Money Management

Ignoring your IRS bill is bad news. Read on to see what the consequences could be. 

Many people who file taxes end up being eligible for a refund. But some people end up in the opposite boat — they owe the IRS money from the previous tax year.

If you end up owing the IRS money and have the cash in your savings, you’re all set. But if you don’t have the money to pay, well, you have a situation on your hands.

The good news is that the IRS will work with you when you owe money and can’t pay. But if you blow off your tax debt rather than address the issue, you might end up regretting that decision.

When you ignore the IRS

The IRS does not take kindly to not getting the money it’s owed. To that end, if you ignore your tax debt rather than aim to pay it, the agency will have the right to:

Garnish your wagesSeize money from your bank accountSeize your vehicle or other personal property

None of these are things you want. You most likely do not want the IRS to take away a portion of your paychecks, for example. So a better bet is to not neglect your tax debt.

Reach out and ask for help

The IRS acknowledges that not everyone can satisfy a tax debt in full at a moment’s notice. If you end up with a tax bill you can’t pay, reach out to the agency and ask to get onto an installment plan. That will allow you to pay off your tax debt over time.

And to be clear, if you’re keeping up with your installment payments under your agreement, you won’t be considered delinquent on your tax debt. That means you’re protected from the IRS going after your wages and other assets.

How to avoid a future tax debt

Owing taxes isn’t ideal. If you want to avoid a scenario where you owe the IRS money, adjust your withholding so you’re having more tax taken out of your paychecks as you go.

Or, leave your withholding as is, but start setting money aside each month in a savings account. That way, you get to hang onto your money during the year. But if you owe some to the IRS, you’ll have a way to pay your tax bill.

Also, be mindful of extra income that could contribute to a tax bill at the end of the year. If you sell an investment at a profit during the year, for example, you might end up with a tax debt on your hands by virtue of a large gain. So a situation like that should prompt you to set aside some money for an upcoming tax bill. You may even want to make estimated tax payments if you’re earning extra money during the year, even if you’re a salaried employee.

Normally, it’s self-employed people who are required to make estimated tax payments on a quarterly basis. But in some cases, it could pay to do so even if you’re paid a salary.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More 

Payday loans can give you quick cash, but they usually wind up doing more harm than good. Here’s what you need to know before getting one. 

When money’s tight and bills are due, payday loans can seem like a nice option to tide you over until you get a little more money in your bank account. They offer quick cash and many lenders don’t check your credit reports or scores. As long as you’ve got a job with a steady paycheck, you can walk away with the money you need, often on the same day.

But that’s where the good news stops. Because in a few short weeks, you’ll have to repay what you’ve borrowed, plus interest — and that’s a lot easier said than done. Here’s why.

How payday loans work

Payday loans are a type of short-term loan, usually limited to a few hundred dollars. They’re meant to help hold you over until your next paycheck, when you can theoretically use your income to pay back what you owe. But often, this doesn’t happen.

Payday loans, like all loans, charge interest rates to borrowers. This interest is how the lender makes a profit and how they afford to lend money to others who need it. But while the average 30-year mortgage interest rate, for example, ranges from about 3% to 7%, depending on economic conditions, payday loan interest rates can be in the triple digits.

Oregonians, for example, can expect a 140% interest rate on a 14-day, $400 payday loan, according to the Center for Responsible Lending. And that looks reasonable next to the 662% that Texans pay to borrow the same amount.

To put this in perspective, if you borrow $400 with a 14-day term and a 662% interest rate, you’ll owe over $501 in two weeks. If you can’t pay that back, you might have no choice but to take out another, larger payday loan to cover your new balance. And that just leads to more interest, which leads to a bigger debt problem. Before you know it, that so-called short-term $400 loan has cost you thousands of dollars.

Those who fall into the payday loan trap have a difficult time getting out of it. And if they fall behind on their payments, they could also ruin their credit, which will make it more difficult for them to secure other types of loans in the future.

