Got Extra Cash? Here Are 11 Smart Purchases Under $400

Here's a list of smart purchases you should never feel bad about buying.

There’s always a lot of talk about how to be financially responsible and increase wealth with very little money. Many Americans live paycheck to paycheck. But put some real numbers behind that generic statement. The Bureau of Labor Statistics Consumer Expenditure Survey of 2015 reports an average household income per consumer unit (think entire household of family members or single, financially independent people living alone or with other people) is $69,629. And the consumer’s unit average yearly expenses is $55,978.

Let’s say you dedicate those yearly expenses to standard things, such as food, housing, transportation and insurance. While the actual percentage breakdown per expense differs from household to household, depending on your family picture, you’ll still be dedicating a good chunk of your income to various necessities each month.

If we continue with this logic, the money you have left over — that unreasonably small portion of your salary that remains after paying bills — is what many would dub “play money.” The average consumer unit will have about $13,000 a year to play. (Speaking of “play money,” here’s how to stop buying stuff you can’t afford.)

With all that extra cash, what can we do? Of course, we could blow it on a steak dinner or splurge for the newest tech gadget. But what are a few smart items we should buy when we have the opportunity? We’ve compiled a list of smart purchases you should never feel bad about buying. And the best part? They’re all less than $400.

1. Student Loans

The average recent graduate has about $37,172 in student loan debt and pays about $351 per month toward the loan, according to Student Loan Hero. For those who are super strapped for cash, they might choose to defer their loans to a later date or skate by paying just the minimum. But the interest will kill you. One of the smartest things you can do with extra cash is to pay more into your loans when you can afford to do so. It’s a solid bet that added expenses will pop up eventually, and staying ahead of the curve means one less financial burden down the road. (Check out some tips for paying off your student loans here.)

2. An Interview Suit

Even if you’re not in the job market, investing in an interview suit is a wise decision. You never know when you’ll need a go-to outfit for networking events, conferences or a random “I’ve got someone I want you to connect with” meeting. Shopping for the perfect outfit is a lot more bearable when you’re not under duress or in a time crunch. Instead, you can browse for sales. You’ll find cheaper options in many locations, but a nice suit should put you right around that $400 mark. (What else can you do to get yourself ready for a job interview? Check your credit — many employers look at a version of your credit as part of the application process, so it’s helpful to know where yours stands. You can see two of your credit scores — absolutely free — on Credit.com.)

3. A Durable Mattress

What does anything matter if you don’t get a good night’s sleep? When you have extra cash at the end of the month, put it toward a high-quality mattress that will ensure you wake up ready to tackle each morning with spunk. High-quality mattresses come at a price. But they also last for years. You could spend thousands on a name-brand mattress, but a foam mattress from IKEA could work just as well.

4. Digital File Protection

External hard drives and online storage are perfect for backing up all those vacation shots, your wedding album and imperative side-business files. Hard drives are easy to find online, and they’ll run you about $82 for one with worthwhile storage capacity. Online storage pricing varies when it comes to options and personal preferences, but you can choose between services, such as Mozy, Dropbox or SugarSync. These cloud-storage providers charge a monthly fee but give discounts for yearly subscriptions. Expect to pay between $28.98 and $99.99 per year.

5. Online Classes

The most successful people will tell you learning never stops. As workforce trends continue to change, the need for specialized expertise grows. Devoting a few extra bucks to improving your knowledge is a practical expense. Maybe you want to become a better public speaker. Or pick up a new hobby to clear your head at night. And maybe you’ve heard tech gurus ramble about an increasing demand for coding professionals. Buy books, go online and enroll in a course. Do whatever you can to set yourself up for future success.

6. A Commuter Bike

Why spend what you could save? One of the smartest purchases you can make with $400 or less is a commuter bike. When considering what you’d also pay for gas, maintenance and car insurance, a commuter bike will pay for itself. There are definitely good, better and best when it comes to bikes, but you could find a quality road bike for around $300.

7. An Emergency Fund

It’s never a bad idea to start establishing an emergency fund. Experts say three months’ worth of expenses is a reasonable amount of cash to stash away just in case. A good trick is to make your savings automatic. Once you’re unable to see your money coming in, it’s easier to get by without it and find ways to work with what you have. Then, when you break your arm doing back flips off a boat or blow a radiator in your car, it’s covered.

