Debt Consolidation
Owning a credit card can be a wonderfully convenient thing for many consumers. However, recent credit card debt statistics point to a growing problem that consumers have keeping their debt under control.
To get you back on track, we'll walk you through all of the options you have to eliminate that credit card debt. We've got a two-part series on creating a household budget, and if you considering debt consolidation, we'll explain some of the services offered by that industry such as debt counseling, debt settlement and debt consolidation loans.
A debt settlement is the result of a negotiation process that takes place between a creditor and debtor. It is one of several options that consumers experiencing a financial crisis have at their disposal.
Credit Cards and Personal Debt
Carrying around a personal credit card can be extremely convenient, sometimes too convenient. If you're one of those persons with a lot of credit card debt, statistics indicate that you're not alone. If you'd like some pointers on how to get that credit card debt back under control, or you have been thinking about talking to your creditors about a settlement, this is where you want to begin your research:
The average American carries a great deal of credit card debt, and that can sometimes lead to financial stress, payment problems, and bankruptcies. In this article, we're going to discuss some of the options individuals have to manage this potential problem.
One of the reasons merchants allow customers to pay with credit cards is they don't have to worry about collecting the money charged. That burden falls on the shoulders of the card issuing company. These same companies are experts at collecting money from customers, and they don't like to settle for anything less than payment in full.
Anyone that's been thinking about making a large purchase, such as a new home or car, might be faced with a decision that involves the purchase of credit insurance too. In this article, we're going to discuss the pros and cons of buying this insurance, as well as choices available to consumers today. Credit insurance is often sold to consumers in the process of making a large purchase such as a new car or home. The insurance purchased can be used to pay off the outstanding loan balance if the borrower becomes disabled or passes away.
In addition to using a credit card to make purchases, most offer the cardholder the convenience of a cash advance. While the process of obtaining an advance is as simple as walking up to an ATM, the cost of taking out an advance is quite high.
In an effort to drive down outstanding credit card balances, the Office of the Comptroller asked banks to institute new standards when calculating minimum required credit card payments. While the change resulted in higher monthly minimums for some cardholders, it's helping to lower credit card debt too.
Debt Elimination Basics
Our debt elimination basics provide you with an overall stepwise process to move from less aggressive forms of debt elimination such as budgeting, to more aggressive forms of debt elimination. If you're thinking about declaring personal bankruptcy, you're starting at the end of the road. You have a lot more options that you might want to explore first:
Nearly every day there are stories in the news about the growing credit card debt problem that plagues consumers throughout America. But what if you're one of the lucky ones that have disposable income, and you're trying to figure out what to do with the extra money?
It's uncomfortable to be in debt; no one likes the feeling of being out of control, especially when it comes to their personal finances. Individuals in this situation have two problems to solve: getting out of debt, and staying out too. In this article, we're going to start by talking about some of the signals that indicate a problem could be on the horizon. Next, we'll explain some of the habits that help individuals to eliminate debt. Finally, we'll talk about the steps borrowers can take to stay out of debt.
Household Budgets
Household budgeting is the first step we usually recommend when it comes to getting your personal finances back in shape. Here we teach you the basics of running your home like a business, and a profitable one at that. There are many helpful tools we provide too, like free budget spreadsheets that you can download:
Debt Counseling and Management
Many times debt starts to build because of a social, emotional, or financial hardship that has befallen a family. It's sometimes difficult to get back on your feet by yourself. That means a good debt counselor can help you with important items like setting up a budget, as well as making sure any outstanding social problems have been addressed:
For individuals facing financial challenges, debt counseling can offer a valuable service. Counselors can help educate consumers about financial matters such as money management or household budgets. They can also help reduce debt, as well as avoid bankruptcy or the loss of a home.
Personal Loans
Here is another category of personal loans, several of which are considered non-traditional. The practices of these lenders can be considered greedy at times, and may even be considered predatory when taken to the extreme.
The rent-to-own business involves dealers that rent homes, furniture, cars, appliances, electronics, and jewelry to consumers. This arrangement provides the customer with immediate access to these assets for relatively low weekly or monthly payments. In this article, we're going to cover the lease-to-own, rent-to-own, or RTO, industry. Since this business sector has such a wide reach, from homes to electronics, we will not be going into the specifics of any one transaction. Instead, we will provide generalized information on the RTO process.
Lending a hand to close family members when they ask for help is a natural inclination. This generosity is often demonstrated when relatives agree to co-sign a loan. But entering into any arrangement involving money requires careful consideration; cosigning a loan is a big financial commitment. In this article, we're going to be talking about the pros and cons of cosigning a loan. That discussion will include the factors to consider before helping, as well as the long-term impact this type of arrangement can have on both parties' personal finances. We'll also cover several specific examples such as student loans,...
When the economy isn't cooperating, many people find themselves short on cash. This can happen to loved ones too. Those that are more fortunate are sometimes faced with the decision whether or not to lend money to a friend or family member.
Bankruptcy and Credit Reporting
If you think bankruptcy is the answer to all your problems, then you need to make sure you understand exactly what can happen to your personal property. If you know a friend that declared bankruptcy in the past, then you should know the bankruptcy laws have changed. It's much harder today to have all your debt forgiven, and bankruptcy can hurt your credit rating for years to come:
Unless someone's independently wealthy, a credit score is an important number and can determine their financial well-being. Scores are used by both lenders and creditors to predict if an individual is going to pay their bills promptly; thereby influencing decisions to extend credit or approve a loan.
Fair Isaac instituted changes to its credit scoring formula to "ensure the continued reliability and predictive powers of FICO scores." The new model, named FICO 08, made its way into the credit scoring process back in 2009. The new model replaced the existing model, which remained relatively unchanged since the 1980s.
