Credit Cards, News

Deeper Into Credit Card Debt With No Regrets This Holiday Season

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.

Deeper Into Credit Card Debt With No Regrets This Holiday Season

This holiday season, spending increased 7.9 percent from a year ago (according to the MasterCard Spending Pulse report). People spent more money on gifts, making many retailers happy and helping the overall economy.

Although the increased spending will be applauded by retailers, many American households are left with a precarious post-holiday financial situation. The euphoria of giving gifts will undoubtedly be replaced by a predictable debt hangover in January. MagnifyMoney conducted a national survey, and found that:

  • American consumers spent without a plan. 50.7% of people set no holiday budget at all. A further 15.1% of people set a budget, but ignored it and spent more than planned. That means 65.8% of people had no control over their holiday spending.
  • After spending money on holiday gifts, a majority of Americans are “broke.” 56.3% of people surveyed have less than $1,000 combined in their checking and savings account.
  • Credit cards will be used to fund a big portion of holiday purchases. 38.3% of the people surveyed will not be able to pay off their credit card in full this month. High interest rate credit cards were used to fund holiday debt.
  • Despite the debt, there was “no regret.” Despite borrowing money at high interest rates to fund holiday purchases, 85.7% of Americans have no regrets about their holiday spending.

During the 2015 holiday season, American consumers have demonstrated their willingness, and apparent happiness, to spend money they don’t have on gifts they can’t afford.

But in just a few days, people will start making New Year’s Resolutions. And if 2016 is like any other year, two themes will dominate the resolutions made across the country. People will promise to become physically fit and financially fit in the New Year.

One of the top resolutions made in January 2015, according to Nielsen, was to “spend less and save more.” This is a recurring theme, and we can expect similar resolutions in 2016, as the credit card statements start to arrive and the debt hangover begins.

However, Nick Clements, Co-Founder of MagnifyMoney, has two messages for people who have found themselves deeper in debt after the holidays:

First, we need to learn valuable lessons from our grandparents and great-grandparents about how to manage money. Before credit cards ever existed, people would only spend money if they had it. Most of our grandparents would have never even considered borrowing money to buy people gifts during the holidays. If we don’t develop that same type of mentality, any New Year’s Resolution will fail. I don’t want to sound like a belated Grinch, but borrowing money to buy gifts should have left more people feeling regret.   

Second, people need to be wise about how they try to fulfill their New Year’s Resolution to become financially fit. Skipping a few lattes isn’t going to do the trick. I recommend taking a day off, and spending as much time and effort building a financial plan for 2016 as you did organizing your presents and your holiday parties in 2015. 

Survey Results in More Detail

There was no spending plan or budget in place

  • 50.7% set no budget. Instead, they “just spent.”
  • 34.2% set a budget and followed the budget.
  • 15.1% set a budget, but ignored the budget and spent more.

A majority of Americans are “broke”

  • 24.8% have less than $100 in their accounts.
  • 23.8% have between $101 and $500 in their accounts.
  • 7.7% have between $501 and $1,000 in their accounts.
  • 16.4% have between $1,001 and $5,000 in their accounts.
  • 27.3% have more than $5,000 in their accounts.

Most financial planners recommend having an emergency fund with at least $1,000. Ideally, the fund should cover three to six months of living expenses. 56.3% do not have even the minimum of $1,000.

A significant minority will be paying off their credit cards for a long time

  • 61.7% of people will be able to pay their balance in full.
  • 27% will take some time, but pay more than the minimum due.
  • 11.3% can only afford to pay the minimum due.

For the 11.3% paying the minimum due, they can expect to stay in debt for more than 25 years and will end up paying more interest than the original amount borrowed.

Despite the spending, we felt no regrets.

  • 85.7% do not regret the amount of money they spent.
  • 14.3% do regret the amount they spent.
  • Of those with no regrets, 13.3% felt they could have spent more.

Tips for A Successful New Year’s Resolution

When the credit card bills start to arrive in January, many people will start to feel the annual debt hangover. As an antidote, people will start making resolutions to spend less, save more and get their finances in order.

MagnifyMoney believes that people should spend as much time in January building a financial plan for 2016 as they did shopping in December for the holidays.

For people in credit card debt, MagnifyMoney has a free 45 page Debt Guide available for download. This guide helps people prepare a customized action plan to lower interest rates, build a budget, negotiate hard with creditors and become debt-free.

In addition, MagnifyMoney recommends that all people spend time in January 2016 doing the following:

  1. Understand where your money actually went. When people create forward-looking budgets, those budgets almost always balance. Yet, when people look back in time, they have usually spent more than they planned. The best way to diagnose your spending problem is to understand where the money has actually gone. And there are great apps, like LevelMoney or Mint, which can help you understand where your money has gone. We particularly like LevelMoney, because it splits your expenditure into fixed, recurring expenses and variable expenses.
  2. Review your credit report from all three reporting agencies. You need to know what is on your credit report in order to build a good credit score. You can download your report for free at
  3. Understand your credit score and put together a plan to improve your score during 2016. People with the best scores never charge more than 10% of their available credit and pay their bills on time every month. Not only is that good for your score, but it is good for your wallet. And you can now get your official FICO for free in a number of places. Otherwise, you can get your VantageScore at sites like CreditKarma.
  4. If you have a good credit score, all debt can probably be refinanced. Mortgages, student loans, auto loans and credit cards (with a balance transfer or personal loan) can all be refinanced. Although the Federal Reserve increased interest rates in December, the rates are still very low. Find ways to lock in much lower interest rates now to help you pay off your debt faster.
  5. There are two big warnings with refinancing. First, try to avoid extending the term to get a lower payment. The biggest trap people fall into with refinancing is that they lower their rate and extend their term. By doing this, you might end up paying more money in the long run. Second, be careful before you refinance federal student loans, because you give up valuable protection.
  6. Automate all of your decisions, including savings and making credit card payments. Data has consistently shown that automating decisions greatly increases the likelihood of achieving your goals. To build that emergency fund, set up automatic transfers from your checking to your savings account. (Even better, get a higher interest rate online account and keep it completely separate from your checking account). To build your retirement savings, automate your 401(k) or IRA contributions. And to pay your credit card bill, automate your monthly payments.
  7. “Net worth” is not just a concept for the rich, and you need to focus on your net worth now. Net worth is a simple concept: it is what you own minus what you owe. Building wealth and being financially responsible means you are building your net worth. It doesn’t mean you make your payments on time and have a fancy car. Focus on the right number: building your net worth.


