Everything You Need To Know About Web Hosting

In order for your website to be live on the Internet, it needs to be hosted.

If you’re creating a website for the first time, move “set up hosting” to the top of your to do list, if it’s not already there.

Already own and operate a website? Did you rush into a plan without understanding how everything worked first? Maybe you feel like you’re fine with the host you picked at random. Makes sense — until you run into a problem with your website, you might not even think twice about your hosting plan. However, you don’t want to wait until that happens. It’s better to educate yourself on web hosting now so you can find the best option before anything goes awry. This will make your life much easier down the road.

Regardless of your situation, you’ve come to the right place. This beginner’s guide on web hosting will help you feel confident picking the host that’s right for you and your goals.

What is web hosting?

Let’s start with the basics. What exactly is web hosting? How does web hosting work?

Websites are hosted on servers. In simple terms, a server is a very powerful computer that does only one or two simple services, hence the name server. The type of server we’re interested in stores websites and delivers them to people over the internet. Your web host provides the server space and the technology for your website to be accessed on the Internet. It’s the process that allows someone to search for your site or enter your URL into their web browser to see your page online.

Everything that your website contains is stored and accessed through the web host. I’m referring to things like images, videos, files, text — everything.

Web hosting and data centers are often confused with one another. While the two are similar and work together, they are not quite the same. Web hosting refers to the servers that host websites or the hosting companies that provide you with server space. Data centers are the physical facilities where those servers are located.

Web hosting types

There is no one-size-fits-all plan for web hosting. It’s like buying a car. You don’t just walk into a dealership and say, “I’ll have a car please.”

What kind do you want? You need to decide if you want a sports car, sedan, coupe, hybrid, SUV, electric, diesel, automatic transmission, manual transmission, etc.

Fortunately with web hosting, you don’t have that many options to choose from. There are four main types of hosting.

1. Shared
2. VPS
3. Dedicated
4. Cloud

I’ll explain how each one of these works and what type of website would need that level of hosting, so you can decide which option is best for you.

Shared hosting

First, shared hosting. With this method, your website shares server space with other websites. Here’s a diagram that shows how shared web hosting works compared to the other web hosting types:

Since you’re sharing a server with other websites, this will be the most cost-effective method. Think of it like taking the bus to work instead of driving your own car. The bus will be less expensive, but you’ll be making some stops along the way to your destination in order accommodate other people.

While I don’t necessarily have a problem with shared hosting, you could potentially run into problems down the road as your website grows and gets more traffic. High spikes in traffic can impact loading time and even lead to error messages for people trying to access your site. The performance of your website can be affected by traffic to other sites on the same shared server. So, just like when you’re on the bus, there may be a ton of other people requesting stops, slowing down your commute. Or, it might be just you and the driver. You’re saving money, but you have less control of the quality of the experience.

Who is shared hosting best for?

Shared hosting is a common option for beginners and entry-level websites. It’s affordable and doesn’t require much technical knowledge. If this sounds like your situation, you’re probably a good candidate for shared hosting. (You can also upgrade later on, when your website traffic grows.)

VPS hosting (Virtual Private Server)

VPS hosting is the next step up from shared hosting. With this option, one server is basically split into multiple virtual servers. The main server is shared with other websites, but each site is given its own virtual server. Since fewer websites share the main server, page load times will be much faster with VPS hosting. Since fewer websites share the main server, page load times will be much faster with VPS hosting.

It’s definitely important for you to understand the principles that boost your website loading time since this will ultimately have an impact on your conversions.

It’s not quite as good as dedicated hosting, but it’s better than shared hosting and gives you, the website owner, more control. If you go with this option, you’ll have complete root access and more control at the server level. But if you’re expecting high volumes of traffic, VPS hosting can still be limiting.

I’d compare it to using a car-sharing service: it’s faster than taking the bus, but you’re still limited in some ways.

Who is VPS hosting best for?

Even small websites with lower volumes of traffic can benefit form VPS hosting. If your site has lots of visual elements like images and videos that could potentially slow down the loading time, you’ll be better off with VPS hosting than a shared host.

Dedicated server hosting

Dedicated servers are yours and only yours. They are more expensive than the other options we’ve looked at so far, but the premium pricing comes with added benefits. It’s like owning your own car, as opposed to taking public transportation. You are in control of everything.

Since you’re the only website on this server, you have complete technical control. This allows you to implement a greater range of software on your website. Downtimes should be minimal since you don’t have to worry about traffic from other sites impacting your site. And, your load time is only impacted by your site — not any other sites.

Depending on your hosting plan, you might be able to upgrade from a shared server to a dedicated server when your website grows without having to start over from scratch. I recommend looking for this room to grow when you sign up for a plan. Migrating isn’t any fun, and neither is capping your site’s success.

Who is dedicated server hosting for?

Dedicated servers are for sites with higher volumes of traffic. If you have an ecommerce platform and want to make changes to the server based on your ecommerce software, you should consider going with a dedicated server.

Cloud hosting

According to Statista, the cloud computing and hosting market has been growing for the last decade or so.

With this method, multiple servers will work together to host your website, as well as other sites. But unlike traditional shared hosting, cloud hosting accounts for traffic spikes, so high levels of traffic to your site or other sites on the same cloud shouldn’t impact anyone’s loading speed.

However, you won’t have root access for a cloud server, which means you can’t change any of the server settings or install specific software. But for those of you who have a simple website and don’t need those tech options, cloud hosting might be a good option to consider.

Who is cloud hosting for?

Cloud hosting is for websites that fall somewhere between shared hosting and a VPS.

If your site doesn’t need access to the technical side of a VPS, but want you’re anticipating high volumes of traffic and don’t want loading time to be an issue, cloud hosting is viable option.

Web hosting features

Now that you understand the four basic types of web hosting, it’s time to know what features to look for before you buy a hosting plan. These features will vary depending on the web hosting type, the hosting company, and the plan you select. Understanding these web hosting features will help you figure out how to choose a web hosting provider.

Bandwidth

Bandwidth refers to the speed of your network connection, as opposed to the transfer speed. Higher bandwidth allows more visitors to access your site at the same time while maintaining a fluid user experience.

Lower bandwidth connections will cause slow loading times, delays, and even errors.

So, take a look at the bandwidth options offered by your hosting provider. If you’re a new website, you probably don’t need the highest bandwidth right away. Find one that can meet your traffic needs and website content.

For example, if users are going to be watching videos, looking at photos, and buying items on your ecommerce shop, you’ll definitely want higher bandwidth. But if you’re just starting with a blog and don’t expect heavy traffic, you can go with a lesser plan.

Data storage and disc space

You might see some web hosting companies offering unlimited data. However, make sure you look at all the details before falling for something that sounds too good to be true. Sometimes there are hidden charges for exceeding average site usage.

Unlimited storage isn’t always the best option. I recommend picking a plan that clearly states the storage you get based on the amount of disc space that you actually need.

Customer support

Most site owners don’t think of this, but customer support should be one of the top considerations when looking for a web hosting company. Roughly 20% of web hosting clients named support as the most important feature when choosing a hosting plan — I think that number should be much higher.

Why?

Hopefully, you don’t have any problems. But in the event you need some help or have time-sensitive questions that need to be addressed, you want to know that your web host is available and at your service.

Read reviews online from their existing clients to see how well they handle customer service communication and response time before you proceed with a plan. It’s also helpful when web hosting companies offer other resources, such as video tutorials or extensive guides and FAQ sections on their website.

