50 Things Millennials Can Do Now So They Can Retire at 65

Want to retire at 65 but don't know how? We're here to help.

It seems like you’ll be punching a clock forever, right? Well, one day, you’ll likely stop spending 9 to 5 at a desk and will enjoy your golden years in retirement. But that’s assuming everything plays out nicely and you have enough money set aside to do so. Stressful, right?

Well, according to a 2016 Retirement Income Strategies and Expectations survey by Franklin Templeton Investments, 70% of millennials are stressed and anxious about saving for retirement. So if you’re one of the millennials who gets anxiety every time mom or dad brings up the importance of your retirement funds, take a deep breath.

We’ve got 50 easy-to-digest ways that can get you on the right track today so you’re ready to celebrate in style once your 65th birthday rolls around.

1. Start Now

“It’s never too late, and it’s never too early, to start saving for retirement,” Ty J. Young, CEO of Ty J. Young, Inc., a nationwide wealth management firm, said.

2. Don’t Fear Your Finances

“A healthy relationship with money is absolutely crucial,” Attila Morgan, Nuvision Credit Union’s manager of community engagement and public relations, said. If you shy away from planning for retirement, you’ll pay the consequences down the line.

3. Think About How Much You’ll Need

“It’s crucial that you know how much money you will need in retirement,” Roger Cowen, a retirement planner and owner of Cowen Tax Advisory Group in Hartford, Connecticut, said. This way, you’ll have an easier time figuring out an amount to save or invest. Don’t forget about inflation.

4. Pay Your Savings Account

There are bills that must be paid but you also need to pay yourself. This doesn’t mean buy something new — it means putting money aside for your future. As Warren Buffett said, “Don’t save what’s left after spending — spend what’s left after saving.”

5. Avoid the Couch Cushions

You won’t gain anything from hiding money under the mattress or in the couch cushion. Take that money to the bank. Sure, interest rates may not be high, but it’s still extra money you wouldn’t have had otherwise.

6. Make Sure You Have a Rainy Day Fund … 

Experts generally recommend having at least three months worth of expenses socked away for emergencies. The amount you’ll need will change over time, so make sure it stays at the level you’d need.

7. … & Only Withdraw in Emergencies

You’ll want to use your emergency fund for “unexpected events, rather than dipping into your retirement savings,” Chad Smith, wealth management strategist at HD Vest, a financial services firm in Irving, Texas, said.

8. Set Up Automatic Transfers

Having the money directly transferred will make [saving] easier,” Cowen said.

9. Avoid Duplicates

If you’re paying for multiple streaming services as well as cable, decide what you can cut. Same goes for multiple magazine subscriptions that you read online. Anywhere you’re doubling up, try to cut back.

10. Maintain Good Credit Card Habits

“Start small. Pay on time and pay of the balance in full at the end of each month,” Cowen said. This can help you maintain good credit.

11. Monitor Your Credit Scores

“Know your credit score and monitor it often,” Marc Cenedella, CEO of career website Ladders, said. Having good credit can help you get better terms and conditions “when it comes to taking out a line of credit or mortgage, which will make a big difference in your ability to retire at 65.” (Not sure where your credit stands? Find out right here on Credit.com.)

12. Invest in the Stock Market

“I think millennials are making a big mistake by not investing,” James Goodnow, an attorney at Fennemore Craig in Phoenix, Arizona, said. “If you take a long-term horizon, the market is still a safe bet.”

13. Don’t Shy Away Entirely From Risks

“We as millennials are in a fortunate position,” Goodnow said. “Because of our age, we are able to weather storms in ways that investors from other generations cannot. If there is another dip or crash, we have time on our side to help us recover.”

14. Utilize Your Company Matching

“If you aren’t contributing enough to get the free match from your employer, you are throwing money away,” Cowen said.

15. Consider a Roth IRA

Roth accounts are not taxed if you make withdrawals after retiring. “Starting young is the key to retiring rich and the Roth account is the best way to accomplish this,” according to Adam Bergman, the president of IRA Financial Group.

16. A Little in Column A, a Little in Column B

“Do not put all of your eggs in one basket — diversification is key, ” Richard W. Rausser, senior vice president of client services at Pentegra Retirement Services in White Plains, New York, said.

17. Adjust When You Get a Raise

“Increase your 401K savings every time you get a pay raise, no matter what,” Rausser said.

18. Evaluate Your Portfolio Over Time

“As you accrue a larger portfolio, take your winnings off the table often,” Young said. This way, you aren’t leaving all you earn at risk.

19. Review Your Budget

Just like you check in on your portfolio, you’ll want to look at your personal finances. Young recommends you “review your finances every three months to determine where you can save.”

20. Avoid Early Withdrawals 

If you withdraw from your retirement plan before you’re at the qualifying age to do so, you’ll face a penalty and won’t benefit from this account the way you could.

21. Live Within Your Means

It’s important that you write down a budget to help you spend only what you can afford and prevent you from racking up credit card debt,” Cowen said.

22. Consider Heading Home

“If a new grad chooses to live at home for two years after graduation and puts the money that he/she saves on rent toward retirement, this grad could retire five years earlier,” Cowen said.

23. Move Somewhere New

There are plenty of big cities that are affordable (you can find a list of them here), so if you’re spending too much now that prevents you from saving for your future, you may want to consider relocating.

