11 Tips for Budgeting Monthly Bills on a Weekly Paycheck

While Chelsea Jackson finished her Early Childhood Education degree at Georgia Gwinnett College in 2016, she took a job as a cashier at a local grocery store. The 23-year-old earned $9.25 an hour and was paid on a weekly basis, bringing in about $250 with each paycheck.

Getting paid on a weekly basis, she says, came with its own set of challenges. She needed to figure out how to save enough from each paycheck to cover bills due later in the month while also meeting her immediate needs (food, gas, etc.) at the same time.

“When you get paid weekly you don’t really have a snapshot of what your true income is because it’s gone so fast,” says Jackson, who now works as a first grade teacher. “It’s such a little amount, you really don’t see how much you make until the end of the month when you add up your paychecks.”

More than 30% of U.S. businesses pay workers on a weekly basis, according to the U.S. Bureau of Labor Statistics. Cashing a paycheck every week might sound like a great deal, but it can actually make budgeting for bills more challenging.

Exacerbating matters is the fact that workers who are paid weekly are already at a financial disadvantage, as they are more likely to earn less than their counterparts who are paid biweekly or monthly. Employees on weekly pay schedules earn an average of $18.62 per hour versus $24.81 (workers paid biweekly) and $28.45 (workers paid monthly), according to the BLS.

There are ways to adjust to a weekly pay schedule and still meet your financial obligations at the same time.

Here are some tips:

Change your bill due dates if you can

If you can, ask whatever entity is sending you a bill each month if you can move your due date to one that’s more convenient for your budgeting purposes.

“You kind of have to have one thing pushed back so it doesn’t hit you all at once,” says Shannon Arthur, 22, who receives a weekly paycheck as the assistant manager for a department store in Suwanee, Ga.

Arthur says her credit card bill comes during the second week on purpose. She called her credit card company to change the bill’s due date to better fit her payment schedule.

Work with your lenders when you can’t meet your due dates

If two bills overlap and there isn’t enough money in the bank for both, workers are left with a hard choice. Arthur found herself in that situation, and she knew she was going to be late paying her phone bill. She found that honesty worked in her favor.

“I just explained to [T-mobile] my situation,” she says. They allowed her to pay $20 of the bill that week, then pay the remainder the following week.

But she stresses making a good-faith effort to pay your bill on time if you’re going to ask for extra time as you’ll likely need to show you have a good payment history or the company may not allow you to pay later.

Save your “extra” check

When you’re paid weekly, you’ll have some months when you’ll receive five paychecks instead of four. “Those months should be used strategically,” says behavioral economist Richard Thaler.

He advises workers to budget based on receiving four paychecks each month and then use the the fifth, or “extra” paycheck to boost or address your financial goals.

“When it comes around, or if, perish the thought, there are outstanding credit card bills, pay them down,” says Thaler.

Chart your cash flow

Know exactly what money you have coming in and how much you have going out each month. Lauren J. Bauer, a financial adviser based in Greensboro, N.C., recommends creating a list of all of your bills. From there, calculate how much you need to withhold from each paycheck in order to cover those bills by their due date.

“It makes it easier than just writing down a total for all your bills and trying to get them paid when you think about it,” says Bauer. She says the chart makes it easy to see what you’ll spend by check, so that you know how much money you’ll have coming in and what you’re able to pay for that week.

Set aside money to cover bills in advance

“If you’re getting paid weekly, you need to develop a discipline to save for things that you pay for on a monthly basis,” says Peter Credon, a New York, N.Y.-based financial planner.

Jackson says she relied on a simple strategy to make sure her bills were paid on time. She strove to save up three months’ worth of expenses. Once her savings fund goal was met, rather than paying her bills with a bit of each paycheck, she used her savings to pay bills as they came. Then, she replenished some of the funds each time she was paid.

This strategy is all about taking back control of your budget.

“If you have enough money [set aside], you can prefund things in many aspects and have control,” Credon says. “You’re controlling your finances and how you spend your money.”

Set aside funds for emergency expenses

No matter how often you’re paid, you should build an emergency fund that holds enough money to cover about three to six months’ worth of your fixed expenses. It can help cover irregular or unexpected bills that don’t line up with your pay schedule, like an emergency dentist visit or a trip to the auto shop.

“The emergency fund helps keep you out of long-term debt,” says Credon. “Focus on building up a little more cash on the side to get yourself through the tougher times. He says you may even want to save a little more if you’re a shift worker and your hours fluctuate.

Keep your spending money in a separate account

An easy self-hack that helps combat overspending is to transfer funds you need to cover your expenses for the month to a designated checking account and restrict yourself to using only those funds each month. Automatically transfer the amount you wish to save to a separate savings account, so you’ll be less likely to spend it.

Putting the extra money in savings can help prevent you from getting used to a larger budget. It stops you from seeing you have more money in your budget for the next week and thinking you can overspend. You take that money out of the equation to keep your spending habits tamed.

Make partial bill payments with every paycheck

If you know the date and amount of an upcoming bill, you can get ready for the payment ahead of time to lessen your financial burden during the week when the bill arrives.

For example, let’s say your rent payment is $700 per month, but you receive only $400 per week. Each week, set aside $175 for your rent and reserve the leftover funds for other expenses.

This way, a large, recurring bill like a mortgage or student loan payment won’t eat up the majority of your paycheck the week the bill becomes due. Plus, you’ll already know you have the money to cover the bill.

Try not to splurge

When you’re paid weekly, you’re paid quite frequently, so it can be easy to feel like your next payday is right around the corner. But you may run out of money faster than you imagine. When Jackson was paid weekly, she was forced to be strict with herself because she wasn’t paid that much at a time.

“There were definitely weeks or months when I would splurge,” says Jackson. “Those six days [till the next paycheck] can feel like a really long time.”

Use apps to track your spending and saving

You can set bill reminders on your banking or budgeting applications to remind you when a bill will be due in the coming week or set alerts to let you know when you’re overspending in a category you’ve budgeted a limit for.

Jackson says she used the budgeting app Mint to reign in her spending on food since she realized she was overspending at the grocery store.

Don’t forget to check your credit report from time to time if you use credit cards or have loans you’re paying off. “If you’re paying your bills on time and promptly, you’re also building your credit score,” says Credon.

Keep your goals in mind

Admittedly, if you’re already struggling to live paycheck-to-paycheck, saving up can be tough, but it’s not impossible.

“Watching a budget isn’t fun because most people want to be able to do what they want when they want to,” adds Credon. He suggests building in some rewards — like getting to go on a date night once a month — to help stay on course. He says to think of longer-term goals to keep you going, like the ability to buy your own place or take a trip for a few weeks overseas.

The post 11 Tips for Budgeting Monthly Bills on a Weekly Paycheck appeared first on MagnifyMoney.

How to Buy a House With a Friend — The Right Way

It’s completely possible for you to purchase a house or other property with someone who isn’t your spouse, like a friend or family member.

“It’s a beautiful occasion, but it’s also a complex business transaction,” says Senior Managing Partner of New York City-based Law Firm of Kishner & Miller, Bryan Kishner. “There are tremendous positives to the overall thing, but people need to be careful with the unforeseen items, and a lot of people say they didn’t think about that.”

For friends who are unable to afford a home in their area on a single income, or cohabiting couples, buying a home together can help both parties boost their net worth or simply achieve a goal of becoming a homeowner.

That being said, purchasing a home with a friend can be more complicated than buying a house with your spouse. The key to a successful co-homeownership arrangement is to set yourselves up for success from the get-go.

Choose the Right Joint Homeownership Structure

When you buy a home, you’ll get a title, which proves the property is yours. The paper the title is printed on is called a deed, and it explains how you, the co-owners, have agreed to share the title. The way the title is structured becomes important when you need to figure out what happens when a co-owner needs to part with the property.

These are the two most common ways to approach joint homeownership:

1. Tenants in Common

A tenants in common, or tenancy in common, is the most common structure people use when they purchase a property for personal use. This outlines who owns what percentage of the property and allows each owner to control what happens if they pass away. For example, a co-owner can pass their share onto any beneficiaries in a will, and that will be honored.

The TIC allows co-owners to own unequal shares of the property, which can come in handy if one owner will occupy a significant majority or minority of the shared home. For example, if two friends decide to buy a multifamily home, but one friend pays more because one friend’s space has much more square footage than the other friend’s space, they can split their shares of the home accordingly.

Kishner says to make sure you “reference and evidence your intent to use the tenants in common structure on the deed,” as it’s the primary evidence of your ownership — meaning you would write who owns what percentage of the property on the deed and note the parties chose a TIC structure.

The Pros of a TIC structure

Ownership can be unevenly split

You can own as much or as little as you want of the property as long as the combined ownership adds up to 100%. So, if you’re putting up 60% of the down payment, you can work it out with the other co-owner(s) to own 60% of the property on the title.

You don’t have to live there

You can own part of the property without living there. This is relevant for someone who simply wants to be a partial owner, but doesn’t want to live at the property.

You get to decide what happens to your share after you pass away

The TIC allows you the flexibility to decide what happens to your interest in the property in the event you pass away. You can decide if it will go to the other co-owners or to an heir. Regardless, the decision is yours.

The Cons of a TIC structure

Co-owners can sell their interest without telling you

Co-owners in a TIC can sell their interest in the property at any time, without the permission of others in the agreement. However, if they are also on the mortgage loan, they are still on the hook to make payments, says Rafael Reyes, a loan officer based in New York City.

2. Joint Tenants with Rights of Survivorship

This arrangement is different from a tenants in common arrangement in that in the case of one co-owner’s death, the deceased party’s shares will be automatically absorbed by the living co-owners. For this reason, this type of structure is more common among family members or cohabiting partners looking to purchase property together.

If, for example, you are purchasing with a family member and would like them to automatically absorb your portion in case you pass away unexpectedly, this is the option you’d go with. Even if the deceased has it written in their will to pass their interest to a beneficiary, that likely won’t be honored.

