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الثلاثاء، 7 أغسطس 2018

When Your Career Is Comfortable, But You Yearn for a Change

You’re at a job that’s comfortable and secure and, frankly, fairly easy in many ways. There might be a few elements that you don’t really like, but for the most part, it’s fine.

Here’s the catch, though: you’re still pretty unhappy at work. You don’t enjoy going to work. You don’t enjoy most of the things you do at work. The little problems at work are like little pebbles in your shoes, building a minor issue into something that’s almost intolerable. Perhaps you simply yearn to be doing something different, maybe something a little more challenging or something that’s a little less stressful.

Does this sound like you?

It certainly sounds like my own situation several years ago. I held down a job that was about 20% interesting tasks, 20% meetings, 15% tangling with bureaucracy, 25% maintenance, and 20% travel. I really enjoyed the 20% of my work that was interesting and I enjoyed my relationship with my coworkers, but I basically dreaded the rest of the job.

I tried a number of different approaches, most of which I’ll talk about below, but eventually I decided that a career change was the right decision for me. I now work from home as a freelance writer, and it was perhaps the best professional decision I’ve ever made, flipping those percentages around to a proportion that I am very happy with (I’d call it about 70% interesting work, 0% meeting, 10% tangling with bureaucracy, 20% maintenance, and 0% travel). (However, that path came with a catch: it involved a big drop in income for quite a while – an issue we’ll get back to in a bit.)

At the same time, I have a few friends – and quite a few readers – who find themselves at a similar crossroads, and simply switching careers isn’t necessarily the best option for them. Every situation is different – some people in this situation are young and some are old, some have a ton of financial responsibilities while others have few, some have skills that are easily transferable, while others do not.

Here are six strategies you might want to consider if you’re in a comfortable place in your career but you’re yearning for a change.

Stick With It

The first and most obvious option is to simply stick with your current job and current career trajectory. While this might not seem like a great choice, if you do it in a smart fashion, it can be quite worthwhile. Your job provides security and good pay and benefits and it’s at least comfortable if not exciting.

There are a few things you can do here to accentuate the positives and minimize the negatives without putting your job at risk, though.

First of all, you can simply start spending a little less and putting more away for retirement. Just bump up your retirement contributions at work and look for a few simple ways in your life to cut back, like buying store brand dish soap. Having a financial target can put a light at the end of the tunnel like nothing else.

Another tactic is to master contentment. Don’t spend your time dwelling on the irritating aspects of your life. Rather, spend your time looking at the good things in your life. One practical way to work on this is to start a gratitude journal. Each day, simply list five things about your life that you’re grateful for, particularly things you noticed within the last day, and intentionally not repeating anything more often than once per week.

A third tactic is use your non-working time with more purpose. Rather than coming home and crashing, find something purposeful to do with that time. Volunteer work? A serious hobby? Community involvement? Figure out a thing or two that you really want to get involved with in your life and start committing time and energy to it rather than just going home and vegetating.

Benefits: You keep your pay and benefits. You keep the security.

Drawbacks: You’re still stuck where you are and generally unhappy with it.

Strategy in a Nutshell: Start spending less than you earn and saving aggressively for retirement, perhaps even an early retirement.

Talk to Your Boss About New Projects

Even the best job in the world can sometimes become boring and routine, and for people who relish challenges, that can lead to a sense of unhappiness. The solution is pretty easy, though: find a new challenge within the framework of your job.

If you want to largely keep things as they are but would like some new challenges at work, just sit down and talk to your boss about helping you find those new challenges. What kind of projects can you take on? What kind of tweaks to your current work can you handle?

My strong recommendation is to have a realistic and well-considered idea of what you might want to actually do at work that you’re not currently doing. What kind of project do you have in mind? Spend some time envisioning what exactly you’d like to be doing and, perhaps even more importantly, how it would benefit the organization more than it would cost the organization.

For example, in my previous job as a programmer, I would often take on different side projects and fill up as much as half of my week with them. I’d contribute to key open source projects that we relied on. I’d rewrite and optimize some of the underlying software libraries that we used, just to make everything a little bit faster. I’d thoroughly document everything and, near the end of my tenure there, I converted all of that into a wiki. The goal was to find new challenges as much as I reasonably could and it helped greatly.

Trust me: if you are a valued employee who has a record of producing good work, your boss will likely be supportive of your desire to find new challenges at work. Just make sure that you have some clear ideas and an explanation of how they’ll be beneficial to the business without detracting from your other responsibilities.

Benefits: You keep your pay and benefits. Your job is still pretty secure. You’ll take on some new and interesting challenges.

Drawbacks: You might have a little less security than simply doing nothing at all, as there is a risk that you fail at the new projects if you and your boss don’t pick appropriate ones.

Strategy in a Nutshell: Meet with your supervisor and keep a positive tone about your current job, but ask for new projects and challenges.

Switch Jobs in the Same Career Path

It may be that you don’t dislike your career as much as you dislike the circumstances of your particular job. Perhaps you’re frustrated by workplace dynamics, or maybe you find yourself doing uninteresting tasks while being regularly turned away from interesting and cutting edge tasks.

If that sounds like your situation, changing jobs within your career path might be a good move. It does come with some risk – you might find that the new workplace is somehow worse than your current one – but there are a number of ways to mitigate that risk and a number of strong benefits of switching to a new job. Let’s consider both.

First of all, there’s a good chance that you may be able to increase your pay by switching jobs. This is a common tactic for people, particularly early in their career, to bump their pay. They jump from job to job, seeking a higher salary. This strategy can still hold true later in one’s career as well. The key, of course, is to not let an increase in pay inflate your lifestyle. If you see a big increase in pay due to a job switch, keep your spending the same and set up a very healthy 401(k) or Roth IRA contribution to gobble up most of the increase.

Second, the actual process of switching jobs can add a bit of risk to your current job. During the process of interviewing, word can get back to your current employer regarding your job search, which can put you on shaky ground at your current job. A good approach here is to start your job search by talking to people you trust in your own professional network and see what they know of. Often, when you use a good mutual contact as a reference, you can get in with a position without your current employer knowing about it.

Finally, don’t burn bridges during this type of transition. Do everything you can to make the transition as smooth as possible. Give notice of your exit and stick by that notice. Don’t destroy any relationships on your way out the door, even if the relationships aren’t all that strong to begin with. You may end up in a situation where you need to move back to this previous employer or may need a relationship with one of your fellow employees there. Don’t destroy those things in a desire to vent all of your feelings as you exit.

Benefits: You have a good chance at increasing your pay. You get a fresh start within your current career path.

Drawbacks: There is some risk in switching jobs, both in the applying and interview process and whether the new job is a good fit for you.

Strategy in a Nutshell: Quietly check your professional network for opportunities. Apply for new jobs when they truly seem like compelling opportunities. Don’t burn bridges at your current job.

De-Emphasize Your Job’s Place in Your Life

This is a surprisingly effective strategy if you have a job that doesn’t require much of your effort to do well. Many people find themselves in a “maintenance” position that they can handle easily and thus only have to actually “work” a small number of hours per week, or the work that they do doesn’t require intense effort on their part.

If that sounds like you, start considering your work as something you do to support the main focus of your life, rather than letting the work be the focus.

I have a friend who has a job as a loan officer at a bank. His focus, however, is on his church and his community, where he is a leader. He focuses his thoughts and energy on those two communities, even doing tasks related to them while at work if there’s nothing else to do. He views his job purely as a way to obtain the resources he needs to do the things he cares most about.

This can be a great strategy to use if you have something else you want to focus your energy on, whether it’s something that will never return a financial reward (like charitable work or community building) or something that requires a very long runway (like writing science fiction novels or designing board games).

The challenge, of course, is that it can become obvious at work that your focus isn’t on the workplace. If you’re able to maintain your quality of work while doing this, then that’s great; if you’re not, then you can end up putting your job at risk. The real risk is when your work starts slipping and you don’t notice it because your focus is elsewhere. Be attentive to performance reviews if you’re taking this approach.