Domains

The majority of the best web hosting businesses will let you create multiple domain names under the same account. So if you’re planning to host several websites through the same hosting service, this is definitely something you’ll want to look into before you get started.

It’s easier to manage everything this way. Having to set up a new account for each domain can be a pain.

For those of you that still need to buy a domain name, you can consider using a web host that allows you to purchase domains through their platform, but I recommend keeping these two things separate in case you have to switch hosts later on, your domain won’t be tied to your old host.

SSL certification

SSL stands for “secure socket layer.” Basically, this certification adds encryption to your website to protect your personal information, as well as personal information of your site’s visitors.

There are different types of SSL certificates. Some are for businesses, while others are made for individuals. Major website hosting services will offer an SSL certificate, but they can also be provided by third-party security companies.

If a website hosting company doesn’t offer SSL certificates or doesn’t have a strong SSL certificate, you may want to consider an alternative option. It’s also worth noting that transport layer security (TLS) is an alternative to SSL. This gives you more security, but it’s not as popular or readily available as SSL certificates.

Email

You may not need more than just a couple of company email addresses right now. However, as your website grows, you may want more. That’s why I think it’s important to look for web hosting services that offer multiple email addresses with your domain name. You could always get these email features through a third-party, but it’s much easier to handle everything in the same place.

Ecommerce software

If you’re going to be selling products through your website, proper ecommerce software needs to be a priority when you’re looking for the best web hosting option. You need to be sure that your plan either supports the software that you plan to use, or comes with ecommerce software that you can implement on your site.

It’s worth noting that ecommerce software is not considered a standard feature, so shop around and make sure your web host has what you need to operate your ecommerce platform accordingly.

Uptime

For the most part, you’ll see the majority of web hosting companies offering 99.9% uptime. However, don’t assume anything.

Usually, those services don’t include scheduled downtimes in the percentages they advertise. So again, it’s best to read reviews and see if their clients are experiencing lots of downtime.

If visitors can’t access your site, it’s going to be a big problem for your business. The best websites have a high uptime percentage.

The cost of downtime can add up quickly. If users are experiencing problems on your website and can’t access content, they will leave and may not come back.

Backups

I do not recommend web hosting services that don’t offer backups. This is one of the most important web hosting features, but it’s often overlooked.

All of your website and company files should be backed up appropriately on the hosting server. You should be backing them up on your own as well, but it’s nice to know that you have this data secured by the hosting company.

Advertising credits

Some web hosts offer advertising credits as an incentive for buying a plan. Here’s an example from Bluehost.

Depending on the company you use for hosting, they’ll let you apply those credits to platforms like Google AdWords. I highly recommend taking advantage of any advertising credits you’re given.

Web hosting costs

So how much is all of this going to cost you? I’m sure this is your next logical question.

I know it’s not the answer you’re looking for, but the real answer is: It depends. Refer back to the car analogy that I gave you earlier. You could buy a new car for a few thousand dollars, or a hundred thousand dollars depending on the brand, type, and features. Well, the same goes for your web hosting service. The price can range anywhere from less than $10 per month to hundreds of dollars per month.

If you’re going to get a shared server with low bandwidth, poor support, and no added software, it’s going to be pretty inexpensive. Even the best shared hosts with great support will run you less than $10 per month; under $5 per month for the initial contract. But if you want a dedicated server, ecommerce software, unlimited email addresses, backups, and multiple domains, you can expect to pay a premium price.

The majority of us fall somewhere in between these two extremes. Just be aware that cheaper isn’t always the best option. You need to understand the hidden costs of website hosting and how these costs will change as your website grows.

Conclusion

Your website needs to be hosted to be online. There is simply no way around it.

But that doesn’t mean you should rush into a web hosting plan without doing your research first.

First, decide which type of web hosting type is best for your situation. Then, determine the web hosting features you want. Once you know the answer to these questions, look for a reputable web hosting service that meets the requirements you’re looking for.

Don’t be intimidated by web hosting. Use this beginner web hosting guide as a reference, and let me know if you have any additional questions.

What type of web hosting server are you planning to use for your website?

Source Quick Sprout http://bit.ly/2DxNBy9

EZTaxReturn Review

Tax forms, in principle, should be simple. You fill in what you earned, add in the deductions, and submit it. It’s a pity, then, that the reality is so different.

If you find that navigating the world of tax forms is a nightmare, then tax return preparation software could be a good idea. The problem is that there are a lot of different options out there.

How do you know that you are choosing the right one for you? In this post, we are going to have a look at one option on the market. By the time you’re done with this ezTaxReturn review, you’ll know whether this software is the right choice for you.

How EZTaxReturn Works

Everyone needs a little guidance to file taxes. Free and premium tax services like EZ Tax can help. 

As you might guess from the name, filing with ezTaxReturn is simple, starting with the signup process.

You create an account on the site and check whether their services are available in your state.

Where EZTax Operates

The software does not support state returns in the following states, so if you live in one of these, you’ll need to choose a different company to work with:

• Connecticut
• Delaware
• District of Columbia
• Florida
• Hawaii
• Idaho
• Indiana
• Iowa
• Kansas
• Kentucky
• Montana
• Nebraska
• New Hampshire
• New Mexico
• North Dakota
• Oklahoma
• Oregon
• Rhode Island
• South Dakota
• Tennessee
• Texas
• Utah
• Vermont
• West Virginia

If your state is not on this list, you then answer a series of questions that will determine whether or not the software can help you.

This is a very simple program, designed to deal with straightforward tax issues.

If you’re running a company or receive income from several sources, this is not the right software for you to use.

How The EZTaxReturn Questionnaire Works

The questions that EZ Tax asks are aimed at narrowing down your tax situation. They are pretty straightforward.

As the software is aimed at simple tax returns, you won’t need to answer questions that have no bearing on your situation. The program uses the answers provided to establish:

• Which forms you need to complete
• Whether some deductions or credits might apply

With that information on hand, ezTaxReturn is able to help you file as accurately as possible, without missing out on tax breaks that might be available to you.

What Happens Next

The program populates the tax forms based on your answers, and you will be told what, if any, supporting documents you need to submit. Then you need to review the information, making sure that it’s all correct.

At this stage, if you’re happy that all is in order, you pay the fee and submit the return. You’ll get confirmation that it’s been accepted by the IRS within 24 hours.

Start filing your taxes with ezTaxReturn>>

EZTaxReturn Features and Benefits

For people with simple tax returns, the main drawcard with this software is that it doesn’t offer a whole host of features. That means that you are not paying for features that you’ll never use. You also won’t have to deal with an array of confusing options that complicate matters.

Simplicity

The company set out to create software that will enable you to quickly and accurately submit your return. They decided early on that the key to delivering a flawless product was to keep it simple.

They focused on one aspect of tax returns instead of trying to help everyone. The result is software that is simple to use and that will help you generate and file your return as quickly as possible.

You don’t have to answer a bunch of meaningless questions or jump through several confusing hoops to get your return completed.

The questions are simple and to the point. They’re designed to weed out anyone who the software can’t help early in the process, so there’s no time wasted for you if you don’t qualify. Also, because the software is geared towards simple returns, the questions are not nearly as extensive. This makes it perfect for someone who doesn’t know the first thing about tax returns.

Support

The company does offer full technical support via means of email and through their call center. As an additional extra, you can opt to buy Audit Support. This service is there to assist those who are audited.