24. Don’t Buy a McMansion

The big house with all the bedrooms may seem like a nice idea, but if it’s out of your price range, you’ll find yourself in hot water. You can go here to learn how to decipher how much house you can truly afford.

25. Let Technology Help You

Use savings and financial planning software … so you can manage how much you save, spend, invest and donate,” Cenedella said.

26. Ask for Advice

Garner experience from those who have “been there, done that.” You never know what gems of wisdom they may have.

27. Set Goals

“Work to create a goals-based plan,” Smith said. “This will show you how saving over time can lead to retirement.”

28. Negotiate Your Salary                    

“Even an extra $5,000 can help at each stage,” Cenedella said. “The compounding effect is enormous, and there’s always room to negotiate.”

29. Always Have a Plan B

If your company downsizes, what will you do? It’s important to have a fallback plan at any age in case your current one doesn’t work out.

30. Don’t Rely on Your Credit Cards

Racking up a lot of credit card debt means additional interest fees and serious stress. Only charge what you can truly afford.

31. Make Money From Your Hobbies

“Teach guitar lessons, buy items at a garage sale and then resell them online or pet sit for a family,” Cowen suggested. “These are just examples of personal hobbies that could turn into extra cash.”

32. Sell Things You Don’t Need

Whether you post your items on eBay or have a garage sale, it’s better to profit from what you don’t use than to have it lying around taking up space. The money you get can go toward your IRA, savings or even paying off debt. (Want more ideas? Here are 50 ways to help you stay out of debt.)

33. Keep Your Old Car

The shiny new cars on the lot may be alluring, but if your car still runs fine and doesn’t require a lot of repairs, it may be smart to hang on to it.

34. Shop Around for Better Rates

Whether it’s how much you pay for cable or your car insurance policy, make sure you’re getting the best deal.

35. Say Goodbye to Annual Fees

If you’re carrying a credit card with an annual fee that you rarely use or that doesn’t offer perks that truly benefit you, consider cutting ties and getting a credit card with no annual fee. Just make sure your credit can handle the ding of canceling a credit card before doing so.

36. Be Careful with Co-Signing

“Co-signers are on the hook for timely loan repayment, so any missed payments — even for someone else’s loan — can hurt a credit score,” according to credit bureau TransUnion.

37. Pay Off Student Loans as Early as Possible …

The sooner you get these off your back, the less you will pay in interest over the years.

38. … But Don’t Put All Your Extra Money Toward Debts

It’s good to focus on paying off your loans and other debts, but you still want to set money aside for retirement — even if it’s just $1 every day, or $10 every pay check. Something is better than nothing.

39. Go for the Health Benefits

Health Savings Accounts (HSAs) help you save to cover healthcare costs with contributions that are tax-deductible (or pretax, if made through payroll deduction) and any interest earned is tax-free.

40. Consider the Protection You Get from Insurance

“You’ll save a lot of money over the next 30 – 40 years as you ready for retirement,” Dan Green, CEO of Growella, said. “All it takes is one accident, though, to clear those savings out. That’s the point of insurance … you get protection from loss.”

41. Establish Healthy Habits

Because unhealthy ones are expensive.

42. Turn Savings Into Investments

“Take advantage of transportation savings or flexible spending accounts that can save you money,” Cenedella said. “Invest the amount you save.”

43. Find Ways to Lower Your Bills

Whether it’s energy-efficient light bulbs or a smart thermostat, cutting costs on bills you have to pay can really help fatten up your wallet.

44. Invest Your Tax Refund

Getting money back from Uncle Sam may be just the ticket to increasing your investments.

45. Do the Same with a Bonus

If your boss rewards you for a job well done, consider taking part of that money and putting it toward your retirement savings or investments.

46. Strategize When You’ll Take Social Security

Even if you retire at 65, you may opt to wait until you’re at least 70 to start collecting on Social Security to make sure you get the most out of these monthly payments.

47. Prioritize

You may want to save more for your child’s education, but remember: They can take out a student loan or work a part-time job to pay for school. You can’t take out a retirement loan.

48. See If You Qualify for an IDA

Some people qualify for an Individual Development Account (IDA), where contributed amounts are matched.

49. Consider Meeting with a Financial Adviser

If you want more guidance from a professional, it’s a good idea to find one who is certified by the Certified Financial Planner Board of Standards.

50. Get Educated

“Invest in the stock market and the Forex market, but first get educated in both types of investments and do the math,” said Robyn Mancell, partner at Girls Gone Forex, a company that teaches women how to trade in the market.

Image: monkeybusinessimages

The post 50 Things Millennials Can Do Now So They Can Retire at 65 appeared first on Credit.com.

10 Bizarre Claims People Make to Avoid Paying Taxes

how to avoid paying taxes

Resistance to taxes is baked into Americans’ DNA. After all, it was cries of “taxation without representation” that spurred the American Revolution. Tax protests have continued on and off ever since, from the Whiskey Rebellion to Vietnam War-era tax resisters to the “sovereign citizen” movement.

People object to paying taxes for all kinds of reasons, from opposition to certain policies to not recognizing the government’s authority to collect taxes in the first place, but the IRS isn’t having it. No matter what you read on the internet or your weird Uncle Bob says, you can’t get out of paying taxes without suffering consequences.

