MAKE MONEY ONLINE POSTS: 01/22/20

الأربعاء، 22 يناير 2020

Recession Proof: How to Prepare for the Next Recession

Regular followers on this blog and my YouTube videos know that I’m a pretty positive guy. So why would I take on a topic like how to prepare for the next recession? And why would I even speculate that it may happen as early as this year?

Because it’s going to hit – sooner or later. That’s not a crystal ball prediction either. There have been a dozen recessions since 1945, and the last two were pretty ugly.

Given that reality, the most positive and proactive approach is to be well-prepared in advance of trouble, even if you don’t know when it will come or exactly how it will play out. As a financial advisor, I owe my clients and readers nothing less.

When Could We Get The Next Recession?

The current economic expansion officially became the longest on record on July 1, 2019, when it reached 121 months. Six months later, it’s still going. In other words, this expansion is well into its 11th year.

To put that in perspective, a Federal Reserve publication confirmed the average length of an economic expansion to be just 57 months. That’s just under five years, which means the current expansion is more than twice as long, at 127 months as of January 1.

At least statistically speaking, we’re overdue for a downturn. I’m not calling a date here, nor am I attempting to project the details it’ll involve. But I am saying it’s coming. And as financially responsible people, we owe it to ourselves and our loved ones to be prepared.

How to Prepare for the Next Recession

Because the specific events of each recession are different from the ones before it, we can’t know how the next recession will go. For example, the Dot.com recession of the early 2000’s was caused by a collapse in the tech sector. The Financial Meltdown a dozen years ago started in the housing sector, then spread to banking and the rest of the economy.

The specific cause of the next recession can’t be known. But we do know how it affects people on a personal level. Jobs become unstable or are lost. Businesses fail. The financial markets take a hit, dragging down portfolio values. And some people even lose their homes.

That’s the part we can know – and prepare for.

With that in mind, how to prepare for the next recession can be accomplished with the following nine strategies:

1. Shore Up Your Emergency Fund

Emergency financial needs can crop up at any time, but they can be more frequent during recessions. But apart from having funds set aside for emergencies, it can be liberating to have cash in the bank to cover you in case you lose your job.

While you don’t want to get too carried away putting money into savings, you may want to increase your emergency fund from three month’s living expenses to six months or more. Just having that kind of money in reserve can reduce the fear of losing your job.

By moving your savings over to one of the best online savings accounts you’ll earn many times more than your local bank is probably paying you.

When a crisis hits, nothing feels quite as good as money in the bank. Now is the time to stock up on it.

2. Pay Off or (at least) Pay Down Your Debts

An oncoming recession may not be the best time to take on a long-term project, like paying down your mortgage early. But it’s an excellent time to pay down or pay off other debts.

Topping the list are credit cards. Since interest rates typically range between 15% and 25%, paying them off is an excellent strategy to improve your cash flow. Another good strategy is to transfer your high-interest credit cards to a 0% balance transfer card. That can eliminate interest payments for 12 to 24 months, so more of your payment will go toward your principal. And as it does, you’ll be able to pay off your credit cards faster.

Next in line would be auto loans or other types of installment financing. Though interest rates on these may be low, high fixed monthly payments may be something you can’t afford after a potential job loss. Just getting a payment off your plate can be a major stress reliever.

And while you may not be able to pay off your mortgage, you may be able to lower the payment by refinancing into a lower interest loan. That’ll be an especially smart strategy interest rates rise before or during the recession.

Paying off student loans – there’s no easy answer here. If it’s a relatively small amount, it may be worth paying off just to get rid of the payment (or to avoid the possibility of default). But a large amount is much like a mortgage. Paying it off requires a long-term commitment. You may be better keeping the funds liquid for emergencies than trying to tackle a large loan balance on short notice. Crunch the numbers and use your best judgment.

There are strategies to pay off student loans more quickly, but you’ll need to be prepared to fully commit to the effort. Investigate strategies, and see which one will work best for you.

If paying off your student loans doesn’t seem doable, refinancing is another option. By choosing one of the best student loan refinance sources you may be able to get both a lower interest rate and a smaller monthly payment. That will make your student loan payment go away, but it can make a lot more manageable.

3. Start Cutting Living Expenses

This is where you can release your inner penny pincher. If you have any expenses that aren’t absolutely necessary, now is an excellent time to reduce or eliminate them.

Paying off or paying down debts is one of the single best ways to cut living expenses. Once you pay off a debt, it’s no longer an expense.

But apart from debt, review all your expenses. If you have a Hulu or Netflix subscription you hardly use, get rid of it. Have you been thinking about cutting your cable? Now may be the time. If you have a gym membership, but you never go to the gym, that’s another target. Just make sure you have alternative methods for keeping fit.

Insurance. Now is an excellent time to do a complete re-evaluation of your insurance policies. Insurance has become a major expense in most households, and premiums can often be reduced with periodic reviews. Committed to finding the best insurance in each category – life, health, disability, business, and even pet policies.

Food is another cost that’s a potentially rich target for cutting expenses. Start with restaurant meals. If you eat out twice a week, cut it down to once. Eat at lower-priced restaurants, and take advantage of coupons and specials.

