6 Things Everyone Should Be Doing to Build Wealth

The idea of “building wealth” isn’t just for rich people.

In fact, if the word “wealth” has you envisioning fancy people spending summers in Cinque Terre on their private yachts, it might be time to reconsider what wealth really means. Wealth, in general, can mean ensuring that you have enough to adequately cover what you need and to keep you happy while also possibly providing you with a little extra on the side for what you just plain want.

The best part is you don’t have to be a financial planner to build wealth — there are some easy things everyone can start doing.

1. Know Your Net Worth

To build wealth, you need to start at the beginning. If you haven’t already, take stock of your net worth (your assets minus your liabilities) and try tracking it for at least a couple months (the longer, the better) to see how it’s trending. (You can view two of your credit scores for free on Credit.com.) Obviously, it’s ideal for your net worth to be getting larger rather than smaller, but if it isn’t, step two will be important.

2. Keep Track of Your Spending

You can’t really build wealth if you aren’t sure where you’re spending your money. Whether you use an aggregate site to track where your money goes out, an Excel spreadsheet, an old-fashioned checkbook or regular old pen and paper, it might seem silly to pay attention to every purchase you make, but only when you start to notice patterns in your spending can you really make cuts where and when you might need to.

For example, if you determine you’re spending more than you’re making, look for adjustable costs you could potentially reduce or eliminate immediately (cable, gym memberships, extraneous spending, etc.). If the problem is your larger costs — student loans, how much you pay in rent or your car payment — it could be time to consider reconsolidating your loans or potentially moving to a more affordable apartment, getting a cheaper car or opting for public transportation, if possible.

3. Make the Most of Free Money

Very few things in life are free, so when something is, it’s foolish not to take advantage. If your company offers a 401K match that you aren’t taking advantage of, you are leaving free money on the table. Talk to your human resources representative about your company’s policy, and adjust your allocations if there is a match you aren’t currently getting.

It also might be worth making sure your savings and checking accounts are the best options for you. If you’re paying extraneous fees or think you could be earning more interest elsewhere, it’s worth researching the best place to help your assets grow.

4. Get a Card With Rewards That Suit You

If your current credit card isn’t cutting it, find one that is. There are great options out there for any type of reward that would be best for your lifestyle, whether for travel, groceries or cash back. Use this guide to help find a credit card that’s right for you, or check out our roundup of the best credit cards to help you build credit.

5. Think Ahead

It’s not always easy to plan for the future when you’re trying to scrape by day by day, but if you can think of any large expenses that might be happening later this year or next, you’ll be ahead of the game. When you start planning for large expenses with enough time to save up, you’ll be less likely to put them on your credit card and potentially have to pay interest on them.

You might want to consider any upcoming travel plans, plans to potentially buy a house or get married, health insurance deductibles for any planned medical procedures, potential taxes you’ll owe, etc. (See more about paying taxes here.)

6. Save, Save & Save Some More

You need to have an emergency savings account. Experts recommend keeping three to six months of expenses in an easy-to-access account, just in case something pops up.

If you have started saving and you’re serious about increasing your net worth, consider putting any tax refunds or pay raises directly into savings, or split them between savings and retirement accounts. If you already did your research from step three and found a good savings account, your pay raise will be even more meaningful when it’s compounded daily with interest.

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How to Save Money by Spending It

All the experts seem to say if you want to save money, stop spending. Here's how to do just the opposite.

All the experts seem to say the same thing: “If you want to save money, stop spending it.”

Stop buying lunch. Don’t buy a coffee in the morning. Cancel your cable.

They make it sound so easy to save money!

But I like buying lunch. I’m a zombie without my morning coffee. And I really enjoy Game of Thrones (and can’t stand seeing spoilers on Facebook).

What if there was a way you could spend, get more out of life and still save in the long run?

Well, there is, and I call it my Upgrade and Save strategy. There are many areas of your life in which you can save money by spending it. If you make an upfront investment, it can mean paying less in the future.