“The IRS and the courts hear many outlandish arguments from people trying to avoid their legal filing and tax obligations,” IRS Commissioner John Koskinen said in a statement. “Taxpayers should avoid unscrupulous promoters of false tax-avoidance arguments because taxpayers end up paying what they owe plus potential penalties and interest mandated by law.”

Now, that doesn’t mean there aren’t things you can do to legally avoid taxes. Taking all your deductions or moving money into tax-sheltered accounts like a 401K are perfectly acceptable ways to lower your tax bill. It’s when you get into weirder tax avoidance strategies that you run into problems. (Note: Not paying your taxes can have serious implications for your credit. Check out our quick guide for keeping your taxes from messing with your credit. While you’re at it, you can also get your two free credit scores, updated every 14 days.)

Trying to claim that filing a tax return is optional, that you aren’t really a citizen of the U.S., or that only certain types of income are taxable will backfire. When you submit a frivolous return or slam the IRS with other off-the-wall requests the result may be a fine of $5,000 to $25,000. Plus, you could also be prosecuted for tax evasion, a felony punishable by prison time and penalties of up to $250,000.

The IRS spends a lot of time and energy debunking various convoluted anti-tax arguments, and it’s collected dozens of them in a document titled “The Truth About Frivolous Tax Arguments.”

Below, we’ve highlighted 10 of the more bizarre reasons why people say they shouldn’t have to pay taxes.

1. Filing a Return & Paying Taxes Is Voluntary

The first and perhaps most direct argument against the U.S. tax system is the idea that filing a return and paying taxes is voluntary. Primary points include court cases like Flora v. United States, in which the term “voluntary” is used to describe how the tax system is based on “voluntary assessment and payment, not upon distraint.”

But when the IRS says filing a return or paying taxes is “voluntary” what it really means is that a taxpayer has the right to determine his or her tax liability by completing the appropriate forms, as opposed to having the government complete the forms and determine the bill. It doesn’t mean you have the option to opt out of the system entirely.

2. The Money They Earned Isn’t Really Income

According to this anti-tax argument, the money you receive for working isn’t technically income. Rather, you’re engaged in an equal exchange of your labor for fair market wages, and thus there’s no “gain” to be taxed. In this view, the government only has the right to tax gains or profit, not wages.

In reality, the IRS is allowed to tax virtually all your income, whether it’s dividend income from stocks or wages you receive from your employer. Exceptions include gifts and inheritances (though large estates may have to pay an estate tax), child support, life insurance benefits, and welfare payments.

3. Taxes Are Against Their Religion

You may not believe in paying taxes, but the IRS isn’t buying it. Though churches and other religious institutions are exempt from taxes, the same does not apply to individual taxpayers.

Allowing people to opt out of taxes on religious grounds would cripple the tax system. In the United States v. Lee, the U.S. Supreme Court ruled that “[t]he tax system could not function if denominations were allowed to challenge the tax system because tax payments were spent in a manner that violates their religious belief.”

4. Paying Taxes Violates the Fifth Amendment

Some argue that including financial information on a return may bring unlawful or illegal activity to light, thereby forcing a taxpayer to forego their Fifth Amendment protections.

The IRS calls this a “blanket assertion” of constitutional privilege. The agency asserts that there are no constitutional grounds for the refusal to file a tax return based on the Fifth Amendment. In cases like the United States v. Sullivan and the United States v. Neff, the courts back the IRS’s position.

5. Paying Taxes Is a Form of Slavery

The U.S. has prohibited involuntary servitude (except as punishment for a crime) since 1865, when the 13th Amendment was ratified. Since then, some anti-tax protestors have tried to equate paying taxes to slavery, arguing that having to send some of their money to the IRS is a constitutional violation. Even prominent politicians have evoked this absurd anti-tax argument. “If we tax you at 50% you are half slave, half free,” Rand Paul said in 2015. But the IRS and the courts have declared the “taxes equals slavery” claim bogus.

On the flip side, arguments that African-Americans and Native Americans can claim a tax credit as reparations for slavery and other forms of oppression are invalid. While there have been serious arguments that the U.S. should pay reparations to the descendants of former slaves, the government has not taken any such action.

6. The 16th Amendment Doesn’t Count

The 16th Amendment to the Constitution is short and to the point: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

Yet some tax protestors argue the 16th Amendment is invalid because it was not properly ratified or that Ohio was not properly a state at the time it voted for the amendment. (Ohio has been a state since 1803; the amendment was ratified in 1913.) “Proponents mistakenly believe that courts have refused to address this issue,” the IRS noted. “There were enough states ratifying the Sixteenth Amendment even without Ohio to complete the number needed for ratification. Furthermore, after the Sixteenth Amendment was ratified, the Supreme Court upheld the constitutionality of the income tax laws.”

7. Their State Isn’t Part of the United States

Among the goofier anti-tax arguments is the assertion that only people who live in the District of Columbia, in federal territories, or on Indian reservations or military bases have to pay federal income tax. Everyone else is supposedly a citizen of a “sovereign” state, not the U.S., which means they’re exempt from federal income tax. Not so, says the IRS.

“The Internal Revenue Code imposes a federal income tax upon all United States citizens and residents, not just those who reside in the District of Columbia, federal territories, and federal enclaves,” the IRS explained.