Survey Methodology

The survey was conducted by Google Consumer Surveys for MagnifyMoney between December 24 – 26, 2015. 532 people responded to the questions in a nationwide, online survey. All respondents were 18 or older.

TAGS: , , , ,


Many School Workers Can’t Afford to Live in the Communities They Serve

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.

Headshot angry woman with glasses skeptically looking at you

While you’re complaining about the traffic pileup as you drive past the local elementary school on your morning commute, you might not think about the bus driver who had to drive more than an hour to work that morning because he or she can’t afford to live in the school district.

That scenario is a reality for almost all bus drivers and a very similar experience for many other members of a school’s staff, according to a new study.

In Paycheck to Paycheck 2016, a study by the National Housing Conference’s Center for Housing Policy, researchers highlight the ability of five common school workers — the bus driver, child care teacher, groundskeeper, social worker, and high school teacher — to afford a median-priced home in more than 200 metro areas.

The Findings

High School Teachers Have It Best. On a median annual salary of $60,610, high school teachers could afford rent in 198 of the areas, or about 94%. However, they could only afford to pay mortgage for a median-priced two-bedroom home in just over half — 130 — of the 210 metro areas analyzed.

Bus Drivers, Not So Much. At the other extreme, the findings show that it’s virtually impossible for a bus driver making a median income in a single-income household to afford to rent or pay mortgage for a two-bedroom home in any of the 210 metro areas. The median annual national salary for bus drivers is $23,412, far less than the national median income of $53,483. The low wages make finding housing even more difficult.

Child Care Teachers. The study found that child care teachers, whose median national salary is $29,539, only make enough to afford rent on a standard two-bedroom home in 9 of the 210 metro areas, or only 4%. Living in the Bay Area in California, for example, would eat up about 75% of a child care teacher’s income in rent. Homeownership is almost equally difficult to achieve, with child care teachers at a median income unable to afford a mortgage in 94% of the metro areas.

Groundskeepers and Social Workers.
Groundskeepers earn a median $34,214, or 64% of the national median income, which makes them barely better off than child care teachers and bus drivers when it comes to affording housing. Groundskeepers could only afford to rent a home in 57 of the 210 metro areas and to own a home in only 25 metro areas.

Social workers, who may be assigned to multiple schools and sometimes multiple districts, are a little more housing-secure at a national median annual salary of $52,538. The average social worker could afford to rent a two-bedroom home in 90% of the metro areas, but could own a home in just above half, or 110 of the 210 areas.

Why We Should Care

Affordable housing for school workers matters, the study authors argue.

The consequences of unaffordable housing are more than an increased transportation expense for the school worker. Implications for a community can be numerous, ranging from losing good talent to having fewer extracurricular opportunities for kids in the district.

Janet Viveiros, the acting director of research at the National Housing Conference, noted that some school workers may reject a job offer from a school in a district with high housing costs simply because they won’t be paid enough to afford housing in the school district.

“If someone is facing a long commute every day, they may be unable or unwilling to take on additional responsibilities like coaching or mentoring,” Viveiros said. “Bus drivers may not be willing to take on an extra shift for extracurriculars.”

Measuring Housing Affordability

The researchers defined “affordable” as the ability to spend no more than 30% of the household’s income on rent and utilities or up to 28% of the household’s income on a mortgage.

When workers are able to keep housing costs below those limits, it “means that you have more money available for healthy food, for medical services” and other improvements to one’s quality of life, Viveiros said.

For the study, researchers only measured affordability for households where the school worker was the sole earner.

How Can School Workers Save?

Several federal and state-backed initiatives have been created to help school workers and other low-income workers afford housing in the communities they serve. Knowing your options and resources can help you save on housing costs.

Federal Help

For example, the HOME Investment Partnerships Program exists to subsidize new construction or rehabilitation of homes, or offer down payment assistance loans or grants. The assistance applies to households that make 80% or less of the area’s median income, a demographic which many of the workers in the study would fall into.

The Federal Housing Administration also offers low-cost financing for first-time homebuyers and lower-income households. FHA loans can lower the down payment to 3.5% of the home’s purchase price.

The Affordable Housing Program, run by the Federal Home Loan Banks, provides funding through member banks for the purchase, construction, or rehabilitation of homes owned by low- or moderate-income households.

The Housing Choice Vouchers Program (formerly Section 8) is the dominant federal rent subsidy program. It serves more than 3 million household and makes housing affordable by paying the difference between what a household can afford and the actual rent, up to a limit determined by the U.S. Department of Housing and Urban Development. However, the program is underfunded as only 1 in 4 households eligible are able to receive the help they need.

State Assistance

Multiple levels of programs and policies can be more beneficial to an area, as resources are slim and many programs lack sufficient funding for all who may qualify. Some states have their own programs as additional sources of assistance.

“There’s not one program at the federal level, state, or local level,” said Viveiros. “It’s really about pulling together a variety of policies and programs” from all levels of government.

Massachusetts has the ONE Mortgage Program, which combines down payment assistance to help first-time, low-income homebuyers save on fees and mortgage insurance. It also gives an interest rate buydown into a single mortgage. The state also has a Rental Voucher Program, which is a lot like the federal Housing Choice Vouchers Program.

In Minnesota, the Minnesota Housing Trust Fund assists with rental assistance for low-income households.

The Arizona Housing Finance Authority has a HOME Plus program, which assists households with good credit through grants toward down payments or closing costs.

Education-Specific Policies and Programs

Some state and local governments have created programs and policies that address the specific affordable housing needs of education workers in their area.

The Connecticut Housing Finance Authority has a program specific to educators called the Teachers Mortgage Assistance Program. The program gives below market rate loans to teachers who work in districts that have a hard time attracting teachers. In addition to the low rate, teachers under this program also automatically qualify for a down payment assistance loan from the CHFA.

The Texas State Affordable Housing Corporation’s program provides low-cost loans and down payment assistance to a variety of education professionals. The program also offers a first-time homebuyer tax credit that allows school workers to claim up to $2,000 of their annual interest payments as a tax credit each year.

In 2016, San Francisco — the most expensive metro area in the country — began Teacher Next Door. The program gives a forgivable loan to educators working in the city’s school district who are first-time homebuyers. Also in California — where we found the nine least affordable housing districts in the U.S. — the Los Angeles Unified School District is repurposing public land to create three housing developments to ensure its staff has affordable rental housing. The district’s program is open to all of its direct staff.

What More Can Be Done?

Viveiros said the key is “creating communities that offer housing affordable at a number of different income levels and offering housing of different types” to present a mix of affordable price points.

