Money Management

Being self-employed offers some pretty great benefits. Here’s one way self-employed individuals can save for the future while saving on taxes. 

Roughly 16.5 million Americans are self-employed. If, like me, you’re among those working for themselves, you have access to a powerful savings tool that can save you thousands of dollars in taxes each year. It’s called a solo 401(k), and it’s available only to self-employed individuals or small business owners with no full-time employees other than themselves and their spouses.

Over the years, I’ve habitually socked money away in my solo 401(k). But I’ve recently decided to dive in, taking full advantage of all the retirement plan has to offer — and saving a bundle of money for my golden years. Here’s why.

A solo 401(k) has higher contribution limits

My husband and I work, meaning we get slammed with income taxes each year. But a solo 401(k) helps offset the amount we have to pay in taxes by allowing me to contribute a higher percentage of my income to this type of brokerage account than I would be able to contribute to a standard company-sponsored 401(k).

For example, if I were still working for a large corporation and contributing to a 401(k) plan through my company, I would have a contribution limit of $22,500 plus an over-50 catch-up contribution of $7,500. That’s a total of $30,000 I could contribute and not pay taxes on until I withdraw funds.

With a solo 401(k), I can contribute up to $73,500 annually since I’m over 50. That provides me with a huge savings opportunity. Let’s say I earn $100,000 a year and contribute $50,000 to my solo 401(k). That means I’m only paying income taxes on $50,000 of my annual earnings, and I have another $50,000 growing in a retirement account.

I get to self-direct my investments

When I worked in corporate America, my retirement plan restricted me to a select number of investments. I was pretty much stuck if I didn’t like what the plan offered. However, a solo 401(k) allows me to direct where my retirement money goes. I can invest in private equity, tax liens, real estate, mortgage notes, precious metals, or anything else I believe will earn money.

I can borrow against it

Say I needed a quick injection of cash to expand my business, pay for college, or even buy a house. With a solo 401(k), I can borrow up to $50,000, or half my account balance, with no credit check. Given how hard I work to make regular contributions, I can’t imagine borrowing against those funds. Still, it’s good to know that I have access.

I have the option of a Roth plan

A Roth plan allows an investor to make deferred contributions to a retirement account using after-tax dollars. In other words, I would pay taxes on my income today but withdraw the funds tax free in my retirement years. And unlike a Roth IRA that restricts higher-income individuals from investing, the Roth component of a solo 401(k) has no income restrictions.

I don’t have to make a call

When I want to change something about my 401(k), like rebalancing my portfolio, I don’t have to call someone and ask them to do it for me. Better yet, I don’t have to pay anyone to do it for me. I have the freedom I need to make investments and changes on my own.

Yes, I’ve taken advantage of my solo 401(k) in the past, but 2024 is the year I use it to minimize taxes like a miser.

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Skyscanner has identified a few trending travel types this year. Find out what they are and how you can use yours to have more fun on your next trip. 

It’s shaping up to be another big year for travel. Among U.S. travelers, 85% plan to take the same number or more trips abroad as they did in 2023, according to Skyscanner’s Travel Trends 2024 Report.

Skyscanner also found that people are leaning into specific types of travel. Three particular travel types are trending for 2024. Figuring out which type you are can be fun, plus it can help you decide what to prioritize for your travels this year.

1. Analog adventurers

Analog adventurers are old-school travelers who want an opportunity to switch off from modern life. They’re not interested in posting pics to Instagram while they travel — they’re going on vacation to disconnect from social media, work, and the world back at home.

One of the signs of this travel trend is how many young adults are swapping out their smartphones for more traditional ways of remembering their vacations. Among Americans between 18 and 24 years old:

31% bring a camcorder with them on vacation31% bring a digital camera31% bring a 35-millimeter film camera and develop their photos when they get home

For those who want to disconnect from it all, staying in a more secluded location is a good choice. Think cabin in the woods instead of a high-rise hotel suite.

