At these stores, a “sale” is often no bargain. bikeworldtravel / Shutterstock.com
When you see a sale price, can you really be sure you are getting a bargain? Probably not, according to research from Consumers’ Checkbook, a project of the nonprofit Center for the Study of Services. A recent Consumers’ Checkbook analysis of 25 national retailers found that the legitimacy of their sale prices — as determined by how frequently they offered such prices — is often suspect. Consumers’…
It’s important to consider the state of the economy before becoming self-employed.
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If you’ve been thinking about going freelance, you’re no doubt in good company. There are lots of benefits to working on a freelance basis, as opposed to being tied to a single employer.
For one thing, you might get to increase your income, all the while getting to set your own work schedule and work from anywhere in the country (or world) you want. Plus, if you have children, you may find that a freelance work setup lends to a better work-life balance and helps you save money on childcare.
But going freelance does involve some risk. And given that financial experts have been warning about a potential recession in 2023 (or shortly thereafter), you may be wondering whether taking the leap into self-employment is really the right choice right now.
So should you give up on your dreams of going freelance due to economic concerns? Not necessarily. But should you factor those economic concerns into your decision? Absolutely.
Generally speaking, it’s a good idea to have a game plan before resigning from a salaried position and becoming a freelancer. That means having some work already lined up, or at least having a long list of potential clients to market your services to.
But on top of that, it’s important to have a solid level of savings before going freelance. And given the potential for a recession, you’ll really want to go in with a nice amount of cash in the bank.
If a recession hits several months after you go freelance, some, or even all, of your clients might pull the plug on the work you’re doing in order to cut costs. That could leave you without an income for months. And as a freelancer, you won’t be entitled to unemployment benefits. So in that scenario, you’re apt to become very reliant on your own savings account balance to cover your bills.
Now let’s say you’re going into a freelance arrangement with enough money in savings to cover a full year of living costs. In that case, you’re setting yourself up nicely to get through a recession. So you may feel comfortable moving forward with your plans. But if you only have enough money in the bank to pay for a few months of bills, you may want to put your plans to go freelance on hold and build up more cash reserves.
We don’t know whether a recession will hit in 2023 or not. But since many experts seem to think we’re in for one, it’s a good idea to take those warnings seriously.
That doesn’t mean you have to give up on going freelance. But it does mean you should go in with plenty of cash reserves as backup.
And remember, if going freelance doesn’t work out in 2023, it doesn’t mean you’re doomed to work a salaried job forever. Rather than get depressed, keep working on your savings so that you’re eventually in a stronger place to become self-employed.
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The ability to transfer funds electronically makes paying bills so much easier.
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Any time you move money from your bank to another party’s bank, it is considered a transfer. There are two ways you can choose to transfer that money — ACH or wire transfer. Here, we’ll break down each of these methods, helping you determine which may best meet your needs.
ACH stands for Automated Clearing House. The ACH network includes approximately 10,000 financial institutions. ACH is likely part of your everyday life. Any time you swipe your debit card, send an eCheck, or make a direct deposit into your bank account, ACH is involved. If your bank or credit union offers bill payment, the ability to send those payments electronically is thanks to ACH.
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ACH transfers are typically free, and unless the system detects potential fraud, an ACH transfer normally clears the bank in a few business days.
Let’s say you’re closing on a home and must make a large, one-time payment. The title company will likely require you to have the money wired from your bank. The upside for the title company is that wire transfers are designed for same-day arrival.
There is normally a fee associated with wire transfers, although it varies by the financial institution. These fees are charged to both the party sending the money and the party receiving the funds. It costs more to wire money internationally than domestically. You can expect to pay anywhere between $5 to $35 for a transfer.
The lowest fees associated with wire transfers are found at credit unions and online banks. In fact, many online banks charge you nothing to receive a domestic wire transfer.
The two types of transfers share several characteristics, but each has features that set it apart.
One thing ACH and wire transfers have in common is that they are blanketed with security measures. Banks add multiple layers of protection to both types of transfer, including encrypted banking information and identity verification.