With grocery shopping, look into wholesale clubs. You’ll have to become a member, but you’ll probably get back the cost of the membership on your first shopping trip. If you have one in the area, check out ALDI. It’s unconventional for a food store, but you can seriously cut your grocery bill shopping there.

Finally, if you’ve never had one before, get serious about implementing a budget. There are free budgeting apps you can use to organize your finances. Sometimes just having your income and expenses recorded on one platform makes a budget more doable.

4. Delay Major Spending Plans

If you’ve been thinking about trading up to a new home or buying a new car, consider delaying the purchase for a couple of years.

One of the situations that gets people into financial trouble during a recession is making a major purchase – and taking on a bigger monthly obligation – just before the downturn hits.

This is especially true of buying a new house. House prices are at all-time highs, reaching levels even higher than they were before the last housing meltdown. That should be a red flag.

It isn’t just the basic cost of the house either. When you transition from one home to a more expensive one, other expenses often increase as well. That can mean higher utility costs and property maintenance, as well as the expenses that inevitably come whenever you move into a new home.

A little bit of caution now can save you major financial trouble later.

5. Rearrange Your Stock Portfolio

This doesn’t mean it’s time to dump your stock holdings. But it may be an excellent time to begin redirecting your portfolio into safer alternatives.

Try these:

High dividend stocks. If the stock market goes down with the economy, there will be a shift in investor focus. Income becomes more important when growth is less certain. You may want to favor high dividend stocks over growth stocks.

Consider moving some funds into a category of stocks known as dividend aristocrats. Those are stocks of large, well-known companies, that have been increasing their dividends for at least the past 25 years.

If you’re going to be making changes in your portfolio allocations, now may be an excellent time to consider changing brokers. A lot of changes have taken place in the brokerage world, including the implementation of zero commission trades in the past few months. Investigate the best online brokers for you, and make the changes while the markets are still behaving.

Real estate investment trust (REITs). They’re something like mutual funds that invest in commercial property. For example, a REIT may hold a portfolio of retail properties, office buildings, or large apartment complexes. It’s a way to diversify a small amount of money across many different properties and even geographic locations.

REITs pay regular dividends, offer capital appreciation, and even have certain tax advantages. And their performance has historically been equal to or better than stocks. Equity REITs have outperformed stocks by a margin of 12.87% to 11.64% between 1978 and 2016.

REITs are a good way to diversify your equity allocation away from an all-stock portfolio. They may continue to produce positive returns even if stocks decline.

Pare down company stock. If you have a lot of company stock in your employer-sponsored retirement plan, you may want to consider reducing your exposure. Financial problems with your employer will not only impact your job, but it can cause the value of their stock to decline. Having too much stock in the company you work for can be a double jeopardy situation in a recession.

6. Start Building Cash Reserves

This doesn’t mean selling investments to raise cash. Instead, hold your new investment contributions in cash and cash equivalents.

This will accomplish three important objectives:

Any funds held in cash will be safe from market declines.
The higher cash position will reduce the volatility in your portfolio.
When the bear market ends, you’ll have cash reserves available to buy stocks and funds at much lower price levels.

There’s one more point – when the financial markets come unglued, cash is the only truly safe investment. By building up your cash reserves, you’ll be creating a truly safe corner of your investment portfolio.

7. Make Yourself More Valuable on the Job

Recessions mean staff reductions. In the last recession, the unemployment rate topped out at around 10%. But the good news is that 90% of workers didn’t lose their jobs.

That’s the group you’ll want to be part of when the next recession hits. Promise yourself you will.

The best way to ensure that is to up your professional game. Get any certifications, professional training, or skill sets now that will make you more valuable to your employer. Yes, people lose their jobs during recessions. But the most valuable employees keep theirs. By becoming better at your job, you’ll have a much better chance of counting yourself among the survivors.

But there’s a secondary benefit to improving your skills and qualifications. If you do lose your job, you’ll be better qualified for the job search that will follow.

It’s better to implement these strategies now, while you’re still in control of the situation than to wait until your job becomes a problem.

8. Add an Additional Income Stream (or Two)

This strategy has at least three major advantages:

1. It can provide the extra income needed to implement the other strategies on this list.
2. A second income will give you greater strength in a downturn.
3. The second income may form the foundation of your next primary income-generating activity if you lose your job.

One of the best ways to develop additional income streams or at least a second income is by creating a side hustle. Essentially, that means becoming self-employed. But doing that with a side hustle makes the entire process easier and less risky.

Think about any skills you have, particularly if you use them on your current job or in previous positions. But you can also consider the skills you use in your personal life. Any one or a combination of those skills can potentially be monetized and converted into a profitable side hustle.

It’ll take some time to get a side hustle out of the starting gate and up to the point of generating a regular cash flow. And that’s exactly why you should get started on this venture now.

9. Keep a Positive Mindset!

There’s no denying that worrying about your job at the same time your stock portfolio is falling is unnerving. But a critical strategy when facing any crisis is not to panic. The best way to do that is by being intentional about implementing and maintaining a positive mindset.

Don’t look at a downturn as a career killer or the end of your investing journey. Instead, look at it as a time of transition.

