Have you struggled with credit card debt and finally had enough?
I can relate. In college I foolishly charged almost $10k on several credit cards and bought a bunch of crap.
It was beyond ridiculous.
Luckily, I meant my soon to be wonderful wife and she helped me to realize the error in my ways.
Together we developed a plan and in a few years, I was completely debt free. Holla!
If you struggle with credit card debt, here are 4 easy ways you can reduce that debt today.
Ed Slott, known as the 'IRA guru' is hosting a retirement planning education party on his site next Tuesday, August 14th.
For those of that don't know, Ed's IRA Forums are one of the best kept secrets on the web. If you have a complex question regarding anything about an IRA, you'll get your answer in his forums. And the best part'.it's free!
I've used his forums several times to get answers to complex questions situations ranging from Roth IRA conversions to highly appreciated stock in retirement accounts. I've never had a situation that they didn't have the answer to.
Now do you see why you should be excited about the retirement planning education party?
If you're wanting sound, practicable information, be sure to RSVP here. Here's some more info about the event:
Be sure to RSVP today!
When Kevin first approached me about the idea of writing a post and conducting a personal case study on himself about 'App O Rama', I had no idea what he was talking about. After a brief explanation, I was intrigued'very intrigued.
Why? 'Cause I'm all about hacking certain strengths to achieve real and quantifiable benefits.
I hate credit card debt, but I use a credit card for everything I buy. We pay it off each month, collect our reward points (usually cash) and we're on are happy way.
If you are responsible enough, credit cards are not evil.
To me, App o Rama is taking it to the next level. What's it all about? Read on to find out'.
Your credit score is precious.
It is something to be loved, cherished, and above all' protected at all costs. (Or at least' most costs.) We put it into a high security vault and make sure nothing ever touches it. We pay off our debts, set up automatic payments, and do whatever possible to avoid foreclosure and bankruptcy.
Personal finance bloggers, financial planners, and pundits all love to heap praise upon the mighty credit score. Your credit score is the thing that can rescue you from thousands in errant interest payments and help your refinance to lower your costs. It's one of the things people in debt most worry about. That's why you see a ton of articles out there about how to improve your credit score.
And that's great. Most people simply don't understand how much of an impact their credit score can have on their life.
But your credit score has a limited shelf life, right? Once you've got your finances on the right path ' out of credit card debt, saving money to pay cash for your next vehicle, and so on ' and you're into a long term home with a long term mortgage, the value of your score goes down tremendously.
Because if you've got your mortgage locked in and have no need for any other type of loan in the future' what good is your credit score to you?
Keeping it locked up in the vault isn't doing you any good. So let's release the power of your credit score for your own gain.
Today I'm going to show you how to profit from wisely using your credit score after you no longer have a use for it.
Ready?
It's called doing an App-o-Rama.
You've gotten junk mail in the past for credit cards with sign up bonuses in the past, opened them, and promptly shredded them. You have no need for evil credit cards, right?
But you're throwing away potentially hundreds of thousands of airline miles, hotel points, and big cash back bonuses when you do that.
You might be interested in some of the offers, but you know that opening up a new credit card every month will have a detrimental impact on your credit score. (Which it will ' don't do it.)
That's where an App-o-Rama or AOR comes in.
You apply for the cards all on the same day to avoid the credit card companies seeing all of the inquiries from your past applications. (If you waited a few weeks in between, the old inquiries would be on your credit report when you applied for the new cards. This might lead to denials of your application.) It also helps to have all of your inquiries hit on the same day in terms of the impact to your credit score, just like you would apply for a car or home loan on the same day with multiple lenders rather than spacing it out over a 30 day period.
You're probably thinking this:
'Wait, so you're telling me you intentionally apply for a ton of credit cards all on the same day?'
Yes.
Absolutely yes.
Here's how it works:
First you need to know what cards you want to target. As you can imagine with the amount of junk mail you get, there are a lot of offers to consider.
It is usually easiest to break it down into what you need:
Know how much you need to spend to hit the minimum requirements in order to get the bonuses. If you have so many cards that you will never be able to meet the requirements there is no pointing in having those cards in your AOR. Save them for a future date so you can get another bonus in the future.
Tally up how much you'll need to spend: let's say it is $5,000 in 4 months (with $1,000 of that being in 3 months). You need to then have a plan on how you're going to meet those requirements without buying stuff you don't need. If your regular spending won't cover everything you might have to find some creative ways to meet credit card minimum requirements. (I'll give you some ideas on this in the future.)