Mistakes happen, but if you’re using ACH to make a payment, you have the ability to reverse the error. Imagine that you’re distracted, and instead of sending $175 to the electric company, you send $1,750. You may be able to cancel the transaction, although the return of your funds can take up to 60 calendar days.
On the other hand, wire transfers are final the moment funds are received on the other end.
If you’re hoping to transfer money out of the country via ACH, you’re out of luck. ACH can only be used domestically. Let’s say your child is on a school trip in Rome and needs money. The only way to get it to them is through an international wire transfer.
As mentioned, wire transfers allow recipients to access the money as soon as it hits their account. If you’re transferring money with ACH, the funds will appear in the recipient’s account as “pending” and won’t be released until they clear the ACH system. Funds are normally released within three business days.
If you’re making a large one-time payment, you may be required to use a wire transfer. However, in most cases, you have an option. For example, if your child calls from college saying they need money, you can decide whether to send it via ACH (if they’re attending school in the U.S.). If you choose ACH, your child may have to wait up to three business days to retrieve the funds. If the situation is critical and you want them to have the money the same day, a wire transfer can take care of that for you.
Both ACH and wire transfers are designed to make moving money faster and more secure. Knowing the subtle differences between the two can help you make the best decision when you have business to take care of.
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Timing your application just right could save you money.
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The decision to start a family is a big one. Having kids means not only taking on additional costs, from extra food to supplies to childcare, but also, having to dedicate a piece of yourself to another living being for the rest of your days (no pressure though).
Meanwhile, many parents make the decision to put life insurance in place once they have kids. That way, they can rest assured that their children will be protected financially if they’re not around to care for them.
If you’ve decided you’re ready to have a baby but don’t have life insurance yet, you may want to apply before getting pregnant. Doing so could end up being a nice source of savings.
You might think that paying for life insurance before bringing a child into the world is a waste of money. But actually, applying for coverage before getting pregnant could work to your benefit.
While some pregnancies go smoothly from start to finish, some women end up with ongoing medical issues during and following their pregnancies. And it can be hard to predict who that will happen to. If you’re ready to get pregnant and your health seems great now, then the time to apply for life insurance is now.
Remember, in most cases, you’ll have to undergo a process called medical underwriting in the course of getting life insurance. That means having a medical exam and having your health assessed. (There is such a thing as a no medical exam life insurance policy, but these policies tend to be more expensive and limited than those that require a medical exam.)
If you get that health assessment done with at a time when you know you’re in solid shape, you might manage to lock in very affordable premiums on your life insurance policy. But if you wait until you’re pregnant, or after, to apply for coverage, you might get stuck paying more.
Granted, the medical profession is aware that certain health issues can arise during pregnancy and resolve afterward. Having gestational diabetes, for example, doesn’t mean you’ll be diabetic for the rest of your life.
But what if, for example, you put on excess weight during a pregnancy and struggle to shed it afterward? If you apply for life insurance and are determined to be overweight or obese, it could result in higher premiums, because your insurer might consider you a riskier applicant.
It’s an unfortunate fact that some women don’t end up surviving childbirth. And that’s yet another reason to put life insurance in place before having a baby.
If you buy coverage before getting pregnant, you can name your partner as your policy’s beneficiary. Then, if you become pregnant, you can designate your unborn child as a beneficiary as well.
Putting life insurance in place before starting a family could give you peace of mind as you embark on that exciting but overwhelming process. And that’s reason enough not to wait.
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Who would’ve thought one three-digit number would make such a difference?
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If you’re thinking of buying a home sooner rather than later, you may have a to-do list that includes items like finding the right real estate agent, narrowing down the neighborhoods you want to look in, and even vetting potential mortgage lenders. But there’s one big task you want to add to your list: improving your credit score.
Personal finance guru Humphrey Yang recently demonstrated the importance of having good credit and being a trusted borrower on Instagram by discussing two different potential mortgage loan applicants with different borrowing histories. The one who missed a loan payment was given a much higher monthly payment (including interest) than the one who repaid a previous loan on time. This resulted in the borrower with stronger credit paying $137,000 less in interest over the course of the mortgage term! I don’t know about you, but $137,000 is a lot of money to me.
