Tamila McDonald

Can You Still Make Money In Real Estate?

January 17, 2020 By Tamila McDonald Leave a Comment

Most adults today were told, at some point in their youth, that real estate was always a good investment. However, after the crash in 2008, people quickly learned that making money in real estate isn’t a guarantee. But, it also created a new opportunity, and many house flippers began raking in cash. As the markets recovered, which forms of real estate investment were lucrative shifted again. This makes for a confusing situation, leaving many wondering, can you still make money in real estate?

Can You Still Make Money in Real Estate?

If you’re trying to figure out if real estate can still be a sound way to make money, the answer to the question is yes. It is possible to earn quite a bit through various forms of real estate investing, including in today’s market.

For example, house flipping can still be lucrative. As long as the market supports an improved property and the numbers are in your favor, it can work.

Similarly, securing a property and using it as a rental can be a solid source of income. As long as the rent is competitive for the area and it allows you to come out ahead after dealing with related costs, you could end up in the green.

If actually buying property doesn’t appeal to you, there are potential alternatives. For instance, real estate investment trusts (REITs) have become an increasingly popular way to get involved in real estate without having to buy property yourself.

Is Real Estate a Safe Place for Your Money?

It’s important to understand that real estate isn’t a foolproof way to earn money. If anything, the 2008 financial crisis was a great example of how even a bastion of investing can topple.

Whether it’s through purchasing actual properties or investing in REITs, mortgage-backed securities, or anything else, it’s critical to understand that nothing is guaranteed. Additionally, the housing market has been cooling in many cities. While that doesn’t mean there won’t be any growth, overall, it may be significantly slower than in previous years.

As with all forms of investing, whether short- or long-term, doing your research is a must. While no investment is ever completely safe, some may be less risky than others. You’ll need to explore the options that are available and see if any of them align with your risk tolerance. Just keep in mind that growth or profits are never a sure thing, but that doesn’t mean there isn’t money to be made in real estate.

Do you think there is still money to be made in real estate? Why or why not? Share your thoughts in the comments below.

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.

Should You Save For Your Grandkids College?

January 16, 2020 By Tamila McDonald Leave a Comment

With the rising cost of college, many grandparents feel that helping their grandkids over the cost is a good idea. After all, the average tuition price public institutions rose by 4 percent in the 2019-2020 school year alone, and private colleges went up by 3 percent. In-state public tuition hit $10,116 while private colleges cost $36,801 annually. But, even with the cost rising, should grandparents contribute to their grandchild’s college? If you want to figure out if it’s a good idea, here’s what you need to know.

Can You Afford to Contribute?

First and foremost, grandparents shouldn’t save money for a grandchild’s education if they will end up in a financial bind. Unless you are maximizing your retirement savings (or, if you’re retired, have more than enough to sustain you), it’s better to focus on your needs. Otherwise, a financial gift for your grandkid could create a hardship in your end.

The Impact of Your Gift

How a grandparent saves for a grandchild’s college costs can come with certain financial implications. If you stash the money in a regular savings account, you’ll have to pay taxes on the interest. Plus, it won’t grow as quickly.

But it does give you a ton of flexibility, as you aren’t limited on how the money is used. You can also use that money to pay your grandchild’s tuition costs directly to the school. No matter the size of that payment, it won’t be subject to the gift tax for your grandchild, thanks to an IRS exception for qualifying educational costs. However, it might qualify as income for your grandkid, and that might not be ideal.

If you are considering opening a 529 plan, then there are potential drawbacks that you need to examine. While the money can grow tax-free, your gift can impact your grandchild’s FAFSA.

As with a direct tuition payment, the money can count as direct income for your grandkid. That comes penalty when it comes to financial aid. Up to 50 percent of a student’s income is considered available for college costs on the FAFSA, impacting their degree of need.

As a result, they might receive less in free financial aid, essentially undermining the value of your contribution. In some cases, this is a benefit, as it reduces a need for student loans. But, in others, it could also limit their eligibility for need-based grants or scholarships.