Benefits: You keep your pay and benefits. You can focus your energy and thoughts on something else that’s more important to you.

Drawbacks: Your job is probably going to become less secure, especially over time, as you move close to doing the minimum at work.

Strategy in a Nutshell: Find another area of your life to focus on. Figure out ways to use downtime at work to accentuate that focus. Stop worrying about work when you’re not there. Spend less than you earn and save the difference so that you have a cushion against the risk of a downturn in your career.

Start a Side Gig

Some people have the entrepreneurship bug and dream of starting their own business where they can set their own hours and decide for themselves what needs to be done. The dream of owning a restaurant or a lawn care business or a comic book store or a Youtube channel runs deep in some people, but they believe they don’t have the opportunity to make it happen.

The truth is you can always make entrepreneurship happen. There are always avenues to use your spare time doing something you enjoy by your own rules and make money. It might take a long time and might not earn a lot of money per hour (especially at first), but it gives you a sense of control and self-determination that you can’t get as an employee, and some people yearn for that.

For those who don’t want the risk of entrepreneurship, another side gig option is to simply take on a second job or some form of consulting related to your career path. Those opportunities are safer, but in many career paths, they won’t earn as much as your main career path.

Naturally, the disadvantage here comes from figuratively burning the candle at both ends. It takes a lot of time and energy to make entrepreneurship work, and the same is true for a second job.

Benefits: You keep your pay and benefits. You gain some interesting challenges and likely some additional pay.

Drawbacks: You run the risk of burnout as you’re essentially adding a second job to the mix. You likely slightly decrease your security at work as your effort devoted to work slips a little.

Strategy in a Nutshell: Find something that meshes your skills with something you’re interested in. Dive into doing that in your spare time. Worry about making money later – start by doing something of value first.

Go Back to School

A final option is to simply reboot your career by going back to school for education in a new career path that’s more in line with what you’ve discovered about yourself since your teen years (where many people made career choices before realizing who they actually were).

For example, one member of my family went back to school in her forties, transitioning from a career in microbiology to a career in nursing. Another friend of mine rebooted his career from teaching into computer programming.

For most, this kind of reboot requires returning to school for some type of education or training. Not only is this often expensive, it also may require a period of no employment, which can be really challenging. Of course, you may be able to obtain much of the education you need during the evenings or weekends to flex around your current career, and community college prices can help lower the costs.

Another concern is that your new career may not be as lucrative as your current one (of course, the opposite may also be true). If this appears to be the case and you’re considering this path, you should cut back on your spending now rather than later and get your finances in healthy shape for this change. Set it as a goal a year or two from now and spend that time planning carefully, minimizing debt, and maximizing savings.

Benefits: You keep your pay and benefits, at least for a while. You’re heading toward a more meaningful and enjoyable career path.

Drawbacks: Your new career might pay less and have fewer benefits, especially at first. The costs of schooling might be intense.

Strategy in a Nutshell: Start spending less than you earn and start saving for the cost of your career change. Figure out what you’d like to study. Seek out evening classes that can get you started on that educational path without causing you to walk away from your current job.

Final Thoughts

If you spend your days dreaming of a big career change in your life, there are many options for making that dream happen. Perhaps you can start from scratch with a fresh education or by starting a side gig. Maybe you can alter your current path by seeking new responsibilities and challenges or finding a new job. Or, perhaps, the best option is to simply stay put.

Whatever it is that you choose, it is far better to have considered the options and settled on the one that works best for you. It’s also worth noting that it’s almost always better to be working for something you care about, even if it’s harder, than to drift through something that just leaves your days feeling empty. The key is to make changes with some financial responsibility and intelligent long term plans.

Good luck!

The post When Your Career Is Comfortable, But You Yearn for a Change appeared first on The Simple Dollar.



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Single Parent Finances: Six Tips to Find Financial Success When It’s All on You

During your most challenging, stressful, and uncertain moments, being a single parent can seem like the craziest financial decision you’ve ever made.

I’m talking about those moments when you’re deciding between whether to buy gas for your car or groceries to feed your family (while trying to avoid using a credit card for either purchase yet again). And the moments when you’re staring at your retirement account wondering if you’ll ever make any real headway. Not to mention those long, exhausting nights when many other parents are likely resting comfortably in their beds while you work a second or third job to help make ends meet and pay for the extra things you’d like to be able to give your family.

Becoming a parent is easily one of the most profoundly rewarding things I’ve ever done with my life, and living each day as Aidan’s mom is my deepest honor, one I wouldn’t trade.

But that doesn’t erase the fact that being a single head of household can wreak havoc on your finances, your time, and your career trajectory, presenting challenges dual income households often do not face.

In 1960, nearly 90 percent of children lived with two parents. But by the mid-1990s, the number had fallen below 70 percent and remained there as of 2017, according to Census Bureau data.

Robert Epstein, of New Jersey-based Access Wealth Planning, says single parents typically live with numerous challenges, finances being just one of them.

“Single-parent households face issues that are often heightened by the limitation of not being able to have two earners in the family, as well as the need for one person to combine work, household, and child-rearing tasks,” begins Epstein.

In fact, while the median income of married couples was $85,300 in 2017, it was just $35,400 among single mothers, nearly a third (31.6 percent) of whom faced food insecurity, according to the National Women’s Law Center.

Still, single parenting doesn’t have to be a financial boondoggle. There are countless single moms and dads who have mastered the art of rearing children, budgeting, and living frugally while still leading a full life and preparing for the future.

I’m not talking about the doctors, lawyers, CEOs, and supermodels for whom economic challenges don’t necessarily apply. I’m talking about those who don’t pull in six figures (or more) as a matter of course. For the latter category, here are some of the ways to improve your overall financial picture.

Have Confidence in the Plans You’re Making for the Future

As someone who unexpectedly became a widower left to raise two children, Epstein learned first-hand how difficult it can be to juggle the responsibilities of a single parent. It’s a reality that can inspire a great deal of self-doubt.

“A lot people go through a trauma of one sort or another and lose their self-confidence and then end up not pursuing goals actively,” explains Epstein.

The problem with that, says Epstein, is the longer you wait, the more difficult it is to achieve things, particularly with regard to financial planning, because timing is so important. So, take the time to think about and plan for the future and have faith in yourself and your goals and dreams.

“If you see that you’re not doing something every day to reach your goals, work with someone who can help you do that,” Epstein adds. “Everyone needs someone to talk to, especially about their financial issues because many people have fears about them.”

It’s also a good idea to surround yourself with people who can keep you accountable yet support your financial goals and dreams, says Arizona-based personal finance coach Kalen Omo.

“Being single leaves you more vulnerable to the impulses of life, so have someone or a group of people who can walk with you and motivate you to succeed,” said Omo.

Get Control of Your Budget and Debt

In addition to maintaining self-confidence through the challenges and valleys, it’s critical to gain a clear understanding of your monthly spending.

“It’s remarkable how many people are not aware of what they’re really spending. Maybe it’s tied to the issue of financial fear, maybe they don’t want to think about it,” says Epstein.

Being a single parent is a big responsibility – financially and otherwise. Getting your budget under control and understanding where your money is going and how it’s spent enables you to prioritize, eliminate, or reduce unnecessary expenses and focus on what’s important.

There are any number of personal finance websites and apps that make this easier than ever. Options like Mint, You Need a Budget, Pocket Guard, and Prism (to name a few) allow you to link all your accounts and expenses in one place, so you can easily view the overall picture.

“With one income stream coming into the household, knowing what money is coming in and having the power to tell your money where to go is important,” says Omo.

Another important step toward securing a better financial position is banishing debt: Every ongoing obligation you can wipe out frees up more money each month to do what you need for yourself and your family.

A debt elimination strategy like the snowball method can help: List your debts from smallest to largest, and make the minimum payment on everything except on the smallest balance; throw every extra dollar at that one until you knock it off completely. Then, do the same with the next-smallest balance until it’s paid off, too, and keep repeating the process.

“The goal is to build up momentum in your debt elimination by paying off the smallest, then the next smallest, and so on,” said Omo.