Alternatives to payday loans

Some states have taken steps to limit the fees payday lenders can charge customers, but even then, these loans usually aren’t what anyone would consider affordable. It’s usually best to avoid them if you’re able to. Here are some other things you can try instead:

Save up: For financial concerns that aren’t pressing, try to save up for them over time rather than taking out a payday loan. And establish an emergency fund so unplanned expenses don’t derail your budget.Take out a personal loan: Personal loans are loans that don’t require any sort of collateral. You can use them for pretty much anything, including to pay off other loans. Interest rates on these types of loans are higher than what you’ll find with mortgages or auto loans, especially for borrowers with poor credit. But they’re significantly lower than what payday loans charge.Look into payment plans: Depending on who you owe, you may be able to set up a payment plan. Hospitals, for example, often offer these so people can pay off their medical bills over time rather than all at once. Talk to your creditor to see if it offers any options like this.Check out payday alternative loans: Payday alternative loans are similar to payday loans, but they’re much more affordable. To find one of these, you’ll usually have to look to credit unions.

The right solution for you will depend on what you need the money for and how quickly you want it. But it’s best to explore all the options available to you before making your decision. Chances are, you can find something better than a payday loan.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More 

Mint is one of the most popular budgeting apps in the market, and for good reason. Read on to learn whether you should get the premium subscription. 

Managing finances is an essential part of our daily lives. It’s a challenge to keep track of expenses, budgeting, and paying bills accurately. Mint is a personal finance budgeting platform that helps users manage their finances. It is the No. 1 most downloaded personal finance app for both the Apple App Store and Google Play Store. It is easy to use and helps users keep track of all financial transactions in one place. It’s free to use, but Mint also offers a premium subscription with extra features.

What is Mint Premium?

Mint’s premium subscription offers users a range of additional features that can help ease the burden associated with managing finances. This service is currently only available to iOS users, so if you have an Android phone, you are out of luck, but you’ll still get to enjoy their free features.

How much does Mint Premium cost?

Mint Premium costs $4.99 per month. To subscribe to Mint Premium on your iOS device, you select your profile icon in the top right of the app, and then select “Upgrade to Premium” in the profile badge.

Mint also offers an ad-free version for $0.99 a month. You can cancel your Mint Premium subscription from within the Mint app.

What does Mint Premium include?

You can use the following features that are part of Mint Premium.

Ad removal

Mint operates on a free-to-use model by displaying targeted ads for credit cards and other financial products. There are no ads and third-party offers outside the Marketplace tab.

The ads can be overwhelming, especially if you have a small phone screen, so this is a big plus. Users who don’t require premium features can pay $0.99 per month to enjoy an ad-free experience.

Subscription cancellation

Mint partners with Billshark, which works with your subscription providers to cancel your unwanted subscriptions for you. Billshark is backed by Mark Cuban and according to Billshark, users save on average $150 a year on bills, and the service has a 70% success rate on bill negotiation.

According to the finance app, Mint users have already saved over $2 million with bill negotiation. Billshark negotiates for you and you only pay if it saves you money. It takes 40% of the savings and you get to keep 60%.

Billshark is able to negotiate internet, phone, and cable services, offered by about 34 providers. Billshark does not negotiate utilities, insurance, credit card, or medical bills at this time.

Advanced data visualization

The premium version gives you daily updates on your financial trends and access to specialized analytics, including spending projections and breakdowns for each spending category.

With visual indicators highlighting projected overspending, you can effectively manage your money and improve your financial habits.

Advanced spending graph capabilities

With Premium, you can easily download your account data as a convenient CSV file with just a few taps on your mobile device.

You can also share insightful snapshots of your spending graphs with friends and family, and gain valuable insights by comparing your spending habits to those of other Mint users. The premium version also offers spending projections for the rest of the month based on your past behaviors, helping you budget better.

Mint Premium Arcade

Premium members get access to two exclusive games that offer up saving and spending tips. These games are designed to keep you engaged while imparting practical tips that will help you achieve your financial goals.

Is Mint Premium worth it?

At $59.88 a year, Mint’s Premium version is cheaper than many other finance apps, but Mint’s free version offers a whole host of features. At the end of the day, It all depends on what you need when managing your finances.

If you don’t need the subscription cancellation, advanced data visualization, and spending projections, then the free version of Mint should give you all you need. Currently, bill negotiation through Billshark works with 34 companies, so if you don’t have an account with any of them, then you may not need the Premium version.

But if you have a subscription and Billshark can save you more than the annual subscription, it may be worth it. The ads can be intrusive, so the Premium membership is plus. But you can also take advantage of the no-ad version of Mint for just $11.88 a year.