You can get around this income issue a bit. Instead of opening a 529 on your own or paying tuition directly, consider contributing to one owned by your grandchild’s parents. The aid eligibility reduction tends to be smaller with parent-owned accounts.

Is Saving for Your Grandkid’s College a Good Idea?

While your heart may be in the right place, you need to make sure that saving for your grandchild’s college makes financial sense for both of you. Consider whether you can actually afford it and examine the potential implications of your gift. That way, you can make a smart choice that doesn’t come with unforeseen consequences.

Do you plan to save for your grandkids’ college? Why or why not? Share your thoughts in the comments below.

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.

10 Retirement Options To Help Your Money Last Longer

January 15, 2020 By Tamila McDonald Leave a Comment

For many, the idea of running out of money during retirement is terrifying. After all, a person’s golden years can be surprisingly expensive, and people are living longer today than they did in many generations before. Couple that with concerns about another recession, the rising cost of healthcare, inflation, and coming up financially short could easily become one of a person’s biggest fears. Luckily, there are retirement options that can help your money last as long as possible. Here are ten.

1. Maximize Social Security

While the idea of receiving Social Security benefits at age 62 might be appealing, waiting can pay off. If you start too early, your benefit is much smaller than if you delay a few years. Waiting until you reach full retirement age should be considered essential. That way, you don’t get a reduced benefit.

Your full retirement age depends on the year you were born. Here is an overview based on a person’s year of birth:

Year of Birth	Full Retirement Age
1950 or before	Already at full retirement age
1951-1954	66 (all will be at full retirement by the end of 2020)
1955	66 and 2 months
1956	66 and 4 months
1957	66 and 6 months
1958	66 and 8 months
1959	66 and 10 months
1960 or later	67

However, if you can wait until age 70, that’s even better. You’ll earn delayed retirement credits that boost your Social Security payment. For every year between your full retirement age and 70, your payment rises by 8 percent. That means, if 67 is your full retirement age, by waiting until age 70, your payment is 24 percent higher than it would be if you didn’t wait.

2. Consider a Lifetime Annuity

Depending on your financial situation, a lifetime annuity might be a smart addition to your retirement planning. In exchange for a lump sum, you’ll receive a set amount every month for the remainder of your life, regardless of how long it is.

It’s important to take care when exploring annuity options. Some come with incredibly high fees, degrading the value of the product. However, if you are using one as a supplement and not a primary source of retirement income, annuities can be worth exploring.

3. Work Part-Time or Freelance

One of the easiest ways to make your retirement money last is to keep working, at least in some capacity. This could include a part-time job that provides you with some extra cash, using freelance work to bolster your bank account, starting a blog that generates income, or any other approach that works for you.

Retirement can actually be a great time to take on a job that you enjoy without having to consider the impact on your career or long-term earning potential. Plus, it can help you stay active and engaged in your community, and that is a great benefit.

4. Shift Your Savings to a High Yield Account

The average savings account interest rate, according to the FDIC, is a measly 0.09 percent. Some banks offer even less, coming in at just 0.01 percent interest.

If your money is sitting in an account like that, you are missing out on an earning opportunity. Just by moving your cash to a high-yield online savings account, you can earn more in interest with zero effort.

For example, $5,000 sitting in an account that earns only the average 0.09 percent brings in $4.50 in interest every year, suggesting the account compounds monthly. In comparison, with an interest rate of 1.5 percent, that money earns $75.52 in interest instead. That’s a difference of $71.02 every year. And it happens even without having to deposit any additional money.

Look for an option with an interest rate of 1 to 2 percent or more. That way, if you have money in savings for emergencies, it’s making you as much as possible.

5. Reexamine Your Portfolio

As you get closer to retirement, it’s normal to skew your portfolio toward the conservative end. That way, your odds of preserving your money go up, but you still have a chance of experiencing some decent gains.

However, if your portfolio has been adjusting automatically or without your direct input, you might want to see if the allocations are appropriate. It’s possible that your portfolio is more conservative than you’d like, particularly if you decide to retire later in life than you did when you first set up your allocations.