Help Your Children Understand That Happiness Is Available Within Your Budget

Don’t be afraid to talk to children and be open about the reality of your financial situation. Engage them in discussions about living within a budget, which helps establish proper expectations.

“Explain to your children, ‘You can’t do two dance classes, you can only do one,'” says Epstein. “We didn’t do as many vacations as others in the neighborhood. We took one vacation per year. Neighbors’ kids took two or three vacations per year. But both of my kids, looking back on it, don’t regret it. When you have less vacations, you appreciate the ones you had even more, and your life is rich in other ways.”

What’s most important to the child is your love. If you do everything you can for them, they’re going to appreciate you, and they will also grow up with good values.

Develop a Plan to Increase Your Earning Potential

Running a household and raising children on your own leaves little time to plot a course for a better future. Not to mention finding the time to do the work to reach that brighter horizon.

“You’re in a situation where your budget is tight, where you’re not able to accomplish all of your financial goals, but you want to make sure you’re going to improve your financial situation in the future, and that takes time,” explained Epstein, who suggests taking courses in an area that will improve your marketable skills.

Educate yourself for the next step, so that in five, 10, or 15 years, you will succeed.

Keep in mind, however, that it may take a few years to complete that education and obtain a position in your chosen field. And beyond that, it may take a few more years before you realize your true earnings potential.

“You want to reach a place where you have the money you need and that gives you internal satisfaction with what you’re accomplishing every day,” said Epstein.

Don’t Cheat Your Retirement

We all want to do as much as possible for our kids, and that often includes helping pay for college, which can be particularly challenging on a single parent’s budget.

But at the end of the day, establishing financial security also means taking care of yourself, so that you don’t eventually become a burden to your children, says Rafael Rubio, senior partner at Michigan-based Oray King Wealth Advisors.

“Everyone is so worried about investing for kids’ college. Yes, that’s good if you can afford it, but it’s important to take care of yourself first,” he explained. “There’s financial aid available for kids to pay for college,” he adds, and federal student loans offer various perks and protections. Meanwhile, you’re pretty much on your own in retirement.

“Your kids are going to be your first and foremost priority, you want to make sure they’re taken care of and fed, but you want to make sure you’re taken care of and fed too.”

Don’t Try to Keep up With the Joneses

The bottom line is that as a single parent household, you can’t and won’t be able to keep up with the Joneses. Nor should you try. It will be frustrating, disappointing, and ultimately self-defeating. And it’s not where true happiness or financial security lies.

“Practice discipline, be frugal, and don’t try to keep up with what you see your friends and neighbors doing,” says Triplemint real estate agent and single parent Tami Kurtz. “Gratitude about kids, health, and a roof over your head can go a long way towards realizing you don’t need everything you want.”

And while you’re at it, make every day count, adds Epstein. There will be ups and downs and twists and turns in life. No one goes through life without difficulties.

“But as you face the challenges, as long as your keep your mind on your long-term goals, you will overcome the inevitable difficulties,” said Epstein. “In the end, you’ll be proud of many things – having raised your child and bettered yourself, and those things will be more important than whether you could buy something or go on vacation.”

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How U.S. Maternity Leave Policy Stacks Up to the U.K. and Germany

If American Airlines Messed Up by Charging You Bag Fees, You May Get $200


One of the more annoying realities of modern travel is paying to check luggage when you fly.

And one airline is now dealing with a class-action settlement after a lawsuit accused it of overcharging customers to check those bags.

American Airlines charged fees for baggage that should have been checked for free between July 2013 and June 2018, according to the suit.

“American breached its contract with certain customers by charging them to check one or more of their bags, despite promises that they could do so at no additional cost,” the settlement website states.

By settling the case, the airline does not admit to any wrongdoing but does agree to compensate customers.

American Airlines travelers who haven’t already received a refund for incorrectly charged checked baggage may file a claim. The airline will refund all wrongly charged bag fees from the case time frame, plus interest. Depending on what you paid, your refund could range from $18.75 to $200 (plus interest!) per bag.

If American Airlines’ records indicate you’ve been impacted by the glitch, you may receive a letter or email inviting you to submit a claim. Not sure if you deserve a refund? You can file a claim without details about when you flew or what you paid.

To submit a claim, visit the settlement website and submit your form by Oct. 19. You may also submit your claim by mail. Once the settlement is approved in court and claims are verified, refunds will be sent by check or PayPal.

Lisa Rowan 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.



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Take a Shot at This $200K Scholarship from NBA Player Derrick Rose


In the game of life, leadership skills and drive are important to success. NBA player Derrick Rose is looking for high school students with those qualities to apply to his newly formed scholarship program.

Last week, Rose launched the Rose Scholars Scholarship Competition, which will award one high school student up to $200,000 toward his or her future college expenses. The grand prize scholarship winner will receive $25,000 each semester over four years to be used for tuition, books, housing and food.

The scholarship program will also award two other students up to $20,000 each for tuition and housing costs to cover one year of college expenses.

“Through this initiative, we are hoping to empower the next generation to pursue their dreams,” the Minnesota Timberwolves point guard wrote on his Facebook page Wednesday, announcing the scholarship program.

The scholarship is open to civic-minded U.S. high school students in their sophomore, junior or senior year. A family member or friend could also apply on behalf of a deserving student.

Students need to have a GPA of 3.0 or higher to be eligible for the scholarship and have an SAT score of 1230 or higher and/or an ACT score of 21 or higher. To complete the application form, students must write an essay describing — in 600 words or less — what they’ve achieved in their lives thus far and how this scholarship will “change the game” for them.

Applicants must also upload a photo or video to their social media accounts that shows how and why they’ve been a leader in their community and includes #RoseScholars2018 in their caption.

The application period ends September 30, 2018. Scholarship winners will be announced on or about October 15, 2018.

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.



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Easy ways to cut your inheritance tax bill

Inheritance tax

If you hate the idea of HMRC receiving a large chunk of your estate when you die, read these expert tips on how to reduce your ‘death tax’ bill or, better still, leave your heirs with no tax to pay. 

Inheritance tax (IHT), commonly known as the ‘death tax’, is a tax on the estate – property, money and possessions – of someone who has died.

It’s a tax dreaded by the middle classes almost as much as the Grim Reaper himself. Yet, surprisingly, it doesn’t affect a huge number of people. According to figures from Her Majesty’s Revenue and Customs (HMRC), for deaths in 2014/15, the number of estates with a liability to IHT was 23,250, which was about 4% of all the estates left on death in the UK (approximately 597,000 in total).

Yet, IHT receipts have increased year on year since 2009/10, on average by 11% each year. Moreover, with house prices having risen, in the South East in particular, an increasing number of people are finding themselves liable for it. According to HMRC’s own figures, approximately £4.8 billion was collected in the 2016/17 tax year.

The IHT allowance

IHT is normally charged at 40% of the value of your estate above a certain amount, known as the inheritance-tax threshold or nil-rate band, which is £325,000 for the current 2018/19 tax year.

However, married couples can combine their IHT thresholds, meaning that up to the first £650,000 of their combined estate is IHT-free, as any unused nil-rate band can normally be passed on to the surviving spouse.

In April 2017, an IHT tax break was also introduced on the family home. This means an individual can transfer an additional £125,000 this tax year to their direct descendants – rising to £150,000 in the 2019/20 tax year and £175,000 in 2020/21.

Adrian Lowcock, investment director at multi-manager Architas, explains: “This effectively means that, by 2021, an individual will have IHT-free allowances of up to £500,000, and married couples or civil partners, who can inherit any unused allowance from their spouse, could pass on up to £1 million before they have to pay IHT.”

Nevertheless, after years of grafting, saving and paying taxes, most are reluctant to allow the tax authorities to take money from their estate.

Avoidance measures

IHT law is relatively complex, but there are plenty of legal ways to avoid it. Danny Cox, head of communications at financial provider Hargreaves Lansdown, stresses that “one of the best ways to reduce the amount of IHT that will be paid on your death is to reduce the value of your estate”.

Moneywise reveals three top tips to cut your IHT bill.

