"Philanthropist: a rich old gentleman who has trained himself to grin while his conscience is picking his pocket." - Ambrose Bierce

SavingAdvice.com Blog

Bridging the gap between saving money and investing


Join Now or Login

Budgeting

Protecting Your Credit When You Lose Your Job

By Leave a Comment

protecting your credit

According to the Bureau of Labor Statistics, 5.5 million job separations occurred in May 2019 alone. Of those, approximately 3.4 million people quit their jobs during the month. Then there are 1.8 million that were laid off or discharged. This usually means fired with cause. While those that quit may have known that they were going to leave, employees who are laid off or terminated might not be prepared. As a result, they have to make critical financial decisions. These include how to protect their credit, while in crisis-mode, and that isn’t easy. Luckily, there are certain steps that are effective for protecting your credit. If you’ve lost your job, here’s what you need to know.

Your Income Change Doesn’t Impact Your Score

First and foremost, it’s important to understand that your income level has no impact on your credit score. Your credit report only includes details about your credit history, such as the amount you’ve borrowed, whether you made payments on time, and your credit utilization.

Losing your job doesn’t inherently impact your credit score. However, if a job loss causes you to miss payments, relying heavily on credit cards (increasing the size of your debt), or similar actions, those could affect your score.

Check Your Credit Accounts

While you don’t necessarily want to contact your creditors immediately, particularly if you aren’t in immediate risk of falling behind, you should check your credit accounts to see if you have any form of payment protection in place. Many lenders offer credit protection as a paid-for service, allowing you to pause the payment requirements if you become unemployed.

If you believe you may have signed up for payment protection, check your statements to see if you have paid premiums for the service. It may be present on your credit card, auto loan, mortgage, or other accounts, so it’s wise to take a look. Then, if you have it, you can contact that creditor and use the payment protection to preserve your credit, at least for a period.

Apply for Unemployment

Regardless of the reason you lost your job, it is always wise to apply for unemployment. While many people who are fired for cause won’t qualify, most others will. However, even if you aren’t sure that you will be approved, it is wise to initiate the process in case you are incorrect.

While unemployment payments won’t equal your former salary, they do give you a source of income in the interim. Any additional incoming money can be beneficial. Just make sure you learn the rules of the program, such as any job search requirements, to maintain your eligibility.

Create a New Budget

When you lose your job, you need to adjust your budget immediately. Even if you have a healthy emergency fund, reviewing your expenses allows you to make adjustments to limit the likelihood that you’ll need to rely on credit cards or end up unable to make a payment.

Examine each of your bills, including everything from utilities to auto insurance to credit cards, and record the minimum payment amount. The goal should be to make minimum payments on every bill as that can preserve your credit.

A single 30-day late payment can cause your credit score to fall by up to 100 points. Plus, the derogatory mark will remain on your credit report for years. By aiming at the minimum payment numbers, you can prevent this from happening.

Once you allocate funds for the minimum payments, you can use the rest for other expenses. While you may have to adjust what you buy for groceries, limit you driving to only essential times, and take similar steps to stretch your money, it is worth it if you are able to preserve your credit while unemployed.

Speak with Your Creditors

If you have a new budget and know that you won’t be able to make your monthly payments, it’s time to talk to your creditors directly. Find out if there are any programs that can help customers experiencing financial hardships, as many would rather work with you and get something than tell you no and get nothing.

Deferments Help in Protecting Your Credit

Additionally, some debts can be deferred when you experience a period of unemployment. Federal student loans usually have deferral or forbearance options, which can help you reduce or eliminate the need for a payment for a period.

Dealing with a job loss is always difficult. But, if you follow the steps above, you can work to keep your credit score intact until you find a new position.

Have you ever lost your job? What steps did you take in protecting your credit? Tell us about your experience and share your tips in the comments below.

Read More:

 

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.

SAVVI Financial Review: Step-By-Step Financial Planning

By Leave a Comment

SAVVI Financial Review

What is SAVVI?

SAVVI is an online tool offering personalized financial advice. The team that created the artificial intelligence behind this service consists of highly educated professionals who have worked with a diverse range of customers. 

You share your goals and your financial situation then they provide you unbiased advice to plan for the future. If you like what they have to tell you, then you can put it into action to save and invest your money in smart ways. 

