learning experience. There are often going to be “unusual months” all the way through any financial turnaround. You’ve now seen the impact of one and, thanks to your financial moves beforehand, it wasn’t nearly as disruptive as it could have been. You now know you can do things in advance to make unusual months less challenging. What can you draw from this to make things even smoother going forward, knowing that unusual months are going to happen?
If you know an irregular bill is coming up – insurance, property taxes, travel, anything like that – start planning ahead for it now rather than waiting until it hits you.
If you have a $1,000 bill coming in five months and you know it’s coming, put $200 in the bank each month until then and then the bill is a non-issue. It won’t disrupt any of your financial plans.
Once you start to get a good grasp on all of your irregular bills, you should be able to do this for most of them. You simply put aside a small portion each month for all of those irregular bills and then when they come up, you have the funds in hand to pay for them.
I do this by just leaving that extra cash right in my checking account, though that might not work for everyone, particularly those who are tempted to spend what they see in their checking account. You may want to simply get in the habit of moving a few hundred dollars a month (or whatever it is that you need to make sure all of your irregular bills are covered) into savings.
If you do choose to move money regularly into savings for this, you’re better off automating it with a regular automatic transfer. That way, you won’t forget about it and find yourself in a tough situation when those irregular bills come around.
An emergency fund is just that – a pool of cash you have set aside for unexpected expensive events that you just can’t easily handle. I don’t believe a credit card is a good substitute for this, as credit cards don’t work in situations like identity theft, natural disasters, loss of wallet, bank errors, or many other situations. Cash is king.
Emergency funds should be used solely for unexpected expenses that you just can’t cover within the flexibility of your normal spending without putting things on a credit card (that you won’t pay off in full). Those things do happen with surprising frequency.
Rather than advocating for people to have a certain amount in their emergency fund, I usually suggest that people just set up an automatic transfer of a certain amount each week into their savings account for emergencies and then never turn it off. Many banks offer automatic repeating transfers that you can easily set up, either by talking to a teller or by using their online banking services.
It’s perfectly fine to have a combination “irregular bills and emergency fund” savings account as long as the amount you’re automatically moving over is enough to cover all of your known irregular bills and more. If, for example, you know you have $6,000 a year in irregular bills, then you should be moving about $110 per week from checking to savings to cover just those bills, so your total transfer should be even more (like $125 or $150 a week).
Finally, remember that financial progress is never a straight line. As you’re improving your finances, there are going to be setbacks. There are going to be all kinds of unexpected events. That’s okay and normal.
You’ll tap your emergency fund sometimes. That’s okay. Keep rolling.
You’ll spend some of your savings to cover an unexpected bill. That’s okay. Keep rolling.
You’ll feel frustrated that you’re not getting to your goals as fast as you want, that all of these unplanned events keep coming up, that it all feels like a never ending cycle. That’s okay. Keep rolling.
Financial change in anyone’s life is going to be a matter of taking two steps forward followed by one step back. Sometimes it’s two steps forward and three steps back.
Just remember that you’re far better off than if you had never taken the steps forward in the first place. Just remember that the money you have set aside for those unexpected events makes them easy to deal with and that they’re now low-stress events when they could have been calamities.
Two steps forward, one step back.
Good luck.
The post Some Advice on Handling Unusual Months appeared first on The Simple Dollar.
Defaulting on your student loans is a serious financial issue you should avoid if at all possible. But if you’re already there, you may be looking for a way out.
Have you considered rehab?
Loan rehabilitation is one option for getting your federal student loan out of default.
It’s not an easy or quick process — and we’ll offer some alternatives — but it can help you recover from the financial crisis a default can cause.
Here’s how student loan rehabilitation can help.
First, you need to know if your federal student loans are in default, which is easy enough to figure out. Start by determining how much you owe in student loans — and to whom you owe it.
If you’ve missed payments on your Federal Family Education Loan (FFEL) or direct student loan for 270 days (about nine months), your loan is considered to be in default.
Unfortunately, if that’s the case, you have company.
More than 350,000 borrowers had loans that entered default in the third quarter of 2019 — a 42% increase compared to the same period in 2018, according to the National Student Loan Data System.
Your loan becomes delinquent the first day after you miss a payment. Before that happens, ask your loan servicer about deferment, forbearance or alternative repayment plan options.
Defaulting on your loans can have serious repercussions. Having that mark on your credit report will tank your credit score and make you ineligible for additional federal student aid — also, the government could start to collect the debt by garnishing your wages or income tax return refunds.