A tax expert will help you deal with your audit professionally. They’ll assist you in getting the right information to the IRS and help you negotiate where necessary.

Access to Previous Tax Returns

One nice benefit that the company offers that you don’t get everywhere is free access to past returns. You are able to access up to three years’ worth of returns on their site. Downloads for these returns are free.

You can opt to have hard copies sent to you for a price. If you want access to returns outside of this three-year period, you can get them; you’ll just need to pay an additional fee. You’ll love the convenience if you have a simple return and want to get done with it as fast as possible.

Why not try it out for yourself? You don’t have to pay a cent until you want to file, so you can see if you like it or not. It’s not for everyone, but it does offer a simple solution for those who need it.

EZTaxReturn Plans and Prices

The plans are very basic and customizable to your needs.

• Federal: For all federal returns with the IRS, a flat fee of $29.95 is payable per return.
• State: For all state returns that you need to file, a flat fee of $19.95 is payable per return.
• Federal and State: This option allows you to file both types of returns at a reduced rate. You’ll pay a total of $39.95 if you select this option.
• Audit Support: This costs a one-off fee of $39.95 per return. You will receive support until the audit is completed.
• Fees for Copies: If you need a copy of your return outside of the three-year period, you can download it for $9.95. A hard-copy will cost you $19.95 at any stage for regular mail. If you need it overnighted to you, it will cost $34.95.
• Insurance for Amendments: We all hope that we’ve filed our returns properly the first time. Sometimes, however, we need to amend them after filing. The insurance costs $9.95 and entitles you to a free amendment. Without it, you’ll pay $19.95 to amend your return.

Bottom Line

If you want something that is quick and easy to use, this might be the best software for you. That said, its functionality is pretty limited. If you have a very straightforward return, you’re golden, but it can’t handle anything more complex.

In all honesty, some companies offer a similar level of service for free, though these free services might not recommend deductions that apply. Also, to shell out $30 for what is essentially a very basic service might be a step too far if you know something about tax.

If, on the other hand, you’re a complete newbie and don’t know what to do, this is a good service. It definitely makes completing your return a lot quicker and simpler.

Moreover, while there are services that offer the same kind of thing for free, there are plenty of others that charge a whole lot more. Either way, it’s still cheaper than heading off to a CPA and getting your tax return completed in-person by a professional.

With a little research, you can find the tax software that’s right for your situation.

Get started with ezTaxReturn here>>

The post EZTaxReturn Review appeared first on Good Financial Cents®.

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Dear Penny: Will I Hurt My Credit by Opening New Cards for Sign-up Bonuses?

Dear S.,

I’m glad you’re asking about this, but I’m concerned about your motives.

Are you working on building your credit history? Do you want to increase the amount of credit available to you in order to boost your score? These are acceptable reasons to apply for a new card. If you do take this route, your score won’t take a long-term negative hit from opening a new card.

The length of your credit history only constitutes 15% of your credit score, and new credit makes up 10% of your score. How much of your available credit you use and whether you pay on time make up a combined 65% of your score.

Once you start using your new card (and paying it off each month, ahem), your score will settle, and you may even see it increase. If you’re a responsible credit card user who opens new cards only occasionally, you don’t need to worry about your score. Just keep an eye on your credit report for any anomalies, and be sure to make those on-time payments.

I am curious about these credit card promotions you’re considering. What are they offering? A zero-interest introductory period? Miles or points? A pony? OK, probably not a pony.

These offers can be tricky. Sure, you might be able to earn a bonus reward, but what will you have to do to get to that spending requirement?

A report from the Federal Reserve Bank of Chicago found that upon enrolling in a rewards program, cardholder spending increased and credit card payments decreased. Over the course of nine months, both people in debt and debt-free people who did not regularly use their cards before ended up with debt. The average cash-back reward was just $25.

It’s hard to resist the urge to gamify your experience with credit cards and work toward earning rewards. But don’t let sign-up bonuses get in the way of your long-term goals to build your credit history and your overall financial health.

Wondering how a big financial decision could impact you later? Write to Dear Penny at https://www.thepennyhoarder.com/dear-penny/

Lisa Rowan is a personal finance expert and senior writer at The Penny Hoarder, and the voice behind Dear Penny. For more practical money tips, visit www.thepennyhoarder.com.

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.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

source The Penny Hoarder http://bit.ly/2CLF9Kk

7 Steps for Catching up on Bills When You Have No Idea Where to Start

Personal Finance 101: How Tax Brackets Actually Work

Right now, with the confluence of tax season and a lot of public discussion about tax rates going forward, many people are discussing the ins and outs of how taxes work in the United States. Over the last few days, I have seen several people post tax thoughts on social media and on otherwise reputable websites that represent a wildly incorrect view of how tax brackets actually work.

What follows is a simple primer on how income tax brackets work in the United States.

What Are the Current Tax Rates for Single Filers?

As of this writing, the tax rates for single filers in the United States look like this:

10%: $0 to $9,525
12%: $9,526 to $38,700
22%: $38,701 to $82,500
24%: $82,501 to $157,500
32%: $157,501 to $200,000
35%: $200,001 to $500,000
37%: $500,001 or more

The dollar amount listed is a person’s adjusted gross income, which is the amount a person actually earns in a year minus their tax deductions. For many Americans, it’s how much they earn in a year minus the standard deduction, which is $12,000 this year.

So, let’s say you earned $30,000 this year and then took the standard deduction. Your income for the purposes of calculating taxes is $18,000.

We’ll stick with the rates for single filers as an example, just so everything is incredibly clear.

Often, each of those levels is known as a “tax bracket.” So, someone making $120,000 a year might be described as being in the 24% “tax bracket.” However, being in the 24% “tax bracket” does not mean that you’re paying 24% of your income in income taxes. That is a huge misunderstanding.

The Water Fountain Model

The mental model that works best for me is visualizing tax brackets as one of those large fancy tiered water fountains, where the top part of the fountain is small, the next part is a little bigger, and the next part is a little bigger than that, and so on.

With such a fountain, when the top portion fills up with water, it overflows, and the water overflow is caught by the next portion of the fountain. Eventually, that portion overflows, causing the portion below it to start filling with water.

That’s the way income taxes actually work. You start dumping income into the top bracket – the 10% bracket – and that’s the tax rate you pay until that bracket overflows. You keep pouring your income in, but now it goes into the 12% bracket and that’s the rate you pay until that bracket overflows. You keep pouring income in, but now it goes into the 22% bracket and that’s the rate you pay until that bracket overflows, and so on.

Even if you end up dumping money into the 24% or the 35% bracket or whatever, you still have some of your income sitting in that 10% bracket and that 12% bracket, and that’s all you pay for those portions of your income. Just because your income overflowed that lower tax bracket doesn’t mean that you suddenly have to pay more on the portion of your income that was in that bracket.

In other words, you break your income up into pieces that are equal in size to each tax bracket. When you earn more income, all you do is make the piece in the highest tax bracket bigger – you don’t change any of the others. If that piece gets bigger than that bracket, then you start another piece in the next bracket up.

A Real Example

Let’s jump into a real world example here. Let’s say Connie, a single woman, made $100,000. She does her taxes and takes the standard deduction, knocking $12,000 off of her total. She’s taxed on $88,000 of her income.

Here are the relevant rows of that income tax table from earlier in the article:

10%: $0 to $9,525
12%: $9,526 to $38,700
22%: $38,701 to $82,500
24%: $82,501 to $157,500

Many people make the mistake of assuming that Connie will be paying 24% of her income in taxes, but that’s not remotely true. Here’s how it actually works.

