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Reviews

Chime Bank Review: A Fee-Free Bank Account

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

If you can’t recall the last time you walked into one of your bank’s physical branches, are sick of bank fees and want a no-brainer way to save more money, you may be interested in opening an account with San Francisco-based fintech start-up, Chime. Chime offers a mobile-first approach to banking. The full features of its no-fee service are offered through the free Chime app, making Chime an option to consider for individuals banking on the go.

Chime Bank account: At a glance

Chime calls its everyday checking account a “spending account.” The major selling point of Chime is that it charges almost no fees, as you can see from the list above. We can almost forgive the fact that it doesn’t offer any interest on this account because fee-free checking accounts are harder to find these days. However, there are certainly low-fee checking accounts that pay interest, so check out our roundup of checking accounts here.

Upon account opening, Chime will issue you a VISA debit card to use at the ATM and to make purchases everywhere VISA is accepted.

Noteworthy features

  • No minimum deposit amount to open
  • No minimum balance requirement
  • No overdraft fee
  • No monthly fee
  • No ACH transfer fee
  • No foreign transaction fee
  • Send 15 fee-free ‘Friend transfers’ (P2P) each month
  • Doesn’t earn interest
  • Can’t request an additional card for another user.
  • Limited to $500 in ATM withdrawals per day

Get your paycheck early
If you set up direct deposit to your Chime spending account, you may gain access to your funds up to two days early. That’s because Chime makes the money available to you as soon as your employer deposits it. Generally speaking, that’s about two days before you’d see your paycheck deposited to your account with most banks. This is a common feature of prepaid debit cards, but not seen with many traditional bank accounts.

ATM access
Use MoneyPass ATMs and you’ll incur no ATM fees. If you go to an out-of-network ATM, the fee is $2.50. ATM withdrawals are capped at $500 per day and card purchases that require a signature and PIN are capped at $2,500 per day.

No overdrafts
There are no overdraft fees to worry about because Chime won’t allow you to make a charge that will overdraft your spending account. If a transaction will overdraft your spending account, the company will refuse to process the payment. If your spending account becomes negative for whatever reason and remains negative for 15 days, Chime will transfer money from your savings account to bring the account back to a positive balance.

Chime Bank account vs. Aspiration Summit checking account

As Chime Bank is one of a growing number of fintech banking challengers, we wanted to see how it compares with its new peers, specifically the Aspiration Summit account.

Rates. Unlike the Aspiration Summit account, a Chime Spending account does not earn interest (although the optional Chime Savings account does). With the Aspiration account, you will be paid 1.00% on balances up to $2,499.99 and 1.00% on the entirety of balances of $2,500 or more.

Fees. The Aspiration Summit account offers no-fee ATM use anywhere, while Chime will charge an ATM fee unless account holders locate and use a fee-free ATM as designated by Chime. Neither bank charges a monthly account fee, however, Chime takes the lead here with no strings attached. Aspiration offers a somewhat complicated, usage-based fee pricing structure which may or may not charge a fee, depending on the user.

Overdrafts. The Aspiration account charges an overdraft fee, whereas Chime account does not – the bank will simply refuse to process the transaction if adequate funds are not in the account. Aspiration’s account is targeted toward middle-class users, whereas Chime seeks to appeal to the millennial or youthful demographic and pushes mobile account access as the norm, as opposed to simply an option to access an account.

Access. The Aspiration Summit account can only be opened by invite and when responding, an applicant may receive an email that they’ve been added to a “waitlist” and to “stay tuned for updates.” However, anyone who meets the basic account opening requirements can apply to open a Chime Spending account.

The bottom line: For individuals who want free global ATM access, Aspiration Summit account is the way to go. For someone who wants to perform most of their banking from the palm of their hand on a mobile device – a Chime Bank Spending account is the better alternative.

Who Chime Bank is best for

Chime is ideal for someone who is tech savvy, maintains a low bank balance and wants to avoid fees and save money without thinking (too much) about it.

Someone who wants a fee-free prepaid alternative
Because Chime doesn’t run a credit check to open an account and offers early access to your paycheck at no extra cost, it may be a viable alternative to using prepaid debit cards, which commonly offer early direct deposits but often come with hidden fees.

Someone looking for a solution to overdraft fees
The bank requires no minimum deposits and avoids overdraft fees, which can be beneficial to anyone who generally maintains a low checking account balance and regularly incurs overdraft fees as a result.

Someone who wants to save money automatically
The account’s automatic saving feature makes it easy to save money for anyone who isn’t used to regularly saving a chunk of their paycheck or wants to save a little bit more money with each purchase.

Someone who won’t miss brick-and-mortar branches
Chime doesn’t have any physical branches, which can be an inconvenience to some individuals. Additionally, Chime’s customer service hours are limited to 7 a.m. to 7 p.m. CST most days. If you’d prefer to have a physical branch to walk into in case you need help with your account or 24-hour customer service, you may be better off banking elsewhere.

Chime Bank savings account

Chime Savings Account

APY

Minimum Balance Amount

0.01%

$0.01

As of 12/12/2018

Only after opening a Chime spending account will you be permitted to open a Chime savings account. The account requires no minimum deposit to open. However, if you maintain a zero balance for nine continuous months, your account may be closed.

At a measly 0.01% variable APY, the interest on Chime’s savings account isn’t impressive compared with other high-yield savings account options currently available. However, the savings account comes with some attractive features that may make up for the poor interest rate.

Noteworthy features

Save as you spend
Once you open a savings account, you can enroll in Chime’s automatic savings program, called “save when I spend.” Chime will automatically round up every purchase made with your Chime VISA card to the nearest dollar and transfer the amount from your spending account to your savings account for you. You can turn automatic savings on or off anytime using the Chime app or on the Chime website.

Automatically stash away 10%
Chime’s “save when I get paid” feature makes it easy to pay yourself first. Not only can you access funds from your paycheck up to two days early, but you can also set the app to automatically transfer 10% of your check to your savings account each time you’re paid. You can enable the feature using the Chime app.

No excessive withdrawals fee
Like most savings accounts, under federal Regulation D you are limited up to six certain withdrawals or transfers from the savings account per statement cycle. However, Chime won’t charge you a fee once you hit your limit like other banks will; it simply won’t allow you to make any more than your six withdrawals.

Chime’s partner The Bancorp Bank, an FDIC member, insures Chime deposit accounts up to $250,000.

Chime mobile app

Chime users can use the full features of Chime via the free Chime mobile app on iPhones and Android devices. The Chime app comes packed with full banking features. The app includes mobile deposits and notifications directly from the app, but also a few features exclusive to Chime users, like an in-app P2P system and the ability to send checks.

Notifications. The app will let you know how much money you have left to work with each day with daily account balance and a transaction notification each time you swipe your debit card.

Mobile check deposits. Just snap a photo of your check and it will get deposited into your account. Mobile check deposit is only available for Chime users who have their payroll direct deposited to their spending account.

Security. The account’s security features allow you to toggle on and off the ability to make domestic and international transactions. This is useful if you lose your card and need to block it ASAP so no one else can use it, or if you simply want to restrict your own use of your debit card.

Send money to friends with Chime. You can send money to your friends who use Chime using the in-app “Pay with Friends” feature. The P2P payments option can come in handy if you need to split dinner with friends or bills with roommates. You can send money to other Chime users using their name, Chime nickname, phone number, email or by selecting them from your contacts.

Pay with Friends also works with popular P2P payments app, like Venmo, in case your friends don’t use a Chime account. Just select pay with Venmo after entering the amount you’d like to send and Chime will launch the Venmo app.

Chime’s Pay with Friends caps users at $2,000 or 15 transfers per month. Transfers to Chime members will immediately post in the recipient’s Chime account, while transfers from recipient’s Venmo account to their external bank account may take up to two business days.

ATM Map. Chime built its ATM map right into the app, so you can find an ATM easily on the go. Chime is in network with more than 30,000 MoneyPass ATMs. Chime allows you to withdraw up to $500 per day, only from your spending account.

