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Suppose one morning, your coffee maker breaks. There are two things you can do: repair it or replace it. Unfortunately, the “repair” option isn’t always easy. You can try to fix the machine yourself, or ask a handy family member for help. But if that doesn’t work, you might be out of options. These days, local…

How Repair Cafés & Fix-It Groups Can Save You Money and Avoid Waste is a post from Money Crashers.

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Is supplemental life insurance worth the cost? Maybe, but private insurance might be better.

Imagine you just landed a great new job. You’re really pumped for the first day of work. You put on your brand new suit, pick up your swanky briefcase, and head to the office…only to sit in onboarding meetings for the whole first day.

These meetings can be boring, and they can take forever if your new employer is large and onboards many employees at once. Typically, they go over things like employment expectations and requirements. But they’ll also usually walk you through the employer’s various benefits package options.

Many times, you’re left with lots of choices at the end of onboarding, including:

• Which health insurance plan to choose.
• How much to contribute to your 401(k).
• Whether or not to use an FSA or HSA.
• Whether or not to purchase supplemental life insurance.

We’ve talked elsewhere on Dough Roller about the first three options. But now, let’s focus on the fourth option: Whether or not to purchase supplemental life insurance.

You might be thinking, “What is supplemental life insurance?” We’re here with answers. First, let’s discuss what this type of insurance is, and then we’ll talk about whether or not it’s worth the cost.

What is Supplemental Life Insurance?

Supplemental life insurance is, as you might guess, a form of additional life insurance. It’s not meant to take the place of a good term life insurance policy. But it will give your family additional coverage should the worst happen to you.

You can get supplemental life insurance two ways: through your employer, or privately.

Employer-provided supplemental life insurance

Some employers offer both term life insurance coverage and supplemental life insurance. Term life insurance through your employer generally works like regular term life insurance. It may be cheaper, though, since it’s a group policy. The company takes on less risk when insuring a larger group of people, and this can translate into savings for you.

In 2014, about 94 percent of U.S. companies surveyed offered their employees life insurance coverage of some sort. Employers generally offer these ancillary benefits based on what their employees need most.

Supplemental life insurance is similar to a group term life insurance policy, but is typically more limited. The limits will depend on your particular policy. Here are some common terms to look for:

• Accidental Death and Dismemberment: Some supplemental policies are specifically for accidental death and dismemberment (AD&D). This means they will only cover you if your death is caused by an accident. Some of these policies, though, will also pay out if you’re in a serious accident but don’t pass away. For instance, if you lose your eyesight, hearing, or a limb due to a covered accident.
• Burial Insurance: Some supplemental policies are strictly to cover the costs of burial and funeral services in the event of your untimely death. These policies typically offer between $5,000 and $10,000 of coverage.
• Non-Portable: Any life insurance policy you purchase through your employer may be non-portable. That means that you can’t take it with you when you move on to a different employer or retire. We’ll talk more shortly about why this can be such a big problem for many consumers.
• Spouse or Domestic Partner Insurance: Sometimes employers will allow you to purchase supplemental life insurance for your spouse or domestic partner. This policy might complement your own term life insurance policy. The limits on policy amounts may be lower, and these policies may be subject to some of the same limits described above.

Your employer’s terms will vary, depending on the plan they’ve chosen. So you’ll want to examine the fine print for these limitations before you decide to purchase a policy.

Private supplemental life insurance

Just like you can get this type of insurance through your employer, you can also buy it on the private market. In this case, it’s like buying private term life insurance. You just shop around to see who offers you the best deal, and then purchase your insurance privately.

This type of insurance can have the first two limitations above. That is, you can purchase AD&D insurance or burial insurance on the private market. In fact, you may be able to buy these policies as a rider on your original term life insurance policy when your purchase term insurance.

The main advantage of private supplemental life insurance is that it is portable. Meaning, you will keep the coverage as long as you are paying the premiums. You can also purchase this insurance for your spouse or domestic partner in his or her own name.

In some case, private supplemental insurance can also be cheaper. For instance, say you’re really young and healthy. In this case, life insurance of any sort will be pretty cheap for you. So before you sign up for the employer’s coverage, you might check to see if you can get an individual policy more cheaply.

A note about portability

The non-portability of both term life insurance and supplemental life insurance through your employer can be a real bone of contention. In short, you shouldn’t depend on employer coverage alone for this reason.

Let’s say you start working with your employer straight out of college. You’re young and in great shape. But it’s still cheaper to purchase life insurance through your employer, so you get a $50,000 term life insurance policy plus a $10,000 burial policy.

Over ten years, you move up the ranks, so you stick with your employer for a while. In the meantime, you gain a little weight, become a little less active, and maybe develop a chronic or acute health condition. Then, you leave employment to start your own venture.

Now you realize you’re stuck replacing your life insurance coverage on your own. And since you now have a house and a family, you likely need more coverage than you did ten years ago. Only now that you’re older and less healthy, your term policy is significantly more expensive.

In this case, you may have been better off paying for your own term health insurance all along, knowing you wouldn’t be able to take your employer’s insurance with you.

If your employer offers incredibly cheap coverage, it’s fine to opt in. Just know that you may also want to bulk up your private coverage so you aren’t stuck paying a lot more for the same coverage when you leave or change employment.

Is Supplemental Life Insurance Worth The Cost?

Now that you know what supplemental life insurance is, you need to determine whether or not it’s worth the cost. This depends on a variety of factors, including how much insurance you already have, the limitations, and the costs.

Your current coverage

Buying life insurance should be a holistic experience. That is, you don’t want to look at all of your policies separately. You need to look at the policies as a whole, and total up your life insurance coverage.

It’s a good idea before you go to your enrollment meeting or shop for private supplemental life insurance to look at your current coverage. Determining exactly how much life insurance to get can be tough. One rule of thumb says to have ten times your annual salary in coverage. But that may be too much or not enough, depending on your circumstances. Read this article for a more thorough discussion of this issue.

If your current coverage is enough or even more than enough, paying more for supplemental life insurance may not make sense. You could, instead, put that premium amount towards saving for retirement or other financial goals.

Even if the premium is small, you shouldn’t pay for insurance you won’t need.

But if your current insurance isn’t quite enough, or if you’d be comfortable with more coverage, you might want supplemental life insurance.

This type of insurance can also be helpful for a couple of specific situations:

1. Faster payout for burial insurance. Your $500,000 term life insurance policy can take a few weeks to pay out to your family. In the meantime if you passed away, they’d have to deal with your burial costs immediately. Some burial insurance has a built-in accelerator clause, so the funds would become available really quickly. That can give you extra peace of mind, even if you’re comfortable with your current term policy.
2. AD&D pays out even if you don’t pass away. If your employer offers an Accidental Death and Dismemberment option, it can be worthwhile even if you have plenty of insurance. Be sure to read the fine print. But this type of policy could pay out even if you don’t pass away, which can make it very valuable. Of course, a long-term disability program could do the same thing. So balance the costs and benefits when deciding on your coverage.

What if you don’t have enough life insurance coverage? A supplemental insurance policy can help. But you shouldn’t rely on this policy too heavily, again, because of the portability issue. But you can go ahead and opt in to this policy, and then shop around later for the proper amount of term life insurance coverage.

Policy limitations

It’s absolutely essential that you understand all of the policy’s limitations when looking at supplemental life insurance. This is true for any insurance policy, of course. But it could be even more crucial for this type of policy, which can have so many clauses and exceptions.

The bottom line is that the less likely you are to need insurance, the less you should pay for it. If your AD&D policy pays out in exactly two types of accidents that you’re never likely to experience, it’s probably not worth the cost. But if the policy covers a broad variety of accidents and issues, it could be worth your while.

I’ll mention just one more time the portability issue, too. With any non-portable life insurance policy, be sure that you have backup or at least a plan for ensuring you’re covered properly if you move to new employment.

The cost

Before you sign up for any employer life insurance plans, shop around to see what you can get on your own. Again, if you’re young and healthy, you may get better coverage at a lower cost than you’ll get through your group policy. This is somewhat unusual unless you’re in excellent health, but it can happen.

Even if the private coverage you find is slightly more expensive, it can be worth a few extra bucks a month. You’ll get portable coverage that you know will last for the entire life insurance term.

For older adults, or those who are less healthy, the employer-based coverage is likely to be the cheapest option around. But, still, if a limited supplemental life insurance policy is pretty expensive, it may not be worth it. Just balance the monthly cost against your needs and the likelihood that you’ll use such a policy.

Remember, if this is an optional benefit through your employer, you’ll probably reduce your paycheck by the amount of the premium. So if it makes more sense to go with a private policy, you get money back in your paycheck to pay for the insurance on your own.

The Bottom Line

So now you know what supplemental life insurance is, but it’s still up to you to decide if it’s worth the cost. Just do your due diligence. Make sure you understand the policy you’re being offered and its costs. Then, shop around to see if you can do better on the private market.

If you’re exclusively shopping on the private market, consider adding supplemental insurance to your term life insurance policy. In some cases, you can add accelerated burial benefits or an AD&D rider to your existing policy, and this may be cheaper than purchasing it separately.

Either way, though, be sure you know how your supplemental life insurance policy fits into your overall life insurance picture and plan before you buy it.

Topics: Insurance

The post What is Supplemental Life Insurance and is it Worth the Cost? appeared first on The Dough Roller.