There’s plenty to be positive about in what might otherwise be considered a gloomy situation:

The downturn can help you build motivation to develop new job skills that may ultimately propel your career to greater heights.
By rearranging your investments and building up cash, you may be positioning yourself for the next major advance in the financial markets.
It may motivate you to get out of debt.
You may finally have the incentive to implement that budget you’ve been putting off during the prolonged expansion.
By creating a side venture, you may be creating an exciting new way to earn additional money. Or you might just be building the foundation for your next occupation.

Concentrate on the positives of a recession, and leave the gloom to others!

Final Thoughts on Being Prepared

All this preparation is – more than anything else – taking greater control of your finances. If you’ve been doing that during the expansion of the past 11 years, you should be even more motivated before and during the next recession.

And in what may be the ultimate way to put a positive spin on the potentially negative situation, remember that all recessions are temporary. There may be some turbulence along the way, but you’ll survive it and go on to thrive.

The post Recession Proof: How to Prepare for the Next Recession appeared first on Good Financial Cents®.

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Claiming Kids on Taxes: 9 Tax Breaks Every Parent Should Know About

Does the thought of doing your taxes on top of caring for your kids make your head spin?

Take a deep breath: We found nine tax breaks for parents.

Whether your children are swaddled newborns or seeking college degrees or whether you’re single, married with kids or adopted this year, you’re eligible to get some money back on tax day.

9 Benefits and Tax Credits for Parents

Here are the top tax credits and deductions for parents to keep in mind.

1. Out-of-Pocket Medical Expenses Related to Pregnancy

If you had a baby last year, paid out of pocket for medical expenses during your pregnancy and were never reimbursed, you’ll be able to itemize those amounts as deductions.

This tax code requires the expenses to be at least 7.5% of your adjusted gross income. That might seem unreachable, but since you’ll be billed item by item for prenatal care and childbirth, it can start to add up.

2. Child Tax Credit

As soon as your child is born, you’re eligible for the Child Tax Credit, which pays up to $2,000 for every child under the age of 17, depending on your income.

This might seem obvious, but it’s important to note: Even if your child is born on Dec. 31, you can still claim them for that year.

Remember to claim this credit for each of your children — if you have more than one, they each qualify for it up until they turn 17 years old.

3. Adoption Tax Credit

The adoption process is notorious for being lengthy and expensive.

The Adoption Tax Credit is worth up to $14,080 to help you alleviate that financial strain. This credit covers adoption fees, court costs and attorney fees, travel expenses and related expenses.

4. Earned Income Tax Credit

If you earned income last year but didn’t exceed certain thresholds, you may qualify for the Earned Income Tax Credit, which can significantly reduce your tax bill.

The income limits depend on your filing status and how many children you have. For example, if you’re filing as single or head of household and have one qualifying child, you must have earned less than $41,094. If you’re filing jointly with your spouse and have three qualifying children, you must have earned less than $55,952.

The maximum amounts of credit vary slightly each year. For the 2018 tax year, the maximum amounts of credit were:

$6,431 for three or more qualifying children
$5,716 with two qualifying children
$3,461 with one qualifying child

Note: You can also qualify for the Earned Income Tax Credit without having a child.

5. Child Care Tax Credit

The cost for center-based daycare can range anywhere between $199 per week for a family care center to $213 per week for a day care or child care center, according to a survey by Care.com.

If you’re paying for child care, you may be able to get a chunk of that back on your taxes.

If your child is 13 years old or younger and you pay for child care while you’re either working or looking for work, you qualify for the Child and Dependent Care Tax Credit. According to the IRS, the amount of the credit varies. It is a percentage based on the amount of work-related expenses you paid to a care provider for the care of a qualifying individual.

The amount of expenses you can use to calculate the credit can be no more than $3,000 for one qualifying individual and no more than $6,000 for two or more qualifying individuals.

6. Head-of-Household Status

If you’re single and have a child, don’t overlook this crucial item: your status.

If you file as a head of household, you’re automatically eligible for a lower tax rate than if you file as single.

To be considered the head of household, you must:

Be unmarried on Dec. 31
Contribute more than 50% of the financial support of the household
Have a dependent who lives with you for more than six months of the year

If your child is in college and is still a dependent on your taxes, you can claim their college expenses.

7. American Opportunity Tax Credit

During the first four years of your child’s college education, you can claim up to $2,500 for tuition and related expenses under the American Opportunity Tax Credit.

Your child must attend college at least part time. The income threshold for individual parents is $80,000; married couples must earn no more than $160,000.

8. Lifetime Learning Credit

Unlike the American Opportunity Tax Credit, there is no limit to the number of times you can claim the Lifetime Learning Credit for education costs to lower your tax bill.

Worth up to $2,000, the LLC covers tuition and related expenses.

To qualify, your modified adjusted gross income must be $68,000 or less (or $136,000 or less if you’re filing jointly with your spouse).

9. State Tax Credits for Parents With Kids in Elementary or High School

Some states offer benefits for certain items or activities during the school year.