How SAVVI Works

Setting up an account with SAVVI is easy. You go to their website and click on the signup link. 

In terms of payments, here’s how it works:

  • If your employer has signed up for SAVVI, then it’s free for you.
  • Try a free ad-supported plan. You can set 4 financial goals and create an action plan.
  • Pay $120/year for a full plan. Set 8 goals, create an action plan, and get asset allocation advice.

Once you choose your plan, create a basic user profile and answer some questions. The idea is that you give them information and they help you to make sense of it in a new way. 

Step-By-Step Set Up

SAVVI Financial Review

First, you’ll link your accounts. Select your institution (such as Wells Fargo) then sign in using your institution’s login info. I already bank online so that was easy. The SAVVI tool does use a secondary authentication (by sending a text message with a private code) to help secure your information.

Once you link an account, you “confirm details.” If the information is incorrect, Iyou can adjust it, but it was all correct when I did it. You can also opt to ignore an account. Certain accounts have a few additional questions such as “have you made an after-tax contributions to this account?” for my IRA.

You keep repeating the process of adding accounts until you’ve added them all. The site reminds you to check for other accounts by highlighting what you’ve added and showing what you haven’t. For example, don’t forget “loans, insurance, and health.” 

I found it particularly helpful that I’d already done this on other tools such as Mint. I could easily switch between accounts to make sure that I’d included everything. If this is your first time using such a tool, though, then the process might take a little bit more time. Make sure you’ve gathered all pertinent financial documents in advance to make setup go more smoothly.

This is all part of the “organize” tab on the SAVVI tool. At the top of the page, you’ll see a running tab of your assets, debt, and net worth. As you link more accounts, this number will change. This is the first sign of what SAVVI can do with your information, quickly organizing it for you into digestible bites.

Enter Income Information

Of course, you can’t make a financial plan without considering your income. First SAVVI asks you to choose between “employee, contractor or self-employed, and I don’t work.” You can add additional income sources and benefits. It’s helpful if you have your tax documents handy but it’s not necessary.

Understand and Plan

Entering all of your information shouldn’t take very long. It took me about fifteen minutes. From there, it’s time to “understand” and then “plan.” You’ll answer some more questions in the “understand” section including:

  • Do you rent or own? 
  • Do you contribute to your savings accounts?
  • Do you support your lifestyle with savings?

Once you’ve answered the questions you get to see “The Big Picture” and “Insights”. Through words and graphics, you can quickly and easily see where your money comes from and where it goes – breaking it down weekly, monthly, or yearly. You can also see where you might be making some financial mistakes and where you’re doing well. For example, I pay a lot for housing and it suggests I may want to look carefully for other options.

After gaining insight through the “understand” tab, move on to “plan.” The site offers the option to plan for an emergency fund, home purchase, and retirement. However, you can click to choose other goals from a dropdown list. You can easily gain information that’s helpful when planning for these goals. For example, when I selected “emergency fund” SAVVI offered to tell me more about why I need an emergency fund, how much is good to save, and where I should save that money.

Once you’ve laid out all of your goals, you can click to “create an action plan.” This takes a few minutes to several hours depending, presumably, on the depth of information you’ve supplied as well as site details on their end. They email you when your report is ready.

SAVVI Financial Review Summary

SAVVI Financial Review

Overall, I found the information in the report and on the website to be fairly helpful. As someone who stays on top of my finances, nothing was particularly surprising. However, it’s always helpful to look at this information in new ways. The advice they offer is solid, and it definitely helped me to think about how I want to proceed with certain aspects of my finances.

That said, the information wasn’t perfect. For example, the site calculated my “general spending” for The Big Picture, but the number it gave was way off (lower) than what I actually spend. It told me what I should theoretically have to spend, but I actually spend more than that. So, I would say that the tool is helpful but should only serve as a starting point. 

If you already use a similar tool to organize your finances, then you might find that adding SAVVI isn’t necessary. The insights for planning can certainly help you, so if you want to try a free account then there’s no harm in that. But I’d say that if you can organize your money for free elsewhere and use that information to plan on your own then it’s not necessarily worth the cost of the annual fee-based SAVVI package. Sign up today and see how SAVVI can help you! 