In an attempt to better service the creditworthiness assessment market, several of the reporting bureaus have announced what are termed "thin-file" credit scores for individuals with little or no history. By doing so, these bureaus allow lenders to reach an under-served market of Americans with little or no traditional debt repayment records.
The purpose of the Fair Credit Reporting Act, or FCRA, was to establish the ground rules for consumer credit reporting agencies. These rules allow agencies to fulfill their role as suppliers of credit information to the commerce market, while at the same time protect the privacy and rights of consumers. The intention of the FCRA is to be fair to consumers, while making sure the reports are as accurate as possible. In this article, we'll discuss the structure of credit reports, their accuracy, privacy protections, and how to remove outdated information from a credit report.
Starting back in February 2010, consumers were offered additional protections under the Credit CARD Act of 2009. Signed by President Barack Obama, the act offers credit card holders a series of industry reforms that help to lower interest rates, penalties, as well as fees.
Back in 2005, Congress passed into law some wide-reaching changes to the bankruptcy process. At the time, it seemed these laws were aimed at making it even more unpleasant for individuals to file for Chapter 7 protection. However, one of the unintended consequences of that legislation appears to be an increase in the cost of bankruptcy.
Businesses that are no longer interested in continuing to operate, or individuals that do not have enough income to repay their debt, can seek protection from creditors by filing a Chapter 7 petition in bankruptcy court. But filing for Chapter 7 comes at a great cost. It requires the debtor to selloff their assets and can damage credit ratings.
When businesses and individuals are failing to meet their financial obligations, they have the ability to file for bankruptcy protection. Unlike Chapter 7, which involves the liquidation of assets, Chapter 11 allows the company to remain in control, while a court oversees the operation of that business. In this article, we're going to cover the topic of Chapter 11 bankruptcy, sometimes referred to as "reorganization" or "debtor in possession." As part of that coverage, we're going to examine some of the rules of the process. We'll also explain the eligibility requirements, as well as the advantages and disadvantages of filing...
Also known as individual debt adjustment, a Chapter 13 bankruptcy proceeding allows individuals with a source of regular income to build a plan to repay some, or all, of their debts. Within this process, repayment to creditors occurs over the course of three to five years. In this article, we're going to run through the basics of Chapter 13 bankruptcy. As part of that explanation, we're going to review some of the rules of the process, eligibility requirements, in addition to the advantages and disadvantages of filing under Chapter 13. Finally, we'll talk about completing the repayment plan, and discharge...
Consumers that pay their bills late, or don't pay them at all, may eventually receive a call from a debt collection agency. This is usually the final step in a lender's dunning process. When that happens, it's important for the consumer to know the rights they have under the Fair Debt Collections Practices Act.
Companies are in the business of making money for their shareholders. This means they need to carefully monitor and control the amount of credit extended to their customers, or their write off of uncollectible accounts will increase.
Identity Theft
As the pressure continues in the credit market, companies as well as consumers are fighting back against identity thieves. National policies are pushing companies to protect confidential customer information more proactively. Credit reporting agencies and law enforcement officials are taking steps to lower the likelihood you'll be a victim of identity theft.
Perhaps the single most important document that can be used to protect against identity theft is a credit report. These reports contain a wealth of information when it comes to financial transactions, as well as the process of accurately matching those transactions to individuals. In this article, we're going to discuss the various types of information appearing in credit reports. We'll also explain how to use that information to figure out if someone has been a victim of identity theft. Finally, we're going to explain how to go about placing a fraud alert on a credit report.
Buying or Leasing a Car
We've tried to lay out the many of the options you've got when it comes to buying a new car. In fact, leasing a car is increasingly popular and we've explained why. So whether your decision is to buy a new car, buy a used car, or even lease a car, we've covered all of the possible choices you have today.
If you're thinking about buying a car in the next 12 months, the information in this article can help optimize that process. With the average price of a new car hovering close to $30,000, it's important to make the right decision. There is a lot of money at stake, and it's a choice that can impact your life for several years.
At one time, nearly everyone bought their new cars directly from a dealership. Only those individuals that were driving a car for business purposes were leasing their vehicles. Today that's all changed, and a growing number of individuals are now leasing instead of buying.
Buying a New Car
If you're looking for reliability and deriving the most long-term value from your car, then buying a new car is perhaps your best option. Here we help you figure out how to research cars, and even how to negotiate with dealerships:
New Car Features
Automobile manufacturers continue to improve new cars on the road today. From variable valve timing to advanced transmissions, we'll help explain some of the technologies that make cars easier to drive, and more fuel efficient than ever before.
Increasing the efficiency of a car is a lesson in physics. Automobile manufacturers can attempt to extract more miles per gallon of gas in several ways:
While anything is possible, it looks like the long-term price of gasoline is going to stay below the $3.00 per gallon mark. Given this new price point, the economics of buying a hybrid vehicle are changing, which is good news for "green" consumers. In this article, we're going to discuss how gasoline prices at the pump are changing the economics of driving in America. We're going to evaluate the premiums paid for hybrid cars, and determine if it makes good business sense to buy these vehicles. We're also going to talk about a very important variable that's often overlooked when...
Leasing a Car
Leasing a car is becoming increasingly popular today for consumers who like the idea of driving a new car every couple of years. Leases also allow you to avoid making a sizable capital (down payment) investment in a depreciating asset. If you're thinking about leasing your next car, then we can help you get started:
When negotiating with a dealer, or reading through the terms and conditions of a car lease, the terminology can be pretty confusing. Even when looking through advertisements, it's sometimes hard to figure out what the dealer is saying.- At one time, nearly everyone bought their new cars directly from a dealership. Only those individuals that were driving a car for business purposes were leasing their vehicles. Today that's all changed, and a growing number of individuals are now leasing instead of buying.