In Arizona, for example, if your kids attend public school, you’re eligible for a tax credit for any fees related to extracurricular activities, including sports equipment or uniforms. You can even qualify for the credit if you spent money on their SAT/ACT tests or prep classes.

While it won’t affect your federal return, look for these credits when filing your state taxes.

Other Parent-Child Tax Items to Consider

Ask yourself two more questions before filing your return, putting up your feet and enjoying a well-deserved break.

Which Parent Should Claim the Child?

A tricky part of being separated or divorced is figuring out who is supposed to claim the child on their tax return.

To make the call, the IRS typically looks at where the child sleeps for more than half the year, but there are some special exemptions as to who can claim the child and when.

It gets a bit tricky, but this IRS chart answers a variety of questions you might have.

Does Your Child Work?

If your child has a job, make sure they file their own tax return.

Teens who work while in school usually don’t make enough money to have a liability. So, even though their employers have likely withheld taxes throughout the year, they’ll get them back in a refund check, which is a nice incentive.

Plus, it’s a great way to continue teaching them about money.

Kelly Smith is a former email content specialist for 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.

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What to Do When You Can’t Pay Your Health Insurance Deductible

No one is immune to rising medical costs, even if you have health insurance.

The average annual deductible for a single person was $1,573 in 2018, according to a Kaiser Family Foundation (KFF) Employer Health Benefits Survey. If it seems you’re having more trouble covering that deductible, it’s not just your imagination.

A deductible is the amount you must pay for health care services before your insurance kicks in. After you satisfy the deductible, you’re typically responsible for any co-payments.

Deductibles in the United States soared 79% between 2008 and 2018. In comparison, income inched up less than 9% during that same period, according to a Penny Hoarder analysis of KFF and Census Bureau data.

It’s the beginning of a new year, which typically means you start over again with your deductible. So unless you have a spare $1,600 lying around, you’ll need to find ways to cover medical costs without sliding into debt.

A bar graph compares individual deductibles to median income over a 10-year period.

We’ve compiled the best strategies when you can’t afford your deductible so you and your finances end up as healthy as possible by year’s end.

What to Do When You Can’t Afford Your Health Insurance Deductible

There’s no quick or easy way to reduce medical debt. But when your deductible is beyond your budget, there are still ways to get the medical care you need without going into debt. Here’s how.

1. Use Savings From an HSA or FSA

If you have a high deductible health plan (HDHP), you can open a health savings account (HSA) to cover medical expenses.

An HSA allows you to save the money before taxes are taken out of your paycheck, then put that pre-tax money toward your deductible.

Any savings you don’t spend in a current year rolls over to the following year, and the money in your HSA stays with you even if you switch insurance plans, change jobs or retire.

If you don’t have an HDHP, your employer may still offer a flexible spending account to cover some medical expenses. Similar to an HSA in that you save pre-tax money from your paycheck, an FSA differs because if you don’t use the money by the end of the year, you lose it.

But an FSA also covers more expenses than you might think — and well beyond your what’s included in your deductible. Check out this list of what you can buy with an FSA.

2. Shop Around

If you’re not in an emergency situation, it pays to do a little bargain hunting when it comes to medical care — there’s no need to reach your deductible limit unless you absolutely have to.

I have personal experience with this strategy. When I injured my arm a few months ago, my doctor gave me a list of places to get an X-ray. The closest one was at a hospital I was familiar with, so I figured I would head there.

Pro Tip

If your total medical expenses exceeded 10% of your adjusted gross income, you may be able to deduct them on your tax return. Check with the IRS for a complete list of deductible expenses.

But just to double check that I was covered, I called my insurer. The customer service representative informed me that, yes, X-rays were covered at the hospital but that I should expect to pay $250 for facility fees.

He then recommended I go to a private X-ray service provider on the list. It was a 20-minute drive across town, but it only cost me $50.

Moral of the story: It pays to call ahead and ask questions.

The same goes for every aspect of your care, including medication. Check out how you can use a prescription discount card to compare prices and get the lowest price for your medication.

3. Pay Attention to Your Bill

If you think reviewing your medical bill for mistakes isn’t worth the effort, consider this: As many as 80% of hospital bills have errors.

Whether it’s human error or something more nefarious — including illegal practices like upcoding and unbundling of services — medical billing mistakes can add huge costs to your medical bill that you don’t even owe.

Those extra costs can needlessly leave you paying more toward your deductible.

So before you give up and pay the bill — or worse, ignore it and let it go to collections — here’s how to correct medical billing errors.

4. Ask for Help

If the medical bill arrives and you’re too scared to open it, you’re not helping yourself.

In fact, you’re setting yourself up for more financial woes than an oversized deductible — from overdue fees to debt collectors to wage garnishment.

Pro Tip

Don’t use a credit card to pay for medical expenses — medical bills typically don’t accrue interest, while credit card interest rates average in the double digits.

If you know you can’t afford your bill, the time to take action is earlier rather than later. By getting organized and figuring out how much you can pay, you can approach your provider and potentially negotiate a reduced payment or agree to an installment plan.

Even if you end up reaching your deductible by the end of the year, by paying in installments you’ll spread out the costs over a year rather than with a huge expense to absorb in one month.