8. Retirement Savings

Expanding on the previous point, try to accumulate as much wealth as you can for early retirement. Consider creating a moderately aggressive investment plan by opening IRAs, 401K accounts, brokerage accounts, etc. Take advantage of your employer opportunities and set up automatic contributions to your company’s 401K plan. Start at a respectable 3% contribution, and gradually increase it until you get to at least 10%. When in doubt, seek a fiduciary financial planner.

9. Solid Clothing

Some of us find it absolutely insane to buy a pair of jeans that cost more than $39.99. However, quality clothing items, such as boots and winter coats, hold up over time. And the money you shell out is worth it later. Reddit’s Buy It for Life adheres to this philosophy. This subreddit aims to “emphasize products that are durable, practical, proven and made to last.” It might seem insane to pay $219 for insulated L.L. Bean Duck Boots, but you’ll be grateful when they’re still keeping your toes warm and dry 10 years later.

10. A Coffee Maker

Does life really exist without coffee? Another smart purchase is to invest in a solid coffee maker. If you fancy those specialty drinks, you could buy a combination machine from DeLonghi for $162 on Amazon. Considering the price of specialty drinks from coffee shops — and our dependency on caffeine — this is a purchase that will pay for itself in a matter of weeks.

11. Various Fitness Programs

There’s no safer bet than to invest in your health. Health equals wealth, right? Whether you buy a treadmill for $399.99 or invest in various meal prep services popular for those always on the go, they’re all worthwhile expenses.

Depending on your employer, you might also be eligible to receive reimbursements for health-related expenses, such as gym memberships, fitness classes or playing in sports leagues. While you’re at it, look into other reimbursement programs you might be eligible for, such as cellphone plans, moving costs or professional-development classes.

This article originally appeared on The Cheat Sheet.  

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How to Spend (or Invest) Your Tax Return

Expecting a hefty check from Uncle Sam? Here's how to spend your tax refund.

If you’re expecting a hefty refund this year from Uncle Sam, you may be tempted to spend it all on something extravagant for yourself. But it’s important to resist temptation and use that money wisely — at least most of it.

Your tax refund may feel like a windfall, but you should treat this surplus cash just like your other earnings, says David Weliver, personal finance expert and founding editor of Money Under 30.

It’s all about your attitude and making sure you set realistic expectations.

“The biggest mistake I see people make … is treating [bonuses and tax refunds] as ‘found’ money instead of earned money. Research shows we’re more likely to spend a windfall frivolously than money we’ve earned. This is especially true of money we weren’t expecting,” he says.

While tax refunds are still earned money, “the fact that it comes all at once means we associate it less with our daily efforts,” says Weliver. If your refund is what you’ve expected, or even bigger than you expected, you could be triggered to spend more of it. It’s probably not a good idea to count on having a sizable refund every year, “because that can lead to spending it before you’ve received it,” he says.

What’s the Best Use of My Tax Refund?

Before you spend anything, first you need to take stock of your debt situation. If you have credit card or consumer debt, attack that first. That’ll help your bank account — and your credit score, since high credit card balances can affect your credit-to-debt ratio. (You can see how yours is doing by viewing your free credit report summary, along with two free credit scores updated every 14 days, on Credit.com.)

“Pay it off, or at least as much of it as you can. That’s true of any debt with double-digit interest rates,” Weliver says. (You can find more tips for paying off your credit card debt here.)

When it comes to paying down larger debts, like student loans or a mortgage, the decision is more personal, and could be a good move as long as your other long-term financial goals are being met.

Should I Invest my Tax Return? 

 

After addressing any applicable debts, make sure you have an emergency fund that will cover at least six months of expenses. That money, along with anything that will be going toward big purchases in the next three years, like a car, the down payment on a home, or a big vacation, should be kept in a savings account.

“It can be tempting to invest that money in a rising stock market, but if there’s a big market correction before you cash out, you could be forced to sell at a substantial loss,” Weliver says. “If, however, you’ve got the emergency fund and won’t need that cash in the next few years, you’ll want to invest in boring old index funds or with a robo-adviser. Invest it, forget it’s there, and go back to working hard.”

You can also make contributions to a Roth IRA or a 529 savings plan.

At the end of the day, your tax refund shouldn’t turn you into a Grinch (unless you’re digging out of credit card debt), and spending some on a splurge could be good for you.

Setting aside between 10% and 25% of your tax refund for something you really want is a great way to reward yourself and stay motivated, Weliver says.