Upgrade and Save With Coffee

A few years ago, my wife purchased a Nespresso coffeemaker for my birthday. It’s a lot like a Keurig except it makes phenomenal single- and double-shot espressos. The pods are single-use, cost around 50 cents to a dollar each and turn me from a groggy mess into someone who’s ready to take on the day.

The coffee maker wasn’t cheap. You can get one for less than $100, but some of the higher-end models, which have features like the ability to make frothy milk, can cost close to $500. It’s not as cheap as a simple drip coffee maker, but it’s far less expensive than visiting a coffeehouse every morning.

If you have one coffee each day with the low-end Nespresso machine, it’ll cost you $465 a year: $100 for the unit and $365 for the coffee pods. A $3 coffee each day will run you $1,095 a year. That’s more than twice as much.

Experts would have you believe the best solution is to buy a drip coffee maker for $20, a five-pound canister of coffee for $15, and 100 coffee filters for $2. But the reason this is more likely to fail is because it will bring far more complexity into your life. You’ll create more steps in your morning or nighttime routine, which you’ll likely forget.

What will happen when you run out of coffee filters? Or coffee grounds? You’ll stop at Starbucks and buy a cup.

We enjoy our coffee maker because we put in a pod, turn it on and can drink our coffee in about 30 seconds. No pot, no filters, no programming — it’s easy.

Other Ways to Spend and Save

You can find these scenarios everywhere in your life — opportunities to make a small upfront investment so you can cut down the costs later on. Coffee has been an easy target ever since David Bach coined the term “latte factor,” but that’s not the only area where you can save money.

If you drive a car, you know you need to change the oil every 3,000 to 5,000 miles. If you switch from conventional oil to synthetic oil, you’ll pay more for the oil but will change it less often. My car needs an oil change every 5,000 miles when it’s using conventional oil. But it can run 10,000 miles when I use synthetic oil, making synthetic oil less expensive.

Another example: CFL and LED bulbs are more expensive, but they last longer and use less electricity. That’s fewer light bulb changes, especially for those hard-to-reach places, and a slightly lower electricity bill. (You can see 11 more ways to lower your electric bill here.)

Saving money isn’t everything — improving your quality of life is important too. Invest in the things you use often, like your mattress. If you buy a quality mattress and even higher quality bedding, you’ll get a strong start every day.

Finally, put the money you save toward the future. If you buy a coffee maker and stop paying $3 per cup, you can put that savings toward another investment. You could spend it on synthetic oil or on upgrading your bed. Just don’t spend it elsewhere without careful planning.

The experts always seem to say to it’s smarter to cut things out, but that’s unreasonable. Make an investment in your life and see how it pays off in the long run.

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8 Hotels Worth Visiting Just for the Food

We've rounded up eight hotel restaurants worth visiting just for a meal.

Most people think of hotel food as something to endure, not enjoy. At some places, it’s as bad as you’d find at a hospital. But when it comes to knockout ambience, killer cuisine and a world-class experience, some luxury hotels bring their A game. Here, we’ve rounded up eight worth visiting just for a meal, based on cursory research and recommendations.

1. Wit & Wisdom at Four Seasons Hotel, Baltimore

Michael Mina’s award-winning tavern is as American as you can get, with seafood thrown in for good measure. New Englanders will feel right at home with their lobster pot pie and grilled chicken breast, while adventurous types will spring for the beef tartare toast and uni hashbrowns with black caviar.

2. The J. Parker at Hotel Lincoln, Chicago

You’d have to visit the Willis Tower for a view that beats the J. Parker’s. Located on the 13th floor of the Hotel Lincoln, the restaurant serves up the usual suspects: crab cakes, grilled cheese sandwiches and spinach garlic dip. We advise ordering cocktails, preferably the one called Dangerous When Rested.