But you won’t get help if you don’t ask for it, so check out this guide to paying medical bills you can’t afford.

5. Seek Out Wellness Alternatives

I get it — if your deductible is high enough, you might be tempted to put off medical treatment. But your health is your most valuable asset, and delaying care could end up costing you even more when that nagging pain turns into an emergency room visit.

It can take a little digging, but you can find lower cost options for many services — particularly routine wellness checks and screenings. Here are seven alternative ways to beat health care costs that will help you stay well, so you never have to bother with the dreaded deductible.

Your health is worth it.

Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Multimedia Content Creator Chris Zuppa contributed to this article.

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JASMINE BIRTLES: Savings accounts should come with a health warning

With savings rates so low, where should you put your money?

Jasmine Birtles Wed, 01/22/2020 - 12:01

Warning: your interest in this article could go down as well as up… Moneywise offers no guarantee that your interest won’t crash into oblivion at the mere mention of ‘building societies’ or ‘interest rates’. If you experience feelings of ennui while reading this article, immediately go to your local sweet shop.

Yes, I know… ‘the value of your investment could go down as well as up’. Yes, of course, but isn’t it time we heard something similar every time savings accounts were mentioned? Something like ‘you will definitely lose money in real terms if you leave it in this account for more than a year’. Catchy? Hmm, maybe not.

But when you stop and think about it (which most of us don’t and that’s the problem), putting any more money into a savings account than you need to have as a ‘savings safety net’ (enough to cover your costs for at least three months) is, as The Share Centre, recently put it ‘muppet money’. At the time of writing, the very best savings rate I can find is 2.03% for a fixed five-year term.

If you had saved £200 a month for the past 10 years (£24,000) in an average cash savings account, it would now be worth £25,563 (or even lower in inflation-adjusted terms). Investing in a basic FTSE 100 fund, however, would have left you with £28,102, a profit of £4,102 – about a 17% return. The numbers speak for themselves.

Financial advisers rightly caution against believing in ‘guaranteed returns’ of anything more than 4.5% a year, but just a bit of reading up will show you the ‘likely’ returns (based on past performance and the company’s background) of quite a lot of apparently ‘risky’ investments.

I am not suggesting we put all our hard-earned into some dodgy crypto or Cape Verde holiday home scheme. But come on… at least a portion of our investments need to go into something a little more interesting (in both senses) than a pathetic Cash ISA.

As far as I am concerned, the majority of my investments should be in stock market and bond funds – but, in my opinion, a good 10% to 20% of my money needs to be in products which, if they were men, my mum would be warning me about.

You know the sort: new and sexy products that give you the eye and promise you the world. Some of them turn out to be cuddly long-term keepers (to the surprise of all your friends and family), while others drop you like a stone (as everyone nods knowingly). But if you don’t give them a try (after doing some due diligence), you will never know how good they could be.

I have mentioned before that I am a fan of peer-to-peer platforms, new digital banks and even some crypto products (yes, it is the future, I don’t care what anyone says). I think gilts are for people who like to wear two pairs of pants “just in case” and I have never opened a Cash ISA. As far as I am concerned, my ISA wrapper needs to be filled with delicious, money-earning morsels that will expand to my future delight, not flat cash savings that offer 0% of nothing year on year.

And I don’t think I am being rash. As far as I’m concerned, the rash ones, the ones who are putting their wealth at risk year after year, are those who insist on keeping the majority of their money in ‘safe’ products such as savings accounts or Premium Bonds.

Interestingly, I am seeing a few other women thinking the same way, even though it always used to be the case that ‘men invest, while women save’. But, according to a survey by peer-to-peer lending platform Blend Network, double the number of women compared to men are keen on investing in alternative finance products. Their cooler brands seem to appeal, in particular, to younger generations of women. It is a step forward, but I would like to see more women go for them because of their better returns, not because they sound cool.

I am not saying that these high-returning strategies will always pay off. Usually you win some and you lose some. With savings accounts, though, you are just guaranteed to lose some and lose some. Time to put our big pants on and make some serious money.

Jasmine’s views are her own and do not constitute investment advice.

Jasmine Birtles is a financial journalist and founder of MoneyMagpie.com. Email her at columnists@moneywise.co.uk

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Four ways to clear your Christmas debt

People across the UK face 'Red Wednesday' woes as Christmas debt tips bank accounts into the red today.

Brean Horne Wed, 01/22/2020 - 11:49

Bank accounts across the nation are expected to fall into the red today as the true extent of Christmas debt hits, according to new research from Credit Karma.

The average Briton owes £623 to creditors, taking the collective debt to £14bn, the consumer technology company estimates.

It's expected to take four months on average for people to clear their Christmas debt.

Akansha Nath, credit expert at Credit Karma said: “We can all be guilty of overspending at Christmas, so it’s no surprise to see Brits facing extra financial strain in January.

“It’s daunting to think that we might be well into April before we’re consistently back in the black, but rather than using ‘quick fixes’ to free up some extra cash, there are lots of simple ways to get back in control of our finances.”

If you’re suffering from a Christmas debt hangover we’ve rounded up four simple ways to help you clear it.

1. Make a repayment plan

It’s easy to turn a blind eye when your debts build up with the intention of sorting them out later.