Student loan rehabilitation is a nine- to 10-month process for putting your loan back into good standing and removing the mark from your credit report.
But rehabilitation requires a strict payment schedule and you don’t get a second chance, noted Alexandra Wilson, a Certified Financial Planner and student loan expert at SmartPath. So you should be prepared to commit to rectifying your financial situation.
“Loan rehabilitation is only offered once, so if (borrowers) begin the process, they should be sure to have a plan to afford the payments going forward,” wrote Wilson, who responded via email.
Wondering if rehabilitation is right for you — and how to do it? Here’s what you need to know.
If your loans are already in default, you are probably familiar with the consequences. Loan rehabilitation can offer the following changes to your current situation:
“Compared to doing nothing, rehabilitation will save a ton on interest and collection fees,” Wilson wrote.
If you’re ready to rehabilitate your loan, you’ll need to call your loan servicer or the collection agency handling your loan.
Wilson recommended speaking with a student loan attorney if you need additional guidance during this process.
Borrowers should “keep a detailed record of everyone they’ve spoken with and a file with all correspondence and statements,” she wrote.
Payments for a rehabilitation plan are set by the loan servicer to be reasonable and affordable to you.
To figure out how much you’ll be paying during loan rehabilitation, start with your adjusted gross income. Subtract 150% of the poverty line based on your household size. Lenders will typically make the payment 10% to 15% of that amount.
Your adjusted gross income is your income after allowed tax deductions — it’s typically lower than your gross income.
For example, if you’re single with no dependents, the poverty line in every state except Alaska and Hawaii is $12,490. So if your adjusted gross income is $30,000, here’s how you’d calculate your payment at a rate of 15%:
$30,000 – ($12,490 x 150%) = $11,265 x 15% = $1,689.75 /12 = $140.81 monthly payment
“If that payment is too high for the borrower, they can ask their lender for a payment that considers their income and expenses,” Wilson wrote. “It’s possible to get a payment as low as $5.”
After making the nine required payments within 10 months, you’ve completed the rehabilitation process and your loan comes out of default. You can then apply for an Income-Driven Repayment plan.
As we mentioned earlier, you shouldn’t put your loans in rehab unless you’re ready to commit. The federal government only allows student loan rehabilitation once, and if you’re unable to make the payments during the process, your loans will go back into default, and you should expect the government to garnish your wages and tax refunds until the loan is paid off.
For borrowers, “getting their loans out of default is important, and could be their only shot if they’ve already started,” Wilson wrote. “If they have started the process and are not able to make a payment I suggest trying to find other options to either make more money or cut expenses.”
Rehab isn’t a quick fix for your student loans. For one, 10 months is a long time to make those payments, especially if you aren’t used to making any payments.
And although the default will be removed from your credit history, the hit to your credit score will take some time to recover.
“It could take up to almost a year before it ever gets posted to your credit report,” said Jamie Dickenson, Certified Educational Planner, who added that any late payments before the loan went into default will still show up on your credit report for another seven years.
There are two other options: paying off the loan in full or consolidating.
If your wages are already being garnished, you can’t consolidate your student loans. Speak with your student loan servicer as soon as possible to start the rehabilitation process.
The first option may not be an option at all, unless you have been hoarding your savings or have a relative or friend willing to loan you the money. But if you can pay off the loan in full, that’s your best choice, according to Wilson.
The second option, consolidation, is a quicker process than rehabilitation. It typically takes 30 days to consolidate the loans, at which point borrowers can apply for an Income-Driven Repayment plan. Then after three consecutive monthly payments, your loan is no longer in default.
However, consolidation comes with its own limitations.
If you already have a Direct Consolidation Loan, you can’t consolidate it again unless you have at least one additional loan. And unlike rehabilitation, consolidation won’t remove the record of the default from your credit history.
Also, consolidation could end up costing you more in the end.
“The fees for consolidating defaulted student loans (18%) are typically higher than doing a loan rehabilitation (16%),” Wilson wrote.
Whichever option you choose, it’s worth your financial future to get your student loans out of default.
Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.
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.
With equity markets at multi-year highs, or in some cases all-time highs, nervous investors sitting on cash, earning little interest, are once again facing a conundrum
Is now a good time to put cash to work, especially as some investment analysts are warning that the stock market is ripe for a correction?
Given that no one can predict with certainty where stock markets will head next, is the best strategy to invest cash all in one lump sum or at regular intervals? If it’s the latter should you drip in monthly, quarterly or even yearly? Is it better to drip in over a longer period of time or a shorter one?
To shed some light on this let’s imagine a couple of extreme scenarios.