Perhaps the most important term associated with a car lease is the money factor. It's the equivalent of the interest rate on a car loan, and provides the consumer with a measure of the financing cost associated with a lease. In this article, we're going to first run through the fundamental concepts of car leases. We'll explain how they're structured, how the dealership makes money, and outline several steps that everyone can use to figure out if the monthly lease payment being offered is a fair one. This is where the money factor comes into consideration. We'll even provide links...
Consumers looking for a no-money-down car lease should evaluate the opportunities that a swap a lease marketplace provides. The term "swap" is a bit misleading, because trading leases isn't necessary. It's an arrangement whereby a buyer agrees to assume responsibility for the seller's existing lease.
One of the terms and conditions a car lease typically includes is an agreement to take possession of the vehicle for a predetermined period of time. But what if it's necessary to terminate the car lease early? What options are available, and what needs to be taken into consideration before making a decision?
Buying a Used Car
With the growing market for leased cars, we're starting to see many "gently used" cars hitting the market; some even carrying the label "certified used vehicle." If you can find a dependable used car, then buying one might be the most economical purchase decision you can make:
New and Used Car Loans
Not many people walk into a car dealership and pay cash for their new car. With new automobiles averaging close to $30,000, car loans are a "must-have" for most of us. If you're looking for a new car loan or might have a credit problem, we can help you work through the process of financing your next car purchase:
Rising fuel prices, longer terms on loans, and rolling-over debt from prior vehicles can all contribute to a condition known as an upside down car loan. When this happens during a credit crunch, it's hard for consumers to escape this financial burden.
Car Safety, Insurance, and Accessories
Figuring out what accessories you need or want in a new car is sometimes a difficult decision. Our car accessories articles tell you what features will also provide value when you finally sell the car. Since most states and finance companies mandate car insurance, we threw in some information on that topic too:
College Life Basics: Budgeting & Loans
If you think buying a car is expensive, going to a private college is like buying a new car for four consecutive years! Here we help you through the process from start to finish. We've got lots of helpful information; whether it's choosing a college, applying for a student loan, or understanding the differences between government loans, grants and work-study.
As families make arrangements to send their children off to college, those plans need to include saving money to pay for college expenses too. It's important for families to understand how much financial aid they're going to receive, as well as their expected family contribution.
High interest rates and a flat wage growth are making things difficult for those repaying their student loans. The high cost of borrowing, rising living expenses, and job market uncertainty make the student loan payoff calculator a really valuable resource. Using this strategy means faster debt repayment while saving money on interest payments.
Applying for College Loans
If you've never applied for a college loan before, the entire process can seem quite complex. Thanks to the Internet, nearly everything dealing with applications can be completed using online forms.
If you're wondering how long each step in the process will take, when to apply, or where to go for your application, we've explained it all:
Going to college is a great career move, but it's also an expensive one. Applying for a student loan is a necessity for most families. This article is going to be one of the "all you need to know about applying for a student loan" summaries. It's going to explain how long it takes to apply, and what kind of information is needed when filling out an application.
Each September, high school seniors return to the classroom, while parents begin the process of applying for financial aid. For many of the wealthier families in America, applying for aid will be a waste of time. For those that are financially-challenged, the process can be quite rewarding.
The Canadian government has set up the National Student Loan Center (Centre) to ensure its students have access to all the information they need to apply for, and repay, their student loans. The center is conveniently housed in an online website that includes all of the tools, applications, and resources that Canadian students need to manage their loans.
Repaying a Student Loan
Unlike grants and work-study programs, student loans are just like personal loans. That means they eventually need to be repaid in full. Fortunately, there are many different repayment options you'll have after graduation.
In fact, you might even be eligible for deferment or forgiveness. There are a number of important programs, and you certainly don't want to miss out on an opportunity to have your student loan forgiven:
One of the ways college graduates can ease their financial burden each month is by selecting the appropriate repayment option. This is especially true if the former student is struggling to find a job after graduation. In this article, we're going to be discussing the options available to former students responsible for repaying their loans. As part of that discussion, we'll first talk about repayment timelines and the counseling available before leaving school. Then we'll describe the variety of repayment options available for each loan type.
There are several circumstances that allow current, and former, students to qualify for loan deferment. These options will vary depending on the types of loans outstanding as well as the borrower's financial and workplace status. A deferment means no payments need to be made on a student loan during the approved deferment period; the payments can be delayed until a later date. In the case of Subsidized Stafford Loans, interest charges will not accrue during this period which means the size of the loan will not grow due to financing charges.
Service payback and loan forgiveness programs can help former students that are struggling to pay back their loans. These programs are designed to attract individuals to serve in certain jobs, or work in regions of the country, that are experiencing a shortage of talented workers.
Taxes and Student Loans
If you're repaying your student loans, you might be pleasantly surprised to find out that you can usually take a tax deduction for the interest charges. If you're trying to get a feel for the latest interest rates on loans, take a look at the articles below:
Each year, new student loan interest rates are published. Overall, rates have been relatively low; nothing like those that existed back in the early 1980s. That's good news for students because even though they can do very little to control the rising cost of tuition at their colleges, at least the interest rate on their student loans are reasonable.
As tax time rolls past, parents may be wondering if the interest on a student loan is deductible on their federal income tax return. This article explains how to qualify, deduction rules, phase out limits, as well as providing links to the proper tax forms.