Making a plan of action, however, is the best way to start.

Having a repayment plan will make it easier to keep track of how much you owe and how much you’ll need to pay off to be debt free within your desired time frame.

2. Make strategic repayments

Prioritising your repayments is key. As a general rule, you should aim to clear your most expensive debts first.

These are usually sitting on credit cards or overdrafts where interest rates tend to be higher.

Larger expenses such as keeping up with your mortgage repayments should be a high priority too.

3. Make your debt cheaper

You can cut the cost of your credit card debt by using a 0% balance transfer credit card.

This will allow you to shift your debt to a card that charges no interest for certain period of time.

Setting up a monthly direct debit can help you pay down the cost of your debt.

4. Stop taking out more credit

Paying off your debts should come first.

While expenses during the year are unavoidable, making cutbacks where possible can help ensure you beat your Christmas debt.

Once it is taken care of, you can start putting money away for December 2020 and avoid falling into debt.

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What Are Americans Doing to Destroy Their Homes?

There is a checklist of items that homeowners run through to protect their homes, such as installing security, insuring against natural disasters, fires or flooding, installing smoke detectors and more. However, many overlook the regular maintenance that a home requires, which can introduce major issues down the line.

When was the last time you cleaned the gutters? That’s just one of the many questions we asked Americans to learn more about how well homeowners maintain their properties. We found that people are unknowingly destroying their homes by disregarding regular maintenance and, in some cases, actively causing harm through what they put down the drain, ignoring leaks and more. Let’s jump into how home maintenance is being disregarded throughout the U.S. and what you can do to be a proactive homeowner.

Key Takeaways:

84% of Americans haven’t cleaning their gutters within the past year
38% of Americans don’t take precautions to avoid water damage in their home
25% of people shower without a window open or a fan on

65% of people don’t maintain the exterior of their home properly

Aside from improving the curb appeal, a home requires maintenance externally to protect itself against the weather elements and avoid slow progressing damage like mold or rot. We found that there is a lack of knowledge surrounding what can happen if you avoid maintaining a property.

84% of Americans haven’t cleaned their gutters within the past year

Did you know that experts say you should clean your gutters at least 3-4 per year?

Cleaning gutters is a task that many people don’t want to do, but avoiding it can have major consequences. When a gutter is clogged, it can cause water to seep through the cracks in your roof and fascia, the board behind the gutter. This water can ultimately create damage to the foundation that’s complicated to repair, or even worse, irreversible.

If you avoid cleaning your gutters, it can result in roof leaks, insect infestations, basement leaks and landscape damage.

The frequency that you clear your gutters depends on the type of trees around your home. Pine trees shed a lot, so it’s recommended that you clean your gutters four times per year if they surround your home. If you have oak trees, you can get away with cleaning your gutters twice per year, once each in the spring and fall.

When was the last time you inspected your roof?

The National Roofing Contractors Association recommends that you self-check your roof at least twice per year in addition to professional inspections, but most Americans don’t follow through.

It’s important to check if you have missing or warped shingles to avoid being put at risk of weather damage. You’ll also want to look out for any mold, rot or algae given it’s a telltale sign that there could be leakage or water damage.

Pressure washing eliminates mold and mildew, but only 14.5% of Americans do it

The exterior of your home is exposed to everything from extreme weather, harsh pollutants, insects, animals and more. Over the course of a few years, it’s common to have a build up of mold, mildew and dirt.

Many recommend that you pressure wash home at least once per year if you can see the grime built up, but there’s a larger debate around if pressure washing your home can cause harm. Since commercial pressure washers can be strong enough to destroy all types of materials, even concrete, it’s important to be careful with the strength of the water and the age and condition of the siding on your home to prevent such damages.

In the end, allowing grime to sit on your home for an extended length of time can ultimately cause permanent damage.

Less than 7% of people checked their window seals in the past year

Did you know that you could save 5-10% on your energy bill annually if you weatherstrip your windows or doors?

Not only does checking the seals on your windows save money, but it will help keep out drafts, insects and moisture. It’s recommended that once per year you check your caulking and either fill in the gaps if it’s in good condition or replace it entirely with new caulking.

38% of Americans don’t take precautions to avoid water damage in their home

Sometimes it’s not easy to spot mold, but there are ways to prevent it in the first place. When we asked Americans questions related to standing water, leakage, opening windows to the elements and more, a majority said that they take precautions to avoid allowing unwanted water from damaging their home, but 38% don’t take any precautions.

How important is ventilation in bathrooms?

There’s a reason why installing a vent fan is a building code requirement for bathrooms, but that doesn’t mean that everyone uses it.

Ventilation is important in bathrooms to remove warm moisture from the air from showering or bathing. Otherwise there is a heightened possibility of damage to the walls, ceiling, insulation, fixtures, not to mention imminent threat to the structural support of your home due to mold and rot.

When showering, you should always turn on the vent fan or open a window to make sure that moisture isn’t being built up in the bathroom.

More than 12% of people have left a window open during the rain

Although you can’t always predict when it will rain, open windows can lead to water damage in your home. A good rule of thumb is to close your windows when you leave the house to avoid unwanted leakage.