Whether Mint Premium is worth it depends on your specific needs and preferences. Subscription management and advanced visual financial analysis can be useful for some, but others may not have any use for them. The daily notifications on your financial trends can also be handy. Ultimately, the premium subscription is most ideal for those who want a more in-depth overview of their finances and are willing to pay for the additional features. However, those looking to save money may be just as happy with the free version of the app.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Alphabet, Apple, and Target. The Motley Fool has a disclosure policy.

 Read More 

Profits on stocks can lead to capital gains taxes. Read on to see what those entail when you’ve only held your stocks a short time. 

It’s generally a good idea to load your brokerage account with quality stocks and hold them for many years. That way, over time, your shares can gain value.

But there may come a time when you decide to sell a stock quickly after buying it. Let’s say you purchase shares of a given company, and suddenly, a week later, positive news sends the price soaring. You know that higher price is likely unsustainable, so you decide to sell while that stock is trading at a high to maximize your profits.

Any time you sell stocks at a price that’s higher than what you paid for them, you’re liable for taxes on your capital gains. But when you sell stocks at a profit a week after buying them, your capital gains tax bill is even higher.

Your timing matters

Capital gains taxes on investment are grouped into two categories — long-term gains and short-term gains. Long-term gains apply to stocks you hold for at least a year and a day prior to selling them. Short-term gains apply to stocks you hold for a year or less.

And to be clear, it doesn’t matter whether you sell your stocks after one week, one month, or one year. If you don’t hold your stocks for a year plus one day, you’ll land in the short-term capital gains category.

Why does it matter? It’s simple. The gains category you fall into will dictate what your tax bill will look like.

Short-term capital gains are taxed at a less favorable rate than long-term gains. In fact, they’re taxed at the same rate as your ordinary income.

So, let’s say you sell your stocks at a profit and make $1,000. If you’re single and earning $100,000 a year, that puts you in the 24% tax bracket for short-term gains as well as ordinary income. (This doesn’t mean that every dollar of income of yours is taxed at 24%, but rather, your higher dollars of earnings.) Based on this, your $1,000 short-term gain would result in a $240 tax bill.

Long-term capital gains, by contrast, are subject to lower tax rates. If you’re single earning under $44,626, you actually won’t pay any taxes on long-term gains. If you’re single earning between $44,626 and $492,300, you’ll pay 15%. And if your earnings exceed $492,300, you’ll pay 20%.

So in our example, let’s say you were looking at long-term capital gains rather than short-term gains. Your tax bill in that scenario would only be $150, compared to $240 for short-term gains.

Sometimes, it pays to wait

Under certain circumstances, it can make sense to sell a stock at a profit before you’ve held it for a year and a day or longer. But if there’s not a compelling reason to sell sooner, then it’s generally best to try to bump yourself into the long-term capital gains caretory to minimize the tax hit involved. After all, why pay the IRS more money than you have to in the course of selling a stock?

Our best stock brokers

We pored over the data and user reviews to find the select rare picks that landed a spot on our list of the best stock brokers. Some of these best-in-class picks pack in valuable perks, including $0 stock and ETF commissions. Get started and review our best stock brokers.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More 

Want a serious income boost? Read on to learn more about one potentially lucrative side hustle. 

There are plenty of good reasons to get yourself a side hustle. For one thing, the extra money could simply give you more financial breathing room.

Want to spring for takeout because you’re too tired to cook? With extra side hustle income, extras like that won’t necessarily bust your budget.

A side hustle could also be your ticket to meeting your financial goals, whether it’s saving up to buy a home, paying off debt, or building a nest egg for your retirement.

But if you’re going to get a side hustle, it pays to pick up a lucrative one. And you may also want to focus on a gig that’s flexible.

If you’re looking for a way to bring in a nice amount of money without having to commit to a preset schedule, then you may want to become a mobile notary — someone who provides notary services at different locations, as opposed to a single one. While you’ll have to put in a little bit of work to get your license and cover some upfront costs, it could more than pay off in the long run.

How does a large income boost sound to you?

Data from the National Notary Association found that more than half of full-time mobile notaries earn $2,000 or more a month. Now you may be thinking, “If this is a side hustle, how am I supposed to maintain full-time hours?”