A joint tenants agreement requires these four essential components:

  1. Co-owners must all acquire the property at the same time.
  2. Co-owners must all have the same title on assets.
  3. Each co-owner must own equal interests in the property. So if you buy with one friend, you’ll own 50%, but if you buy with two friends, you’d own one-third of the property. This may be an important consideration if co-owners will occupy different amounts of space in the property.
  4. Co-owners must each have the same right to possess the entirety of the assets.

The Pros of a joint tenants agreement

Everyone owns an equal share in the property

There’s not arguing over shares if you go with a joint tenants arrangement, since it requires all co-owners to have an equal interest. So each co-owner has the same right to use, take loans out against, or sell the property.

No decisions to make if someone dies

There’s nothing for co-owners or family members to fight over after you pass away. Your ownership shares are automatically inherited by the other co-owners when you pass away, regardless of what might be written in a will.

The Cons of a joint tenants agreement

Equal ownership

Equal ownership can be a con as much as it’s a pro. If you’re going to occupy more than 50% of the space, or put up more of the mortgage or down payment, you may want to own more than your equal share of the property. If that will bother you, a TIC agreement is best.

How to Create a Co-ownership Agreement

Before you even start the mortgage lending process, it’s recommended to work out an agreement on how you’ll split equity in the home, who will be responsible for maintenance costs, and what will happen in the event of major life events such as death, marriage, or having children.

“You are more or less going into business together” when you purchase a home with a friend or relative, says Kishner. And like any smart business owner, you’ll want to protect yourself in case things go south down the road.

A real estate attorney can help you set up an official co-ownership agreement.

Kishner recommends each person in the agreement get their own attorney, who can represent each party’s personal concerns and interests during negotiation. Rates vary by location, but he estimates a good real estate lawyer would charge around $1,000.

Ideally, Kishner says, this agreement is created and signed before closing the mortgage loan. That way, if simply going through all of the what-ifs scares someone off, they have the opportunity to pull out.

3 Questions Every Co-ownership Agreement Should Answer

The co-ownership agreement you draft and sign will need to address many issues. Here are three common scenarios the experts offered us:

1. What happens if someone wants out?

Your agreement should outline an exit plan in case one or more of you want out of the property. This could be because of a number of reasons but is the area where things can get extremely complicated. For example, what if one of the co-owners wants to be bought out by the other co-owners?

Let’s say you’ve got three people on a mortgage and on the title to a property. If the other two can come up with the money for the equity, you’ve solved that problem.

But if someone wants to sell their interest in the property, for example, Reyes says they can’t just take the cash and walk away, since they’ll still have some financial obligation to the home if they are on the mortgage. So you’d need to also refinance the mortgage to get them off of it, and that could affect the other co-owner’s financial picture. The only way to relieve someone of their financial obligation to the mortgage is to refinance with the lender. That’s because if they leave and decide to stop making mortgage payments, that will affect your credit score.

Be prepared. When you refinance, the remaining co-owners will need to qualify again for the mortgage. If you decided to add a co-owner because you couldn’t originally qualify for the property based on your income, you might not qualify to own after a refinance.

If you can’t refinance, you all may decide to arrange for the departing member to rent out their living space in the household … then you’d need to deal with the issues surrounding finding a roommate or having a tenant. However you all want to go about handling this kind of situation should already be outlined in the co-ownership agreement, so you’ll have one less thing to argue over in a split.

2. What happens if a co-owner loses their job?

You want to be prepared to fulfill your financial obligations if someone loses their income. That’s why it’s recommended to create a shared emergency fund, which you can draw from in the case that one of the owners runs into financial issues (or, of course, to handle any maintenance needs). You can establish the contributions and rules surrounding a shared emergency fund in your co-ownership agreement.

Reyes advises putting away about six months’ worth of the property expenses into a shared savings account.

“That six-month reserve, at least, is important because ultimately, God forbid, if there is some kind of financial turbulence like job loss, they can cover the mortgage or they could sell the home within six months in this market,” said Reyes.

3. How will you pay bills and taxes?

The co-ownership agreement also needs to address how you all will split up housing costs. Kauffman says you should set up a joint account and agree on what each party should contribute to the fund each pay period.

You should consider the repairs, maintenance, and upkeep on the house, as well as things that could increase over time such as property tax and homeowner’s insurance, too, Kauffman adds. In the event those costs exceed what you’ve set aside to pay for them in escrow accounts, the co-ownership agreement needs to outline how the extra bill will be paid.

Applying for a Mortgage as a Joint Homeowner

If you want to purchase a home with a friend or relative, you’ll first have to decide whether or not both of your names will be on the mortgage.

A lender will consider both of your credit scores during the underwriting process, which means a person with a lower credit score could drag down your collective credit score, leading to higher mortgage rates.

Kauffman strongly advises reaching out to figure out your financing before applying for a loan with friends.

“Each of them might understand what they can afford on their own, but they may not be aware of how their purchasing power changes,” Kauffman says. You may find you qualify for more or less house than you thought you could afford.

He adds there are some serious things to consider when you decide to enter into an investment with other people that you’re not necessarily tied to. Carefully consider your personal relationships with the people you’re going into homeownership with.

“You’ve got to really consider who you’re getting into it with and really consider all of these things that are bound to happen when you have [multiple] lives,” says Kauffman.

It can also be potentially awkward when friends or colleagues realize they must reveal aspects of their finances that they might prefer to keep private, such as their credit score, credit history, and total income.

“Oftentimes people learn a lot about their [co-owner] through a credit report, and it becomes embarrassing and uncomfortable sometimes,” says Rick Herrick, a loan officer at Bedford, N.H.-based Loan Originator.

The post How to Buy a House With a Friend — The Right Way appeared first on MagnifyMoney.

Citi Double Cash Review: Twice The Cash, No Limits

Citi Double Cash offers the highest no-fee flat-rate cash back credit card on the market. If you pay your balance in full and on time every month, you can earn up to double cash back on everything you spend. You earn 1% cash back when you spend, and then 1% cash back when you pay. If you pay your statement balance in full and deposit the cash back into your checking account, you will have earned a nice 2%.

There is no cap on the cash back you can earn, and there are no rotating categories or requirements to opt into every quarter. If you are looking to earn a lot of cash back without a lot of work, this card could be right for you.

Citi®Double Cash Card

APPLY NOW Secured

on Citibank’s secure website

Citi®Double Cash Card

Annual fee
$0 For First Year
$0 Ongoing
Cashback Rate
1% when you buy, 1% when you pay
APR
14.49%-24.49%

Variable

Credit required
good-credit

Good

  • Earn cash back twice on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases.
  • Balance Transfers do not earn cash back
  • 0% Intro APR on Balance Transfers for 18 months. After that, the variable APR will be 14.49% - 24.49% based on your creditworthiness
  • Click 'Apply Now' to see the applicable balance transfer fee and how making a balance transfer impacts interest on purchases.
  • No categories to track, no caps on cash back, no annual fee

How the Citi Double Cash Card works

To get double cash back, you must emulate the habits of the savviest credit card holders: use your card, and pay it off in full each month. Do anything else, and you won’t get the full benefit of the double cash back reward.

With the Citi Double Cash Card, you receive your first 1% when you purchase something, but Citi holds onto the second 1% cash back reward until you pay them back. So you get 1% cash back for every dollar you spend, and another 1% cash back for each dollar you pay off on your balance — on time — each month.

To get the maximum double cash back quickly, you should pay off your entire balance. However, as long as you pay the minimum each month, you’ll eventually receive the double cash back, although you’ll pay a lot more than 1% in interest each month.

How to redeem cash back with Citi

When your balance reaches $25, you can choose to redeem your cash reward through a gift card, check, direct deposit, or statement credit to your Citi account. Beware: if you redeem with a statement credit, you won’t get exactly double cash back, but just shy of it depending on the size of the reward.

If you redeem via gift card, you’ll select from retail, restaurant, entertainment, and electronic gift cards in Citi’s gift card marketplace. Choosing the direct deposit option will allow you to transfer your cash back directly to your bank account whether it’s a Citi account or not. If you redeem via check, you should receive a paper check at the address you have on file in 7 to 10 business days.

You can also redeem with a statement credit, but you might notice you don’t get quite double cash back. Since a $25 credit on your statement reduces the amount you’d need to pay back by some amount, you technically get a little less than 2% cash back.

For example, if you redeem $1,000 in cash back for the year, you’ll be shorted about $10 if you redeem your rewards with a statement credit. Assuming you paid off your balance each month, your cash back is reduced to about 1.98%. If you don’t want to miss out on that gap, redeem via check or direct deposit. Also, remember Citi does not count a statement credit as a payment, so you still need to make at least your minimum monthly payment by the due date or you’ll be charged a late fee.

For more details on how to get your cash back, check out this article, where we show you step-by-step how to redeem your cash back with Citi.

Disclaimer: Your rewards will expire if you don’t use your card for 12 months, so be sure to swipe at lease once a year, or redeem your cash before it expires.

How to qualify for the Citi Double Cash Card

Borrowers with good or excellent credit scores are likely to get approved for the Citi Double Cash Card. That means you can still get approved with a few marks on your credit report. That’s unusual as rewards cards with a 0% introductory balance transfer offer like the Citi Double Cash Card are rare for those who lack excellent credit.