3. Huang Ting Restaurant at the Peninsula, Beijing

Luckily for travelers, the food at Huang Ting is as good as its ambience — and judging by the photos, the ambience is stunning. Designed to recreate a Beijing nobleman’s courtyard home, the restaurant serves Cantonese food with a contemporary twist. The equally elegant tea lounge is adorned with Ming Dynasty-era tables and parasols.

4. Nathan Outlaw at Al Mahara, Dubai 

The waterfront patio isn’t the only attraction at Nathan Outlaw — the seafood restaurant features a floor-to-ceiling aquarium. Also attractive: the lobster risotto, lightly pickled oysters and Dover sole terrine.

5. The Restaurant at Meadowood, Napa Valley

The $500 tasting menu may be outrageously pricey, but few would turn down the chance to sample one of star chef Christopher Kostow’s warm strawberries infused with anchovy or buttery oysters layered with sturgeon caviar. The drinking selection, which features mostly locally grown vino, is worth writing home about.

6. Borgne at the Hyatt Regency, New Orleans

Chefs John Besh and Brian Landry have made Borgne into a destination for lovers of classic New Orleans cuisine, which may explain why it was a James Beard Award semifinalist for Best New Restaurant in 2013. Thursday’s special, fried chicken with homemade pepper jelly, may be worth skipping lunch for.

7. NoMad Restaurant, NoMad Hotel, New York

If imbibing an absinthe martini in the library doesn’t entice you, perhaps entrees like the signature roasted chicken will. Not convinced a trip to NoMad is worth it? The wine list is almost as tempting as The Restaurant at Meadowood’s, and the extensive selection of cocktails features something called the Drunk Monk.

8. Alain Ducasse au Plaza Athénée, Paris

Jaw-dropping decor? Check. Wines as old as 55 years? Check. The subject of a film (“Naturalité”) because the shojin cuisine is so memorable? Check and check. Basically, the restaurant is everything one could hope for from the godfather of French cuisine.

Save on Your Next Trip 

Whether you’re planning to try the Drunk Monk or splurge on the tasting menu at The Restaurant at Meadowood, it never hurts to make a plan to save on your travels. Rewards cards can help you do that and rack up some freebies while you’re at it. Be sure to check out our roundups of the best airline miles cards and cards with no foreign transaction fees.

And remember, before you apply for any credit card, we recommend checking your credit to see if you’re likely to qualify. You can do that here on Credit.com, where you’ll get two of your free credit scores with updates every two weeks.

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

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

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

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

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

For the Constant Commuter

1. BankAmericard Cash Rewards Card

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

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

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

For Whoever Does the Grocery Shopping 

2. Blue Cash Preferred Card from American Express

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

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

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

For Retirees

3. AARP Credit Card From Chase

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

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

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

For the Fickle Spender

4. Citi Double Cash Card

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

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

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

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

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3 Things to Never Do When You Complain to Customer Service

These customer service tips and tricks will help you make the most of your phone call.

Most people don’t call a customer service hotline because they’re happy. If you’ve picked up the phone and dialed a 1-800 number, chances are you want to complain about something. But bringing a bad attitude into the call isn’t likely to get you the results you want. That’s according to a new study by researchers at the University of British Columbia (UBC).

The angrier or more aggressive you get during a customer service call, the greater the chance you’ll receive poor service in return, according to the paper, which was published in Journal of Applied Psychology. That’s not exactly surprising — most of us would predict that rudeness begets rudeness. But the researchers wanted to know what exactly customers were doing to antagonize customer service reps. To find out, they used transcripts and computerized text analysis to review over 100,000 words spoken in more than 400 calls to a Canadian customer service center. The goal was to identify how workers responded to what customers said during a conversation.

“We know that customer service quality suffers when customers are rude or aggressive to employees,” David Walker, the study’s lead author and an assistant professor in the faculty of management at the UBC’s Okanagan campus, said in a statement. “But our research is one of the first to pinpoint the specific words service employees hear from customers that can undermine the quality of customer service.”