Another option? Get involved with causes you’re passionate about and donate some of your refund to charity. There’s a bit of a bonus to that option, too: The donation could net you a tax deduction next year.

Image: AntonioGuillem

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3 Ways to Stick to Budget When You Don’t Have a Steady Paycheck

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It’s difficult enough to balance your budget with a steady income, but can be really stressful when you aren’t making one. Here are some helpful tips to manage your budget when you don’t have a steady paycheck.

1. Know Your Income-to-Expense Ratio

Understand how much money you have coming in and how much is going out. If you have to, sit down and gather all of your expenses from the past three months to help you get started. Write down your net pay (take home pay) and then how much you’ve been spending on essential and non-essential expenses. If you are spending more than you are earning, then you might want to cut back a little. If you stick to a steady budget and have a good financial balance, then you won’t ever find yourself scrambling for money when your bills come in and you’re between jobs.

2. Stick to the 50/20/30 Rule

The 50/20/30 rule consists of fixed expenses, goals and discretionary (flexible) expenses. You want to dedicate most of your take home pay to your fixed expenses – regular bills, groceries, car payments, etc. You might want to put the next 20% of your paycheck toward your future goals. Do you have any upcoming events that are costly? For example, you might be planning a wedding in the next year or two. You want to make sure your goals and budget run in parallel tracks. If your goals ever change, then you will find yourself going in and adjusting your budget. Don’t let both of these crash as it will only put a large dent in your wallet.

The golden rule is to put 30% of your net-pay towards discretionary or flexible expenses. This could be eating out, hobbies, going to the gym, entertainment, etc. I recommend trying your best to never reach that 30% mark. If you always are spending 30% or more of your pay on non-essential items, you may lose track of your spending and find yourself in debt in the future.

It’s also a good idea to keep your credit card balances low as higher debt ratios can have a negative impact on your credit scores. You can see how your spending is affecting your scores by checking your two free credit scores, updated every 14 days, at Credit.com.

3. Have an Emergency Fund

Maintaining a financially stable life on an irregular income can be difficult. You never know when you might be in transition or out of a job for a short time. Try to always have a back-up option. An emergency fund can help you stay prepared for unexpected expenses. Even if you know you will always have money coming in, you never know when a large, unexpected expense will come up. An emergency fund will help you stay on top of your finances and always prepared for the unexpected.

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Why Daniel Radcliffe Is Our Patronus

Daniel-Radcliffe-saving

Call him The Boy Who Saved.

Daniel Radcliffe has made an estimated £74 million (equal to about $94 million, based on the current exchange rate) since taking on the eponymous role in the blockbuster Harry Potter franchise. That probably doesn’t come as a surprise, given the eight movies in that series alone have raked in close to $8 billion worldwide.

But you may be surprised to learn that the 27-year-old British actor has, well, been hoarding his money in Gringott’s.

“I don’t really do anything with my money,” Radcliffe told the Belfast Telegraph in late September. He went on to put forth a compelling argument for why he decided to save it.

“I’m very grateful for it, because having money means you don’t have to worry about it, which is a very lovely freedom to have,” Radcliffe said. “It also gives me immense freedom, career-wise … For all the people who’ve followed my career, I want to give them something to be interested in, rather than them just watch me make loads of money on crap films for the rest of my life.”

Radcliffe may be talking specifically about movie projects, but, no matter what your role in life, he’s right that having some money socked away can afford you a certain amount of freedom and security. People with money in the bank can sleep a little easier at night knowing they could weather an unexpected financial setback (like job loss or major car repair), afford more home and pursue new job opportunities if their boss turns out to be a real He-Who-Must-Not-Be-Named.

But, despite these clear advantages, many people — and Americans, in particular — just aren’t saving enough. Survey after survey shows that we’re woefully underfunded for retirement, are ill-equipped to handle even a small financial emergency and carry more debt than is ideal.

Ways Mere Muggles Can Save

Of course, there are plenty of socio-economic reasons for that: Many folks are still recovering from the Great Recession, wage growth has been pretty stagnant and high levels of student loan debt are weighing down many Americans’ finances. (We don’t all have £74 million in the bank, you know?)

But even people who are on a tight budget can consider Radcliffe their financial Patronus (we do) and find some new ways to save. Here’s how you might be able to get some more Galleons in your vault. Accio, savings!