The Hope Scholarship Credit can help offset the cost of higher education by directly reducing the amount of income taxes paid. The Hope Credit has been around since January 1998, and allows individuals to claim a tax credit of up to $2,500 in qualified education expenses for each student enrolled in school.
Consolidating College Loans
If you're already repaying your loans, then you probably understand that keeping track of all those student loans, and their specific repayment schedules, is not so easy. There are several private and semi-governmental institutions that can help streamline your monthly bills by walking you through the process of consolidating your student loan:
Students looking for help with rising college costs are often told by their school's financial aid department to apply for an ACS Student Loan. In this article, we'll take a closer look at the services this company has to offer students, universities, and financial institutions. Affiliated Computer Services, Inc., or ACS, specializes in business process outsourcing (BPO) and technology outsourcing solutions. According to a press release:
Sallie Mae was created in 1972 as a government-sponsored enterprise to enhance public access to higher education by serving as a secondary market, and warehousing entity, for student loans. The company offers existing and former student borrowers a wide variety of services, including securing private student loans and debt management.
Former students can leverage economies of scale by consolidating their federal loans into a single monthly payment. This process helps students save on interest expense, and provides the convenience of managing only one student loan each month.
Saving for College
Several years ago, the federal government introduced what are called 529 college savings plans. These plans allow individuals to save for college and, at the same time, often providing them with a tax incentive to do so. Here you'll find a wide array of information dealing with this important investment strategy.
If you've ever felt helpless against the rising cost of college tuition, you're not alone. Fortunately, there is an answer to this problem in the form of 529 plans, which offer individuals saving for college a prepaid tuition option. That's great news for parent-investors looking to lock in the cost of college tuition, since it provides their children with a large choice of private colleges and universities.
The federal government provides a number of tax breaks that can help ease the financial burden of families saving for college. One of the ways to take advantage of these breaks is by opening a Coverdell Education Savings Account, or Coverdell ESA. At one time these were referred to as Education IRAs, but the Coverdell has a new name and some new rules too.
College Loan Legislation
You might be surprised to hear that there has been a loophole in some college loan legislation dating back to the 1980's, which allows private lenders to make some extra cash at the taxpayer's expense. Find out what some of our legislators are trying to do to close those loopholes, and get more money into the hands of students:
Back in 2005, the Wall Street Journal and the Washington Post reported Congress was going to once again try to close a student loan loophole that's existed since the 1980s.
Buying a Home: Basics
Our guide to buying a home aims to be a great source of information for both the first-time home buyer and those thinking about a second home. We'll take you through the entire process: from figuring out how large a mortgage you can afford, right through your closing. We'll explain it all to you in simple terms, which should remove the mystery around buying a home.
Maybe you have a new job, got married, or retired; perhaps the home is too small for a growing family, or too big for empty nesters. These are just a few of life's events that have people wondering: How much house can I afford?
When the Department of Housing and Urban Development was created back in 1968, their objective was to help manage federally-subsidized housing, and develop new communities in urban areas.
Work hard, play hard; we've all heard that expression. More than ever before, people are buying a second home along coastal towns and resort communities..png)
Before buying a home, it's always a good idea to have it inspected by a professional. In fact, if planning to borrow money to help pay for this home, it is very likely the mortgage company, or lender, will require a home inspection. Inspectors can often uncover existing problems with a home that are not immediately apparent to a potential buyer. In addition, most offers made by buyers on a home are usually subject to change based on the information contained in the inspector's report.
You've finally found a dream home in your price range, and it's time to make an offer to buy the home. Your about to start one of the most tension-filled parts of the entire process: negotiating with sellers!
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Buying a Home for the First Time
Our first-time home buyer series walks you through the entire process of buying a home. That means we start with a "how to" find the best town, and run right through negotiating with the homeowner. You're about to spend a lot of money, you should be doing all you can to make sure you're going to do it right, or at least minimizing your mistakes:
Federal grants can be an important source of funding for the first time home buyer. Unlike a loan or mortgage, a grant does not have to be repaid, which means these programs are targeted to areas where the government wants to invest in the revitalization of a community.
Financing Your Home
If you have bad credit, or you've been thinking about refinancing your home, we lay out the options you have in this series of articles. Whether it's a home equity loan, or you're considering remodeling your home, here's some information that can help you understand the financing choices you have:
Maybe you've overheard coworkers or friends talking about the great deal they got on a new mortgage, or perhaps a recent downward movement in interest rates has you wondering if it's the right time to refinance.
If you're thinking about starting a home remodeling project, then you're not alone. According to the Census statistics on residential improvements and repairs, Americans will spend nearly $60 billion on maintenance, and over $460 billion more on improvements, alterations, and replacements.
There are a number of reasons why someone might wind up with bad credit; people make mistakes. They stretch too far when it comes to financial commitments, or experience an unfortunate run of bad luck such as losing a job. Regardless of the reason, many of these same individuals often wonder to themselves: Is buying a home with bad credit possible?
Families thinking about buying a new home may have considered working with a mortgage broker. Many borrowers believe mortgage brokers can lend a helping hand when it comes to finding the best deal on a loan. But as we'll see, a mortgage broker may not always have the borrower's best interests in mind.
There is no doubt that filing for bankruptcy can have a devastating impact on the ability to borrow money. This is especially true in the months and, sometimes years, immediately following a bankruptcy filing and settlement. But buying a home after bankruptcy in as few as 18 to 24 months is possible if the right steps are taken to rebuild creditworthiness. Anyone that's presently in a bankruptcy proceeding is going to have to wait until their case has been decided before trying to buy a home. No one's going to extend credit to someone when they're in this situation. Besides,...