This is really important. Make sure you clear your browsing data ' cookies, history, etc. ' just to make sure there isn't an old cookie in your internet history that ties you to an old credit card offer or bonus. You want to make sure you have the most recent offer available.
Once your browsing data is clear, it is time to open up the links to the credit card applications. You will rarely need to wipe your data in between applications, and if that's the case you should know it. (For example, there is one card that is offered both as a Visa and an AMEX where you need to do this.)
Type in all of your information on all of the applications, then verify, verify, verify. If everything looks good, click apply on all of the applications.
Sometimes you receive an immediate response ('You've been approved!') and sometimes your information is sent in for manual underwriting. You may get a 'ding' letter that says you've been denied a few days later; if so, there is a number you can call for reconsideration.
If you've got stellar credit history (and a great credit score to go with it) and kept to the 2 (or 3) card max per issuer, you should be fine.
This is another really, really important step. If you get credit cards for the purpose of earning bonus miles, points, or cash you will greatly diminish the value of your efforts by paying interest and fees to the credit card company.
Here's how to avoid that problem.
About a week later you will start receiving your cards in the mail. Make sure you keep all of the paperwork and call the number that is on the activation sticker on the card. As soon as you activate the cards, you need to do two things:
1. Sign the back of each card
2. Go to the credit card company's website, open an account (or add the card to an existing login), and setup automatic payment of the credit card bill.
We don't want that.
So set up automatic payment of the bill for the full statement amount on the due date. (And make sure you check on the first due date just to make sure everything went smoothly.)
Now you've got a handful of shiny new credit cards all waiting for you to hit a spending requirement before they'll pay out those bonuses you want. You have a plan in place from the above steps on how you're going to meet those requirements without going into debt or buying stuff you don't need. Get going ' the clock is ticking.
We plan to share with you some of the top cards to target for an App-o-Rama each month. We'll dive into specifics on why the cards are the best five that month.
Until then, here are two cards to consider:
Stay tuned until the next post for more on App o Rama!
Figuring self-employment tax isn't that difficult; all you need to do is make use of Schedule SE.
Self-employment tax is meant to collect payroll taxes from those who are self-employed. For those who work for 'the man,' payroll taxes ' those taxes collected for Social Security and Medicare ' are automatically taken out of the paycheck. If you're self-employed, you obviously don't have that luxury, and you have to figure and pay your own tax, in the form of the self-employment tax.
You are supposed to pay self-employment tax if your net earnings from self-employment are $400 or more during the tax year. And, if you are a church employee, you are expected to pay the self-employment tax if you earn $108.28 or more during the tax year. Realize, too, that you are supposed to report all of your income, even you won't be paying the self-employment tax on it.
When you figure your self-employment tax, you need to first figure your net earnings. The Schedule C can be used to figure your earnings if you are a sole proprietorship, or if you have a LLC.
If you complete a business tax return, you can use those forms to help you figure your net earnings if you have a LLC or S-Corp. In any case, once you have your net earnings, it's time to get out Schedule SE and determine what you owe in self-employment tax.
The directions are fairly simple. Schedule SE tells you exactly where to get the information you need to fill out the form and figure your tax. Once you know how much you have made you multiply your amount by the self-employment tax rate. Right now, that rate is 13.3% on up to $106,800.
If you have more than that, the result is multiplied by 2.9% and you are required to add $11,107.20 to the result. Remember that the 13.3% rate represents a reduction in regular payroll taxes, due to the 2010 Tax Relief Act. When the act expires, if it isn't extended, the rate will go up 2%.
There is also a deduction you can take for the employer-equivalent portion of your self-employment tax. Directions for taking that are on the Schedule SE. That deduction is then added to your Form 1040 or Form 1040NR to reduce your total income when figuring what you owe in income taxes. This is a small bonus, and a way to reduce the impact of paying self-employment taxes.
Next, of course, you have to pay your self-employment tax. These taxes are usually paid along with your 'regular' taxes. You can pay throughout the year by including your self-employment tax as part of your estimated quarterly taxes.
If you know how much you owed the previous year, it can be fairly straightforward to make sure that you pay what you owe. You won't be charged penalties if you pay 100% of what you paid last year.
Long-term care insurance pays for her mother's home care'which means that, while her mom receives the care she needs, Bonnie can run errands, attend programs at the kids' school and take a few moments to breathe.