1. Automate Your Savings

You shouldn’t spend more than what you have. If this is a challenge for you, consider setting up an automatic transfer so at least some of your extra funds (after paying your bills) make it into your savings account. You can apply a similar strategy to your investments and up the money from each paycheck that’s going into your 401K.

2. Improve Your Credit

A good credit score can help you save on everything from mortgage rates to insurance policies, so if your credit is looking a little lackluster, it might behoove you to put in a little work. You can improve your scores by paying down high credit card balances, disputing errors on your credit report and identifying specific areas where you need to improve. (You can find out what these areas are and monitor your progress toward building great credit by viewing your free credit report summary, updated every 14 days, on Credit.com.)

3. Find Ways to Generate More Income

The gig economy is real, and, in many respects, thriving, so if you and your family aren’t saving because of lack of income, consider a side hustle. You might be able to make some extra dough selling your stuff online, blogging, running errands for others on the weekend or sharing your ride, among other things.

4.  Scrutinize Your Budget

Even if you’ve already cut back, there may be ways you can still reduce your expenses. Spending too much on coffee? Brew your own at home. Blowing your food budget? Switch from brand name to generic products at the grocery store. Paying too much for cable or other subscription services? Ask your provider if they can lower your rate. You can find 47 more ways to stay out of debt — and, as a result, save more — here.

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How to Keep Thieves From Stealing This $2,300 Car Part

catalytic-converter-theft

When you think about protecting your car from damage or theft, you probably run through a mental checklist of sorts. Doors locked? Check. Windows up? Yep. Catalytic converter secure? Um…

Most cars have catalytic converters as part of the exhaust system, but they’re notable for more than reducing emissions. Catalytic converters get their jobs done using precious metals like rhodium, platinum and palladium, and that’s what makes them vulnerable to theft. Thieves can scrap these metals for $20 to $240, according to the National Insurance Crime Bureau, and catalytic-converter thefts have been pretty common over the last few years.

In 2015, consumers filed 3,986 insurance claims regarding stolen catalytic converters, up from 1,058 in 2009, according to the NICB. The figures come from the Insurance Services Office ClaimSearch data, which NICB used to identify patterns of catalytic converter thefts from 2008 to 2015. Much of the rise in theft has to do with the values of precious metals, which tanked in late 2008 and have since increased. (Keep in mind this only includes insured vehicles — there are likely more thefts that don’t result in an insurance claim.)

“There was a spike of catalytic converter thefts in 2008, but likely due to the metal prices in 2008-2009, the number of these claims took a downturn. Since then, there has been a steady climb in catalytic converter thefts which is likely attributed to the growing popularity and ease of stealing them,” says an NICB report from Aug. 28.

Thieves often target trucks and SUVs for their catalytic converters, because they sit higher above ground, so it’s easier for a thief to get under them and cut out the part. (Vehicles that sit lower to the ground aren’t necessarily safe — it’s just more time consuming if the thief needs to use a jack.) Between 2008 and 2015, catalytic-converter thefts were most common in Chicago (980 thefts); Sacramento, California (850); Los Angeles (550); Atlanta (407); and Indianapolis (353). On a state level, thefts were most common in California (8,072), Texas (1,705), Illinois (1,605), Ohio (1,439) and Georgia (1,215).

Most important: It’s expensive to repair. Depending on what kind of car insurance you have, you could be on the hook for the whole bill.

“Installing a replacement catalytic converter may cost between $500-$2,300 depending on the type,” the report says. “Repair costs are driven higher since thieves work fast and often damage other areas of the car attempting to remove catalytic converters as quickly as possible.”

Ideally, you can keep your car in a garage — a significant obstacle to thieves — but there are other ways to deter theft and avoid the headache of replacing a catalytic converter. Here are some recommendations from the NICB:

  • Claim ownership. Look into etching the license plate number or vehicle identification number onto the heat shield of the catalytic converter. There are government programs that do it for free, or you may be able to pay to have it done at a dealer or local body shop.
  • Park strategically. If you don’t have a garage, park near a building entrance or somewhere near surveillance cameras. A well-lit parking area may also deter theft.
  • Lock it down. Consider adding a security system to your car, having the catalytic converter welded to the frame of the vehicle or having a cage added to protect the part. Before you make any changes, make sure you find out how it may affect any warranties you have on the vehicle.

Otherwise, you might find yourself out of a catalytic converter — and $500 to $2,300.

