Month: September 2021

The history of prepaid debit cards has been spotty. There were many celebrity-endorsed cards that charged high fees. However, there are several benefits provided by prepaid debit cards, and their popularity has never been greater. Consider that their use has grown from less than $1 billion in 2003 to $100 billion in 2014. The use of these cards is expected to grow even further.

Many younger consumers lack the credit history and credit score to qualify for a credit card. Other consumers enjoy the unique benefits provided by these interesting cards.

Consider these benefits of pre-paid debit cards:

1. 1. 1. It’s an effective tool to control your spending. You might be able to overdraft your checking account numerous times each month, but most pre-paid debit cards will stop you once your balance runs dry. When the money is gone, it’s gone. Knowing that you have a hard stop will keep your focus on your balance and spending.
         
         
      2. Overdraft fees are non-existent. You can save yourself a lot of money by avoiding overdraft fees. Even a $1 overdraft can turn into a $45 fee. There’s no reason to worry about racking up overdraft fees with your prepaid debit card.
         
         
      3. There are no credit checks. Do you have bad credit? No problem. Since you can’t owe the debit card company any money, no one cares if your credit score has seen better days. You’re spending your own money, and the debit card company takes its fees out at the beginning.
         • • They’ve already made their money from you when you purchase or reload the card.
             
             
      4. Your credit isn’t affected. This can be very important in certain situations. If you need to make a large purchase before applying for a loan, using a credit card could significantly affect your credit score.
         • • A large purchase on a prepaid debit card won’t show up on your credit report and has no effect on your credit score.
           • Using a credit card for a large purchase, like an appliance, could result in the rejection of a loan application.
             
             
      5. You have more privacy, to a point. It’s possible to purchase a prepaid debit card up to $250 and use it without identifying yourself. However, you’ll have to provide your identity when you reload the card.
         
         
      6. You’re able to make ATM withdrawals. You’ll pay a fee, but you’re able to access the funds in your account at most ATMs. This is helpful if a store doesn’t accept credit cards.
         
         
      7. You receive many of the same protections available to credit card holders. Prepaid debit cards receive the same protections as a credit card on the same branded network. Therefore, your Visa prepaid debit card is just as safe as regular Visa credit card.
         
         
      8. Direct deposit is an option. It’s possible to have part of your paycheck directly deposited to your prepaid debit card. Consider using this feature to pay for all of your groceries, gas, clothing, and entertainment each month. You’ll be more careful with your spending, and the money will be available each month without any work on your part.

The primary disadvantage of these cards is the fees. Spend some time shopping for the best deal, and this disadvantage is minimal.

Prepaid debit cards have many advantages, but aren’t a solution to every circumstance. Prepaid debit cards do have a few unique benefits that aren’t found in other payment options. If you’re looking for a unique way to control your spending, or your credit score is less than great, a prepaid debit card can be an effective option.

Social Security benefits could become a main source of income once you retire. It is important to understand how these benefits work, figure out the best time to file, and know how much you’ll receive on a monthly basis.

Who qualifies for Social Security benefits?

Qualification is based on a credit system. You need to earn a total of 40 credits during your life. You can earn up to 4 credits a year and one credit is awarded every time you meet a certain earning requirement. This amount varies from one year to the next. You will become eligible for Social Security benefits if you met earning requirements for a total of 10 years.

How are benefits calculated?

Only the 35 years during which you earned the most are considered. An average is then calculated to figure out what a typical income was during these 35 years. An index is used to adjust this income to account for inflation.

If you wait until full retirement age to file for benefits, you’ll receive the full amount of your benefits based on these 35 years.

What is full retirement age?

Your full retirement age depends on your birth date. For those born from 1943 to 1954, the full retirement age is 66. The full retirement age creeps upward until those born in 1960 or later can receive full benefits at age 67.

It’s important to note your full retirement age, since waiting only a couple of months before you file for benefits could make a difference in how much you receive.

Can you get benefits before you reach full retirement age?

You can start collecting your Social Security benefits once you reach the age of 62, but you will only get a portion of what your benefits would be if you waited until you reached age 66 or 67.

If you decide to file early, your payments from Social Security are reduced a bit for each year before your full retirement age.

Can you delay receiving benefits?

You can choose when you start receiving Social Security benefits. Your benefits will continue to increase past your full retirement age if you do not file right away. They will increase by 8% for each year that you wait.

How can you file for Social Security benefits?

All you have to do is visit the official Social Security website at ssa.gov and create an account. The filing process is pretty straightforward, but it is recommended to start the application process at least three months in advance.

You’ll probably have to upload some documents such as your tax returns, marriage certificate, and birth certificate. Preparing all these documents in advance will definitely speed up the approval process.

Can you find out how much your benefits will be in advance?

You can create an account on ssa.gov even if you don’t plan on applying for benefits at the moment. This will give you access to helpful information such as the amount of your benefits.

In the end, the benefits you’ll receive depend on how much money you earned during your life, when you file for benefits, and how long you live.