But depending on how demanding your primary job is, it may be feasible to put in a lot of hours each week as a notary — especially if you’re willing to give up your weekends for a period of time.

Even if you’re only looking to take on a part-time side hustle, you could be looking at quite the nice payday by becoming a notary. That’s because 43% of part-time notaries earn more than $500 a month, and almost 30% earn more than $1,000 per month.

What is a notary, anyway?

A notary is someone who witnesses the signing of important documents and puts their stamp of approval on them. If you’re starting a business, you may need a notary when you sign the documents that make your venture official. You may also need a notary when you’re putting a loan into place.

One nice thing about being a notary is that you get to meet and interact with different people. And as a mobile notary, you can meet clients anywhere.

How to become a notary

The process of becoming a notary can vary from state to state. Generally, you’ll need to be 18 years old and a legal resident of the state you’re applying in without a criminal record. You may also need to undergo a background check.

Some states will require you to take a training course to become a notary, which might take three to six hours. You might spend up to $100 for this training, which means there’s the potential to make that money back quickly. You can also generally undergo notary training online.

Now you may need to make a bigger investment in becoming a notary in the form of paying for a notary bond. This acts as insurance of sorts if you make a mistake that results in someone’s financial losses — for example, if you authorize a document you shouldn’t have. The cost of a notary bond typically ranges from $5,000 to $10,000. But it can be as low as $500.

But let’s say you have to spend $5,000. If you’re able to earn $1,000 a month as a part-time notary, you’ll break even in five months. From there, you’ll get to enjoy ongoing profits.

Of course, if you’re going to spend that money, you should be prepared to work as a notary — at least on a part-time basis — for a long enough time to recoup your investment and then some. But all told, it’s possible to become a notary in about eight weeks. So if you’re looking for a side hustle that’s flexible and pays well, this could be a good option to pursue.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More 

Getting pre-approved for a mortgage is important on multiple fronts. Read on to see why. 

Buying a home can be a lengthy process. Not only do you have to look at different properties, but you also have to crunch the numbers to figure out what you can afford. And then, once you’re ready to move forward with a home purchase, you have to apply for a mortgage loan (unless you happen to have the cash to buy a home outright) and hope you get approved

But there’s another step you may want to take on the road to buying a home, and it’s getting pre-approved for a mortgage. Although this isn’t the same thing as getting an actual mortgage approval, it’s an important step worth taking for multiple reasons.

When you want to embark on a more efficient home search

A mortgage pre-approval letter isn’t the same thing as an actual mortgage approval. It means that a lender has done a preliminary review of your finances and has determined that you’re likely eligible to borrow a specific amount, provided nothing changes for the worse (meaning, your credit score doesn’t nosedive and your income doesn’t drop).

Having a mortgage pre-approval letter could help guide your home search. Let’s say you have $40,000 to put down on a home and are pre-approved to borrow $160,000. That means you can potentially buy a $200,000 home. If that’s the case, then there’s no point in spending your time looking at homes in the $240,000 to $250,000 range, since homes at that price point are out of your reach.

When you want an edge over the competition

In a tight housing market, you may be more likely to end up in a situation where you’re duking it out with competing buyers over the same property. If that’s the case, a mortgage pre-approval letter could work to your benefit.

Such is the state of the real estate market today. As of the end of April, there was only a 2.9-month supply of available homes on the market nationally, according to the National Association of Realtors. That’s well below the four- to six-month supply that’s generally needed to fully meet buyer demand and even out the housing market so neither buyers or sellers have an upper hand.

Meanwhile, let’s say you and three other buyers are all vying for the same home because it’s in good condition and is competitively priced. If you’re the only buyer with a pre-approval letter in hand, the seller may be more inclined to accept your offer if it’s on par with the others. That’s because the seller might have confidence in the fact that your mortgage financing is likely to come through without a hitch.

A step worth taking

In some cases, getting pre-approved for a mortgage may be a simple matter of calling some lenders and providing some financial information, like pay stubs and recent tax returns. Is it an extra step in an already time-consuming process? Yes. But it’s one worth taking because it could help ensure that you’re spending your time looking at suitable properties, and that you’re able to beat out other buyers when many of you are competing to purchase the same home.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More