Overview of card benefits

The Citi Double Cash Card offers the following benefits and protections to cardholders:

  • No penalty for your first missed payment. Citi won’t charge you a late fee on a first missed payment. This benefit forgives those who usually pay on time, but may miss a payment by accident. Careful, you WILL be charged a fee if you miss a second payment.
  • Citi Private Pass. Citi customers get special access to purchase presale tickets and VIP packages to events such as concerts, sporting events, dining experiences, and complimentary movie screenings.
  • Citi Price Rewind. If you notice a price drop on the big-ticket item you just bought, Citi may have already refunded you the difference. Citi Price Rewind will look for a lower price on any registered items you purchase for 60 days. If the system finds a lower price, you may be refunded the difference.
  • Chip-enabled card. Just one warning: this is a chip and signature card (and not a chip and pin card). While that should be fine for all of your spending in America, it might make using the card overseas a bit more difficult when only chip-and-pin is accepted.
  • Citi Concierge. Citi Concierge sets you up with trained experts to help you plan your travel, shopping, dining, entertainment, and other parts of your next trip.
  • Protection against interrupted trips. If your travel plans are interrupted for some reason, Citi will reimburse you for part of your hassle. The bank will reimburse any nonrefundable travel expenses such as change fees if you paid for the ticket with your Citi Double Cash Card.
  • Car rental and collision insurance. You can skip paying extra for the rental company’s collision loss and damage insurance if you use your Citi Double Cash Card. Citi will cover you against any theft or damage done to the rental as long as you used your Citi card to pay for it.
  • Zero liability protection. You won’t be held responsible for unauthorized charges made with your card or account information. This is a fairly common credit card benefit.
  • Purchase protection covers repairs or refunds for your new purchases in case of damage or theft within 120 days of your making the purchase.
  • Lost wallet service. If you happen to lose your wallet and everything in it, take some comfort in knowing your Citi card, at least, will be replaced within 24 hours. Citi can also give you emergency cash up to your available cash advance limit to help out between losing your card and receiving a new one.

Why we like the Citi Double Cash Card

It has the highest no-fee flat rate reward in the market.

The clearest advantage of the Citi Double Cash Card is that it offers the highest flat rate cash rewards program without an annual fee on the market. The card’s double cash back feature can be a valuable feature for those known to make most everyday purchases on a credit card, and pay the card balance off each month.

The flat rate on all purchases keeps earning rewards simple.

If you like things simple, the card’s flat rate on everything will make keeping up with rewards a breeze. You’ll earn 1% on everything you buy, so there won’t be any need for you to fumble through a stack of credit cards for a specific cash back card at the grocery store. It also eliminates stressing over when or by how much rewards categories might change on your current go-to card each quarter.

It’s a good balance transfer card, too.

The card’s 18-month introductory 0% balance transfer offer makes it a good choice for those seeking to consolidate debt, too. The cash back rewards won’t apply to your balance transfer, but you’ll get 18 billing cycles to pay off the balance interest-free before the card’s higher ongoing interest rate kicks in.

It comes with other great cardholder benefits.

The Citi Double Cash Card’s other benefits aren’t bad either. The card also grants you free access to view your Equifax FICO® Score, and the Citi Price Rewind benefit automatically reimburses you the difference on purchases made with your card if the price changes within 60 days.

What to watch out for with the Citi Double Cash Card

You have to pay off your balance in full to reap the full reward.

You could pay the minimum each month and eventually see you’ve redeemed your cash back. However, the reward really only benefits you if you pay your balance in full each month. If you don’t, the full interest you’ll be charged on your purchases will eclipse the double cash back benefit.

It charges a 3% balance transfer fee.

Although the balance transfer isn’t the main perk the card has, it’s important to note Citi charges you a 3% fee to transfer your balance. Granted, the charge isn’t much compared to the 16% on average you’d be charged in interest on your balance each month if you don’t transfer, but there are many, no-fee balance transfer alternatives (like the Discover it or Chase Slate cards) you could qualify for instead.

You get charged 3% to use it overseas.

You’ll pay to use this card overseas, and the fee isn’t worth it if you can avoid doing so. The 3% foreign transaction fee you’ll be charged to swipe makes the potential double cash back you’d receive on the purchase trivial.

It doesn’t come with a sign-on bonus.

With the Citi Double Cash Card, you won’t get a sign-on bonus like you’d get with other competing cash back cards like Fidelity’s Rewards Visa Signature ($100) or the Capital One Quicksilver card. It’s not a huge pitfall among the card’s best-in-class cash back offer and other perks, but it’s something to consider when weighing your options.

Your rewards will eventually expire.

Take care to redeem your cash back before you stop using the card! If you don’t earn cash back on rewards with your Citi Double Cash Card for 12 months, your rewards will expire. If you plan to stop using the card — maybe you accepted the offer for a specific purchase, or simply for the balance transfer offer — make sure to redeem your cash back before adding it to your credit card graveyard.

Alternatives to the Citi Double Cash Card

The Citi Double Cash Card has the highest no-fee flat rate cash back reward on the market, but it might not be the best cash back card for you, depending on your spending habits.

Cards that only earn cash back in certain categories, for example, may work better for you. You might find you spend most of your income in a category such as groceries or gas, so you’d earn a greater reward with a card that earns cash back only in specific spending categories or enjoy keeping up with rotating categories.

Next we compare how the Citi Double Cash Card compares to four other cash back credit cards:

  • Fidelity’s Rewards Visa Signature – the other 2% cash back credit card
  • Alliant Cashback Visa Signature – the 2.5%-3% cash back credit card with a fee
  • Chase Freedom — the rotating category alternative
  • Blue Cash Preferred Card from American Express — the bonus category alternative

Fidelity Rewards Visa Signature

Fidelity’s Rewards Visa Signature card earns cardholders 2% cash back on all purchases with no annual fee. The card is best for existing Fidelity customers, as the funds you earn must be deposited into a Fidelity account.

Borrowers with “good” credit need not apply for this card. Your credit score has to be above 700 to get approved for a line of credit with the Fidelity Visa. Even then, you may be disappointed if you’re not a big Fidelity customer as Fidelity bases its credit limits on the total amount of assets it’s managing on your behalf.

Alliant Cashback Visa Signature

If you don’t mind paying an annual fee, the Alliant Cashback Visa Signature card could be a viable alternative to the Citi Double Cash Card.

Alliant’s Cashback Visa Signature card offers an unlimited 3% on all purchases in the first year and 2.5% cash back on all purchases in the years following. You’ll also forgo a foreign transaction fee if you use the card overseas. The catch is, cardholders pay a $59 annual fee to hold the card. Only those with excellent credit and high income will qualify for this rewards offer.

Chase Freedom — the rotating category alternative

With Chase Freedom, you’ll automatically earn 1% back on all purchases, 5% on purchases you make in the categories you’ve activated. The card also offers a $150 signing bonus when you spend $500 on purchases in the first three months the account is open.

The Chase Freedom card rotates rewards categories each quarter, so you’ll need to look out for changes and opt in to the quarter’s categories before you can start earning rewards in them. You also won’t be charged interest on purchases or balance transfers made in the first 15 months. You can also earn a $25 bonus when you add an authorized user and make your first purchase within the first three months.

If you qualify for the Citi Double Cash Back Card, you have a good chance of qualifying for Chase Freedom, too. Borrowers with good or excellent credit scores have the best shot at getting approved for the Chase Freedom card.

Blue Cash Preferred Card from American Express — the bonus category alternative

With a card like the Blue Cash Preferred Card from American Express, you’ll earn a larger amount of cash back, but only in one fixed category. The card awards holders 6% cash back at all supermarkets, on up to $6,000 worth of spending. You also get 3% cash back on gas station spending. So, if your household spends big on gas and groceries, the rewards you’d earn with a card like the Blue Cash Preferred Card will likely be greater that what you could earn with the Citi Double Cash Card.

The Blue Cash Preferred Card also awards a $250 sign-on bonus to cardholders who spend $1,000 within the first three months of opening the account, and you won’t be charged interest on your first 12 months of purchases, boosting your rewards in the first year. You won’t be charged any interest on a balance transfer for the first year either, but you will be charged 3% to transfer your balance over in the first place. The main downside to this card’s offerings is that it charges a $95 annual fee, so unless the cash back you’d earn makes that amount negligible, you should steer clear of this card.

Try using this tool to figure out which cash back card has the best ongoing program for your needs. Fill in how much you tend to spend each month in each spending category, and the system will generate recommendations based on your spending habits.

Who benefits the most from the Citi Double Cash Card

Overall, cash back cards can be a great way to put some extra money in your pocket, as long as you remember to pay your statement balance in full each month. Interest and late fees can eclipse your cash back earnings pretty quickly.

The Citi Double Cash Card is best for borrowers with good or excellent credit, who make everyday purchases with a credit card and have great payment habits. The double cash back feature is great if you already have the discipline to pay your statement balances off in full each month, and it’s the only way the card’s reward offer is valuable. If you don’t think you can consistently pay off your card each month, it’s best to get the habit set in stone before trying a rewards credit card.

If you’ve never had a rewards card, the Citi Double Cash Card’s simple terms and flat rate cash back rewards make for a great starter rewards card and — so long as you pay your balance off each month — it can be a great way to earn extra pocket change without going into debt.

Citi Double Cash Card FAQs

You’ll get up to double cash back on all of your purchases, which is the logic behind advertising the card as “Double Cash” and not “2% Cash.” You’ll earn your first 1% on all purchases, then another 1% when you pay off the purchase, but if you choose to redeem your cash back via statement credit on your account, you’re technically getting just shy of 2% cash back.

Yes, the cash back on the Citi Double Cash expires if you haven’t used your card for 12 months.

Anything over 1.5% cash back is a good deal. There are some cards that offer more — as much as 5% or 6% cash back on purchases. But sometimes those offers are too good to be true. Banks don’t like to lose money and will pepper the fine print with all sorts of limitations. For example, they may offer 5% cash back on only purchases at certain types of retailers and only for certain periods of time. And those categories may change every quarter, which can make it hard to keep track.

Don’t let those cash back promises pressure you into spending more than you can afford. If you don’t pay your statement balance in full each month, you could get slapped with sky-high interest charges. That would totally negate any benefit you might get from earning cash back. Cash back cards are only valuable if you can pay your bill in full and capture the entirety of your cash back rewards.

It depends on the card. Some cards allow you to redeem cash back dollar for dollar as a statement credit, which can help lower your total balance. Just keep in mind that applying cash back to your card statement does not count as a monthly payment. Other cards will increase the value of your cash back if you spend on certain categories, like travel. Review your terms carefully to be sure you’re getting the most bang for your buck.