For an average life expectancy, you’ll end up receiving about the same total benefits regardless of when you file. You can receive less money for a longer period of time, or more money for a shorter period of time. You get to decide which works best for you.

Too many people have too much free time right now. Considering how many people regularly complain about not having enough free time, you wouldn’t think that it’s possible to have too much. However, many of us find that a life without time limits is more challenging than we ever thought it could be.

Free time is most enjoyable when it’s consumed in finite quantities, much like fudge.

But an excess of free time is actually a great opportunity!

Discover what you can do with that time:

1. 1. 1. Appreciate it. It’s a blessing to have a lot of free time. Remind yourself of all those times you’ve wished for more free time. You might have unlimited free time right now. Appreciate it and be determined to make the most of it. You can accomplish a lot right now if you take full advantage of the situation.
         
         
      2. Realize that it won’t last. Understanding that this period won’t last forever might be a relief. It’s also a wakeup call to get busy and use this unusual situation to the best of your ability.
         
         
      3. Ask yourself how the time could best be spent. Literally ask yourself, “What is the best way for me to use all of this free time?” Ask yourself that question periodically throughout the day and take note of your answers.
         
         
      4. Indulge your interests. Now is the time to explore and do those things you’ve always wanted to do. Learn to ride a motorcycle or play the piano. Write a novel. Put a pool in your backyard. Learn about the birds in your part of the world. Learn woodworking. Grow some roses.
         
         
      5. Focus on self-care. Having too much time on your hands makes it easy to become lazy. Why take a shower if you’re not going anywhere for several days? However, it’s important to stay on top of your self-care. This means getting enough sleep, bathing, exercising, eating properly, and being kind to yourself.
         
         
      6. Do that thing that you always put off. Everyone has that thing they never seem to get around to doing. Maybe the house needs new gutters. Or the attic needs to be cleaned out. Or maybe you’ve sworn for years that you were going to train for a marathon. Now is your opportunity!
         
         
      7. Make a plan each day. Decide what you want to accomplish today and stick to your schedule. Give yourself a few hours at the end of the day to do as you please but be productive with the bulk of your day. You’ll feel better, accomplish more, and avoid feeling frustrated with yourself.

If you’re overwhelmed with the amount of free time you have available to you, remember that it won’t last forever. Before long, you’ll be back to wishing you had some of that free time back.

Take advantage of this unique situation. You’re unlikely to have a similar amount of free time until you’re retired. At that point, you might not be physically or intellectually capable of doing many of the things you can do now.

Seize the day!

Banks have nothing good to say about credit unions. Credit unions don’t have a lot of appreciation for banks. Their customers of one entity believe the customers of the other are delusional. Which is better? It depends on your location and your needs. Banks and credit unions each have advantages over the other.

1. 1. 1. Credit unions are not-for-profit. While banks exist for the purpose of earning as much money as possible, credit unions exist to provide a service to their members. Excess income can be used to provide lower fees and lower interest rates on loans.
         
         
      2. Credit unions are technologically challenged. Credit unions are often a few years behind banks when it comes to online banking and other online tools. Depending on how you like to bank, this might be an issue.
         • • • Thoroughly evaluate the online banking tools before joining a credit union. If online banking is important, a traditional bank could be a better option.
               
               
      3. Credit unions can be harder to join. Some unions only service a particular population, such as teachers or employees of a particular company. There are credit unions open to the general population, but they’re less common. It might require a little work to find a local credit union that will accept you as a member.
         
         
      4. Credit unions pay higher interest rates on deposits. Sometimes as much as 10 times more. Online banks often provide rates that are competitive with credit unions.
         
         
      5. Banks spend much more on advertising. Many banking customers are slow to switch to credit unions because of the tremendous advertising reach of big banks. Keep in mind that the banking customers are ultimately paying for those advertising costs. You’ll have to find your local credit unions since they’re unlikely to find you.
         
         
      6. Banks offer more options. Credit unions offer many of the same products as banks, but with fewer options overall. A credit union might only offer a couple of checking accounts, one savings account, and a couple of credit cards. A bank often has many more options available and can potentially satisfy your need better.
         • • • Do you have simple or complex banking needs?
               
               
      7. Banks charge higher interest on credit cards and other loan products. The difference is usually 1-2%. This might not sound like much, but it can be significant when dealing with a large loan over many years.
         
      8. Credit unions are more focused on service. While banks want to maximize profit, even at the expense of customer satisfaction, credit unions are owned by the members and place a higher value on service. Members vote on how a credit union handles the day to day activities.
         • • • Credit union members consistently report a higher level of satisfaction than bank customers do.
               
               
      9. Banks typically have more locations. Some banks seem to have a branch on every corner. Credit unions often only have a few, or even just one, location. Depending on where you live relative to the local branch, this can be a deal-breaker.

Banks offer more locations, more ATMs, more products, and a higher level of technology. Credit unions pay more interest on deposits, charge less interest on loans, and charge lower fees at the expense of convenience. Which is more important to you? By answering that question, you’ll find the right answer for your situation.