This review was paid for by SAVVI Financial. However, all opinions expressed above are my own. 

Read More

3 Cities You Should Consider Moving to for Cheaper Housing

By Leave a Comment

 

cities with cheaper housing

Where you chose to live can play a big role in your financial well-being. For most households, housing is one of the largest line items on their budget. By choosing to live in a metro area known for lower housing costs, you can spend less of your income in this area. As a result, paying down debt, managing expenses, and planning for the future may be easier to handle. If you are open to relocating to save on housing, here are three cities with cheaper housing that should be on your list of potential destinations.

1. Huntsville, Alabama

Considered one of the most affordable metro areas in the entire country, the median household in Huntsville spends only 19.3 percent of their income on housing costs. The 2018 median home price and median monthly rent costs are $167,300 and $779, respectively, making this critical budget area easier to handle.

Plus, unemployment in Huntsville is just 2.9 percent (as of April 2019), which is lower than the national average. Couple that with a higher average annual salary ($53,600 compared to the national average of just under $47,000), and the area can be an excellent choice for relocating.

When it comes to other everyday costs – like groceries and transportation – Huntsville sits close to the national average. As a result, the lowering housing costs aren’t offset by higher prices in other areas, making the city incredibly affordable.

2. Fort Wayne, Indiana

Another metro area where living expenses come in at under 20 percent of the median household’s budget, Fort Wayne is a great option for those looking to save on housing. The median home price is below $150,000, and the median monthly rent is just $714.

Fort Wayne also has lower than average unemployment rates, coming in at just 2.6 percent compared to the national average of 3.6 percent (as of April 2019). The average annual salary is slightly under the national average, coming in at $43,590.

However, the overall cost of living is far below the national average, so even a slight decline in your income doesn’t necessarily mean you are losing out financially, depending on where you move from. Since you can save on utilities, groceries, gasoline, health care, and transportation along with housing, don’t let the lower income levels scare you away from this city.

3. Des Moines, Iowa

Households in Des Moines spend approximately 20.11 percent of their income on living costs. The median monthly rent, sitting at $857, is higher than other cities on this list, though it is still quite affordable for many professionals. The median home price is just shy of $179,000, making it competitive for a metro area.

Des Moines also has an unemployment rate far below the national average, coming in at just 2.2 percent (as of April 2019). With an average annual salary of $50,600, notably above the national average, and a lower overall cost of living, the city is incredibly affordable.

Living in downtown Des Moines is often your best bet if you want to save on housing. Once you head into the suburbs, including Ankeny and Urbandale, housing prices do go up.

These Cities Are Worth Checking Out

If you are open to relocating to help you find cheaper housing, all three of the cities above are worth checking out. Couple the lower costs of living with low unemployment and solid salaries, and each of these metro areas is a budget-friendly option for those tired of paying higher prices in other major cities across the country.

Plus, as a bonus, all of the cities above have lower than average daily commute times, coming in near the 20-minute mark. If you’d rather spend less time on the road and more time at home, these metro areas can be a way to do just that.

How expensive is housing in your area? Do you feel like it’s a good deal? Share your thoughts in the comments below.

Read More:

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 Reasons You’re Not A Millionaire

By 28 Comments

millionaireThere seems to be an impression that the only reason that people aren’t able to become millionaires is that they don’t work hard enough. The truth is that hard work has very little to do with becoming a millionaire. That’s not to say that you don’t have to work hard. You do. But you also need to avoid the many pitfalls and bad financial decisions which end up being the real cause that most people aren’t able to build wealth. The truth is that you don’t have to have a huge salary to gain assets in excess of a million dollars, but you do have to make good financial decisions (and avoid making bad ones).

It’s important to note that a single issue is likely not what’s keeping you from millionaire status, but a combination of several of the actions and decisions you’ve made. And, yes, there are exceptions to the rules, but then there are also people who win the lottery — and would you really bet your retirement on winning the lottery? Here are 10 reasons that could very well be a contributing cause of why you’re not currently a millionaire:

You Spend More Than You Make

There are no secrets, and there certainly is nothing magical, when it comes to the basics of personal finance. In order to keep your finances in order, you need to spend less than you earn. If you fail to do this one simple thing, it doesn’t matter how much money you make, you’ll always find that you don’t have enough money to make ends meet. It also goes a step further than this. Spending less than you earn is not enough in itself to build wealth. You have to also actively save and invest a portion of all the money that you make. Most people recommend this amount to be 20% of your income. If you aren’t putting aside 20% of every paycheck you receive and placing it into long-term savings and investments, chances are you aren’t going to become a millionaire.