Find the card that fits your day-to-day spending needs best, beyond the flashy sign-up bonus offers and cash back promises. Pay your bill in full each month (spend only what you can afford to pay off).

The post Citi Double Cash Review: Twice The Cash, No Limits appeared first on MagnifyMoney.

7 Reasons Your Mortgage Application Was Denied

There are few things more nerve-racking for homebuyers than waiting to find out if they were approved for a mortgage loan.

Nearly 627,000 mortgage applications were denied in 2015, according to the latest data from the Federal Reserve, down slightly (-1.1%) year over year. If your mortgage application was denied, you may be naturally curious as to why you failed to pass muster with your lender.

There are many reasons you could have been denied, even if you’re extremely wealthy or have a perfect 850 credit score. We spoke with several mortgage experts to find out where prospective homebuyers are tripping up in the mortgage process.

Here are seven reasons your mortgage application could be denied:

You recently opened a new credit card or personal loan

Taking on new debts prior to beginning the mortgage application process is a “big no-no,” says Denver, Colo.-based loan officer Jason Kauffman. That includes every type of debt — from credit cards and personal loans to buying a car or financing furniture for your new digs.

That’s because lenders will have to factor any new debt into your debt-to-income ratio.

Your debt-to-income ratio is fairly simple to calculate: Add up all your monthly debt payments and divide that number by your monthly gross income.

A good rule of thumb is to avoid opening or applying for any new debts during the six months prior to applying for your mortgage loan, according to Larry Bettag, attorney and vice president of Cherry Creek Mortgage in Saint Charles, Ill.

For a conventional mortgage loan, lenders like to see a debt-to-income ratio below 40%. And if you’re toeing the line of 40% already, any new debts can easily nudge you over.

Rick Herrick, a loan officer at Bedford, N.H.-based Loan Originator told MagnifyMoney about a time a client opened up a Best Buy credit card in order to save 10% on his purchase just before closing on a new home. Before they were able to close his loan, they had to get a statement from Best Buy showing what his payments would be, and the store refused to do so until the first billing cycle was complete.

“Just avoid it all by not opening a new line of credit. If you do, your second call needs to be to your loan officer,” says Herrick. “Talk to your loan officer if you’re having your credit pulled for any reason whatsoever.”

Your job status has changed

Most lenders prefer to see two consistent years of employment, according to Kauffman. So if you recently lost your job or started a new job for any reason during the loan process, it could hurt your chances of approval.

Changing employment during the process can be a deal killer, but Herrick says it may not be as big a deal if there is very high demand for your job in the area and you are highly likely to keep your new job or get a new one quickly. For example, if you’re an educator buying a home in an area with a shortage of educators or a brain surgeon buying a home just about anywhere, you should be OK if you’re just starting a new job.

If you have a less-portable profession and get a new job, you may need to have your new employer verify your employment with an offer letter and submit pay stubs to requalify for approval. Even then, some employers may not agree to or be able to verify your employment. Furthermore, if your salary includes bonuses, many employers won’t guarantee them.

Bettag says one of his clients found out he lost his job the day before they were due to close, when Bettag called his employer for one last check of his employment status. “He was in tears. He found out at 10 a.m. Friday, and we were supposed to close on Saturday.”

You’ve been missing debt payments

During the loan process, any recent negative activity on your credit report, which goes back seven years, can raise concerns. The real danger zone is any activity reported within the last two years, says Bettag, which is the time period lenders play closest attention to.

That’s why he encourages loan applicants to make sure their credit reports are accurate and that old items that should have fallen off your report after seven years aren’t still appearing.

“Many things show on credit reports beyond seven years. That’s a huge issue, so we want to get dated items removed at the bureau level,” Bettag says.

For first-time homebuyers, he cautions against making any late payments six months prior to applying for a mortgage. They won’t always be a total deal-breaker, but they can obviously ding your credit, and a lower credit score can lead to a loan denial or a more expensive mortgage rate.

Existing homeowners, Bettag says, shouldn’t have any late mortgage payments in the 12 months prior to applying for a new mortgage or a refinance.

“There are workarounds, but it can be as laborious as brain surgery,” says Bettag.

You accepted a monetary gift

Your lender will be on the lookout for any out-of-place deposits to your bank accounts during the approval process. Bettag advises homebuyers not to accept any large monetary gifts at least two months or longer before you apply, and to keep a paper trail if the lender has any questions.

Any cash that can’t be traced back to a verifiable source, such as an annual bonus, or a gift from a family friend, could raise red flags.

This can be tricky for homebuyers who are relying on help from family to purchase their home. If you receive a gift of money for a down payment, it has to be deemed “acceptable” by your lender. The definition of acceptable depends on the type of mortgage loan that you are applying for and the laws that govern the process in your state.

For example, Bettag says, the Federal Housing Authority doesn’t care if a borrower’s entire down payment comes as a gift when they are applying for an FHA loan. However, the gifted funds may not be eligible to use as a down payment for a conventional loan through a bank.

You moved a large amount of money around

Ideally, avoid moving large sums of money about two months before applying.

Herrick says many borrowers make the mistake of shuffling too much cash around just before co-signing, making themselves look suspicious to bank regulators. Herrick says not to move anything more than $1,000 at a time, and none if you can help yourself.

For example, If you’re considering moving money from all of your savings accounts into one account to deliver the cashier’s check for the down payment, don’t do it. You don’t need to have everything in one account for the cashier’s check for your closing. You can submit multiple cashier’s checks. All the lender cares about is that all of the money adds up. You may be able to simply avoid some of this hassle by arranging to pay using a wire transfer. Just be sure to schedule it in time.

You overdrafted your checking account

If you have a credit issue already, says Bettag, overdrafting your checking account can be a deal-breaker, but it won’t cause as much of an issue if you have great credit and offer a good down payment. Still avoid overdrafting for at least two months prior to applying for the mortgage loan.

You may be the type to keep a low checking account balance in favor of saving more money. But if an unexpected bill could risk overdrafting your account, try keeping a few extra dollars in the account for padding, just in case.

You forgot to include debts or other information on your loan application

Your loan officer should carefully review your application to make sure it’s filled out completely and accurately. Missing a zero on your income, or accidentally skipping a section, for example, could mean rejection. A small mistake could mean losing your dream home.

There’s also the chance you accidentally omitted information the underwriter caught in the more extensive screening process, like money owed to the IRS. Disclose all of your debt to your loan officer up front. Otherwise, they may not be able to help you if the debt comes up and disqualifies you for your dream home later on.

If you owe the IRS money and are in a payment plan, Bettag says your loan officer can still work with you. However, they want to see that you’ve been in a plan for at least three months and made on-time payments to move forward.

“Can you imagine not paying your IRS debt, getting into a payment plan, and then not paying on the agreed plan? Not cool for lenders to see, but we do,” says Bettag.

The Bottom Line

There is no hard and fast rule on how long before you begin the mortgage process that you should heed these warnings. It all varies, according to Bettag. If you have excellent credit and a strong income, you might be able to get away with a recently opened credit card or other discrepancies — minor faults that might totally derail the application of a person who has bad credit and inconsistent income.

Whatever the case may be, Bettag encourages prospective homebuyers to stick to one general rule: “Don’t do anything until you’ve consulted with your loan officer.”

The post 7 Reasons Your Mortgage Application Was Denied appeared first on MagnifyMoney.

7 Money Moves New Empty Nesters Should Make Now

Raising one child to age 17 costs a middle-income married couple on average $233,610, according to the U.S. Department of Agriculture.

Once your kids leave the nest, all of the money you spent feeding, clothing, and entertaining them is suddenly up for grabs. But if empty nesters don’t earmark their newfound savings for specific goals, it’s easy to fall into the so-called “lifestyle creep” trap — when your lifestyle suddenly becomes more expensive as soon as your discretionary income increases.

A 2016 study by Boston College’s Center for Retirement Research found that a couple collectively earning $100,000 per year should be able to put an additional 12% toward their retirement savings after their children fly the coop. But in reality, researchers found that same couple would only increase their 401(k) contribution by 0.3 to 0.7 percent.

Covington, La.- based certified financial planner, Lauren Lindsay encourages empty nesters to put their extra pocket money to work.

“In general, when people have money ‘available’ they tend to spend it and not even be conscious about how they’re spending it,” Lindsay told MagnifyMoney. “I think it’s really important to refocus our goals now that we are in a different stage and, hopefully, on that home stretch towards retirement.”

Lindsay says the empty-nester stage is a really good time to circle back and revisit your budget to focus and make a plan for your financial goals. “Depending on where you are in the scale of retirement, you could use the extra funds to pay off a car, pay down the mortgage, save towards a trip, fund the emergency fund, or other goals,” she says.

As a new empty nester, there’s likely an endless list of purchases and lifestyle upgrades your newfound savings could go toward. You may even think you deserve a new car or boat, or to go on a luxury vacation every year after 18 or more years of child-rearing.

You can certainly treat yourself if you’d like, but you should make sure to get your financial house back in order before celebrating your freedom.

Here are a few things you can do to make sure your empty-nest savings go to the right places.

Put a number on what you’re saving now that the kids are gone

You may not be aware of exactly how much money you are really saving now that there are fewer mouths to feed at home. Creating or revising your budget gives you an opportunity to see the numbers behind the decrease and adjust your spending to maximize potential savings.

Peachtree City, Ga.-based certified financial planner Carol Berger suggests new empty nesters take the opportunity to complete a cash flow analysis — either on your own or with a financial adviser.

“This will allow you to identify how much discretionary income you have and then develop a plan on how to use it,” says Berger. Tally up the reduction in your spending to get an idea of how much potential cash you could be diverting to your own financial goals.

Shrink your lifestyle

If you’ve spent decades shopping for a family of three or more, it’s hard to break that habit right away. You might still be shopping for more groceries than you really need, for example, and wasting money in the process.