In the first scenario we’ll assume that stock markets go up in a straight line, as shown below. The red arrow is the point when a lump sum investor would invest all their money in one go, while the black arrows are when a regular investor invests equal-sized portions of their cash.
For the lump sum investor, all of their money has been exposed to the market rally after they invested. For the regular investor, each subsequent instalment of money which they dripped in has been exposed to less and less of the market rally.
This means that the regular investor has made less profit than the lump sum investor. Clearly in this scenario lump sum investing wins.
In our second scenario let’s assume that markets always fall in a straight line. For the regular investor each dripped instalment loses less and less as the market falls. Whereas all of the lump sum investor’s money (the red arrow) is exposed to the full market sell-off.
The regular investor would win in this scenario. Furthermore, the regular investor will make more profit if the market rebounds back to where it started. In this scenario the regular investor is taking advantage of what is known as ‘pound cost averaging’.
Of course, real markets don't move in a straight line, so let's consider two historical examples of market collapses from all-time highs that echo exactly what nervous investors fear a repeat of today.
One of the worst five year periods for investing in recent memory was the five-year period after the dotcom bubble high on 30th December 1999. Over the next five years the FTSE 100 lost a total of 30.45%.
The table below shows the returns an investor in a FTSE 100 tracker would have enjoyed using a range of investment strategies. In each case a total of £12,000 was invested.
| Investment strategy | Total invested | Final value |
|---|---|---|
| £12k at start | £12,000 | £9,668 |
| £2,400 a year | £12,000 | £12,370 |
| £600 every quarter | £12,000 | £12,884 |
| £200 per month | £12,000 | £12,827 |
The benefit of regular investing vs lump sum investing is plain to see. The lump strategy produced a loss of nearly 20% versus a profit of 7% from dripping money in monthly or quarterly.
One of the worst ten year periods for equity investors started just before the dotcom bubble burst. From the 4th March 1999 to 4th March 2009 the FTSE 100 (including reinvested dividends) made a loss of 17.79%
The table below again shows how each strategy fared between 4th March 1999 and 4th March 2009.
| Investment strategy | Total invested | Final value |
|---|---|---|
| £12k at start | £12,000 | £9,865 |
| £1,200 a year | £12,000 | £9,995 |
| £300 every quarter | £12,000 | £9,892 |
| £100 per month | £12,000 | £9,921 |
Regular investing was the best strategy but the outperformance was only marginal given the timescales involved.
Interestingly, if you continue extending the time frame over which you invest/drip money in to the market the odds of the lump sum investor winning keep increasing until it is actually the most likely outcome.
It's more about time than timing
For nervous investors with shorter investment time frames looking to enter the market now, regular investing still makes sense. As does reducing the frequency of any regular investing to either monthly or quarterly as opposed to annually.
But the more historical scenarios you run the more it becomes apparent that a range of factors determine which strategy is ultimately successful including the price you bought at, the frequency of your investment and the market environment.
Yet the biggest factor determining which strategy is most profitable is your investment time frame, especially if the stock market collapses.
The shorter the time frame the less time a lump sum investment has to recover from a severe market fall. As your investment time frame starts to increase the benefits of dripping are quickly eclipsed by the benefits of time in the market, thanks to the power of compounding.
What this means is that investors deciding how to deploy cash shouldn’t just be pondering whether markets are more likely to fall or rise from here but also their investment time frame.
Damien Fahy is founder of Money to the Masses
Millions of online shoppers are losing out to fraud while regulators drag their heels on introducing rules to protect them
One in every five UK consumers have fallen victim to fraudsters when shopping online, according to findings from secure payments solution Shieldpay – around 11.5 million people.
Shoppers are defrauded by an average £683, but one in 10 lose more than £1,000. Scammers often target victims more than once; where this happens individuals have on average £1,400 stolen.
Consumers were promised more protection from online con artists with new European regulations called the Strong Customer Authentication (SCA) rules, which are designed to reduce fraud and make online payments more secure.
The rules will ensure electronic payments are performed with multi-factor authentication, to increase the security of electronic transactions. Initially scheduled for introduction last month, the tougher requirements will now not be in force until 31 December 2020, because financial firms and retailers have said they need more time to prepare.
A spokesperson for UK Finance, a trade body for the financial sector, says: ““Two-factor authentication will add an additional layer of protection for online card transactions, and the industry is working hard to implement these changes in a way that balances both convenience and security.”
Online fraud is often associated with older people but Fraud Tracker research has found victims are often younger and lose larger sums.