Consumer frustration with customer service is common. Even though many companies have taken steps to improve the way they deal with customer complaints, such as enhancing technology and adding services like chatbots, many people still report being unhappy with the way their problems are handled, according to Consumer Reports.

One of the biggest complaints was rude or condescending service. Seventy-five percent of people Consumer Reports surveyed said rude workers were a major annoyance. But the results of the UBC study are a reminder that impolite or uncooperative service reps may simply be responding to rudeness on the part of customers. Customer service calls are a two-way street. When callers pay attention to how they address the person who picks up the phone, they may get better service.

Specifically, there were several customer moves that triggered a negative response from workers, especially when those things occurred in combination. Do these three things the next time you complain to customer service and you may hurt your chances of getting your issue speedily resolved.

1. Use Aggressive Language

The more aggressive your language when talking to customer service, the less likely your problem will be resolved satisfactorily. Most people probably know that, but apparently it doesn’t stop people from getting sassy with innocent call center workers. Roughly three-quarters of the calls researchers studied contained aggressive language — words such as angry, complain, hassle, and nightmare.

No matter how frustrated you are, you tend to receive better results if you use positive language. When people used positive words like “great” and “fine” during a call, the customer service response improved.

2. Attack Them Personally

The customer service rep isn’t to blame for the faulty product you received, and you both know it. Taking out your frustration on them personally won’t help you get your complaint resolved faster. The researchers found that when a caller used aggressive language along with second-person pronouns like “you” and “your,” customer service got markedly worse.

Saying things like “Your product is garbage” puts the customer service rep on the defensive. Reframing those comments by saying “This product is garbage” yields better results.

3. Interrupt

Your mother told you it was rude to interrupt people, and she was right. Cutting off the customer service representative violates normal conversational rules and makes them less likely to want to help you. Nonetheless, the majority of calls analyzed in the study contained customer interruptions.

“[W]hen they interrupt the person they are talking to, we found that the employee’s negative reaction is much stronger,” study co-author Danielle van Jaarsveld said. Even if you’re pressed for time and want to get your issue resolved as quickly as possible, hear out the customer service rep. They may be trying to explain something important to you.

Overall, the lesson from the UBC study is that a little politeness goes a long way when it comes to getting your customer service issue resolved.

“If customers change their language so that it’s less about the employee and more about the product or problem in question, they can improve the quality of the customer service they get,” Walker said. “Employees can handle a lot, but when aggressive language and interruptions happen together — combined with minimal positive language from the customer — employees get to a point where customer service quality suffers. Customers need to remember that they’re dealing with human beings.”

[Editor’s Note: You can monitor your financial goals, like building a good credit score, each month on Credit.com.]

This article originally appeared on The Cheat Sheet.

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1 in 4 Americans Plan on Racking Up Holiday Debt in 2016, Survey Shows


In a new survey of 1,147 American adults conducted by MagnifyMoney, more than one in four (26%) Americans said they plan to rack up holiday debt during the 2016 holiday season that will linger more than a month. Among the 26% who will rack up debt, 66% expect they will take three months or more to pay off the debt.

Holiday debt can quickly spiral out of control. MagnifyMoney found the average shopper surveyed who added debt during the 2015 holiday season racked up $1,073.

Using a credit card with average APR of 16% and making monthly minimum payments of around $25, it would take that person more than five years (61 months) to get out of debt, according to MagnifyMoney’s Credit Card Payoff Calculator. Over that time, he or she would pay an additional $496 worth of interest charges.

Nearly one-third (32%) of this year’s survey respondents said they incurred holiday debt during the 2015 shopping season. People who took on holiday debt in the past are much more likely to take on debt this year because they can’t afford to pay cash, our survey found, with 74% saying they will incur debt this year. They are also more likely to feel financially stressed.

Among those respondents who incurred credit debt during the holidays in 2015 , the average shopper added $1,073 of holiday debt. And a staggering 74% said they will likely take on more credit debt again this year.