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Michelle's quick note: Hello! I have a great article by Suzi Whitford. She is a blogger who has grown from $0 to $17,000 per month!  Today, she's going to show you exactly how she accomplished this in just one year.

I used to dress up nicely, put on makeup and go to a quiet office filled with adults to work. It was nice, for a while. My college sweetheart and I got married right out of college and started working as Industrial Engineers for large corporations. But I always knew I wanted to stay at home when I started having kids.

After a few years in the corporate life, I became pregnant and after the birth of our first daughter, I started my life as a stay at home mom. I loved it. The first year was wonderful. And then we became pregnant again when my first born was 11 months old. Our family was growing quickly and our financial were needs too.

Deep down inside I missed the adult interaction I had in my corporate life and I desperately wanted to help contribute to the family finances again. Motherhood was wonderful, but I knew that with two little ones we’d have to tighten our belts more; unless I found something that I could do from home. Additionally, my confidence was dwindling as I spent all day changing diapers, cleaning the home and growing another baby. I desperately needed an outlet.

I started on a journey which I had no idea would lead to making over $17,000 per month!

 

My Various Attempts at Making Money From Home

I researched and tried out many different methods of making money from home. Such as Fulfilled by Amazon, direct sales, selling hand-made crafts and photography. All of the methods were too time consuming and inflexible for me. I knew that soon I’d have to juggle a baby and a toddler, and I needed something that I could do from home at night or during nap times.

Fulfilled by Amazon required too much inventory in the house, direct sales required that I host parties which I’m terrible at, and crafts and photography were skills I was mediocre at. Managed correctly, these side hustles could be extremely profitable; they just didn’t fit in with my strict needs.

Additionally, it had to be something that didn’t require thousands of dollars of an initial investment, as some direct sales business require. I browsed the internet and stumbled upon posts on Pinterest about making money with a blog.

It immediately caught my eye!

I’m super technical, I can create websites in a flash (I used to code back in college) and I love tinkering around on my computer. Blogging would be perfect for me. Also, it’s extremely flexible, a big bonus for a stay at home mom with an unpredictable schedule.

Related content: The Ultimate Guide To Making Money Blogging – How I Earn Over $50,000 A Month Online

 

How I Found My Blogging Niche

I started in 2015 growing a family lifestyle blog. It was very personal and mostly a recap of my life with my little one. I was able to make a few hundred dollars with it through affiliate marketing, but nothing consistent. I knew that if I wanted my blog to be a business it had to help other people. It couldn’t just be a diary of my own struggles, it had to be a source of inspiration, guidance and help for others.

I went back to the drawing board and knew that I could tap into my Industrial Engineering background again! I used to write standard operating procedures for the operators on the manufacturing floor – why can’t I do that for the online world too?

I’m not a fantastic writer, but I do know how to write instruction manuals. I’m pretty dry and not very humorous. I tried guest posting on ScaryMommy but got turned down, whoops.

So I started my current blog to help other moms in my situation. I want them to find their voice again, to know that they can still contribute to the outside world while staying at home with their bundles of joy covered in Cheerios.

Two weeks before the birth of my second daughter I launched my current blow. For six months I worked late into the night and woke up early to continue to work. I knew that if others made their blogs successful, I could do it too.

Related: How To Start a WordPress Blog- Full Tutorial

 

What I Focused On to Grow My Blog Before Monetizing

For six months I barely made any money. I focused on growing my email list, writing amazing content, and truly listening to my readers. I wanted to understand exactly what they were struggling with so that I could create a product to help them.

• I created countless freebies to grow my email list, many failed, but a few worked and grew my list to over 2,000 email subscribers.
• I guest posted on various sites to grow my blog traffic. I invested in Tailwind and grew my Pinterest following. I read everything I could about SEO, social media and website design.
• I wrote pillar post after pillar post and networked until late at night on social media. I knew that growing a blog from scratch is hard work, but I also knew that I could make this work.

We had three options. My husband would continue to support us with his 12 hour work days until one day he retires at 65 years old, I could go back to work or I could make this blog a success. I chose the latter.

 

My First Month of Making over $1,000 with my Blog

After months of focusing on growing my email list, writing content and listening intently to my readers, I knew exactly that I needed to create. So I took the month of May off from blogging to retreat and write my ebook, Blog by Number.

I didn’t do a great job launching it and made a few big mistakes, but regardless, in my first month of launching my ebook I made over $1,000 between the ebook and affiliate sales! That’s huge! I knew that if I could make $1,000, I could scale up and make $10,000.

I was completely elated and blessed that all of my hard work was starting to pay off. I was still working for pennies per hour, but that didn’t matter. I loved blogging and helping others, and my first product launched as a success.

 

Focusing On The 20% That Brings 80% of the Results

Over the next few months I continued to grow my email list and traffic. I also guest posted and directed readers back to my ebook’s sale page. Over the following months my income grew from $1,000 to over $4,000.

I invested in blogging courses such as Making Sense of Affiliate Marketing, which doubled my affiliate income within a month!

I knew people loved the Blog by Number ebook but they craved more. They wanted step by step videos and 1:1 hand holding. So in August I created the Blog by Number course on Teachable. Not only does it go through the ebook step by step, but it adds in extra tips, guidance and tutorials that took me months to learn.

Find out what works for you and continue to do that. You need to experiment and try out new methods to find the 20% of your actions that bring in 80% of your results.

If Google+ is not doing anything for you, but you’re killing it with SEO, then focus your efforts on improving your search rankings.

If your readers are mostly on Pinterest, don’t waste your time on Twitter or Reddit.

Take the first few months of your blogging journey to find out what works for your blog and niche. It will be hard work in the beginning, but once you discover your 20%, you can grow like a weed!

 

How to Decide on a Product to Create

This is my advice if you want to create an online product.

1. First, create a blog post or freebie and see how it does. Create a few, because some freebies will fall flat, and that’s okay. The struggle is part of the growing process.
2. Once you have a freebie that takes off and grows your email list, then create a quick ebook or printable. Start selling a smaller product.
3. If that small product takes off and does well, you know you have a market!
4. Then go on to create your course, master class or membership site to skyrocket your income.

From my Lean Kaizen background I first always ‘trystorm’ smaller actions before diving in and spending months creating a 20 lecture course that may not sell.

Start small, keep testing, and grow fast.

 

Making Over $9,000 in One Month

I networked and connected with other great bloggers in small mastermind Facebook groups. This is where I met Carolina from MamaInstincts. She makes over $1,000 from Amazon’s affiliate program and she did this while her blog was getting under 10,000 page views per month! Wow! Since I had the audience and she had the experience, we worked together to write an ebook sharing all of her strategies.

This was an amazing experience to work with another mom blogger who I’ve never met in person before on a new product. The connections you can make as a blogger are phenomenal. To date the ebook has grossed over $5,500.

Along with the launch of the Amazon ebook and a Black Friday special I ran on the Blog by Number ebook and course, I made over $9,000. It was a phenomenal month.

 

Tips for Running a Successful Sale

I learned that running short specials can bring a good bump in income. Here are my best tips for running sales or promotions on your products.

• Make sure there is an end to the sale, people tend to procrastinate for as long as possible.
• Additionally, prepare your readers and your email list for the sale, don’t just surprise them one day. I constantly struggle with this as I’m always strapped for time and it sometimes feel that I don’t prepare my readers well enough for an upcoming special.
• Lastly, make sure you communicate the value of your product to increase conversions.

Ideas for times you can run sales include:

• Holidays
• Milestones for you or your blog
• Back to School
• Summer Vacation
• Monthly Sales
• Or bundles with other products

 

How I Reached $17,000 in One Month with my Blog

December’s income was in line with November’s right around $9,000. I was elated and had no idea I could grow even more.

But at the end of December I created an optin freebie that did really well. The 12 Month Blog Plan, which can be downloaded on the bottom of this page, grew my email list by a few thousand. This placed more readers on my email list and allowed me to bring in more conversions to the Blog by Number course and ebook.

Additionally, I ran a very successful promotion on January 18th, celebrating my blog’s one year anniversary. I prepared my list well and built up excitement. Also, at this time my readers were well informed of the value of the Blog by Number course, so that helped bring in more conversions.

I ended January with an income of over $17,000. I never even dreamt that my little blog would be making this type of money within a year! And my monthly income is still growing.

 

Celebrate the Small Victories

It’s amazing what you can accomplish if you put in the hard work, continuously research and experiment and never give up. Even while raising two little children I was able to grow my blog into a successful business.

I struggled to find time and energy to work on my blog every day. I almost gave up multiple times. But I continued to celebrate the small victories. I am thankful for every sale that comes in, for every student that enrolls in my course. Secretly I say a little prayer for every new student that they achieve success too!

Blogging has allowed us to become debt free and provide a better future for our little ones. I’m pregnant with our third baby, a little boy, and can’t wait to embrace the new challenges of being a blogging mom with three under 3.5 years old.

If I can do it, you can too!

Author bio: Suzi Whitford is a former Industrial Engineer turned stay at home mom. She helps moms start successful blogs by sharing her time management tips and blogging advice. Download the free 12 Month Blog Plan to grow your blog from $0 to $17,000 per month.

Are you interested in starting a blog?