8. The IRS Is Secretly a Private Corporation

Some conspiracy theorists are convinced the IRS isn’t actually part of the federal government at all. Supposedly, it’s a private corporation masquerading as a government agency, and it actually has no authority to enforce the tax code. In the 2002 case Edwards v. Commissioner, the court dismissed the claim as “tax protestor gibberish.”

9. They’ve Rejected Their Citizenship

You can’t reject your U.S. citizenship or claim to be a “free born citizen” of a particular state in order to get out of paying taxes. “Claims that individuals are not citizens of the United States but are solely citizens of a sovereign state and not subject to federal taxation have been uniformly rejected by the courts,” according to the IRS.

Even if you were to formally renounce your U.S. citizenship (which involves appearing in person at a U.S. embassy or consulate in another country), you still may not be able to escape your tax bill. “Persons who wish to renounce U.S. citizenship should be aware of the fact that renunciation of U.S. citizenship may have no effect on their U.S. tax or military service obligations,” the State Department explained.

10. They Aren’t Technically a Person

In various court cases, this argument has been declared “meritless” and “frivolous and requir[ing] no discussion.” Here’s a tip: If the government is willing to consider a corporation a person, they’re definitely going to consider a person a person.

Erika Rawes contributed to this article.

This article originally appeared on The Cheat Sheet.

Image: AndreyPopov

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4 Rewards Credit Cards for People Who Just Don’t Travel

Prefer staying at home? These are the best credit cards for people who don't travel that often.

So many credit cards today offer cardholders travel rewards. Airline-branded cards focus on earning and redeeming miles with individual carriers. Hotel credit cards do the same with individual hotel chains. But what if travel isn’t your thing? If that’s the case, having a card for earning and redeeming points on travel is, well, kind of pointless.

As a general rule of thumb, you’ll want to get a rewards credit card that offers the most bang for your buck in a category you tend to spend a lot on already. And if you don’t pay your balances off in full each month, you’re probably better off foregoing a rewards credit card completely since those points, miles and cash back will just get lost to interest. (You can see how your credit card balances are affecting your credit by viewing your free credit report summary, updated every 14 days, on Credit.com.)

Having said that, here are four rewards credit cards for non-travelers to consider.

For the Constant Commuter

1. BankAmericard Cash Rewards Card

If you find yourself in the car a lot during the week, the BankAmericard Cash Rewards card would be a good fit for your wallet. Whether you’re driving to and from work or just shuttling the kids to all their activities, this card rewards you for filling up the tank. You’ll get 3% cash back on gas purchases and 2% cash back at grocery stores and wholesale clubs. There’s a $2,500 limit on those bonus categories each quarter, but you’ll get 1% cash back everywhere else. (Not bad for a card without an annual fee.)

Plus, you can receive a $100 cash back bonus if you spend $500 in the first 90 days. If you’re a Bank of America customer, the earnings are even higher. Depending on the assets you have with the bank, you can earn a 10% to 75% bonus when you redeem your cash back into a Bank of America checking or savings account. (That 75% bonus is for Bank of America Preferred Rewards clients.)

As a new cardholder, you’ll receive an introductory 0% annual percentage rate (APR) for 12 months on purchases and any balance transfer you make within 60 days. Once the introductory period has ended, the APR will change to a variable 13.49% to 23.49%, depending on your creditworthiness.

For Whoever Does the Grocery Shopping 

2. Blue Cash Preferred Card from American Express

When it comes to earning rewards on groceries, there is no better card than the Blue Cash Preferred card from American Express (we’ve got a full review here). With this card, you receive 6% back at U.S. supermarkets on up to $6,000 in purchases per year. When you use this card at gas stations, you receive 3% back. All other purchases earn 1% cash back.

When you apply before May 3, 2017, you can earn 10% cash back at restaurants (a $200 cash back max) for the first six months, and you’re eligible for a $150 cash back bonus after spending $1,000 in the first three months.

This card does come with a $95 annual fee, but it also offers an introductory 0% APR for 12 months on purchases and balance transfers. After the introductory period has ended, the APR will become a variable 13.49% to 23.49%.

For Retirees

3. AARP Credit Card From Chase

Chase’s AARP credit card is designed for members of the organization, though anyone can apply and it touts some solid rewards for foodies. Cardholders receive 3% cash back at restaurants and gas stations and 1% cash back everywhere else. Plus, when you sign up for this no-annual-fee card, you’re eligible for a $100 cash back bonus after spending $500 in the first three months.

The card also has a charitable component: For every dollar you spend with your card at restaurants, 10 cents will be donated to the AARP foundation in support of Drive to End Hunger, up to $1 million in 2017. (You can find a few more credit cards that make giving easy here.)

The AARP credit card comes with an introductory 0% APR for 12 months on purchases and balance transfers. Once the introductory period has ended, the APR will change to a variable 16.74% to 23.49%.

For the Fickle Spender

4. Citi Double Cash Card

The Citi Double Cash card doesn’t have a flashy signup bonus, but it does give you the ability to earn cash back on every purchase without any hassle. There are no bonus or rotating categories, just an attractive flat rate. You will have the opportunity to earn 2% cash back on every purchase: The first 1% will come when you make the purchase. You will then earn another 1% back when you pay it off. This is a pretty attractive offer considering the card comes with no annual fee. (Full Disclosure: Citibank advertises on Credit.com, but that results in no preferential editorial treatment.)