On her income up to $9,525, Connie is going to pay 10% in taxes – $952.50. That leaves her with $78,475 in taxable income, but now the 10% bracket is full, so we move up.

On her income between $9,526 and $38,700 – or, in another way of looking at it, the next $29,175 in income she earned that year – Connie is going to pay 12% in taxes. That equals $3,501 in taxes. That leaves her with $49,300 in taxable income, but now the 12% bracket is full, so we move up.

On her income between $38,701 and $82,500 – or, in another way of looking at it, the next $43,800 in income she earned that year – Connie is going to pay 22% in taxes. That equals $9,636 in taxes. That leaves her with $5,500 in taxable income, but now the 22% bracket is full, so we move up.

On her income between $82,501 and $157,500 – or, in another way of looking at it, the next $75,000 in income she earned that year – Connie is going to pay 24% in taxes. However, she isn’t filling up that full bracket. She only has $5,500 of her income in that range. So, her taxes on that last $5,500 is $1,320.

So, her tax total is:
$952.50 from the 10% tax bracket, plus
$3,501 from the 12% tax bracket, plus
$9,636 from the 22% tax bracket, plus
$1,320 from the 24% tax bracket.

The sum total of Connie’s taxes is $15,409.50.

Now, notice that total is not 24% of her income. If she were truly paying 24% of her income in income taxes, her total tax bill would be $24,000. Instead, it’s $15,409.50. Connie is in the 24% tax bracket, but her actual effective tax rate is only 15.4%.

If Connie were to have earned more than $100,000, then all of that additional money would have been taxed at 24%, but that’s not what she’s actually paying on her income.

For example, if Connie had earned $110,000 this year instead of $100,000, her total tax bill would have been $15,409.50 plus $2,400, or $17,809.50. Connie’s effective tax rate would go up a little – she’s now paying $17,809.50 on a total income of $110,000, or 16.2% – but she’s still not paying anywhere near 24% of her income in income taxes.

Even if Connie had a huge increase in salary – bumping her up to $200,000 a year – she would edge into that 32% tax bracket, but her overall tax rate wouldn’t be 32%. Rather, her income tax would be
$952.50 from the 10% tax bracket, plus
$3,501 from the 12% tax bracket, plus
$9,636 from the 22% tax bracket, plus
$18,000 from the 24% tax bracket, plus
$13,600 from the 32% tax bracket.

That would give Connie a total of $41,849.50 in taxes on a $200,000 income, or a 20.9% effective tax rate. Connie might be in the 32% tax bracket, but she’s only paying 20.9% of her income in taxes.

Some Takeaway Thoughts

First of all, the idea that earning more will somehow “cost you money” is foolish. The more you earn, the more you keep. Every single additional dollar that you earn, you’ll keep some large portion of it, regardless of your total earnings.

Many people and many otherwise accurate articles misrepresent this idea. They paint the picture that if you cross the line into the next tax bracket, you’ll suddenly have to pay more taxes on all of your income, so, under this misunderstanding, earning a little more if you’re close to the line can cost you money. That is completely false – earning more money always means more money in your pocket.

What the tax brackets are actually telling you is how much comes out of each dollar that you earn. For the first $9,525 you earn, only 10% comes out of each dollar no matter how much you make in total. That statement remains true regardless of whether you’re earning $15,000 a year or $1.5 million a year. For the next $29,175 you earn, only 12% comes out of each dollar no matter how much you make in total. Again, this statement remains true regardless of whether you’re earning $15,000 a year or $1.5 million a year.

Even if the highest income tax bracket were paying a rate of 70%, a proposal that’s making the rounds these days, you would still only pay a 10% tax rate on the first $9,525 you earn, regardless of how much you earned in total. You just pay the 10% on that part, then forget about it and only worry about taxes on the rest.

Another thing worth noting: the average American household income is around $70,000. If you’re a single person making $70,000 a year, you’re only in the 22% tax bracket and your effective income tax rate is somewhere around 11%. Most tax changes will have very little impact on your life.

If you’re earning $70,000 a year and the 22% tax bracket became a 25% tax bracket, it would literally only add $939 to your total tax bill. That would be about $18 from every paycheck, assuming you’re paid every other week. It would not eat 3% of your income – rather, it would eat about 1.3%.

Thus, I would encourage most Americans to not worry too much about changes to income tax laws. The only changes that will affect most Americans are adjustments to the lowest tax brackets, and those rarely change at all. They might dip up or down a percentage point or two, but those amount to just a few bucks in the paycheck of the average American household.

A final note: be very wary of absurd financial claims that don’t pass the common sense test. If someone is claiming that earning more money will actually somehow cost you money, that should fail the common sense test – and it does, because that’s not how tax brackets work. If someone is claiming that a tax change will cost you thousands, it might if you’ve got a huge income, but for most Americans, tax changes rarely have that much of an impact – it’s usually in the realm of a few dollars in your paycheck.

Related Articles:

• The Best Free Tax Software
• Seven Life-Changing Ways to Use Your Tax Refund
• Five Ways to Get a Faster Tax Refund

The post Personal Finance 101: How Tax Brackets Actually Work appeared first on The Simple Dollar.

Source The Simple Dollar http://bit.ly/2FOMMmX

The New Southwest Companion Pass Offer Is Pretty Meh – Here’s What to Do Instead

Why are my insurance premiums rising 89%?

Moneywise helps a reader with soaring insurance premiums

I have just received a ‘review’ from Aviva on a former AXA Equity & Law whole-of-life/critical illness plan, which is asking me to increase premiums by 89% if I want to retain my £200,000 cover level. How can such an increase be justified?

NM/Bath

This sounds shocking, but Aviva has an explanation. An Aviva spokesperson says: “This customer has an ex-AXA Equity & Law Multiplan, which is a reviewable whole-of-life policy linked to a managed investment fund and was taken out in 1994. It provides cover in the event of death, critical illness or in the event of permanent disability.

“Policies such as these are periodically reviewed in order to determine whether the level of cover provided can be sustained by the premiums and if not, to notify the customer of their options to reduce the level of cover or increase their premiums to keep the cover at the same level. One of the factors that will determine the outcome of a periodic review is the investment performance.

• Why can’t I write a cheque in blue ink?

“In the case of this customer’s policy, it was regularly reviewed as part of the terms of the policy. Previous correspondence to the customer in 2014 indicated that the chosen level of benefit would not be sustainable at the next review in 2019. The customer was informed that an increase in premiums would be required, or that there would be the option to reduce the benefit.”

The company suggests that NM talk things over with a financial adviser.

NM wasn’t happy with the response.

• Pick the winner of the Moneywise Customer Service Awards 2019

“I think it is waffle. It provides me with no positive solutions or explanations as to why an 89% increase in premiums can be justified. This was mis-sold tothousands of people as a protection plan when it is really a highly volatile investment-based policy.”

The next step would be to look at how the product was initially sold those years ago and whether it was fair. It is true that the reason for the premium increase is because of the investment performance. Aviva is looking into the issue of mis-selling, but this doesn’t mean that it was mis-sold.

OUTCOME: Aviva will check whether this 25-year-old policy was mis-sold

 

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11 money-saving tips for new parents

Wondering whether you can afford to have a baby or how you’ll cope with the costs of supporting your newborn? Read our guide to making the most of the financial help on offer

There is no escaping it, having a child is an expensive business and from birth until the age of 18 it can set you back just over £4,000 a year – or £75,436 in total for a couple – according to Child Poverty Action Group.