The post How I Grew My Blog from $0 to $17,000 per Month in a Year as a Stay at Home Mom appeared first on Making Sense Of Cents.

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Season 7, Episode 4

The bad news: roughly 70 percent of Americans are financially illiterate. The good news: all the important stuff can fit on one index card. This week on Freakonomics Radio: how to become your own financial superhero.

Plus: Stephen J. Dubner brings you the tale of the $15 tomato.

To find out more, check out the podcasts from which this hour was drawn: “Everything You Always Wanted to Know About Money (But Were Afraid to Ask)” and “The Tale of the $15 Tomato.”

You can subscribe to the Freakonomics Radio podcast at Apple Podcasts or elsewhere, or get the RSS feed.

The post Everything You Always Wanted to Know About Money (But Were Afraid to Ask) appeared first on Freakonomics.

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Knowing the difference between APR and APY may not seem like a big deal on the surface. But it’s something that can save every consumer hundreds, if not thousands of dollars over the course of their lives. In this article, we’ll clear the air on the APR vs APY debate, starting with an explanation of how they are different.

You’ve no doubt heard of both of the terms, APR and APY. Most people, however, haven’t given much thought to how they are computed. Creditors will quote interest rates using either APR or APY. They almost always quote the number that looks better to you. Thus, it is important to know the difference.

We’re going to first define what each of these terms means. Then we’ll provide a real-life example of how it can affect you.

Annual Percentage Rate (APR)

APR is an acronym for Annual Percentage Rate. The term is mostly used when defining the interest that is paid on a mortgage, credit card or other loan. You can apply APR to any interest rate and it will always be equal to or smaller than APY. APR generally does not need any calculations to compute, it’s simply the rate applied to money borrowed.

Lenders usually apply this rate as often as possible. For example, if your credit card APR is 15%, they apply that percentage to your “average credit card balance” every day, after the grace period.

The credit card company divides the 15% APR by 365 days in the year. The result is a daily periodic rate of 0.041095. If you pay off your balance after interest is applied once, then 15% is an accurate representation of your interest rate. If you carry a balance from month to month, however, then you’re paying more than you think.

Annual Percentage Yield (APY)

APY is an acronym for Annual Percentage Yield. It is a common term used when defining the interest paid in a savings, checking, or other interest bearing account. Unlike APR, APY reflects interest paid on interest. Thus, APY is always higher than APR. Interest is generally compounded quarterly, monthly, or daily. As a result, the interest added to your account becomes part of your average daily balance.

The balance increases when interest is applied. Since your balance is now higher, more interest will accrue the following month. The amount of interest you earn will grow each month, unless you withdraw from the account.

APR and APY in Action

So, now that you understand the difference, let’s see how it would affect you in a real life situation. First, let’s say that you have a savings account with an interest rate of 3%.  A pretty awesome interest rate these days. For purposes of the example, it’s an easy percentage to work with. So let’s say you decide to make a deposit of $5,000 in this savings account.

Over a 12 month period, the bank would credit interest to your account once a month, at a rate of 0.25% (3% interest rate divided by 12 months). If you simply took the 3% and applied it once to the balance at the end of the year, you would expect to earn a total of $150 in interest. However, the actual rate is higher than 3% because interest is earned on interest.

Compounding Interest

Over the course of a 12 month period, your new balances would be as follows:

• Month 1 – $5,012.50
• Month 2 – $5,025.03
• Month 3 – $5,037.59
• Month 4 – $5,050.19
• Month 5 – $5,062.81
• Month 6 – $5,075.47
• Month 7 – $5,088.16
• Month 8 – $5,110.88
• Month 9 – $5,113.63
• Month 10 – $5,126.42
• Month 11 – $5,139.23
• Month 12 – $5,152.08

You can see in the model that the actual interest owed after a 12 month period is $152.08. This is of course more than the $150 the APR would lead you to believe. When we compound interest monthly, as in this example, the actual APY of a 3% interest rate is 3.04%. The more times an interest rate is applied to a balance, the higher the APY.  So interest compounded daily would have a higher APY then the example above, and interest compounded quarterly would have a lower APY.

Credit Cards

If you applied this $5,000 to a credit card balance owed, APY would become a less attractive model to use. In regard to a credit card account, you would probably have to pay off a certain amount of your bill every month, making the actual interest you would pay less than the $152.08 the example shows (assuming you didn’t charge more to the card). You will be paying off a portion of your bill with every statement, making the principal + interest amount lower each month.

Why APY is Valuable

APY always gives you a more accurate representation of how much money you will earn or owe at the end of a full term or year. Home loans, auto loans, savings accounts, CD’s and other similar accounts roll over from month to month. Therefore, interest accrues on interest. When you shop for a savings account, for example, it’s important to compare APY. For example, the EverBank money market account currently offers a bonus rate for the first three months, then the rate lowers to EverBank’s prevailing rate.

While comparing this offer to other banks would be difficult using APR, APY factors in the changes in rate and compounding. Thus, it is easy to compare EverBank’s first year APY of 1.31% (as of 09/08/2017) with say Ally Bank’s first year APY of 1.20% (as of 09/02/2017).

Finally, when it comes to mortgages, you’ll often see a quoted “rate” that is lower than the APR. The rate represents the interest rate on the loan, while the APR factors in other fees (such as points) that you’ll pay. The APR is always higher than the rate. The key is that when you compare mortgage rate quotes, make sure you are comparing an APR that has factored in the fees you’ll pay with the loan.

The upshot of all of this is simple. The next time you are looking into a loan or savings account, make sure to compare the APY.

Topics: Banking

The post APR vs. APY – How One Letter Can Mean So Much appeared first on The Dough Roller.

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Interested in volunteering? What about giving back to the community, gaining a leg up in the workforce, and meeting like-minded people? AmeriCorps is a program that teaches you unique skills, lets you earn money towards your education, and instills a new appreciation for your country. While lesser known than the Peace Corps, AmeriCorps is a better…

Should I Join AmeriCorps? – Benefits & Drawbacks of Service is a post from Money Crashers.

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My first understanding of the power of influence came as a 21 year old at 1 New York Plaza, New York City. During a job interview with a sales trader at Goldman Sachs, I remember him telling me the most frustrating thing about his job was that as soon as GS showed up in the queue to buy, the stock would instantly move higher.

His job was to buy stock for an institutional client at the lowest price possible. But because GS was the most powerful investment bank at the time (perhaps still is), other traders would instantly try and front-run a GS order.

The thinking always went like this: If GS is selling, we should probably sell as quickly as possible because they probably know something we don’t know and vice versa.

Due to the constant front-running, algorithmic trading and dark pools were created to obfuscate large buyers and sellers. When there was simply too much stock a fund wanted to offload, an investment bank would act as a principal, buying the stock at a discount in hopes of selling off the stock to other clients at a lower discount. With enough discretion, taking such risk often paid off. But sometimes, the bank would get slaughtered due to loose lips. 

The Power Of Influence

Nowadays, the most common example of influence lies in an announcement that XYZ famous investor took a stake in ABC stock. For example, whenever Warren Buffet says he bought something, you can be sure the stock will jump several percentage points. The only way you can really get an edge is to buy Berkshire Hathaway stock.

None of us will ever be as influential as Warren Buffet, but over time, we can all develop our own sphere of influence.

The easiest way to develop influence is do something and succeed over and over again.

For example, after you’ve done 1,000 successful eye surgeries, you will become the leading eye surgeon in the land. You will be invited to conferences, be able to direct research funding, and receive a steady stream of clients. Your influence will enable you to raise prices, create courses, license your name, and get rich in the process.

If you’ve done 25 surgeries, and botched five of them, nobody will ever want to see or hear from you again.

Develop expertise through consistent execution and patience.

Influence Can Come From The Smallest Idea

Although a lot of folks from all over come to Financial Samurai to learn more about personal finance, this site is really tiny in the grand scheme of things. I don’t expect to influence the world, especially since I’m an unemployed nobody.

I only expect to help the 3% of you who actually take my advice. That’s right. Based on conversion metrics, roughly 97% of you read something and never take action. That’s cool, because it just means something isn’t painful enough for you to do something about it.

Because I like to check out open houses, on average I speak with three real estate agents every week. I always ask the real estate agent at least three things: 1) How do you think the market is doing versus this time last year? 2) Where do you think the market is heading over the next 12 months? and 3) Where is the best place in the city to buy?

To my surprise, over the past several months, more than half of the experienced real estate agents have told me the western side of SF is the best place to buy. They pointed to Inner Sunset, Parkside, and Golden Gate Heights as the primo neighborhoods to make the most amount of money.

Several even listed reasons why Golden Gate Heights is the best area which sounded eerily similar to the reasons given in my post published in 2014 called, “The Best Place To Buy Property In San Francisco Today.”

Then one realtor handed me a flier with this chart below. It’s Redfin’s 10 hottest neighborhoods in the ENTIRE country to close out the year 2017. Notice anything funny?

There are around 150,000 neighborhoods in America and 119 neighborhoods in San Francisco alone. What are the chances that Golden Gate Heights, a tiny neighborhood, would even make the list? My guess is less than 0.1%.

When I Googled,”the best place to buy property in San Francisco,” I found my article in the #1 or #2 spot of the results. So I asked all the realtors whether they had heard of Financial Samurai before, and all of them said yes.