You might be able to have the best of both worlds by having an account with both a bank and a credit union. You’re not limited to just one or the other.

Is the IRS on your gift list? You might not think so, but if you don’t take all the tax deductions that you’re entitled to, then you’re just giving your money away. There are many tax deductions and credits that are not well known.

How much money are you giving to the IRS that could be happily filling your wallet instead?

Consider these commonly missed tax deductions:

1. 1. 1. Non-cash donations to charities. We all know to deduct the checks we write to our favorite charity, but most of us forget to deduct other things. Items like automobiles, clothing, food, furniture, and more are all deductible.
         • • • You’ll need to show receipts if you get audited, so be sure to collect your receipts.
               
               
      2. Mortgage refinancing points. If you’ve refinanced your mortgage, you can deduct those points. In many cases, they have to be deducted over the life of the mortgage. So if the mortgage is for 15 years, you can deduct 1/15 per year. It’s not much each year, but it adds up.
         
         
      3. Medical insurance premiums. If you spent more than 7.5% of your income on medical expenses, you can likely deduct the cost of your medical insurance premiums.
         • • • If you’re self-employed, you can deduct 100% of your medical insurance premiums without meeting the 7.5% requirement.
               
               
      4. Energy savings home improvement. You can get a 30% credit for any energy saving improvements you make to your home. This is a credit, not a deduction. So you not only get to take 30% of the cost of the improvements directly off your tax bill, but you also get to save money on your utilities. You win both ways.
         
         
      5. Retirement tax credit. Contributions to retirement plans are typically untaxed at the time of the contribution. If your income falls below a certain level, you can also get up to a 50% tax credit to boot!
         
         
      6. Disaster. If your area was officially declared a disaster area, you can deduct your losses.
         
         
      7. Tax and investment expenses. The total cost of these expenses must exceed 2% of your adjusted gross income before taking this write-off. These include things like tax preparation, any legal advice on tax matters, and all your investing expenses. Investing expenses include:
         • • • Your fees and other costs for the investments
             • The mileage to drive and see your investment guru
             • The cost of publications and subscriptions for investment research, like investment-oriented magazines and The Wall Street Journal.

Taxes are likely your biggest expense each year, so spend some time to familiarize yourself with tax deductions. How many of these deductions apply to you? See your tax professional if you’re unsure if you qualify.

Keep as much of your money as possible. After all, you probably worked pretty hard to earn it.

If your financial situation is complicated, it would be wise to find a real expert. Don’t try to wade through all the tax changes every year by yourself. The extra money you save on taxes can be well worth your time.

Inflation can eat up your savings and plans for the future. However, you can take steps to protect yourself from inflation.

Consider these tips to protect your finances:  

1. 1. 1. Understand purchasing power. Purchasing power refers to your ability to buy items such as necessities and luxuries. One of the main issues with inflation is that your purchasing power goes down as inflation goes up.
         • • • For example, your $1 could buy an item yesterday, but today you’ll need $5 to buy the same item.
             • Unfortunately, interest rates and incomes can’t always keep up with inflation.
               
               
      2. Consider investing in the stock market. Do you have investments in the stock market? Instead of taking them out after every drop, plan a long-term strategy.
         • • • Long-term investments in stocks may protect you from inflation.
             • Commodities tend to increase in value during inflation. For example, coffee or grains may survive inflation well on the stock market because they’re commodities.
               
               
      3. Consider real estate investments. Real estate can be a powerful investment tool.
         • • • Real estate can fluctuate in value. If you’re considering an investment, then you may want to be careful.
             • Although real estate prices can go up during inflation, you have to consider your ability to handle all of the loans and mortgages. Even if you rent out the properties, how will you handle periods without renters?
             • Commercial real estate can be even more complicated than buying a home. If you want to invest in commercial real estate, then you also have to deal with zoning laws and extra fees.
             • Land is another possible investment option.
               
               
      4. Consider investing in your future. You have the power to survive inflation, and you can take steps to deal with it.
         • • • Have you considered investing in your future by going back to school? Additional degrees may help you earn more money and provide a bigger cushion during times of inflation.
             • However, going back to school isn’t the only choice. You can also take free classes online or from other organizations. You can build your skill set and discover new hobbies that can increase your income.
               
               
      5. Try to make your income sources grow. If you can make your sources of income increase, then inflation will have a lower impact on you.
         
         
      6. Get rid of debt. As inflation rises, the interest rates on your debts can also rise. If you pay off your debts, then you don’t have to worry about it. However, if you can’t pay off all of your debts, be prepared to make higher payments during times of inflation.
         
         
      7. Consider your Social Security benefits. During periods of inflation, benefits such as Social Security usually can’t keep up with the growing prices. Be prepared for this event. Have some savings that will cover you when prices go up.

Inflation isn’t always easy to predict or avoid. However, you can take action to make it have a smaller impact on your finances. Follow these strategies and protect yourself, your family, and your finances from inflation.