There are prime loans, subprime loans, and somewhere in between is the Alt-A loan. This type of mortgage is considered riskier than an A-paper loan (prime), but not quite as risky as a subprime loan; which is generally considered the riskiest type of mortgage a lender can write.
Financial hardships, such as the sudden loss of a job, can often force homeowners to delay payments on their monthly mortgage. Unfortunately, when a homeowner starts to fall behind on their payments, they run the risk their lender may try to foreclose on their home. In this article, we're going to explain how homeowners can attempt to avoid foreclosure. As part of that discussion, we'll first talk about the process timeline. Then we'll provide some tips on how to avoid foreclosure, and the available alternatives. Finally, we'll talk about some of the common scams that prey upon the fears of...
Prefabricated / Manufactured Homes
The prefabricated housing market is a billion-dollar industry. If you're wondering how this market grew so big, then you probably haven't seen the latest lineup of manufactured homes. There're big, safe, and made better than ever. Some are even competing in the luxury home market:
Selling Your Home
Up to this point, most of our information is for those thinking about buying a home. But many of the same people buying homes are also selling a home. Here's an introduction to the process of selling your home, including the concept of house flipping, and a specialty article dealing with relocating a pet:
Safety and Security in a New Home
While owning a new home can be an exciting experience, you're also going to realize that you have an obligation to your loved ones to make sure your home is safe and secure. This series of articles is dedicated to making sure you've done all you can do to make your new home a safe home.
Buying Insurance
Our guide to buying insurance aims to provide you with helpful insurance information. We'll talk about the pros and cons of term life insurance versus cash value policies such as universal life. We'll help you find low cost health insurance, and tell you about the ins and outs of the Medicare program.
If you're a homeowner or renter, we'll explain to you what your homeowner's insurance policy covers, and what it excludes. We'll also help you understand what is covered under the different categories of your car insurance policy, so you can make informed decisions that keep your premiums to a minimum.
Health Insurance
Affordable health insurance is quickly becoming a mandate for most politicians here in America. Fortunately, there are low-cost health insurance programs offered through every state in the nation. We can tell you where to find this kind of health insurance in your state.
If you're a student in need of health insurance, you'll also be glad to know that many colleges and universities now offer affordable health insurance directly to their students:
Life Insurance Basics
To date, we've provided a wide range of information on the various types of life insurance policies. The offerings in the marketplace today currently include:
Medicare Insurance
If you're over the age of 65, or have a qualifying illness, then we have a wealth of information on Medicare, Medicaid, and supplemental insurance policies. In this first series, we talk about the basics, such as eligibility rules. We also talk about the three most common parts of Medicare, including the newly introduced Medicare Part D (prescription drugs):
Homeowners Insurance Policies
If you own or rent a home, you need to make sure it's adequately covered by your homeowner's insurance policy. If you rent a home, the owner normally insures the structure itself, but if you have clothing, wall art, or other valuables contained in the home, you need to take a closer look at renters insurance.
Finally, you'd be surprised at how many homes sit near, or in, flood plains. If you read through your existing homeowner's policy, it is very likely that flood insurance is specifically excluded from your coverage. We'll tell you where you can go to get this kind of protection for your home:
Retirement
It's never too early to start planning for retirement, and our guide to retirement is a good way to get started. We'll talk about the importance of individual retirement accounts, such as the traditional and Roth IRA, and we'll explain all of the eligibility and contribution rules too. This information will allow you to better understand the best choice for your individual situation.
We take the same approach with 403b and 401k plans that we do with IRAs. If you're lucky enough to have an employer that offers a 401k, then we'll give you some tips that will help make sure you're taking full advantage of this great retirement benefit.
401k Retirement Plans
We've covered all of the rules, whether it's related to contribution limits, rollovers, or withdrawals. We've taken all of the information from the IRS, and spelled it out in easy-to-understand segments.
If your employer offers a 401k plan, and you cannot decide if you want to participate, we'll explain why we think this might be the most valuable retirement benefit offered today:
The term rollover refers to the option of taking money from one retirement account and transferring it into another qualified plan. The most common rollover scenario occurs when an individual accepts a new job, and wishes to move a 401(k) plan to a new company, or another financial institution.
On February 20, 2008, the U.S. Supreme Court ruled that individuals have a right to recover 401(k) losses based on what were considered fiduciary breaches. This landmark decision means the 50 million Americans participating in a 401(k) plan now have a right to recover their loss if plan administrators don't fulfill what's considered their obligation to participants to manage their plans wisely.
Borrowing money from a 401(k) plan just got easier; the only thing needed is a 401(k) debit card. When a financial hardship occurs, it's a relief to know one can borrow from their account. But retirement savings are just that: money set aside that's intended to provide income once retired. These two points of view are at the heart of this debit card controversy.
Undoubtedly, the market slide that began in December 2007 unveiled some series flaws in the way America saves for retirement. Millions of Americans watched their precious 401(k) retirement savings vanish, as did their hope for an early retirement.
In this article, we're going to be discussing 401(k) withdrawals. This includes early withdrawals, and allowed distributions under current rules. We're also going to discuss potential tax penalties that may apply to early withdrawals. Pension plans such as IRAs and 401(k) plans were put into place by the government to encourage families to save money towards retirement. It only makes sense the government discourages the use of these funds for purposes other than retirement. In fact, the tax law imposes an additional 10% penalty on certain early distributions from these funds.