The Citi Double Cash card (full review here) is also a great card if you need to transfer a balance from a high-interest credit card. You can receive an introductory 0% APR for 18 months on balance transfers. The balance transfer fee is 3%. Once the introductory period has ended, the rate will change to a variable 13.99% to 23.99%.

At publishing time, the American Express Blue Cash Preferred and Citi Double Cash credit cards are offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for these cards. However, these relationships do not result in any preferential editorial treatment. This content is not provided by the card issuers. Any opinions expressed are those of Credit.com alone, and have not been reviewed, approved or otherwise endorsed by the issuers.

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

Image: Eva-Katalin

The post 4 Rewards Credit Cards for People Who Just Don’t Travel appeared first on Credit.com.

5 Ways Teens Can Start Building Credit Right Now

Here's how you can start establishing credit even before you're 18.

When it comes to building credit, most people start at a disadvantage. It takes credit to build credit, and with no substantial credit history, it’s difficult to qualify for the very credit cards or loans they need to start building credit. And if you’re under 18, you can’t even legally open a credit card in your own name.

Luckily, there are some credit building methods you can use while you’re still in high school — even before you turn 18. Here are a five ways high school students can start building good credit (plus some tips on how to maintain it). 

1. Get a Job 

OK, so getting a job doesn’t directly help you establish credit, but income is a key factor in qualifying for credit, and your job history, just like your credit history usually gets stronger with time. The more experience you have, the better your chances of getting a better, higher-paying job in the future, so get started early (without hurting your academics, of course).

The CARD Act of 2009 requires students and other young adults to demonstrate their ability to repay debt before they can open a credit card account. Having a job will help you do exactly that and strengthens your qualifications for getting a credit card when you’re old enough.

2. Get Added as an Authorized User 

When you’re under 18, one of your options is to get an adult to add you as an authorized user on one of their credit cards. As an authorized user, you can hold and/or use the adult’s credit card, but you won’t be the primary cardholder. The primary card user’s responsible card use can help boost your credit.

“As an authorized user [you] would be able to piggyback off of the more responsible person’s credit,” says Amber Berry, Certified Financial Education Instructor at Feel Good Finances. “Of course, this requires consent from the sponsoring adult because it is the card owner, not the authorized user who is ultimately responsible for making payments.”

This is only a good idea if you and the cardholder both trust each other to use or pay on the card responsibly. You’ll also want to make sure the card in question reports authorized users to the three major credit bureaus. (Still confused about what it means to be an authorized user? We’ve got a full explainer here.)   

3. Get a Secured Credit Card

If you’re already 18, another option for establishing a credit history from scratch is getting a secured credit card. Secured credit cards require a security deposit that dictates your line of credit — for instance, a security deposit of $300 would get you a $300 credit limit. Even though your card is tied to hard cash, you still use it for purchases and make monthly payments just like a normal credit card.

It’s much easier to qualify for a secured credit card, and responsible use will still help you build credit. Card providers may even raise your credit limit or offer you an unsecured credit card after a period of responsible use. You can find some of our picks for the best secured credit cards here 

4. Get a Student Credit Card 

If you’re heading to college soon, another good starter option is the student credit card. Student credit cards have more lenient qualification requirements, have low or nonexistent annual fees and often offer incentives for responsible behavior.  For instance, the Discover it Chrome student credit card offers cash back for good grades, 2% cash back at gas stations and restaurants on up to $1,000 in purchases per quarter and a cash back match at the end of the first year.  

5. Use Good Credit Card Habits  

When you do land a credit card, long-term responsible use is necessary to build and maintain your good credit. That includes paying your bills on time, carrying a low balance and paying your balance in full.

“Do your best not to carry a balance on the card. If you carry a balance and pay only the minimum monthly payment, it can take decades or more to pay off the debt,” says David Levy, Editor at Edvisors Network. “Late payments result in late fees, and some credit card issuers will increase your interest rate if you’re late with a payment. Making payments on time will help you build a good credit history.”

As you build your credit, it’s a good idea to monitor your credit reports and credit scores for errors and signs of fraud, which will also help you maintain your hard-earned credit standing. You can get your your two free credit scores, updated every 14 days, at Credit.com.

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Your $10,000 Bundle of Joy: How to Budget for Your New Baby

baby-budget

Having a baby is a life-changing experience. Every aspect of your life will change, especially how you spend and save money. A recent BabyCenter survey found that parents should expect to spend almost $10,000 in their first year with baby.

With some forethought and careful budgeting, you and your family can moderate some of the costs associated with the first year of your baby’s life. While you can’t foresee every cost, being proactive will minimize surprises and increase peace of mind and enjoyment when your beautiful new addition arrives.

Giving Birth

Labor and delivery costs vary wildly. Location is a big factor. Where you are in the country and where you choose to give birth (home, hospital or birthing center) can alter your plans and budget.

According to the U.S. Agency for Healthcare Research and Quality (AHRQ), the average cost of a normal (no C-section or complications) birth in a hospital is around $3,200. Add in the costs of pre- and postnatal care and you’re looking at thousands more added to your hospital bill, and this is after insurance. If there are any kinds of complications, such as low birth weight or jaundice, you can realistically expect to pay more.