Send a check. Chime won’t issue you a checkbook, but it will mail a check to whomever you owe on your behalf from the app. Enter the recipient (business or individual) and the amount you want to send, and Chime will take care of mailing the check for you. You can send and unlimited number of checks, up to $5,000 per check.

How to open a Chime Bank account

Signing up for a Chime account is relatively simple and easy. Chime says it takes less than two minutes to enroll.

You can sign up using the free Chime iPhone or Android app, or by visiting Chime‘s website. You must be at least 18 years old and either a U.S. citizen or permanent resident with a valid Social Security number to be eligible to open a Chime account. Chime uses a third-party service to verify your information before approving your account. Chime does not run a credit check for approval or require any other forms of identification like a driver’s license number to apply.

The initial enrollment only opens a Chime spending account and so you will still need to open a savings account if you want one. Chime will present you with the option to open a savings account after your spending account is set up, but if you don’t want to do that right away, you can always do it later online or through the app.

Your Chime VISA debit card should arrive within 10 business days after you open a spending account. As of this writing, Chime does not offer joint accounts.

Linking an external account
You can link an external bank account you own to your Chime spending account in the Move Money section of the Chime app or by logging into your account online. Under Move Money, select Transfers and you will then be prompted to enter your other bank’s login credentials. Your external bank account will be instantly linked to your spending account.

How to fund your Chime account

There are currently five ways Chime allows you to put money into your chime account. As of this writing, Chime does not support wire transfers, but says it may later add the feature.

  1. Set up direct deposit with your employer. Funds will post when Chime receives them (that may be up to two days earlier than your payday!)
  2. Initiate a transfer to your Chime account from an external bank. Chime says this is the fastest way to move money from your external account to a Chime account. If you use a debit card to transfer funds to your Chime account, the funds will be made available within minutes. There are no limits on direct deposits, but if you use a debit card, the minimum transfer you can make is $25 and the maximum is $200 per day.
  3. Initiate a transfer from an external account using Chime. After linking an external bank account, you can transfer up to $200 per day, or $1,000 per month to your Chime spending account. It may take up to five business days for the funds to be made available for use.
  4. Use the mobile app to deposit a check. Chime users can use the app to deposit checks using their mobile devices.The feature is only available to users who receive payroll direct deposit to their Chime spending account.
  5. Deposit cash at a one of over 60,000 Green Dot locations. Visit a Green Dot location and ask to add the cash to your Chime spending account. You can deposit up to $1,000 within 24 hours, or $10,000 per month. Green Dot may charge up to $4.95 to make a cash deposit to your Chime spending account. Find a location near you here.

Overall review of Chime

Overall, Chime offers fairly standard checking and savings accounts, but it’s mobile-first approach to banking and robust mobile app features make it stand out from others in mobile banking. If you aren’t super excited to use the Chime banking app and aren’t afraid to do a little extra work, you can achieve most of the same features with a higher-yield checking or savings account offered elsewhere.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Reviews

SmartyPig Savings Account Review

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Year Established2005
Total Assets$25.6B
LEARN MORE on SmartyPig’s secure websiteMember FDIC

If you’ve ever put off saving for vacation or lifecycle event, but then ultimately borrowed to pay for it, using a credit card or personal loan, then you might want to check out the SmartyPig savings account. SmartyPig, in partnership with Sallie Mae Bank, offers a virtual “piggy bank” that allows savers to automatically fund goals with set deadlines and earn 1.75% APY on their money to boot.

SmartyPig’s Most Popular Accounts

APY

Account Type

Account Name

Compare Rates from Similar Accounts

1.75%

Savings

SmartyPig SmartyPig Savings

2.00%

American Express National Bank High Yield Savings Account

on American Express National Bank’s secure website

Member FDIC

The SmartyPig Savings Account: At a glance

A SmartyPig account is a good way for new savers to get into the habit of saving little by little to meet timely goals

APY

Minimum Balance Amount

1.75%

$0.01-$2,500

1.75%

$2,500.01-$10,000

1.75%

$10,000.01-$50,000

1.75%

$50,000.01 - $250,000

  • Minimum opening deposit: $0
  • Minimum balance to earn APY: $0.01
  • Monthly account maintenance fee: None
  • ATM fee: N/A
  • ATM fee refund: N/A
  • Overdraft fee: N/A

This account is your standard high-yield savings account tied to personal goal planning. As of this writing, the online-only savings account promises account holders a variable 1.75% APY on all balances (although its website claims to offer tiered interest rates.) To put that into perspective, the FDIC reports the average savings account earns only 0.08% APY.

This account is free to open and charges no fees. Each account is FDIC insured up to $250,000 via Sallie Mae Bank. SmartyPig limits account balances to $250,000.

This savings account allows account holders to set automatic biweekly or monthly deposits to a primary savings account by either setting up direct deposit to the account or linking an existing checking or savings account elsewhere. You can only connect one account to fund your SmartyPig primary account. You can then set automatic transfers from your primary savings account to fund specific savings goal accounts with target dates, for a little extra motivation.

The company’s policy is to delay the availability of deposits made by bank transfer for five business days, during which you may not withdraw funds from the account and the funds can’t be used to make any payments.

When you reach your savings goal, the service automatically stops allocating contributions to the goal account — even if that’s prior to your predetermined target date — and you can transfer the funds out whenever you’re ready to use them.

Like most savings accounts, you are limited to making only six withdrawals per statement cycle from this savings account under Federal Reserve Regulation D. The company says it will not process any attempts to make excessive withdrawals. On the bright side, the limit applies to your primary account and each goal account individually.

What stands out about the SmartyPig account?

Goal planning

The account’s standout feature is its goal planning system. The feature can be helpful to someone new to saving or struggling to stick to their goal to sock away some money. The system allows you to set a deadline for their savings goals and make automatic recurring contributions to your primary account so you don’t have to think about saving.

Each savings goal must be a minimum of $50. You can set a target date for each goal, but no pressure — you won’t be penalized if you don’t reach your target date in time. You can always cancel the goal and the funds will be returned to your primary savings account, or you can reset the target date.

Automatic saving

Automation can make saving a painless and less-stressful practice. You can set biweekly or monthly direct deposits or transfers from a linked deposit account to fund your primary savings account. You’ll be able to schedule automatic transfers from your primary account to your goal accounts, too. If you choose to set a monthly or biweekly recurring goal contribution, it must be for at least $10.

Solid interest rate

This savings account rewards savers with a minimum 1.75% APY on account balances as low as a penny. That’s almost 20 times higher than the current national average interest on simple savings accounts. Interest is compounded daily and credited monthly.

Amazon connection

You can also use funds held in the account to order Amazon.com gift cards once your account has been open for at least 60 calendar days. The feature is useful if you want to make a purchase on Amazon but don’t want to wait up to three days for a transfer to an external funding source to post. Amazon gift cards can only be used on Amazon.com purchases and SmartyPig does not offer refunds or exchanges on unused gift cards.

Where the SmartyPig account falls short

We see four key shortcomings in the account.

Account holders can only link one checking or savings account as the external funding source for their SmartyPig primary account. The limitation can be a downside for anyone who uses more than one deposit account to manage their finances or wants to set recurring deposits from more than one account.

Another shortcoming is the $50 minimum that is required for the goal accounts. It can be a bit steep for some simple, short-term savings goals like birthday or holiday gifts.

SmartyPig is an online-only service, so you won’t be able to visit a physical branch to make changes to or address any concerns with your account in person.

Finally, account holders are not issued a debit card or granted ATM access to their funds. If you need to use your money, you’ll have to initiate a transfer from your savings goal account or SmartyPig primary account to your linked checking or savings account, which may take up to three business days to post.

How to open a SmartyPig account

You can open an account online where you will be directed to the online application form.

To open an account, you must:

  • Be at least 18 years old;
  • Have an existing checking or savings account; and,
  • He a U.S. citizen, permanent resident with a green card and Social Security number, or a U.S. resident with a Social Security number.