Similarly, many people could potentially live decades after retiring. That means you could have 20, 30, or 40 more years to live. That means you have some time to ride out a degree of market volatility, so keeping at least a portion of your retirement account in stocks could be a wiser choice.

If you are delaying your retirement by a few years or could potentially have a lengthy retirement, explore whether being more aggressive makes sense for you. It may let you earn more before you retire, so it is worth considering.

6. Factor in the Value of Downsizing in the Future

If you will pay off your house before you retire and are in a family-sized home, then you can factor in the value of your property when planning for your retirement. Once it’s paid off, if you choose to downsize, any excess value above the cost of your new housing arrangement could be an income boost.

Even if you wouldn’t plan on shifting to a smaller home, it’s wise to examine the value difference. That way, your property could function as a safety net, giving you a source of cash should your other retirement accounts dwindle down faster than you expected.

However, if you downsize when you retire, you are creating a way to stretch your retirement income. A smaller property is usually less expensive to maintain, operate, and insure. As a result, your monthly expenses could go down, allowing you to stretch your dollars further.

7. Take Advantage of an HSA

If you aren’t enrolled in Medicare yet and are eligible to open a Health Savings Account (HSA), consider doing it as part of your retirement planning. While you can’t contribute once you enroll in Medicare, you can add to the HSA until that day comes.

With an HSA, contributions are tax-deductible. Plus, it grows tax-deferred and, as long as you use the funds for qualifying healthcare expenses, you can withdraw it tax-free.

Even if you are no longer eligible to make contributions, you can keep using the saved money until it is gone. Since healthcare costs tend to rise as a person ages, this can be a great way to plan for managing retirement expenses. Then, your other retirement account funds don’t have to go to medical costs.

8. Readjust Your Life Insurance

While it might seem like adjusting your life insurance as you get closer to retirement isn’t a great idea, it might be. If your children no longer live at home and don’t depend on you financially, you might not need as much insurance as you did when they were younger.

If you haven’t examined your policy recently and your household’s situation looks different than it did when you signed up, see if reducing the size makes sense. In some cases, it may, allowing you to cut a monthly expense and still have a suitable amount of protection.

9. Make a Tax-Smart Withdrawal Plan

If you have more than one type of retirement account, then making a tax-smart withdrawal plan is a good idea. Certain kinds of accounts – like traditional IRAs and 401(k)s – have taxable withdrawals while others – like Roth IRAs – don’t. Aside from any mandatory withdrawals, make sure you consider the tax implications when you access the money. That way, you can choose an approach that may minimize your obligation, allowing you to keep more of your money.

10. Move to a State with Lower Taxes or Cost of Living

Some states have higher tax rates than others. Income, property, and sales tax rates can vary dramatically, so moving to one that has better options than where you live now can help you stretch your money.

Similarly, the cost of living isn’t the same in every state or city. Some are much more affordable than others, so you might be able to make your money last by opting for a change of scenery.

If you don’t have a reason to stay in your current area, compare how much you could save by heading elsewhere. Just make sure to factor in taxes and the cost of living. That way, you can genuinely find the most affordable option for you.

Do you know of any other retirement options that can help make the money last longer? Share your thoughts in the comments below.

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.

Here’s What To Expect From Cryptocurrency in 2020

January 10, 2020 By Tamila McDonald Leave a Comment

The cryptocurrency market is largely about speculation. It is dramatically impacted by what investors (both current and potential) think will happen in the market. As a result, cryptocurrencies have had some incredible highs and shocking lows over recent years. The volatility makes it hard to figure out what you can expect from the market in 2020. However, by understanding various trends and upcoming events, you might be able to predict a bit of what the future will hold. If you’re wondering what you can expect from cryptocurrency in 2020, here’s what you need to know.