Keep in mind that wherever you are, you’re going to be in control of how much you disconnect. There’s wifi practically everywhere now. So if you want a break from it all, take time off from work and resist the urge to check your email every morning.

2. Celebration vacationers

Celebration vacationers travel to commemorate major life events. And they do it together, with 79% of U.S. travelers having taken a group trip to celebrate a birthday or anniversary. Another 12% say they’d love to do it in the future.

If you’re hoping to take a trip with friends or family and aren’t sure where to go, here are the top destinations for group trips in 2024:

MexicoCanadaSpain

As fun as they are, group trips are notoriously difficult to coordinate. Everyone needs to agree on the destination, the dates, and the cost. More than 4 in 10 U.S. travelers said that those issues put them off on arranging a group trip. Here are a few ways to make it easier:

Set up a group chat so everyone can discuss the details together.Poll everyone on travel dates that will and won’t work for them.Vote on where to travel and when.Look for affordable destinations if anyone is on a tight budget.

3. Luxe-for-less seekers

With this travel type, the name provides a pretty accurate description. Luxe-for-less seekers want to have luxurious travel experiences, but they also want to get a good deal in the process. This will likely be one of the major travel trends in 2024, based on a couple of recent data points about U.S. travelers:

38% have plans to upgrade their flight to either business class or first class this year39% plan to buy airport lounge access

Luxury and affordability don’t have to be mutually exclusive. It takes a little more work, but you can book upscale travel experiences without a huge hit to your finances. Here are a few tips for saving money on things like business-class airfare and five-star hotel stays:

Use travel credit cards for all your regular spending. These credit cards earn points that you can put toward travel expenses. I’ve used credit card points to cover the cost of $3,000 business-class airfare and $5,000 hotel stays, so they can be extremely valuable.Be open about where you travel. If you’re flexible, try an “everywhere” search where you plug in your departure airport and see destinations with the lowest flight prices.Travel to an area during its offseason. It can be just as fun to visit Europe in the spring, fall, or even the winter, to give you one example. There will also be far fewer tourists, and you could spend half as much on your flight and hotel.

Whether your travel plans are disconnecting, celebrating with your friends, or experiencing luxury for less, you’re not alone. These are all major travel trends for 2024. Once you’ve decided on your travel goals for the year, you can figure out how to make them happen.

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Some workers want more flexibility and control over their income, so they prefer freelance work. Find out more and learn what to consider before doing gig work. 

Many Americans no longer want to work traditional jobs and are switching to gig work and freelance roles. Unlike conventional jobs, which operate with set schedules and pay structures, freelancers have more control over their schedules, workload, and income potential.

While this type of work isn’t for everyone, more Americans are leaving the traditional workforce. Here are a few reasons why more people are making career changes and are choosing gig work in 2024.

Workers value a good work-life balance

Most traditional jobs give employees little control over their schedule and workload. Some employees’ work life bleeds into their free time. They may be expected to answer emails or be available for work in the evening. When you’re constantly in work mode, it can be challenging to enjoy your free time, and you may get minimal quality time with friends and family.

Some workers have had enough and want complete control over their personal and professional schedules. For that reason, many people want to start freelancing or take on gig work to prioritize spending more time with their families. Scheduling work around doctor appointments, family events, and your child’s school or sports commitments can be easier if you do gig work.

There is more room for income growth

As a contract worker or small business owner, you’re responsible for finding plenty of work to earn enough money to pay your bills. You need to work to earn money. However, many people choose gig work to have more control over their income.

Many traditional employees make a set income, and unless you qualify for overtime pay or get a raise, there’s little room for income growth. As a freelancer or gig worker, you control your income potential. This can be a freeing feeling if you previously worked in low-income roles.

You can make more money by prioritizing higher-paying work, increasing your hours, or working when there is more opportunity to make more money. If you’re unhappy with your current salary and want to boost your income, gig work may allow you to reach your goals.