It might be time to take an even bigger step toward minimizing your housing costs — downsizing. Not only could this reduce your overall housing costs, but it’ll give you an opportunity to shop around for a home that better fits your needs as you age or to consider a residence in an active adult community with homes and amenities designed specifically for those ages 55 and older.

Check out what you’re paying for utilities, too. While you may have needed the tricked-out cable package when your kids were living at home full time, you may not care about paying for premium channels any longer. Call your provider and negotiate a less-expensive package. Try using a service like BillFixers or Trim to renegotiate or cancel bills and features you may no longer have use for.

Review your insurance policies

The same goes for your insurance policies like car and health insurance. Under the current health care law, kids can stay on their parents’ health insurance plan until they turn 26. But if your adult child already has employer-provided insurance, you don’t need to pay for their coverage anymore.

Contact your employer’s human resources department to discuss removing members from your family plan, or switching to a lower-cost individual plan when you’re on your own. The same goes for any vision or dental insurance plans you may still be paying the family price for.

If you’re still paying for your child’s life insurance policy, you may want to speak with them about transferring the plan into their name or canceling the plan if they have access to a better one through an employer.

It couldn’t hurt to ask for a discount on your car insurance or switch to lower-cost coverage because the kids aren’t there to drive your car.

Put your newfound money toward any outstanding debts

Saving for retirement is important and paying off your outstanding debts should be your top priority. The interest rates on unsecured debts like credit cards are generally higher than any returns you’d receive on potential savings. So if you pay off your debts first, you’ll actually save yourself more money in the long run.

According to a 2017 Consumer Financial Protection Bureau report, the number of Americans 60 and older with student loan debt rose from 700,000 to 2.8 million individuals between 2005 and 2015. The average amount of student debt owed by older borrowers almost doubled during that time, from $12,000 to $23,500.

One of the worst things you can do for retirement planning is ignore past-due debts. If debts go unpaid for too long, you could see your wages or even your future Social Security benefits garnished. The same CFPB report shows the number of retirees who had their benefits cut to repay a federal loan rose from about 8,700 to 40,000 borrowers over the 10-year period.

Don’t sacrifice your retirement goals to pay for college

College has never been more expensive. But remember: Your kids can take out a loan for school and pay it off as their income grows. You can’t necessarily take out a loan for your retirement.

That’s why financial planners often advise parents not to put themselves at financial risk by sacrificing their nest egg to pay for their child’s college education — unless they can afford to take the hit.

“Many people believe that they must send their kids to college, and they pay a hefty sum for that — sometimes at the expense of their retirement,” says Oak Brook, Ill.-based certified financial planner Elizabeth Buffardi.

If you’ve covered your debts and have room to save more, you still have plenty of time to contribute to your retirement funds.

Let’s say a married couple has $200,000 already saved for retirement with 15 years left to go. They collectively earn $100,000 per year, and they have diligently been saving 15% of their monthly pre-tax income for retirement. If they double their savings to 30% — putting away $2,500 each month — and their investment grows at an average annual rate of 6%, they could have well over $1 million saved by retirement.

Plan for long-term health care needs

A couple retiring today will spend an estimated $260,000 on health care needs in retirement, according to Fidelity.

Think of what other health care needs you could have in retirement. Buffardi says she always asks clients if they are worried about needing long-term care in the future. While most workers will qualify for Medicare once they turn 65, Medicare does not cover all long-term care needs. If you know you have a family history of dementia or other age-related illnesses that may require long-term care, this may be a concern for you. You may consider taking out a long-term care insurance policy or setting aside funds in a regular savings account.

Learn to say NO

Even after your kids move out, they can still treat you like the Bank of Mom and Dad. They may come to you for a wedding loan or to ask you to co-sign something they can’t afford, like a mortgage. Even though their pleas may pull at your heartstrings, consider your own financial needs first.

The post 7 Money Moves New Empty Nesters Should Make Now appeared first on MagnifyMoney.

RANKED: The 10 Best Options When You Need Cash Fast

What happens when your emergency fund isn’t enough?

Long-term unemployment or a medical emergency can easily dry up a once-healthy rainy day fund, leaving consumers wondering where to turn next. According to a recent consumer expectations survey by the New York Federal Reserve, only one in three Americans say they wouldn’t be able come up with $2,000 within a month to cover an unexpected expense.

It’s during times of vulnerability like this that it’s easy to jump at seemingly quick and easy sources of cash, like payday lenders, credit cards, or even your 401(k).

Unfortunately, practically every potential source of cash that doesn’t come from your own piggy bank is going to cost you in some way.

But at this point, it’s all about choosing the lesser of all evils — when all you have are crummy options, how do you decide which one is the best of the worst?

We’ve ranked common sources of emergency short-term cash from best to worst, which can help you sort through your borrowing options when your savings dry up.

#1 Personal loan from family and friends

It’s an uncomfortable conversation to have with a loved one, but asking a friend or relative for a small loan can be a far better idea than turning to high-interest credit debt, or worse, payday lenders. Unless they’re offering, it doesn’t have to be an interest-free loan. Agree on an interest rate that seems fair and is lower than what you’d find through a bank or other lender.

Because you have a relationship already, you may have an easier time convincing them to lend you money versus a bank that would make the decision after doing a credit check and evaluating other financial information.

#2 (tie) Lender-backed personal loan

A personal loan can be a solid borrowing option if you need money in a pinch or you’re looking to consolidate other debt. The process to apply for a personal loan is similar to applying for a credit card or auto loan, in that the lender will run your credit and offer you a certain rate based on your creditworthiness.

If your credit is poor, that doesn’t necessarily mean you’re out of the running for a personal loan, but it will cost you in the form of much higher interest charges. For example, Lending Club offers loans with APRs from 5.99% to 35.85%, but it’s willing to lend to people with a credit score as low as 600.

Why choose a personal loan over a credit card? It really comes down to math. If you can find a personal loan that will cost less in the long term than using a credit card, then go for it. Use this personal loan calculator to estimate how much a loan will cost you over time. Then, run the same figures through this credit card payoff calculator.

#2 (tie) Credit cards

If your need for cash is truly short-term and you have enough income to pay it off quickly, then credit card debt can be a decent option. This option gets even better if you can qualify for a card with a 0% interest offer. The card will let you buy some time by allowing you to cover your essentials while you work on paying off the balance.

Because the debt is unsecured, unlike an auto title loan, you aren’t putting your assets at risk if you can’t pay. Westlake, Ohio-based certified financial planner Edward Vargo says he would recommend using credit card debt first.

#3 Home equity line of credit (HELOC)

You may be able to leverage the equity in your home to cover short-term emergency needs. A HELOC, or home equity line of credit, is a revolving credit line extended to a homeowner using your home as collateral. How much you can take out will depend on your home’s value, your remaining mortgage balance, your household income, and your credit score. A home equity line of credit may allow you to borrow the maximum amount, or only as much as you need. You will also be responsible for the costs of establishing and maintaining the home equity line of credit. You can learn more about these here.

You’ll choose the repayment schedule and can set that for less than 10 years or more than 20 years, but the entire balance must be paid in full by the end of the loan term. You’ll pay interest on what you borrow, but you may be able to deduct it from your income taxes. Keep in mind that if you are unemployed, it will be unlikely that you’ll be approved for a HELOC.

HELOC vs. Personal loans

Because home equity lines of credit are secured against the borrower’s home, if you default on your home equity line of credit, your lender can foreclose on your home. Personal loans, on the other hand, are usually unsecured, so, while failure to make your payments on time will adversely impact your credit, none of your personal property is at risk.

#4 A 401(k) loan

A 401(k) loan may be a good borrowing option if you’re in a financial pinch and are still employed. And it is a far better bet than turning to a payday lender or pawn shop for a loan. Because you’re in effect borrowing from yourself, any interest you pay back to the account is money put back in your retirement fund. You are allowed to borrow up to $50,000 or half of the total amount of money in your account, whichever is less. Typically, 401(k) loans have to be repaid within five years, and you’ll need to make payments at least quarterly.

But there are some cons to consider. If you get laid off or change jobs, a 401(k) loan immediately becomes due, and you’ll have 60 days to repay the full loan amount or put the loan funds into an IRA or other eligible retirement plan. If you don’t make the deadline, the loan becomes taxable income and the IRS will charge you another 10% early withdrawal penalty.

#5 Roth IRA or Roth 401(k) withdrawal

Generally, withdrawing funds from your retirement savings is a big no-no, because you’re going to miss out on any gains you might have enjoyed had you kept your money in the market. On top of that, there are fees and tax penalties, which we’ll cover in the next section.

But there is an exception: the Roth IRA or Roth 401(k).

Because funds contributed to Roth accounts are taxed right away, you won’t face any additional tax or penalties for making a withdrawal early. The caveat is that you can only withdraw from the principal amount you’ve contributed — you’re not allowed to withdraw any of the investment gains your contributions have earned without facing taxes and penalties.

However, it is still true that any money you take out is money that will not have a chance to grow over time, so you will still miss out on those earnings.

#6 Traditional 401(k) or IRA withdrawal

Experts typically recommend against borrowing from your 401(K) or IRA, but when you’re in desperate need of cash, it may be your best option.

Just understand the risks.

If you withdraw funds from a traditional retirement account before age 59 1/2 , the money will be taxed as income, and you’ll be charged a 10% early distribution penalty tax by the IRS. You may want to speak with a tax professional to estimate how much you’ll have to pay in taxes and take out more than you need to compensate for that loss. There’s no exception to the income tax, but there are a number of exceptions to the 10% penalty, such as qualified education expenses or separation from service — when you leave a company, whether by retirement, quitting, or getting fired or laid off — at 55 years or older.

When you take that money out, not only will you lose out on potential tax-deferred investment growth, but you’ll also lose a huge chunk of your retirement savings to taxes and penalties.