Just In Case: 7 Passwords Someone Close To You Should Have

January 9, 2020 By Tamila McDonald Leave a Comment

Most people have been told that sharing their passwords with someone else is a bad idea. While this is technically true in many situations. There are exceptions. Sometimes, giving your password to someone who may get involved with your personal or professional life during an emergency is important. Otherwise, they won’t have access to critical information that you aren’t able to provide.

Which Passwords Should Someone Close to You Have?

Deciding which passwords should be shared can be challenging. First, your personal or professional situation may involve passwords that others don’t have to worry about. Second, if there are trust issues, the idea of handing over any password might be hard to stomach.

However, it’s a good idea to make sure that certain passwords are accessible to someone else. That way, if you are incapacitated or die unexpectedly. Someone has the ability to access critical accounts.

If you aren’t sure which passwords need to be given to another person. Here are seven you might want to include on that list.

1. Bank Accounts

Someone else having the ability to access your bank account information could be critical during an emergency. This is especially true if you have dependents who rely on your income for survival. Especially if they don’t have a way to access your money if you become incapacitated or pass away.

In some cases, you’ll need to make specific arrangements with your bank if you want someone else to be able to withdrawal money. For example, you might be able to designate a “survivor” who becomes the account’s owner if you die. However, by at least providing your password. Someone can keep an eye on your account if you aren’t able to do so on your own.

2. Email and Social Media

Your email and social media accounts can be critical parts of your life. They may serve as your main way of communicating with a range of people. They may also play an important role in your job. Plus, they may be used to verify you are the user of another account. Particularly if you choose your email address for two-factor authentication on other sites.

Ideally, you want to make sure that someone has access to your email and social media account credentials. That way, they can inform your network or other people in your life if an emergency occurs or handle your account if you die unexpectedly.

However, if you don’t want to hand over your Facebook login details, there is also an alternative. You can designate someone your “Legacy Contact.” Then, if you pass away, they can update specific aspects of your account or request its deletion.

3. Electronic Devices

Most people password-protect their computers, laptops, tablets, and smartphones. During an emergency, there could be critical information on these devices that someone else needs, such as contact information for friends, family members, employers, or your company. As a result, you need to make sure someone can get to those details if the need arises.

You may also want to provide details for accounts associated with your devices. This could include your Google account, Apple ID, or similar device-oriented service logins.

4. Medical Website Passwords

If you have online medical records accounts with your doctors, sharing the passwords can be a good idea. Then, someone you trust can make sure that, if you are incapacitated, critical information is shared with the organization that is now providing your care.

5. Insurance Sites

Since there is a chance that insurance will play a role in covering costs if you become incapacitated, giving someone your passwords can be a good idea. While your medical insurance account may need to be the priority, making sure a trusted person can access your home and auto policies might be smart as well. That way, if your injuries are associated with a potential claim, they can at least provide relevant details to those who need them.

6. Mortgage and Auto Loan Accounts

If you are the sole person on a mortgage or auto loan and have dependents, making sure they can log into your mortgage and car loan accounts isn’t a bad idea. That way, they can make arrangements with the lender to ensure timely payments are made or access benefits that may be available, such as clauses that eliminate the debt if you pass away.

7. ATM PIN

A PIN is technically a type of password. If you want someone to be able to withdraw money from your bank account during an emergency, providing them with your PIN can be one way to do that. Then, they could head to an ATM and remove cash, up to your bank’s daily limit.

For most PIN-based transactions in stores, the fact that the person using the card isn’t actually the cardholder usually goes unnoticed. However, if a merchant does determine that the person with the card isn’t the cardholder, it could cause some trouble for the person with your card. The store might confiscate it, or the cops could be called, mainly because there is no way for a merchant to know for sure that permission was given.

The Cardholder Agreement

It might not be illegal for someone else to use your ATM or debit card with permission, but it does go against the cardholder agreement. Plus, it does put the person you gave permission to in a tricky position as, if you decided later that you wanted to claim they stole your card, there’s little they could do to fight it. Then, they might get stuck facing criminal charges.

If you do decide to give someone your PIN, provide them with a signed note. That offers them a degree of protection. You could also give that person a durable power of attorney that only kicks in if you are incapacitated, giving them additional protections.