They’re struggling to land full-time work

Many workers who have lost their jobs are struggling to land full-time work. Companies are hiring, but many people are applying for the same roles — so there’s a lot of competition.

While some workers qualify for unemployment benefits, today’s higher living costs make it difficult to afford life on benefits that are a fraction of what you were once paid. For those without emergency funds, gig work allows them to earn the money they need while looking for work.

They can pursue more meaningful work

Many freelancers prefer contract work over traditional jobs because they have more freedom to choose what work they do. There are more opportunities to seek out projects that are of personal interest. For others, gig work offers a chance to explore a new industry.

With limited experience outside of your current role or company, it can be harder to transition into a full-time position in a completely different industry. But gig work can make that possible. It can be more rewarding to have more control over your everyday workload.

Don’t overlook gig work

Whether you want to increase your bank account balance by taking on additional work in your free time or transition into a more flexible career, pay attention to gig work and freelancing opportunities. But consider how a change like this will impact your personal finances.

You should research self-employment taxes and additional costs associated with being a gig worker and consider how you will replace any employer-sponsored benefits that you have now, such as health insurance coverage. Building a solid emergency fund before making a life-changing career move like this is a great way to prepare financially.

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When emotions are involved in spending, it’s easy to overspend. Here’s how one writer intends to get control of Christmas shopping in 2024. 

In terms of the holidays, this year was an odd one for me. While I normally begin collecting wish lists and shopping in August, I didn’t get around to it until October. And then, because I went in with no clear plan, I spent far more money than I intended — $2,400, to be precise. To put that number in perspective, the average American was expected to spend $648 on Christmas gifts in 2023. Honestly, I’m pretty frustrated with myself.

Christmas 2023

Like many people, I’m wild about my family. I still can’t believe my sons are mine, adore my daughters-in-law, and melt every time I’m around my granddaughters. I also tend to idealize special occasions. I’ve bought into the belief that a “real” Christmas should look like a Hallmark movie. I can’t cook worth a darn, so I try to dazzle my loved ones with great gifts.

I want every member of my family to look back on the latest holiday as “the best ever.” It’s not only unrealistic, it’s a set-up for disappointment. Someone isn’t going to think it’s the best holiday ever, and I’m going to feel as if I’ve failed.

Each and every year, my husband encourages me to be sensible and asks me to take it easy on the checking account. I agree every year, then go on to do my own thing. I’m nothing if not predictable.

You know that creepy feeling you can’t quite shake when you’ve done something foolish? That’s what I was left with this year. After spending so much time and energy making the interior of our home look like a gingerbread house exploded and spending a wad of cash making sure everyone received the gifts they wanted, I felt ridiculous. My family and friends would be perfectly happy hanging out, playing games, eating pie, and just talking. The ridiculous expectations are mine.

It’s been over three weeks since Christmas, and I’m still kicking myself for not making better decisions. I’ve also come up with a plan to do Christmas 2024 differently. Here’s how.

A new budget

I’m budgeting $1,800 for Christmas. That’s a 25% cut from this year, but if I’m a smart shopper, not a soul will notice. One reason I overspend is that I tend to keep a rough budget in my head. I roughly know how much I want to spend, but then life gets busy, and I find myself playing catch-up.

I know a few people who love nothing more than last-minute shopping, walking through a mall with their hands wrapped around a cup of hot coffee, and listening to Christmas music. I think that sounds great, but it doesn’t work for me. If I want my Christmas budget to work for my personal finances, I’m going to have to approach it with the discipline of an army general.

A shopping list

Normally, I don’t make a list until late summer or early fall. This year, it’s while the snow blows. The list is conveniently located on my phone and includes everyone I want to buy for. As I buy a gift, I’ll add it under the recipient’s name and include how much I spent.

A list is the only way I’m going to keep things straight, especially since I’m starting so early this year.