1. Gift smaller sums

Gifts to your spouse or registered civil partner and to registered charities and political parties are IHT free.

In addition, you can gift £3,000 of capital each year, which is known as your annual exemption. If you didn’t use last year’s allowance, this can also be used.

You can also make regular gifts from your income, but you must show that such gifts leave you with sufficient money to maintain your standard of living.

IHT law is complex, but there are plenty of legal ways to avoid it

Wedding or civil ceremony gifts are also allowed. You can give up to £1,000 to a relative or friend, up to £5,000 to a child or up to £2,500 to a grandchild or great-grandchild.

In each tax year, you can also gift up to £250 to any number of people completely free of IHT, provided you’ve not used another exemption on the same person.

2. Gift larger amounts

You can also reduce your IHT by giving away larger financial sums, but you must live for at least seven years from the date of the gift for it to be completely free of IHT. These gifts are known as potentially exempt transfers and are taxed on a sliding scale known as taper relief (see box, below).

Tim Fullerlove, a partner at Wilsons Solicitors, warns, however, that you must not benefit from the money or assets you give away. If you do, even in a small way, your estate will still pay IHT on the asset when you die.

Mr Lowcock adds: “Much IHT planning involves giving away some of your money early and, as such, you lose the benefit and access to that money.

“This needs consideration, because, while you might not need the money today, you could find you might need it later in life, for healthcare, for example.”

One common concern when making large gifts, particularly to younger children, is whether the recipient will spend it wisely. Fortunately, it is possible to give money away while retaining control over its use by way of a trust arrangement.

How taper relief on gifts works

Number of years between gift and death Percentage of gift liable for inheritance tax (%) Effective rate of inheritance tax (%)
Less than three years 100 40
Three to four years 80 32
Four to five years 60 24
Five to six years 40 16
Six to seven years 20 8
More than seven years 0 0

Source: Gov.uk, 5 July 2018.

Mr Fullerlove explains: “Trusts are a complex topic, but there are a variety of structures that allow you to give money away, achieving the tax savings of a gift, without giving the children or other recipients control over it.

“You, or other chosen trustees, can hold the money on behalf of the recipients and use the funds to support them until you feel they are financially mature enough to have the funds themselves. If you give more than £325,000, on current values, to a trust you will trigger an immediate tax charge – but gifts up to this threshold will, again, be free from IHT if you survive for seven years.”

3. Invest your cash

Some investments also qualify for relief from IHT after two years – although there are risks and the rules can, again, be complicated.

Julia Rosenbloom, private-client tax partner at accountancy firm Smith & Williamson, explains that if you’re a small-business owner, for example, and have held the business for two years before death, then it may be that the value of the business qualifies for business property relief (BPR) at 100%.

However, she warns: “Sometimes the way people operate or structure their businesses, or the assets held by the business, can jeopardise either the amount of IHT relief available or even whether IHT relief is available. Therefore, business owners should review how they manage things, to ensure they qualify for BPR.”

If the business premises are owned (rather than leased), for example, but are held outside the company, only half the business value will qualify for IHT relief, compared with 100% if held within the company structure.

Qualifying Enterprise Investment Scheme (EIS) companies, certain AIM (Alternative Investment Market) shares and unquoted shares also qualify as free from IHT if held for two years.

Unfortunately, BPR is not available for AIM stocks where the business mainly deals in land or buildings or the making or holding of investments.

It is possible to give money away while retaining control of its use

However, if you choose wisely, it’s possible to have AIM shares in an Isa that benefit from tax-free growth and dividends which, if held for two years, can also be passed on free of IHT after death.

Mr Cox points out: “There are packaged schemes offered by selected investment companies that invest in AIM portfolios and unquoted shares for their IHT benefits.”

Of course, all these investments carry additional risks, and Mr Lowcock stresses: “Investors should be wary of jumping into these investments both feet first, as you could easily lose more than you gain from the tax avoidance. Don’t let tax drive your investment decisions; any investment should be sound on its own merit first.”

Ensure money is accessible on death

Ian Dyall, head of estate planning at wealth management firm Tilney, adds that the final step in IHT planning is to ensure that your executors have the money available, prior to the grant of probate, to pay any remaining tax liability.

He advises: “This can often be most efficiently achieved by holding life-assurance policies in trust to pay any remaining liability.”

How Mr & Mrs Smith’s estate could pay no IHT

Tim Fullerlove, a partner at Wilsons Solicitors, provided the following example of how IHT can potentially be avoided.

Mr and Mrs Smith have assets together worth £1.25 million. They both die in 2021 and leave their entire estates to their three children. In the tax year 2020/21, their combined IHT allowances will total £1 million. Their estates will pay IHT on £250,000, resulting in a tax bill of £100,000.

However, imagine that Mr and Mrs Smith have been making tax-saving gifts for the seven years before they die. They have each given £1,000 to each child each year, using up their £3,000 annual allowance and giving away £42,000 between them over seven years. All three children have got married over the past few years and Mr and Mrs Smith each gave each child £5,000 for their weddings, giving away another £30,000. They have felt able to give away another £10,000 each from their income to each child each year, for another £420,000. This means they have given away a total of £492,000 over the seven years.

These gifts are all immediately IHT-free, with no requirement to survive seven years. As a result, no IHT will be due on their estates.

CHRIS MENON is an editor and writer who has contributed financial articles to the Telegraph, Guardian and Independent on Sunday

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Dreaming of a Good Night’s Sleep? These Mattress-Buying Tips Will Help

الاثنين، 6 أغسطس 2018

Recommended summer — and anytime — tween reads

Generation Z — some of whom are in or approaching tween-hood — are rediscovering books that hooked millennials or even boomers.

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American Airlines’ Carry-On Fees for Basic Economy Will End on Sept. 5


Most basic economy airline tickets limit you to one personal item, the last boarding group, no advance seat assignments or upgrades and no wiggle room to change your flight.

This no-frills way of flying has become commonplace for budget travelers — and also a way for airlines to charge extra fees for seat assignments and additional baggage.

We have good news for our bargain-basement brood: Being basic is looking pretty fly right now.

American Airlines has announced that passengers on a basic economy ticket will be allowed a free carry-on bag as well as a personal item starting Sept. 5. Currently, it charges a $25 gate-check fee in addition to a $25 fee to check a first piece of luggage.

The airline made the change to keep it competitive with other airlines that include carry-on baggage in their economy fares, it said.

What You Get With American Airlines Basic Economy Ticket

While you might be stripped of the perks other main-cabin passengers enjoy, you can now pack a little extra on your next trip — if it’s after Sept. 5.

The carry-on bonus is good for all American Airlines destinations and it will allow passengers to use overhead bin space in addition to the under-the-seat space in front of them at no extra cost.

American Airlines basic economy ticket restrictions still apply.

Travelers will not be able to change, upgrade or board their flights early. However, they can choose their seats in advance or change seats for an extra $10 to $40 fee.

Thinking about snacks — I’m always thinking about snacks — don’t worry, all passengers receive the standard food and beverage service regardless if they’re on a regular main-cabin or basic-economy fare.

Read the Fine Print on Third-Party Purchases

Truth is, the quest for affordable flights often lands us on third-party travel-deal websites like Expedia, Kayak, Orbitz, Google and Priceline.

These aggregators list the cheapest flights first, which leads consumers into purchasing the lowest fare option without realizing they’re buying a basic economy ticket full of hidden restrictions.

Due to those hefty restrictions and fine print, there’s not much recourse if you accidentally buy a basic economy ticket.

Double check all the fine print and be sure you’re ready to commit to a basic economy ticket before making a purchase.

You might get stuck in a middle seat, but at least you’ll get there cheaply — and with an extra bag if you’re flying American.

Stephanie Bolling is a staff writer at The Penny Hoarder. She loves boarding a plane last. The less time spent crammed on a plane, the better.

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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3 Smart Ways These People Are Saving a Collective $2,040/Year on Car Insurance

This Repayment Method Crushes Debt One High-Interest Account at a Time


You’ve probably heard of Dave Ramsey’s “debt snowball” method of debt repayment. That helps you tackle debt when you need quick wins to keep you motivated.