Can you think of other passwords someone close to you needs to have in case of an emergency? Tell us which ones and why in the comments below.

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.

5 Tax Breaks You May Have Overlooked

January 3, 2020 By Tamila McDonald Leave a Comment

When a typical person or couple files their taxes, they are usually eligible for at least a few tax breaks. The trick is, deductions and credits aren’t typically applied automatically. In many cases, you have to choose to pursue that tax deduction on your return. If you don’t, then you end up overpaying.

Most Overlooked Tax Breaks

There are certain tax breaks that people are fairly familiar with, regardless of whether they apply to their tax situation. For example, most people know about the child tax credit and earned income credit, even if they don’t personally qualify.

However, there are many others that aren’t as widely known. As a result, tax filers may miss them simply because they don’t realize the deductions or credits are available.

By understanding which tax deductions are frequently overlooked, you can decrease your odds of overpaying. See if any of the situations apply to you and, if so, make an effort to secure that tax break.

Here is a look at five tax breaks that taxpayers frequently miss.

1. Gambling Losses

Whether you live in a state with casinos, spent some time at the track, played the lottery, or took a trip to Las Vegas in 2019, you might be eligible for a tax break. Gambling losses are deductible in some situations.

If you want to claim the deduction, you do have to itemize. In some cases, that approach won’t make sense. But, if you are itemizing anyway, it could help you lower your tax bill.

Additionally, the deduction is limited to how much you report as gambling winnings as part of your taxable income. As a result, it could help you offset how much you owe if you happened to come out ahead when gambling.

2. Jury Pay Given to Your Employer

If you work for a company that pays you your usual wage when you’re on jury duty but requires you to hand over your jury duty pay to them, then you are eligible for a small tax break. Jury pay has to be reported as taxable income. But, if you had to give that check to your employer, you can deduct that amount.

3. Child Care Expenses

Through the Child and Dependent Care Tax Credit, you might be to reduce your tax bill. You can get between 20 and 35 percent of up to $3,000 or $6,000 of your dependent or child care costs back as a credit if you qualify.

Eligibility is based on a few factors. First, you have to be using the service so that you can work. Second, for child care, the child must be under the age of 13. For spouses’ or parents’ or other dependents’ care, they must be deemed incapable of self-care and live with you for more than half of the year.

The size of the credit decreases for higher-income households, though it never disappears completely. While the credit isn’t refundable, it can help you reduce your liability significantly.

4. Dependent Tax Credit

Even if a dependent no longer qualifies you for the child tax credit, that doesn’t mean you can’t get a break. Older children, including college-aged kids, as well as aging relatives who you are providing care for in your home, can make you eligible for a dependents credit of $500.

This tax credit does phase out for higher-income households. If your adjusted gross income is above $200,000 ($400,000 if you are married filing jointly), you’ll fall in that category.

5. Student Loan Interest Paid by Parents

If a parent is paying back your student loans, you are the one who can legally claim the student loan interest deduction. Only the person who is responsible for the debt can deduct the interest, regardless of who is actually paying the bill. This includes adult children who aren’t being claimed as dependents by their parents.

The best part about this deduction is you don’t have to itemize to claim it. That makes it significantly more accessible. Additionally, you aren’t taking a deduction from your parents, as they can’t legally claim it anyway.

Claiming a Tax Break

In most cases, the federal government doesn’t just take your word when you say you are eligible for a tax break. Instead, it requires some form of evidence or proof.

Depending on the deduction or credit, what you need to support your claim varies. You might need details from a specific tax document, like a 1098-E for student loan interest. For the child care tax credit, you have to provide information about the care provider and have proof that you incurred the expenses.

Incorrectly claiming a tax break has consequences. If you aren’t sure you have what you need to claim a deduction or tax credit, it’s wise to review the IRS website. It will outline what you need in each scenario. You can also speak with a tax professional, as they are typically well aware of what it takes to qualify.

Do you know of any other tax breaks people accidentally overlook? Share them in the comments below.