A Christmas account

We have separate savings accounts for just about everything, from saving for a new car to veterinarian fees. I changed the account we use least often over to a Christmas account. Since I now know how much I plan to spend, I know how much I need to put away into that account each month.

Coupons and promo codes

The thing about speed shopping is that I rarely do the homework required to take advantage of discounts. This year, I’m specifically looking for coupons and promo codes to save money. I know the types of gifts my sons, daughters-in-law, and husband enjoy. Keeping an eye out for sales at their favorite stores should be easy.

The little girls are a bit more challenging. Because they’re so young, their interests change throughout the year. I’ll still count on discounts, but I plan to purchase their gifts after I purchase them for the adults.

I’ve always had a thing about not giving gift cards. I’m not sure why that is, other than wanting people to open a box with a “real present” in it. I have decided that it’s one of the goofiest self-imposed rules I’ve ever adopted.

No more underestimating the people I love

The truth is, no one in my life would be bent out of shape by receiving fewer gifts. The “perfect Christmas” fantasy is mine, not theirs. I’m determined that this year, I’m going to take a healthier, more balanced approach to the holidays.

I’ll let you know how it goes.

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The CFPB wants to limit bank overdraft fees. A newly proposed rule could save Americans billions of dollars. Find out what this could mean for consumers. 

On Jan. 17, the Consumer Financial Protection Bureau (CFPB) proposed a new rule to curb excessive overdraft bank fees. The rule would end a loophole that exempts overdraft lending services from some consumer protection laws. It could save consumers an estimated $3.5 billion or more in bank fees annually. Here’s what you need to know.

The Biden administration wants to eliminate junk fees

One initiative that the Biden administration has been tackling is excessive junk fees. These additional fees impact consumers’ bank accounts and are often not disclosed clearly.

In 2022, the CFPB announced its initiative to reduce exploitative junk fees. The agency collected public comments from consumers to learn more about their experiences with these fees. Over 80,000 responses were gathered during the public commentary period.

A common complaint was overdraft fees. Last week, the CFPB announced a rule that could save consumers billions on such fees. With this proposal, the agency hopes to close a loophole that many large banks are using to profit from excessive overdraft fees.

The CFPB wants to end this loophole

The Truth in Lending Act was enacted in 1968 to help protect consumers. It required lenders to provide disclosures regarding lending processes and fees. However, the Federal Reserve Board established an exemption to this law, and big banks still use it today as a loophole.

The exemption ensured that banks didn’t have to treat overdraft loans as a consumer credit product, meaning the disclosure rules didn’t apply. This exemption was created at a time when consumers were sending checks by mail, so there was some unpredictability as to when a check might be received.

Years ago, when bank accounts were overdrawn, some banks would charge a modest fee and clear the check as a convenience to their customers. However, banking habits have changed since then — and the fees have continued to rise.

Debit card usage and banking automation have significantly increased in modern years, resulting in more frequent overdrafts. Banks have continued to use this loophole to charge excessive fees, resulting in billions of dollars in profit yearly. But that could change in the future, saving consumers billions in fees.

Here’s what the new rule proposes

On Jan. 17, 2024, the CFPB proposed a rule that would force large banking institutions to treat overdraft coverage like credit cards and other loans, meaning they’d be required to provide clear disclosures. This rule would apply to large financial institutions with assets of $10 billion or more.

The agency also proposes setting limits for fees. Financial institutions would be allowed to determine a fee they would need to charge to break even, using a breakeven standard.

Alternatively, they would be allowed to charge fees in accordance with a set benchmark. The CFPB has proposed fee benchmarks of $3, $6, $7, or $14.

Positive changes could be coming for consumers

If you’ve ever paid overdraft fees, this is good news for your personal finances. While this proposed rule won’t result in immediate change, it’s a positive step toward protecting consumers from excessive and unfair fees. Consumers are encouraged to comment on the proposed rule on or before April 1, 2024. The proposed rule is expected to go into effect on Oct. 1, 2025.

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