Thinking as a community can help create solutions, Viveiros said. She recommends that parents and other community members “lend their voice to the need for affordable housing in their community” by attending and speaking up at zoning meetings.




Identity Theft Protection, News

6 Things You Should Do Immediately If You Have a Yahoo Account

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.

Sunnyvale, CA, USA - Apr. 23, 2016: Yahoo Inc. Headquarters. Yahoo Inc. is an American multinational technology company that is globally known for its Web portal, search engine Yahoo! Search, and related services.

Yahoo says 500 million user accounts have been compromised, and they are telling users to change their passwords. That’s good advice, and below you’ll find better advice from security firm Sophos.

But first: For the next several days, or even weeks, beware emails that appear to come from Yahoo. Now will be a great time for phishers to trick users into following alleged “change your password” links that actually lead to hacker-controlled sites.

Now, onto the better advice:

  1. Change your Yahoo password immediately.
  2. Reset this password, if you’re reusing it on other online sites. Cybercriminals are now using tools that sniff out passwords reused on other, more valuable sites to make their work easier and to make the stolen passwords and other hacked data more lucrative on the dark web.
  3. Make all new passwords different and difficult to guess – yes, you need to create different passwords for every site you visit.
  4. Include upper and lower case letters, numbers and symbols to make passwords harder to crack – refer to the Sophos Password Quick Tips guide for creating stronger passwords.
  5. Don’t trust password strength meters – these are unreliable and inaccurate.
  6. In general, it’s always good practice to update your passwords, password manager and security questions if you hear of a potential data breach that might affect you. Even data breaches from several years ago could still impact you today.

I disagree about using a new password for every site. I mean, it’s a lovely idea, but it’s just not realistic.  Instead, I’m an advocate of having password families.

One simple password for throwaway accounts you don’t care about, like newsletters;  one medium-hard password for sites that require a registration, but don’t involve money; and then one really strong password for financial accounts that you change on a regular basis.

For that tough password, use something clever, like the first letter of every word in a sentence.  Like this: I Was Born on November 1 in North Dakota — IWBoN1iND (I wasn’t, by the way).  Change a number to a symbol and you are in good shape, like IWBoN!iND.

Now, as for how often you should change your password — I asked a bunch of experts that question not long ago and got some interesting answers.

Graham Cluley – Independent computer security analyst, formerly of Sophos and McAfee (more about him)

I only change my password if I’m worried a service has been hacked/compromised. I have different passwords for each site. In fact, I reckon I have over 750 unique passwords. I use password management software. I think requiring people to regularly change their password is a bad idea. it encourages poor password choices, (such as) ….passwordjan, passwordfeb, etc.


Mikko Hypponen – Chief Research Officer, F-Secure (more about him)

For your corporate network account? Several times a year. For an online newspaper that requires registration in order to read it? Never.  As always, it’s about threat modelling: Figure out which services are the important services FOR YOU. Then use a strong, unique password on those, and change it regularly. For non-important sites: who cares.

James Lyne, Global Head of Security Research at Sophos, speaking specifically about corporation passwords (More about him)

The requirement to change your passwords is a preventive measure that is designed to minimize the risk of your already stolen password being cracked and used. Over 2014 there have been a huge number of attacks which have led to the loss of password hashes (or other representations). These password ‘representations’ require time and effort for attackers to crack and reverse to their plain text form. Depending on the hashing scheme in use and the resources of the attacker this can take little, or a very long time. Changing your password regularly helps manage the risk of an attacker stealing your password hash from the provider (without you knowing) by increasing the probability you have changed it before they use it.

There is a real balance to be struck with password rotations. Some enterprises set painful rotation rules that require staff to regularly learn a new password and commit it to memory – ironically this can lead to staff producing poor passwords to meet the requirement which again ironically makes it much easier for the attacker to break. Providing the service provider does their part and secures your password with an appropriate storage mechanism often using a significantly longer, complex and hard to guess password is a much better defence. Good luck to the cybercriminal going after a 128 character password stored as a (moderately poor) SHA1 hash.

Password managers help you generate long and complex passwords that will be hard to crack even if lost, that said, if you go this far and implement a manager you may as well rotate your passwords once in a while as you don’t need to remember them and it helps minimize the risk of attackers using stolen credentials (particularly on sites that store your password poorly).  Most enterprises would do well to consider how to improve their password storage security and the strength of the original password over a 30 day rotation period.

Harri Hursti – independent security researcher, famous for “The Hursi Hack” of voting machines (more about him)

This is not (an easy question) … because also changing the password too often can become a security risk

It greatly depends. Passwords I use more often, over the internet and are in sensitive sites are changed 2-3 times a year. Then there are very important passwords which are either used very seldom or are used in more secure environment and those I change once a year, or not even then.

Chester Wisniewski and Paul Ducklin, senior security advisors at Sophos. (More about Chester and Paul)

The answer, loosely, is this.

Change a password if any one of these is true:

  1. You suspect (or know) it has been compromised.
  2. You feel like changing it.
  3. You have been re-using passwords and have decided to mend your ways.

We explain better in the podcast “busting password myths,” I think.

The podcast is 15 minutes, however, the first two minutes address this very question and may be worth your time.


TAGS: , , , ,

College Students and Recent Grads, Life Events, News, Strategies to Save

How 4 Students Took a Gap Year Without Breaking the Bank

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.


Planning the Perfect Gap Year Doesn’t Have to Break the Bank

The gap year — taking a year off from formal education to travel, participate in social projects, or gain work experience — is growing in popularity among American students. Just ask Malia Obama. The first daughter announced back in May that she would be taking a gap year before attending Harvard University.

She’s among those contributing to a 22% increase in American students taking part in the practice already common among students in Europe and Australia, according to the American Gap Association. Some families spend hundreds of dollars on gap-year consultants.

Like Harvard, many higher education institutions encourage students to take gap years. The reason: a push toward experiential learning. Schools increasingly see value in the life experience, maturity, and other skills that gappers return with.

“We have more information in the palm of our hands than ever. So why are we teaching [students] information? They don’t need information,” said American Gap Association Executive Director Ethan Knight. “They need experience to know what to do with that information.”

Jamie Hand, 23, a senior at Middlebury College in Vermont, echoes the sentiment. She said her gap-year trip to São Luís, Brazil with Rotary Youth Exchange allowed her to “take a break from this rat race that I felt like I was in.” At the time, she was 18 years old and wanted to take time off before beginning her freshman year. Though she already had a high school diploma under her belt, the program involved taking classes at a local high school in Franklin, W. Va.