When you link a checking or savings account to your SmartyPig account as an external funding source, you must verify you own the account before you’ll be permitted to transfer any money from your SmartyPig account to the external account.

To verify the source, you’ll confirm the amounts of two deposits of less than $1 that the company will make to the external account. If you don’t verify your external account within 14 calendar days, the funding source will expire and you’ll need to start all over. There is no minimum deposit amount required at account opening.

LEARN MORE Secured

on SmartyPig’s secure website

Member FDIC

How the SmartyPig savings account compares

magnifying glass

SmartyPig offers an APY slightly lower than the best offerings currently available, but— if you’re new to saving — its goal planning feature may be worth missing out earning a few basis points more from a competitor. Check out our ranking of the best savings accounts currently available if you’re looking to earn the highest rate possible on a simple savings account. Additionally, a simple savings accounts is the only account offered. The company does not offer checking, money market or certificate of deposit accounts.

Overall review of SmartyPig savings account

The SmartyPig account is a solid simple, high-interest savings account and it’s goal planning system makes it a good option for anyone who is needs a little help trying to establish a savings habit. That said, if you’re already used to saving your money there are competitors worth considering as an alternative to the SmartyPig account that currently offer higher rates and may offer easier access to your cash when you need it.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Reviews

Simple Bank Review — a Simple Way to Budget

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Like most things in the world of “adulting,” managing your finances isn’t always as simple as it should be. This is where online bank Simple stepped in six years ago, providing customers with a mobile bank account rolled into a budgeting app.

Acquired by Spanish lender BBVA in 2014, Simple was founded in Portland, Ore. in 2009 and launched commercial operations three years later. The money in a Simple account is held by BBVA Compass, the American subsidiary of Banco Bilbao Vizcaya Argentaria, S.A., and FDIC-insured up to $250,000.
Though Simple offers only one type of bank account — personal checking — it promises zero fees and features found at bigger banks, such as photo check deposit, plus other features, including a goals function and “safe to spend” notifications. In an effort to attract new banking customers, Simple is offering a 2.02% APY return on balances of $2,000 or greater under the checking account’s Protected Goals.

We’ll review Simple’s bank account, its pros and cons and what else you need to know to determine if it’s a good fit for you.

What is Simple?

The Simple bank account is a checking account that incorporates budgeting tools into a consumer’s everyday banking.

Simple banking is provided through both desktop and mobile applications, although you will need to download the app to deposit checks using a photo. The free mobile app is available for Android and iOS-powered devices. You can complete all other necessary banking tasks on both platforms.

The Simple account

Minimum deposit amount to open

$10

Minimum balance requirement

$0

Interest rate

0.01%

Annual percentage yield

0.01%

Overdraft fee

$0

Monthly service fee

$0

ACH transfer fee

$0

ATM fee

$0

Out of network ATM fee

$0

Simple Visa debit
Simple customers are issued a Simple Visa debit card for daily purchases and to use at more than 40,000 ATMs in the Allpoint network. In-network ATMs won’t charge you a fee, and are easily found using the ATM finder both online and in the app. Simple doesn’t charge you a fee for using an out-of-network ATM, but you may be charged by other banks and ATM owners.

Simple bank review
Simple

Safe-to-spend
Simple’s safe-to-spend feature helps you resist the temptation to spend every dollar in your bank account when those funds should be reserved for more important and urgent things. The budgeting algorithm sets aside funds for spending categories in your budget and your savings goals. The app subtracts the amount of money you’ve set aside from your total account balance so you can easily see how much money you have left to spend — your safe-to-spend number.

Goals
The Simple bank account makes it easy to set aside money for long- and short-term goals. The feature also serves as a digital envelope budgeting system for your monthly budgeting needs.

A warning to chronic overspenders: Although the amount set aside for goals is subtracted from your total balance so you know what’s safe to spend, the goal money is kept in the same account as the rest of your funds, so you can spend the money if you really need to. We will address how to use goals to save and budget in the following section.

Simple bank review
Simple

Analytics
Simple provides spending reports to give you more insight on how you’re spending your money. You can use the graphs and breakdowns Simple creates to analyze trends in your spending. With that information, you can evaluate whether or not your budget is meeting your needs or if you need to make adjustments in your spending habits. You can also add hashtags, notes and images to each transaction.
You will need to go online to view reports as the feature isn’t yet available in the Simple app.

Protected Goals
You can set up separate savings goals and an emergency fund within the Protected Goals account. Unlike the money for your short-term goals, money in the “protected” account is separate from your main Simple bank account. If you need to use your money, you can make unlimited transfers from a Protected Goals account to your regular Simple checking account. That means there’s no need to worry about hitting the six withdrawals per month limit most other savings accounts have under Regulation D, and the common fees associated with making excessive withdrawals.

If you are looking for a high-yield account, the Simple bank account may be the one for you. Your emergency savings is where you’re earn the most interest if you have a balance of $2,000 or more. Right now, you can earn up to 2.02% APY if you meet the balance requirements. If you don’t, a Protected Goals account with Simple earns 0.01% APY, which is significantly lower than the national average yield on savings accounts. So if you’re looking to earn a return on your savings and can’t make maintain a balance of $2,000 or more, you may want to look elsewhere.

Although they may lack the bells and whistles Simple incorporates, there are many alternative high-yield savings accounts that earn a much higher yield on your money with no minimum deposit. You can compare rates and terms on the best savings options currently available here.

Simple Shared
Simple offers joint accounts it calls Simple Shared accounts. The Simple Shared account is a separate Simple bank account that you co-own with someone else. The joint Simple Shared account allows pairs to plan budgets and complete savings goals together. However, couples will have to save for an emergency separately. As of this writing, Emergency Funds are not available for Simple Shared accounts.

Both co-owners of a Simple Shared account must have individual Simple accounts, too, and they have to keep the individual accounts open in order to have a shared account. Your individual accounts stay private.

Simple Instant
Simple Instant is a peer-to-peer payments system exclusive to Simple users. It’s the quickest way to send money to other Simple account holders instantly, for free. After you add the Simple user to your Instant contacts, you can send money to them using an email address or phone number.

Simple bank accounts work with most third-party p2p payment services like Venmo and Square Cash, too, so you can still send money to your friends who don’t use Simple, although you may be required to pay for instant transfers.

Where Simple falls short

A 1% fee for foreign transactions
Simple doesn’t charge you any fees for making foreign transactions, but Visa does. Each time you swipe your Simple card overseas, you may be required to pay a 1% International Service Assessment fee to Visa. That fee may not be a deal breaker for some frequent travelers, but it’s a bummer to pay any more than you have to, ever.

Additionally. there is a $1,000 daily spending limit for international transactions, but you can have that temporarily raised to $6,000 if you let Simple know you’ll be traveling.

No checkbooks
Simple users are not issued checkbooks to write paper checks. If you find yourself in a situation where you need to send a personal check or pay a bill, you can use Simple’s free bill pay service to have Simple send a check on your behalf. The bill pay feature is found online and in the app. You may also request a treasurer’s check — similar to a cashier’s check — from Simple.

Simple mobile app

When you don’t know exactly how much you have to spend on the things you want but don’t need, you’re either constantly running out of time, money or both. When you’re running around living your life most of the time, keeping track of your money can become a chore.

The Simple mobile app incorporates features that help you keep track of how much money you have left to work with for the month while on the go. You can also set reminders so the app can let you know if your spending is cutting into more important budget items or goals.

Features that stand out

The goals feature is what sets the Simple app and account apart from other mobile-first fintech startups and online banks, which we will get into in detail below.

Using Goals to save money
When you create a goal in Simple — after naming it and adding an optional memo — you’ll set the amount and date by which you would like to complete it. You can fund the goal in two ways: (1) set aside money right away, or (2) elect to save over time.

When you save over time, an algorithm will calculate how much money to move over incrementally from your safe-to-spend amount to the savings goal so it’s fully funded by your preset completion date. You can move money each day, or set a custom funding schedule so the app only moves money on predetermined days.