However, there are many ways to cut the costs of having a baby. These range from finding the best deals on essential products and buying second hand to setting up the right protection and making sure you’re receiving the benefits you’re entitled to.

1 Sign up for freebies from new baby schemes

Retailers are desperate to draw in new parents and offer a range of freebies and promotions to do so. Here is a selection of the best around:

• In Scotland, parents receive a free baby box full of essentials, which you can apply for by speaking to your midwife. In England, there is a less generous scheme available through the Baby Box Company, which you can apply for online after watching a free parenting course and taking a quiz on baby and child health.
• Amazon offers freebies when you set up a ‘Baby Wish List’ – currently, it’s a free nappy tub worth £10.
• Mothercare’s ‘My Mothercare’ scheme includes 20% off maternity clothes and discount vouchers on a huge range of products.
• The Boots Parenting Club hands out extra Advantage points when you buy baby items.
• With Tesco’s Baby Club, you will be sent offers appropriate to your child’s age.
• Members of the Asda Baby & Toddler Club get alerted first about discount events in the supermarket.

2 Life insurance will protect your loved ones

No one wants to think about a parent dying, but it’s one of the most important financial factors when preparing for a new baby.

Life insurance pays out a lump sum if the holder dies and there are two options: level-term insurance, which pays out a set amount if they die between a fixed period of time, or mortgage life insurance, which specifically covers the cost of your mortgage.

“A life insurance payment could make all the difference in helping a partner and children cope financially if one parent passes away during the policy term,” Paul Dalgliesh, head of protection propositions at Aviva, explains.

“Having a baby can provide the prompt for new parents to consider taking out life insurance for the first time,” he adds.

Where you buy the policy can make a big difference to the cost, and it’s well worth checking a few different quotes before you buy to make sure you’re getting a good deal.

• Three reasons why pensions are better than Junior Isas for your kids

3 Meet other new parents and share money-saving tips

There are hundreds of apps available for new parents. One of these is Mush, a free app designed to help parents find free and cheap activities to do in the day time with their babies.

“Being a new parent means you suddenly have long chaotic days without any plans. It can be tempting to book in classes for your baby, but they are often extremely expensive,” says Katie Massie-Taylor, founder of Mush.

“Mums who meet on Mush often do babysitting tokens – they take it in turns to babysit their friend’s baby so they can have a bit of time to themselves. This can save between £8 to 12 an hour,” she adds.

You may get presents or hand-me-downs from friends

4 You might be eligible for child tax credits

Anyone with children might be able to get child tax credits. The exact amount you could receive depends on your income, but for a child born on or after 6 April 2017 parents may be able to claim up to £2,780 a year.

You may also be able to claim child benefit, which is available to anyone living in the UK who is responsible for a child up to the age of 16 (or under 20 if they stay in approved education or training). A sum of £20.70 is paid weekly for the first child and £13.70 is paid for subsequent children. If you can, putting this into an interest-paying savings account is a good way to start a mini savings pot for emergencies.

new-parents-2.jpg

5 Until your baby arrives, only buy the essentials

It might be tempting to overbuy on new baby items, but you only really need the essentials at this time. The NHS has a checklist of things you’ll need including a cot, pram, basic babygrows, feeding equipment and nappies.

Anything else you can buy once the baby arrives, and by this time you’ll know what you actually need. You may also receive presents or hand-me-downs from friends with older children.

• Moneywise Children’s Savings Awards 2019

6 Free childcare hours are available for working parents

Although you can no longer apply for childcare vouchers after the scheme shut to new parents last year, working parents can still benefit from the government’s tax-free childcare scheme. For every £8 you pay in to your account, the government will top it up by £2, offering a maximum saving of £2,000 a year per child. Families where either partner earns more than £100,000 are not eligible.

You can pick up a nearly new pram online for £100

7 Claim your full maternity entitlement

If you’ve worked at a company for six months or longer, you will be entitled to the statutory maternity pay, which is £145.18 per week for up to 39 weeks.

However, most companies offer an enhanced maternity allowance for at least the first six weeks and this can be your full-time salary or 90% of it.

Before you go on maternity leave, find out exactly what is available and ask about ‘keeping in touch’ days, which are paid days when you can go back into the office.

If you are self-employed, to receive statutory pay, you will need to have made enough national insurance contributions, although you can top these up if not.

Don’t cut your company pension contributions before you go on maternity leave. Your employer will continue paying contributions at the same level, so in fact if you can increase your contributions you will get even more.

8 Don’t succumb to emotional spending

All parents want everything to be perfect for their newborn and this makes you an advertiser’s dream. Think carefully whether your baby really needs sheepskin liners in their car seat or baby-wipe warmers. After your baby is born, when you’re likely to be tired and emotional, be wary of splurging on products that promise to revolutionise your life. Just because Amazon reviewers claim a high-tech baby bouncer got their baby to sleep doesn’t always mean it will work for you.

new-parents-3.jpg

9 Start building a nest egg

It is never too early to start saving for your new arrival. If you open a Junior Isa (Jisa), you can pay in £4,260 a year and all growth and income is tax-free. The money can’t be accessed until the child is 18, at which point the account becomes an adult Isa.

You can choose either a Cash or an Investment Jisa: 70% opened this year were cash products, but if you’re saving for the long term, an Investment Jisa may produce better returns.

• How investing is teaching children about money - and life

10 Buy secondhand or try before you buy to save a fortune

There is a wealth of secondhand baby items available, whether it’s from a local Facebook group, eBay, Gumtree or an NCT sale.

Most of the items have a short usage span before the baby grows out of them and therefore are usually in an almost-new condition, at a fraction of the price. A brand-new pram, for example, could set you back £700, but online you could pick one up for nearer to £100 or less.

Also check out services such as toy or sling libraries to test-drive items before splashing out.

11 Register the birth on time or you’ll be fined

You need to register your baby’s birth at the local registry office within 42 days – if you miss this deadline, you might be fined £200. Once you register the birth, which takes around half an hour, you will receive your child’s a birth certificate.

new-parents-case-study.jpg

“Baby brain is not a myth, so save time and money by shopping online”

Georgie Gilding, 34, lives in Buckinghamshire with her husband, Jack, and her 17-month-old daughter, Harriette (pictured left) and is expecting her second baby in March. Here, she explains her top tips for cutting down the cost with a new arrival.

“Baby brain is not a myth, so save time and money by online shopping as there’s nothing worse than driving to the shops and ending up buying 10 things you don’t need and forgetting what you initially wanted.

“Plan meals and bulk-cook – it will save you a fortune when your baby starts eating food.

“Services such as Amazon are a new parent’s dream as you can shop online at 4am when up with the baby, and it has a discount scheme for families.

“We used reusable wipes which are a fantastic way to say money and also be environmentally responsible – I highly recommend Cheekywipes, these are fantastic.

“If you can, make the most of asking friends and family for free childcare and if you have any big trips coming up, make sure you are strategic with when you book as children usually fly free under the age of two.”

Rebecca Goodman writes for websites and publications including This is Money, MailOnline,The Sun and LoveMONEY.com

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If You Fall in One of These 4 Categories, You Should Buy Postage Now

Every time I mention I need to buy stamps, someone always scoffs, “Who uses stamps anymore?”

But every time I go to the post office, I end up in a line six or eight deep.