Ah hah! It’s seems that three years after I made a strong argument for Golden Gate Heights, Google now agrees with the argument, many realtors now agree with my thesis, public company Redfin agrees, and now a herd of new buyers agree.

In fact, just the other day, our local paper republished a post originally published on Business Insider about Golden Gate Heights.

I might not be able to influence the world with my tiny site, but I have been able to influence the population looking to buy real estate in San Francisco. In turn, this influence has helped improve my net worth given I’m long a panoramic ocean view home in Golden Gate Heights.

Who said the only way to make money blogging is through online advertising? My biggest mistake was not buying two GGH properties before the mass media and real estate companies decided to agree.

Will they give me credit for the thesis I made in 2014 they are now claiming as their own? Of course not. But it doesn’t matter because what I care most about are the results. The author of the Business Insider article graduated in 2013 and came to SF in 2015. So from her perspective, GGH is an incredible revelation.

Achieve Financial Independence With Influence

The most important place to grow your sphere of influence is at work. Do what you say you will do in a professional manner for a long enough time and you will get paid and promoted.

Once you’ve developed a solid track record at work, develop influence with your clients and competitors. If your clients all believe in you, then you can go anywhere and your clients will follow. The more you are respected and feared by your competitors, the more they will want to poach you for bigger bucks and a larger role.

To really scale your influence, establish a presence online. Compared to offline reach, online reach is unlimited. I could have tried to meet every single realtor in San Francisco to make my Golden Gate Heights pitch in person, but that would have taken forever and expended too much energy. Instead, I simply spent a few hours typing a post, then let the internet do its thing.

Once you develop influence you can scale your influence into any number of things:

• Consulting
• Public speaking
• Building a business
• Creating a subscription newsletter
• Managing other people’s money
• Selling your own product
• Selling other people’s products you believe in
• Getting other companies to hire you away for big bucks

With so many new ways to make money beyond your day job, your financial worries should decrease, if not disappear altogether. Achieving financial independence is only a matter of time.

Key Points Of Influence

* Influence must be earned through repetitive successful outcomes.

* You will only gain influence if you do what you say you will do.

* Providing an opinion when you have no skin in the game is pointless.

* The stronger your brand, the longer you can make your influence last.

* Once you gain influence, you can leverage your influence in many different directions.

* You’re only as relevant as your last result.

* You can skip the long slog of developing your influence by joining a firm that already has influence. However, you might always feel like an impostor piggy backing off your firm’s reputation.

Related:

When To Sell Real Estate: Every Indicator To Consider

For A Better Life, Be The One Percent In Something, Anything

How To Build Passive Income For Financial Independence

Readers, how would you rate your sphere of influence? Are you using your influence to help others? How has your influence enriched your life?

The post Develop Your Sphere Of Influence To Achieve Financial Independence appeared first on Financial Samurai.

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I know it’s a little soon to be talking about filing your 2017 tax return (though, it’s never actually too early!), but a bit of news happened this week that could drastically change the amount of taxes you’ll pay next year.  Donald Trump recently released his plan to cut taxes for the upcoming filing year, and if his plan becomes legislation, it means a full overhaul of the current tax code.

It’s important to note that the below table is not official, and the information within it is only conjecture at this point because no law has been passed. It’s likely to take a bit of negotiating to get something done, so the final result may look different. But it’s still fun to look at now and see what’s potentially around the corner.

2017 Federal Income Tax Brackets (Single)

If Taxable Income Is ...	The Tax Is ...
$0 - $37,950	12% of the taxable income
$37,950 - $191,650	$4,554 + 25% of the taxable income over $37,950
$191,650 +	$42,979 + 35% of the taxable income over $191,650

2017 Federal Income Tax Brackets (Married)

If Taxable Income Is ...	The Tax Is ...
$0 - $75,900	12% of the taxable income
$75,900 - $233,350	$9,108 + 25% of the taxable income over $75,900
$233,350 +	$48,470.50 + 35% of the taxable income over $233,350

If you’re wondering where the rest of the table is… well, that’s it.  Three tax brackets, and tax rates of 12%, 25%, and 35%. Gone is the seven bracket system, and here you see a much more simplified setup, with the top rate being 4.6% lower than in previous years (39.6% was the top rate in 2017).

New 2017 Standard Deduction

Another big benefit from the newly introduced Trump tax code is the increase of the standard deduction. Your proposed 2017 standard deduction amounts are as follows:

• Married filing jointly and surviving spouses: $24,000 (previously $12,700)
• Single, or married filing separately: $12,000 (previously $6,350)

But with all of these tax decreases, there is one glaring negative. The administration is looking to kill off all but two tax deductions that can be claimed on your tax return: the home mortgage interest deduction and charitable donations. Say goodbye to claiming a home office, travel expenses for a new job, state income tax, etc. Part of the hurt from this change will be relieved by the higher standard deduction amount, but for filers who love to add line after line of deduction? Well, those days may be over.

Related: The “Old” 2017 Standard Deduction and Exemption Limits

Please remember that these rates are for the income you receive in 2017 and the tax return you will be filing in early 2018. Of course, nothing is official until the IRS confirms what the tax rates will be. This likely won’t happen for a good long while, so we will continue to monitor the situation.

Related: File your tax return for free with Credit Karma!

UPDATE – September 27th, 2017

Five months ago, Gary Cohn and Steve Mnuchin provided a peek at what the new administration was looking for in a tax reform plan.  Today, Donald Trump stepped up to the podium and provided a few additional details.  Somewhat striking is that the only noticeable “change” from the initial reveal is that the lowest income tax bracket went from a 10% tax to a 12% tax.  All other frame-work remained the same.

Here are a few new details that Trump provided today with regard to your potential 2017 Federal Income Tax Brackets:

1. The Child Care Tax Credit will be going up from $1,000. (No news as to just how high)
2. An additional $500 Tax Credit for non-child dependents has been added (for the elderly, for example)
3. There is a high likelihood that a 4th tax bracket (above 35%) will appear for the wealthy.  No specific details were provided
4. Confirmed removal of the state and local tax deductions
5. Keeping the mortgage interest deduction and charitable deductions
6. Elimination of the estate (death) tax
7. A one-time repatriation tax of an unspecified amount.  This is an attempt to bring money kept overseas back to the United States
8. A corporate tax rate of 20%

As a reminder, this is not a finished product.  If tax reform is signed into law AND reverted back to 2017 it will likely be different than the numbers you see above.  How different is unknown but we’ll continue to publish updates as they’re presented.

Topics: Taxes

The post The New 2017 Federal Income Tax Brackets and Deduction Limits (Updated September ’17) appeared first on The Dough Roller.

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Part of the reason why I bought a smaller house in 2014 was because I wasn’t willing to rent my own house for the market price at that time of ~$8,500/month. The price to rent my house had grown from about $5,000/month when I first bought it in 2005. If I had a couple kids and a penchant for throwing tons of money away on rent, then maybe I would have stayed.

To optimize my finances, I figured the best thing to do was to buy a new house more suitable to my house-spending desires (~$5,000/month max) and rent out my old house at market to those willing to pay $8,500/month in rent. This way, economic waste is eliminated, and everybody is happy.

Conduct the same mental exercise with your existing home. If you haven’t rented in a while, you may be surprised by how much your primary residence can command for rent in the open market. The cost of living in your home isn’t the actual money you are spending to live there. The actual cost is the opportunity cost of not renting it out at market rate.

Let me share with you why it’s important to follow the real estate investment rule of Buy Utility, Rent Luxury (BURL) if you want to maximize your lifestyle and your net worth.

Buy Utility, Rent Luxury (BURL)

A common rule a savvy real estate investor follows is to pay no more than 100X the monthly rent as the purchase price. In my example, an investor wouldn’t pay more than $900,000 for my now $9,000 a month rental house.

That said, it’s IMPOSSIBLE to follow this rule when buying in expensive cities such as New York, San Diego, LA, and San Francisco. Even finding properties priced at 150X monthly rent is extremely difficult to find. Why? Because there is excess demand looking to buy property for lifestyle and capital appreciation. Housing becomes more than just basic living expenses, it becomes a luxury option. A Honda Civic takes you around just fine, but some people like to buy classic Ferraris.

I’ve chosen to live and remain in San Francisco because I believe it offers a great combination of wealth creation and lifestyle. The average temperature is in the low 60s, six-figure jobs are a dime a dozen, consulting opportunities are endless, it’s picturesque, the food is amazing, there’s tremendous diversity, and there are plenty of outdoor activities thanks to the topography. San Francisco is amazing, which is why it’s so expensive.

I’d love living in Hawaii, but it lacks a robust domestic economy. With tourism as its main industry, the economy is subject to the whims of others. Unless you are a doctor, lawyer, or entrepreneur in Honolulu, there just aren’t many six-figure jobs. You need to already be rich or have a location independent business to comfortably afford a sweet home.

Rent Luxury Example

Although spending $9,000/month ($108,000 a year) on rent sounds expensive, it’s actually good value since you need to spend roughly 303X the monthly rent (25.25X annual rent) to buy my house at market price ~$2.7M. The 100X – 150X monthly rent rule gets blown out of the water.

Even if you owned the $2.7M home outright, you’d still have to pay $33,000 a year in property taxes ($2.7M X 1.2%), $2,500 a year in insurance, and around $5,000 a year in maintenance costs. Meanwhile, your $2.7M could earn a 2.5% annual rate of return risk-free = $68,500 for a total cost of roughly $109,000 if you had no mortgage. 