Using Goals to budget
You can use the Goals setting feature to mimic old-fashioned envelope budgeting. Envelope budgeting is a method in which you set aside cash in physical envelopes for each budgeting category. You set aside what you think you’d need to cover categories like gas, groceries or shopping for a period and if you run out of money for that category, you stop buying in that area. Simple offers a digital version.

You would create goals and name them for each spending category in your budget for the month and determine how much to set aside for purchases made from that category. Here’s an example budget from Simple:

Simple bank review
Simple

Ideally, you would fund the goals immediately and not over time. When you spend money from a goal, you can manually deduct the amount from the budgeted goal category instead of your safe-to-spend amount. If it’s a recurring expense, you can create an autospend from the goal for those transactions. When you get your next pay, you can replenish your goals and start all over.

What if I overspend?
As mentioned earlier, you can intentionally or accidentally spend money set aside for your goals if you go over your safe-to-spend amount. Of course, dipping into your goal money may cut into your progress. If you fall behind on saving or need to edit a goal, you can always edit the target date and/or amount, or delete the goal. On the flip side, if you complete a goal and want to save more money, you can choose to automatically save more over time.

Other features that deserve an honorable mention:

  • You can deposit checks — This is the only feature exclusive to the app and may be in found in the “Payments and Transfers” tab. Simple recommends submitting the deposit before 5 p.m. EST, as it allows the bank to process the deposit on the same day. The limit on how much money you can deposit using a photo check will depend on factors such as how long you’ve been with Simple and the number of checks you’ve recently deposited, so it varies by individual user. You can find out your current check limit under “Deposit a Check.” If the check is too large, you can deposit it by mail.
  • You can block and unblock your debit card — Blocking your card is useful if you lose your card or think it’s been stolen. Go to your profile and select “Your Simple Cards” then block the Simple Visa card. If you see any unauthorized transactions made on your account, you may be covered by Visa’s Zero Liability policy if you report it in time.

How to open a Simple Bank account

Opening a Simple bank account is a quick and easy process (see how I didn’t use the word “simple” there? I saved you from a very punny sentence). Signing up takes all of about five minutes. Simple requires applicants to be U.S. citizens and 18 years or older with a Social Security number.

The company also recommends you have access to a device that can run its mobile app. The device will need to be running on either Apple iOS 10.0 or higher or Android 5.0 (Lollipop) or higher.

You can open an account online or on the Simple mobile app. The application requires you to create a username and password for your Simple bank account, and indicate how you plan to use the account. Then, it asks for personally identifying information like your name and Social Security number.

Simple bank review
Simple

Who could benefit from the Simple bank account?

The Simple bank account would be most beneficial to individuals and household budgeteers who want to be able to manage their budgeting and bank account in one place, in real time.

Most household money managers are well aware how much their bills will come up to each month and what their short- and long-term monetary goals are. However, it’s naturally difficult to keep the numbers you’re juggling on the top of your head when you are busy and often on the go. Other budgeting apps may keep you organized, but you have to make an effort to keep them on track with your actual spending.

Simple makes keeping up with bills and savings goals effortless.

Simple’s safe-to-spend feature allows even the busiest among us to easily keep track of how much money you actually have available to spend freely. You can use Simple from virtually anywhere, desktop or on your phone, so there are no excuses. Just checking your bank account balance and seeing the difference between the total balance and your safe-to-spend will remind you of your budget and savings goals.

With Simple, you can create and automatically contribute to an emergency fund account, one separate from your other financial goals, so that it actually gets done this time around. Transfers are based on your income and spending, so saving money isn’t necessarily based on how much money you happen to have in your account at the end of the month or pay period.

Simple’s Goals system can help you stay organized, compartmentalize your budget and keep your financial priorities straight. If you don’t immediately fund a goal, the app has your back. It calculates and makes small transfers to get you closer to your goal for you.

Alternatives

Simple is one of many fintech companies that have recently released a mobile-first or mobile-only banking option. Next, we take a look at how Simple compares with its peers: the Aspiration Summit account, Chime, Beam and Finn by Chase. Rates are as of  the date of publication.

Simple vs. Aspiration Summit account
 SimpleAspiration Summit

Overdraft fee

$0

$25

APY on Checking

0.01% APY

1.00%APY; up to 1.00% APY

APY on Savings

n/a

n/a

The Aspiration Summit account is the mobile-only banking option for those trying to be a bit more socially conscious. Aspiration’s standout feature is its Aspiration Impact Measurement (AIM), which measures your social impact based on where you spend your money.

You get a personal AIM score, calculated based on the businesses you choose to support, which also each get an AIM score. For businesses, the AIM score is split in two: a “people score” based on factors like employee pay and access to health care, and a “planet score” based on things like the company’s greenhouse gas emissions.

In addition to knowing how the money you spend affects the world around you, you can feel confident knowing Aspiration donates $0.10 of every dollar it makes to financially-focused charities.

Like the Simple bank account, the Aspiration Summit account is a checking account. While the Simple bank account earns 0.01% APY, the Aspiration Summit account earns a higher 1.00% APY on balances up to $2,499.99, and 1.00% APY on balances $2,500 and up. But, Aspiration doesn’t give you the opportunity to open a separate account to set aside savings like Simple does. Aspiration also doesn’t provide any budgeting and goal-setting features on its account, while Simple does. Aspiration requires a $10 minimum deposit to open an account, but no minimum balance to maintain the account.

Aspiration charges is a $25 overdraft fee and a $5 daily fee for each day your balance remains negative. Meanwhile, Simple charges no fees but won’t allow a transaction if it will overdraft your Simple bank account. Like Simple, Aspiration doesn’t charge its users a fee to access ATMs anywhere in the world but goes a step further by fully reimbursing you (on the 10th of each month) if you’re charged a fee by an out-of-network ATM. If you’re traveling overseas, you’ll be charged a fee equal to 1.1% of the transaction using the Aspiration Mastercard debit card.

Simple vs. Chime Bank
 SimpleChime Bank

Overdraft fee

$0

$0

APY on Checking

0.01% APY

n/a

APY on Savings

n/a

0.01% APY

Chims is a fee-free, mobile-first banking option that features automated savings, but doesn’t come with the analytics and goal-setting features that Simple has.

With Chime, you can automatically save 10% of each paycheck in a savings account and, if you’re enrolled in direct deposit, you can get access to your paycheck up to two days earlier than the money would become available with most other standard checking accounts. Once enrolled in Chime’s automatic savings program, Chime will automatically round up each purchase made with your Chime Visa Debit Card to the nearest dollar and save the difference in your savings account.

If you ever need to split a bill, Chime does the math for you and lets you send a text to a friend with a link to pay you back using Venmo, or Chime’s in-app peer to peer payments feature (Pay Friends) if the friend is a Chime Member. Money sent between two Chime members is received instantly. Simple doesn’t do the math for you, but you can send money instantly to other Simple users using its built-in p2p system, Simple Instant.

Chime offers both a checking account and a designated savings account, unlike Simple, which offers a checking account and the option to save emergency funds in a “protected goals” account.

Whether your savings are in a Chime savings account or in a “protected goals” account with Simple, neither company grants more than a 0.01% yield on your funds. Neither Chime nor Simple charge overdraft fees. While Simple doesn’t charge you for using out-of-network ATMs, Chime charges $2.50. You can find more than 38,000 in-network ATMs using the ATM map in the Chime app.

Simple vs. Beam
 SimpleBeam

Overdraft fee

$0

n/a

APY on Checking

0.01% APY

n/a

APY on Savings

n/a

2.00% APY; up to 4.00% APY

Beam is a fee-free, mobile-only high-interest deposit account. You can earn a much higher yield on your savings than you would with Simple. Beam accounts promise a minimum 2.00% APY compared with Simple’s 0.01% APY. Beam also gives its customers the opportunity to claim rewards that can earn them up to 4.00% APY on their funds daily. Beam calls its rewards “billies” and they can be earned by engaging with the app and doing things like referring a friend to Beam. The “billies” are awarded daily between 6 p.m. and 7 p.m. local time. Neither service requires a minimum balance to earn interest on funds.