What can you put down the drain?

While putting unwanted items down the drain is a well known no-no, however, 39% of people still put food items down the drain.

That said, nearly 1 in 10 of people do put some food items down the drain, the most popular being lemon peels (15%).

The age old trick for naturally deodorizing your garbage disposal is by putting lemon peels down the drain. Sure, it may replace the smell of your kitchen with a fresh lemon scent, but plumbers say it may be causing more harm than good if it clogs the drain.

It’s no surprise if you’ve heard time and time again not to put grease or oil down the drain, and it’s for good reason. Grease and oil accumulates on the side of pipes eventually clogging the drain, but that doesn’t stop 9% of people to do it anyways.

Believe it or not, nothing should be put down the drain as it is detrimental to your pipes.

Methodology

The Simple Dollar conducted an online survey of 1,000 Americans aged 18 and older to learn what they do to destroy their homes. The survey consisted of 3 questions fielded December 2019 using Google Surveys.

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Utilizing Balance Transfer Credit Card Offers

When Sarah and I first started our financial turnaround, one tool that helped us quite a bit to stop the financial bleeding in the short term was balance transfer offers from credit cards. These enabled us to turn high interest debt into zero interest debt for a year, and when we paired that with an intense effort to pay off our debts, we were able to clear out all of our credit card debt (well into the tens of thousands) in less than a year.

If you have $5,000 in credit card debt, for example, and that debt comes with a 33% APR, you’re adding about $1,700 in interest payments a year. Your typical minimum payment on that much debt mostly just goes to pay the interest; it doesn’t do much damage to the actual balance. Imagine that you’re making a $200 minimum payment and $170 of that is going to interest, with only $30 reducing the actual balance. Now, imagine that $200 is going entirely toward the balance instead because you don’t have any interest. That’s the power of balance transfers.

Balance transfers are pretty simple. You sign up for a new credit card that has a balance transfer offer upon signing up. You’re then given the opportunity to share your old credit card number and other info about your old account with the new credit card issuer, and then the new credit card company issues a payment equal to whatever you’d like to the old card (up to your new card’s credit limit). Your debt on your old card goes down by that amount, and your debt on the new card goes up by that amount. The advantage is that the debt on your new card has 0% interest (or very low interest) for a certain period of time, often 12 to 18 months. That’s a huge improvement over the high interest rate on your old card.

Once you’ve done that, work diligently toward paying down that debt and not increasing the amount charged on any cards.

What’s the drawback? There are several downsides to a balance transfer that you should be aware of.

For starters, most balance transfers involve some kind of fee, typically 3% of the balance transfer or $10, whichever is higher. So, if you’re transferring $3,000, you’ll have a $90 fee tacked on, for example. That’s usually equal to a couple of months of interest.

If you’re still carrying any balance on that card after the transfer offer expires, the interest rate usually goes sky high. You should aim to try to pay it off while the interest rate is zero or else try to transfer it to another card when the transfer offer expires.

You also need to have good enough credit to be approved for a new card. If you’ve been missing a lot of payments on your old card, it’s likely that you won’t be approved for a new card with a balance transfer offer.

Finally, it can be tempting, when you don’t have a good personal history with credit cards, to rack up even more debt on your cards now that there’s a lot of breathing room. If you are living a lifestyle that’s supported by credit card debt, a balance transfer is just going to dig a deeper hole for you that you’re going to have to climb out of. Don’t even bother with a balance transfer unless you’re consistently spending less than you earn and are trying to dig out of the hole. If you’re just financing an extravagant lifestyle, you’re going to end up in a far deeper mess if you start doing balance transfers.

Knowing all of this, here’s the best plan for using a balance transfer credit card offer.

First of all, ignore it unless you have significant credit card debt already in place and you’ve been keeping up with your bills. Credit card balance transfer offers really work best for people who have built up some credit card debt but are still in good enough financial shape that they’re keeping up with their bills. If you don’t have much credit card debt, they’re not going to help much at all. If you have a ton of debt and are struggling with payments, you’re likely just going to get declined for your new card.

Second, you need to have a plan in place for paying off the card, and that means living a lifestyle where you spend less than you earn. For a balance transfer offer to really pay off, you need to be able to pay off all (or at least most) of the debt that you transferred before the offer expires while also not accumulating any more credit card debt on other cards. The only way to pull that off is to live a lifestyle that’s within your means. You must be spending less than you earn consistently, month in and month out. If you’re not doing that, a credit card balance transfer is just a bigger shovel with which to bury yourself in even more debt.

There are a lot of ways to get your spending moving in the right direction. One great way is to try living without credit cards at all for a while. You just pay for everything straight from checking, so you have to live off of the cash you have on hand. Hand in hand with that approach is a “pay yourself first” strategy, where you make a big debt payment when your checking account is flush with cash from a fresh paycheck. That way, you have to live on what’s left, which means forcing yourself to cut back on unnecessary expenses.

To make that work, consider cutting back on a few bigger bills while making some smart small steps. This might be the right moment to cancel your cable or satellite bill and go with just a streaming service, saving you as much as $100 a month. You might want to consider moving to a smaller living space or taking on a roommate. Look at your monthly subscription services — things like Netflix, Hulu, gym membership, food subscription services and so on — and decide if they’re actually providing value for you.

At the same time, take a look at your other spending habits. Switch to buying store brand items at the store instead of name brands, as that adds up surprisingly fast. Cut back a little on how often you eat out and aim to eat a couple more meals a week at home. Take some simple steps to trim your energy bills and your laundry expenses. These little moves won’t make a huge difference on their own, but if you do several of them and keep up with them, they’ll definitely improve your situation and help tip the scales from spending more than you earn to spending less than you earn.

Putting all of those strategies together results in a different approach to your finances. Rather than continually adding to your credit card balance, you live without cards for a while and start knocking down the balance instead of watching it grow. Rather than making a minimum payment because you didn’t plan ahead, you make a big payment when your account is flush and then live on what’s left.

The key thing to remember is that balance transfer credit card offers are best used as a tool in getting yourself into a better financial place. They can be really effective if you use them with that mindset and really stick to that approach. If you’re not pairing a balance transfer credit card offer with other changes to your finances, they’re just going to serve as a tool to help you dig even deeper into debt, which means that the eventual road to financial stability will be even longer and more painful.

So, if you’re thinking about a balance transfer credit card offer, start by getting your financial house in order first. Begin with some real financial changes, and that means more than just a vague commitment to “start spending less.” Cancel some bills. Make some real changes to how you shop. Implement some energy improvements. Better yet, try to live without using credit cards at all, using only the contents of your checking account while still making payments on your debts. Make sure you’re paying all of your bills as you go.

When you’re able to do that, then consider a balance transfer credit card offer, as it can accelerate your progress and bring you to freedom from debt even faster by transforming your high-interest debts into zero interest debts.

Good luck!

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UK employment rate hits record high

Unemployment is at its lowest since 1974, according to government figures.

Emma Lunn Wed, 01/22/2020 - 10:56

The thriving UK jobs market means the country has hit a record high employment rate at 76.3%, with the unemployment rate not lower since 1974. Wage growth has outpaced inflation for the 22nd consecutive month.

Figures from the Department for Work and Pensions show that all regions in the UK have benefited from an upturn in employment since 2010. In the North West the number in work has climbed to a record high of 3.55 million.

The DWP says women have benefitted the most from the thriving UK jobs market – with 317,000 more entering work in the past year alone.

Ministers also claim the figures show an uplift in people taking up quality careers offering real progression – with 3.1 million more people in higher skilled work since 2010.

Mims Davies, minister for employment, says: “These figures show not only more people in work than ever before, but it’s also pleasing to see alongside this a rise in those working in higher skilled roles. It means at the dawn of the decade the opportunities to progress in work are out there, with people already benefiting from another month of rising wages.

“This, coupled with business confidence turning a corner, is paving the way for an even stronger jobs market in 2020.

“And with unemployment at its lowest since the 1970s, our jobcentres go beyond getting people into work – they are about community and progression. Reaching out to more people, and supporting those in work to get ahead.”

However, the figures also show a rise in so-called “zero hours” contracts – where workers are not guaranteed a minimum number of hours each week. Between 2013 and 2019, the proportion of workers on zero hours contracts in total employment increased by 0.8 percentage points to 2.7%.

The latest data for the period April to June 2019 show that there were 896,000 workers on zero hours contracts with more women (483,000) than men (413,000) on this type of employment contract.

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New veterans railcard to offer a third off train travel

A new railcard offering cheaper fares for military veterans will be launched on Armistice Day.

Emma Lunn Wed, 01/22/2020 - 09:35

Transport secretary Grant Shapps has announced a new railcard offering veterans cheaper train travel.

The card will be available from 11 November 2020 and will offer a third off most train fares to more than 830,000 veterans not covered by existing discounts. The railcard will cost £21 for a limited period, before rising to £30.

Shapps says: “Every part of society should honour the debt we owe those who’ve served our country. I’m proud that the Department for Transport, together with other government colleagues and the rail industry, is doing its bit.

“This railcard will help open up opportunities to veterans, whether through employment and retraining, or by strengthening links with friends and family. I believe that enabling former service personnel to travel more easily is the least we can do.”

The railcard forms part of the government’s veterans’ strategy coordinated by the recently-established Office for Veterans Affairs. The action plan sets out support for those who served in areas including community and relationships, employment and skills, health and wellbeing, finance and debt, housing, and contact with the law.

Cabinet Office minister Oliver Dowden, who represents the office for veterans’ affairs (OVA), says: “The office for veterans’ affairs was set up to get things done for our veterans. I am pleased to see that the OVA is already able to show it is achieving just this, working with the Department for Transport to deliver this railcard.

“Our new action plan will help to make the UK the best place in the world for veterans. The Office for Veterans’ Affairs will drive the plan from the heart of government, working to help veterans on jobs, housing and health, through better data and a more joined up approach.”

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How Wine, Art and Diamonds Defy the Laws of Economics

Economics law says that demand goes down when price goes up. But Veblen goods work the opposite way – when price goes up, so does demand. How do these goods get so lucky?

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