#7 Reverse mortgage

Homeowners 62 years old and older have another option for cash in a pinch: a reverse mortgage. With a reverse mortgage, your property’s equity is converted into (usually) tax-free payments for you. You can take the money up front as a line of credit, receive monthly payments for a fixed term or for as long as you live in the home, or choose a mix of the options. You keep the title, but the lender pays you each month to buy your home over time.

In most cases, you won’t be required to repay the loan as long as you’re still living in your home. You’ll also need to stay current on obligations like homeowners insurance, real estate taxes, and basic maintenance. If you don’t take care of those things, the lender may require you to pay back the loan.

The loan becomes due when you pass away or move out, and the home must be sold to repay the loan. If you pass away, and your spouse is still living in the home but didn’t sign the loan agreement, they’ll be allowed to continue living on the property, but won’t receive any more monthly payments. When they pass away or move out, the home will be sold to repay the loan.

The reverse mortgage may take a month or longer to set up, but once you get the paperwork set you can choose to take a line of credit, which could serve as an emergency fund, advises Columbus, Ohio-based certified financial planner Tom Davison.

He says the reverse mortgage’s advantages lie in the fact that it doesn’t need to be paid back until the homeowner permanently leaves the house, and it can be paid down whenever the homeowner is able. You can also borrow more money later if you need it, as the line of credit will grow at the loan’s borrowing rate.

Take care to look at the fine print before you sign. Under current federal law, you’ll only have three days, called a right of rescission, to cancel the loan. Reverse mortgage lenders also usually charge fees for origination, closing, and servicing over the life of the mortgage. Some even charge mortgage insurance premiums. Also, if you pass away before the loan is paid back, your heirs will have to handle it.

#8 Payday loan alternatives

While regulators work to reign in the payday lending industry, a new crop of payday loan alternatives is beginning to crop up.

Services like Activehours or DailyPay allow hourly wage earners to get paid early based on the hours they’ve already worked. Activehours allows you to withdraw up to $100 each day and $500 per pay period, while DailyPay, which caters to delivery workers, has no cap. DailyPay tracks the hours logged by workers and sends a single payment with the day’s earnings, minus a fee ranging from 99 cents to $1.49.

Another alternative could be the Build Card by FS Card. The product targets customers with subprime credit scores and offers an initial low, unsecured $500 credit limit to borrowers, which increases as they prove creditworthiness. The card will cost you a $72 annual membership fee, a one-time account setup fee of $53, plus $6 per month just to keep it in your wallet. It also comes with a steep interest rate — 29.9%. After all of the initial fees, your initial available limit should be about $375.

#9 Pawn shop loans

Pawn shop loan interest charges can get up to 36% in some states and there are other fees you’ll have to pay on top of the original loan.

Pawn shops get a shady rap, but they are a safer bet than payday lenders and auto title loans. Here’s why: Because you are putting up an item as collateral for a payday loan, the worst that can happen is that they take possession of the item if you skip out on payments. That can be devastating, especially if you’ve pawned something of sentimental value. But that’s the end of the ordeal — no debt collectors chasing you (payday loans) and no getting locked out of your car and losing your only mode of transportation (title loans).

#10 Payday loans and auto title loans

We have, of course, saved the worst of the worst options for last.

When you borrow with a payday loan but can’t afford to pay it back within the standard two-week time frame, it can quickly become a debt trap thanks to triple-digit interest rates. According to a recent study by the Pew Charitable Trusts, only 14% of payday loan borrowers can afford enough out of their monthly budgets to repay an average payday loan. Some payday lenders offer installment loans, which require a link to your bank account and gives them access to your funds if you don’t pay.

Some payday lenders today require access to a checking account, meaning they can dip in and take money from your bank account if you miss a payment. Also, your payday loan will be reflected on your credit report. So if things end badly, your credit will suffer as well. They have no collateral, so payday lenders will continue to hound you if you miss payments.

And, of course, auto title lenders require you to put up your wheels as collateral for a loan. And if you rely heavily on your car to get to and from work, having it repossessed by a title lender could hurt you financially in more ways than one. The loans are usually short-term — less than 30 days — so this might not be a good option for you if you don’t foresee a quick turnaround time for repayment. If your household depends on your car for transportation, you may not want to try this option as there is a chance you could lose your car. If you don’t repay the loan, the lender can take your vehicle and sell it to cover the loan amount.

One more thing to watch out for is the advertised interest rate. Auto title lenders will often advertise the monthly rate, not the annualized one. So a 20% interest rate for the month is actually 240% APR.

The post RANKED: The 10 Best Options When You Need Cash Fast appeared first on MagnifyMoney.

9 Ways Save Money on Your Summer Reading List

Summer is the perfect season to tear through a stack of books. You might already be able to picture yourself sunbathing on a beach with a drink in one hand and a book in the other. Books are great but, like summer vacation, they aren’t free.

Books are already a relatively inexpensive form of entertainment, but compared to a $15 movie ticket or $11.99 a month streaming subscription, spending around $20 on a book can be a hard sell. Luckily for you, and booklovers everywhere — there are plenty of ways you can save money on books.

Use these tips to save money as you cobble together your summer reading list.

Host a book swap

 

Get all of your favorite bookworms together with some cheese and crackers for a book swap at your place. Ask everyone to bring a few books that they wouldn’t mind parting with, and set them all out on a table. As you mix and mingle over food and drinks, you and your guests can browse the collection for new additions to your libraries. The best part about this party is you’ll have a great pool of candidates to ask for recommendations. When all’s said and done, you’ll have a number of new-to-you books to read, for next to nothing.

Read the classics

It takes 70 years after the author’s death for a book to enter the public domain, so many classic texts can be shared and copied for free. Check sites like The Public Domain Review and Project Gutenberg to get free copies of classic titles. Gutenberg even has user-recorded audio versions of books.

Use a subscription service

Subscription services can be a great way to save money on books after the free trial ends. Depending on your price level and how much you read, paying for a monthly subscription could end up significantly cheaper than buying a book each time you’d like to read one.

For example, as an Audible subscriber, you’ll pay $14.95 for access to the library, plus get one book credit per month, which you can use to buy any book. If you’re subscribed to Amazon’s Kindle Unlimited service for $9.99 a month, you can read an unlimited number of books in a month, but only keep 10 books on your device at a time. As another example, an $8.99 Scribd subscription gives credits for three books and one audiobook each month and unlimited access to magazines and documents.

If you’re a fan of subscription boxes, you can try a subscription box service like OwlCrate and or a number of book subscription boxes available on Quarterly. The prices and packages will range widely depending on your taste, and some boxes even add in goodies for booklovers. OwlCrate’s subscription boxes, for example, start at $29.99 and come with one new hardcover Young Adult novel and three to five items inside each monthly box. In contrast, Quarterly’s Literary Box sends once every three months and costs $50 per box, but it comes with at least three books hand-picked by the box’s featured author, and a handwritten note from that author.

Get a free advanced review copy

If you’re a particularly voracious reader, and don’t mind sharing your opinion, you may be interested in getting advance copies of books in exchange for reviews online. A number of book-related sites like Goodreads and LibraryThing host early review programs. Publishers do too, but you’ll need some insider knowledge. Sign up to receive newsletters from publishers like HarperCollins and Penguin Random House for information on how to get advanced copies.

If you’re a book blogger, you may want to consider signing up for a blog tour — when authors go from blog to blog to promote their books or organize a mass posting by several book bloggers about the upcoming title — with a company like Blogging for Books or TLC Book Tours. Finally, if you’re interested in making a little money for your reviews, you can sign up with a publishing house or use websites like Online Book Club or Nothing Binding. You probably won’t make enough to quit your day job, but at least you’ll be paid to do something you enjoy. For example, Online Book Club’s site says you won’t be paid for your first review, but after that, you’ll be paid $5 to $60 per review.

The main downside to doing this is that you may not enjoy all of the books sent to you to read.

Share a Kindle library

If you use Amazon Kindle, you can share Kindle books, apps, games, and audiobooks with friends or family members pretty easily, and you don’t have to be an Amazon Prime member to use this feature. If you want to share with friends, you can lend a book from your Kindle library to theirs for up to 14 days. Just go to your Kindle Store and select the title you want to loan out. Then enter the borrower’s email address and hit send. Beware: They have to delete the book from their Kindle Library for you to get it back. Also keep in mind a Kindle book can only be loaned once, so if anyone else asks you to borrow the title, they’re out of luck.

If you want to get your entire family reading, try a Family Library. It requires at least two adults with Amazon accounts to join an Amazon Household, you both can then add child accounts. You and the other adult will see all of the books in the Library, while the children will only be able to see “shared” books. You can also share Kindle books borrowed from a public library and those loaned to you via personal lending.

Use the 72-hour rule

Journalist and money expert Carl Richards came up with the “72-hour rule” to hack his bad habit of buying every book he wanted on Amazon, ending up with a pile of unread titles.

Now, Richards says he lets a book sit in his shopping cart for at least 72 hours before hitting “buy.” The trick helps him save money on books because he only buys books he’ll actually read. You can apply a similar rule to your purchasing process to save on books yourself. The 72-hour time frame isn’t set in stone. You can set the wait for as long as you need, as long as it gives you enough buffer time to think about your purchase before you buy.

If you can empathize with Richards’ problem in other areas of your budget, you may want to check out what we wrote about how you can apply the 72-hour rule to your spending habits here.

Buy used books

Used books are a great way to save on popular titles. Try visiting used bookstores or online book retailers like Amazon, eBay, thriftbooks.com, or AbeBooks.com for used reads. They’re typically cheaper than brand new ones, but hold the same great content. The downside to this savings strategy is you’ll probably have to wait to get the physical book shipped to you before you can read it. In that case, always look for free shipping to save.

Unfortunately, this strategy may not work for you if you’re strictly a digital reader.

Get a book for free online

You could get several books for free this summer just by knowing your way around the web.

As of this writing, signing up for a subscription service like Audible or Scribd will usually earn you a free book or at least a couple of weeks on a free trial. These are great options if your budget is too tight to afford a subscription and you can knock out a book in the two weeks before the free trial ends. If you’re an Amazon Prime member, you can get one free book a month from the Kindle Owner’s Lending Library.