The long-term care benefit also taught Bonnie the importance of a budget for care. With a budget, Bonnie can plan appropriately for her mom's care needs, giving Bonnie a sense of control in a situation that can feel so out-of-control.
The budget also means that Bonnie schedules regular time off for herself. Looking forward to having a break has become a critical coping strategy for Bonnie. She finds the she can manage her stress much better when she knows she soon will have a few hours to herself.
Bonnie isn't alone in caring for her mom; a 2009 survey sponsored by National Alliance for Caregiving in collaboration with AARP found that that 29% of the U.S. adult population, or 65.7 million people, provide care to a family member.
Unfortunately, caregiving comes as a surprise to many. According to a recent survey of Americans aged 35 and older sponsored by Genworth Financial, long-term care is rarely top-of-mind until an event actually occurs.
The stress of helping a parent or another family member after a crisis or a diagnosis can be overwhelming. Understanding how to create a budget for care can be critical in helping to manage that stress.
These suggestions can help you create your care-giving budget:
1. Think short-term. Look at the needs for each month for your parent and for yourself. During the day and night, when will your parent or family member need care? During the day, when do you need a break?
2. Think long-term. The true struggle of a budget for care is determining how long you'll need a budget. It's so difficult to predict how long caregiving will last. So, do your best to map out how long finances and benefits, like long-term care insurance, could last. Use a cost-of-care calculator, like this one from Genworth Financial, to understand what costs will look like next year, in two years and in five years.
3. Be flexible. Care needs will increase which means the amount of help you and your parent will need will increase. Recognize that the care budget will change as your parents care needs change.
4. Pick a day each month that you'll review the budget. Perhaps on the 15th of each month you review the monthly budget. Ask yourself:
Is my parent getting the help he or she needs when he or she needs it? Am I getting the breaks when I need them?
Your budget may stay the same. Or, it might adjust as care needs increase in the morning or at night or during another time during the day. Or, it may change depending your need for much-deserved time away from caregiving.
5. Pick a day each year that you'll review the budget. Perhaps November 30 becomes the day that you review how you used finances during the year to pay for care. Consider: What worked well that you'd like to bring into the next year? What would you like to adjust or change?
6. Pass on the lessons learned about budgeting. If you have children, teach them what you've learned about a budget. This article from SmartMoney.com offers suggestions and ideas on teaching kids about saving money for their own future.
Because budgeting can be intimidating, look to professionals who can offer guidance. A financial planner and a geriatric care manager can be great resources for you. The financial planner can offer insights on managing the money; a geriatric care manager, typically a social worker or nurse, can help you find and organize your parent's care.
You can find a financial planner through National Association of Personal Financial Advisors and can learn more about hiring a geriatric care manager here. You also can purchase a subscription to tools that can help you organize your parent's care.
The start of another movement
Stories like the two below are the ones I wish I didn't have to share.
Unfortunately, I know similar stories like it occur each and every day.
*****
It had been three years since she lost the love of her life.
Sitting in my office a tear forms in the corner of her eye.
Thinking about that day that she walked into the kitchen to find the love of her life gone.
Unexpectedly and prematurely gone.
It was way to soon.
I can remember the first meeting we had when she shared the details of that tragic day when she lost her husband.
Healthy at the ripe age of 50, they had many more years ahead of them.
Even his healthy lifestyle and routine physicals couldn't stop him from having a heart attack that ended up taking his life.
Having to deal with all the emotional aspects of losing your spouse is draining. Thankfully the one thing she has not had to worry about is the finances.
Why?
Life insurance.
Just a few days later in the same office I have another meeting. This meeting is all too similar as the initial meeting I had with the other client. She, too, had lost her loving husband prematurely.
She was still in the grieving process and hadn't quite grasped that he was no longer here.
The big fundamental difference between the two occurrences was life insurance.
In this case the husband did have some life insurance but not nearly enough; only having a $25,000 policy.
What does that mean for his surviving spouse? She is left with a mortgage, debt, not nearly enough in retirement, and the outlook of having to work until at least 70 ' if she can retire at all.
Sitting in my office and witnessing these two relatively identical situations was just another reinforcement of why life insurance is so important.
We all think that nothing is every going to happen to us; that we're all invincible.
I'm sure these two widows will be the first to tell you that that is not the case.
You might recall another movement I did called the Roth IRA Movement where I shared the importance of saving and the benefits of doing so with a Roth IRA. Today I'm announcing another movement, this one called the Life Insurance Movement.
Its motivation is to make sure that every couple that is in need of life insurance has it, and make sure they have enough coverage.