The debt avalanche is another wintry metaphor to help you pay down debt. It’s more efficient and can save you money in the long run — but it might be harder work.

What Is the Debt Avalanche Method?

This method focuses on paying off your highest-interest debts first. Think: credit cards, probably. Maybe a loan you got back in the day when your credit wasn’t top-notch.

At the bottom of the list? Likely your federal student loans, which tend to come with favorable interest rates and flexible repayment options.

Also known as debt stacking, this method is great for people motivated by numbers — not so great for people motivated by feelings.

(Pst: If your Myers-Briggs test always produces an “F,” the debt snowball method might be better for you.)

Why Use the Debt Avalanche?

If you can’t tackle all your debts at once, paying off the highest-interest ones first is your smartest move. The longer they sit unpaid, the more debt you’ll accrue and the more this whole thing will cost you in the long run.

Let’s look at an example. (Warning: numbers ahead. But don’t worry; we’ll guide you through this.)

Say you have:

  • A $5,000 loan at 3% interest, and
  • A $5,000 credit card balance at 15% interest, and
  • A budget of $300 a month to pay toward debt.

According to this credit card interest calculator, if you split it and pay $150 toward each debt:

  • The loan will take 2.9 years to pay off and cost $227.23 in interest.
  • The credit card will take 3.7 years to pay off and cost $1,508.52 in interest.

That’s not too bad. But what if you put extra funds toward the high-interest credit card debt, instead?

If you pay $100 toward the loan and $200 toward the credit card balance:

  • You’ll pay off the credit card in 2.6 years and pay $1,032.66 in interest (saving nearly $500).
  • You can then add the $200 you were paying toward the credit card to your loan payment. In eight more months, you’ll pay it off, and your total interest over 39 months would be $306.21.

Using the debt avalanche method to target your high-interest debt would help you be debt-free about five months earlier and save you $396.88 over paying toward each evenly.

Enough with the numbers. Who’s in the mood for a snowball fight?

Debt Avalanche vs. Debt Snowball

tl;dr: The debt avalanche method is usually the fastest and cheapest way to pay down your debt.

The debt snowball method, on the other hand, will cost you more in interest but could keep you motivated to stay on top of your finances. It involves paying your smallest balances off first — so, quicker wins as you knock those debts off your list.

As long as you’re paying off debt in the end, we support it.

If you need help deciding which method is best for you, Debt Payoff Planner app might help. It lets you experiment with “payoff order” — the debt avalanche or debt snowball method — to see how each would affect your debt balances.

For help fitting your debt repayment into your budget, Dave Ramsey’s EveryDollar app includes a “debt” category, where you can list and rank your debts and track your progress toward paying them off.

Debt Payoff Charts

So, playing with numbers every month might not be super fun for you. We get it. Maybe an art project could keep you motivated?

Use this fun trick to keep your debt-payoff goals top of mind and celebrate your progress paying it off: Create debt art.

You know those thermometers you see around town to measure an organization’s fundraiser? They help the organization track and celebrate its progress toward its goal.

Debt art is like that.

You can create artwork that measures your debt as you pay it off. It’s prettier than those giant thermometers, but still helps you focus on your goal.

It’s like adult coloring pages, but with a purpose.

You’ll start with an image, where each section is assigned a payment value. Color in a section as you make payments.

When the image is colored in, you’re debt-free!

Feel free to get creative and create your own — but, in case that’s not your thing, we created some debt art you can download and print for free.

Happy financial freedom!

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

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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Auto Bits: Could compact pickup trucks have a future in America?

Tip of the WeekThere are no longer any compact pickups in the U.S. market. The new 2019 Ford Ranger and its peers are all larger mid-sized trucks. Could automakers be missing a golden opportunity?Americans like trucks. They buy them in great numbers for use in businesses and as personal and family vehicles. Toyota is one of the few manufacturers who has consistently offered a smaller than full-size truck over the past decades.However, even Toyota’s top-selling midsize truck, [...]

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Questions About 401(k) Matching, Book Recommendations, Educational Savings, Trade Schools, and More!

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. Saving to switch careers
2. New personal finance book recommendations
3. Match or no match?
4. Using Roth IRA for education
5. Less frequent 401(k) matching
6. Sensible gift for groomsmen
7. Giving up stuff you love
8. Trade school advice?
9. 7% average annual return?
10. Bouncing around streaming services
11. Take anything to Goodwill
12. Good audiobooks for road trip

When I was young, I used to always look forward to birthdays with great anticipation. A birthday usually meant presents and cake and ice cream and family and friends.

When birthdays pass for me as an adult, I would actually prefer that they were invisible. I don’t want to celebrate them because it’s honestly just another day in my life.

The difference is that, when I was young, there was a reason to want to grow older. It meant new opportunities and new experiences and new freedoms. Now? I have all of the opportunities and freedoms I want. There’s nothing really to be gained by the passage of years.

I’d far rather put a little extra effort into celebrating a child’s birthday (and by effort, I don’t mean throwing money at it, but actually putting footwork into doing something memorable for them) than celebrating my own in any way.

On with the questions.

Q1: Saving to switch careers

I am 31 years old, male, single, a lawyer who hates his career. I am in a huge law firm where I make good money but am basically anonymous and handle cases for clients that I hate and legally protecting them against people I have sympathy with. I wake up each morning dreading going to work. So I decided to switch careers. I am going back to school with the goal of teaching high school math.

Let’s assume that I could probably force myself to keep working here for another year before quitting. What’s the best strategy financially for transitioning back to school from this job? And eventually onward to teaching?
– Will

It’s good that you discovered that you hate your career when you’re still young and single, so that you’re not stuck in a situation where you can’t really change careers because of the responsibilities and other burdens on your shoulders.

If I were in your shoes, I’d obviously target going back to school starting in fall 2019. What do you need to do between now and then? You need to figure out what training you need to become a certified math teacher in the state you want to teach, figure out an educational path to get there in an efficient manner, and apply to the necessary schools.

From a more financial angle, you should aim to live as inexpensively as possible for the next twelve months. Going back to school is going to be expensive, so you’ll need all of the money you set aside, plus your life as a teacher is going to involve a lower salary than your life as a lawyer. Live cheap and build up a healthy amount of money in your savings account. However, if you have a 401(k), especially if it has an employer match, I would not cut back on your contributions. You’ll be extremely glad to have them in 30 years.

If you have any outstanding student loans, you should make sure that they will go into deferment while you go back to school. This will help you make ends meet while you’re studying. You’ll also want to make sure that you can take on the additional debt that will likely spring up from this trip back to school.

As for a school to target, aim for a state university in the state you currently reside. Figure out which one will require the minimum amount of coursework on top of what you’ve already taken to obtain a teaching certification in mathematics and aim for that.

In other words, start living cheap and start doing your homework. There’s really not much else to it.

Q2: New personal finance book recommendations

I’ve been enjoying the series on Wisdom of Frugality. You used to do a lot of book reviews. Do you still read personal finance books? Any newer ones that you recommend?
– Alexis

I do read recent personal finance books. A normal part of my writing routine is to go to the library, scavenge the personal finance book section (and a few other related areas), and do some reading with a notebook open in front of me, scrounging for fresh ideas or angles for me to consider for my own life and, eventually, for The Simple Dollar.

The thing with personal finance books is that most of them tend to go over the same core ideas. A personal finance book written in the 1970s and one written today is going to usually have the same core message: spend less than you earn and do something smart with the difference. Some specifics might change, but the core message is eternal. Thus, it can seem kind of repetitive to discuss the latest book that’s more or less the same as earlier books. In my eyes, Your Money or Your Life is still the best all-around personal finance book and The Total Money Makeover is still the best debt reduction book, and both regularly come out with revisions to make sure the little details are fresh.

I will make space on here to review truly interesting new personal finance books that I discover that say something that’s distinct and different enough from the usual message to be worth discussing. The Wisdom of Frugality is a good example of that.

Q3: Match or no match?