“It felt like I was taking this big breath and I was free to excel but I didn’t have to excel,” said Hand. “It was one of the times when I learned the most in my life [because] I didn’t have to.”


The Cost of a Gap Year

Gap years may seem like a privilege only available to families wealthy enough to finance them. It’s true that some gap-year programs can easily cost more than a year’s worth of college tuition. Families pay over $35,000 — close to the average cost of a four-year degree these days — to participate in the “Global Gap Year,” a program offered by Thinking Beyond Borders, which offers gap-year and study-abroad programs. During their global year abroad, students split their time between homestays on three different continents. But the gap-year experience isn’t just for the super-rich. MagnifyMoney caught up with some current and previous gappers to find out how they made it work.

Go the DIY Route

Brandon Stubbs, 18, motivated by his interest in Southeast Asian archaeology, decided to defer his acceptance to Brown University for a year to travel to Malaysia for two months this fall.

Rather than paying for a trip through a travel agency, which could easily have cost several thousand dollars, he did some research on his own. Stubbs found a hostel in Johor Bahru, where he will be able to work in exchange for room and board.

To save on airfare, he booked a round-trip ticket to Malaysia for just $500 with StudentUniverse, a site that offers cheaper fares to students. When he’s not working, Stubbs plans to spend his free time sightseeing and exploring the city.


“I’m most excited to explore an entire different area of the world,” said Stubbs, who said he grew up enthralled by the exotic locales in movies like Indiana Jones.

When he returns to the U.S. from Malaysia in November, Stubbs’ gap year will continue with a stop in New Orleans. He plans to take time off for the holidays and then move to the Big Easy, where he’ll work at a hostel in exchange for room and board.

“I feel like taking a gap year will sort of increase my momentum. High school wasn’t an easy experience mentally,” said Stubbs. “I feel like in a year I’ll be rejuvenated and ready to jump back into my studies.”

Get College Credit for the Program

A great way to save money and kill two birds with one stone during a gap year is to earn college course credits along the way. Some schools offer course credit to students who take gap years. Students may even be able to use financial aid dollars toward their gap-year experience.

Some schools have specialized programs or fellowships for gappers like UNC Chapel Hill’s fellowship, or Princeton University with its Bridge Year. Others, like Elon University, offer their own version of an experiential learning program for first-year students.

There are even some gap-year programs that will not only give you a stipend, but contribute to the cost of your college education like those offered through AmeriCorps or City Year.

Work Now, Play Later

Breaking up a gap year into smaller trips or working for part of the year can help to reduce overall costs. If you budget well, the money you earn could fund your travels.

Jericho, Vt., student Asher Small, 19, who will begin his first semester at Brown University this fall, also worked at a ski resort in Utah for part of his gap year.

“It was kind of like a dream job because I love to ski,” said Small. In addition to his $8/hour wages, the resort subsidized his room and board, leaving him with just $300 to cover each month.

Small worked at the ski resort for four months. Before making his way back home, he took a road trip through Southern Utah and California and participated in a 10-day meditation course retreat. To save on lodging, he used, a service that connects benevolent hosts with houseguests. He estimates he ended up saving about $2,000 from his work at the resort after the trip.

Working or interning during a gap year can also be a great way to build skills or experience for the subject you’re interested in majoring in once you get to school. Some programs will pay you for work abroad or offer perks like free room and board as an incentive. For example, if you have a green thumb, you could volunteer to work at an organic farm or winery through a program like World Wide Opportunities on Organic Farms during your gap year in exchange for food and accommodation.

Before he went to Utah, Small spent the first half of his gap year in Desab, Haiti, with Volunteers For Peace, a nonprofit volunteer organization. There, Small taught an English class to local residents. The trip cost him about $1,500 in total, which he paid with funds he saved from past summer jobs.

Work Now, Play Later

Stay Close to Home

Keeping your gap-year experience stateside can be an easy way to minimize travel expenses, reducing the overall costs of a gap year. Staying in the U.S. doesn’t mean you’ll have any less of a cross-cultural experience.

Start Saving Early

Knight recommends planning your gap year at least six months from the date you want to travel, so you’ll have ample time to save up.

Stubbs worked all four years of high school as a junior college tutor and as a camp counselor at a music camp. Doing so helped him to save about $3,000 to spend on his trip to Malaysia and Louisiana.

Small worked over the summers prior to his gap year as well. Those funds helped him with his trip to Haiti.

Tap into Your Savings

If your parents have been saving up for college, you may be able to use some of that money to finance a gap-year program, although it may mean sacrificing going to a more expensive college.

Gabe Katzman, 24, was considering the University of Maryland, where he would pay in-state tuition, and other, more expensive out-of-state institutions at the time he was planning his gap year in Israel.

His parents presented him with the option to use some of his college savings to fund the trip, which cost about $16,000 to $17,000. Because the cost was close to a year’s worth of tuition at the pricey out-of-state school, his parents told him they could only help him finance his gap year if he decided to stay in state.

Ask for Free Money: Grants, Scholarships, Trusts, and Charities

Find an organization, trust, or charity that’s aligned with the focus of your trip and ask if they have any grants or scholarships that you can apply for and that would be applicable toward your gap year.

Local associations, businesses, schools, and charities such as the Rotary Club or Lions Clubs International award grants, or scholarships may even be able to sponsor students who meet certain criteria and goals.

When Katzman decided he wanted to spend 9 months in Israel with Habonim Dror’s Workshop, a gap-year program run through his childhood camp, Habonim Dror Camp Moshava, the first thing he did was look for scholarships and grants to help him cover the $16,000 the trip would cost.

Ask for Free Money: Grants, Scholarships, Trusts, and Charities

“I talked to my synagogue,” said Katzman. “I knew that if I connected with the synagogue they [would support me].” In the end, they gave him about $3,000.

Katzman then asked other organizations including one called Masa, an Israeli organization that advocates interning and volunteering in Israel, adding another $1,000 to his fundraising goal. Next, he went to the Jewish Community Center of Greater Washington.

After he got some funding through community organizations, Katzman turned to his family and friends to help out.

“I talked to all of my family. Instead of a Hanukkah or birthday present, I asked them to give me money for the trip,” said Katzman.

The rest of the funds came from his own savings from working as a lifeguard and camp counselor while in high school.

Get Creative

Katzman and the group he went to Israel with saved money by pooling their resources.

“We were living a socialist lifestyle with a group of 23. We had a shared bank account that we all put money into. Some of us put $2,000 and some put just what they could,” said Katzman.