I'm excited to share that I formed strategic partnerships with BankRate.com, LifeHappens.org, InsuranceProviders.com, Insure.com and many others to help bring awareness of the importance of having life insurance.
According to Genworth,
52 million American adults with household incomes between $50-$250k don't have life insurance coverage. Of those insured, it will only cover them for 3.6 years.
3.6 years! That's not even close to being sufficient.
Even if you have life insurance, chances are it's not enough. It's time to get your family protected!
The Life Insurance Movement will occur Wednesday, August 22nd. The sole purpose of this event is to bring awareness to a very important topic and spread the word. To encourage you to spread the word we're going to be having a raffle like give away for those that help out. While we definitely want more bloggers on board, there will also be incentives for non-bloggers to get rewarded for sharing the event through Facebook, Twitter, and Pinterest.
We don't have all the prizes worked out yet, but stay tuned for some really cool ones that I know will give you incentive to spread the word about the life insurance movement.
My savings account is paying me more interest than I can handle.
Haha- yeah right!
For the past several years my clients have been griping (me included) about how their savings accounts are paying next to nothing.
Many feel like they are paying the banks just to keep their money with them.
Can you relate?
Looking for a top savings account to stash away some cash for a future financial goal should be part of your financial strategy.
Saving for future purchases and expenses is one of the best things you can do to stabilize your financial situation.
Whether you are saving up an emergency fund or just preparing to spend money on a nice vacation next year, you need a great savings account to hold your money.
There's no need to let your money sit in an account that doesn't pay interest. That's one of the worst things you can do with your money because the value of your money will slowly go down due to inflation. You need to generate some interest to combat inflation just to maintain the spending power of the money you have.
Then again interest isn't everything. So what exactly should you look for in a top savings account?
For me, interest comes first. Generating interest helps protect your money from inflation. Even if inflation is really low, getting some small interest on the side will help you bolster your account over time. Interest isn't the only important factor, but it never hurts to have someone paying you to store your cash with them.
Having great customer service is another key aspect of a great savings account. If you earn a little bit more interest at one bank but the customer service is awful you will probably regret it. I like to stick to firms that have solid reputations or that I've had previous experience with.
Lastly, you want easy access to your funds. If you have to jump through a lot of hoops to pull money out of your emergency fund during an emergency' you won't exactly be thrilled. Do you have to go to a physical branch? Or can you transfer funds online using your smartphone? Access can be a tiebreaker when you are comparing two very similar banks.
Here are five great saving accounts to consider.
Ally Bank is one of my favorite banking institutions. (Yes, we bloggers are a weird bunch and have favorite banking institutions while the rest of the world goes about their normal lives.)
Why do I love Ally so much? Let me quote myself from an article earlier this year, Best Online Checking Accounts:
Ally Bank was built on the premise of getting rid of all the crazy fees that normal banks charge while giving customers great rates and great customer service.
I mean, seriously? How can you not love that? A bank that is fighting to end banks gouging customers will get my vote every time. In the linked article above we told you how great Ally's checking accounts were, but the saving options are great, too.
Here's what you get with Ally:
I've had an account with ING Direct longer than I have with Ally, to be honest. That's because ING Direct was one of the first reputable online banks to exist. As with any industry they now have some stiff competition from Ally, but I still love them.
Here's what you get with ING Direct:
Yes, American Express, the credit card company that offers fantastic cash back now has a banking arm that offers great interest on your account.
Rates are currently very competitive with some of the larger, well known online banks. Account access is not as sophisticated, but again they are only offering two simple products. If they had a full suite of financial products like mortgages and checking accounts on top of the savings account and CD I will be more stringent. But this is a pretty basic product: deposit money, earn interest, watch it grow.
AMEX also has a 36-month CD that you can drop your money into to earn a slightly higher rate of return. However, the difference is so small that I can't recommend locking your funds up for 3 years. (If you elect to close a CD before its maturity date you pay back 3 months of interest. That's dumb.)
Here's what you get with AMEX's High Yield Savings Account:
Whichever way you go, you'll end up with American Express' renowned customer service to back you up. You probably won't need it, but it is always nice to know it is there.
Just like American Express, Discover has gotten into the banking business. Their rates are competitive with other online products, so it is definitely a firm to include in your search for a top savings account.
The product offerings are similar with Discover, but we really like Discover's online CD. The rates on the CDs are very nice compared to some other players in the industry.
Here's what you get with Discover Bank's Online Savings account:
