Credit Cards, Featured, News

6 Questions to Ask Before You Use Jewelry Store Financing

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6 Questions to Ask Before You Use Jewelry Store Financing

This Valentine’s Day, U.S. consumers were projected to spend a collective $182 billion on fancy dinners, cards, flowers, and other gifts for their loved ones, according to the National Retail Federation. Jewelry retailers can expect to receive a sizable chunk of that spending. One in five Americans said they’d give jewelry as a gift to their significant other this Valentine’s Day, totaling an expected $4.3 billion spent nationwide.

If you can’t afford to pay for a large jewelry purchase out of pocket, most jewelry retailers are more than happy to let you finance it with a store credit card. But beware: Diamonds might be “a girl’s best friend,” but a jewelry store retailer isn’t always looking out for your best interest. As you would with financing any large purchase, you should thoroughly evaluate your decision before you sign on.

Here are 6 questions to ask before you finance through a jewelry store.

What happens if I can’t pay off my balance before the promotional period ends?

Low-interest or 0% financing promotions for jewelers typically last from 6 to 18 months. You may be tempted to wait to make payments until some time goes by. But if you don’t start making payments right away, you may find yourself with a balance even after the promotional period ends. And that can spell trouble for your finances. Some financing offers include “deferred interest” clauses, which means if you even owe $1 after the 0% period ends, they will charge you interest from the beginning.

Take online fine jewelry seller Blue Nile, for example. Right now, the company has a promotion for 0% financing for 6 or 12 months, depending on how much you spend. Deep in the company’s terms, a deferred interest clause is buried, warning shoppers that “interest will be charged to your account from the purchase date if the purchase balance is not paid in full” by the end of the period or if you make a late payment.

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Other jewelers may offer a low promotional rate for a certain period but will raise the annual percentage rate (APR) if you aren’t able to pay the balance in full by then. For example, the Zales credit card starts off with a low 9.99% APR if you make a minimum purchase of $1,500 and pay it off within 36 months. But if you can’t pay it off by then, they will triple your rate, making it 29.40%.

Can I afford my monthly payments?

Do the math to find out what your monthly payments will be and how long you’ll need to pay back the loan. If it looks like it’s going to be a struggle to pay the loan back before your promotional period ends, you’re probably borrowing more than you can really afford and you’re asking for trouble — especially if there’s a deferred interest clause.

If you really want to do it to finance the purchase, make sure it’s something that you can pay off within the promotional period. To save money, try comparing prices at several different retailers, opting for a more modest precious gem instead of a diamond or using a grandparent’s ring instead.

What’s in the fine print?

Some jewelers may require a down payment in order to qualify for a 0% financing offer. For example, Kay Jewelers charges a 20% minimum down payment for their 12-month 0% interest financing plan. Zales offers 6 months of financing interest free if you open up a credit card for a minimum purchase of $150, but that period extends to 18 months for purchases of $3,000 or more.

You don’t want to be surprised by any fees either. Some retailers will charge a transaction fee simply for processing your payment. Zales doesn’t charge a transaction fee for people taking advantage of 6-month or 36-month financing, but it tacks on a $9.95 transaction fee for their 12-month and 18-month interest-free tiers.

Look closely for any maintenance fees like annual fees charged for each year you have the card open, or penalty fees for late or returned payments.

Are there any warranties or insurance policies?

You’re making a large purchase that you can’t afford out of pocket, so you’ll want to protect yourself in case the jewelry is lost or damaged. Many retailers, like Jared or Kay Jewelers, offer lifetime diamond and gem warranties that cover cleaning and repair, although you may have to meet certain requirements to maintain a warranty.

To maintain a Zales Lifetime Diamond Commitment or Jared’s Lifetime Diamond & Color Gemstone Guarantee, for example, you need to take the piece to a store for cleaning and inspection every six months. You’ll need to bring your inspection history with you when you go, and the warranty doesn’t cover making any repairs. You could void your warranty if you don’t keep up or if you don’t make the suggested repairs.

Some plans offer additional protection plans to cover theft. Zales offers a lifetime jewelry protection plan with theft replacement for the first two years. To use it, you’ll need to bring in a police report and proof of purchase, but the warranty is void if a family member steals your jewelry.

You could forgo the jeweler’s insurance for your own, however, and tack the piece onto your home or renter’s insurance plan as a ‘jewelry rider’ for a few dollars more each month.

What’s the return policy?

Not to be a killjoy, but what if you break up with your significant other before you get a chance to give them the gift? What if they don’t like it or — even crazier — the salesperson was just really good and after the purchase you decide you don’t like the jewelry you picked out? You’ll need to make a return, and you’ll want to make sure you get your money back.

Ask about the company’s return policy related to in-store financing. You’ll want to know what the period is to make a return or exchange, as they may differ, and when you’ll see the charge removed from your account. Keep in mind, many jewelers won’t let you return specially made or engraved jewelry; however, some, like Blue Nile, make an exception for rings.

If you’re returning an online purchase, ask about any extra fees you may need to pay, such as shipping or insurance for the jewelry.

Do I get any perks?

If you frequent a particular jeweler, you may be interested in what perks you’ll get from opening a store credit card. For example, Zales cardholders benefit from exclusive coupons, reminders for jewelry inspection and cleaning, and an automatic $50 off birthday purchases $200 and higher.

Sometimes, these perks may not be worth the hassle of signing up for a high-interest credit card or financing deal. Compare the dollar value of the perks to the amount you’ll pay in interest and fees down the road.

Alternatives to Jewelry Store Financing

Friends and family

Reach out to your network of close friends and family to see if you can get a more flexible, interest-free loan. To demonstrate responsibility, you may want to create a contract with payment terms and set a date for when you’ll pay the loan back in full. Warning: Only do this if you’re certain you can pay off the loan quickly to avoid harming your relationship with the lender.

Credit cards

Jewelry store cards generally charge high interest rates, so you might find a more competitive offer with a traditional bank or major credit card issuer.

If you can qualify for a credit card with a longer promotional 0% interest offer, or one with a lower interest rate after the promotional period ends, you may be better off putting the jewelry purchase on it. Depending on the card you choose, you might even be able to earn points or cash back rewards for your purchase.

A bonus tip: If you decide to open a store card but aren’t 100% sure you’ll be able to pay off the balance before the promotional period ends, you could make payments until the period is over, then transfer the remaining balance over to a balance transfer card to avoid paying interest.

Personal loan

If you don’t want to open up a credit card, a personal loan can be an alternative way to finance the purchase, although you won’t benefit from an interest-free promotional period.

Rates on personal loans range from as low as 4% with good credit to as high as 36%. On the other hand, with personal loans you’ll have a fixed interest rate and a fixed repayment term, so you’ll know exactly how much you’ll pay each month and when you’ll pay off the purchase.

You can apply for a personal loan through your bank, or leverage technology and try peer-to-peer lending through sites like Upstart, Lending Club, or SoFi.

The Final Word

Financing a large jewelry purchase may be convenient, but it may not be your most cost-efficient option, especially if you’re not sure you’ll be able to pay off the card before the 0% interest promotional period runs out.

If you’re planning to pop the question soon, remember: the engagement ring and all of the traditions surrounding it are a relatively new construct of modern-day romance. You don’t have to prove your love and commitment to your spouse with a huge, expensive ring.

 

 

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Featured, Life Events, News

Now You Can Pay for Uber and Lyft Rides With Your Commuter Benefits

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Now You Can Pay for Uber and Lyft Rides With Your Commuter Benefits

Ride-share users, your employee commuter benefits package just got a little better. Earlier this year, Lyft became the latest ride-sharing app to give riders the chance to pay using employee commuter benefits.

That means riders can now use pre-tax dollars to pay for Lyft rides the same way commuter benefits can be used to cover transit costs or parking expenses. Lyft isn’t the first ride-sharing app to add commuter benefits — Uber beat them to it back in August — but Lyft’s addition of commuter benefits signals a trend that could save big-city commuters time and money on the way to work each day.

Right now, it’s not possible for workers to use commuter benefits to pay for regular cabs — including regular Uber or Lyft rides. But Uber and Lyft found a clever way around this. Benefits can be used when riders select Lyft Line or uberPOOL, the apps’ carpooling options.

If you’re curious about this benefit and whether or not it’s worth linking your Uber or Lyft account to your commuter benefit account, we’ve got you covered.

What are commuter benefits?

Commuter benefits are an employer-provided benefits program that lets you set aside pre-tax dollars in an account to be used for your commute costs. Employees can use these benefits to pay for public transportation — trains, subways, buses, even parking passes — used on their daily commute with pre-tax dollars. The amount of money you set aside to pay for your commute doesn’t count as income, so you’re not taxed on it.

Which benefits programs are included?

Each ride-hailing service has partnered with select benefits programs, although there is some overlap. For example, if your company’s benefits package is with Zenefits or TransitChek, you can use them with Lyft, but not with Uber. On the other hand, if you are with EdenRed or Ameriflex, you can only pay with your benefits on the Uber app. The lucky commuters with benefits under WageWorks, Benefit Resource and Navia can use their benefits on either rideshare app.

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How do I sign up for commuter benefits?

Workers have to sign up for commuter benefits in order to receive them. You will be asked to select how much money you want to set aside from your paycheck each month to cover your transportation costs.

Once you’re enrolled, you may receive a benefits card (it can be used like a regular debit or credit card) to make transportation purchases. Otherwise, you can purchase transportation expenses using your regular credit or debit card and then submit a claim to be reimbursed through your benefit provider.

Reach out to your employer’s human resources department to find out how to take advantage of your commuter benefits program.

How much can I really save?

Depending on your current tax bracket, you could have up to 40% more to spend on your commute. For example, if you’re in the 35% tax bracket and contribute $200 each month to your commuter benefits account, you’re getting an extra $70 to spend on your commute each month. That’s an extra $840 per year.

But here’s the catch: Commuter benefits contributions are capped at $255 per month. So if you are already relying on your benefits to finance your monthly subway pass or parking garage expenses, you may not have much left over to use on Lyft or Uber rides.

What are Lyft Line and uberPOOL?

To use commuter benefits to pay for Lyft or Uber rides, you have to select the apps’ carpooling options — either Lyft Line or uberPOOL. Carpool vehicles seat six or more passengers. Both Uber and Lyft use algorithms to place riders going toward the same area together. Because you’re carpooling, however, you may or may not have a shorter commute, depending on traffic in your city and how many other riders get picked up or dropped off during your trip.

How to use commuter benefits on Lyft

First, you need to add your commuter benefits card to your profile.

  1. When you open the Lyft app, tap “Payment” in the left-hand side menu to see your payment options.

  2. Select “Add credit card,” enter your commuter benefits card information, and save. The card will have a “Commuter” distinction.
  3. Next, set the card as your default payment method. There are two ways to do this:
    1. Select the card as your default payment method for your personal profile under the “payment defaults” section in the “Payment” menu.
    2. When you open the app, set your location and destination. You’ll then see the last four digits of the card is being used to pay for the trip. Tap the numbers to change your payment method to your commuter benefits card. You should see a rectangular icon with a diamond in its center when using your benefits card.
    3. Select “Lyft Line & Ride.”
      You can only use your benefits to pay for carpools under Lyft Line. Select the pooling option to be matched with a car with six or more seats, and you’ll be all set.

How to use commuter benefits on Uber

Add your commuter benefits card to your profile by going to the left-hand menu and adding your commuter benefits card under “Payment.” You can also add the card after setting your location and destination under uberPOOL, shown below.

Tap on your card information to set or add your commuter card as a payment option.

Your benefits can only be used to pay for carpools under uberPOOL. Select the pooling option to be matched with a car with six or more seats, and you’ll be good to go.

Pros

Using pre-tax dollars saves you up to 40%

The most obvious perk of using your commuter benefit is that you’re using pre-tax dollars, so your dollar goes up to 40% further. If you’re already paying out of pocket for your commute, this could be a huge benefit.

Cut back on driving

If you drive to work, a 2014 Trulia analysis found you likely spend about 30 minutes in the car each way. If it’s more affordable for you to use a ride-sharing app, you can use that time to read or catch up on work or a nap while you ride.

Reduce your carbon footprint

Legally, commuter benefits can only be used with efforts to reduce your commuter footprint, so ride-sharing counts only when you’re placed in a car that seats six or more passengers. If you drive to work, this cuts down your footprint and takes the hassle out of organizing a carpool.

Cons

Lyft Line or uberPOOL only

You may want to put your pre-tax dollars elsewhere if you’re not into making new friends each morning. You’ll be placed in a vehicle that seats six or more people when you use your benefits card, and other riders may have various personality types.

Limit on contribution

Your contribution is limited to $255 a month, which may or may not be a month’s worth of commuting, depending on how much your commute costs. For example, a LendingTree analysis found the average monthly cost of commuting with Uber’s non-pool service UberX in New York City is more than $700. Still, $255 pre-tax will help cut down on your monthly spending for the trip to work.

Only available in select major cities

The apps’ commuter benefits options are only available in select major cities so far. Here’s a breakdown of where you can use yours.

Lyft: New York City, Boston, Seattle, and Miami

Uber: New York City, Boston, Chicago, Washington, D.C., San Francisco, Philadelphia, Las Vegas, Denver, Atlanta, Miami, Los Angeles, San Diego, Seattle, and New Jersey (state).

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College Students and Recent Grads, Featured

60 Years Old and Still Paying Off Student Debt

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60 Years Old and Still Paying Off Student Debt

Like a growing number of student loan borrowers, 60-year-old Beatrice Hogg will be paying off her loans well into her 80s.

“I’ll probably die before I pay off the loan,” says Hogg, a social worker living in Sacramento, Calif. In total, she owes $46,000 in outstanding federal student loan debt. She borrowed the money in the early 2000s in order to finance her Master of Fine Arts degree in creative nonfiction, which she received in 2004 from Antioch University of Los Angeles.

With monthly payments of $251, Hogg says she doesn’t expect to pay off her loans until well into her 80s. That could easily change if she runs into the same bouts of unemployment that have dogged her over the last decade, leading her to defer her payments several times.

Hogg
Beatrice Hogg, 60, will be paying off her loans into her early 80s. Source: Beatrice Hogg

Hogg’s story is further proof that student debt has become a multi-generational issue. A recent report by the Consumer Financial Protection Bureau found the share of Americans 60 years and older who carry federal student loan debt has quadrupled over the last 10 years — from 2.7% of all borrowers to 6.4%. In total, this group of borrowers carries roughly $66.7 billion — or 5.4% — of all outstanding federal student loan debt in the U.S.

According to the CFPB’s report, borrowers who carry student debt late into their lives have more trouble repaying them, reflecting other possible financial issues. Borrowers over the age of 60 were twice as likely to have missed at least one student loan payment compared to the same group in 2005, the CFPB found, and 2 in 5 of borrowers 65 and older have loans in default.

The CFPB reports older Americans burdened with student loan debt are also more likely to skip important health care purchases like prescription medication, doctors’ visits, and dental care because they can’t afford it. As an example, the report cites a separate, 2016 study that found 39% of older borrowers said they skipped those needs compared to 25% of those without a student loan in 2014.

As student loan borrowers have grown older, the number of borrowers who have their Social Security benefits garnished because of student loan payments increased from 8,700 to 40,000 from 2005 to 2015 according to the CFPB. The U.S. government can garnish up to 15% of a borrower’s Social Security benefits as long as the remaining balance is greater than $750 each month.

How did we get here?

Nearly two-thirds, or 73%, of student loan borrowers 60 and older said they took on student debt for a child’s or grandchild’s education. More than half (57%) of all those who co-signed student debt are 55 and older.

Adding to the burden of debt, says Betsy Mayotte, an expert in student loan repayment strategies at American Student Assistance, is the fact that families are now borrowing more than ever to pay for rising college costs. For example, between 2006 and 2016, in-state tuition and

fees at public four-year institutions outpaced inflation by about 3.5% per year according to the College Board. In 2016, the average in-state student at a public four-year institution paid $3,770 in tuition and fees compared to $2,220 in 2009.

“You can have families with a lower income level end up taking out six figures in student loan debt,” Mayotte says.

Another reason student loan borrowers are getting older is because they now have the option to extend their repayment terms if they are struggling to make payments. The Obama administration rolled out several of these income-driven repayment plans in the years after the Great Recession.

The lasting impact of senior student loan debt

It’s simple to understand how paying student loans leaves less to save for retirement.

“For every dollar that you pay toward your student loan payment, it’s a dollar that you’re not putting toward retirement,” says Mayotte.

Hogg now works as a county social worker and began making payments again in December 2015. She says she’s “been current ever since,” but she has yet to contribute to a retirement plan.

“I’m sure that if I didn’t have the [student] loans, I could have probably set myself up better for retirement,” says Hogg. “Hopefully I’ll be able to stay at my job until I’m vested in their retirement plan.”

Tips for struggling student loan borrowers

If you have federal student loans and are struggling with your payment each month, you may want to consider requesting an income-driven repayment plan through your loan servicer. The plans can reduce your payment to as little as $0. You can also request to defer your loans or place them in forbearance if you’re going through financial hardship. Just keep in mind that interest is still accruing.

“It could be tempting to try to get the lowest payment on your student loans,” says Mayotte. But remember, “you’re trying to win the war and not the battle. The longer you pay over the life of the loan, the more you pay in interest.”

Mayotte recommends creating a budget to figure out the most you can afford to pay toward your loans each month. The Department of Education has a calculator on its website that you can use to see your estimated payments under each repayment plan.

When you’re on a income-driven repayment plan, you should keep in touch with your loan holder, and don’t forget to apply for renewal each year.

Unfortunately, if you have private loans, there’s not much you can do to reduce your monthly payment outside of consolidating or refinancing your loans with a lender like SoFi, Earnest, or LendKey. Mayotte says she sees those with private loans and those who don’t complete their degree or program struggle most with repayment.

“The people that I haven’t been able to help almost exclusively have had private student loan debt,” says Mayotte. She says it’s because they don’t have the many repayment options federal student loans do and “life can happen.”

The final word

Despite her debt burden, Hogg says she’s happy as a social worker and says she doesn’t regret getting her master’s. She regrets that she used student loan debt to finance it.

“I regret that I had that big of a gap in my payments from being unemployed. I just wish there were more grants available for getting a higher degree,” says Hogg.

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Featured, News

7 Ways to Increase Your Net Worth

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7 Ways to Increase Your Net Worth

The more than 75 million young adults that make up the millennial generation had a lot against them as they entered adulthood. The largest and most diverse generational cohort came of age during the financial crisis. They pursued higher education at a higher rate than the two generations before them despite skyrocketing education costs, and many older millennials faced a tough job market upon graduation.

The financial crisis coincided with a boom in college and graduate school attendance. This wasn’t much of a surprise, considering education has always been considered a reliable way to increase wealth. However, a recent study by the Young Invincibles found that despite being the most college-educated generation in history, the average millennial’s net worth is still half of what the average baby boomer’s net worth was at the same age.

To explain why, the Young Invincibles looked at how an increase in student loan debt and average wages has worked against college graduates. According to the results of the study, millennials are not just being held back by student loan debt — about $27,000 on average — but they are also earning an average of 20% less than boomers earned at the same age.

Why all the concern over millennials’ net worth? We’ll explain why your net worth matters and what you can do it increase it.

What Is Net Worth?

Your net worth is fairly simple to determine. It’s what you have left over after adding up the assets you own and the debt and other financial liabilities you have as well.

In short, it’s how much you own versus how much you owe.

Your assets are a combination of the cash you have in the bank, investable assets like your 401(k) or investments in the stock market, and the current value of your home and your car.

Your liabilities are your debts. That’s essentially everything that pops up on your credit report like credit card debt, student loan debt, auto loan or mortgage (yes, equity you have built in your home is an asset, but the mortgage you took out to buy the home is a financial liability).

Calculate your net worth by subtracting your total liabilities from your total assets.

For example, you could be a doctor earning $300,000 a year, with $80,000 in savings and $100,000 in your retirement account, but if you have a mortgage worth $400,000, $130,000 in student loans to pay off, and $10,000 in credit card debt, you would have a negative net worth. ($180,000 – $540,000 = -$360,000)

How to Increase Your Net Worth

Hate to break it to you, but outside of receiving a large unexpected inheritance, there is no quick fix to growing your net worth.

However, as a millennial, time is on your side.

“Building up your financial situation takes time, a good plan, and a lot of persistence,” says Peter J. Creedon, a certified financial planner at Crystal Brook Advisors in Mt. Sinai, N.Y. “Life is about choices, and good behaviors take time to form and discipline to adhere to.”

Follow these tips to grow your net worth:

  1. Work with What You Have

So, you’re saddled with student loan debt and earning 20% less than your parents’ generation, but you’re determined to grow your net worth. It may be time to make like Beyonce and turn lemons into lemonade.

“Millennials can’t change their college debt situation and may not be able to increase the wages from their full-time job,” says David J. Haas of Cereus Financial in Franklin Lakes, N.J. “So the important thing is careful money management to make the most of what they do have.”

Practicing a daily budget is an excellent first step toward increasing your net worth. If you can master the practice of spending less than you earn each day, then each week, each month, and eventually each year, you’re on your way to a higher net worth.

If you’re not into calculators and spreadsheets, there’s good news: It’s never been easier to use technology to do the hard work for you.

By automatically scheduling savings to disperse to different goals such as an emergency fund or retirement savings, “millennials can train themselves to live on less while building their net worth a little bit at a time,” says Daniel Andrews, a financial adviser at Well-Rounded Success in Greenwood VIllage, Colo.

  1. Look for a job with growth potential

If you went to college and took on student debt like many millennials, chances are high that your net worth will be in the red. If that’s the case, you should focus on creating a plan to earn more and owe less over time says Allison Vanaski, a financial planner with Arcadia Wealth Management in Smithtown, N.Y.

“You shouldn’t be worried if you are young and have a negative net worth, but you should be worried if you don’t have a plan [to grow your net worth over time],” Vanaski says.

By focusing on increasing your earnings over time, you’ll have more cash on hand to pay down your debts and build up your cash reserves. All the while, you’re laying groundwork for a higher net worth.

Ask yourself if you’re in a position with room for growth or increased income because that is a surefire way to increase your networth. If you’re not, it could be time to look for a job with more opportunity for growth.

  1. Take Advantage of Your Employer Benefits

One of the easiest things you can do to increase your net worth is to maximize employer benefits like a 401(k) match, flexible spending account, or health savings account.

Roger Ma is a New York-based financial planner at Life Laid Out. He says to maximize your retirement contributions to fully take advantage of any 401(k) match you get from your employer. This is like getting a guaranteed return on your retirement investments — for free.

To put this in practice, imagine your employer matches 50% of what you contribute to retirement up to 5%. At the very least, you should set aside 5% of each paycheck for your 401(k) to capture the full match.

Flexible spending or health savings accounts can seem intimidating to figure out, but they are a great way to save on health care expenses. Health care is only getting more expensive each year, and it can quickly eat away at your budget. When you put money into an FSA or HSA, you’re doing so with pre-tax dollars, giving you extra money for those costs.

Even little perks like commuter benefits can add up over time. Those accounts allow you to use pre-tax dollars to pay for transportation costs.

  1. Get a Side Hustle

You might find an excellent job with great upward mobility but still not feel like you’re earning quite enough to be able to pay down your debts. Leaving your job may not be the answer if you feel you have potential to grow and earn more there. Instead, look for ways to capitalize on a talent or skill to bring in additional income.

“The job market is getting better right now. Don’t be afraid to look around to see if you can find a better job which pays more, or think about picking up a little extra money by participating in the gig economy,” says Haas.

Technology has significantly lowered the barrier to entry for many gig-type jobs. Making extra cash on a Saturday by driving for Uber, soliciting your talents on Fiverr, or helping someone get work done via TaskRabbit weren’t options for Gen-Xers. Today, almost anyone with an internet connection can make extra cash relatively easily. An added advantage for millennials is that you can use these tasks to develop job skills to increase your human capital and increase your earning potential.

  1. Save Up While You Pay Down Debts

There are some things you shouldn’t do at the same time — like texting and driving — but you should definitely work on your savings and debts at the same time.

Saving while you have so much debt to pay off can feel like an impossible ask. But it’s important to prioritize savings just as much as paying down debt. Without cash reserves on the side, you’re more likely to take on more debt when unexpected expenses pop up over time (and trust us — they always do). An early savings goal should be to save at least three months of monthly expenses. Accomplish that while you make minimum payments on your other debts. Once you’ve reached that goal, you can save a little bit less and put a little bit more toward your debts.

Doing both also gets you into the habit of saving, so that once your debts are all paid down, you have already built a good habit. At that point you should start to think of how much you want to increase your savings rate instead of just getting your saving started says Vanaski.

“Saving 20% of your earnings would be a great target, but even if you can only save 5%, start there and increase it by a percentage every year,” Haas says.

  1. Don’t Be Afraid to Invest

Once you’ve been able to save money for emergencies, you can begin to focus on saving for long-term goals. The best way to achieve long-term goals like retirement is to get into the market and invest. We get it — the stock market can be intimidating, especially for a generation that came of age during one of the worst financial crises in history.

According to a 2016 Bankrate study, only one-third of millennials own stock, while about 51% of Gen X-ers and 48% of baby boomers invest in the market.

Investing doesn’t have to be rocket science, and you don’t have to (and honestly, you probably shouldn’t) get into buying and selling individual stocks.

By simply setting aside 5%-10% of your paycheck in a 401(k) or IRA, you’re investing in the market. Many employer retirement plans have advisers on hand to help you pick your investments.

The important thing is to start as soon as possible, as early as possible. Time is a huge asset when it comes to investing since your earnings will have more time to grow and compound for decades.

If you’re stuck between paying down debt and investing, that’s understandable. If you have high-interest debt, like a credit card, with an APR over 8%, then you should absolutely focus on paying that debt down first and aggressively.

For more information on investing, check out these posts:

How to Set Up Your Investment Strategy for 2017

5 Things Millionaires Understand About Investing

It’s also important not to mistake making large purchases as increasing your net worth. Like we mentioned earlier, a home can be considered an asset but ONLY if the home becomes worth more than the loan you borrowed to pay for it. This is why the housing crisis of 2008 was so devastating to so many homeowners — suddenly, their homes were worth significantly less than they paid for them or could sell them for on the market.

  1. Invest in Your Human Capital

Increasing your income can help you increase your net worth just a bit faster. A possible way to do that is to invest in your human capital: the skills, knowledge, and experience that you have that adds value to your worth.

Constantly develop skills related to your field or a field in which you may be interested in entering. You can use a wealth of online resources to develop your skills in various areas, such as web development, podcast editing, or management, with sites like Lynda.com or with learning courses on Linkedin. You may even consider pursuing a higher degree if the long-term benefit will outweigh the cost of education.

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Featured, Strategies to Save

Why Everyone Loves the Zero-Sum Budget

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Why Everyone Loves the Zero-Sum Budget

How would you like a budget that lets you spend literally every single dollar you have? That’s exactly how the zero-based budget operates, and it’s growing increasingly popular as a tool to help people save more and spend less.

The concept of zero-based budgeting has actually been around for several decades. It was developed in the 1970s by Peter A. Pyhrr, who worked as a manager at calculator-maker Texas Instruments in Dallas, Texas. At the time, the budgeting method caught on as a popular way for businesses to budget but eventually went out of fashion.

Today, zero-based budgeting is having something of a renaissance, not as a business accounting tool but for helping people manage their personal finances.

How Zero-based Budgeting Works

The goal of zero-based budgeting is to ensure you don’t spend any money that you don’t have to spend. The method gives you an opportunity to review each dollar in your budget and assign amounts to spending categories so that you can get a picture of where all of your money goes each month.

“There should never be any money ‘left over’ because a zero-based budget includes expenses such as ‘investments’ and ‘savings’,” says Scottsdale, Ariz.-based Certified Financial Planner Alexander Koury.

The goal is simple: income – spending = 0

How to Follow a Zero-based Budget

List all of your net monthly income

To kick off your zero-based budget, figure out exactly how many after-tax dollars you have coming in every month (you could track your earnings biweekly, as well).

If you’re a salaried worker with a steady income, it’s fairly simply to predict your earnings. If you do contract work or your income is irregular, you may want to average your income for the past three months to create a starting point, then adjust it accordingly.

List all of your sources of income to get your total income for the budgeting period. That number will be your starting point.

Track your past spending

A benefit of the zero-sum budget is that it “helps create awareness of all outflows and expenses,” says San Francisco-based financial planner Catherine Hawley.

In short, you’ve got to know where your money is disappearing to every month.

When you become fully aware of where all of your money goes, you can discover where you’ll need to control your spending.

Start by listing all of your fixed expenses for each period. Those are expenses that you know you will need to make each period. For example, in a monthly budget you may have rent, utilities, and subscription services listed as your fixed expenses.

Next figure out where you spend your flexible dollars. Try an app like Mint to easily categorize your expenses. Or do it the old-fashioned way with a spreadsheet or pen and paper. Koury recommends pulling your past 12 months of expenses to locate and categorize your purchases.

Create your budget

Once you have your income and expenses calculated, it’s time to throw it all together and zero out your budget.

“Budgeting is the foundation on which financial planning is built. Without having a budget, it is difficult if not impossible to grow and create wealth,” says Koury.

Take your income for the budgeting period and subtract your fixed expenses. Hopefully, you’ll still have money to play with, because next you’ll need to decide how much you want to “spend” on savings and long-term goals like retirement.

“When you list out your expenses, put yourself at the top of the expense list. You are the most important, and you always want to pay yourself first,” says Koury.

Fixed expenses and savings (paying yourself) should always come first on your budget. If you still have money left over, don’t let it sit in your account without a purpose. With a zero-sum budget, every dollar you earn should have a job. Otherwise, it’s easy to lose track of those dollars. Go back to the beginning, when you listed out your spending categories. A trend probably emerged, showing you where you spend the most. Maybe it’s eating out with friends, or buying toys for the kids. Designate a certain amount you’re allowed to spend out of your total budget to those categories. Once you set a limit for spending there, you’re less likely to go overboard.

If you get paid bimonthly or biweekly, you may want to create two versions of a budget — one for the first half of the month and another for the second half of the month to accommodate for bills for fixed expenses due at different times in the month.

Pros and Cons of Zero-based Budgeting

Pro: You know where your money is going.

The best part about a zero-based budget is that you’ll know exactly what you are spending you hard-earned money on. At first, your spending habits may surprise you. You may be shocked that you spent more on dining out than on groceries last night, or that your shopping habit has gone a bit overboard.

“The main reason people use zero-based budgeting is to control their spending habits in the face of impulsive behavior,” says Dr. Constantine Yannelis, an assistant professor of finance at NYU Leonard N. Stern School of Business.

When every dollar you earn is assigned to a task, you are able to visualize and rationalize your budget each period. You can see how cutting back in certain spending categories will help you to reach your financial goals.

Con: A zero balance requires a lot of discipline.

If this is your first attempt at budgeting, you may want to ease into it, as it requires you to be very disciplined.

“[The budget] may become too strict, just like a diet, and if one gets off track even for a bit, they may stray from using it and they may go back to their old ways,” warns Koury.

Unfortunately, the budget that creates a place for every dollar doesn’t leave much room for error.

“The chief pitfall of zero-sum budgeting is that it can decrease flexibility, and if adhered to strictly, it can lead to artificial constraints on what individuals may purchase,” says Hawley.

Don’t be too hard on yourself. It may take a couple of budget cycles for you to get used to your new budget and to adapt it to your lifestyle.

Pro: If you stick to it, you’ll see results.

This budget is not for the commitment-phobic. The zero-balance budget is an exercise.

“It is a very results-based approach to creating great results,” says Koury. “The more disciplined you are in your approach, the more effective the results can be. If you have specific goals, then you would want to use this approach.”

Dr. Yannelis says the zero-balance method is also good for new budgeters because “it provides a commitment device for individuals with difficulty meeting their spending and savings objectives.”

Con: This may not work well for emergencies.

The zero-balanced budget is pretty strict, so “it may not work well if people have unpredictable spending needs due to health issues, children, or other life events,” says Dr. Yannelis.

To combat this, you’ll want to make sure to contribute to an emergency fund each period and to make sure you have insurance coverage for all of the important things — health care, disability, life, home, auto, etc. You can’t predict when an emergency will cost you financially, but it’s better to have cash stashed so a small emergency with the kids won’t interrupt your budgeting goals.

Pro: You can track progress toward your goals.Using this budget — especially when you use it with a budget-tracking tool— can help you see the progress you are making toward your savings and debt repayment goals. If you can stick to the contribution you make each month, you can more easily predict when you will reach your goals.

Mark that date, and stay as close to your budget as possible to reach your goal by it. If you happen not to spend all of your money in a particular category, it has to go somewhere. You can contribute the extra funds to your savings or debt payment goals to beat your target date.

Con: You may be “overdoing” your needs.

The zero-balanced method can get very detailed since you need to track the route of each and every penny.

“It can be more detail than some people need. For some it’s enough to carve out long-term savings and live off the rest,” says Hawley.

Koury says the method works better “for those that are diligent about their finances and are analytical.”

If you make more than enough money, you might not care or feel the need to make a super-detailed budget.

“Some people just like knowing they put a certain amount of money in their savings account monthly, and they spend the rest,” says Koury.

Tools to Help You Master Your Zero Balance

EveryDollar and EveryDollar Plus

EveryDollar is the budgeting app created by personal finance guru Dave Ramsey, who popularized the zero-based budget for personal use. You can use it on your desktop or smartphone.

The app automatically creates eight spending categories that cover the basics of most budgets, but you can create budget-specific custom categories, too. It also lets you set up “funds,” which are saving accounts. This lets you set aside money for an emergency fund or other savings goal. The app also sends you tons of reminders to stay on top of your goals.

In addition to the basic version of EveryDollar, there is a premium version called EveryDollar Plus that can be connected with your bank account to pull in your transactions automatically.

You Need a Budget (YNAB)

You Need a Budget — aka YNAB — is budgeting software that’s also available for desktop and mobile devices. The company’s mantra, “Give every dollar a job,” describes its zero-balance foundation.

It prompts you to assign the money you have to a budget category. When you have one month’s worth of expenses fully funded, you can start budgeting funds for future months.

YNAB will cost some money to use. The platform offers a 34-day free trial, after which you will have to pay either $5 a month or $50 a year. Students can get 12 months of YNAB budgeting for free, after which they’ll be eligible for a 10% discount for one year.

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College Students and Recent Grads, Featured, News

Student Loan Borrowers: Here’s How to Renew Your Income-Driven Repayment Plan

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Student Loan Borrowers: Here's How to Renew Your Income-Driven Repayment Plan

If you are on an income-driven repayment plan, it’s important to know that you must renew your plan each year in order to remain enrolled. And waiting on your student loan servicer to remind you of that fact isn’t the smartest idea

The Consumer Financial Protection Bureau recently filed a lawsuit against Navient, the country’s largest loan servicer. Among many other claims, the CFPB alleged Navient failed to adequately inform borrowers of their need to renew their income-driven repayment plans.

The outcome of the CFPB’s lawsuit is still unknown. Navient has already taken steps to improve communication with borrowers around repayment plan renewal time. Even so, the news serves as a prime example of why you should learn the details of the income-driven repayment renewal process on your own.

How to Renew Your Income-Driven Repayment Plan

The DOE began offering income-driven repayment, or IDR, in 2009 to help ease the burden of student loans on borrowers struggling to repay federal student loans. If you can meet certain income or family criteria, you could pay as little at $0. Another important benefit is for the first three years after enrollment, many borrowers qualify to have the federal government pay part of the interest charges if they can’t make payments.

IMPORTANT: If you are on an income-driven repayment plan, you have to renew your plan each year.

This will require you to submit updated information about your annual income and family size to your servicer. The time to renew your plan is typically a month or two before the 12-month mark.

If you do not renew your income-driven plan, you’ll get kicked out of your IDR plan and your payment may increase since it will no longer be based on your income.

There are two ways you can renew your IBR plan:

  1. Visit the Federal Student Aid website at studentloans.gov: This is the fastest and generally the most convenient way to renew your plan.

Steps:

  1. When you get to the website, follow the “Apply for an Income-Driven Repayment Plan” link. You will follow the same link if you need to renew your IBR. The form will prompt you to select a reason for your request once you begin.

Select “Apply for an Income-Driven Repayment Plan” to get started:

Select “Apply for an Income-Driven Repayment Plan” to get started

Choose “submit recertification”:

Choose “submit recertification”

  1. The application will ask you for information such as your marital status, household size, employment, and income. Once you are on the “Income Information” section, you’ll have the option to retrieve and use your most recent income information from your taxes if you filed them with the IRS.

Choose the “annual recertification” option:

Choose the “annual recertification” option:

The application asks for your personal information:

The application asks for your personal information

  1. Follow up with your loan servicer. If you have loans with multiple servicers, you only need to submit the request once. They should all be notified when you renew online via the Federal Student Aid site. Below is an example of a completed submission with one servicer; your other servicers will be listed if you have multiple servicers.

Completed submission:

screen shot 12

  1. Use the Income-Driven Repayment Plan Request form

Use the Income-Driven Repayment Plan Request form

Steps:

  1. Download the official income-driven repayment plan renewal form here on the Federal Student Aid website or on your servicer’s website.
  2. Once you print and complete the form, you can submit it to your servicer’s website if they allow. Navient allows you to upload the completed form. You also have the option to mail or fax the paperwork to your loan servicer.
  3. Your servicer should notify you once your request has been processed.
  4. You should be able to monitor the status of your renewal on your student loan servicer account.
  5. If you mail or fax the paperwork to your servicer, you’ll need to mail one to each servicer individually as they will not be automatically notified of your request.

How to Enroll in an Income-Driven Repayment Plan

The first time you apply for an IDR plan, you can either do so through the government’s website at studentloans.gov or contact your student loan servicer to help you enroll. You’ll need to log in to the platform and follow directions to fill out the application. It should take about 10 minutes, although you may be asked to mail in supplemental documentation to your servicer for review.

You can use the studentloans.gov website repayment estimator to estimate how much your payments, interest, and total amount paid would be under each plan option.

Repayment estimator results from studentloans.gov

Repayment estimator results from studentloans.gov

Your servicer will notify you once your request has been processed.

Choosing an Alternative Income-Driven Repayment Plan

When you renew your IDR plan, you can check to see if you’d qualify for alternative payment options. You might find an alternative could work better for your budget.

In addition to the two standard repayment and graduated repayment plans, borrowers have five income-driven repayment plans to choose from. It’s important to note that under most IDR plans, you’ll pay more over time than you would under the standard plans.

Here’s a quick rundown of each:

1. Income-Based Repayment PlanThe traditional income-based repayment plan generally caps your payment at either 10% or 15% of your discretionary income. Your payments will never be more than what they would be on the standard 10-year plan. Payments are recalculated each year and are based on your updated income and family size.

After 25 years of payments, your loan balance is forgiven, although you’ll have to pay taxes on the forgiven amount when you file your taxes for the year.

2. Pay As You Earn (PAYE) PlanPay As You Earn increases your monthly payment as your annual earnings increase, but generally sets your monthly payments at about 10% of your discretionary income. Only those who took out their first federal loan on or after October 1, 2010, or who received a direct loan disbursement on or after October 1, 2011, can qualify for the PAYE plan. Applicants must also have a partial financial hardship (disproportionately high debt compared to current income). Your payment is recalculated annually based on your updated income and family size. The loan’s outstanding balance is forgiven after 20 years.

3. Revised Pay As You Earn (REPAYE) PlanThe Revised Pay As You Earn Plan expanded the PAYE plan to about 5 million more borrowers. You may qualify for REPAYE regardless of when you took out your first federal student loan. It doesn’t require you to have a partial financial hardship. REPAYE generally sets payments at about 10% of your discretionary income and doesn’t cap income. Spousal income is considered in calculating payments no matter how you file your taxes. Under this plan, undergraduate loans are forgiven after 20 years, while graduate loans are forgiven after 25 years.

4. Income-Contingent Repayment (ICR) PlanThis plan caps your monthly payment at either 20% of your discretionary income or the amount you would pay on a two-year fixed payment plan, adjusted for your income. The payments are recalculated each year and based on updated income, family size, and the amount you owe. After 25 years of payments, your balance will be forgiven.

5. Income-Sensitive Repayment PlanThe income-sensitive repayment plan serves as an alternative to the ICR plan for those who received loans via the Federal Family Education Loan Program (FFELP). It makes it easier for low-income borrowers to make their monthly payments. Under the ISR plan, you can make monthly payments based on your annual income for up to 10 years. The payments are set at 4% to 25% of gross monthly income, and the payment must be larger than the interest that accrues.

Currently, Federal Direct loans and Direct PLUS loans qualify for both IBR plans, but private loans and Parent PLUS loans do not qualify. Read more about your repayment options here.

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Featured

The One Financial Resolution You Need in 2017: Automation

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The One Financial Resolution You Need in 2017: Automation

“Out of sight, out of mind” isn’t typically the kind of advice you get from a financial professional. However, taking some financial decisions off of your mind and out of your hands can be one of the smartest money decisions you’ll ever make. We’re talking about the power of automation. Automating most or all of your recurring financial decisions can be a huge help when it comes to saving, investing, and digging yourself out of debt.

Even better, many popular financial resolutions for the new year — paying off debt, building an emergency fund, investing, saving for a large purchase, and building your credit score — are easy to automate.

What Is Automation?

Dr. Barry Schwartz, a behavioral economist and author of The Paradox of Choice: Why More Is Less, says we may be naturally programmed to live in the here and now and think about the future when we get there. By learning to use tools and life hacks to automatically make choices for our financial well-being, we’re removing one of the biggest barriers toward financial health: ourselves.

“People have a hard time thinking accurately about risk, and they have a very hard time giving adequate weight to the future,” says Dr. Schwartz. “Automated investment would address both of these problems. But, of course, the software would have to be doing the right thing for the client rather than the company.”

When you automate, you eliminate the opportunity for that negative feeling to affect your decisions because you won’t be actively making that payment.

7 Ways Automation Can Help You Keep Your 2017 Resolutions

If your goal this year is to learn budgeting, save up for a large purchase, or simply try to better manage your finances, automation can be a huge help.

  1. Automate Your Budget

Creating a budget is the easy part. Following it becomes the real challenge.Try these two automation hacks to stick with your budget in 2017.

Create a bank account for your allowance

  1. Open up a secondary checking account with your bank, but don’t get a debit card for this one. The account will act as your “reserve” account. You’ll keep your fixed and flexible spending money there and schedule bills to be paid from this account.
  2. Figure out how much money you can freely spend each week (after your bills are paid).
  3. Set up an automatic weekly transfer from your reserve account to your “spending” account (main checking account) for that amount.

It will be like getting a weekly allowance to spend on whatever you want, just like in middle school.

Use apps that do the math for you

Sometimes all we need is a little nudge to follow through with our goals. Budgeting apps like Level Money, Budgt, or Daily Budget can be the reminder you need to keep to your budget each day. The apps take into account your income, fixed expenses, and savings goal to come up with a daily spending number.

Level Money will connect to your bank accounts and generate the number automatically, while Budgt and Daily Budget require you to enter your spending manually, then generate what you have left to spend for the day. The apps will notify you daily with how much cash you can spend each day and still stick to your budget.

  1. Automate Routine Expenses

This one is for anyone who has ever walked into a grocery store to buy a gallon of milk but walked out with bags full of things they didn’t really need.

You can save time and money on groceries by avoiding the grocery store. That doesn’t mean you have to stop buying groceries and splurge on dining out. Automate your grocery shopping with services such as AmazonFresh or Fresh Direct. The services cost about $150 to $200 annually. With these services, you are able to compare prices and add and subtract items from your cart to stay on budget, then schedule your delivery time.

You could also try a meal delivery service like HelloFresh or Plated to deliver fresh ingredients coupled with recipes for meals weekly. Using these services, dinner for two costs about $10 to $15 a person. If you’re a couple that dines out often, scheduling weekly meal delivery and cooking could help you cut back significantly on spending.

If you live in an urban area like New York or Los Angeles, you may have several other options for grocery delivery available to you.

  1. Automate Your Savings

Automation makes it easy to set aside funds for an emergency fund or a large purchase such as a down payment for a home.

….at work

If you get paid via direct deposit, check with the human resources department at your place of employment to see if you can split your paycheck into different accounts. If you can, send the amount you want to save from each check into your savings account. If your pay is inconsistent, you may be able to set this amount as a percentage of your pay.

If your human resources department doesn’t offer that option or you simply want to handle it on your own, you can set up an automatic transfer to your savings account and schedule it for the dates you get paid.

…on your smartphone

You can also try automated savings software such as Digit, Qapital, or Simple.

Digit, backed by Google’s venture arm, analyzes your spending habits then uses an algorithm to determine how much it can transfer to your Digit savings account and how often to make transfers. When you need the money, you can have it transferred in one business day by sending a text.

Qapital lets you set savings goals and rules to match them, then automatically transfers money toward your goal when the rule applies. For example, you can set a savings goal to purchase $200 tickets to a music festival, then set a rule to round up all purchases you make with your debit card to the next dollar and save the difference. Qapital will transfer the difference to the account designated for your festival tickets.

Some new digital banks have added budgeting tools. Simple, for example, calculates a “safe-to-spend” number so you know how much you can spend freely.

  1. Automate Your Investments

You don’t have to be a financial whiz to invest your money. If you plan to start investing this year, you can do so passively with automation.

An important and easy way to do this is to automate savings to your retirement account(s). If you contribute to a 401(k) or an IRA through your employer, you can set a contribution as a percentage of each paycheck. Some plan providers allow you to automate annual contribution increases. This way, you’re automatically saving more each year without having to do any extra legwork. Even an annual increase of 1% or 2% can drastically improve your savings outlook.

If you use robo-adviser services like Betterment or Stash, set up auto deposits for your accounts and let them grow. Acorns is a great tool for beginners to automate investing. Acorns rounds up each of your transactions to the nearest dollar, then invests the difference.

You can find more details about these apps, such as what fees they might charge to manage your investments, here.

  1. Automate Your Student Loan Payments

If you resolved to stay on top of your student loan payments this year, setting up automatic payments could be tremendously helpful. Automating your payment can help ensure you pay on time each month. With most servicers, you’ll get the added benefit of .25% off interest on your loans.

If you want to pay back your loans faster, you can automate an additional payment to all of your accounts when you set up direct debit. If you can’t set up an automatic additional payment to a specific loan, you can set alerts with a calendar or a budgeting app to remind you to make an additional payment to your loans on payday.

  1. Automate All Your Bills

You can automate most recurring bills like your rent, credit card payment, auto loan payment, utilities, and subscription services to avoid missed payments. This tactic can also help time your payments to ensure you have enough money in your accounts to cover them. There are several options to help schedule bills you know need to be paid each month.

Choose whichever of the following methods work best for you:

  • Set up automatic bill pay through your bank’s online banking platform.
  • Use a budgeting app like Mint, Level Money, or YNAB to link to your accounts and schedule automatic payments.
  • Set up an automatic debit with each individual service provider through their online platform or over the phone.

If you pay an individual each month for something like rent or shared utilities, you can pay them via automatic bill pay to their bank account, or set up automatic payments using a tool like PayPal.

  1. Automate Your Credit Makeover

If your goal is to improve your credit, paying bills on time and lowering your utilization rate are the two most powerful things you can do.

Debitize lets you use your credit card like a debit card. The app automatically transfers money from your checking account to pay off charges to your credit card with money. You’ll be using your credit card, then paying it off in full each month. Even better, it’s more difficult to overspend, since you’ll be using up the funds in your checking account.

If you’re building or rebuilding your score with a secured card or a new credit card, you can try this “set it and forget it” method:

  1. Figure out what 20% of your credit limit is. Example: 20% of $200 is $40.
  2. Find something that you pay for each month that costs less than that. This might be a payment for a streaming service such as Hulu, Netflix, or Spotify.
  3. Set up your account to take the payment from your credit card each month.
  4. Set up your checking account to pay your credit card balance each month.
  5. Watch your score grow with a credit monitoring service like Mint or Credit Karma.

When your score reaches the high 600s or mid-700s, you’ll have an easier time qualifying to borrow large amounts for an auto loan or a mortgage.

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Auto Loan, Featured, Personal Loans

5 Things You Should Do Before You Buy a Car

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

When it comes to buying a car, whether used or new, the real work should happen before you even set foot on the lot. Taking the time to go through a few crucial steps will make your time at the dealership a breeze. To top that, a few pre-checks could save you money, time, and the hassle of dealing with a bad auto purchase in the future.

When you finally get to the dealership, Jack Nerad, executive market analyst at Kelley Blue Book, says it will pay off to come with a price in mind and all of the legwork done. The salesperson is going to ask you questions like what you’re looking for, how soon you’re going to buy, if you’ve looked at other dealerships, and what you do for a living, because they want some sense that they aren’t wasting their time with you.

“Demonstrate to them in your answers that you know about your own finances and that you know largely what you want in terms of a vehicle, and it will go pretty well for you,” says Nerad.

 

Step 1: Set a budget

When you get to the lot you should already know your credit score and how much you can afford for a car. Make sure to set a budget, and stay under your budget if you can. Unless you’re paying cash for your car, you’ll likely finance or lease your vehicle, so you should figure out how much you can afford in a monthly payment. Generally, all your monthly debt payments — credit cards, auto loans, student loans, and mortgage — should not exceed 50% of your monthly income.

Outside of the value of the car, you should budget for the taxes and any other one-time costs such as title fees and dealer fees. It could also be beneficial to create some space in your personal budget for costs such as gas and insurance. You may also want to open an alternate savings account to allocate separate funds to recurring costs such as ongoing maintenance, car insurance, and any future repairs.

“They are going to try to sell you more stuff like the insurance, treatments, etc. Most of that stuff is not worth nearly what they are selling it to you for,” says Nerad. “It could hurt the deal that you’ve worked hard to get. Just say no to most of it or do it aware of the financing.”

Don’t forget to weigh your savings options. Consider putting down a larger down payment if you can. If you won’t need it anymore, selling or trading in your current vehicle can help you come up with extra funds for a down payment. You could also consider a less-expensive vehicle, cut back on the add-ons and features, or improve your credit score, to save on the overall cost of the vehicle.

Step 2: Get pre-approved for financing

Shopping for an auto loan is another tedious process, but you should have already completed the first step in setting your budget.

Your next step will be to shop for the best used-auto loan rates and get pre-approved for the best offer for which you are eligible. What’s better, you won’t need to leave your computer to shop for an auto loan. A growing number of online-only banks, such as LightStream, PenFed, and Capital One, offer competitive interest rates on auto loans. Your best bet is to get pre-approved for financing before you get to the dealership. Coupled with your budget, getting pre-approved will help you have an idea of what your monthly payment will be.

When shopping online for a used-auto loan, the application process will look like that of a brick-and-mortar bank, but more streamlined. You should have the following information at hand:

Your contact information: Name, address, phone number, email address

Vehicle information (if known — required for lenders that do not offer online pre-approval): Make, model, mileage, VIN, dealership information

Your financial information: Employment information, gross income, and expenses

While you’re at the dealership, negotiate the price of the car before telling the salesperson that you are approved for financing. When the salesperson tries to get you to finance the purchase through the dealership’s affiliated lender, you can show them your pre-approved financing offer. There is a good chance they will try to beat your pre-approved offer, which could save you thousands of dollars in interest over the life of the loan. If they can’t beat it, you’ve already found your lowest rate and can continue your vehicle purchase.

Step 3: Choose your vehicle

Research and make a decision regarding what kind of car you want. You can use websites like Kelley Blue Book, Edmunds, and TrueCar to figure out a fair purchase price.

During your search keep in mind all of the specifications that are most important to you. You should think about how you intend to use the vehicle, not just how cool you’ll look in it. If you have a long commute to work, fuel economy may be important to you. If you have small children, having enough space for a car seat could possibly weigh in your options. If you live in the city, you might want to consider how much parking parking space you’ll have access to. Get the picture? A few other considerations:

Do you want a new car or a used vehicle?

Do you want to lease or purchase?

Do you need all-wheel drive?

Do you need a lot of cargo capacity?

How many passengers do you need to carry?

What type of driving do you do: highway, surface streets, off-road?

What safety features are important to you?

Will you drive in ice and snow?

Will you be doing any towing?

Again, think about what you need in addition to what you want.

When it comes to add-ons, remember anything you add — line items such as tire treatments, insurance, etc. — will be factored into the total purchase price and financing. The salesperson at the dealership may try to get you to purchase more than you bargained for, so come in knowing what you want to add on and where your line is drawn in your budget.

Step 4: Pick the right dealership

Next, you should find out who has the car you want within your budget. Back in the day, you would have combed through newspaper advertisements or had to visit several dealerships in person to see the cars you’re interested in. Now, with the internet, you can view multiple cars at several dealerships in your area and set filters to make sure they have what you want, for the price you want.

“More often than not the sales process is going to depend on the dealership and training of the salespeople there. If you come in knowledgeable, then you are going to be in a way better position,” says Katherine Hutt, director of communications at the Better Business Bureau.

After you get a healthy list of the dealerships in your area that have the car you want, you should check out their ratings on the Better Business Bureau website. Search for auto dealers in your area to find out which ones are BBB accredited, then look at the company’s profile to see if and why they have had any complaints filed against them.

Checking the dealerships for any serious complaints regarding their sales tactics or a negative rating will help you decide which ones are worth visiting.

Step 5: Run a background check on the car you want

Consumers for Auto Reliability and Safety (CARS) is a consumer advocacy group for the auto industry best known for leading the nationwide adoption of the lemon law, which entitles consumers to reimbursement or compensation if they are sold a vehicle that fails to perform as it was expected to within a certain amount of time.

Founder Rosemary Shahan encourages consumers to check the vehicle’s background by getting a vehicle history report through resources such as the National Motor Vehicle Title Information System, CARFAX, and AutoCheck.

In the vehicle history report you should check…

Name and description

Check the name and description that pops up to make sure the car you are looking at is the same as the car in the report. This will help you avoid VIN cloning, a type of vehicle fraud that involves using a VIN from another registered car and putting it on a stolen or similar vehicle, as well as other forms of vehicle fraud. Check for the name, color, and even details like the engine type to make sure you have the right car.

Number of owners

The number of owners a vehicle has had should be weighed cautiously in your consideration. You can’t be sure that each owner was a responsible and caring car owner like you, but the chance that the car has had a bad owner rises with the number of owners it has had. However, there is no magic number of owners that will disqualify a used car. Overall, you should place more import on the vehicle’s mechanical condition and how it has been cared for than on the number of owners it’s had.

Routine maintenance

Check to see that the car was regularly serviced. If it was, it will usually last longer and may be more expensive in general. The details about the vehicle’s maintenance may also help you answer any questions you may have about its repairs or servicing. If you know where its other owners took it for servicing, you can call up those locations and ask them if they can clear up anything that concerns you.

Anything suspicious

Be sure to ask about records that don’t quite line up. For example, if you see any records of body work but no reported incident, you should look into why the vehicle got work done. It’s not often that owners want a new side door and coat of paint just to spruce up the vehicle. It’s more likely that there may have been an accident that prompted the body work.

Finally, have the car looked at by an unaffiliated mechanic before buying no matter who you choose to purchase from. You can use a resource like Car Talk to find a mechanic in your area.
When you’ve checked off these steps, pay attention to what the salesperson tells you to make sure you get the best deal.

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Featured, Reviews

The Ultimate LearnVest Premium Review — Online Financial Planning for $299 Upfront, $19/Month

Advertiser Disclosure

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

The Ultimate LearnVest Premium Review

If you’re young, or simply don’t have an extra $1,100 to $5,600 a year on average lying around waiting to pay a financial planner, it can be difficult to know where to turn for financial guidance. Fortunately, several online financial planning companies have made financial planning more affordable. LearnVest is one of many such companies that have cropped up in recent years to provide the service at a lower cost.

What Is LearnVest?

LearnVest is an online financial planning company that was founded in 2009 with a mission to give young professionals access to affordable financial planning services. The platform combines budgeting tools with resources for financial information and the opportunity to gain access to an online financial planner if you upgrade your package. The startup went on to raise $75 million in venture capital until it was finally acquired in 2015 by Northwestern Mutual. The merger allowed LearnVest to develop and expand its offerings. Since its founding, the platform has developed into a more affordable way for members of either gender to gain access to a financial planner and to create and manage a personal financial plan.

How It Works

LearnVest offers both a paid and unpaid version of its services. The free version gives you access to the company’s online budgeting tool and dashboard to help you manage your budget, similar to popular budgeting platforms like Mint and YNAB.

You can also peruse LearnVest’s Knowledge Center, where you’ll find a wealth of articles and videos with information about several financial topics.

If you are looking for personalized financial advice from an expert, you’ll need to sign up for the paid version, called LearnVest Premium. For an initial payment of $299 plus $19/month, the premium service comes with access to a personal financial planner in addition to the online dashboard features.

MagnifyMoney tapped staff writer Brittney Laryea to test out LearnVest’s financial planning service, LearnVest Premium, and review it here. Find out more about LearnVest and Brittney’s review below.

The LearnVest Premium Review

As a 22-year-old recent college graduate, I am in that important stage in life. I reviewed LearnVest from the perspective of someone who has never gotten professional financial advice before and is looking to get her financial life in order as she starts her career. My experience will certainly be different from, say, a single mother or an elderly couple facing retirement. But I tried to demonstrate how each element of the LearnVest experience works so anyone reading will get a sense of what they offer.

The LearnVest Premium Review

The Fees

For $299 up front, you’ll get access to a personal financial planner who will set up a time to speak with you on two separate occasions and work with you to create a personal financial plan. You can split the $299 payment into two payments of $149 or three payments of $99. After the two initial phone calls, you’ll pay LearnVest $19 each month for “ongoing support” from your planner via email.

At $299, LearnVest is certainly delivering when it promises to offer affordable financial planning services. The average financial planner charges an initial fee of $500 to $2,000 and then about $50 to $300 monthly for ongoing service.

$19 per month for ongoing financial planning is only a little more than Spotify premium customers pay for monthly subscriptions.

So far so good. But what are you really getting for that money?

Creating My “Smart Profile”

The first thing you’re prompted to do when you sign up for LearnVest Premium is to fill out your financial profile, which is called your “Smart Profile.”

Creating My “Smart Profile”

You’ll enter basic financial information for your planner such as your annual income, goals, and current budget if you have one. This is also when you would link all of your accounts — checking, savings, credit card, retirement, student loans, etc. — to your profile if you haven’t already done so. In addition to prepping your information for your planner, filling out the financial profile helps put your current finances in perspective in relation to your financial goals. This part was intuitive and took less than 15 minutes for me complete.

After that, I was eager to schedule my call with my planner, which I was prompted to do after filling out the Smart Profile.

The First Call: Strategy Session

The goal of the first call is to lay the foundation for what will become your complete financial action plan with your planner. But you won’t receive the actual plan until your second call. During the first call the planner gets an idea of your financial situation. Your final plan takes all of the details that you discuss with your planner in this first conversation and shows the smaller steps you’ll need to follow to reach your financial goals. For me, those were things like paying off my student loans and saving up for retirement, but for others it could be things like saving up to buy a new home or for your kid’s college education.

The First Call: Strategy Session

During the call, you’ll speak with your planner over the phone, while you both look at the plan-to-be in your LearnVest dashboard. The first thing my planner did was verify all of the information that I entered into my Smart Profile. He then asked if there were any other accounts or information that I needed to add or clarify. Your planner may also ask about your current insurance policies and important financial documents such as a regular or living will or power of attorney.

At the end of the call, you should have a general idea of the plan-to-be, and your planner may assign some follow-up homework for you to complete before your next call (ideally, about a week later) such as sending additional information that will help them create your action plan. Your planner may also assign you a challenge — which you can see when you log in to your dashboard. The challenge may be to practice a budget for the week or to create a bank account.

My experience:

My first call was enjoyable, and we spoke for about an hour. My planner was patient as I clarified and adjusted information I entered into my Smart Profile.

After we sorted out my personal accounts and debts, my planner asked about my short- and long-term financial goals such as saving for an emergency fund or for travel. I’d given some thought to retirement before. I actually already started contributing to a 401(k) through my employer. I think of travel as more of a luxury, and definitely not a necessity. If I had extra money and the ability to travel, then I would, but everything else comes first. This would be the first time I’d specifically set aside funds to travel in the future. Keeping my savings goals in mind helped to inform the budget he would create for me. The planner made sure to factor in the monthly $19 for LearnVest’s ongoing support into my overall expenses.

Then he calculated a tentative weekly spending budget based on my outlined plan. The weekly spending number was the amount I could spend each week and still accomplish all of my monthly goals. It’s determined by splitting up what was left of my flexible spending over the number of weeks left in the month.

One aspect I appreciated was that my planner gave me three different budgets with varying levels of spending flexibility. I chose the budget that gave me the tightest weekly spending allowance, meaning more of my money was going toward my goals each month.

budget strategy

He also gave me a few financial tips during the first call. I’ve listed a few below, although there were many more.

  • Freezing (in a bag of water, in my freezer) or hiding my credit card to trick myself into not using it to help with paying down the balance.
  • Opening high-yield checking and savings accounts with an online bank. My planner recommended Ally Bank, where I could earn 1% on my savings, versus the 0.01% I earned at Wells Fargo. Luckily, I was already in the middle of switching to Ally from Wells Fargo. His encouragement gave me the extra boost I needed to get it done.
  • Setting up two checking accounts — one as a regular checking account but without a physical debit card linked to it, the other a “spending” account that was linked to my debit card. Then I was to set up an automatic weekly transfer of my weekly budget into the spending account to use. This way, it would be impossible to go over my budget without deliberately transferring funds over to my spending account.
  • Think about insurance options. He also explained to me the importance of having different types of insurance plans that many don’t get through an employer such as renters insurance or life and disability insurance. The explanation was helpful, and easy enough to understand. But I have to admit, I didn’t follow the advice. I hadn’t yet considered paying for what I see as “extras” like renters insurance or life and disability insurance. I rent, but I don’t own anything of substantial value so, for me, renters insurance is a waste. I figure I’ll just get it when I have something more valuable than my rice cooker to protect. One of my parents pays for a small life insurance policy that I’ve had since high school, and I’m young so here’s hoping I don’t suddenly become disabled while I look into it. I’ll likely start paying for disability insurance in February 2017.

After we covered those details, we scheduled a follow-up call, which would take place about a month later.

The Homework

After our talk, my planner sent me a follow-up email with my homework for the week. I had two assignments: to open new checking and savings accounts and to double-check my existing insurance policies and coverage amounts.

He also assigned me a “challenge,” which are little tasks your adviser sets up for you on the LearnVest website. You can see your challenges when you are logged in to your LearnVest dashboard, and you’ll get email reminders when the deadline for the challenges are close. You can check off your challenges as you complete them, or mark them as missed. Be honest; your adviser will ask you about them in the follow-up call.

action program

My first challenge was to practice the weekly spending budget he created for me during the initial call. The added challenge was to use cash only (so that I could physically see what I would be spending). Having the challenge helped me to keep my budget in mind; however, I didn’t complete it. My 22nd birthday was that week, and I take my birthday celebrations pretty seriously.

Since my weekly budget was determined by splitting up what was left of my flexible spending over the remaining weeks of the month, I just subtracted what I used up on my birthday celebrations and determined a new weekly budget for the rest of the month.

The Second Call: Getting My Action Plan

This is the call that solidifies your financial action plan. During the second call, your planner will explain to you all of the ins and outs of following the plan they have created for you to follow based on information from the first call.

The second call will be about a week or two later, depending on your scheduling availability and that of your planner. I scheduled my follow-up call at the end of our previous conversation for two weeks later, but I had to reschedule via email because I had other obligations come up. Rescheduling was painless and completed in less than 24 hours. My planner responded to my initial email with the times he would have available coming up, I emailed back with the time that worked for me best, and I was booked.

My experience:

Because I had to reschedule our initial follow-up call, our second call was about a month later. By then, I was used to my new weekly budget and felt good and ready to begin my new action plan. Before we got to my actual action plan, my planner checked in with me to see how I did with my suggested weekly budget.

He even gave me the option to switch to one of the other versions he created with a little more flexible spending, but a longer road to my savings goals. I struggled a bit with my birthday spending and a few emergencies, but I knew those were outliers and I could easily stick to the weekly allotment in a regular week.

I chose to stick with my budget. He also asked me if anything about my financial situation had changed since we’d last spoken. One thing did change: I planned to move into a cheaper apartment the following month. My planner made a note to adjust my action plan accordingly and said the final plan would include the update. Afterward, he talked me through how to implement the action plan he created for me.

Toward the end of our conversation, he explained important financial documents I should have at any age such as a living will and where I could look for resources to complete them in my dashboard. In the dashboard, under the “Program” tab is a section called “Planner Picks” that has the company’s approved recommended resources.

Action Plan and a $2.5 Million Surprise

My planner delivered my action plan to me via my LearnVest dashboard. It was a PDF file of about 20 pages that I could download to my computer if I wanted. It was super simple to understand and split into three parts:

  1. A recap of my current financial situation
  2. My financial goals
  3. The action steps that would help me to reach my goals over time

The Recap

The recap restated my weekly spending number (that’s the amount I was allowed to spend each week) and still accomplish all of my monthly goals.

The Goals Summary

The goals part broke down each of my stated savings and debt goals and showed how I would go about reaching them over five years.

The Goals Summary

The goals changed over time to reflect when smaller goals like my emergency fund and credit card payoff would be complete. Of course, this part also included my retirement needs.

I was shocked at his calculation: I would need to save more than $2.5 million to maintain my current income in retirement. To get there, I would need to continue contributing 10% towards my 401(k) and bump that contribution up by 2% every year or any time I get a raise. The idea here is that I would save more as I earned more over time. Sounds doable enough. Finally, it listed what estate documents I needed, such as a living will and beneficiary forms. To be honest, I haven’t completed my living will yet. You can upload these documents to your dashboard once they are completed.

The Action Steps

The final part outlined the action steps that I would take monthly to reach my goals. It briefly reviewed my monthly budget and showed how I should set up my accounts so that each month of successful budgeting would contribute to my overall goals.

I had a few more challenges assigned to me, such as learning to categorize my purchases and create goals in the dashboard. My planner sent a follow-up email after both calls recapping what we discussed. Moving forward, I would have ongoing support from him via email and had a copy of my plan available to me in my LearnVest dashboard.

For now, I’m following the plan as best as I can. The first month was rough with moving expenses and holiday expenses, but I’m confident I’ll be able to beat my weekly spending target and pay down my debts even faster when life settles down a bit.

What Is Meant by “Ongoing Support”?

Ongoing support from LearnVest means that you can reach out to your planner for help or advice via email, anytime. Your planner will also continue setting up challenges for you in your dashboard and may, on occasion or when you email them, ask you about your progress.

I follow up with the challenges when they are assigned to me, but I’ve only had to contact my planner once via email to clarify my insurance needs. Other than those little questions, I don’t have much of a reason to contact the planner since my entire plan is on my dashboard, and I have a feeling I’ll be following the same plan for a while.

Pros and Cons

Pro: Quick Responses

Having email access to your planner actually works out pretty well. I was impressed when I emailed my planner late in the day with a question and he got back to me via email in less than 24 hours.

Pro: Online and Mobile

LearnVest is accessible to you on the computer and in an app for your mobile device. Having both platforms makes it easy and convenient to check your progress toward your goals or edit your budget whenever or wherever.

Pro: Challenges

Each time your planner sets up a new challenge for you, you’ll get an email. They will be challenges such as watching an educational video, practicing a shopping fast for a month, or automating contributions to one of your savings accounts. The challenges help in a couple of ways. They are a reminder to log in to your dashboard if you aren’t prone to doing so on your own. The challenges also serve as a way for your planner to contact you and keep you motivated with creative short-term financial goals.

Con: No Face Time

Both meetings with your financial planner will take place over the phone. You can’t video chat or otherwise see the person to whom you are giving your financial information face to face, which may make some feel cautious or uncomfortable. Your planner may do as mine did and exchange some polite banter or offer to answer any questions you may have about LearnVest or the process to help you feel more comfortable.

Con: No Credit Score Information

You’ll need to download a separate app it you want to monitor your credit score. Unlike other popular budgeting apps, such as Mint, you won’t be able to see any information related to credit score or credit report information with LearnVest.

Con: Can’t Split Transactions on Mobile

The LearnVest mobile app’s budgeting software doesn’t allow you split up one transaction into multiple categories. So if you spent money on both clothes and food in one location, you’ll have to log in at a desktop computer to split the transaction.

Con: No Investment Management

Unlike the robo-advisers out there and some other financial planning platforms, LearnVest doesn’t manage your investments. You can check out this article for a few robo-advisers if investment management interests you.

Other Financial Planning Platforms to Consider

There are a host of other robo-advisers and online financial planning tools that target millennials cropping up to choose from that you may prefer over LearnVest.

Stash Wealth

A newer online financial planning platform, Stash Wealth, operates very similarly to LearnVest, but is aimed at what it calls H.E.N.R.Ys (High Earners Not Rich Yet). It costs $997 to get started, then $50/month to continue the service. Stash Wealth does do more of the work for you — like setting up automation for your savings and checking your tax information — so you don’t pay any taxes that you don’t have to pay. Once you’re ready, they start investing your money for you in accordance with your goals.

XY Planning Network

The XY Planning Network is a network of fee-only financial advisers who focus specifically on Gen X and Gen Y clients. There are no minimums required to get started as a client, and advisers in the XY Planning Network are not permitted to accept commissions, referral fees, or kickbacks. In other words, no high-pressure sales pitches or hidden agendas. Just practical financial advice doled out at a flat monthly rate. The organization is location independent, offering virtual services that enable any client to connect with any adviser regardless of where they reside.

Garrett Planning Network

A national network featuring hundreds of financial planners, the Garrett Planning Network checks many key boxes for millennials. All members of the Garrett Planning Network charge for their services by the hour on a fee-only basis. They do not accept commissions, and clients pay only for the time spent working with their adviser. Just as important for millennials, advisers in the Garrett Planning Network require no income or investment account minimums for their hourly services.

Mvelopes

Mvelopes is an app that provides a spinoff of the cash envelope budgeting system popularized by Dave Ramsey. Like LearnVest, its basic version is free and allows you to link up to four bank accounts or credit cards. Mvelopes has a second tier called Mvelopes Premier. It costs $95 a year, and you can link an unlimited number of bank accounts and credit cards, among other features. Mvelopes’ top tier, Money4Life Coaching, adds one-on-one coaching tailored to your financial needs as LearnVest Premier does. However, there is no price for this tier specified on the website.

The Final Verdict

LearnVest Premium is a convenient and cheap alternative to an in-person financial adviser if you need a little additional help planning your finances or a convenient reminder to stick to your budget, but it’s not worth the $299 + $19 a month if you just want to keep an eye on your spending. For the latter, stick to the apps that do it better, like Mint and YNAB.

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Building Credit, Credit Cards, Featured

Where to Get Your Credit Report for Free

Advertiser Disclosure

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Where to Get Your Credit Report for Free

If you haven’t checked your credit report lately, you’re not alone. A 2016 survey conducted by Princeton Survey Research Associates International found more than half — about 54% — of Americans hadn’t even checked their credit score — the number constructed from factors in your credit report — within the past year. What’s worse, almost a quarter of respondents had never checked their score, making them extremely vulnerable to financial crime. Checking your credit report may seem like any other financial chore, but you shouldn’t keep placing it on the back burner. Similarly to getting a check-up at the doctor’s office, checking your credit report is a preventative measure you should take at least once a year with a bonus: it’s free.

What Is a Credit Report?

Your credit report paints a financial picture of your life. It is a complete history of your use of credit going back at least seven years, good and bad. This includes credit card accounts, student and personal loans, and mortgages, and information about how you use them such as payment history or accounts that have gone to collections. It may also include any utility and other bills that have gone unpaid and were sent to collections. There are three main companies that track your credit report: Experian, Equifax, and TransUnion.

Don’t confuse your credit report with your FICO credit score. Your credit score is a numerical figure that is calculated by using the information from your credit reports. Banks and lenders weigh information from your credit report to create a credit score to gauge how responsible you are when it comes to credit. If your credit reports show a solid history of on-time payments and a good mix of different types of loans, your score will reflect that. Likewise, if your credit report shows lots of missed payments and debt collection accounts, you can expect a poor score.

Knowing the information that is currently on your credit report can help you stay ahead of fraudsters and give you details about how you can improve your credit score. If you don’t check your credit report annually, you may not be able to accurately track the health of your credit score, or know when someone has used stolen personal information from you. In addition to those benefits, checking your reports annually can be an exciting way to benchmark your financial progress.

Where to Get Free Credit Reports

You should check your credit report annually for yourself, but you may also need a report to apply for a car loan or to rent an apartment, etc. When you do need a copy of your report, you can get one for free from a few sources.

You are entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting bureaus. You can order a free copy of your credit report from all three bureaus from AnnualCreditReport.com. Like the name implies, you can only order each report once a year for free.

Since you only get one free report from each of the three bureaus per year, stagger them throughout the year. For example, once every four months, request a report from one of the bureaus.

If you want to get an update on your credit report more than once a year, but you don’t want to pay for it, there are a bunch of tools out there that offer credit monitoring for free.

Credit.com offers a Credit Report Card tool to monitor your Experian credit report. All you need to do is go to credit.com, and click “Free Credit Report Card” under the “Credit Cards & Score” tab to create an account. The report card updates every 14 days.

Credit Karma gives you access to your TransUnion and Equifax credit reports for free. You can also sign up for their free credit and account monitoring services. If you do, you’ll receive an email alert whenever your credit score changes, and you’ll be notified whenever a new account is opened. The reports update weekly.

Credit Sesame gives you access to your TransUnion credit report via their credit monitoring service. The service updates your report each month.

Mint.com, a free money-management website and app, gives anyone with a Mint account access to their free Equifax credit report. The report is updated every 30 to 60 days.

Quizzle offers a free VantageScore — a scoring model developed by all three credit bureaus — and a free Equifax credit report, which is updated every six months.

Once You Have Your Report

Once you see your credit report, you should check it carefully for any wrong or negative information impacting your credit score. Double check to make sure the open accounts reported all belong to you. Check that the payment information is accurate and all of the account balances are correct. If you find any errors, you should dispute them directly through the bureau websites. MagnifyMoney has a more in-depth guide about how to do that here.

You might not see any errors, but realize that you need to work on rebuilding your credit. A healthy credit score can be very helpful to you when making a large purchase like a car or first home. MagnifyMoney’s complete guide to help you rebuild your credit can be found here.

You may also notice that you’ve been a victim of identity fraud. That may take a few more steps to clear up, but you can find what to do here.

 

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