The shared account allowed them to prioritize the group’s experience as opposed to the individual and kept them out of “a situation where someone felt excluded because they couldn’t afford it,” said Katzman.

Two of the members in Katzman’s group were co-treasurers of the shared account and managed the group’s budget. If some or all of the group’s members went out to eat or someone in the group needed to replace a pair of shoes, the money to pay for it came from the shared account. At the end of the trip, they had a little left over to donate back to the camp.

Stubbs, who already has his room and board covered with the hostel, also plays the trumpet. He plans to finance some of his living expenses while in Malaysia this fall and New Orleans in the spring with money earned from street performing or “busking.”

Some Final Advice: You have to want it.

“Sometimes coming up with the money for something like this can be really discouraging because it’s really expensive,” said Katzman.

But setting aside time for a gap year was well worth the added cost and effort. After he graduated from college, Katzman decided to move to Haifa, Israel, full-time, where he is working part-time to lead this year’s Habonim Dror gappers and taking Hebrew classes.

“I grew more in one year than I think the average college student would have grown,” he added. “It affected what I did in college, it affected my choices during college and afterward [when I decided to] live here.”


TAGS: , , , , ,


How the Wells Fargo Scandal Could Impact Your Credit Score

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.

Wells Fargo Bank

Since 2011, roughly 2.1 million accounts were opened by Wells Fargo Bank for existing bank customers who didn’t actually intend to apply for them on their own. While some legislators are calling for the company’s leadership to face further scrutiny in the wake of the scandal, the bank’s customers are left wondering how their finances will be impacted in the long term.

If you’re a Wells Fargo customer, you probably have just one question:

What should I do if I’m one of the bank’s customers who ended up with accounts for which I never applied and what’s best for my credit scores?

We asked our resident credit expert John Ulzheimer to weigh in:

The fake accounts opened by Wells Fargo employees fell into four separate buckets of account types, according to the Consumer Financial Protection Bureau. Three of those four account types could result in some sort of credit score reduction: Deposit accounts (checking, saving); Credit card accounts; debit card accounts.

Credit Card Accounts

According to the CFPB, Wells Fargo submitted roughly 565,443 credit card applications that “may not have been authorized.” The application likely resulted in a credit report being pulled and a credit inquiry occurring, which as I explained above can cause a score to go down, albeit a minor decrease and in some cases has long since been removed. The more meaningful issue regarding credit cards is what to do with the open credit card account that is almost guaranteed to be on your three credit reports.

The impact of the credit card account can fall into one of three categories as it pertains to your credit scores; positive, negative or neutral.

Positive impact: If the account has no balance and a large credit limit then it’s very likely helping your credit scores because of the positive influence it’s having on your credit card balance-to-limit ratios. If this is the case then leaving the account open, assuming you actually don’t mind having it, may be the best course of action especially if you’re about to go out and apply for some sort of credit and need the best credit scores possible.

Negative impact: If the credit card account is relatively new then it may be lowering your scores because it is lowering the average age of the accounts on your reports. Closing the account isn’t going to change that because closed accounts still have a “date opened” and a young closed account is considered the same way that a young but open account is considered. If this is causing too much of a score problem then asking that it be removed may be your best bet. The deletion will back out any impact on your scores.

Neutral impact: If the credit card is unremarkable then it is likely not having any measurable impact on your credit scores. So, no huge credit limit helping your balance-to-limit ratios and the age of the account isn’t helping or hurting your scores.

In that case you can either live with the account and leave it open or you can close it or perhaps even ask that it be removed.

Deposit Accounts and Debit Card Accounts

According to the CFPB Wells Fargo opened roughly 1.53 million deposit accounts and an undisclosed number of debit card accounts that may not have been authorized by the customer. Deposit accounts generally include checking, savings and money market accounts…any place where you can make a deposit. Deposit accounts and debit cards are never ever reported to the credit reporting agencies so if one was opened in your name it’s not on your credit reports.

However, if the bank pulled a credit report prior to opening the deposit account or issuing the debit card (not unheard of) then there could be a credit inquiry on your report that you didn’t instigate. If that happened then there’s a chance your credit score went down as a result. Having said that, the inquiry would fall into one of these 3 categories and would be considered accordingly…

  • If the inquiry is over 24 months old then it has already been deleted by the credit bureau/s and is no longer being considered by any credit scoring systems.
  • If it is between 12-23 months old then it is still on your credit report/s, but is not being considered by any credit scoring systems.
  • If it is under 12 months old then it is being seen and could result in a lower credit score on that one credit report. If possible, I’d ask that any unauthorized inquiries be removed because they have no redeeming value. Point being, inquiries never help your scores.

While it was not mentioned in the CFPB’s Consent Order, in many scenarios overdraft protection on checking accounts is reported to the credit reporting agencies as an unused installment loan, normally with a line of no more than a few hundred dollars.

If that did, in fact, occur with these Wells Fargo checking accounts then the installment loan could result in a lower score but only if that loan is significantly lowering the average age of the accounts on your credit reports. The age of your credit history factors into your credit score. If it’s too low, it could drag your score down.

TAGS: , ,

Credit Cards, News

5 Ways to Finance Your New iPhone 7

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.

Finance Your New iPhone 7

Apple released a new iPhone this month. Cue fireworks.

The iPhone 7 comes with a slew of new and improved features, including a sharper camera and the controversial missing headphone jack.

Apple also announced a special financing option for people interested in purchasing the phone, which costs a whopping $649 on the low end and as much as $969 for the most expensive model. If you use Apple’s financing offer, you can make payments interest free for 12 months.

But is Apple’s financing option the best way to buy the new iPhone? We dug into the fine print. Here’s what you need to know:

You’re really signing up for a credit card. Apple’s special financing offer is really just a credit card with a few perks. Apple partnered with Barclaycard, Barclays’ global payment business, to offer no-interest financing for iPhone buyers through a credit card. Customers can use the card to pay for the iPhone 7 or any other Apple products.

Beware of deferred interest charges. If you don’t pay off your iPhone fully within 12 months, you’ll be in for a nasty surprise. The Apple Barclaycard comes with a deferred interest clause. That means that if you even have $1 left to pay on your card after your interest-free promotional period is up, the card will charge you all of the interest it deferred over those months. The APR will vary from 14.24% to 27.24%. Either way, it’s definitely going to sting.

Your interest-free promotional period will vary by how much you spend. The period is six months for purchases of $498 or less; 12 months for purchases from $499 to $998; and 18 months to pay off a charge of $999 or higher.

The bottom line: Pay down your bill ASAP. Apple’s Barclaycard financing option can be a good deal — but only if you pay off your card before your promotional interest-free period ends.