Let’s have a closer look and break this down in real numbers to see what a higher credit score can do for you in your quest to buy a home.
Let’s say you’re applying for a mortgage loan and you have a credit score of 620. This is the minimum acceptable credit score to be approved for a conventional mortgage loan (meaning, one not backed by the government like an FHA or VA loan would be). The amount you’re borrowing is $350,000, and you’re getting a 30-year fixed-rate mortgage, which is “the best instrument in the world,” according to Warren Buffett. With your 620 credit score, as of this writing with current mortgage rates, you’d be looking at a monthly payment of $2,535, and paying a total of $562,538 in interest on your mortgage.
But what if you approached the process with a credit score of, say, 700? You’ll qualify for a lower interest rate (as lenders will see you as a less-risky borrower), giving you a monthly payment of $2,211, and leaving you paying $446,074 in interest — or $116,464 less than in our first scenario.
It’s easy to see from the numbers above just how advantageous a higher credit score can be if you’re hoping to save money on your home purchase. And, let’s face it, homeownership is expensive enough as it is. So what can you do to get your credit in tip-top shape before you apply for a mortgage?
Pay down debt: Really dig in and focus on paying down your existing debts, especially if they are of the high-interest variety, like credit card debt. This will in turn free up cash to save for your down payment and improve your debt-to-income ratio, another number you’ll want to be as low as possible to get approved for a mortgage.Improve your payment habits: Your payment history makes up 35% of your credit score, so if you’ve historically been late with payments, now is a great time to get better at paying on time.Check your credit report: Credit report errors are fairly common, so it pays to check yours out (you can access your credit report for free every week until the end of 2023) and see if there are any mistakes on it. If you find any, you can ask that they be removed.
While you may not relish the thought of having one more thing to do as you prepare to buy a home, improving your credit score should really be a top priority. Having a better score will save you money on mortgage interest and make you a more attractive borrower to mortgage lenders. And isn’t that worth it?
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The quick answer? It depends on your situation.
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You’ll often hear that life insurance is prohibitively expensive. But if you buy the right kind of life insurance, you may realize how incorrect that statement is.
While whole life insurance can be very expensive, term life insurance tends to be far more affordable. Granted, there’s a reason for that. Whole life insurance will cover you indefinitely, whereas term life insurance will expire after a certain period of time.
Whole life insurance policies also accumulate a cash value that you can cash out or borrow against as needed. With term life insurance, you get nothing if you don’t pass away by the time your policy ends (other than, you know, being able to stay alive).
Many people who buy life insurance ultimately land on term life policies due to the difference in cost. And if you plan to do the same, you’ll need to choose the right term for your coverage.
A lot of people put life insurance in place for 20 or 30 years. But do you need to go that route? Or is a 10-year term life insurance policy enough?
The goal of life insurance is to ensure that your loved ones have financial support in your absence. And the number of years of support you want to provide will dictate what type of term life policy to buy.
Let’s say you’re applying for a term life insurance policy when your oldest child is five years old and your youngest just turned three. It’s fair to assume that children can support themselves financially once they graduate college and enter the working world, but for many, that doesn’t happen until around age 22. And so in that case, it could pay to put a 20-year term life insurance policy in place. That way, if you were to pass away shortly after getting life insurance, your kids would still be supported until they become full-fledged adults.
But let’s say your situation is different. Maybe you skipped out on getting life insurance when your kids were younger, and now, they’re in their teens. In that case, a 10-year life insurance policy could suffice for your family.
Or maybe you don’t have kids at all. Maybe you’re married, your spouse has decided to retire in their 50s to care for an aging family member, and you want to make sure your spouse is covered until they’re old enough to collect Social Security. In that case, a 10-year term policy could be more than enough for you, since seniors can start receiving Social Security as early as age 62.
If you’re convinced you’ll be giving your loved ones adequate protection with a 10-year term life insurance policy, then there’s really no need to buy coverage beyond that point. The shorter the term of your policy, the less your premiums are apt to cost. And the less you spend on those, the more money you’ll have to put toward retirement savings, your kids’ college fund, and any other financial goals you have on your list.
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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.
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