But the reality is that most homebuyers only put down 20%. Let’s say a buyer put down 27% and got a $2M mortgage at a 3.5% interest rate. His annual mortgage interest cost would be $70,000 on top of $33,000 in property taxes, $2,500 in insurance, $5,000 in maintenance = $110,500. Then you must bake in the opportunity cost of not getting a 2.5% risk-free return on the $700K and you get $17,500. The total gross cost of ownership is therefore $110,500 + $17,500 = $127,500 after putting 20% down. 

Obviously, renting for “only” $108,000 a year versus owning for $127,500 a year is a financially cheaper option if you don’t include the tax benefits, not to mention the benefits of less maintenance stress. The only way the owner comes out ahead is through principal appreciation and tax deductions. The problem most people have is coming up with the 20% downpayment. Meanwhile, getting approved for a mortgage is much more difficult post financial crisis.

Buy Utility Example

Now let’s look at Midwest properties. There are actually $100,000 properties that can earn you $1,000 a month in rent. An $80,000 mortgage at 3.5% after putting down $20,000 only costs the homeowner $359.24/month or $4,310.88 a year. Add on $200 a year in property taxes, $1,000 a year in maintenance, and $500 a year in opportunity cost for not earning a 2.5% risk-free return on the $20,000 downpayment costs only $6,010/year to own compared to $12,000 a year to rent.

If you live in the Midwest, you need to be a buyer of real estate since it’s cheaper and you can cash flow immediately. Capital appreciation is slow compared to coastal city property, but that’s OK because the income generation is so much higher if you begin to accumulate rentals.

So why doesn’t everybody just buy all the Midwest property they can? It’s partly because many people in the past believed that in order to buy Midwest property, you had to live in the Midwest. It’s natural to want to be able to see and manage the property you want to own. Given half the country lives in the coastal cities, half the country focuses on accumulating coastal city real estate. But now, you can surgically buy specific Midwest property through real estate crowdfunding, which is why I’m so bullish on the space. This is financial arbitrage at its finest.

The solution for half the population living in expensive coastal cities such as SF, NYC, LA, San Diego, Boston, Washington D.C. and Honolulu is to therefore rent where you are and buy in the Midwest and South to maximize income and net worth.

What Determines Luxury And Utility?

We can qualitatively say without prejudice that coastal city living can be considered Luxury living while non-coastal city living can be considered Utility living. Who doesn’t want to be near the ocean, see the ocean, fly direct to other countries, eat a wide assortment of food, be constantly entertained, and take advantage of the highest concentration of job opportunities? There’s a reason why expensive cities are expensive.

But of course, non-coastal city people will balk at this classification given there’s so much non-coastal city living has to offer too. There’s something great to be said about a slower pace of living, much lower costs, and lots of space. We’re all biased for where we currently live or where we come from. Therefore, the easiest solution to determining what defines Luxury and Utility is to utilize objective math.

According to data compiled by Zillow, the national Median Price to Rent Ratio is around 11.44 (see dotted horizontal line below). Therefore, we can say the higher a property is valued above 11.44X annual gross rent, the more it is considered Luxury and vice versa.

If we use one standard deviation to determine the Luxury and Utility Median Price to Rent Ratio, the breakpoints are roughly 13.3X and above for Luxury and 9.6X and lower for Utility. In other words, roughly 68% of homes in America trade within 9.6X – 13.3X annual gross rent, which makes renting or owning a wash.

As you can see from the chart, San Francisco (Zillow includes Contra Costa and Alameda counties) trades at a Median Price To Rent Ratio of 20.51X, way above the 13.3X ratio I’ve determined to equal Luxury. However, my rental home trades at 26X annual gross rent, therefore, I should consider selling the property.

On the flip side, check out properties in Raymondville, Texas with a Median Price to Rent Ratio of only 5.2X. In other words, the median $60,000 house commands almost $1,000/month in rent ($60K / 5.2 = $11,538/year) . In other words, in just 5.2 years, you can have your renter pay back your entire property assuming you took out a 100% mortgage!

Raymondville, Texas clearly is considered Utility, and a savvy real estate investor should be buying Raymondville property all day long if their job market remains stable. The problem is that access to the market hasn’t really opened up yet. Not to worry though, since there are literally hundreds of other towns and cities with properties that trade below the 9.6X Utility classification ratio if you look at the RealtyShares platform.

The Optimal Investment Lifestyle Combo

Of course, real estate is a very personal situation for each individual. We live where we want to live mainly due to our families, friends, and jobs. Not everything is about money. But given this is a blog about ways to optimize our finances, a savvy real estate investor should seriously consider my advice of Renting Luxury, Buying Utility.

Here’s a scenario I’ve been pondering now that I’m in the second half of my life. I want to be closer to my parents and live it up like a boss before I die.

For the sake of dreaming big, there’s this sweet 5 bedroom, 5 bathroom, 6,400 sqft new construction home in Honolulu with a killer view asking $6.95M. Think how many sweet blog posts I can write from the pool! Let’s say the real price is $6.2M since it’s been sitting for a while. Based on a 25X Median Price to Income Ratio, this means I can rent the house for approximately $248,000 a year or $20,500 a month. $20,500 is a lot of money, but think about how much rental income $6.2M can earn in Raymondville, Texas.

First, check out this picture and short video highlighting the $6.2M property. I’m happy to throw a pool party for readers who want to stop by and hang.

If the $6.2M was deployed in Raymondville, Texas, I could theoretically earn an insane $1,192,307 a year in gross rental income since the annual gross rent to price ratio is only 5.2X. After spending $248,000 a year living in a sweet home in Hawaii, I’d still have $944,307 left over in cash flow if I followed my rule of Renting Luxury, Buying Utility.

Seriously, the last thing I want to do is own a humungous house with tons of ongoing maintenance to deal with. But renting it is a different story. Besides, I don’t have $6.2M laying around!

Here’s a shortcut to decide whether it’s better to rent than to buy. The chart shows the share of homes in each city that can be rented out for more than their monthly expenses according to Zillow’s database. Of course, you just can’t buy every single property above the rental profitability line. You must still carefully run the numbers and do your due diligence.

The opportunities are plenty to buy cash flow generating properties around the country. Specialized REITs and the rise of real estate crowdfunding companies are making this move easier today. You just need to figure out what type of real estate portfolio mix you want.

For 15 years I’ve been 100% long luxury growth markets. Now I’m shifting towards a balance of growth and income (utility) because valuations are stretched in San Francisco and I don’t have a job.

If you can remove emotion, pride, and prejudice from the equation, you should be able to maximize your lifestyle, cash flow, and net worth. Ready to BURL?

Related: A Housing Expense Guideline For Financial Independence

Real estate investors, are you following the recommendation of buying utility, renting luxury? What type of growth / income percentage mix do you have in your real estate portfolio? If you live in the Midwest or South, what are some of your reasons for not buying real estate? If you live in a coastal city, what are some of your reasons for buying real estate now after such a massive rise in price?

The post The Real Estate Investing Rule To Follow: Buy Utility, Rent Luxury appeared first on Financial Samurai.

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Posted by: John S Kiernan

EDITOR’S RATING

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There are many decisions that we all must make about retirement. One of the most perplexing relates to the types of retirement account options available, and where we should put our money first. In this article, we’ll clear the air on the 401k vs IRA debate so you can make the best financial decision possible.

For many of us, there are a lot of choices. These include a 401k, Roth 401k, Deductible IRA, Roth IRA, and a Non-deductible IRA. And that’s not even counting 403b accounts, SEP IRAs, Self-Directed IRAs, and, of course, taxable accounts.

That’s enough to make your head spin. Of course, for many of us, the best option is actually a combination of 401k, IRA, and taxable accounts. So, how do you know which combination will maximize your retirement savings?

I recently came across a post on the Bogleheads forum (which is an excellent investing forum, by the way) that addressed this very question. According to the good folks at Bogleheads (named after the founder of Vanguard, Jack Bogle), retirement investing should be placed in the following types of accounts, in the order listed:

1. 401k/403b, up to the company match

2. Max out Roth IRA

3. Max out 401k/403b

4. Taxable Investing

While your situation may be unique, I think the above priority ranking is, as a general rule, quite sound. Let’s look at the rationale behind this list.

1. 401k/403b Up to Company Match

When your employer matches some of your contributions, it’s critical to take full advantage of the match. Otherwise, you’re just turning away free money.

The value of the match makes this the ideal first place to stash your retirement savings. The average company seems to offer around 3% in matched contributions. There are, however, companies that offer as much as 50% or even 100%, up to a specified limit.

Be sure to check with your employer to see what percentage they match, what the maximum is, and if there are any other stipulations.

Let’s say you’re the type of person to front-load your contributions early in the year. If your employer matches up to a certain limit each month, you could still leave money on the table. You may need to switch up your contribution schedule and spread it throughout the year, in order to get every penny that you can off this free money.

Also, pay attention to whether your employer’s matched contributions require you to be vested or not. If you stay with the company for your entire career, this isn’t an issue. However, if you decide to leave your job at some point, you may or may not be able to take your entire retirement account with you–which could be a very costly mistake.