A quarter of aged 18-34 year olds have been defrauded while shopping online at an average cost of £767. Nearly one in six (16%) have handed over more than £1,000 to fraudsters.
Tom Clementson, director of consumer at secure payments solution Shieldpay, says: “It takes just moments for fraudsters to target unsuspecting consumers and their methods are becoming more advanced. Initiatives like confirmation of payee and strong customer authentication have been kicked into the grass to the benefit of retailers but to the detriment of consumers.
“People must take their online safety into their own hands. Simple steps like only shopping on trusted websites, checking the website is secure and never clicking on links in unexpected emails go some way to keeping money safe.”
The UK Finance spokesperson adds customers should check their bank and credit card statements regularly and if they spot any unfamiliar transactions, contact their bank or card company immediately.
"Always remember to follow the advice of the Take Five to Stop Fraud campaign and take a moment to stop and think before parting with your money or information in case it’s a scam."
Consumers are protected against unauthorised fraud losses on a debit or credit card.
Players in a lottery that promoted winning a £650,000 flat in London were misled by adverts suggesting winners would actually receive a property, it has been ruled
Raffle House advertised its scheme across emails, a website and sponsored posts on Facebook during summer 2019, telling ticket buyers “A £650,000 London flat yours for £5”.
Details of a “previous winner” were given, who, a Facebook post said, had “her life changed through Raffle House”, asking “Will you be next?” and stating “Live in London for a tenner”.
The Advertising Standards Authority (ASA) found these claims and offers were misleading, however, as the previous winner had not in fact received a property, or a reasonable equivalent.
They had instead been given a cash prize of £173,012.93, less than 27% of the advertised property’s value and less than 43% of the total amount generated by the competition. See the original advert below:
In its defence Raffle House, founded by entrepreneur Benno Spencer and supported by Brian Mattingley, chairman of gambling brand 888, said the cash prize was won at significantly better odds than described for the property jackpot prize, and so was a reasonable equivalent.
It claimed it was clearly displayed on the website’s home page and elsewhere that the ticket sales threshold had to be reached to award the property, otherwise the prize was one of cash.
Raffle House added customers were informed how many entrants were required to guarantee the property as the main prize throughout the competition, and in one of the complained about adverts, which stated 6,500 more raffle players would guarantee it as the jackpot.
The ASA disagreed and upheld the complaints it had received about the promotion and Raffle House.
In its decision it stated “we considered the incentive for entering the promotion was winning the £650,000 flat in London”, and as such that is what Raffle House should have delivered.
“Given the number of references to the property, we did not consider that [the cash prize] overrode the impression created that the purpose of entering the competition was to be in with a chance of winning the property,” it continued.
In a warning to other similar schemes the ASA added: “We considered that any promoter who needed to generate sufficient revenue from the competition to fund the advertised prizes was likely to breach the Code if they failed to sell the requisite number of tickets.”
Raffle House has been ordered by the ASA to ensure in future that they award the prizes as described in their marketing communications or reasonable equivalents, “and that their future advertising did not mislead by exaggerating the value of a prize that had been previously awarded”.
Speaking to Moneywise in April, Mr Spencer said of Raffle House: “It looks shambolic and badly planned, but we are committed to awarding a property. The business would struggle to do anything again if we didn’t. We hope to be a UK first.”
The company is not the first to get in trouble for offering a misleading property lottery to hopeful ticket buyers.
A Moneywise investigation this year found rising numbers of homes are being raffled rather than sold through conventional means, but entrants are often left disappointed.
In the 18 months to April, competition website Loquax had listed 50 house competitions. Only two of these resulted in anyone winning a property, one of which was a community project in Ireland.
In more than 70% of cases a cash prize was awarded, usually worth far less than the estimated property value. In some cases, the winner receives just a few thousand pounds because the raffle didn’t sell enough tickets.
When things go wrong, ticket buyers are often left unable to contact the raffle organisers, with the company behind the scheme vanishing.
Consumers can complain to the ASA, which can order the promoter not to repeat a breach, but otherwise consumers have little recourse to get their money back.
The ASA told Moneywise it has seen a rise in property raffle grievances and found many in breach of the Committees of Advertising Practice code for changing closing dates, adjusting Ts&Cs, withholding the prize advertised or offering significantly lower-value cash prizes.
Complaints have been upheld against Homeraffler.com, Real Hot Property, HMV Competitions and Win Your Dream Home.
Many companies have been discontinued, dissolved or struck off Companies House for not providing annual accounts after failing to sell enough tickets.
Images courtesy of the Advertising Standards Authority