Mailing stuff is still big business. But it’s about to get a little more expensive.

This month, prices are going up from 50 cents to 55 cents cents per stamp.

Penny Hoarders know what this change means: The best time to buy postage is right now.

Why You Should Buy Stamps This Week

Unless you’re looking for a special edition postage stamp, most stamps are now labeled “Forever” instead of with a monetary value; you can use them regardless of the fluctuating price of stamps.

On Sunday, Jan. 27, the price for those Forever stamps will increase 5 cents. Here are the mailing price changes you need to know:

• Letters (1 oz.): 50 cents to 55 cents
• Letters (metered 1 oz.): 47 cents to 50 cents
• Small Priority flat-rate box: $7.20 to $7.90
• Medium Priority flat-rate box: $13.65 to $14.35
• Large Priority flat-rate box: $18.90 to $19.95
• Large APO/FPO flat-rate box: $17.40 to $18.45
• Regular flat-rate Priority envelope: $6.70 to $7.35
• Legal flat-rate Priority envelope: $7.00 to $7.65
• Padded flat-rate Priority envelope: $7.25 to $8.00

If you fall into one of these categories, you should probably get in line to buy stamps or Priority postage right now:

1.You Actually Send Letters

If you buy a book of 20 stamps this week, you’ll pay $10. Next week, a book of stamps will cost $11. Five cents per stamp doesn’t seem like much, but think about how many letters you mail in an average year. If it’s more than 20 — people who still pay rent by mail, sing it with me — it’s worth stocking up now and saving a buck per book.

2. You Sell on Etsy, eBay or Another Online Platform

If you sell anything online, you’ll probably see a small increase in the cost of mailing each package. A cent here or there? No big deal. But over the course of a year, the increase can mean hundreds in additional business costs.

Make plans now to adjust your prices to account for the postage increase. Then, buy whatever supplies you can before the price goes up on stamps or Priority flat-rate postage.

3. You’re Getting Married

There is a little good news — at least for those hearing wedding bells: The single-piece additional ounce price will be reduced from 21 cents to 15 cents. So a 2-ounce stamped letter, such as a typical wedding invitation, will cost less to mail, decreasing from 71 cents to 70 cents.

But you’re probably putting stamps on the invitation-response cards. And the save-the-dates. And all those thank-you cards you’re totally going to write within three months of the wedding.

I’m not saying you have to send all those items to have a fun wedding celebration. I’m just saying that if you plan to mail any of them, you’re about to pay a bit more.

4. You Want to Make Some Extra Cash

Did you know you can buy and sell unused postage stamps on eBay? Buy a bunch at 50 cents each now and sell them later as the price continues to increase. Bonus tip: Don’t just buy whatever stamp the guy behind the counter offers you. Ask for the cool stamps that collectors or letter-writing fanatics might be looking for later. Your profits may be small, but a small profit is way better than no profit.

What’s Up With All the Price Changes on Stamps? They’re Just Stamps

The price changes are actually more calculated than you might think.

In 2014, the U.S. Postal Service got permission to raise stamp prices by 3 cents (from 46 cents to 49 cents) for a two-year period. The hike was essentially a fundraiser for the Postal Service, which doesn’t receive any government funding — thus you still receive your mail during a government shutdown. Instead, it makes all its money off us mailing things.

Stamp prices are typically tied to the rate of inflation, so when the two-year special increase expired in spring of 2016, stamp prices dropped back to 47 cents — which was in accordance with the inflation rate.

This month’s increase is just another turn in the inflation game.

Lisa Rowan is a senior writer and on-air journalist 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.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

source The Penny Hoarder http://bit.ly/2FNRzVI

Why Gasoline Prices Vary From Station to Station

Gas stations line the streets of America. But their prices vary as much as the cars we have to fill up. What's the deal?

Source Business & Money | HowStuffWorks http://bit.ly/2HwhV0m

Why Gasoline Prices Vary From Station to Station

Gas stations line the streets of America. But their prices vary as much as the cars we have to fill up. What's the deal?

Source Business & Money | HowStuffWorks http://bit.ly/2HwhV0m

29 Creative Ways to Make Money on the Side Easily (From Home!)

8 Side Gigs for Federal Workers Affected by the Government Shutdown

There’s no need to state the obvious here, especially if you’re a government employee.

The government has been shut down for more than a month, and many federal workers have now missed their second paycheck. Thousands have applied for unemployment, according to The New York Times and, while idle, many seek side gigs.

During this time, it’s difficult to know what to do. If you’re working without pay, you have little time to look for income elsewhere. If you’re furloughed, who’s going to hire you knowing you could leave to take your government job back at any time? But you need the income.

Although a side gig — or even two or three — won’t necessarily replace your lost or delayed income, it can help offset some of these challenges. It’s temporary work that pays relatively quickly.

Here are a few ideas to get you started.

1. Take on Freelance Assignments

You’ve got skills, so flaunt them.

Upwork is a great platform if you’re just wading into the freelance world.

Once you create a profile, search through thousands of gigs based on your skills and interests. If you find one you’re interested in, apply.

One of the perks of Upwork is that it handles all financial transactions, eliminating any unease or questions of, “Will they really pay me?!” Upwork takes a 20% fee for the first $500 you bill with each client.

Fiverr is another freelance platform you can check out if you don’t have luck on Upwork.

2. Share Your Spare Room (or Couch) With Travelers

If you have a spare room, you might as well try to earn some money by listing it on Airbnb.

If you’re a good host with a desirable space, you could earn enough money to offset the cost of rent or mortgage payments.

And, hey, even if you don’t have a spare room, you can get in on the Airbnb action. Folks across the country are getting creative.

A few simple steps can make the difference between a great experience and a less-than-satisfactory one. We talked to Terence Michael, an Airbnb superhost based in Los Angeles.

Here are some of his tips:

• Break out the labelmaker. “I have the entire house loaded with labels,” says Michael. “They look nice; they’re modern. This helps people feel less helpless.”

• Be a good host, and stock your place with the toiletries you’d expect at a hotel — toilet paper, soap and towels. Here’s a little hack from Michael: “I order on Amazon and have it delivered when people are there.”

• Be kind to your neighbors. “I say, ‘I’m not going to put anyone here who I think won’t be good for you,’” Michael explains. “And I turn a lot of big groups away, especially in Nashville. I don’t want anyone going to the cops or the city.”

(Hosting laws vary from city to city. Please understand the rules and regulations applicable to your city and listing.)

3. Drive People Around Town

Instead of watching your car sit idly in the driveway, use it to make some extra money. No, it’s not going to replace your paycheck, but it is a fairly simple side gig.

Try driving with Lyft. To be eligible, you’ll need to be at least 21 years old with a year of driving experience, pass a background check and own a car made in 2007 or later.

Because it’s simple to switch between apps, many Lyft drivers also sign up as a driver partner with Uber.

As a partner driver with Uber, you’re an independent contractor. You set your own schedule and work as much or as little as you want.

If you want to give it a try, here are a few things to keep in mind: You must be at least 21 years old, have at least one year of licensed driving experience in the U.S. (three years if you’re under 23 years old), have a valid U.S. driver’s license and pass a background check.

Finally, your car must be a four-door, seat at least four passengers (excluding the driver), be registered in-state and be covered by in-state insurance.

4. Let off Some Steam, and Hang out With Dogs

If you’re totally stressed but love hanging out with dogs, Rover might be your perfect gig.