Other Ways to Finance the New iPhone 7

Find a no-fee credit card. If the deferred interest clause makes you nervous, you could easily find another no-fee credit card that offers a 0% interest promotion that doesn’t carry such a clause.You can find a list of 0% interest cards here. Just be sure to pay it down before your promotional period ends, or interest will begin to accrue.

Finance through a mobile carrier. Another option would be to finance payments through your mobile phone carrier. Typically, this requires you to put a down payment on your phone and pay the remaining balance in installments that are added to your monthly bill for 17 to 30 months, depending on the carrier and plan. Most plans set the payment plan term at 24 months. This could be the better choice for anyone who is able to put down a decent amount toward the price of the phone. The more you pay upfront, the less you’ll have added to your monthly bill to pay off the phone.

Trade in your old phone to save. A third option to save on the new iPhone 7 would be to trade in your old smartphone for credit toward a new phone. All of the big carriers — AT&T, Sprint, T-Mobile, and Verizon — and Apple currently have offers that award credit toward a new iPhone 7 if you trade in older models of the iPhone and, in some cases, Android phones. The trade-in value will be deducted from your monthly bill over the next 24 months. The remaining cost of the new phone will be spread out over payments for the 24 or 30 months. If you leave the carrier before completing payment, you’ll have to pay the balance due on the phone.

Use Apple’s iPhone Upgrade Program. Another option would be to finance the phone with Apple’s iPhone Upgrade Program. The program would enter you into a 24-month, 0% APR agreement with the tech giant’s other bank partner, Citizens One. You’ll need a credit card to get started with the program. If you get approved, your card will be charged monthly over 24 months for the  installment loan which includes the iPhone 7, AppleCare+ (a $129 value) and any applicable taxes. You won’t be charged any additional interest through Apple or Citizens One. The highlight of this program is that you have the option to upgrade to the latest iPhone after six months or 12 payments, whichever comes first. You also won’t be tied down to any single carrier if you go with Apple’s iPhone Upgrade Program, which means if you dislike your plan, you will able to switch anytime.

TAGS: , , , ,

Credit Cards, Life Events, News, Pay Down My Debt, Strategies to Save

What Happened When I Used a Credit Card for the First Time in 7 Years

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.

Credit card fraud

The following story is an excerpt from “The Recovering Spender: How to Live a Happy, Fulfilled, Debt-Free Life” by Lauren Greutman.

I decided to do a little experiment. I took myself off a budget for three months and made myself start using a credit card again. I’d been successfully budgeting for more than seven years, and had successfully paid off over $40,000 in debt and half of our mortgage.

People around me consider me very good with money, and I agree with them; I am very good with sticking to a budget. I know my boundaries and how to stay within the fence. (Remember, I wasn’t always this way.) But I wanted to see what would happen if I took myself off a budget, stopped using cash, and used a credit card instead. I haven’t owned a single credit card in years, ever since we put ours through a paper shredder. I’ve been using cash for most of the past seven years, so using a credit card again was way outside of my comfort zone.

The first thing I did was to sign up for a card that would give me a certain amount of points if I spent $3,000 in the first three months of using it. I then stopped using cash and decided to only use the credit card for those three months. My goal was to earn enough points for a free stay at a hotel for a fun vacation for my family. I wanted to see how quickly my money rules would go out the window and I would turn back into a Spender.

How bad could it be?

In the first week I did pretty well. I didn’t spend too much unnecessary money. I did try to find different ways to spend money using the credit card so that I could earn extra points. I paid a few of my bills with the card and paid them o right away online. I figured this couldn’t be bad. Two nights that week I had nightmares in which I woke up in a panic attack.

The nightmares were about moving back into our old house in South Carolina, and they were both the same: We decided to return to our old home and found it was back on the market, so we bought it again. I saw my family of six living in the same house where we had lived in during those stressful years. Not only were we back in that house, but we were also again in $40,000 worth of debt. Those dreams felt so real. They were the kind where you wake up and your heart is beating fast and you aren’t sure if you are awake or asleep. I woke up in my current house, thankful that it was only a dream. There was no way I wanted to go back to that old way of life.

Looking back, I see those dreams as a warning. Both times I woke up mid-dream in a panic attack that we were going to go back into debt. I was terrified of using the credit card again. It literally was giving me nightmares, and I found myself hating what I was doing. I could see myself going down the same path again, and I was terrified. I never want to go back to that place of no self-control, transferring balances to zero percent credit cards to stay afloat, and constantly stressed because we didn’t have the money for basic essentials.

Sticking it out

At this point, I wanted to quit my experiment; it was just too hard for me to go back to old habits. Ultimately, I decided to stick it out, because the question of whether I would fall back into my old spending habits had not been answered yet.

One day I was having a rough time with the kids. I looked at my husband, Mark, and said, “Can I just go somewhere by myself for an hour?” Being the great husband that he is, he put the kids to bed and I left the house to find something to do. I live in a small town and there isn’t much open in the evening, so I did what most people do and headed to Walmart (it would have been Target if I had one nearby). I found myself walking around the store, sick to my stomach and anxious, looking around for something to “do” and something to buy.

I picked up a York Peppermint Patty, a new curling iron, and some fake eyelashes (a total impulse purchase). I was sad, depressed, and feeling totally lost. I found myself wandering around the brightly lit store without a plan or goal. It was a very lonely feeling, but I realized that living without a budget made me depressed. I had no idea how much money was in our checking account. It felt horrible! Ironically, that feeling of depression over not knowing what was going on led to more spending because of boredom.

Three months later

At the end of my experiment, three months later, I was a complete mess. I had spent $3,000 on the credit card but paid it off in full every month. Yet I had somehow managed to spend an extra $2,000 on that card and didn’t know where the money had gone or what I had spent it on. I was anxious because I had no idea what we had in our bank account, and I was stressed out to the max. Here I was, seven years later, sitting on that same bed in our much smaller master bedroom. I knew that if I continued to use credit cards this way, I could end up dead broke again.

This was a huge milestone for me in my journey to financial independence. I realized that I will never “arrive” at being good with money. I will forever be in “recovery” as a Spender, and one of the things that I need to continue to do to keep myself in recovery is to stay within my fence.

I know that staying inside the fence works for me. I know that if I use cash and set a budget with Mark, I stick to it and feel safe. I don’t know why I always try to play with fire, but whenever I do, I certainly get burned! As a well-known expert in the field of frugal living, it’s hard to admit that I still have the ability to overspend. But how helpful would I be if I said I was perfect?