Roth IRA Retirement Accounts
Everything is relative, and the Roth IRA is a relative newcomer. The tax shelter benefit from these plans is quite unbelievable. If your 401k or 403b plan is fully funded, and you want to put more money away for retirement, then you should give the Roth IRA serious consideration:
For anyone that's been wondering whether or not to fund a Roth IRA or a 403(b) plan, we're going to lay out some of the factors to consider before making that decision. They are both great retirement planning options, but there may be reasons for choosing to fund one type of plan versus the other.
Traditional and Simple IRA Accounts
If you're looking for some immediate tax relief, then you might want to think about opening up a traditional IRA. As we did with 401k plans and Roth IRAs, we provide all the information you need, including IRA rollover rules and contribution limits:
Funding a retirement account is an important part of the financial planning process. When it comes to choosing between a Traditional and a Roth IRA, it's important to make an informed decision, since it's vital to get the optimal future income benefit from the money placed into either of these plans.
This article is going to cover the topic of IRA withdrawals. Here we're going to summarize the withdrawal or distribution rules that apply to a Traditional, Roth, and SIMPLE IRAs. We're going to talk about qualifying and minimum required distributions, exceptions to these rules, and possible income tax penalties. In the following sections, we're going to use the words distribution and withdrawal interchangeably. For the most part, IRA holders believe they are making withdrawals from their account, while in the "technical" sense, the IRS considers these distributions.
Special Retirement Topics
Finally, we have a couple of special retirement topics that might be of interest to you. Coverdell ESAs are an often overlooked way to save for college. If you're wondering what the difference is between a Roth and Traditional IRA, we can help you figure out which plan is right for your individual situation:
- The federal government provides a number of tax breaks that can help ease the financial burden of families saving for college. One of the ways to take advantage of these breaks is by opening a Coverdell Education Savings Account, or Coverdell ESA. At one time these were referred to as Education IRAs, but the Coverdell has a new name and some new rules too.
Keogh plans allow self-employed individuals, or small businesses, the opportunity to provide employees with retirement savings benefits. Keogh plans are sometimes referred to as qualified plans, or HR10 plans, and their rules are quite different from those that apply to Individual Retirement Accounts (IRA).
A 457 plan is a retirement or pension plan that provides benefits to government employees as well as employees of tax-exempt organizations. Employees participating in 457 plans are allowed to defer their compensation on a before-tax basis through regular payroll deductions. Money placed in these accounts grows on a federally tax-free basis until withdrawn.
A fixed annuity is an insurance contract in which the issuing company promises to make fixed dollar payments to the contract holder, the annuitant, for a pre-determined length of time. In return for payment of the contract premium, the issuing company also guarantees both the earnings on the account and the principal balance.
Equity-indexed annuities, or EIA, are a unique type of annuity. It's one that's based on a stock market index, such as the S&P 500, Dow Jones Industrial Average, or the Russell 1000. As a reminder, an annuity is defined as a contract with an insurance company in which the annuitant, or contract holder, agrees to make a payment or series of payments. In exchange, the insurance company agrees to supply the contract holder with a future source of income.
In this article, we're going to discuss minimum required distributions, or MRDs. For certain retirement accounts, including the 401(k), 403(b), and the Traditional IRA, minimum distributions are required. Here we'll discuss the calculation of this distribution, and the exact MRD rules to follow.
Under certain conditions, it's possible to obtain a loan from a 403(b) plan. But it's important to work closely with the plan administrator to make sure the loan isn't viewed as an early distribution. If that occurs, the distribution will be reported as income, and if the accountholder is under age 59 1/2, then a 10% tax penalty may apply.- For anyone that's been wondering whether or not to fund a Roth IRA or a 403(b) plan, we're going to lay out some of the factors to consider before making that decision. They are both great retirement planning options, but there may be reasons for choosing to fund one type of plan versus the other.
Retirees that want to enjoy a richer lifestyle should give serious thought to tapping into their home's equity using a reverse mortgage. For many Americans, the single most valuable asset they own is their home, and reverse mortgages allow seniors to generate a steady stream of income. In this article, we're going to help answer the question: What is a reverse mortgage? We're also going to explain how these loans work, and discuss the different offerings on the market today. Finally, we're going to finish up with some information on how they're calculated, their income tax treatment, and the costs...
Taxes
Our guide to taxes takes aim at helping you to better understand the federal and state income tax return preparation and refund process. By helping you to better understand how your income taxes are calculated, we hope that you can make better investment decisions. This includes choices such as whether or not to take a long term capital gain on your investments, or if a retirement tax shelter, such as a 401k, IRA, or 403b, is right for you.
We'll cover the fundamentals such as reading tax brackets and tax tables. We'll give you hints to help you figure out if you need to fill out a 1040EZ, 1040A, or if the long form is your best choice. Finally, we'll even cover topics in more detail, ranging from inheritance tax to tax credits and deductions.
The majority of taxpayers prepare their own income tax returns, and that's the way it should be. After all, the IRS is supposed to ensure the average American understands how to complete a tax form. The Internet has made that process even simpler by providing direct access to tax preparation software programs. These applications walk a taxpayer through the process of preparing an income tax return.
Income Tax Return Preparation
This first set of articles is our income tax preparation help section. Here you'll find information on filing electronically with eFile, and where you can go to find tax forms. We'll tell you how to find websites and software that allow you to file your taxes for free.
The IRS really tries to make filing your taxes simple. In fact, they offer several ways for filers to get help, including written explanations, audio explanations over the phone, and even live telephone support. If you're having trouble preparing your tax return, this should be your first stop:
The term income tax is used to describe federal and state tax obligations payable on individual or business income. Income taxes are computed by completing tax forms available from the Internal Revenue Service.
Deferred income tax is the accounting term used to describe situations where the income tax expense and the income tax payable are not the same. Deferred income taxes are listed on the balance sheet as a liability.