You Try To Meet Other’s Expectations

There is nothing which will keep you from reaching your financial goals faster than trying to live up to other people’s expectations instead of your own. This is more commonly known as trying to “keep up with the Joneses.” The simple fact is that if you’re trying to live like a millionaire before you have the resources of an actual millionaire, it’s not likely that you’re ever going to become a millionaire. Instead, you will simply be building up a lot of debt and wasting money on things to impress people who probably won’t be impressed anyway. Trying to keep up with the Joneses when your salary can’t compete with the Joneses is a sure way to sabotage the chance of building wealth.

You Don’t Pay Yourself First

One of the most fundamental steps that you can take to ensure that you put away money for yourself is to pay yourself before you pay anybody else. If your goal is to save 20% of your income, you need to pay yourself that 20% from your paycheck before you pay any other bills or expenses that you may have. If you try to pay yourself after you pay all your other expenses, you’ll inevitably fall short at the end of the month from time to time (if not always), and fail to save as much as you had hoped. By paying yourself first, you make the commitment that wealth creation is an important part of your overall plan, and not something that hopefully gets accomplished after everything else.

You Have Kids

This probably isn’t going to be the most popular item on the list of why you’re not a millionaire, but the hard, cold truth is that children are expensive. Very expensive. The costs associated with kids can be mitigated to some degree if you have already built some wealth and have planned the cost of having children into your budget, but that often isn’t the case for many couples. Having children when you are young with a limited income will greatly affect your ability to build wealth. With compound interest being so important to wealth creation, and a cornerstone of it being that the sooner you begin saving and investing, the better, the fact is that it’s nearly impossible to put money aside when you’re young with children. When this is the case, all the extra money you have inevitably ends up going toward the children’s care instead of being invested for wealth creation.

Your House Is Too Big

Some people assume that purchasing a big house is a good investment. While this can be the case, purchasing more house than you can afford is a good way to make sure that you’re unable to create real wealth. The problem is that when you buy big, your expenses for the house are also bigger. A large house will mean bigger tax payments, more expensive upkeep, more stuff purchased to fill the house, higher insurance payments and all around more expenses than if you purchased a house that actually fits your needs. The real way to build wealth is to purchase a house that fits your needs and budget, and take all the savings that you gain from not buying the large house to invest and create wealth.

You Replace Things Too Soon

Just because there is a newer and shinier version of the gadget that you purchased a year or two ago doesn’t mean that you need to buy that new gadget. If you’re the type of person who is constantly replacing products that still have a useful life in order to buy the supposedly latest and greatest gadgets, chances are that you’ll have a difficult time building the type of wealth that you want. Those who create savings to invest do so by getting great value out of what they buy by using their purchases for the entirety of the items’ useful life. People who are able to afford the newest and shiniest things by upgrading every year are those who have already built their wealth, not those that are currently trying to.

You Let Others Take Charge Of Your Finances

There is nothing wrong with getting the opinions of others to help you lay out a plan to build your wealth, but it’s important to be an active participant in this planning. Giving full control to somebody else to handle your money is a sure way to make sure that you fail to build the wealth that you hope to create. Creating wealth and keeping it means that it’s necessary for you to understand the financial decisions which are being made, and periodically reevaluating them to make sure that they are meeting the goals that you have set. Giving full control of your finances to somebody else creates a situation where you’re no longer in control of your financial future, and the only one who you can truly trust to be looking out for your best financial interests is yourself.

You Fail To Take Care Of Your Health

There is nothing which will drain your wealth more quickly than getting sick. While you may not be able to control all aspects of your health, there are certain steps that you can take to make sure that you’re as healthy as you can possibly be. Eating right, getting exercise, taking preventative measures, getting annual check-ups and taking care of medical problems before they become truly serious all put you in a position to live a healthier life. The better you take care of her health, the better the chance that you will be able to create wealth, and keep that wealth as you age.