When you find out you’re pregnant, it’s a good idea to contact your insurance company to find out what kind of coverage you have, and if you have it, what your health savings account (HSA) or flexible spending account (FSA) will cover. If you’re insured through your work, you may want to talk to your human resources department. You will likely have several conversations in their office, especially if you plan to take parental leave.

Taking Time Off

Finding out what kind of family leave your company offers (or doesn’t offer) will affect your budget. It may be surprising, but only about one-third of all working women in the United States are offered any sort of maternity leave. If your company offers leave, find out if you get the full amount or only a percentage of your regular paycheck. This may affect how long you take. If your company doesn’t provide leave, they’re still required to honor 12 weeks, unpaid, under federal law. Fully understanding your own benefits will give you a clear idea of how to create a feasible budget for your growing family.

Budgeting for Baby

Once you have a clear idea of how much money will be coming in, you can begin creating a budget for the months leading up to, and after, giving birth. You may use a “first year” calculator to figure out what you’ll need to save. The numbers may surprise you, so expect to make some adjustments in your spending. Curious about how to start making cuts? Start by figuring out where your money is going now. To do this, you can track your expenses in Excel, or if you’re more comfortable on your phone or the computer, you can try using an app/program like You Need A Budget.

With big purchases on the horizon, it might also be a good time to check your credit score. You can see two of yours free on Credit.com.

Once you’ve figured out where your money is going, you can create a budget with savings in mind. More importantly, start that budget before the baby is born and stick to it. If you’re spending more than you’re earning (or saving), you can start cutting unnecessary expenses like cable or magazine subscriptions. You may also want to consider things like limiting your travel and avoiding eating out too often. Packing a lunch instead of ordering a sandwich can add up quickly. (Want more ideas for smart spending habits? Consider these 50 ways to stay out of debt.)

Buying for Baby

Buying furniture and supplies as you prepare your home for your little one is where a lot of families tend to blow their budgets. First-time parents are often unsure about what and how much they will need to care for their newborn.

Before you build a registry or go on a shopping spree, have an honest conversation with your partner, yourself and other parents about what’s truly necessary.

You may also want to bring a friend or relative who is already a parent on your registry trip – they will give you the lowdown on strategic purchases and can assist your internal debate between that fancy baby Jacuzzi or $10 plastic tub. That doesn’t mean you can’t splurge on something adorable you love. Just call a splurge a splurge, save for it and buy other things more affordably.

Don’t buy anything without seeing what your friends or family members are willing to lend or give you for free. Some babies grow so quickly they never get the chance to wear their newborn outfits or onesies. The same can be said of furniture like gliders or high chairs – parents may discover that their kids prefer their car seats or booster chairs. Buying gently used clothing, furniture and supplies can save you a lot of money over time. Also, consider registering or purchasing gender-neutral clothing and equipment. If you plan on having more children, you won’t feel pressured to buy new things.

Lastly, if you’re planning on using day care or home care, the sooner you can start interviewing centers or home care candidates, the better. Some have an admissions process, waiting lists or deposits so if you have a certain person or location in mind, schedule your visit well before your due date. With this sort of prudence and planning, you’ll feel more confident about bringing your baby home.

Image: KQconcepts

The post Your $10,000 Bundle of Joy: How to Budget for Your New Baby appeared first on Credit.com.

7 Essential Apps for Small Business Owners

Here are seven apps that can help entrepreneurs focus on running their business and less on the tools they’re using to do it

Chances are, if you ask a business owner or other entrepreneur what apps they rely on to help them stay on top of things you’ll get a response like this: “Apps? I don’t know. I’m too busy running a business to worry about apps” or “Hahahahaha! I’m not on top of things!”

Those are real responses from some highly entrepreneurial business owners to whom I posed the question. And, when you stop and think about it, their responses make sense. After all, most entrepreneurs aren’t going to mention that cup of coffee, their email or their phone as essentials to their daily work because they’re just so much a part of their day-to-day. Like oxygen or sunlight, you only really think about them when they’re suddenly unavailable.

The same holds true for genuinely helpful apps. They become fully ingrained into the user’s daily work and even personal lives. We looked across the spectrum at apps that help users communicate, organize their days, be more productive, keep their data and communications secure, and even help them learn.

The following are seven apps we think can truly help entrepreneurs focus more attention on running their business and less on the tools they’re using to do it.

1. KanbanFlow by CodeKick AB

Platforms: Android and iOS

Price: Free Basic version, $5/user/month Premium version

If you need to manage projects, KanbanFlow can help you do it. This web-based app lets users see the entire workflow, from assigning tasks to uploading documents and scheduling due dates. The Premium version allows for file attachments, revision history and even the ability to analyze your work history.

2. ColorNote by Social & Mobile

Platforms: Android, iOS and Windows

Price: Free

This app essentially functions like digital Post-It notes. It allows you to create text notes, checklists, to-do lists, etc., and you can check off items as you complete them. The notes can also be color-coded to keep them organized, and you can even name the color groups. The notes can be added to your calendar and even be shared.

3. Evernote

Platforms: Android and iOS

Price: Free with in-app purchase options

It’s like a notebook for your inner creative, allowing you to capture ideas based on pictures, drawings or writing, create project to-do lists around those ideas and also share them across devices and with others.