More debt = more financial stress

More than half (59%) of respondents who took on debt over the holidays in 2015 said they accumulated $500 or more of debt. Among people who said they racked up $500 or more in holiday debt in 2015, MagnifyMoney found greater trends of financial stress and a greater likelihood of incurring additional debt in 2016.


Check out our full survey findings below or download a fact sheet here.


Here are 5 ways to avoid holiday debt traps:

1. Steer clear of store credit cards

The holidays are prime time for retailers selling store credit cards to customers. Customers are often wooed by promises of upfront discounts on purchases, helping them save on their holiday shopping in the short term. But store credit cards notoriously have some of the highest interest rates on the market — an average APR of 23.84% versus 16.28% for regular credit cards. People with poor credit may be saddled with store cards with interest rates as high as 27%.

Store credit cards can also come with onerous deferred interest fees — they may offer no-interest promotions for a certain amount of time. But if you fail to pay off the entire balance by that date, you can be slapped with the entire interest balance in one lump sum.

If you want to get a discount on your purchases and signing up for a store credit card is the only way to get there, just be sure you have enough cash on hand to pay your bill right away. With most discounts only 10% to 20% off, you’ll actually wind up losing whatever you saved if you get slapped with a 20% or higher interest rate later.

2. Make a budget and stick to it

The downfall of most holiday shoppers is that it is incredibly easy to get swept up into the excitement of shopping. Before you know it, your budget is blown, and it isn’t until after the giddiness of the holidays winds down that you realize the extent of the damage. Avoid the holiday debt hangover by creating a budget early and sticking to it no matter what.

3. Exchange ‘Secret Santa’ gifts with family and friends

Secret Santa is a fun and smart way to drastically reduce your holiday gift-giving budget. Ask your siblings or friends to draw names from a hat rather than buying gifts for everyone individually. You can all agree on a price limit so no one feels like they over- or underspent.

Can’t draw names in person? Try a Secret Santa online tool like Secret Santa Generator or DrawNames.com.

4. Get rid of last year’s holiday debt first

The average shopper racked up $1,073 worth of credit card debt last year, our survey found. If you have credit debt left over from last year’s shopping, don’t pile on more debt and continue to let interest accrue. Consider signing up for a 0% APR credit card and making a balance transfer (check out the best ones of the year right here). You’ll buy yourself additional time to pay off last year’s debt, and you’ll improve your credit score in the process.

5. Start saving for next year’s holiday shopping today

If you felt unprepared for holiday shopping this year, it might be because you didn’t have enough time to save up. Going into next year, open a savings account and label it “Holiday Shopping.” Then estimate how much you’ll need to save — $500? $1,000? Divide that number by 10 and set up a direct deposit from your paycheck into that savings account for that amount. For example, if your goal is to save $1,000, you’d need to contribute at least $100 per month for 10 months to reach that goal.

Why only 10 months? That way you can start shopping a bit earlier than December, giving you plenty of time to find the perfect gifts for your loved ones.

The post 1 in 4 Americans Plan on Racking Up Holiday Debt in 2016, Survey Shows appeared first on MagnifyMoney.

Review: You Need a Bugdet (YNAB) — The Budgeting Tool That Makes Every Dollar Count

YNAB app-spread

You Need a Budget (YNAB) is subscription-based budgeting software available both on desktop and mobile devices. Its trademark mantra is, “Give every dollar a job.” That means as you have money coming in, you assign it a budget category. Once you have one month’s worth of expenses fully funded, you can start budgeting funds for future months.

How Does ‘You Need a Budget’ Work?

When you first sign up for You Need a Budget, you will be asked to link your checking, savings, and credit card accounts. This allows the app to see exactly how much money you have at this very moment.

Next, you’ll add upcoming transactions like rent, utilities, and groceries. As you add these expenses, you’ll also be prioritizing them. The ones that are most important (generally rent or mortgage payments) will go on top, and the ones that are a little more frivolous like entertainment spending will go at the bottom.