A common reason that Spenders continue to spend is that you lie to yourself—you tell yourself that you can stop spending, but the spending continues. You feel out of control, and that feeling leads you to spend more, and you continue to feel out of control.

If I were to tell you that I have it all figured out, I would be defeating the entire purpose and message of this book. I know that I will always be a Spender, but after seven years of successful budgeting and not owning a credit card, I thought I was strong enough to have one.

The reality is that I am not, and I’m not sure I ever will be. But what I do know is that if I set a budget and make sure I am safe within my fence—I do amazingly well! I got us into over $40,000 worth of debt, and I got us out of over $40,000 worth of debt. I got us in debt by using credit cards, and I got us out by not using credit cards.

Life inside the fence

I decided to run this experiment on myself to see if I am strong enough to live outside the fence, to see if so many years of good financial habits had changed me. Unfortunately, the conclusion is that despite my excellent financial habits and new ways, it’s dangerous to reintroduce some of my old temptations, because I fall right back into my old ways.

This is why this book is called The Recovering Spender and not The Recovered Spender. To be in recovery, you must constantly be trying to better yourself. If I were recovered, I would be able to use a credit card and not overspend.

I am in recovery, which means that I am in a constant state of trying to better myself and improve my spending habits. I realize that one bad turn can lead me down a road that I do not want to travel. One bad financial move can turn into a financial disaster for anyone who is a Recovering Spender like I am.

If you find something that works and helps you stay inside your fence, by all means continue doing it! Despite how much time you’ve been inside your fence, there is always danger on the other side. I much prefer to stay within my fence, stay out of debt, be happy and financially fulfilled by keeping a budget, and live the rest of my life as a Spender in recovery.


Lauren Greutman is the frugal living expert behind the popular money saving blog (formerly

TAGS: , , , ,

Health, News

Stuck With a High Deductible Health Plan? Here’s How to Save

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.

child and doctor talking in clinic

The majority of Americans receive health care through an employer-provided health plan, new Census Bureau data shows. But thanks to rising premium costs and ever-increasing deductibles, health coverage — even if your employer covers part of your tab — can easily feel more financially burdensome than beneficial.

Annual premiums rose most significantly for employer-provided family plans in 2016, according to a survey released Wednesday by the Kaiser Family Foundation. The average annual workplace family health premium rose to $18,142 in 2016, a 3% increase. This is a slowdown from last year’s 4% hike, but family premiums are still 58% higher than they were just a decade ago.

But sticker prices on annual health plan premiums — $18,142 for families and $11,480 for individuals — only tell half the story.

Employers commonly make contributions toward their workers’ health care premiums. But employers have contributed less and less to annual premium costs over the last decade, leaving families footing larger portions of their coverage. For example, workers now pay 78% more in annual premium contributions for family coverage than in 2006, according to Kaiser.

Here are other ways rising health costs are impacting consumers:

Out-of-pocket costs continue to soar. In 2016, 29% of all workers were in high-deductible plans, up from 20% in 2014. The average annual deductible for individuals climbed 12% year-over-year to $1,478. Families endured even higher out-of-pocket costs.

Premiums have also outpaced inflation and earnings increases over the past five years, 6% and 11%, respectively, according to Kaiser’s report.

What you can do to save if you have a high-deductible health plan.

Look at more than just the sticker price

Plan premiums can be deceiving. Even if a plan’s premium looks more affordable, it will likely have a higher deductible, meaning your out-of-pocket costs could be much more in the long run. Sophie Stern of Enroll America, a health care advocacy nonprofit, recommends reading plan offerings closely before you sign up.

“First and foremost employees should reach out to their employer to gain a better understanding of their plan options and covered benefits, including how much they will have to pay out of pocket for their health care,” Stern says. “If already enrolled in coverage, employees can also contact their insurance company directly.”

Take advantage of health savings accounts

If your deductible is higher than $1,250 for individuals or $2,500 for families, you likely have access to a health savings account (HSA). HSAs let workers set aside pre-tax dollars for medical expenses. Some employers provide Health Reimbursement Arrangements (HRAs), in which case the employer would reimburse its employees for out-of-pocket medical expenses and individual health insurance premiums.

Sign up for a health risk assessment or biometric screening

Many large firms offer financial incentives like cash, reduced premiums, and other benefits for undergoing a health risk assessment or biometric screening. Kaiser found that most large firms offer health risk assessments (54%) and biometric screenings (53%) for workers. Health risk assessments ask questions about your medical history, health status, and lifestyle, while biometric screenings measure things like body weight, cholesterol, blood pressure, stress, and nutrition.

Some things in health care are free

Under the Affordable Care Act, many preventative care services are free to you. Be certain to make sure they are coded properly at your doctor’s billing office so you are not incorrectly billed.

Pay cash

Some health care providers offer to charge a lower fee for some treatments if patients pay cash upfront. You can also ask for a low- or no-interest installment plan if you can’t afford the full cost upfront.

Plan ahead

One of the nastiest surprises at the doctor’s office can be an unexpected bill because your physician is not covered by the insurer’s network. Verify that a provider accepts your insurance before you go, either by calling or by checking your plan provider’s website. Once you find a provider that accepts your insurance, Stern recommends calling before you visit to get a sense of how much your treatment will cost.

Be proactive. Ask how much services will cost before your appointment. Make sure to ask about cheaper options and the pros and cons of comparable services before you get there and about the price of drugs before leaving with a prescription.

Compare and save

Prices for medical treatments are notoriously opaque. Sites like and have made it easier to shop around for certain routine treatments (such as an MRI or teeth fillings). Some services, like, will even pay you to shop around for lower cost treatments.

Lower your medication costs

Ask for a generic prescription if you’re getting medication. Generic prescriptions cost anywhere from 80% to 85% less than brand name medications, according to the FDA. You can also browse sites like and to compare and save when it comes to your prescriptions.

If you aren’t covered by your employer and you’re shopping for health coverage, there are resources that can help. Through Enroll America’s Get Covered Connector, you can schedule an appointment with an expert near you who can walk you through the process.



TAGS: , ,

Identity Theft Protection, News

What to Do When a Family Member Steals Your Identity

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.

What to Do When a Family Member Steals Your Identity

Imagine you’re 20 years old and you’re ready to open your first credit card.  You fill out application after application, but you’re constantly rejected. Looking for a reason, you pull your credit report and find that your credit has already been established — and wrecked — by none other than your parents.