4. Duolingo

Platforms: Android, iOS and Windows

Price: Free

If you’re an entrepreneur who wants to take your business global (or at least into another country), learning a new language while trying to do it might seem daunting. But Duolingo aims to help you learn a new language in your down time, like on your commute, while exercising, or even while relaxing.

5. CamScanner by INTSIG

Platforms: Android and iOS

Price: Free with in-app purchase options

This app turns your device into a scanner and also allows you to access, edit and manage documents anytime, even on the go.

6. CM Security by Cheetah Mobile

Platforms: Android

Price: Free with in-app purchase options

This security app offers all kinds of nifty features, like AppLock, which stops intruders who try to unlock protected apps on your device and notifies you with the intruder’s photo.

7. Polaris Office

Platforms: Android and iOS

Price: Free Basic version, $3.99/month Smart version, $5.99/month Pro version

This app lets you create, edit and sync Microsoft Office files from your phone or device, and you won’t lose any of the formatting you worked diligently to create.

Small Business Financing 101

Of course, apps aren’t the only things that can help an entrepreneur successfully build and run their business. Having good credit can help tremendously, as well, since many lenders, including business credit card issuers, are going to pull a version of your traditional credit reports to see if they’re willing to extend financing for your business. (You can see how your credit is doing by viewing two of your credit scores, updated every 14 days, for free on Credit.com.)   

If your credit is just fine, there are plenty of solid business credit cards (see our picks here) available that can help you finance some of your business expenses. The Small Business Administration also offers several loan programs designed to help budding and operational entrepreneurs and there’s also conventional financing at your disposal that you can look into. 

Just remember to manage whatever financing you use responsibly, since many business lenders require a personal guarantee and will report a default to the major consumer credit reporting agencies. You can find tips for making sure a business loan doesn’t wreck your credit here.

Image: Geber86

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4 Toy Trends Your Kids Will Love This Year

A look at the upcoming trends and coolest toys featured at Toy Fair New York.

Image: Weekend Images Inc.

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5 Ways to Find Extra Money for a Down Payment

Here's how to find money for a down payment.

In order to buy a home, you need to have a balance of good credit, manageable debt, stable income, and sufficient savings. Maintaining a balance between these four categories is challenging enough on its own, never mind coming up with enough cash to close on your potential new home.

If you’re worried about the credit part, you can see what you can potentially do to improve by viewing your free credit report summary, updated every 14 days, on Credit.com. And, if cash flow is your issue, here are some ways you can find extra money for a down payment.

1. Move in With Family

Having a nearby family member that will let you move in for a little while is a great way to save money on rent. It’s nice to live alone, but saving that $2,500 per month is a financial home run. In exchange for a little less privacy, you can start saving big money in a shorter amount of time than you would have by continuing to pay $2,500 per month. This can yield huge dividends for you in the future and could be the means of collecting the down payment for your new home.

2. Retirement Funds

Did you know that some retirement accounts let you draw from your reserves early in order to pay for your first home? Every retirement account is different, so it is a good idea to contact your human resources department to review your 401K, or a bank/financial adviser to review the terms of withdrawal from your investment account. In most cases, if it is a first home (i.e., you have not owned a home in the last three years), you can borrow from yourself to finance your down payment or cash to close. There can be tax penalties for withdrawing early, so be sure to review your terms.

3. Cash-Out Refinance

If you already own a home, it might be worth considering a cash-out refinance on your current home in order to pay for another one. Fannie Mae and Freddie Mac have recently taken kindly to this approach by changing the equity position in a departure residence to purchase a new primary home. Completing a cash-out refinance on your current home to purchase another is a form of leveraged debt and will allow you to purchase with a stronger offer. Just be sure this makes sense for your finances before you apply.

4. Sell a Home

In a similar scenario, by already owning a home with equity, you can sell your home in order to buy another one. For example, if you have $150,000 of equity in your current home, you can sell and use that equity as a down payment to acquire another. The challenging aspect of this is that these scenarios are contingent upon one house selling. If the buyer backs out of the deal, your ability to secure the house you are in contract for will be at risk.

This method should be approached with caution and only with a real estate agent who can walk you through the ins and outs. Education is key to a successful dual transaction like this.

5. Sell Personal Property

As much as we like our things, it is nice to have a roof over our heads we can call our own. If you have any toys or big-ticket items like a boat, motorcycle or novelty, those can be sold to generate cash for buying a home. In order to use these funds, you need to keep all documentation while selling the item. If you do not have supporting documentation, the cash cannot be used.

If you are looking to see what it takes to buy a home, we recommend talking to an experienced licensed mortgage professional. If you do not have the necessary means to acquire cash quickly or efficiently, talk to your mortgage professional about programs that require little to no down payments or lenders who have down payment assistance available. And, of course, be sure to determine how much home you can comfortably afford (more on how to do that here).

Image: monkeybusinessimages

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Tax Tips for Recent College Graduates

When life changes, so do your taxes, and graduating from college brings several life changes that can affect your tax return. You may go from being claimed as a dependent by your parents to filing on your own for the first time. You may move out of state, collect a paycheck for the first time, and start paying off student loans. All of these events present opportunities to save — and costly pitfalls to avoid. To help you keep more of what you earn in this next phase of life, check out these tax tips for recent college graduates.