2. Roth IRA

Once you’re saving enough in a 401k to get the company match, additional retirement savings should go to a Roth IRA, according to the Bogleheads. While I think arguments to the contrary could be made here, I like this approach for two reasons.

First, most people generally assume that taxes will go up in the future. So, unless you are in the top brackets today (tax brackets) or have reason to believe that you will be in a lower bracket at retirement, this is sound advice.

Many recommend paying the taxes on the income now, which is exactly what you do when you contribute to a Roth IRA with after-tax earnings. Then, you can sit back and enjoy both tax-free growth and tax-free retirement distributions later.

With retirement savings in both a 401k and Roth IRA, you have some investments that are tax-deferred and some that grow tax-free. This is a nice way to hedge your bets when it comes to future taxes.

Second, with any IRA, you can choose where to open the account. Many 401k plans charge extremely high fees and have limited investment options. For those who like to keep investing simple, Betterment is an excellent option for an IRA (you can read my review here).

If you like to trade, I think Scottrade is a great choice because of low fees and physical branches just about everywhere, but there are many brokers that offer IRA accounts.

Keep in mind that your income may disqualify you from opening a Roth IRA. You can check out the Roth IRA limits here.

3. Max Out 401k/403b

Once you’ve maxed out your Roth IRA, additional savings can go toward topping off your 401k. Even though you won’t be benefiting from additional employer contributions, the tax benefits still make this an excellent retirement vehicle to focus your efforts on.

Keep in mind the limits on contributions, which can change from year to year. For 2017, the contribution limit is still set at $18,000 (we don’t have 2018 numbers just yet, but will update our 401k contribution limits page when they are available). The catch-up contribution limit for those aged 50 and over remains unchanged at $6,000, bringing the total allowed contribution to $24,000 for them.

4. Taxable Accounts

Unless you qualify for a SEP IRA, the next and last stop is to put your savings in a taxable account.

For this, you can open an account with a mutual fund family like Vanguard or Fidelity. You could also open a brokerage account or use a service like Betterment.

Roth IRA vs Traditional IRA

You may be wondering what the difference is between a Roth and a traditional IRA, and why we suggest contributing to the former first.

A traditional IRA and a Roth both have the same contribution limits ($5,500, as mentioned above, unless you’re over 50). You also have more than a year to contribute to your IRA — instead of December 31 being the last day you can put money in your IRA for the 2017 year, you can actually continue contributing all the way until April 15 of the following year.

However, that’s pretty much where the similarities stop.

A Roth IRA, as we talked about, is built with after-tax earnings. Because of this, your money will grow tax-free. When you take contributions in retirement, that money can be withdrawn tax-free, as well. (This is why a Roth is a smart choice if you foresee being in a higher tax bracket in the future than you are in now.)

The Roth also has those income limits we talked about, in order to qualify. However, you are not required to begin taking distributions from your Roth at a specific age, and you can also withdraw your contributions at any time before retirement without penalty.

So, what about a traditional IRA? Well, with this account, you get the benefits now.

All of your contributions to a traditional IRA will be made with pre-tax dollars. Contributions are tax-deductible and earnings grow tax-deferred. However, when you go to withdraw in your later years, you will be taxed at then-current income tax rates.

If you want to withdraw funds from your traditional IRA before reaching 59 ½ years of age, you’ll likely be subject to a 10% early distribution penalty, in addition to taxes. Once you hit age 70 ½, you have no choice but to begin taking money from the account. These are called Required Minimum Distributions (or RMDs).

401k vs IRA

So then, what’s the big difference between a 401k and an IRA?

First of all, there’s the issue of contribution limits. There’s a big discrepancy between what you can put away in an IRA ($5,500 / $6,500) and what you can put into a 401k ($18,000 / $24,000).

By definition, 401k plans are established and sponsored through your employer directly. The contributions made are deferred directly from your paycheck, without you ever touching the money yourself. Roth IRAs, however, are between an individual and an investment firm. This means that your employer will not have a role in your Roth IRA and has no opportunity to match your contributions.

An IRA has many more investment options than a 401k. In fact, your options are almost endless with an IRA, whereas the average 401k has about 20 fund options . Also, keep in mind that 401k management fees are often much higher than those of IRAs.

When you leave your employer’s company, you cannot continue to contribute to their 401k. You can choose to leave it alone or roll it over into an IRA. An IRA, on the other hand, is yours to contribute to, regardless of who employs you.

There are some similarities, though. For instance, you can make extended contributions to both your 401k and your IRA, up to the tax-filing deadline the following spring. This means that for 2017, you can put money in these retirement accounts all the way up to April 15, 2018, and it will still count toward your 2017 contribution limit.

Finding Your Own Perfect Plan

As mentioned above, every situation is different. The above priority list, while a great plan for many investors, may not be ideal for everybody. Take into account your own employer’s offerings, your ability to contribute to retirement savings, and whether or not your income qualifies you for things like a Roth IRA.

You may need to tweak the list above to match your own situation. At the end of the day, though, I think it’s a very sound way to approach retirement investing.

Have you approached retirement savings in a similar order? How has it worked for you and would you recommend the same to others? Sound off below.

Topics: Retirement Planning

The post 401k vs. IRA: Where Should You Save for Retirement? appeared first on The Dough Roller.

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Are you looking for a way to make extra income, maybe by providing an RV rental? According to the Recreational Vehicle Industry Association, over 8.9 million households own an RV, and this number only continues to increase.

Many RVs sit unused in storage lots, driveways, and backyards, so why not try to make a little money while you’re not using your RV?

And, who doesn’t want to earn a little extra money?

As you know, I talk a lot about how to make extra money here on Making Sense of Cents because I believe that earning extra income can completely change your life. By learning about different ways to make extra money, you can stop living paycheck to paycheck, you can pay off your debt, and more.

Due to the fact that I learned how to make extra money, I was able to pay off $38,000 in student loans within 7 months, I was able to leave my day job in order to pursue my passion, travel full-time, and more!

Whether you just want to make more money, you have goals that you want to reach (maybe you finally want to go on your dream vacation), you have big expenses coming up, or something else, finding ways to make extra money can really help you financially.

So, if you already have an RV and you know when you won’t be using it, it’s possible that you can make extra money by doing an RV share program.

You may be able to earn some extra money by renting it out, and it may help cover some of your RV ownership costs, such as maintenance, storage, etc.

RVshare is helping travelers save money by cutting out the middleman through renting RVs directly from owners.

Think of it as Airbnb for RVs (RV Airbnb!). My sister actually has experience doing an RV share by renting two travel trailers, and she loved it! It seems like a great side hustle to do if you already have an RV. If you're interested in enjoying an RV rental for yourself, you can check out possible RV rentals for you and your family here.

But, if you already have an RV, you may be able to rent out your RV for extra money!

While we love RVing full-time, I know that many people just use their RVs for short, fun vacations. Or, maybe you are a full-time RVer but you know that there's a weekend or month coming up where you won't be using your RV.

By listing your RV rental online with RVshare, you can earn between $5,000 and $30,000 a year in extra income. RVshare also securely handles all payments and releases funds to your bank account one business day after the start of each rental. So, instead of letting your RV sit idle in your driveway or storage unit, why not make some extra money with it?

RVing is becoming more and more popular, and the RV share business is definitely booming!

If you are thinking that renting out your RV sounds a little risky, be assured that RVshare makes renting your RV easier, as you and your renters are provided with liability, collision, and comprehensive insurance coverage with your RV rental.

 

How much does the average RV owner make by renting their RV?

The average RV owner earns more than $10,000 per year in extra income by renting out their RV online to strangers. Some RV owners are earning more than $30,000 a year, and I even read an article where someone said they were earning over $80,000 per year by providing an RV share service.

The exact amount you can earn with your RV rental varies because of many factors, such as the type of RV and where it is located.

With RVshare, you have complete control over your pricing when you create your RV listing.

To determine what you price your RV rental at, it is recommended that you look at comparable RVs in your area and price your RV similarly. It is as simple as seeing what others are pricing theirs for and trying to find a number that makes sense for you.

Here are some general pricings from RVshare:

• Travel Trailers $75 to $175 per day
• Class C Motorhomes $125 to $250 per day
• Class A Motorhomes $150 to $300+ per day

That's a lot more than I thought RV rentals would make!

 

What kind of RVs can you rent on RVshare?

No matter what type of RV you have, you can probably rent it out on RVshare. Different types include:

• Class A Motorhome
• Class C Motorhome
• Class B Motorhome
• Travel Trailer
• Fifth Wheel
• Toy Hauler
• PopUp Trailer
• Truck Camper

As you can see, it's not limited to just one or two types of rentals.

RVshare also offers these great benefits:

• Every rental booked through RVshare is provided with 24/7 roadside assistance, including towing at no additional cost.
• Every rental is provided with liability, collision, and comprehensive insurance coverage.

Now, what happens if someone damages your RV while they are renting it? According to RVshare:

“Even though RVshare renters are characteristically very respectful and treat the RV just like it was their own, damage can still occur. Once your RV is approved for RVshare rental insurance, you’re covered by two protective mechanisms of the RVshare platform.”

 

How much does it cost to rent out your RV online?

RVshare only makes money when you make money. There is no fee to list your RV share on their website.