This scenario isn’t all that uncommon. It’s a case of so-called “familiar fraud,” which occurs when the victim knows or is related to the person who steals their identity. Children are an especially easy target for family members, because they are much less likely to be vigilant about their credit history and their personal information is often easily accessible.

In fact, familiar fraud is five times more likely to happen to teenagers, according to a 2015 study by Javelin Strategy & Research. Child identity theft by a relative can be a touchy issue for obvious reasons. In many cases, the parent may have good intentions and may not even think what they have done is wrong.

“[Parents] don’t really necessarily see it as a crime or see it as harmful until later,” says Eva Velasquez, CEO of the Identity Theft Resource Center, a consumer protection group. “[They say] ‘My credit is ruined and I have to keep lights in the house so I’m going to use my kid’s [information]. They are benefiting from it and they’re my kid anyway.’” If the parent isn’t able to pay their debts off, they can wind up doing more harm than good.

And when children find out that their credit has been ruined, it’s not an easy matter to rectify. More than one-third of young people who fall victim to familiar fraud only find out when debt collectors start calling, and another 7% find out when they are rejected for new credit.

Victims of familiar fraud could report the crime to relieve themselves of the debt. Victims of identity theft probably wouldn’t hesitate to file a police report about an anonymous hacker. The story changes when the hacker is their parent or a sibling.

So what do you do if you realize that a family member has used your personal information to open financial accounts in your name?

Here are some steps to follow:

Create a paper trail.

The key to getting fraudulent accounts removed from your credit history is to create a paper trail showing you were the victim of identity theft. Start your paper trail by filing a report with the police and filing a report online or by phone with the Federal Trade Commission. Make copies of all of your reports, Velasquez recommends.

If you know a family member or friend stole your identity and you’re nervous about the idea of going to the police, consider this: Filing a police report doesn’t necessarily mean you’re pressing criminal charges against your family member.

“Creating a report is creating a record of the theft so that the victim can prove the debt is not theirs,” says Adam G. Singer, a consumer attorney located in New York City. “That is a matter of civil law. If a person were to press charges, it would then become a matter of criminal law.”

Contact each lender individually.

Make a list of all the fraudulent accounts that have been opened under your name and contact each lender or debt collections firm individually. Explain that the charges were fraudulent and that you would like to dispute them.

Even if you have a copy of your police report and an FTC complaint handy, the lenders may ask you to provide further proof that the accounts weren’t opened by you.

This could mean bringing a birth certificate that proves you were a minor when the fake account was created or documentation that shows  you weren’t living at the address or in the area where the account was created. Make sure to take notes on all of the conversations that you have with any institutions along the way.

Add a fraud alert to your credit report.

Protect yourself from future fraud by adding a fraud alert to your credit reports. Contact one of the three credit reporting agencies — Experian, TransUnion, or Equifax — to place a 90-day fraud alert on your credit report. When you have an alert on your report, a business has to verify your identity before it issues credit. This makes it more difficult for someone else to open more accounts in your name.

When you contact one credit bureau and request a fraud alert, the alert will also be applied to your files at the other two bureaus as well. You can extend the alert to stay in effect for up to seven years after filing a police report or filling out a complaint form on the Federal Trade Commission’s website.

Alternatively, you could consider a credit freeze.

When your credit is frozen, no one can open a new line of credit under your name unless you agree to thaw your account. Fees depend on the state, but victims of identity theft can usually ask to have those fees waived.

Make credit checks a monthly ritual.

Many young people don’t realize their identity was stolen to open financial accounts until debt collectors begin calling. It’s important to start tracking your credit history early, says Karen C. Altfest, a financial adviser with Altfest Personal Wealth Management.

“You have to know what’s in your accounts and you have to know what’s going on,” she says.

There are some identity theft protection services that charge monthly fees to monitor your credit year-round. But you can also use free services like Credit Karma and Credit Sesame to check your credit report for free and without penalties to your score.

At the very least, comb through your monthly financial statements and make sure nothing looks out of the ordinary. Another easy tip is to ask your bank to alert you anytime charges over a certain dollar amount are made on your account.

TAGS: , ,


U.S. Household Incomes Are Up 5.2 Percent — Here’s Why You Might Not Feel Any Richer

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.

U.S. Household Incomes

The Good News

The real median household income for Americans increased 5.2% to $56,516 in 2015, the U.S. Census Bureau reported Tuesday. This marks the first annual rise in household income since pre-recession 2007.

Rising incomes led to a significant drop in the household poverty rate as well — a decline of 1.2%, or 3.5 million fewer households living under the poverty line. This is the largest annual percentage point drop in poverty since 1999. (The income threshold for poverty is $28,995 in annual income for a family of 5.)

Now, for the Not-so-good News…

Don’t start celebrating yet. Progress has been made, but the real median household income is still about 1.6% away from catching up with its 2007 levels and even further — about 2.4% — from its 1999 peak.

Income inequality. Income inequality remained stubbornly stagnant in 2015. The Census Bureau measures income inequality on a scale of 0 to 1 (1 meaning perfect income equality) to measure the extent to which income is distributed among the population. In 2015, the U.S. scored a 0.479, showing no significant change over the year prior.

The gender wage gap. Women continue to earn about 80 cents to every $1 a man earns; however, the real median earnings for women increased 2.7% compared to a 1.5% rise for men compared to a year ago.

census earnings by sex gender

Asian-American households. Asian households earned the highest median income in 2015 at $77,166, but the group experienced no significant change in income.

Non-Hispanic whites see significant income growth. Real median income of non-Hispanic whites rose 4.4% to $62,950. African-American households saw median incomes rise 4.1% to an average of $36,898. This is the first rise in income for non-Hispanic black and white households since 2007. Hispanic-origin incomes rose 6.1% to $45,148, the first annual increase since 2013.

Census Median household income 2015

Noncitizen income rises sharply. The median income of households maintained by a noncitizen rose the most — by 10.5% — although it’s the lowest amount by nativity at $45,137. The real median income of households managed by foreign-born people rose 5.3% to $54.295, while that of households maintained by a native-born person rose 4.4% to $57,173. Naturalized citizens didn’t see a significant change in household income at $61,982.

Why You May Not Feel Any Richer

It may be hard to hear the jingle of extra cash in your pocket. Public policy think tank American Enterprise Institute reports the consumer price index — the average measure of consumer prices — jumped about 55% since 1996. The largest increases were in big-ticket items — housing, food, medical care, child care — but you may feel the rise even more if you’re in school.

The average price of college tuition and textbooks rose the most — by a staggering 197% and 207%, respectively. Next to that, a 5.2% bump in median income over the past year is meager.