Situations like the theft of a catalytic converter is a good example of why it’s so important to have an emergency fund: Such large, one-time expenses are difficult to absorb into your regular budget and put people at risk of getting into credit card debt. In addition to the out-of-pocket costs and credit consequences, it’s important to note that making insurance claims can cause your premiums to rise. And on the topic of credit and insurance: In some states, insurers consider your credit history when determining your premium, so protecting your credit can be just as important as keeping your car safe from theft. (You can keep tabs on your credit standing by getting a free credit report summary every 14 days on Credit.com.)

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These Sneakers Covered in Dirt Can Cost You Up to $600

Are your sneakers an expression of your life’s travels and your personal tastes? Do they have all the signs of a life well lived? Scars and scuffs, a little mud here, a bit of sand from the beach there?

If your life tends more toward the mundane where wear-and-tear on your shoes is concerned, there’s now an easy fix available that doesn’t require you to actually go out and live a little more. Instead, you can now just buy your sneakers with added scuffs and “nature.” Of course, it’s going to cost you — a not-so-subtle $500 to $600.

There’s apparently a market for these distressed sneakers, so artisans for the Golden Goose brand are now adding scuff marks and dirt to denim and suede lace ups. The calf-leather sneakers pictured above with the “nature” effect cost $515, according to the company’s public relations team.

The reason for the lofty price tag, according to company spokesperson Flaminia D’Onofrio, is because they’re from a design collection and many of them are made from “the best” leather in Italy. Plus, the distressing and well-placed wear is all done by hand by craftsmen in Venice. You can find Golden Goose sneakers at Barneys.

We know there is a whole culture around sneakers, but the average American can’t afford a $400 emergency bill, according to a survey conducted by the Federal Reserve in 2014 which found that 47% of Americans wouldn’t have the reserves to cover such an expense. So you may want to think twice about getting this new footwear.

That said, before you reach for your credit card, it’s a good idea to consider what your wardrobe budget is. If these are sneakers you feel you absolutely must have, and you can afford the new scuffs, er, sneakers, then go ahead and buy them. But keep in mind that taking on too much debt can affect your credit scores, which can impact your ability to get loans when you need them in the future.

If you’ve had an oops-impulse buying moment that boosted your credit card debt, and you’re curious to see how it affected your credit, you can view two of your credit scores, updated every 14 days, for free on Credit.com. If you discover your credit is in lackluster shape, you may be able to improve your scores by paying down high credit card balances, disputing any errors with the credit reporting agencies and limiting new credit inquiries. After all, if you get buried in debt, it’ll take more than cool new sneaks to put a bounce back in your step.

Image: Golden Goose

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10 Events Homeowners Insurance Doesn’t Always Cover

what-homeowners-insurance-doesn't-cover

If you own a home, you most likely have homeowners insurance (it’s typically required to secure a mortgage). You know your insurance policy covers your home and the possessions inside it in the event of a fire or theft, but you may not realize there are many things which are not covered by your homeowners insurance.

Before you have a claim, it is important to know what your insurance provider will and will not cover so you can alter your policy or budget accordingly.

1. Flooding

Flooding is usually not covered under a standard homeowners insurance policy. If you live in an area prone to flooding, you may have already secured flood insurance. However, many people who do not live in this type of area do not have this additional coverage. You can visit the National Flood Insurance program to learn more about adding this to your insurance line up.

2. Earthquakes

If you haven’t experienced an earthquake in your area, you probably feel you do not need to worry about earthquake coverage. However, there have been more instances of this in less typical parts of the country, like the one that hit Oklahoma recently.

If you have a basic policy, it likely will not cover this type of damage. Therefore, you would need to take out additional insurance to cover your home. This is usually only an issue in areas which face higher risk, but you can ask your agent about this and decide if you should purchase it or not.

3. Animal Bites

Many times, basic homeowners insurance does not cover any sort of animal bite. If you have pets, you need to check your current policy to see if you are covered or not. If you are not, find out what you can do to cover yourself.

4. Sewer Backups

If your sewer backs up into your home, a standard insurance policy may not cover you. If you live in a newer home, this may not be as much of a concern. However, if your house is older, or you have a septic tank, this could be more of an issue. Ask your agent about adding in additional coverage.