After you’ve set up transactions you know are coming, you’ll be able to establish goals. You can set up goals by a date, in which case the app will tell you how much you have to save per month to meet your objective. You can also set them up by how many dollars you’d like to allocate toward them per month, in which case the app will tell you how long it will be until they are fully funded (or in the case of debt repayment goals, paid off).

YNAB direct-import-setup

You’ve linked accounts. You’ve accounted for bills and upcoming spending. You’ve set goals. Now it’s time to fund all of those things! You start with the money you have, and not a penny more. You assign each dollar to a certain line item, again, starting with the most important items at the top. Once you reach the end of your current funds, you won’t be able to budget any more until you get more cash in your hands.

If you are able to fully fund one whole month, then you can use any excess funds on hand to start funding the next month. The more you do this, the happier the founders of YNAB get. Their entire philosophy is that you should “age your dollars,” meaning the further in advance you can fund a transaction or goal, the more financial stability you will have.

How Much Does ‘You Need a Budget’ Cost?

Currently, You Need a Budget offers a 34-day free trial — no credit card required. After that, you will have to pay either $5 per month or $50 per year. Students get twelve months free, after which they’ll be eligible for a 10% discount for one year. If you have a previous version of YNAB, you’ll be able to score a 10% lifetime discount on the latest version.

Fine Print

ynab-app-icon-1024YNAB is extremely transparent and seemingly ethical in their practices. They do not sell information to third parties, but may give others access to it in the course of business as they work to facilitate the software through companies such as Amazon Web Services and Finicity, which are two trusted names in the Fintech industry as far as security is concerned. Your data is always encrypted, and will be completely and irreversibly deleted upon request should you ever choose to close your account.

Pros and Cons

You Need a Budget is commonly recognized as one of the best budgeting apps around. That doesn’t mean that it’s perfect for everyone, though. Think through the pros and cons before downloading.


  • Transparent company.
  • Committed to security and positive user experience.
  • Helps you change your financial habits through a simple, yet revolutionary, process.
  • Prioritizes your expenses each month.
  • Forces you to address overspending.
  • Allows you to set goals.
  • Can be used by those who get paid regularly and receive W-2s or by freelancers.
  • There are user guides and lessons accessible to members to deepen your understanding of common personal finance principles and concepts.
  • There is a community where you can get support.


  • There is a price for your subscription.
  • This won’t be good software for you if you’re a percentage budgeter as the interface makes no allowance for that method.
  • At this point in time, there are no reports or analyses to help you disseminate your habits. They are promised on the horizon, though.

How Does ‘You Need a Budget’ Stack Up against the Competition?

YNAB is an extremely useful and user-friendly app. However, it does come with a fee and is far from the only budgeting software on the market. Here are some other options you may want to check out if the YNAB $50 annual subscription is getting you down:


While it may not use the “give every dollar a job” philosophy, Mint.com solves very similar budgeting problems in a very free way. It allows you to link accounts, plan for upcoming expenses, and set goals. It also provides charts and graphs to analyze your past behavior and provides your FICO score at no charge — two things YNAB doesn’t do. The biggest con to this no-cost application is that it is laden with ads.


If you don’t like the idea of your financial accounts being linked to a third-party app, another free option is Wally. When you use this app, you’ll have to be a lot more diligent at inputting your income and expense as none of it will be automated, but that’s the price you pay for keeping your bank account info completely separate.

Level Money

Level Money is a free app that allows you to link accounts, gives you insights into how much you have left to spend in any given category on any given day, and comes 100% ad-free. This app isn’t the best for the self-employed or those with variable income, and also isn’t as useful for those who make a lot of cash purchases.

Who Should Use You Need a Budget?

You Need a Budget is great for anyone who wants to get a hold on their money today, but doesn’t necessarily want to analyze their past spending. It’s developed for people who prefer budgeting by dollars rather than percentages, and comes with extra savings for students who are trying to establish good money habits at a younger age. It is time-tested, and is created by a company that has continually shown it cares for its customers.