RVshare only makes money after a booking has been successfully made through their website. This is a small commission that comes from each booking to help cover the cost of marketing your listing, providing free 24/7 roadside assistance, renter and owner support, their secure payment processing, and all the other benefits that RVshare provides. The rental commission is as low as 15%.

 

So, what's the next step to making money with an RV share?

Making RV rental income on a website like RVshare is an easy process.

1. Click here to head to RVshare and sign up. You can set your price and your availability.
2. Book rentals with customers on the website. You can accept or reject any rentals that are booked for your RV – it's all up to you.
3. The person renting your RV comes to you, and when they are done, they return it to you.
4. After someone has booked and used your RV share, you receive your payment.

Note: Before doing an RV share, I do recommend contacting your RV insurance company and making sure that they allow you to rent your RV to strangers. You just want to make sure before you proceed.

 

Are you interested in an RV rental for yourself?

If you don’t have an RV to rent and are interested in seeing what the RV life is like, you may be interested in renting an RV for yourself.

There are no sales pitches or complicated rental agreements to deal with when renting an RV from RVshare. In fact, details like daily rates and availability are between you and the owner of the RV you're interested in.

You also don't have to drive to an RV rental agency to browse available RVs and deal with sales associates. Start your search for a perfect RV share from the comfort of your own home.

Plus, I've seen how much some of those RV rental companies charge, and RVshare is a great place to check for affordable RV rentals.

RVshare offers a peer-to-peer platform (again, think RV Airbnb!) that makes it easy to find the perfect RV for spending some quality time with friends or family, while at the same time, staying within a budget that you are comfortable with.

There are already thousands of RV rental listings on their website, so I'm sure you can easily find one in your area!

If you’ve been wanting to rent an RV, click on this link here.

What do you think of RV rentals? Would you do a motorhome rental from a website like RVshare?

The post How To Make Extra Money By Renting Out Your RV appeared first on Making Sense Of Cents.

from Making Sense Of Cents


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Posted by: Richie Bernardo

1. Main Findings
2. Ask the Experts
3. Methodology

Main Findings

Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/20496/geochart.html" width="556" height="347" frameBorder="0" scrolling="no"></iframe> <div style="width:556px;font-size:12px;color:#888;">Source: <a href="http://ift.tt/2yH8QcL;  

Overall Rank	State	Total Score	‘Spending & Debt’ Rank	‘WalletHub Financial Literacy’ Rank	‘Credit’ Rank	‘Saving’ Rank
50	Arkansas	36.03	42	47	43	49
51	Missouri	35.48	32	51	30	37

 

Ask the Experts

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• Vicki Jobst Assistant Professor in the Undergraduate Business Department at Benedictine University
• Pam Smith Presidential Teaching Professor and KPMG Professor of Accountancy at Northern Illinois University
• Sandra Poirier Professor in the College of Behavioral and Health Sciences at Middle Tennessee State University
• Sean Stein Smith Assistant Professor in the Department of Economics and Business at Lehman College CUNY
• Cliff A. Robb Associate Professor of Consumer Science and Faculty Director of Consumer Finance & Financial Planning in the School of Human Ecology at the University of Wisconsin-Madison
• D'Arcy Becker Chair and Professor in the Department of Accounting at the University of Wisconsin Whitewater
• Wayne Kelly Chair & Professor of Finance, Real Estate and Business Law at the University of Southern Mississippi

Vicki Jobst Assistant Professor in the Undergraduate Business Department at Benedictine University What tips do you have for consumers looking to make a budget and stick to it? Write down everything you spend in a week, day, or month, and compare it to your budget for that period. You will only have to do this for a short time before you realize what things you are wasting your money on, and how you can improve your spending. What is the biggest obstacle for consumers trying to stay on budget? The biggest obstacle is that consumers do not realize what they are spending their money on. When they become aware, they can control their spending habits. What tips do you have for consumers to get out of debt and stay debt free? Figure out which credit card you can pay off the soonest, and after you do, use that extra money to pay off the next card. Stay debt-free by putting aside an amount from every paycheck (through direct deposit) in a savings account for emergencies. That way, you will not have to borrow when an unexpected purchase arises. How should parents teach children about the importance of financial responsibility? Parents should give their children a chance to make spending choices on their own, but also be taught to put aside money for savings. Parents should stress that the more money they have, the more choices they can make that will lead to their accomplishment of personal goals. Pam Smith Presidential Teaching Professor and KPMG Professor of Accountancy at Northern Illinois University What tips do you have for consumers looking to make a budget and stick to it? A budget is nothing more than a plan. Come up with a plan that makes sense for you and you can consistently implement. For example, allow yourself only one meal out a week, or one Starbucks latte a week, or plan to save $50 a week. Often it is the spending on the “little” things that add up and erode our earnings. The big-ticket items also impact our savings, but those purchases do not occur as often. Big purchases should be thought of as a “need” or a “want.” Do I need a new car, or just want a new car? If you can answer those questions on the big-ticket items, it will help temper unnecessary purchases. Set up a plan for weekly purchases, you would be amazed how easily $100 of “pocket cash” can disappear in one week’s time. What is the biggest obstacle for consumers trying to stay on budget? The biggest obstacle is usually impulse purchases. That is why a plan (or budget) is beneficial -- it will reduce impulse purchases. The best way to stay on a budget is to keep your long-term goal in mind and remind yourself of why you want this goal. There is a saying that “discipline is remembering what you want.” Remembering your long-term goals will help eliminate impulse purchases. What tips do you have for consumers to get out of debt and stay debt free? Same advice as above. First, don’t live beyond your means. Second, develop a budget and stick with it. Third, keep reminding yourself of the long-term goal, it will help keep you on track. How should parents teach children about the importance of financial responsibility? Parents have a huge influence over their children’s perception of financial responsibility. I may be a bit old-fashioned, but I believe that kids should have a “job” where they learn the value of earning funds to support their goals. Of course, the job should be age-appropriate. Understanding that when they earn money, they then have the responsibility of deciding how to spend (and save) their earnings. For example, if you child gets $10 a week for their chores, they should save 20% and decide how, when, where and why to spend the rest. Help your children understand choices that have short-term and long-term impacts on their earnings. Maybe they want to save for a month for something “bigger,” or maybe they want to spend the earnings each week. Understanding the trade-off of immediate gratification versus long-term goals is an important lesson and will serve them as they grow into adulthood. Sandra Poirier Professor in the College of Behavioral and Health Sciences at Middle Tennessee State University What tips do I have for consumers looking to make a budget and stick to it? As a couple, create a budget that is realistic and agreed upon by both individuals. The final budget should reflect your short- and long-term goals. Celebrate together when budget milestones have been achieved. Base your budget on your basic needs, and not your wants. You can incorporate into your budget how you will be saving over time for some of your wants. What is the biggest obstacle for consumers trying to stay on a budget? Unplanned expenditures, e.g., illness, extreme weather damage to your property, death in the immediate family, high automobile repairs, sudden change in a marital relationship are just a few. Another major obstacle is focusing mainly on the present, and not visualizing what your future could be if you were more self-disciplined in spending habits. What tips do you have for consumers to get out of debt and staying debt free?

• Don’t spend more than your take-home pay.

• Know your debt by tracking on a spreadsheet every cent you spend in an entire day, week, and month. This will develop an awareness after one month of how you spend your take-home pay.

• Limit the number of credit cards you use each month.

• Pay your credit card balances in full every month whenever possible, and always pay your higher-interest credit card bills first.