Visit a public library

You’re probably well aware of this resource since it’s funded with your tax dollars, but here’s a quick reminder to support your local library. You can visit your local library to borrow as many books as you want for free. All you need to borrow books is a library card, which is also free. If you don’t know where your local library is located, you can consult Google or check out the database on PublicLibraries.com.

You might not even need to leave your house to borrow a book from your local library. If your library offers e-book lending, you could log in to your account on their site and borrow a book for free from the comfort of your couch. Search OverDrive.com or the Libby app (by OverDrive) on any device to find and borrow e-books available for lending near you. You’ll need a student ID or library card number to borrow, then you can download the e-books to read offline on all of your devices, including the Kindle or Kindle app, Nook, or another e-reader for the lending period.

The post 9 Ways Save Money on Your Summer Reading List appeared first on MagnifyMoney.

How a Spending Freeze Can Save Your Finances

Just after the 2016 holiday season passed, recent empty-nester Laura Vondra, 49, from Black Hawk, Colo., realized she was at a new financial crossroads — after struggling to make ends meet for 30 years as a single mother of three, she was finally going to learn what it felt like to have wiggle room in her budget.

To jumpstart her new financial lease on life, she decided to try a spending freeze. Spending freezes are fairly straightforward but difficult to execute: for a set period of time, you stop spending money on anything that is not essential.

For Laura, a spending freeze would allow her to take full stock of her financial picture. At the time, she had over $110,000 in debt — a combination of student loans and credit card debt.

Her goal was to start a 30-day freeze beginning January 1, 2017. When the big day arrived, the registered nurse set the ground rules: she’d spend money only on gas and food (for herself and her trio of beloved cats, Baby Girl, Matilda, and Poppy). When she wasn’t shopping for essentials, she left her debit and credit cards at home.

At the end of the month, the results were undeniable: Laura had saved roughly $3,000 — one-half of her monthly earnings. She used the funds to completely pay off one of her credit cards. “Before, I always felt like I was broke, I was poor. This month showed me ‘no, you’re not.’ I could easily live off of what I make,” she told MagnifyMoney. “[I realized] I could actually live off of half of that.”

How to Do a Spending Freeze — the Right Way

The goal of a spending freeze is to reign in all unnecessary spending and help to jumpstart your savings goals.

While a spending freeze requires you to not do something, not spending money isn’t always the easy choice in our consumer-driven culture. Here are a few tips to steel your resolve when faced with the inevitable ad for something you really, really, really need want.

Set a time limit and stick to it.

Committing to a certain time frame will help you remember that your frugal period is only temporary, and prevent you from binge-spending when you get weary of sticking to your budget.

Everyone has a different frugality threshold. The spending freeze can help you test your limit. Start off with a shorter freeze, for maybe about a week, then extend it if it feels tolerable, and learn new financial habits along the way. Eventually you’ll be able to handle a no-spend month or even a year or two like some extreme budgeters have done.

Clemson, N.C., couple Jen and Jordan Harmon have gone on a 30-day spending freeze every January since 2014. For the parents of three, it began as a way to recover from holiday season spending.

“Christmas was awful [that year], and we had spent so much money. We were just miserable,” says Jen. Her father had passed away in early December 2013, and on top of those costs, the family had spent money on holiday gifts and fast food during the chaotic month.

Make a list of things that really matter.

Laura says her spending freeze was a way to take stock of what she really needed to spend money on — and what she didn’t. She began “spending [her] money on things that matter and on things that last, not just a dinner out or to get [her] nails done.”

She’s since focused on taking care of some things she didn’t think she would have been able to afford without going on the freeze, like eliminating her debt.

Set yourself up for success.

The more you plan ahead for your spending freeze, the easier it will be for you.

Laura, for example, planned ahead by brewing her own tea at home and bringing tea bags to the office to replace her daily $25 Starbucks habit.

The Harmons prepared lunches in advance so that Jordan wouldn’t feel pressured to spend money for food on his lunch break.

“It’s the convenience that really gets you,” says Jordan. “Once you break that habit, you realize going out to lunch may only be $5 a day, but it adds up.”

Tell EVERYONE and get them to join you

Telling your friends and family about your spending freeze is a great way to garner support for your no-spend trial as well as help you stay accountable.

When the Harmons announced their freeze on Facebook by making a spending-freeze group their friends could join, Jen said she was a little nervous, thinking, “What are people going to think?”

“I was surprised at the general positivity from friends. I thought one or two would sign up. It was like 20 people in the final group, which was more than I thought it would be,” says Jen.

You can also join groups like The Epic Spending Freeze Challenge and Bells Budget Spending Freeze on Facebook for support. Or, invite a friend or family member to join you. If your debt situation is complicated or you think you may need stronger debt support, groups like Financial Peace University and Debtors Anonymous can be good resources.

Laura joined a couple of spending-freeze groups on Facebook to keep herself motivated throughout the freeze.

“I remember talking a picture of my breakfast one morning, thinking ‘this is my last egg, I won’t have another egg until the end of January,’” she says. She says the image received several comments in the group from others who shared their final mid-month rations too.

Don’t be too rigid.

While social events can often come with a host of unexpected costs, you don’t have to avoid them altogether to have a successful freeze. Sometimes it just takes getting a little creative. You can look for free events in your area or plan nights in with your family or significant others.

Also, remember it’s your freeze, so you can bend the rules slightly for your sanity. When Laura received invites to hang out with friends at a local bar, she compromised — she ate a meal at home and purchased only drinks at the bar.

“I didn’t want to stay all month at home and be antisocial,” she says.

She made one more break for social life. In the final week of her freeze, Laura let her boyfriend — who was otherwise forbidden to spend money on her during the freeze — take her out to dinner using a buy-one-get-one-free coupon, so her meal was free.

Set a purpose for the money you’ll save.

You should be able to get a good idea of the amount of money you’ll save over the period when you first go over your spending-freeze budget. Give it a purpose. At the end of the freeze reward yourself with that thing you always wanted but could never find room in your budget for.

The Harmons said they are able to save a couple of hundred dollars each freeze, helping to boost their savings, and they’ve gotten into the habit of adding in the occasional no-spend week when necessary. So much so, that they were able to start saving to pay cash for a new family car. In 2016, the freeze helped boost their savings to buy a Prius that February. They say they would have financed the vehicle had it not been for what they learned practicing the spending freeze.

Hide the money (from yourself).

If you think you’ll have serious trouble keeping your hands off of your money, you could try hiding it from yourself to get that “out of sight, out of mind” effect. Transfer all of the money you won’t need to cover the essentials (or an emergency) to an online savings account or one-month CD with another bank.

When you check your main checking account and don’t see much money there to spend on impulse buys, you might be prevented from spending. On top of that, if you need the money, you’ll have to wait or work to get access to it since it will likely take a day or so for the funds to transfer. The wait may give you the time you need to think about the purchase before you buy.

A final word

Generally speaking, just about anyone can benefit from a spending freeze or no-spend period. The challenging spending break can help you develop a better mindset about how you use money and have lasting results on your day-to-day spending habits.

For example, Laura hasn’t tried another no-spend month, but now she’s found the money in her budget to pay $500 toward her credit card debt each month. She says once she eliminates $9,000 in credit debt, she’ll start making headway on about $100,000 in student loan debt.

She says the freeze helped her learn to spend her money on things that matter, not just on lifestyle perks like going out to dinner or getting her nails done. Building that mindset is the whole point of going on a spending freeze.

The post How a Spending Freeze Can Save Your Finances appeared first on MagnifyMoney.

Barclaycard Ring Review: 0% Balance Transfer Until 2018

If you are looking for a balance transfer, this is one of the best offers available in the market. Barclaycard Ring has a 0% intro APR for 15 months on balance transfers made within the first 45 days of opening the card. Even better — there is no intro balance transfer fee. There is also no annual fee, so this is a great choice for anyone looking to get out of credit card debt cheaper and faster.

Barclaycard Ring™ MasterCard<sup>®</sup>

APPLY NOW Secured

On Barclaycard’s Website

Barclaycard Ring™ MasterCard®

Intro Rate
0%
promotional rate
Fee
$0
APR
13.74%
Transfer Period
15 months
Credit required
Excellent

Excellent

  • 0% Introductory APR for the first 15 months on purchases. Plus, you'll get a 0% introductory APR for 15 months on Balance Transfers made within 45 days of account opening. After that, a variable APR will apply, 13.74%
  • No balance transfer fees
  • No foreign transaction fees
  • No annual fee
  • Chip technology, so paying for your purchases is more secure at chip-card terminals in the U.S. and abroad
  • Free online access to FICO® Credit Score

How to qualify for the Barclaycard Ring MasterCard

The Barclaycard Ring MasterCard is only for people with excellent credit. If you have good (but not excellent) credit, consider the Chase Slate® card — another card with a very good balance transfer offer. Although banks keep their approval criteria to themselves, here is a good idea of what it takes to get approved by Barclaycard:

  • Have an excellent credit score.
  • Don’t have too much credit card debt.
  • You should be current on all of your accounts — no delinquency.

Credit card companies tend to reject people with high debt burdens. You calculate your debt burden by adding up all of your monthly fixed expenses and dividing the number by your monthly income. Your main expenses will be your housing, then any auto payments, student loan payments, and payments for any other credit lines or loans that appear on your credit report. If your debt burden is above 50%, you will find it difficult to get approved. Ideally, your debt burden should be below 40%.

If your debt burden is too high to get approved, or your score hasn’t quite reached “good” yet, you may want to consider applying for a personal loan instead. You’ll have an easier time getting approved and might get a lower APR than your high-interest card. You can use the loan to pay off your credit card debt, then make regular payments on the loan, which will help build your credit score over time.

You can shop for a personal loan from multiple lenders — without hurting your score — here.

Who is Barclaycard?