I know you always recommend beginning your retirement savings by investing in any company program up to the company match before starting to invest in a Roth IRA. However, what if you don’t know what the company will match? I’m about to begin a job with a new company and their 401(k) documentation specifically says “According to the [COMPANY] Savings Plan, [COMPANY] may, in its absolute discretion, make a matching contribution at Plan Year-End… Employees who are on the payroll on the last day of the fiscal year and who contributed to the savings plan during the year will receive a matching contribution if one is granted.” How would you go about investing here? Should I just pick a percentage and hope? Thanks in advance for your help!
– Tim

If I were in your situation, I would start out at work by asking your new coworkers whether or not the company typically does a match at the end of the year. Is this something they’ve actually done on a consistent basis? Or is it kind of an empty promise that they’ve rarely if ever fulfilled?

If it’s a pretty consistently fulfilled promise, then I would sign up for the 401(k). If there’s a good indication that they don’t actually do this at the end of the year with any consistency, then I would go with a Roth IRA.

Honestly, it sounds to me like it’s a company that’s hedging its bets. If they need to make their target numbers at the end of the year, this bonus is probably something that’s on the table as something they can cut. It does muddy the water for employees, though.

Q4: Using Roth IRA for education

My wife and I are expecting our first child in November. I am considering options for saving for his education. Is it better for us to start a 529 plan in my name and transfer it to him at birth or start a Roth IRA for me and use the contributions when he reaches college age and keep the gains for my own retirement? I’ve been reading about both options and want your take.
– Doug

My general belief is that parents should have their own retirement savings well in hand before they consider helping their children with college. If you don’t do that, then you run the risk of finding yourself at retirement age with inadequate savings and inadvertently becoming a burden to your children at the very point when they’re trying to find their way in the world. In other words, you should be putting away (at least) 10% for your own retirement before saving for your child at all.

Let’s assume, however, that you’re already doing that through your 401(k) and now you’re considering whether to contribute to your own Roth IRA or to your child’s 529.

Your choice boils down to this: would you rather have the proceeds of your savings be used to supplement your retirement savings or be used to supplement your child’s educational spending?

To put it another way, let’s imagine your future thirty years down the road or so. Are you better off with a little extra in your retirement funds while your child has a little bit higher student loan payments, or vice versa?

It’s really hard to predict which is financially “better” because we have no idea what’s going to happen in the thirty years in the middle. However, my feeling is this: I’d probably lean toward the Roth, all things considered, because it is inevitable that you will eventually retire, while it is not inevitable that your child will go to college or need your savings if he does go.

Q5: Less frequent 401(k) matching

What do you think about the trend of employers moving 401k matching to once or twice a year? This was totally new to me but recently I’ve heard of it more and more.

It seems like a crummy way to essentially replace a bonus with a previous benefit. It also incentivizes people to stick around longer—good for the employer, I acknowledge, but again gaming what had previously been a straightforward and socially valuable benefit. This coupled with “take a gamble” health care plans that atill manage to cost an arm and a leg…it seems like “benefits” of “good” jobs sure are eroding.

I am a firm believer in financial responsibility and frugality, but it seems consummately unfair in a world with such vast and growing wealth inequality that the burden of retirement and health care is continually shifted to individuals.
– Annie

This follows up nicely on Tim’s question above.

I think this trend of shifting to annual 401(k) matching is a trend that many companies are following because it keeps money in their own coffers for longer. If you pay all of the benefits at the last possible moment, then you keep the money that pays for those benefits in the company for longer, which is generally a good thing for the company. They can invest that money in the business for that time period and hopefully earn a positive return on that money for the company rather than a positive return for the individual employee in their 401(k).

Is it a move that’s friendly to workers? Not at all, obviously. Workers benefit by having their 401(k) matching deposited as early as possible, because it gives more time for compound interest and dividends to work in their favor. Switching to paying 401(k) matching from each paycheck to a 401(k) “bonus” at the end of the year means that the employee misses out on a lot of compound interest throughout the year. That can end up having a real impact – tens of thousands of dollars over the course of a career.

Unfortunately, unless the exact timing of 401(k) contributions is mandated in the employee contract, there’s not much that employees under contract can really do about it.

With regards to your final statement, I think that the things that happen to a person and their loved ones (and, depending on their degree of empathy, others beyond that circle) shapes a person’s political outlook. There is an truly healthy political and economic debate to be had over these kinds of issues… but The Simple Dollar is not the forum for that. Our interest is in helping people with the situation we have now.

Q6: Sensible gift for groomsmen

I am getting married in October. I have settled on spending $200 each on a memorable gift for my three groomsmen. I am looking for some ideas for something that they’ll value and use for a long time. Most of the groomsmen gift suggestions I’ve seen are impractical crap. Suggestions?
– Patrick

My honest suggestion would be to consider what you have in common with each individual groomsman and pick out a truly practical gift that expresses that commonality. This requires some homework and thought, of course, because you’re not just going to go to Amazon and “add three to cart” on some idea.

Sit down and, for each person, ask yourself what interests you share with that groomsmen and what key life experiences you’ve shared with that groomsmen. Then, when you look at that list, ask yourself what practical item touches well on at least one of those things.

There is nothing that beats a gift that speaks to who that individual actually is and what their connection is to you.

While I didn’t have a $200 budget, I did buy each of the people in my wedding party a gift that I thought matched what we have in common.

Q7: Giving up stuff you love

The biggest struggle I’m having in all of this is giving up things I love. I love going to cocktail bars. I love going out to eat at good restaurants. Giving all of that up just for the sake of “financial stability” seems like a terrible exchange.
– Max

Then don’t give up those things.

Instead, spread them out more. Wait until you’ve built up a big head of anticipation before you go to the cocktail bar or to that good restaurant. Savor that anticipation a little. Think about what you’re going to order when you go. Visualize it a few times.

Then, when you go, enjoy yourself thoroughly.

After you go, think back on the enjoyment you got from that experience. Was it really enjoyable? What will you do the same next time? What will you do differently?

Then let that all percolate for a while and let the anticipation build for a while for your next meal at a restaurant or your next cocktail bar visit.

What you want to avoid is making those things routine, so that you don’t appreciate them any more or have only a minimal appreciation.

Q8: Trade school advice?

My oldest son is 17 and has decided after his senior year to go to community college to become a carpenter. It’s a career path that the father of one of his close friends has followed and he has gone to a bunch of job sites and worked on Habitat for Humanity houses.

We have a small amount saved for him in a 529 which should apply to community college. There is a local community college that offers a carpentry program and his friend’s father says that he will help him find work. I don’t think he will have any debt.

What financial advice do you have for him?
– Craig

My number one piece of advice is to save for retirement starting on day one. It’s very likely that in this career path he’ll be responsible for his own retirement savings, so he should take that seriously from day one and open a Roth IRA as soon as he starts his first real job and set up automatic contributions to that Roth IRA. If he starts one at age 20 and contributes up to the limit until he retires, he’ll be able to retire in his mid fifties or so with plenty of money set aside.

This is particularly important in the trades, as a person in their late fifties and sixties may begin to have trouble actually performing the tasks required in that trade, and having a comfortable retirement cushion enables a tradesperson to retire without concern.

I personally feel as though trade work is a fine choice for any young person who is genuinely interested in that trade. People will be needed for trade work for the foreseeable future and construction does not appear to be slowing down in the least.

Q9: 7% average annual return?

When you talk about the stock market returning 7% on average, do you mean after inflation? Because it sure seems like it returns more than 7%.
– Jim

It’s after inflation. I got that number from Warren Buffett:

The economy, as measured by gross domestic product, can be expected to grow at an annual rate of about 3 percent over the long term, and inflation of 2 percent would push nominal GDP growth to 5 percent, Buffett said. Stocks will probably rise at about that rate and dividend payments will boost total returns to 6 percent to 7 percent, he said.

In essence, Buffett believes that stock market growth that’s substantially higher than GDP plus inflation plus dividends is not something that can be expected over the long term any more. With GDP around 3%, inflation around 2%, and dividends around 2%, you wind up with a 7% average annual return.