How should parents teach children about the importance of financial responsibility? Begin teaching children about money at a young age. Generally, at four or five years of age. Young children can begin to learn some basic concepts of saving, needs and wants, making choices, etc. Provide a piggy bank and enthusiasm for each penny dropped into the bank. At this young age, children can also participate in helping with the family chores. Allow them to work with the parents to set-up a weekly schedule and what chores each child will be responsible for during the week. Assign a designated amount to be paid if all chores are completed in a timely manner. Gradually, as the child gets older, additional responsibilities can be added to the list of chores, with an appropriate increase in their allowance. Sean Stein Smith Assistant Professor in the Department of Economics and Business at Lehman College CUNY What tips do you have for consumers looking to make a budget and stick to it? The top two tips I have for consumers seeking to put together a budget and stick to it would be as follows. First, find a budget buddy, which is a person that is on the same financial path as you are. Having this moral support will help you stick to your goals, and add some extra motivation when you encounter the inevitable bumps in the road. Second, be sure to set different goals for different stages of your financial life. Short-, medium-, and long-term goals will help focus your financial planning and budgeting process. What is the biggest obstacle for consumers trying to stay on budget? A big obstacle that I have seen when speaking with clients and other individuals is that many people just do not know how to start. Writing down your goals has been proven to help increase your odds of achieving them -- your budget process is no different. What tips do you have for consumers to get out of debt and stay debt free? The suggestions that I most often provide to consumers seeking to reduce their debt levels can be summarized into the following two buckets. Choosing your preferred method for paying down debt, whether it focuses on higher-interest debt first, your largest debt burden first, or some other method of debt repayment, is the key to paying off your debt. Another item I usually recommend that consumers leverage technology to automate their debt repayment as much as possible -- setting up a separate savings account to use for debt repayment is a great way to get this process started. Cliff A. Robb Associate Professor of Consumer Science and Faculty Director of Consumer Finance & Financial Planning in the School of Human Ecology at the University of Wisconsin-Madison What tips do you have for consumers looking to make a budget and stick to it? Often, I recommend people start by engaging in a simple plan of tracking their expenses for a period of a few months. This is critical for helping people to understand their current behaviors, and to identify trouble areas that might need attention going forward. Breaking expenses into categories of importance is another important step, and considering which spending categories have flexibility in the short run can be especially helpful. Over the long run, all expenses are variable to an extent, so individuals should really consider how each spending category influences their lifestyle (positive or negative). Everything should be on the table, and by taking this sort of start-from-scratch approach, households can be more honest about their needs, wants, and goals for their money. Establishing an initial budget is really just a small step towards effective budgeting, as it is sticking with the budget that can be a challenge. What is the biggest obstacle for consumers trying to stay on budget? In a lot of cases, the biggest obstacle to implementing a new budget or sticking to a spending plan is the fact that the plan/budget is new. It is always difficult to establish new habits as it takes a lot of concentration, dedication, and practice over many months to really solidify a behavior. This is further complicated by the fact that many consumers do not find it easy to track all of their expenses on a daily basis, given already hectic schedules or poor existing spending habits. I think that it is important for people to be realistic with themselves from the start, acknowledging that they likely will not be perfect from day one. The point of a budget is not to always stick to it perfectly, but rather to create a path for your resources that is reasonable and beneficial for the household or individual. Anyone who is starting out will find this extremely difficult, so it is good to have a positive attitude and be willing to give yourself grace when you falter. Over time, with practice, one will find that the process becomes more manageable. What tips do you have for consumers to get out of debt and stay debt free? Getting out of debt can be tricky if individuals have accumulated significant balances and lack adequate liquidity to handle large, unexpected expenses that are pretty much the norm (that is, they are unexpected only in the sense that their exact timing is uncertain). I think that there are several standard recommendations out there that are good, including focusing on paying off debt with the highest interest rate first. That being said, I do think that there is also something to be said for the psychological benefits of a win. In some cases, it might be reasonable to take on a smaller debt balance simply due to the fact that it can be retired more easily. Seeing a line of debt actually go away can be very freeing emotionally, and may provide the extra impetus needed to stick with a tough spending plan geared towards debt reduction. I am not a huge proponent of closing cards or accounts once they are paid off, simply due to the fact that the existing available credit can be helpful for your credit history and score. I do think it is wise to consider whether the credit is needed, what it would be used for, and how one might consider making it more difficult to access in the future. How should parents teach children about the importance of financial responsibility? From a modeling perspective, parents should be proactive. I believe that parents need to not only formally discuss and explain family financial practices, but also, they need to work hard to demonstrate behaviors that support good practice. Much of what children learn about finances comes from observations of parental behavior. So, it is critical that parents think about effective modeling. Even in households where parents do not believe that they are teaching anything to their children, classes are (informally) in session. Parents have to take responsibility for their own financial behavior, and helping their children to understand the ins and outs of financial management can be a powerful lesson. In some cases, parents may feel insecure in their own practices, and it is very reasonable to have personal doubts in an area like personal finances, where so many Americans seem to feel out of their depth. In that case, I would encourage parents to be proactive knowledge seekers, and show their children how to be thoughtful about their sending, saving, and planning decisions. Ask questions and do not be afraid to admit when you are not sure of something. D'Arcy Becker Chair and Professor in the Department of Accounting at the University of Wisconsin Whitewater What tips do you have for consumers looking to make a budget and stick to it?

• Don't start by making a budget. Start by tracking how you spend your money right now. Keep track for 2 or 3 months. Where does your money get spent right now?

• Then decide if you have any longer-term goals, like buying a house, moving into a better apartment, or getting a different car -- and how fast you'd like to get there. For example, you may want to save $10,000 toward a new car, and achieve that over 2 years.

• Next, decide what current spending can be reduced to help work toward that longer goal. In my example, you would have to reduce other spending by $416/month. For most people, that would be really burdensome. This helps you adjust that goal in mentioned above to something realistic. If you think you could save $210 a month in other spending -- you'll have $5,000 after 2 years. Maybe that is enough to help buy that new car.

• Write down your new spending plan. That's your target. A budget is a plan, not a set of limits. Be sure to mark every main cost in the budget as “must pay” or “choice.” It really helps to identify the money you're spending because you “choose” to pay it. Rent is “must pay,” and coffee is “choice.” Buying lunch is “choice.” Ordering pizza is “choice.” If you have credit card debt, your plan must include some debt repayment beyond the minimum payment every month as a “must pay.”

• Keep track of all of your spending and compare what you spend with your plan every 2 or 3 months. Do not worry about the budget every day. Stuff will happen each month that isn't in the plan -- when the amount seems like a lot, get the budget out and look at where you might cut back this month to cover that unexpected cost. Since your income in the plan (budget) is probably a fixed amount, don't just let those unexpected costs lead to credit card debt.

• Think about adjusting your spending plan (budget) every 6 months or so if your spending and the budget are really far apart. Stats show that just tracking your spending introduces a form of financial responsibility -- same idea as tracking the food you eat helping you eat less candy.

What is the biggest obstacle for consumers trying to stay on budget?

• They look at it as a huge change from what they are doing, rather than an evolving process depending on what's currently going on in their lives.

• They blow the budget on special occasions, like their kid's birthday or Christmas, and then wind up incurring more debt.

• They think only about the spending side of the budget, when in reality, for most people, getting a better paying job is truly the best route over time. Think about how to get paid more -- if you are passing up weekends or evening shifts in favor of weekday work, try one weekend day a month (if it pays more). Arrange day care shifts for that day in advance, and fit it into your life. Or think about something you could do if you had more training or education. Thinking of your current income as all you're ever going to make is hard.

What tips do you have for consumers to get out of debt and stay debt free? Pay off credit card debt using a plan to pay more than the minimum amount monthly. I don't agree that people should be debt-free. You cannot get ahead in life by paying cash for everything. Buy a car one time (at a reasonable rate) -- making those payments build your credit up, so you can eventually buy something bigger. You have to participate in the banking system to build credit. How should parents teach children about the importance of financial responsibility?

• Talk about how much things cost when the kids are asking for them. Talking about money in the abstract doesn't work -- it has to be at the time, and age-appropriate.

• If a 5-8-year-old wants lots of stuff, you should agree on how many you're willing to buy (let's say, in a month). Young kids usually don't understand money. So, you might agree on one toy on the first Saturday of the month. But then stick to it. If it isn't toy-buying day, the answer has to be “no.” And no allowance.

• Kids 9-12 will begin to understand the abstract idea of money. They are too young to control money themselves, so still no allowance. But you can have a dollar amount you will spend to get them things they want. Examples are toys or movies, or pocket spending money on a specific occasion, like going with their friends to the water park.

• Kids 13 and up should work for you for money you provide to them. And keep the amounts low. You usually are better off continuing to pay for their clothes, etc. If you give them an allowance, they may buy a $100 T-shirt. If you go clothes shopping with them, those are a lot less likely to come home. Once they earn the money, make sure you have them open a bank account and use it. Teach them to use an ATM, write a check, look at their bank statements. Eventually, when they have jobs outside your home, they can start to make (and manage) their own budgets.

• “Free money” kids receive as gifts should not rest in the hands of the kid. You might buy them Amazon gift cards they can spend, for example. Most kids will waste this money -- so agree with them when they receive it how much is “mad money” (spendable), how much should be saved, and how much should go to a charity or charitable purpose. Even 5-year-olds can grasp these 3 types of spending.

Wayne Kelly Chair & Professor of Finance, Real Estate and Business Law at the University of Southern Mississippi What tips do you have for consumers looking to make a budget and stick to it? Tips for consumers on sticking to a budget -- I have one. Make a savings commitment one of the high-priority items. In other words, pay yourself first (or nearly first). When you make that commitment, it’s harder to stiff yourself than a lower priority. That will let the consumer amass a war chest, so to speak, for retirement, large ticket items, etc. for the future. If you only save leftover money, there will never be leftover money. What is the biggest obstacle for consumers trying to stay on budget? Biggest obstacles to consumers -- from my observation, it’s little temptations. A few dollars here, a few dollars there adds up, but that’s not on the mind when nickel-and-dime spending minute to minute has cash trickling away on trinkets, eating out, etc. As a footnote, it would be a great budgetary exercise to record all the nickel-and-dime discretionary spending, and see how the dollars matched the priorities at the end of a week or month. What tips do you have for consumers to get out of debt and stay debt free? It isn’t clear to me that being debt free should be everyone’s goal all the time. It is one of mine in principle, but leverage can be a good thing, too, depending on how it’s used. A super popular financial advice guru preaches hard against debt, particularly credit card debt. I think more individuals should heed the principle to guide the practice, but not treat it like it’s a law. The best tactic I can think of when it comes to handling the debt that seems to be most problematic is to not carry a credit card balance. If you have a card and can’t make that a habit, then you should hide the card from yourself, except for emergencies. If you close the account, part of your credit history goes away, and that can cost points on your credit score. How should parents teach children about the importance of financial responsibility? School-age kids are smart enough to be involved in spending decisions that affect them, and can figure out quickly that Mom’s money is more easily spent than Kid’s money. Involve them in spending that they understand, and advance their involvement with age and the complexities that brings in their consumption. Methodology Spending & Debt – Total Points: 40

 

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