Barclaycard is the credit card division of UK-based Barclays PLC, one of the world’s largest multinational banking and financial services companies. If you’ve never heard of Barclays, it’s probably because the bank isn’t as big in the United States; however, the bank is no small fish. Barclays is also active in retail, wholesale and investment banking, wealth management, and mortgage lending. The bank is secure — it is the only big UK bank that didn’t require a bailout from the government.

Why we like the Barclaycard Ring MasterCard

Not only does the Barclaycard Ring MasterCard offer one of the best no-fee balance transfer options on the market — but it also has a much lower go-to APR after the balance transfer period is over.

With the Barclaycard Ring MasterCard you won’t pay any interest on balance transfers made within 45 days of opening the card for the first 15 months. After that period, Barclaycard applies a 13.74% variable APR to the remaining balance. There is no balance transfer fee, and the card has no annual fee.

Barclaycard waives the interest during the balance transfer period. You do not need to worry about deferred interest charges. If you still have a balance after the promotional period is over, there will be no retroactive charges or penalties. You will only pay interest, at the 13.75% rate, on the remaining balance on a go-forward basis.

The go-to APR is unique for two reasons. First, the 13.74% rate is pretty low compared to the 15% or higher APR consumers pay to use most credit cards, and significantly less than the more than 20% APR charged on most store credit cards. Even better — everyone approved will get the 13.74% interest rate. There is not a wide range of interest rates, which you typically find with other credit card issuers. However, this rate may vary with the market based on the prime rate.

Barclaycard has another interesting feature — charity giveback. A portion of Ring’s profits will be given to charity. And, as a Ring cardholder, you can vote on which charities get the money. We like that this card offers a great financial deal — and tries to give back to the community at the same time.

What to watch out for:

  1. You need to have “excellent” credit to qualify for the Barclaycard Ring MasterCard, so most people might not make the cut.
  2. Once you have the card, take care not to miss a payment or you’ll be hit with a $27 late payment fee.
  3. The introductory balance transfer offer is only for the first 45 days after you open the account. Don’t miss this window, or you’ll lose the balance transfer offer.
  4. Barclaycard still has high cash advance charges, so you should do your best to avoid taking one. You shouldn’t take a cash advance on a credit card anyway, as interest starts accruing immediately, and it can quickly become an expensive way to borrow money.

How to complete a balance transfer with Barclaycard

Completing a balance transfer with Barclaycard is easy. While applying for the product, you can provide the credit card number of the card you want paid off.

We have put together a step-by-step guide to help you through the process. The online process should take fewer than five minutes. If you have trouble completing the transfer online, you can always call the bank.

Beware: The balance transfer may take as long as four weeks to post to both of your accounts. Continue making payments to each creditor until you receive confirmation that the old balance has been paid off.

2 alternatives to the Barclaycard Ring MasterCard

You won’t qualify for the Barclaycard Ring MasterCard if you already have your debt with Barclaycard. Also, if you don’t have “excellent” credit, you will find it difficult to get approved. Here are a few good options to consider.

A similar offer for people with good credit

Chase has a similar balance transfer offer. A $0 introductory balance transfer fee with 0% introductory APR for 15 months on purchases and balance transfers, and $0 annual fee. Plus, receive your Monthly FICO® Score for free.

For people who need more time to pay off their debt.

If you think you might need a few more months to pay off your credit card balance interest-free, you should consider the “Discover it – 18 Month Balance Transfer Offer.” If you have good or excellent credit, you have a good chance of qualifying for the Discover it card. You will have an introductory 0% APR on balance transfers for the first 18 months, with a 3% balance transfer fee.

Frequently asked questions about the Barclaycard Ring MasterCard

You will have 45 days from when you open the account to complete a balance transfer that qualifies for the 0% interest introductory period. Any balance transfer completed after the 45-day period will not be subject to the promotional 0% intro-rate.

If you don’t pay off the balance transfer during the introductory period, you will be charged 13.74% APR, varied based on the prime rate, on the remaining balance on a go-forward basis.

Yes, the introductory interest-free period applies to all charges made in the first 15 billing cycles as well as to balance transfers made within the first 45 days of opening the account.

You can transfer debts from MasterCard, Visa, American Express, or Discover Card accounts. If the debt you want to transfer is not on a MasterCard, Visa, American Express, or Discover Card account, you’ll need to call the number on the back of your card to make the balance transfer once you are approved for the card.

If you miss a payment, you will be charged a late payment fee up to $27.

The Barclaycard Ring MasterCard is a great option for those seeking to ditch high-interest credit card debt. It makes no sense to put your hard-earned money toward paying interest on your debt when you don’t have to. So, if you have excellent credit and high-interest debt to pay off, consider the Barclaycard Ring MasterCard.

The post Barclaycard Ring Review: 0% Balance Transfer Until 2018 appeared first on MagnifyMoney.

4 Ways Being a Perfectionist Can Hurt Your Finances

Everyone knows a perfectionist. They’re that friend who obsesses about succeeding in everything they do, fears making even the smallest mistakes, and berates himself at the first sign of failure.

American culture tends to reward those who relentlessly pursue high standards, and many perfectionists even claim the anxiety that motivates them to get things done is helpful. However, numerous studies support the opposite: perfectionism can be an extremely harmful personality trait that can lead to anxiety, depression, or self-harm.

Trying to maintain your finances perfectly comes at a price, too. If you’re demonstrating any of the following traits of financial perfectionism, you could be harming your financial future.

You’re waiting to focus on your finances until you’ve learned everything there is to know about money first

Financial perfectionists fear making mistakes with their money. They may put off investing, for example, until they feel they can do it perfectly and with consistent success.

“Fear of making the wrong decisions is a powerful thing and oftentimes keeps people from making decisions at all,” says Overland Park, Kan.-based certified financial planner Patrick Amey.

Time is money. If you’re waiting to know everything about money to start working on your finances, you might waste valuable time and miss out on potential income from investment. In the worst-case scenario, you could never start building wealth because you don’t make the time to educate yourself on financial matters.

For example, there is no perfect time to enter the market. As Knoxville, Tenn.-based certified financial planner Rose Swanger puts it, “we all experience the perfect hindsight effect.” Swanger says she often hears people speak of the returns they would have reaped if they had invested during the financial crisis. In reality, she adds, no one could have predicted how long or how well the market would recover.

The key is to start investing now and stick with it for the long term. Rather than obsessively tracking stocks and trying to pick the best investments, Swanger encourages her clients to practice systematic investing. They invest an equal amount of money every week or month (for example, automatically contributing 10% of their paycheck to their retirement fund).

They key to investing isn’t to be perfect — it’s to start as early as possible. Case in point: according to JP Morgan’s 2017 Guide to Retirement, a person who invests $5,000 a year starting at age 22 would have more than $820,000 saved by the time they are 65 years old. If they had waited until age 35 and invested the same amount, they would have saved only half as much, $419,000.

The market will have its ups and downs. Don’t let that deter you from investing because you think it reflects poorly on your ability. Nobody can predict the market, not even the professionals paid to try. Aim to keep your investments diversified with broad exposure to the market (like you would get with a target-date fund) and try not to get spooked if the market starts to look shaky.

It can be as easy as enrolling in your employer’s retirement plan if you have access to one. If not, you can set up an investment account with most banks or a mutual fund company like Fidelity or Vanguard.

You give up on your budget too easily

Budgets are especially susceptible to a perfectionist’s all-or-nothing approach to situations. For example, you could be following your budget religiously for weeks, then you receive one unexpected bill that skews your spending for the month. Rather than make adjustments to your budget to accommodate the unexpected, you might give up on the entire plan until you can get it just right.

“I’ve seen budgets for groceries down to the penny. While I appreciate this hard work, it is very rare that the exact same amount can be spent on groceries each month, and determining the right amount can be painstaking,” Amey says.

Amey advises creating a cash flow system that allows for flexibility so you won’t feel as guilty when you can’t follow your budget down to the last penny. Random expenses are a fact of life, but they are difficult to predict. Leave room in your budget for wedding gifts, birthdays, or even emergencies, so they won’t throw you off and leave you feeling discouraged at the end of the month.

If your budget doesn’t work out, don’t beat yourself up for it. Forgive yourself and try to adjust accordingly.

You’re desperate to achieve the “perfect” credit score

While it’s nice to brag about maxing out your credit score, having a perfect 850 is not only almost impossible, it’s also completely unnecessary.

No lender requires you to have an 850 to get approved or be offered the best terms. According to Informa Research, which tracks interest rates by credit scores, the ideal FICO credit score for the best credit offers is 760, not 850. In fact, you’ll still have a good shot at getting approved for the best deals with a credit score 90 to 130 points off the maximum.

So, if you already have a score in the mid-700s, your efforts to increase your score could be pointless. If you’re not quite at a 760 yet, try these strategies to help build your score.

Depriving yourself of simple pleasures can lead to “binging”

Much like the dieter who finally snaps from starvation and eats a tub of ice cream, trying to adhere to an inflexible budget could make you more prone to sudden “binge” attacks.

After months of depriving yourself of small creature comforts like a daily coffee or a cab ride home after a long night, you might decide to reward yourself with a night out. And because it’s been so long since you’ve enjoyed spending money, you might go overboard, ordering way more than you might on a normal day, offering to pay for your friends’ tabs, etc. And once you’ve blown your budget, you might consider it a total loss and toss it out the window altogether.

If that sounds like you, it’s a sign you might be too hard on yourself. When you deprive yourself to follow an extremely strict budget you’re depleting your self-control.

If this happens to you, try to modify your budget and focus your mind on your overarching goal of financial freedom instead of financial perfection.

Whatever you do, Melville, N.Y.- based certified financial planner David Frisch says to try not to get frustrated with the short-term deviations, or mistakes, and keep the long-term goals in mind. He adds to remember in these situations that no one is perfect, and so expecting to handle your finances perfectly can’t be realistic either.

The post 4 Ways Being a Perfectionist Can Hurt Your Finances appeared first on MagnifyMoney.