The stock market has been on a long bull run as of late, one that will eventually correct itself, so I would not judge long term stock market numbers on just data from the 2010s so far.

It is also worth noting that predicting long term stock market returns is a fool’s game, because no one can accurately predict the future. I use the 7% number because it’s a reasonable one.

Q10: Bouncing around streaming services

My husband and I “bounce around” streaming video services. At the end of each month, we’ll deactivate our account on one service and then on the first of the month we’ll activate it on another service. So one month we might have Netflix and another month we might have Hulu Plus and another we might have HBO Now. It takes just a couple of minutes to do it. Then we have fresh stuff to watch because we can catch up on all of the new stuff added in the 3-4 months since we last watched it.
– Maggie

This is a pretty good strategy, especially if you watch a lot of streaming video (ideally, you’ve ditched cable and replaced it with streaming) and you’re attentive to subscribing and unsubscribing to services. This is something I would schedule a calendar alert for.

If you subscribe to Amazon Prime Video (about $10 a month), Netflix (about $10 a month), Hulu Plus (about $10 a month), and HBO Now (about $15 a month), costs start to add up. That’s $45 a month, right there. If you instead rotate through the services (buy Prime for a year, then let it lapse for a few months while you catch up on other services), you’ll save about $35 a month as compared to having all of those services.

We usually pair Amazon Prime Video with one other service that we rotate every once in a while when we’re not finding anything new to watch that interests us. It’s a good money saving strategy.

Q11: Take anything to Goodwill

Trent, I read your article about the boxes you store in the garage for a period of time and then take to Goodwill if you haven’t used anything from the box. I went on a “Trash Tour” in the 90’s, put on by our Solid Waste Authority. At that time, the largest exporter, by weight, in our county was a recyling company that bundled clothing and other fibers to send overseas to fiber poor countries. The old clothing was used to make such things as shingles. Fast forward to 2016, I was at a conference on sustainability and one of the speakers was from Goodwill. She said that they would like all of our used clothing, bedding etc, no matter the condition. They sell what they can in their stores and then sell the rest to businesses that use the fiber. Some is sent overseas as described above. So don’t be picky about what you donate to Goodwill. They have uses for your old clothing you might otherwise throw out. The fiber is put to good use and saves space in our landfills.
– Brenda

My philosophy is that, if I want to get rid of something and I don’t intend to bother trying to sell it, I first check and see if Goodwill wants it. They’ll take a lot of things, and this is the reason why. Someone somewhere probably wants that stuff.

To me, the fact that I can take something that I was on the verge of tossing and give it to someone who will eventually put it in the hands of someone who will use it is far better than just tossing it. I would far rather give an item to someone who would get some value out of it than throw it away where it would just fill up a landfill somewhere.

That’s why anything that isn’t pure rubbish around here usually winds up in a Goodwill box or bag if we want to get rid of it.

Q12: Good audiobooks for road trip

I am looking for some good self improvement audiobooks to listen to on a long upcoming road trip. My library has a huge selection. I am mostly looking for ones that will help me build discipline to stick with things in my life.
– Andrew

Here are two books on that topic that I’ve enjoyed in the last couple of years. I can’t judge the audiobook quality here, but I can say the books were good.

Willpower by Roy Baumeister centers around the argument that we each have a certain amount of willpower during a given day and that it depletes throughout the day. He offers a bunch of solutions for nudging our capacity for daily willpower upwards a little, as well as suggestions for how to “refill” our willpower effectively.

Triggers by Marshall Goldsmith is a book I’ve been high on for a while and mentioned offhand more than a few times on The Simple Dollar – perhaps I should do a series on it. The book’s focus is on orienting your life so that you naturally have triggers that exist that nudge you into better behavior, and he offers a few really great techniques for doing this.

Both of these hit the very points that I think you’re looking for, and I think you’ll enjoy both of them.

Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.

The post Questions About 401(k) Matching, Book Recommendations, Educational Savings, Trade Schools, and More! appeared first on The Simple Dollar.



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These Car Features Could Make Life Easier for Dog Owners

The Investment Riskometer

When it comes to investing your hard-earned money, you obviously want it to grow. That’s really the whole point of investing as opposed to keeping it in the bank. But you also know that investing means that you can lose money, and you hate the idea of all that money you’ve saved suddenly disappearing.

So, how do you know which investments will help your money grow without subjecting it to too much risk? There’s no perfect answer, but this post will help you figure it out.

What follows is an investment riskometer that ranks the most popular types of investments from least risky to most risky so that you can find the perfect balance between growth and safety for your personal goals and preferences.

A Quick Primer on Investment Risk

Before we dive into the investment riskometer, there are a few big picture ideas that are important to keep in mind.

First, risk and return are inextricably linked in the world of investing. That is, just about any investment that offers higher expected returns comes with higher risk. You can’t get better returns without taking on more risk. (Though it’s worth noting that increased risk DOES NOT automatically lead to higher expected returns.)

Second, this investment riskometer – and the investment world in general – defines risk as variability in returns. The more the return from a particular investment fluctuates from year to year, the riskier it is.

But it’s important to understand that there are other risks as well. Inflation, for example, is a big risk over long time periods, and a “safe” investment that provides a small guaranteed return may actually face significant risk of losing real value by not keeping up with inflation.

Finally, there are a few simple ways to manage the overall risk of your investment porfolio, no matter which specific investments you choose:

  1. Emergency fund: Having an emergency fund in place reduces the risk that investment losses will leave you without the money you need to pay your bills.
  2. Asset allocation: Your overall asset allocation is the primary driver of your investment portfolio’s risk and expected return. The specific investments you choose are less important than your portfolio’s overall balance between stocks and bonds.
  3. Diversification: Diversification is the practice of spreading your money out over a number of different investments instead of putting it all into just a few, and it’s one of the only ways to decrease risk without decreasing expected return.

Focusing on those principles first and foremost will do more than anything else to keep you from taking on more risk than you’re willing to take.

The Investment Riskometer

What follows is a list of types of investments, ranked from least risky to most risky. But first, a few words of warning:

  1. This list is not comprehensive. These are by and large the most common investment categories, but there are many different types of investments not included on this list.
  2. This ranking is general, not definitive. The distinction between certain categories is small and you could easily argue for a different order.
  3. The future is unknown and just about any particular investment could lose more or less value than any other investment over any given time frame.

With that, I present the investment riskometer!

1. Savings Accounts

A good savings account offers FDIC insurance, a guarantee that your account balance will never decrease, and a known return, though the interest rate will rise and fall as market rates change.

The main risk is that inflation will likely outpace the interest rate you earn. This shouldn’t matter over short time periods, but it can have a big impact over long time periods.

2. Money Market Mutual Funds

Money market mutual funds are a lot like savings accounts. They pay a small interest rate that changes with overall market rates and your account balance will never fall.

The main difference is that money market mutual funds are not protected by FDIC insurance, which could matter in worst-case scenarios.

3. CDs

With a traditional certificate of deposit, you agree to lock your money in the CD for a set amount of time in exchange for a higher interest rate than what you can get from a savings account. The main risks are the penalties involved if you need to withdraw the money early and the fact that in most cases your interest rate will be fixed and will not increase if overall market rates increase.

You can also buy brokered CDs, which are easier to trade than traditional CDs but whose value can rise and fall with the market.

4. U.S. Treasury Bonds

U.S. Treasury bonds are generally considered to be the safest bonds in the world. The value will rise and fall, but they are fully guaranteed by the U.S. government.

5. Municipal Bonds

Municipal bonds are issued by states, counties, cities, and other municipalities. The main benefit is that the interest you earn is exempt from federal taxes, and in some cases exempt from state and local taxes as well. The risk level varies widely, though, and it’s important to do your due diligence before investing.

6. Investment-Grade Corporate Bonds

These are bonds issue by U.S. companies that ratings agencies have deemed to have a relatively low risk of default. There’s more risk than with Treasury bonds, but you may also earn slightly more interest.