The post Review: You Need a Bugdet (YNAB) — The Budgeting Tool That Makes Every Dollar Count appeared first on MagnifyMoney.

3 Reasons You Earn More But Still Feel Broke

stressed worker job work

If you’re earning more but still feel like you’re living paycheck to paycheck, there’s a likely culprit: lifestyle inflation. Lifestyle inflation is the ultimate budget-killer — a widespread phenomenon that occurs when people spend more as their income increases. Before they know it, that raise or bonus they earned slowly but surely disappears … right into that cell phone upgrade, a bigger apartment, or those few extra takeout orders each week.

Any financial planner can offer sound, reasonable methods for avoiding this problem: Stick to a budget. Automate your savings. Bump up your 401(k) contribution. The solutions seem easy enough, but no matter how much more you earn, you still feel like you’re living paycheck to paycheck.

We’ve come up with three simple reasons why you might still feel broke — even though you’re earning more — along with strategies on how to overcome them.

You don’t know what you want from life.

One reason many people struggle to keep their spending in check as their income increases is that they aren’t intentional about how they spend their money, says Meg Bartelt, founder and president of Flow Financial Planning. Bartelt encounters this problem every day with her clients, who are mostly women working in the tech industry who earn healthy paychecks but live in expensive cities.

When people are clear about their reasons for earning money and the goals they hope to achieve with those earnings, it becomes easier to avoid the kinds of incremental spending increases that can quickly consume their budget.

“Ask yourself why you worked hard for a raise,” says Bartelt. “Was it so that you could eat out more or buy fancier clothing or have a better streaming subscription … or was it so that you could make a meaningful change in your life?”

Goals — whether it’s being able to retire at 45 instead of 65, sending your child to college, or buying a home — give workers a reason to keep an eye on their spending from paycheck to paycheck.

To help figure out your financial goals, Bartelt suggests asking yourself a specific set of questions:

What do you want out of life?
What do you want to do, have, or accomplish?
How much money is it going to take to get you there?
And how are you going to get that money?

Taking this approach may also make the concept of budgeting more palatable. Saying “no” to a few upgrades in your life will feel less like deprivation, and more like a positive step toward the future you imagine for yourself.

You compare yourself to others.

Nothing can threaten a healthy budget like a serious case of “FOMO” — fear of missing out.

It can be hard to keep long-term, big-picture goals in mind amid the constant stream of filtered photos of international trips and nights out posted on social media. “It’s a huge contributor [to lifestyle inflation], especially for younger generations,” says Stephen Alred Jr., founder of Atlanta, Ga.-based financial planning firm Ignite Financial. Constant, real-time coverage of internet acquaintances’ adventures can make people feel worse about the state of their own lives and distract them from what they really want or need. Then, when a raise or a bonus comes into play, they are more likely to spend it on something that fits into that picture of what they think they should be doing, rather than what works best for their future goals.

It’s important to remember that you won’t get the full picture of someone’s life by looking at their social media profile — for example, you won’t know that the friend who took the tour of Italy last summer is still paying off the resulting credit card bill a year later, and you won’t see that a person only ordered appetizers at that fancy restaurant she went to last week, says Alred. Focusing on your own needs and goals, separate from those of the people in your life and in your social network, is critical to being happy with the state of your finances and your life, now and in the future.

You haven’t addressed negative spending patterns.

Once your financial goals begin to take shape, the hard part isn’t quite over. If you have a pattern of spending money as soon as it’s in hand, it’s going to take a while to change that behavior. Alred calls this a “behavioral barrier” — something people do every day with money that prevents them from reaching their financial goals.

It’s calling Uber every time you’re at the office later than 5 o’clock. It’s using your credit card to pay for even the smallest purchases. It’s grabbing a $15 salad for lunch every day.