5. Sinkholes

With more and more stories of these instances hitting the news, it is something you need to consider. If you reside in Missouri, Texas, Florida, Alabama, Kentucky or Tennessee, you are more likely to have this potential issue arise. There are riders you can add to your policy to protect your home, should this happen to you.

6. Termites

In the majority of cases, the damage caused by these little bugs is not covered and the only way you can cover these costs is by paying out of your own pocket.

7. Simultaneous Events

If you happen to suffer severe wind damage and then your home floods, you may not be covered. The reason? Flood is not covered under your policy. It is what the insurance world calls “anti-concurrent causation.” This is when two events happen at the same time — one of which is not covered under your policy.

8. Burst Pipes

While many times a burst pipe is covered, there are times when it may not be. For example, if it is due to homeowner negligence, such as not leaving the heat on when away on a winter vacation or forgetting to drain a pipe, then it may not be covered. Make sure you take the necessary steps when you are going to be away to help prevent damage. And consider talking with your insurance provider to see what your policy coverage entails.

9. Mold

Mold is horrible and, not only is it ugly, it can actually make you sick. You might check with your provider to see if mold damage is covered by your current policy. If you ever have water in your home for any reason, it’s a good idea to get it cleaned up as soon as possible to help prevent mold growth.

10. Identity Theft

This is actually slowly changing with many companies, but some do not cover the problems that arise because of identity theft. Some companies offer optional additions for your policy, which can cover things like the cost to get your credit restored. (You can see where your credit currently stands by viewing two of your credit scores for free, updated each month, on Credit.com.)

No matter which company you use for your insurance, make sure you talk about these instances and add in those riders or consider purchasing additional insurance as needed. Make sure you take the time to read your own policy, or go over it with your provider, to help you avoid any surprises.

Image: Marilyn Nieves

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A Broken Air Conditioner May Cost a Lot More to Fix This Year. Here’s Why

Chances are, if you’ve had to call a repair service to check the coolant levels in your air conditioning unit this summer, you’ve gone into sticker shock if you’ve needed to replace it. That’s because the most commonly used coolant, R-22 or Freon, is in short supply, sending prices sky high.

Price increases for Freon have risen sharply, according to Rob Haines, marketing manager for Service Experts, a Plano, Texas-based provider of HVAC repair, maintenance and sales for residential and commercial customers in 29 states and three Canadian provinces.

“Most of our locations are seeing big increases,” Haines said in an email. “For example, the price for a standard tank of R-22 was around $450 this time last year. Now the same 30-pound tank is over $600. It is the sharpest price increase we’ve seen.”

Calls to multiple HVAC repair companies around the country show prices are ranging between roughly $80 and $140 per pound of Freon, with most companies charging a reduced price after the first pound. At 2 to 4 pounds of Freon per ton, just topping off a a 4-ton air conditioning unit can add up pretty quickly.

The shortage stems from Freon being phased out because of concerns about its impact on the environment, the ozone layer in particular. In fact, manufacture of Freon will cease altogether in 2020, per Environmental Protection Agency requirements. Production of new R-22 will decrease by an additional 28% in 2017, and will decrease even more the following two years.

That doesn’t necessarily mean that people who haven’t already switched to units using the replacement coolant R410A will need to buy new units right away. That’s because Freon circulates within a closed system, so it doesn’t get used up by air conditioning units like cars using gasoline. It can, however, leak out of the system, and leaks are virtually inevitable in older units. That’s why it’s important to have your air conditioning serviced every year.

The bad news is that prices will likely continue to skyrocket as Freon becomes less and less available, Haines said, adding that “there could be double-digit price increases again for summer of 2017.” Haines did note that recycled R-22 should be available after 2020, but again, it will be subject to the same limited supply conditions. And, there is no guarantee how long recycled R-22 will be available.

While there are some cheaper R-22 alternatives on the market, often referred to as “drop-in” replacement refrigerants, Haines said they aren’t always a good choice.

“Lennox, one of the leading air conditioning manufacturers, has conducted research that shows these cheaper alternate refrigerants are not compatible with the lubricating oil used in R-22 units,” he said. “Recharging older air conditioners with these alternative refrigerants may actually damage the system and/or void your manufacturer’s warranty.”

Haines said his advice is to be proactive, and start investigating options for a system upgrade if you’re still using R-22 so you don’t find yourself trying to make a speedy decision when your air conditioner stops working during extreme temperatures.