Figure out if your parents can still claim you as a dependent

If you just graduated, you may still be eligible to be claimed as a dependent on your parents’ tax return. Dependency rules are complex, but essentially, for your parents to claim you as a dependent:

  • you must be under age 24 at the end of the year,
  • you must be a full-time student (enrolled for the number of credit hours the school considers full time) for at least five months of the year,
  • you must have lived with your parents for more than half the year (you are deemed to live with your parents while you are temporarily living away from home for education), and
  • your parent must have provided more than half of your financial support for the year.

If you meet all of these tests, your parents can still claim you as a dependent and take advantage of the dependency exemptions and education credits.

Even if your parents claim you as a dependent, you may still be required to file your own return if you had more than $2,600 of unearned income (interest, dividends, and capital gains) or more than $7,850 of earned income (wages or self-employment income).

Get reimbursed for moving expenses if you moved in order to take a new job

If you moved for a new job after graduation, you might be able to deduct any unreimbursed moving expenses, as long as the new job is at least 50 miles away from your old home. Those expenses include costs to pack and ship your belongings and lodging expenses along the way, but not meals. You can also take a deduction for 17 cents per mile driven for 2017 (down from 19 cents per mile in 2016).

If you moved out of state, you might have to file two state returns if you had taxable income in both states. Many students have a part-time job while in school and take a full-time job in another state after graduation. Rules vary drastically by state. In some states, you will have to claim 100% of your income on your resident state return, then receive a credit for any taxes paid to another state. In this case, you may be better off working with a professional who can help guide you through filing in both states.

Make sure you’re withholding the right amount from your paycheck

When you start your new job, the human resources department will ask you to complete a Form W-4 to indicate how much of your paycheck you’d like your employer to take out for taxes. Working through the questions on the form is simple enough, but it doesn’t take into account how much of the year you’ll be working.

Most new graduates end up having too much federal tax withheld in their first year, effectively giving the government an interest-free loan, says Bradley Greenberg, a CPA and partner at Kessler Orlean Silver & Co. in Deerfield, Ill.

That’s because graduates rarely start new jobs right at the start of a new year. You may graduate in May and start working in June, or graduate in December but not find a job until February. Yet you are taxed as if you have been earning that pay for the entire year.

“The withholding tables are designed with the assumption that one makes the same amount of money for each pay period of the year, regardless of how many pay periods were worked,” Greenberg says. “For example, a June graduate starting a job on July 1 for $50,000 will have the same taxes withheld per pay period as a colleague with the same salary, marital status, and number of exemptions, but who worked the entire year.”

Greenberg recommends two courses of action for new graduates:

  1. Set up your withholding in your first year of employment so less tax is withheld. Then make sure you adjust it on the following January 1, so you don’t have too little tax withheld in your first full year of employment, or
  2. View this as a savings plan and file your taxes as early as possible next year to get your refund from the IRS.

Take advantage of student tax credits

If your parents can no longer claim you as a dependent, you may be eligible to claim valuable tax credits for any tuition you paid during the year. There are two tax credits for higher education costs: the Lifetime Learning Credit and the American Opportunity Credit.

For 2016, there is also the tuition and fees deduction (Congress failed to renew this deduction, which expired on December 31, 2016, so it is not available for 2017). The rules and income limits for each credit and the deduction vary, but the IRS offers an interactive tool on their website to help you determine which tax break applies to you.

If you used student loans to pay for your education, you can take a deduction for up to $2,500 of interest paid on a qualified student loan. If your parents made loan payments on your behalf, you are in luck. Typically, you can only deduct interest if you actually paid the debt, but when parents pay back student loans, the IRS treats it as if the money was given to the child, who then repaid the debt.

Don’t ignore your 401(k) or health savings account at work

New college graduates may be financially strapped and hesitant to divert part of their paycheck into a retirement plan or health savings account, but opting out means missing out on substantial tax-saving and wealth-building opportunities.

If your employer offers a matching 401(k) contribution, as soon as you’re eligible you should contribute at least enough to get the employer match. Otherwise, you’re missing out on free money. If you select a traditional 401(k), you can save on next year’s taxes. That’s because any contributions you make will be tax free, and they will reduce the amount of your income subject to federal income tax as well as Social Security and Medicare (FICA) taxes.

For better or for worse, many employers now offer high-deductible health insurance plans. These plans often come with health savings accounts (HSAs). Any money you set aside in an HSA can be used for any qualifying medical expense, from co-pays to prescriptions. The best part is that money you put into your HSA is not taxed, so you can potentially save a lot by using your HSA for medical expenses rather than paying out of pocket.

HSA funds stay in the account until you use them and are portable, meaning you can take it with you even if you leave your job. If you have big medical bills down the road, the funds can come in handy. If not, think of them as another tax-advantaged way to save for retirement.

Bring in a professional if you think you need help

If this is your first time filing on your own, you may be wondering whether you should do it yourself or pay someone to prepare your return for you. If you have a simple return with just a Form W-2 and perhaps some interest income, you could save money by buying some tax software and doing it yourself. MagnifyMoney’s guide to the best tax software is a great place to start.

But if you have dependents, investments, or a small business, you may be better off going to a reputable accountant.

Doing your taxes is never fun, but for recent college graduates, they may not be as big a headache as you might have heard. Keep in mind that tax laws often change, and everyone’s situation is a little different. But taking the time to know which tax breaks apply to you can make your post-college life significantly easier.

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