You Get A Divorce

Just as getting married can be a wonderful way to help build wealth, getting a divorce usually has the exact opposite effect. In fact, getting a divorce is one of the best ways to destroy the wealth that you have built up to that point. That’s not to say that you should stay in marriage solely for financial reasons, but it’s important to know that divorce is usually a giant wealth destroyer, and getting a divorce will hamper the best-laid plans to become a millionaire.

You Have One Or More Bad Habits

A bad habit is anything that takes money away from you without giving more in return. The classics are smoking, gambling and drinking alcohol, but a bad habit could just as easily be that daily expensive cup of coffee or the three sodas that you drink each day. It doesn’t even have to be buying things. Being lazy and sitting in front of the TV five hours a day instead of working on making yourself better is also a bad habit that hurts wealth creation. Depending on the number of bad habits you have, and how much they cost you on an ongoing basis, these alone could be keeping you from becoming a millionaire.

(Photo courtesy of Enkhtuvshin)

Is Putting a 20% Down Payment on a House Realistic?

By 31 Comments

Is-Putting-a-20-Down-Payment-on-a-House-Realistic
I understand the argument behind the advice of putting at least a 20% down payment on a house purchase. No one wants to pay private mortgage insurance and the idea of getting two different loans to avoid it isn’t that great either. I imagine if you are a previous homeowner and have some equity from a previous house to put down on a new one, a 20% down payment is very feasible, but what about first time home buyers?

Saving Up The 20% Down Payment has Huge Opportunity Costs

In the area that I currently live, the average home price is about $175,000 for a decent starter home. That’s actually a pretty low price compared to where I grew up across the state, where you can’t get a decent starter home for under $275,000. Let’s say someone wanted to buy a home for the first time. A 20% down payment for an average house in each area would be $35,000 and $50,000 respectively (and that doesn’t even include closing costs) Who has that kind of cash readily available? Not many people. So the advice many are given is to save up and wait.

Let’s look at what that would look like. Say you are able to save $500 a month towards your down payment. You are able to knock down your costs and pull aside that much every month. It would take you almost 6 years of saving $500 a month in order to afford the 20% down payment in the less expensive city and over 9 years to afford the one in the pricier area.

What if you were able to save $1,000 a month? Then it would take you 3 years and 4.5 years respectively. But saving $1,000 a month is quite difficult when you are trying to fund a retirement account and live day to day. Especially for up to 9 years. Most first home buyers are younger – probably in their 20s. In the best case scenario, you need to save for 3 years – in the worst case, it would be 9 years (this is assuming you already have a sizable emergency fund to take care of unexpected expenses).

It is even harder when you start looking at this from a market standpoint. House prices will rise. I don’t care what the housing market looks like now – eventually, the values will rise again. Let’s say values rise at a conservative 1% per year. In 3 years, each “average” house will cost at least $5,500 and $8,500 more, respectively. In 9 years, each house will cost at least $16,000 and $25,000 more, respectively.

Everyone who finally reached their 20% down payment goal will now need more money than originally thought for the down payment of a home that is now more expensive. Not to mention the money lost on throwing away rent rather than building equity (however small that amount may be in the first few years). Add to that the tax deductions missed and the missed opportunity to profit from the market’s increasing values. Ouch! Those numbers aren’t pretty. You have to spend money on housing either way – why not get some benefits from it?

Chances are, if you are saving a huge chunk of money each month for a large house down payment, you aren’t contributing the max to your retirement account. Your early investing years are the most critical for your future because of the wonderful concept called compounding interest. You could lose some very valuable interest time by waiting to invest (or increase your investment amount).

It Is Perfectly Reasonable To Buy A Home For Less Than 20% Down

Perhaps there are some people for which putting a 20% down payment on a house is not only possible but also a perfect fit for them. I personally don’t know any of those people and am not one of them. We chose to buy our house with no money down and use our monthly extra to invest more, stock up our retirement fund, fund our emergency savings, and make improvements to our house that will increase the value when we go to sell.