The online network connects dog walkers and sitters to local dog owners through its 4.9-star-rated app, so you don’t have to staple flyers on every utility pole across town.

Rover says sitters can earn as much as $1,000 a month.

Rover dog-sitter requirements vary by location. In general, you must:

• Be 18 years or older.
• Pass a background check.
• Have access to the Rover app (iOS or Android).

Here’s how it works: You’ll create an online sitter profile where you’ll answer questions about your experience with puppers and your schedule availability.

You can choose to offer a variety of services, including dog walking, overnight boarding at your home or theirs, and daycare. Boarding is the app’s most popular service, so offering it can get you more gigs. You set your own rates. (Rover keeps a small percentage as a service fee.)

Dog owners will reach out to you. Accept which gigs you want, then start snugglin’ pups. As soon as you complete a service, you’ll be paid within two days.

5. Shop and Bag Groceries (No Need to Deliver)

Sure, there are a number of grocery delivery services out there (think: Shipt, PeaPod), but if you’re not into the idea of driving your car around town, there’s another option:

Instacart, a grocery-delivery service, is looking for part-time in-store shoppers who simply shop and bag orders.

To qualify, you must:

• Be 18 or older.
• Be eligible to work in the U.S.
• Have access to an iPhone 5 or Android 4.4 (or newer).
• Be able to lift 30 to 40 pounds.

You choose the hours you work (up to 29 hours a week) and get paid per order weekly. Rates will vary by location.

If you want to get real adventurous (or work more hours) you can also sign on as a full-service shopper, meaning you’ll deliver the groceries, too.

Once you sign up to become a shopper, Instacart will reach out about an orientation.

6. Help With Odd Jobs

If you’re handy, consider helping your neighbors out with odd jobs around the house.

Rather than going door to door, connect with people in your area who need help getting things done through TaskRabbit — anything from picking up dry cleaning to putting together Ikea furniture.

Keep an eye out for virtual tasks, which are mostly centered around personal assistance, administrative work or research help. You can do those and earn money without even walking out your door.

7. Find Nannying Gigs

Parents, oldest siblings and former camp counselors: This one’s for you.

Whether you want to look after school-aged kids on Saturday nights or help tired parents after school, you can find opportunities to use your childcare experience to earn cash.

Look within your circle of friends and acquaintances first, as parents are more likely to trust someone they know. Ask friends if they know anyone else who could use a few hours to themselves, whether it’s to grocery shop or simply to head to the gym.

You can also let parents find you through Care.com. Rates on the platform will vary by city, but the average rate for babysitters in 2017 was $16.20 an hour, according to Care.com’s 2018 Cost of Care Survey.

8. Sell Your Plasma

If you’re not afraid of needles, you could consider selling your plasma. It’s a way to get paid, and it also helps others in need.

The process takes about two hours, but it’s relatively simple. You’re free to read or watch TV while a machine draws your blood and separates the plasma.

It’s common for plasma donation centers to pay between $20 and $30 per visit, up to twice a week.

Interested? Search “plasma center + [your city]” for options, and ask your friends for referrals — many centers offer referral sign-up bonuses.

Carson Kohler (carson@thepennyhoarder.com) is a staff 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.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

source The Penny Hoarder http://bit.ly/2WhSiDB

This Is What You Need to Keep in Mind If You Plan to File Your Taxes Online

11 Money-Saving Secrets From People Who Paid Off a Total $726K in Debt

The Destiny Trap

Yesterday, I read this wonderful article on the Australian website Whimn entitled ‘I Make A Six-Figure Salary But I’m Still Always Broke.’ The article takes the form of a “letter to the editor” in which a person struggling with their spending sensibilities writes in for advice:

I just got a raise, which will create about $700 more of income per month. I will also finish paying off a consolidation loan (another result of my terrible spending habits) within the year. Between these two things, I’ll have an extra $2,000 per month that I’m afraid I’ll just waste on more trips to Sephora. Is there a way to train my brain to stop wanting to buy things after years and years of feeling like I need them? Will I ever be able to save money, or am I destined to continue to throw it away on disposable goods?

I know that feeling all too well. The answer from Whimn writer Charlotte Cowles was quite good, but one section really stood out to me (I added the highlight):

If you continue to see your situation that way — as your “destiny” — then the answer is yes, because you’ve effectively removed yourself from the equation and decided that your spending controls you. But if you put some work into figuring out what you really want to do with your income (which involves figuring out what you really want, period), then you can wrestle your finances into their rightful place in your life — a source of occasional stress and annoyance, sure, but mostly a means to take care of yourself.

This is such a brilliant point. Once you’ve made the decision that your situation is “hopeless” and that things will always be like this, you’ve abdicated personal responsibility for the situation. You’re saying that, because this is simply how things are, you no longer have to take any meaningful steps to fix the problem. This is just how things are.

Nothing could be further from the truth. Believing that this is how things are so that you don’t have to take any action on your own behalf just gives you an excuse to not even try to improve your situation. The truth is that virtually every situation in life can see some improvement if you’re actually willing to try. “That’s just how things are” is an excuse not to try to improve things.

Looking back on my own experience, I certainly felt this way quite a lot during the year or so before our financial turnaround began. I continually felt like the future that Sarah and I happily talked about and dreamed about as we were graduating from college was slipping away from us and that’s just how things were. I believed that I was now an “adult” and the rut that my life had fallen into, where I was spending money all the time on all kinds of forgettable things because they brought me little bursts of pleasure, was just the normal life routine of an adult. That’s just “how things were.”

That feeling came from several sources, I think.

One, I didn’t look to people who were spending less than they earned as role models or influencers in my life. The real influencers in my life at that time were people who spent quite a lot of money on disposable goods and minor enjoyable but forgettable experiences (like an afternoon playing golf and having drinks) or were earning a lot more than I was.

I spent most of my professional networking time and social time outside of work with people who fell into those two categories. They were either earning many multiples of my income and could afford their expenditures with ease or they were as addicted to spending their relatively small salary as I seemed to be at the time.

The end result was that spending lots of money felt completely normal. It felt like that’s what people in my social group and my professional group just did. It was normal, and not doing it thus felt abnormal.

It wasn’t as if better influences weren’t available to me. I just chose to hang out with big spenders, and that rubbed off on me.

Two, I never really tied what I was doing on a given day to what my life would look like in the future. When I first launched my professional life, I really believed that in ten years Sarah and I would be living in a wonderful home with a few kids and so on. That just felt like what would inevitably happen.

As time passed, it became clear that our finances weren’t going to allow this to happen any time soon, so my vision of the future changed to one I didn’t like nearly as much. That nice vision of the future slipped away and I began to think that my future probably involved living in an apartment most of my life.

While I could see that being frugal and not spending could help out, I mostly saw it as a tactic that would help until the next paycheck, nothing more. “Living cheap” simply meant eating a few cheap meals at home until the next paycheck came in and then it was time to party. I never saw the connection between those daily behaviors and choices and the big direction of my life.

Three, I often blamed “the man” for my problems. In other words, I believed that the big picture outcomes of my life were out of my control, that I was just being swept along by currents that were bigger than myself.

I believed that although I had some control over my career, the tides of fortune were going to ensure that I never earned a huge income, so why really try for it?

I believed that people in their twenties and thirties were supposed to be weighted down by student loans and credit card debt and that owning a home was something that only rich people did, so why fight for it?