Beam doesn’t issue users a debit card or give users ATM access like Simple does. Beam is intended for use alongside a primary checking account as a supplementary bank account, while Simple is intended to be used as a primary checking account. If you want to use your money in a Beam account, you must first transfer it out to a primary checking account, which can take up to two days. Beam also doesn’t have any special saving or budgeting features and doesn’t show you spending analytics like Simple does.

As of this writing, Beam is not yet available for widespread use, but Simple is. Beam is still in a “private beta” stage, so it can only accommodate a limited number of customers. If you want to use Beam, you’ll have to sign up on the waiting list, which currently has more than 126,000 names.

Simple vs. Finn by Chase
 SimpleFinn by Chase

Overdraft fee

$0

$0

APY on Checking

0.01% APY

n/a

APY on Savings

n/a

0.01% APY; up to 0.04% APY

Finn by Chase is a free mobile-first banking option from Chase Bank. Finn by Chase offers checking and savings accounts, and you are required to have both types. For comparison, Simple only offers a checking account. Simple and Finn by Chase users earn the same 0.01% APY on balances below $10,000. For balances that are $10,000-$25,000, Finn users earn 3%, then 0.04% APY on higher amounts. Simple doesn’t offer increased interest on larger balances. Finn does not offer joint accounts, but Simple does.

Both banks issue users Visa debit cards for daily purchases and to use at the ATM. Finn charges $2.50 if you use an out-of-network ATM, while Simple doesn’t charge a fee at all. Finn says its users have access to more than 29,000 in-network ATMs while Simple advertises more than 38,000 in-network ATMs.

The banks both show users’ spending analytics and offer automatic saving features but differ in how their features work.

Finn lets users rate each transaction as a “want” or “need” and how it makes the user feel. Users can choose happy, sad or indifferent faces. Finn also provides users analytics via charts and graphs that summarize their spending habits.

Finally, Simple lets you send money instantly to other users using Simple Instant, but Finn by Chase lets you send money to anyone in the Zelle network, even if they are with a different bank, instantly for free. Both services let users send money with third-party platforms like Venmo, Google Wallet and PayPal.

The bottom line

The Simple bank account is a solid one-stop shop for hassle-free banking and budgeting. Simple doesn’t charge any fees, so it won’t cost you to use their budgeting and analytics system, but it’s not a great option for earning interest on your savings.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

TAGS:

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Strategies to Save

Best Money Savings Apps

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

best mobile apps
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Saving money isn’t always as simple as the oft-prescribed “put it away and don’t touch it” advice makes it seem. With financial concerns constantly tugging at our attention, it can be difficult to find the time and money to save for future goals, events or the unavoidable emergency.

If the savings aren’t there when you need them, you may finance a purchase or cover an emergency with debt like a credit card or personal loan. In a pinch, those tools can be invaluable. But taking on debt should generally be considered a last resort, as carrying debt comes with its own risks.

Luckily for the tech-savvy, the fintech revolution gave rise to several mobile apps designed to help you save money — and make saving a bit more interesting, to boot. Read on to discover the best money savings apps to help you save for short term goals like a vacation, long term goals like a home or college education, and pad your all-too-important emergency fund.

Best money savings apps to help you save daily

Consistency is the root of wealth-building. That said, it follows that saving a little bit of money every single day can be a good practice to start building a wealth mentality. It also happens to be a great way to save money without feeling drastically penalized today to serve your future goals, since you can split your saving into small chunk sand meet targeted saving goals. The following money savings apps can help you get into the habit of saving a little bit of money every day.

Best for saving money on a tight budget: Joy

App Store: 4.3/5, Google Play: n/a
If you’re on a tight budget, the Joy app may be a great way to find money you didn’t think you had.

This free iOS app analyzes your income and spending habits and calculates how much money you can safely save each day without breaking your budget. The Joy app won’t automatically make the transfer for you, so you’ll have to open up the app and decide whether or not to save the money. If you say yes, the funds will be transferred from your linked account to an FDIC-insured Joy savings account.

You can also elect to save more or less than the amount suggested, as you can move money into your Joy savings account anytime. If you need a reminder, set up a daily notification to remind you to make the transfer.

When you’re ready to spend your savings, you can transfer the funds from the Joy savings account to an external account.

Another popular app, Digit, deserves honorable mention. Digit calculates how much you can save each day and will make the transfer for you, automatically — however, Digit costs $2.99, so it may not be a viable option for those on a tight budget.

Best for saving up an emergency fund: Chime Banking

App Store: 4.7/5, Google Play: 4.4/5
Standard financial advice suggests keeping three to six months worth of monthly expenses stashed away in an emergency fund, just in case you run into a financial emergency. In reality, however, around 40% of Americans report they aren’t able to cover a $400 emergency out-of-pocket, while the average U.S. monthly household expenditure is about $5,005.

Chime, a mobile-only bank, hopes its app’s automatic savings features may just help you beat the status quo and make it a little less painful to finally build up your emergency fund. The Chime app is free and available for both iOS and Android devices.

When you enroll in direct deposit and Save When You Get Paid, Chime will automatically transfer 10% of each paycheck into a seperate Chime savings account for you. If you’re enrolled in Chime’s automatic savings program, the bank will also automatically round up each transaction made with your Chime Visa debit card and deposit the amount into your savings account, too.

Best for saving money for a vacation: Tip Yourself

App Store: 4.6/5, Google Play: 4.4/5
Tip Yourself is a free app that may help you save for your dream trip. With the Tip Yourself app, available on iOS and Android devices, you can reward yourself for positive behavior by transferring a little bit of money to your digital tip jar each time you accomplish a personal goal.

If you make it to the gym on a Tuesday, for example, tip yourself $1 (or whatever amount you feel you deserve). The same goes for every other personal goal you may have, such as getting to work earlier or calling your parents once a week.

The app aims to help its users build savings habits and motivate them to stay more consistent about their personal goals, too. The app also has a social feed, so you can share your wins — big and small — with your peers in a supportive community. If you’re into maintaining a streak, there is also a calendar that keeps track of the days you did tip yourself.

With Tip Yourself, you can set a savings goal for your next vacation. When you reach your goal, you’ll feel confident taking a vacation knowing the money you’re spending is your reward for keeping the promises you made to yourself.

Best money savings apps to help you save monthly

Saving money on a monthly basis for large goals doesn’t have to come down to what’s left over at the end of the month. And it won’t, if any of the following money savings apps have anything to do with it. The apps below encourage users to set aside the funds when they have them, before the money is absorbed into their monthly expenses.

Best for saving money for a car: Qapital

App Store: 4.8/5, Google Play: 4.5/5
A car is a fairly large savings goal to meet, but it can seem less daunting if you can save a bit toward your vehicle each time you are reminded why you need the car in the first place — that’s where Qapital comes in.

With Qapital, you can set customizable autosave rules for just about anything, so you can save money simply with the actions you take living your life. You can set a custom rule; for example, you can save a certain amount of money each time you pay for a public transit ticket or fill up the tank for that friend who drives you to work.

Qapital has a bunch of other ways to help you save up for a car, too. With the round up rule, the app will round up all of your transactions and automatically transfer the difference to your designated goal account. So each time you pay for anything, you will have a little bit of money going toward your car. The spend less rule saves whenever you spend less than a certain amount with a retailer or in a certain spending category, and the guilty pleasure rule saves a certain amount whenever you spend on a chosen guilty pleasure, like ordering takeout.

When your goal is funded, you can withdraw the funds and spend it on your chosen vehicle. The free Qapital app is available for both iOS and Android devices.

Best for saving money for a child’s future: Kidfund

App Store: 4.8/5, Google Play: n/a
Whatever your child’s future holds, having the money on hand to help them accomplish their goals will come in handy. With Kidfund, not only can you contribute to your child’s future success, but so can your family, friends and anyone who supports your child’s dreams.

You can open a dedicated savings account for each of your children and set a rule to gift money to your child’s account on a periodic basis. For example, you can gift each of your children’s Kidfund accounts $20 each month. Kidfund awards interest based on the balance within the account.

On top of your giving, you can invite your friends and family members to follow your child’s Kidfund account and they can gift money to the account for birthdays, holidays or whatever reason. When the time comes, you’ll have the money waiting in the Kidfund account to fund your child’s dreams.

Kidfund is a free social savings app available only on iOS devices.

Best for saving money for the holidays: Simple

App Store: 3.8/5, Google Play: 4.2/5
Simple is a mobile-first bank that helps you set aside money for future goals. With a fee-free Simple account, you can set and fund financial goals with a target date. Simple will then calculate how much money you need to transfer periodically to reach your goal by your specified target date, based on the frequency you set.

For example, you can set a goal to save $500 for holiday shopping over 10 months and set the frequency to transfer an amount each month. Simple will automatically set aside $50 each month so you’ll reach your goal for the holidays.

The money for the goal will remain in your Simple account, but will be set aside and tagged for that specific purpose. The amount designated toward the goal will be deducted from your total to give show you how much money is safe for you to spend. The Simple app is free and available on iOS and Android devices.

Best money savings apps to help you save in the long term

Saving for long-term goals can be difficult when you can’t see the tangible results of your efforts just yet. Using one of the money savings apps below may help you keep track of the progress made toward your savings goal, so you can stay motivated as you wait, save and watch the investment you are making towards your future grow with time.

Best for saving money for a house: Rize

App Store: 4.2/5, Google Play: 3.7/5
Rize is a free automatic savings app available for both iOS and Android devices. It helps you earn extra money on your savings for a long-term goal (like a home down payment) and offers a high APY on your cash savings. You also have the option to earn even more on your savings by investing the funds. You set a goal amount and how often you want Rize to pull a specified amount of money from your account, and the app will do the rest of the work for you.

You can set investment or cash savings goals. The money saved in a Rize account earns interest on cash savings. If you choose to invest your money, it’s put into exchange-traded funds which earn varying interest rates.

Rize doesn’t charge any fees on your cash savings or require a minimum amount to open an account; instead, it lets you decide how much you want to pay. If you invest your money, Rize asks you contribute a minimum $2 per month to your account and pay an annual 0.25% management fee of your invested assets.

Rize also has a few built-in features to help you reach your goal a bit faster. It calls the features “Power Ups,” and you can turn them on or off at any time. You can use the Accelerate feature to automatically increase your contribution by 1% each month. So if you are saving $100 toward your down payment this month, Rize will increase your contribution to $101 the next month.

Rize also has a Boost feature that calculates how much extra money you have based on your income and spending habits, and automatically transfers up to $5 to your goal whenever “it makes sense,” which Rize says is about once or twice a week.

Best for saving money for college: Clarity Money

App Store: 4.7/5, Google Play: 4.1/5
Clarity Money is a free automatic budgeting and savings app available for both iOS and Android devices. The app helps you save by setting rules for how often and how much you want Clarity to automatically stash away for goals, like paying for next semester’s tuition or funding your child’s college savings account.

Clarity Money also has a few other features that may help you find more money in your budget to save for school fees. The app can analyze your expenses to find where you may be able to cut back on subscription services and free up some of your funds. Its budgeting features display your spending habits and let you know when you are going over your intended budget in a category, so you can adjust your spending behavior before you overspend. Clarity Money does not charge any fees for its services.

Best for saving money for retirement: Acorns

App Store: 4.7/5, Google Play: 4.3/5
Acorns is an investing app popular for letting its users invest the spare change from their daily transactions with its Acorns Core option. With Acorns Core, the app automatically rounds up your transactions to the nearest dollar and invests the difference into your chosen investment portfolios (once you’ve reached a minimum $5 in roundup savings).

Acorns also has a retirement savings feature called Acorns Later. With Acorns Later, you can invest your money in an Independent Retirement Account (IRA) and set recurring contributions from your linked account. You can invest using a Roth IRA, Traditional IRA or SEP IRA. The ETFs in your investment portfolio will automatically adjust to fit your needs over time based on your retirement date and goals. You can’t have Acorns Later without have Acorns Core, and having both costs the user $2 per month. Acorns Core only is $1 per month.

The Acorns app is free and available for both Android and iOS devices, but the Acorns service costs $1, $2, or $3 (with the Acorns Spend checking account) per month depending on what plan you select.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

TAGS:

Advertiser Disclosure

College Students and Recent Grads

A Financial Checklist for Your 1st Year in the Workforce

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Congratulations! You just got your first job — and your first paycheck as a full-time worker is on its way. You’re an adult. You’re independent.

And you have no idea what to do.

“You will be tempted to use up all of your money to purchase things like a new fancy new car or new apartment,” warned Monica Dwyer, a West Chester, Ohio-based financial advisor.

Maybe you deserve a little reward after landing a competitive job. But, before you go on a shopping spree, do your future self a favor and check off your new financial obligations first.

We made a checklist for you, complete with links to some of the best resources on MagnifyMoney to help you complete the tasks.

Your at-work checklist

1. Fill out your W-4 form correctly

First up, make sure you pay your taxes, but don’t overpay.

The W-4 form is one of the first pieces of paperwork you’ll be asked to complete when you get to your new job. The W-4 tells the employer how much of your paycheck you would like to withhold for income tax.

“Failing to withhold enough money for taxes can lead to an unpleasant surprise next tax season,” said Ron Strobel, a CFP at Nampa, Idaho-based Retire Sensibly. “Withholding too much means you will receive a big refund.” While you may like the idea of getting a big sum of money after filing your taxes, consider what you could have done with the money. “The IRS doesn’t pay interest on refunds, so receiving a refund means you missed out on earning interest over the course of the year,” Strobel said, referring to investments you could have made if you hadn’t over-withheld.

The “unpleasant surprise” Strobel mentioned is a tax bill from the IRS for unpaid taxes. If you don’t have the funds on hand when you get the bill, you may need to set up a payment plan with the IRS or borrow to cover the tax debt. Either option isn’t ideal. The IRS charges interest on balances not paid by Tax Day, and you’ll also likely have to pay interest on any money you borrow to pay your tax bill.

If you find the W-4 confusing, you can use this withholding allowance calculator on the IRS website to help you figure out how much you should elect to withhold for income tax. We also have an article on MagnifyMoney that explains tax withholding changes for 2018.

You will generally be asked to return your completed and signed W-4 to your employer’s human resources department as soon as possible to avoid delays with your first paycheck.

2. Contribute to retirement savings

Another thing you’ll probably be introduced to during the onboarding process for your new job is your employer-sponsored retirement account if the company offers one. Experts we spoke with recommended you set your retirement contribution to 10% of your earnings.

But a 10% contribution right out of the gate might not be the most useful advice for someone in their early 20s, said Sean Gillespie, a CFP and co-founder of Virginia, Va.-based Redeployment Wealth Strategies.

“Don’t get stuck on 10%. It’s a nice rule-of-thumb number, but it’s a number that can intimidate a lot of young’uns so they won’t save at all,” said Gillespie. He noted new workers with student loan debt might be on a tight budget, so they may not even be able to save a full 10% of their salary and cover their bills.

“Let’s figure out how to put something away. If you can’t do 6% because you have to eat, let’s start with 3%, and let’s see if we can bump it up 1% next year,” said Gillespie. He added that getting started is more important than the amount you save at first. “Even if it’s like $50 a month, try to establish the habit.”

Our Ultimate Guide to Maximizing your 401(k) has some awesome advice you can use to make sure you make the most of your retirement account. The experts we interviewed also provided a few tips:

Tip #1: Max out the match
If your employer offers to match your contributions, you should aim to at least maximize the match, advise the experts.

Every penny your employer matches can be described as a 100% return on your investment up to the match limit. Or you could think of it another way:

“This is part of every penny that you’ve been promised as part of this job. If you don’t contribute, you are giving money back to your employer,” said Gillespie.

Tip #2: Take advantage of a Roth
New York City-based CFP Sallie Thompson said she advises young workers to contribute to an employer-sponsored Roth 401(k) or Roth Individual Retirement Account (IRA) if they have the option.

Contributions to a Roth account are made using after-tax dollars. As a result, you can take out the contributions and earnings tax-free once you reach the eligible retirement age.

You may be in a higher tax bracket when you are older and earn a higher salary, so getting taxed now means you may get to keep more of your money.

Tip #3: Max out the annual contribution limit
If it’s within your budget, the experts advised maxing out the contribution limits to your retirement accounts.

Employee contributions to a 401(k) are capped at $18,500 in 2018. The limit will rise to $19,000 for 2019. Those 50 and older can still contribute up to an additional $6,000 as catch-up contribution. The limit applies to individuals, not accounts, so if you contribute to more than one 401(k), your overall cap in 2018 is $18,500. The limit does not include the employer match.

The IRA contribution limit for individuals in 2018 is $5,500. The limit is $6,000 for 2019. Again, the same limit applies if you have more than one IRA. Employers cannot match contributions to traditional or Roth IRAs.

3. Insurance coverage

Your employer’s benefits package may include a variety of insurance options, including health insurance, life insurance and disability insurance. Taking advantage of what’s offered, but first, evaluate if the plans suit your needs.

Tip #1: Opt for an HSA and high-deductible health plan
If you have the option to use a Health Savings Account (HSA) in combination with a high-deductible health plan, you should, said John Gugle, a Charlotte, N.C.-based CFP.

“While you are young and healthy, a high-deductible health plan can save you money in monthly premiums. An HSA is the only investment vehicle that has a triple tax benefit,” said Gugle.

The contributions are tax-deductible, the money you invest grows tax-free and any funds you withdraw to cover qualified future health care expenses can be taken out tax-free.

“Let this account grow and use cash flow for health care expenses. The longer this account can grow tax-free, the better,” Gugle advised new workers.

Thompson echoes this advice and suggested workers aim to use the funds to cover medical expenses in retirement. Thompson recommended workers invest their HSA contributions into good growth mutual funds for the long term.

Tip #2: Get disability insurance
Your employer will likely offer disability insurance. If they don’t, try and find a policy from a private insurer. The coverage is very important to have, as it protects your largest asset: your future income. Disability insurance ensures you can keep paying your bills and put food on the table in the event you become disabled and are unable to work for an extended period of time.

MagnifyMoney has a complete guide to disability insurance here to help you weigh your options.

Tip #3: Consider term life insurance
If you choose to get a life insurance policy, Gugle recommended signing up for term life insurance, as opposed to a whole life insurance policy.

In a nutshell, term life insurance policies cover a fixed period of time and are generally more affordable for young workers on a tight budget. Whether or not you need life insurance at this stage in your life depends on if you have financial dependents. We explain in more detail the major differences between term and whole life insurance here.

When you are designating beneficiaries on your insurance policies, be sure to designate both a primary and contingent beneficiary.

Your at-home checklist

1. Write down your financial goals

“It’s a great time in your life to start a discovery process about what is important to you and the lifestyle you want to build for yourself,” said Kayse Kress, a Bristol, Conn.-based CFP, referring to the first years in the workforce. “By outlining financial goals, you can create an action plan using your money to accomplish those things.”

Your goals and when you intend to reach them may change as you go through life, and that’s fine. You can revisit the list annually or how often you deem necessary.

Here are a few questions to help you get started with that list:

  • When do you expect to pay off your student loans? What will you do with the extra money?
  • How often will you go on vacation?
  • Do you want to own a home or a rental property one day?
  • Are you planning to have a wedding?
  • Do you want to start a business?
  • When do you plan to retire, and how does a retirement lifestyle look for you?

Full-fledged financial planning likely isn’t necessary at this point in your life, since you may not have much in your asset column. However, if you have assets or merely want some guidance, you may want to meet with a financial planner on a one-time or once-a-year basis to help you set appropriate goals and prepare to reach them.

2. Create and follow a budget

The most suggested tip experts shared for new graduates joining the workforce was to master “cash flow management,” or budgeting.

“Budgeting is not as painful as people think and actually allows you to spend your money in meaningful ways, while also helping you make sure to live below your means,” Kress said.

Your budget categories

To get started with basic budgeting, list your monthly expenses and sort them into larger categories. For example, you might label them savings, fixed expenses, flexible expenses and debt.

You can automate your savings by having retirement contributions deducted from your paycheck or setting up recurring transfers from your checking account to a savings account.

“I’m a big fan of automating because it makes life so much easier,” said New York City-based financial planner Samuel Deane. “It really takes the stress out of budgeting.”

Your fixed expenses are the nonnegotiables, like your rent or mortgage payment, groceries, your car payment and utility bills. The debt category includes required monthly payments on things like student loans and credit cards. The remainder of your monthly expenses would likely fall into the flexible expenses bucket. Flexible expenses are things that are “wants,” like ordering takeout, your subscription payments and Uber rides. The flexible bucket is the first place to start when you need to cut your spending.

Practice and review periodically

Once you create your budget, try to stick to it. Monitor how you’re doing so you can make adjustments. Thompson recommended comparing your actual spending with your budgeted figures on a monthly or quarterly basis.

3. Build an emergency fund

Your top savings priority should be setting aside money for an emergency, like losing your job or urgent car repairs you need so you can continue driving to work. These funds serve as cushion so you don’t have to turn to expensive borrowing options.

Experts generally recommend saving three to six months’ worth of expenses in a savings account, where you can quickly access the funds when needed.

“It should only be used for emergencies. If it goes below the specific amount, it should be replenished,” said Thompson. “Use a payroll deduction to fund this or set up automatic transfer from checking to savings.”

4. Prioritize paying off debt

A recent study by LendingTree, MagnifyMoney’s parent company, found that millennials in the largest 50 U.S. cities carry an average $23,064 in non-mortgage debt.

“To get started on your path to financial independence, it is important to start paying down any debt that you have ASAP,” Kress said

Paying money toward interest on debt means it may take you longer to reach other financial goals because you have less money to allocate. If you have debt, do your best to tackle it as quickly as possible after fully funding your emergency fund.

Using a strategy like the debt avalanche or debt snowball may help to organize and speed up your debt payoff. In addition, you may be able to save money by consolidating your debt with a personal loan or balance transfer credit card.

5. Make sure you understand your student loan terms

If you have student loan debt, your first bill may be coming soon, as first payments are often due about six months after graduation.

“Without a student loan payment you will feel rich when that paycheck hits your account, and you’ll likely have to urge to splurge,” said Michael Troxell, an Oakland, Calif.-based CFP. “But you may be filled with some regret down the line when you see your student loan bill.”

Start preparing to make the payments as early as possible. If you haven’t already received repayment information from your student loan servicer, you can log into the Federal Student Aid website to get more information on making payments. You can read more about dealing with education debt in our ultimate guide to student loans.

6. Work on your credit score

Establishing good credit early on is key, as a high credit score can help you qualify for new credit at better terms. This is especially important if you ever want to borrow money to buy a home or car. Using a credit card responsibly will help you build good credit.

The simple act of paying off your card each month helps you build positive history in the two areas that contribute to about 65% of your FICO credit scoring calculation: on-time payment history (35%) and credit utilization rate (30%). Your credit utilization rate is the amount you use of your total available credit. Using less of your available credit and making consistent, on-time payments demonstrate to creditors you are a responsible borrower who will pay back a loan on time. The habit should help to build your credit score over time, but it’s not the only thing you can do to help increase your score. MagnifyMoney has a few more credit building tips here in our credit scoring guide.