“If you get ahead of the curve, you’ll be ready to take advantage of great rebates, sales and financing options that can make an upgrade very affordable,” Haines said. “For instance, right now there are government tax credits for up to $500 on a new high-efficiency air conditioning unit – and those can be combined with manufacturer and local rebates for further savings. But the government tax credits expire at the end of 2016.”

If your air conditioning unit needs Freon, it’s good to keep in mind that it could have a significant leak if it needs more than a pound or two. And, it’s a good idea to ask your service technician to use a scale to ensure the amount of Freon being used is accurate. Just a quarter pound can make a big difference in your bill.

Remember, it’s a good idea to always have some money set aside for when you need to purchase big-ticket items in an emergency, like when you need a new air conditioner. And saving doesn’t have to be painful, as these money-saving tips prove.

It’s also a good idea to keep your credit card balances below 30%, and ideally 10%, so you have some flexibility if you have to rely on credit to make a big emergency purchase. You can see how your credit card spending and debt are impacting your credit scores, plus get two free credit scores every month using Credit.com’s free credit report card.

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How a Personal Finance Failure Can Be a Good Thing

personal-finance-failure-can-be-a-good-thing

Just about everybody experiences money problems. Unless you’re born into the upper crust, odds are you or your family will go through some sort of personal finance catastrophe at some point. Actually, in all likelihood, you’ll probably go through many trying financial times over the course of your life. Financial issues can harm family relationships and impact your health. And even if you’ve done everything you should have to prepare for an economic downturn or medical catastrophe, you can still end up seeing your savings and safety net vaporized with a single mistake.

Money and personal finance issues are more or less a fixture in our lives. We’re always striving to keep our heads above water, to pay the rent or mortgage, and if we’re lucky, try to save for a new toy or vacation. When times do get really tough, however, there isn’t much to say that’s positive about the experience. You simply have to try and weather the storm the best you can and hope you’re not too much in the red when things calm down.

Surprisingly enough, researchers are now starting to say that those times of intense stress and struggle related to money might actually be a good thing — at least one way. Money problems may make us mentally sharper.

Personal Finance Issues & Psychology

Though our personal finance problems may feel like they’re sending us into a mental tailspin, a new study says we’re actually more psychologically nimble when we’re experiencing strife related to money. The study was published in the Scandinavian Journal of Psychology, and found that while having financial issues on your mind can bog you down, it doesn’t necessarily affect every mental task you do. It all has to do with “working memory,” according to the researchers.

“Recent research has shown that poverty directly impeded cognitive functions because the poor could be easily distracted by monetary concerns. We argue that this effect may be limited to functions relying on working memory. For functions that rely on proceduralized processes however, monetary concerns elicited by reminding of financial demands would be conducive rather than harmful,” the study’s abstract reads. “Our results supported this hypothesis by showing that participants with lower income reached the learning criterion of the information-integration categorization task faster than their more affluent counterparts after reminding of financial demands.”

Essentially, the research team came to the conclusion that worries about money don’t hamstring all of our mental processes, though it may feel like it, and that people with more financial trouble in their lives can perform better in certain cognition tests.

The British Psychological Society’s take on the study lays out an example:

A trucker is likely to rely much more on the relatively automatic and instinctive processes that make up safe, effective driving. This is not to make a facile argument such as “financial stress is good for the poor,” but rather to make the point that even if such stress does impede some parts of poorer people’s lives, in other capacities they will be able to operate strongly in spite of, or even in small part due to, this stress.

Getting Your Money Problems in Order

While the results of this particular study may be surprising and a little bit encouraging, you’re still going to be much better off — mentally speaking — if you can get and keep your finances in order. That’s no easy feat, of course, and many people spend their entire lives trying to wrangle their finances and money problems into submission. But, as we all know, things can happen that can derail even the most carefully constructed plans.

Though there are money lessons to be learned seemingly everywhere — from TV shows to movies, and everywhere in between — sticking to sound advice from the experts is your best bet. What they’ll tell you is to slowly and methodically build up savings accounts for emergencies, and then to start saving for retirement and investing. Yes, it’s easier said than done, but if you don’t have some sort of plan, you’ll find yourself in a hole in your later years.

The best thing you can do to prepare for a financial emergency is to plan for one while you can. Recessions are going to happen, and stock markets are going to dip. But if you plan ahead, you’ll be able to save yourself a lot of mental grief.

This article originally appeared on The Cheat Sheet.  

Image: Geber86

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