7. International Treasury Bonds

Other governments issue bonds, too, and the risk level really depends on the overall characteristics of the country and its government. This is one area where diversification is particularly important so that you’re not too dependent on any single government.

8. High-Yield/Junk Bonds

High-yield bonds – also known as junk bonds – are bonds issued by companies that ratings agencies have deemed more likely to default. You can get higher interest rates, but that comes with greater risk that the bonds will never be repaid.

9. Large Cap U.S. Stocks

Large cap U.S. stocks are stocks issued by the biggest companies in the United States. This is essentially what the S&P 500 represents. Stocks always carry risk, but these are some of the most stable companies in the world.

10. Developed Market International Stocks

Stocks issued by companies from developed markets share many of the characteristics of U.S. stocks, with a little bit of extra risk. They can be a great diversifier, ensuring that you have money invested in companies across the globe.

11. Small Cap U.S. Stocks

Small cap U.S. stocks are issued by the smallest public companies in the United States. These stocks offer the potential for higher returns than large cap stocks, but they come with more risk because they represent younger, less established companies.

12. REITs

REITs – short for real estate investment trusts – allow you to invest in real estate without having to purchase individual properties. They can be a good way to invest in the real estate market in a way that’s more diversified and less labor-intensive than managing properties.

13. Emerging Market International Stocks

Emerging stock markets are generally smaller and less developed than other stock markets. Stocks issued by companies within these markets have the potential to provide superior returns, but they come with an increased level of risk.

14. Investment Properties

Buying individual investment properties can certainly pay off, but they are inherently undiversified. Each property you own represents a significant amount of money invested in a single asset, and it’s a costly asset to boot. That’s not to say that you should never buy investment properties, just that you should do so carefully.

15. Alternative Investments

There are many other alternative investments, from gold, to commodities, to peer-to-peer lending, to collectibles like art and fine wine.

As a financial planner, I generally steer clients away from investments like these. It’s hard to know what to expect and the costs can be significant. There is also often more risk involved than what’s presented up front.

Remember That Risk Is Relative

My hope is that the list above helps you understand a little more about the investment options available to you so that you can make more informed decisions when putting your own portfolio together.

But it’s important to remember that risk is not absolute. You have your own goals and your own preferences, and your particular risks will not be the same as everyone else’s.

Above all, remember that the purpose of investing is never to minimize risk or maximize returns. It’s simply to create and implement an overall investment plan that helps you reach your personal goals. Choosing the right mix of investments one part of that plan that can help you get and stay on track.

Matt Becker, CFP® is a fee-only financial planner and the founder of Mom and Dad Money, where he helps new parents take control of their money so they can take care of their families.

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الأحد، 5 أغسطس 2018

Make Money on Craigslist: How I Earned $3,500 in 30 Days

When I first started working from home, 99% of my business came from word-of-mouth – a design here, a few blog posts there. I started every workday by spending a few hours writing cold emails to friends of friends and pitching to freelance gigs found on various sites and Facebook groups. Finding work was as […]

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Five Home Improvements Worth a Discount on Your Homeowners Insurance

As a homeowner, the process of renovating, remodeling, and upgrading your property to create your own private corner of paradise can be an expensive hobby.

The silver lining however, is that some upgrades can help pay for themselves over the long run by saving you money on your home insurance bill.

Granted, the renovations that typically help you qualify for an insurance discount are of the less glamorous or aesthetically pleasing variety, but it’s still money in your pocket. And when it comes to home ownership, every penny is important.

Here are some of the projects to keep in mind when considering home improvements that can help pay you back with a discount on homeowners insurance.

Security Alarm

This one is (or should be) a no-brainer for homeowners everywhere. There are about 2.5 million burglaries annually, and 66 percent of them are home break-ins.

Naturally, burglars are more attracted to properties that don’t have a home security system. In fact, homes without such protection are 300 percent more likely to be targeted.

“Installing a home security system reduces the odds of a burglary and homeowners insurance gives you a reduction on your premiums if you do so,” says McCall Robison, who manages a home blog for Best Company that regularly focuses on cutting insurance costs and home improvements.

In addition, some home security systems will earn more of an insurance reduction than others. To max out the discount offered by your insurance provider, says Robison, your home security system typically must include central monitoring that’s connected to emergency services. The insurance company wants to know that in the event of a break-in, an alarm will be triggered immediately and authorities will be notified.

It’s also important to keep in mind that the home alarm systems of today are far more sophisticated and advanced than the simple burglar alarms of decades ago. The days of a security system focused only on theft are quickly disappearing.

Today, security systems include everything from sensors in your basement or near your water heater to detect water leaks to monitors that let you know if your pipes are freezing, says Jim Hyatt, senior vice president of personal lines at Arbella Insurance Group, in Quincy, Mass.

“Certainly, security systems are a great way to deter burglaries, but the bigger risk is fire and water,” says Hyatt. “Water is the other top cause of people having disasters happening to their homes.”

“A lot of alarm systems 20 to 30 years ago were just burglar and fire alarms,” added Hyatt. “Today it’s more common to also have water leak detection systems.”

Insurance companies will provide credits ranging from five to 10 percent for homeowners with security systems, says Hyatt.

Emergency Generator

With increasingly severe storm events occurring around the country and the world each year, many homeowners are installing generators to protect themselves. It’s a smart move on many levels.

“During some of these winter storms, utility companies have a very difficult time keeping up with power outages,” Hyatt said, and a generator can keep the lights on during such an event.

Perhaps equally important, a generator purchase will not only save a few dollars on your insurance, it will also help prevent expenditures on additional losses such as repairing burst pipes during extremely cold weather and redoing floors when the pipes leak everywhere.

Once again, the amount of the insurance discount related to the generator installation varies, but can be anywhere from four percent to 10 percent, says Robison, who adds that they can also increase your home’s resale value.

New Roof

If your roof is 10 or more years old, it’s considered a substantial risk by many insurance companies, says Robison.

“This results in higher premiums on your homeowners’ insurance,” Robison explained. “If this is the case, consider replacing your roof for a lower premium. Roof issues are the main cause of water damage and leakage, so your homeowners insurance will heavily consider a sturdy roof as a worthwhile discount on your premiums.”

Replacing or simply reinforcing a roof with newer, stronger material makes the most sense if you live in an area prone to heavy snow, rain, or natural disasters (think: hurricanes and tornadoes).

For those who do live in a dangerous and disaster-prone area, the roof is not the only item that can result in a discount.

Shatterproof glass and storm shutters are among the additional precautionary changes that provide protection during a disaster and translate into a reduced premium, said Robison. The states where home owners are most likely to get a hefty discount for these additional improvements are Florida, Mississippi, North Carolina, and Louisiana.

Upgrading Old Electrical and Plumbing Systems

Do you own a home that was built in the late 1800s or early 1900s? Even if it was updated in the 1940s or 1950s, the plumbing and electrical are still several decades old, says Hyatt.

“You’re most likely paying a pretty high price for homeowners’ insurance,” said Hyatt, who notes completely pulling out the old wiring and upgrading it to current standards may be another way to cut your insurance bill.

knob and tube wiring

Updating an old electrical system, like knob and tube wiring, can lower your home insurance premiums. Photo: House and Hammer

Removing a Wood Burning Stove

Ensuring that there’s a safe heating source in your home goes a long way toward keeping insurance premiums down as well. While a wood-burning stove may seem like a nice feature on a cold winter night, they account for a significant number of fires, says Robison.

“Insurance providers raise your rates if you have one,” says Robison. “Taking it out could save you anywhere from $50 to $150 on your premiums, depending on your provider. Also, not having a wood-burning stove makes your home less accident prone and much safer, especially if you have children in the home.”

The Bottom Line

Renovating your home is part of the joy of being a homeowner (at least for many people). But if you’re embarking on such changes, it’s important to touch base with your home insurance provider and ensure you have adequate coverage going forward to protect all the money you’re spending.

“If you decide to do a major renovation and expand the square footage substantially and add a bathroom, then your house is different than it was before,” said Hyatt. “You don’t want to get caught not having enough insurance after spending $70,000.”

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