Tax Planning
It's never too late or too early to start planning your tax-saving strategies. This next series of articles helps you to minimize your overall income taxes by discussing a series of income tax objectives and tactics you may want to adopt.
Audits can be a nerve racking experience. Many times they feel like an investigation, and the outcome is often painful. This is especially true when the audit involves the Internal Revenue Service.
Tax Deductions, Shelters and Credits
If you're wondering if you have enough tax deductions to beat the standard deduction this year, then this next set of publications can help. Itemized deductions are pretty straightforward, especially for homeowners paying a mortgage and property taxes.
Here we provide you with an explanation for each type of deduction and tax credit offered:
Several years ago, important changes were made to the tax code regarding gifts to a charity. There were also significant tax breaks introduced for IRA owners, if the accountholder is willing to transfer funds to a charitable organization.
Special Tax Topics
In this section of our tax publication, we take a quick look at several special tax topics. Presently this includes inheritance tax, alternative minimum taxes and capital gains. We'll revisit this topic from time to time and continue to add more of these speciality tax articles:
Generally, capital gains tax, or CGT, is owed on any property sold for a profit. Accurately determining a capital gain involves both an understanding of its cost basis, which is the amount of money paid for the asset, as well as any dollars spent on improvements.
Sales and Income Tax Basics
Next up are articles that contain some basic, but useful, tax information. If you've been wondering what all those tax items are on your paycheck, take a look at our payroll taxes article. We even have federal tax bracket tables, as well as information for all 50 states.
If you're planning to visit another state, we can even tell you what to expect when it comes to state sales tax:
Real Estate Taxes
Here are several tax articles that deal specifically with real estate. We explain why property taxes are so essential to your county and town. In fact, in our tax lien article, we even explain what can happen if you decide to stop paying your property taxes:
Recent Additions
Money doesn’t grow on trees—it grows on Jeff Bezos.
Lauren BedfordApril 4th, 2024
We’ve always been fascinated by the rich—we watch them on TV, read gossip about them, and admire their luxurious lifestyles on social media.Lauren BedfordApril 4th, 2024
If you're anything like the millions of young Americans, you may be worried about your finances and what they're supposed to look like. If you've found yourself asking "Where should I be financially at 25," you've come to the right place.
Kimberly StuddardNovember 18th, 2024
Get a windfall? Come into a small inheritance but not sure what to do with it? Worried you're going to mess up and spend your money "unwisely"? While 10k may not seem like much in today's world, it can actually stretch fairly far (if you have a plan for it!). This entire post is devoted to the question, "What to do with 10k."Kimberly StuddardApril 4th, 2024
Have you come across $20,000 extra dollars? If so, congrats! But, now you have to figure out what to do with it.Kimberly StuddardApril 18th, 2024
As a young adult, it can be hard to gauge where you are financially and if you're on the right track. If you've asked "Where should I be financially at 23?", or any financial question in your early 20s, you aren't alone. Based on our experience and research, here's our take!Kimberly StuddardApril 3rd, 2024- What if I snapped my fingers and granted you a $5 million net worth lifestyle? Where does your imagination take you? Are you twirling (head up, eyes closed, arms out, the whole deal) in your swanky executive home? Are you traveling the world in first class? Or maybe you’re on the bow of your mega-yacht, letting the sun hit your face and the wind blow through your hair? Dang, that $5 million lifestyle is looking pretty sweet—if all of those things were true, that is.
Derek SallApril 17th, 2024 - Elon Musk makes $14.39 billion a year. This is based on his escalating net worth over the last ten years. But how did he earn all that money? And is it all in cash? Or is it tied up in company assets? Read on for the full answer.
Jane TumarApril 12th, 2024 - Joe Rogan doesn’t shy away from controversy on his podcast. But the man means business—and is worth a whopping $190,000,000 as we speak.
Deepti NickamApril 4th, 2024 - Americans’ biggest fears:Derek SallApril 12th, 2024
- You've got $1,000. You're wondering what to do with it. You want to be smart with it and propel yourself to a brighter future (great job!).Derek SallApril 4th, 2024
- To say the economy right now is weird would be an understatement. The stubborn inflation is finally dropping down, but the Fed still plans to increase the interest rate to achieve its 2% target. Major tech companies are announcing layoffs every day, but unemployment claims are at a record low of 3.5%.Deepti NickamApril 12th, 2024
- Back in 2012, county officials in Carson City, Nevada, found over seven million dollars in gold coins in a dead man’s garage. Five years later, police discovered 20 million bucks hidden away in a bed frame at an apartment in Massachusetts. Absurd as these cases might seem, they do make you wonder—where do people actually keep their money?Deepti NickamApril 17th, 2024
- The tides are shifting... Up until now, you were focused on paying down debt, career, and maybe even investing. You kept your housing to 25% of your income, your auto loans to no more than 8%. You’ve mastered cash flow management and probably don’t even have to look at your budget anymore. But now you're closing in on that magic number and you're wondering, "Where should I be financially at 40?"Derek SallApril 3rd, 2024
- Have you noticed the extra dollars on your food bill? Or those rental prices slowly creeping up? Your mind isn’t playing tricks on you.Lauren BedfordApril 4th, 2024
- To succeed in anything, you’ll need three things:Derek SallNovember 18th, 2024
- “The problem with quotations is that most of them are not true.”―Albert Einstein.Jane TumarApril 4th, 2024
- When you think about saving 1 million dollars in 10 years, do you think it's possible? What if I told you it was? Let's talk about the beauty of compound interest, a few years, and being diligent with your savings! It's time to figure out how to save 1 million dollars in 10 years!Kimberly StuddardApril 4th, 2024
- Bob and Jim are identical in almost every way. They're both tall, thin, semi-athletic, they both love the show "American Pickers"....AND they net exactly $60,000 a year from their day jobs.... But they do differ in one area: How they spend their money.Derek SallApril 4th, 2024
- Wondering what to do with 50k? What's the best way to invest 50k in the short term? Or maybe you're wondering how to double 50k with your investments? Or, perhaps you already have hundreds of thousands of dollars put away, and you just want to have fun with it! How should you spend 50k, then?Kimberly StuddardApril 18th, 2024
Inflation is bad. Right?Lauren BedfordApril 4th, 2024- Can a poor person become rich? Some of the ways you can become rich from a poor background include, starting a business, working a side hustle, creating a sellable product, investing in stocks, bonds, real estate, or alternative investments, and building an emergency fund.Derek SallApril 4th, 2024
- Will we see an economic downturn anytime soon? Or are we running out of time for a 2023 recession?Deepti NickamApril 4th, 2024
- When you think about how to make 2 million dollars, it may seem completely impossible. But surprisingly, it can be a realistic goal!Kimberly StuddardApril 4th, 2024
- Imagine living in a city that not only sets you up for financial success but also offers a vibrant, thriving environment to call home.