These behaviors can crush financial goals, whether a person earns $30,000 or $300,000. Getting the right habits in place now will not only help combat lifestyle inflation this year — it will help down the road as income (hopefully) continues to grow.

Come up with strategies to help break those negative spending habits. For example, we’ve written about a simple $20 rule that can help break your credit card addiction.

But don’t be too tough on yourself. You shouldn’t deprive yourself of simple pleasures or pinch pennies to the point that you’re putting your mental or physical health at risk. Budget for the things that you know will bring you happiness, like the weekly dinner with friends you can’t miss or your daily $5 latte.

“Be clear about what’s important to you,” says Mary Beth Storjohann, financial planner and founder of Workable Wealth. “You can do it all, you just can’t do it all at once.” Once debts and savings goals are taken care of, “20% should go toward something fun,” says Storjohann. Building in some flexibility will help you avoid stress and self-loathing down the road — and will allow the occasional indulgence without throwing savings goals off track.

The bottom line:

Rigid financial rules may work for some, but will be hard to implement without a solid reason for following them.

“It’s like a diet. If you restrict your calories significantly, maybe you can last for a week or a month,” says Bartelt. “But most likely, you’ll revert to your old habits in the long run.”


The post 3 Reasons You Earn More But Still Feel Broke appeared first on MagnifyMoney.

How Much Time Should You Really Spend Managing Your Money?


Taking time to manage your money can be beneficial to your life. You will be less stressed, more organized and perhaps even get on the road to becoming debt-free. If you are on top of your bills, you won’t be surprised when your credit card bill comes rolling in. Here are some guidelines to help you better manage your finances.

1. Set Up a Budget to Track Your Spending

So you are always in the know with your finances, you might want to design a budget that fits your lifestyle. If you are budgeting for more people than yourself, then try to create a compatible budget that works for everyone. That includes rent, utilities, food, entertainment expenses, phone, date nights, babysitting and so on. As a couple, you might want to have a talk about what items are truly important as well as items you both could live without. You will be surprised by how much money you can save each month by following a budget.

Tip: Your budget can be adjusted as needed. Consider repurposing your budget every month to make sure you are properly managing your finances and not overspending. If you always stay within budget, then you will be less likely to fall into debt.

2. Check Your Online Banking Weekly

If you have online banking or mobile app, great! If you don’t, then you might want to consider looking into it. Having a banking app on your phone or online service will save you a trip and be more convenient.

Both will help you stay on track financially. Consider checking your app weekly; you might want to designate a day where you go over each charge. Checking your balance and charges every Friday might be the best strategy. Even though you are only checking your charges once a week, you should always be aware of your balance. Always know how much money is in each account to avoid overdraft fees.

3. Check Your Credit Card Statement Every Month

Check your credit card statement every month so you know your balance and can ensure all of your charges are correct. Identity theft and fraud are very common. If you see any fraudulent charges on your card, report it immediately to your provider. By checking your statement every month, you will also see how much your monthly payments are.

Consider paying over the minimum each month to decrease your debt. A golden rule is to only use 30% of your credit card limit or less to stay in a good credit standing.

4. Get a Copy of Your Credit Report at Least Once a Year

In order to keep a close eye on your finances, you might want to check your credit report annually. This will help you be aware of how much debt you have and if you’ve missed any payments. If you have, then you might want to set a reminder on your phone or sign up for automatic payments. You’re entitled to one free credit report per year, so use it! (You can pull your credit reports for free each year at AnnualCreditReport.com and can view two of your scores for free on Credit.com.) There is no harm in managing your credit history. A good credit history will only benefit you in the long run.

5. Practice Saving Money

Practice saving every month to ensure that you always have a back-up plan. You can choose to save for emergencies, medical expenses, retirement or even a vacation. Saving a specific amount of money each month will help you practice financial discipline and may even come in handy when you decide to make a big purchase.

Image: AleksandarNakic

The post How Much Time Should You Really Spend Managing Your Money? appeared first on Credit.com.