The funny thing is that our mortgage is not outrageous, we are not struggling to keep up with our payments and we are not in jeopardy of defaulting on our loan. The fact of the matter is that there are people who are a high risk to mortgage companies who will likely default on their loan if they get into a house with no money down. But there are also responsible people who will pay their mortgage on time every month who just want to have a choice of what to do with their extra money and how to best use it.

Can You Get A Mortgage For Less Than 20%?

Yes. You can get a mortgage for less than 20% down. The best way to find out if you can do this is to start making calls. You’ll want to talk with a mortgage broker. Probably you’ll want to talk with several. A good starting place might be USAA (they have great customer service) as well as your local credit union. Stay away from the bigger banks, they sometimes have incentives that are perverse (for example, by pushing low money down loans or adjustable rate mortgages).

3 Ways to Use a Rotisserie Chicken for Dinner

By Leave a Comment

 

rotisserie chicken

There are tons of ways to use a rotisserie chicken to make an amazing dinner. If you want to make the most of your rotisserie chicken, here are three ways to do just that.

Ways to Use a Rotisserie Chicken

Rotisserie chicken is available at nearly every major grocery store. They are often incredibly convenient dinner options since they are precooked. Plus, they are surprisingly affordable, allowing you to stretch your food budget. But, did you realize that a rotisserie chicken is also an incredibly flexible meal option?

1. As a Main Course

Serving a rotisserie chicken as the main course is often one of the easiest ways to use a rotisserie chicken. With a little carving and some simple sides, you can have a meal ready in no time flat.

Since most rotisserie chickens feature simple seasoning, they tend to be crowd pleasers. Plus, they can pair with nearly any side, ranging from salads to mashed potatoes to steamed veggies.

Unless you have a very large family, leftovers are common. Luckily, any extra chicken and the bones can help you create more amazing meals, ensuring you get the most out of every rotisserie chicken you buy.

2. As the Base for a Soup

After you remove the majority of the meat from a rotisserie chicken, you can use the bones to create an amazing chicken stock. Simply add water, onions, celery, garlic, salt, and pepper, and boil the bones. You can do this on a stove top or in a crockpot on high for several hours. However, if you have a pressure cooker or Instapot, making stock is much faster.

Once you have the broth ready, use cheesecloth to remove the bones, onions, celery, and anything else you added for flavor. Then, take your soup base and add veggies, leftover chicken, noodles, or anything else you would like.

After all of the veggies are cooked, you have an amazing homemade soup, all thanks to that simple rotisserie chicken. This alone can be dinner. However, you can also make rolls or a side salad if you want to make the meal even more filling.

3. For a Chicken Pot Pie

Making a chicken pot pie at home is usually a multistep process. First, you have to cook the chicken. Then, you gather the veggies, make gravy or broth, create a crust, add everything, and bake.

If you use a rotisserie chicken, you can skip the first step. This potentially saves you a ton of time, particularly if you use gravy from a mix or jar and frozen or refrigerated crust. If you decide to use simple, frozen vegetables instead of fresh – like frozen peas and carrots – your prep time is even smaller.

Now, the baking time is usually close to an hour, as you do have to make sure the crust cooks through completely. However, this part is very hands-off, so you do not have to keep an eye on it until you get close to the finishing time.

4. Chicken Salad

Need a quick sandwich, but all you have is rotisserie chicken. No problem. Start by peeling the skin off your chicken and then place the chicken in your blender. Blend the chicken for about 2 minutes (2 more if it’s not fine enough). Dump the rotisserie chicken into your bowl. Add mayonnaise, relish, salt and pepper. Mix well. Presto, you have a great chicken salad.

Rotisserie Chickens Are Good for Your Budget

Ultimately, all of the ways to use a rotisserie chicken listed above can be great for dinner. Plus, if you get a large rotisserie chicken, have a small family, or both, you could feasibly make all three meals from a single chicken, giving you dinner options for several days. If you need to stretch your food budget, this is particularly beneficial. After all, few food items can be used for three different meals.

You don’t even have to use all of the leftover chicken or stock at once. After making soup, you could freeze some for future use. Similarly, the chicken pieces could also be stored in a freezer for up to four months when placed in a zip-top freezer bag (with as much air removed as possible) or when vacuum sealed.

What are some other ways to use a rotisserie chicken? Share them in the comments below.

Read More:

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.