Halina GrzeskiewiczApril 12th, 2024 - Stashing money away for emergencies or future spending is always a great idea. But do the numbers reflect this wisdom when we look into the actual stats?Derek SallApril 4th, 2024
- We all love to hate the ultra-wealthy—we roll our eyes at their disconnection from reality, protest about their exploitative ways, and complain about their spending habits. We’ve all been there (and bought their products)—but that doesn’t stop us from being drawn to them.Lauren BedfordApril 4th, 2024
- Have you ever started talking with someone about money and thought, "This person really has it all together"? ...and then later realized they waste their money by going out to lunch every. single. day. ?Derek SallApril 4th, 2024
- From spending your younger years in a WordArt-induced haze to typing up essays in the library like it was your job, we’re all familiar with Microsoft.Lauren BedfordApril 5th, 2024
- If you were the first human being on Earth (roughly 300,000 years ago), working tirelessly every day from the dawn of time, making a reasonable $1,350 a day—you’d barely reach Elon Musk’s net worth by now.Jane TumarApril 18th, 2024
- Trying to grasp how much a billion dollars is—let alone hundreds of billions—is like trying to comprehend the number of stars in the universe.Jane TumarApril 12th, 2024
- If I had one dollar for every time I heard someone complain about Jeff Bezos—I still wouldn’t be as rich as Jeff Bezos. But, at least some of us can say we’re closer to being a millionaire than he is.Lauren BedfordApril 12th, 2024
- This last year, you earned $60,000 at your job, made $5,000 in the stock market, but......you lost $8,000 and you didn't even know it! Kind of hard to believe, right? That you lost $8,000 and you didn't even realize it?Derek SallApril 12th, 2024
- The world gains a new billionaire every 17 hours—and this timeframe only keeps getting shorter.Jane TumarApril 5th, 2024
- Personal finance bloggers are in love with the topic of net worth these days. It's their main measure to see how well you're doing financially, but is it really the right measure? Is there something else better out there? I certainly think so. Ask me, and I'll tell you to focus on your future value.Derek SallApril 18th, 2024
- It might be a bitter pill to swallow, but you and I are much closer to becoming homeless than turning into the next Elon Musk—with plenty of Americans being one medical emergency away from homelessness.Jane TumarApril 12th, 2024
Almost every survey shows a high interest in learning personal finance in formal education and many people admit they need help. How confident are you in your personal finance management skills? You think you do a better job at planning and budgeting your funds? Check out the latest stats about personal finance and see how do you hold up compared to the average American.
Darko JacimovicFebruary 14th, 2024
Credit cards are magical pieces of plastic that allow us to buy things we can’t afford with money we don’t have. Because of their magic, according to credit card statistics, more than half of Americans have credit card debt that will take years to pay off.Darko JacimovicDecember 5th, 2023
You can probably guess that in a world with an almost 8 billion population, at least a few million people would have at least a million dollars in their accounts. Well, you’ll be pleased to know that there are enough millionaires all over the world, that if they decide to have their own country, it would be the world’s 25th largest country by population.Darko JacimovicFebruary 14th, 2024- Companies and individuals could both benefit from accountants, making these experts wanted worldwide. Learn about the current trends, such as shifting to remote work and a modern accounting approach.
Aneeca YounasDecember 5th, 2023 
Keith HodgesDecember 6th, 2023
Moneyzine EditorDecember 5th, 2023- Keith HodgesDecember 6th, 2023
The latest cryptocurrency statistics show that the growth of everything related to the blockchain network has been dwindling across the world. Regardless, the top cryptocurrencies and markets are still holding their own.
Martynas PupkeviciusJune 6th, 2024- If you start investing at an early age, then you also have time working for you. That's one of the reasons we are a big proponent of starting your investment portfolio early in life. To help get yourself, or your children, started down that road, we have the following publications to choose from:Moneyzine EditorNovember 15th, 2024
Financial Dictionary
Finally, we've supplemented our personal finance section with a financial glossary that helps define some of the more confusing terms you'll encounter in this area. For example, when you're buying a home the real estate agent will talk about closing costs and your attorney will mention a deed. It's nice to know what everyone's talking about when you spend so much money.
We've also defined terms that you'll come across whether you're buying a car, purchasing insurance or applying for a student loan. Our financial dictionary contains 100s of the most common terms you find in these areas.
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