In short, I bought into the idea that my situation was one that was simply not going to lead to home ownership. I was a twenty something coming of age in an era where student loans were suffocating and there weren’t really any opportunities for me. It was an easy thing to believe, so I believed it, and that made me not really try when it came to the other aspects on this list.

Four, I was addicted to the little pleasures and didn’t want to think about life without them. I enjoyed going to bookstores and walking out with three or four fresh books in my arms. I enjoyed going out for drinks with my friends. I enjoyed going out to eat with my wife. I enjoyed visiting coffee shops. I enjoyed having a nice shiny car. I enjoyed dressing in nice clothes.

It’s not as if I don’t view those things as enjoyable now – I certainly do. The difference is that now I have the capacity to distinguish between those which are just momentary and forgettable bursts of pleasure and which really mean something to me.

Back then, I didn’t really see a difference. I viewed them all as pleasurable and worthy and I didn’t want to really think of life without any of them.

The reality was that many of them really didn’t last. They’d provide little bursts of joy and then they’d fade so fast I’d forget about them within a day. They made no meaningful impact on my life other than to drain my bank account and give me the most fleeting sense of joy.

The crazy part? I wanted to hold onto all of those little fleeting joys. I didn’t want to change anything. The thought of giving up even a little of those fleeting pleasures seemed like pure misery. (Oh, how foolish I was.)

Finally, I didn’t really believe I had the capacity to change my behavior in any real way. Even if I ignored the previous four elements, I still didn’t believe that I had the ability to make real meaningful changes in my life.

From my perspective at the time, I worked hard already. I barely had any free time as it was, and what little I thought I had I wanted to guard carefully.

My view was that real meaningful change in my life was simply beyond me. I didn’t just accept the situation, I accepted my own non-response to it.

Added together, those five elements felt like destiny. They felt like the story of my life – I was headed down this path I saw for myself where I was going to keep struggling with debt and living in this little apartment forever, never quite achieving the dreams I had for myself just a few years ago. My destiny was to keep up with this lifestyle, which seemed fun but left me feeling sort of empty inside – almost exactly what the woman writing the letter that started all of this described.

What changed? Well, over a several month long period, I knocked down every single one of those ideas that underpinned my sense of destiny.

One, I started to spend more of my time with financially responsible people and less time with less responsible people. A big part of that was having a kid, which somewhat changed our social life, but another part of it was simply engaging more in my local community and also getting back in touch with older friends who had started to fade in my life. The thing is, you choose who you hang out with, and if the people you spend time with are constantly spending money, you’ll probably do it, too. On the other hand, if the people you hang out with don’t constantly spend money, you’ll probably cut back on it, too – if nothing else, you won’t have to spend money just to hang out with them. I also noticed that a lot of my conversations started to change – it was less about “stuff” and “the cool thing I did last weekend” and more about “life” and “ideas.”

Two, I started to really associate my day-to-day behavior with where my life was headed. More than anything else, this was the revelation drummed into my head by the amazing personal finance book Your Money or Your Life, which completely changed my life. More than anything else, that book really got me to connect the long term outcome of my life with my day-to-day behavior and made me realize that the many choices I made each day did a ton to shape those big lifelong outcomes.

Three, I stopped blaming “the man” or society for things not going perfectly in my life. This shift was guided by some of my mentors I had in my life at the time, who were incredibly good at helping me realize that I was making a lot of mistakes while blaming external forces. I remember hanging out at the retirement party of one of my mentors and he sat down next to me for a moment and said something I won’t ever forget. He told me that there were a ton of days early in his career when he felt stuck in place and felt like he’d never get ahead and he wanted someone to blame for it, and the day when things got better for him was the day he woke up and realized that the someone he needed to blame for it was himself. Sometimes the world will hand you a bad hand, but what makes the difference is how you play that hand. You can win sometimes even with a 6 and an 8 off suit, to borrow some poker parlance, if you play your hand right. The “man” isn’t holding you back. You are.

Four, I began to realize that the pleasures that didn’t last were actually a net negative in my life. Whenever I spent money on some little burst of pleasure that I forgot about within a half an hour, I was basically making my future a little worse for nothing. There are many, many, many free things in life that can give you those little bursts of pleasure – paying for them is a fool’s game. If you’re going to spend money for something that brings you joy, that’s fine, but make it something worthwhile. If I want something pleasureful for free, I’ll hold my wife in my arms or play around with my kids or play a board game or go on a walk out in the bright sunshine or go on a hike or do any of the hundreds of enjoyable free things there are to do. Many of them even provide lasting pleasure, too.

Finally, I simply gave change a sincere shot, based on the other four realizations. I began to understand that I could control my own financial destiny, but in the end, I had to make some changes, and the only way to find out if you’re capable of something is to… yep, just do it. I started making sweeping changes to my spending habits, to my bills, to all kinds of things in my life and not all of them stuck, but many of them did, enough to turn the ship around.

The truth is there really isn’t any such thing as destiny. There’s only the future you make for yourself and how you work around the unexpected events, and that future is built piece by piece, day by day, out of the choices you make. You choose who you spend time with. You choose the things you think about. You choose to accentuate certain thoughts and minimize others. You choose whether to blame others for your problems or look within for the best way around those obstacles.

Those choices might not lead to a perfect golden future, but they will definitely lead to a better future than you have right now. They led me from sitting in a tiny apartment with no savings, tens of thousands in credit card debt, tens of thousands in student loans, and a sense that things couldn’t get better to living in a four bedroom house – fully paid for, no mortgage – with no other debts and a fresh new career, all within about five years.

Was either one of those things my destiny? Nope. However, the better outcome was shaped by realizing that I wasn’t tied to a destiny of financial struggle. I could make my own story.

And so can you.

You don’t have to surround yourself with people who encourage your worst impulses. Instead, find people who encourage the best in you, not the worst. This might require you to get out and look for those people. I suggest starting with your local community calendar and with Meetup.

The choices you make every single day do shape your future, even if you don’t immediately seek the connection. Aim to be your best self every day. You won’t always make it, but what matters is the effort. Aim to spend less. Aim to be a better person. Aim to exercise. If you don’t quite make it today, don’t feel like a failure. Aim for it tomorrow even harder.

You don’t have to blame other people for the things going wrong in your life – in fact, that’s a giant waste of time. Yes, they might actually be part of the problem, but they’re a part of the problem that you can’t control. Separate what you can control from what you can’t control and focus on what you can control. The first thing you can control is your emotional response to things – not your emotions, but how you act on them. Work on keeping that in check. Next, start looking for things you can do to make a bad situation better regardless of who might have caused it. Are there workplace issues? What can you do to make them better, even if it’s not “your fault”? Start looking at all of your life through that lens.

Turn a discerning eye to the things you do for fun. It’s fine to spend money on the things that really mean something… but how much of the things you spend money on really provide lasting value to you? Eliminate those things that really don’t matter and try to trim down the ones that do. Replace those things with free things that bring you joy, like a conversation with a friend or a jog around the neighborhood or reading a good book. Seek lasting bliss, not momentary bliss. Fill your life with low cost activities and things that bubble up with momentary bliss all the time.

In the end, if you’re in doubt about all of this, just give it a shot. Doing things like this can’t really harm you. Even if you find out that they don’t really work, what exactly did you lose by trying? What matters more than anything is sincere effort towards living a better day to day life, and that starts… today.

There’s no better day than today to start changing your destiny, and along the way, you may just realize that there’s no destiny at all, just a path through a life you’re happy with.

Good luck.

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