7. Build a habit of thrift

Gillespie suggests those new to the workforce “build the habit of thrift.” That doesn’t mean to shop exclusively at thrift stores, but in a more broad sense, the habit of thrift relates to keeping both your fixed and flexible expenses low.

For example, if you have the opportunity to save money by living with a roommate or living with your parents, do it.

“Adopt the mentality of minimalist,” said John Pak, a Los Angeles-based CFP. “Build the habit of spotting lower cost options or alternatives. Consume more of what you need and minimize what you want, at least until you start seeing extra money left over each month.”

Final thoughts: It’s your responsibility to become financially literate

Deane said 20-somethings often make the mistake of believing money is something they should inherently know how to manage, when it isn’t.

“You don’t necessarily know as much as you think you do,” Deane said. “You have to make the effort to go out and seek the information,” Deane told MagnifyMoney.

To that end, the information is out there. You can apply some of the tips you learn from the internet, books, other people and financial experts to your lifestyle, and see what works for you. Every budgeting strategy doesn’t work for every personality. Try not to get discouraged if you falter a few times before you get the hang of things. Just try to learn from your past mistakes and make changes for the better.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Reviews

Tally App Review

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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It’s no secret many Americans have credit card debt. The Federal Reserve reported that as of August 2018, Americans carry a total of $1.04 trillion in revolving credit card balances.

Tally, an automated debt manager, aims to make it easier for those with credit card debt to pay down their debt faster and save money while doing it. The fintech company behind the Tally app, Tally Technologies, was founded by serial entrepreneurs Jason Brown and Jasper Platz.

“We created Tally to help people overcome credit card debt and the anxiety that comes with it,” Brown told MagnifyMoney.

What is Tally?

In simplest terms, Tally is an automated debt manager. With the aid of algorithms, automation and a line of credit, Tally says it helps consumers pay down their credit card debt faster, reduces the costs related to carrying credit card debt and minimizes the emotional stress of debt management.

The free Tally app launched in 2017 for iOS devices. The company released a free app for Android devices in September 2018.

How does Tally work?

Tally acts as the middleman between you and your creditors. You make one payment to Tally each month and Tally uses that money along with your Tally line of credit to make payments on your credit cards at least two days prior the due dates. Tally prioritizes paying off your most expensive debts — the highest balances with the highest interest rates — to save you money in interest payments along the way.

You Pay vs. Tally Pays

For each of your credit cards, you have the option to decide if you want Tally to pay the bill on your behalf using your Tally credit line (Tally Pays) or if you would like to manage the credit card payments on your own (You Pay).

If you elect Tally Pays, then Tally will pay your cards using the Tally credit line.

Cards with rates higher than the rate on your Tally credit line: Tally will pay as much as possible toward the balance with your Tally credit line, so you can repay Tally at a lower interest rate.

Cards with rates lower than the rate on your Tally credit line: Tally will make only the minimum payments.

Tally will then send you one bill. It first uses your payment to cover the minimum payments (minimum payments are not added to your credit line balance), and your remaining payment goes toward paying the principal and interest on the line of credit. Tally does not compound interest. You must pay at least the minimum payment on your Tally line of credit, but you can pay more if you wish. Tally told MagnifyMoney its average customer pays 2.5 times the minimum each month. Tally charges a minimum payment equal to the greater of $25 or at least 1% of the total balance on your credit line each month.

Tally does not charge a fee if you go over the Tally credit line limit. You won’t be charged, for example, if your minimum payments send you over the Tally line of credit limit.

With You Pay, using Tally gets a bit more complicated. Tally reminds people using You Pay to pay their credit cards a few business days before the bills become due. You have the option to pay through the Tally app using funds in a linked checking account or pay directly on the creditor’s website. If you use the Tally app to make the payment(s), Tally will show an estimated date of payment arrival.

If you use the creditor’s website, Tally recommends making the payment at least seven business days ahead of the due date to avoid double payments with late payment protection. Tally’s system needs the time to register that you made a payment. If the system can’t detect you made a payment close to the due date — even if your card is set to You Pay — Tally will still make a payment if you have late free protection enabled. For that reason, the company recommends those who pay through a creditor’s website disable its late fee protection to avoid double payments.

Eligibility

While anyone across the U.S. can download the app, as of this writing Tally is only licensed to serve consumers in 16 states: California, Texas, Florida, New York, Illinois, Ohio, Michigan, New Jersey, Washington, Massachusetts, Wisconsin, Colorado, Louisiana Minnesota, Utah and Arkansas. If you don’t live in one of those states, you can sign up to be notified once Tally is available in your state.

You must be 18 years or older to use Tally’s services, and as of this writing, only those approved for a line of credit are eligible to use Tally. Tally requires a minimum 660 credit score and conducts a soft pull to determine eligibility, so your credit score isn’t harmed if you apply.

Tally’s service is two-part: Tally Advisor and a personal line of credit. (Again, you can only use Tally Advisor if you qualify for the line of credit.)

Tally Advisor

  • Analyzes your debt
  • Tells you which cards to prioritize
  • Encourages you to pay down your debt faster

Tally Advisor is the app’s automated debt management feature. It analyzes your credit card balances, spending habits and goal debt-free date to recommend a monthly payment amount. Tally Advisor also shows you how much faster you can get out of debt by paying more each month.

Image via Tally

Line of credit

  • Personal line of credit for consolidating debt
  • Pays your cards with the highest APRs first

Tally issues a line of credit it will use to help you save money on high-interest credit card debt. Tally charges a variable interest rate between 7.90% and 19.90% APR on the line of credit. Your credit limit and APR on a Tally credit line will be determined by the information obtained using a soft pulland other factors, like your card balances, interest rates on your credit cards and spending habits. Tally reevaluates your profile every six months and may offer you a higher line of credit or a lower interest rate.

If you elect Tally Pays, the line of credit automatically consolidates high-interest credit card debt at a lower rate. Tally monitors your card balances, interest rates and due dates, so you don’t have to keep track of which cards it’s consolidating. Considering the average credit card charges 16.5% APR, it’s likely you would save money using Tally’s line of credit.

Tally will automatically use the credit line to pay your credit card balances with APRs higher than the line of credit’s APR, and then you will pay down the line of credit. Once space is freed up on the line of credit, Tally will use it to pay debt from the card with the next highest APR and so on, as long as it saves you money in future interest payments.

For the cards with interest rates below the rate charged on your Tally credit line, Tally will only make minimum payments. Tally says it does not use the line of credit to make minimum payments; rather, it plays middleman by repaying your credit card issuers using the payment you make to Tally.

Cost

  • The Tally app is free to download.
  • Tally doesn’t charge any fees to use the app or any maintenance fees associated with the personal line of credit.
  • You pay interest on the line of credit used to consolidate debts, which is how Tally makes its money.

Is Tally secure? Tally transmits all information through secure SSL encryption and does not store any bank usernames or passwords. In addition, Tally does not store sensitive information on your phone.

Our thoughts on Tally

What we like about Tally

The automated debt avalanche

Tally follows the debt avalanche method. It prioritizes and pays off your credit card debts in order of interest rate, from highest rate to lowest rate, ensuring you pay off debts in the order that saves you the most money.

A credit line using a soft pull

Tally uses a soft pull to determine your eligibility for a line of credit. The number of credit inquiries, or hard pulls, on your credit report comprises 10% of your FICO® credit score, and having several hard inquiries for new credit can damage your credit score. Since a soft pull isn’t factored into credit scoring formulas, applying for a Tally line of credit won’t damage your credit score.

Late fee protection

Tally provides late fee protection. It promises never to miss or make a late payment, as it pays your cards at least two days before the due date. Tally also promises to refund late fees if it makes a mistake.

Improve your credit score

Tally told MagnifyMoney that the majority of its users see an increase in their credit scores after signing up.

The app’s services focus on both ensuring on-time payments and paying down credit card balances, targeting the two factors that make up 65% of your FICO credit score: payment history and credit utilization. Payment history determines 35% of your FICO score, while credit utilization — the amount of credit you use out of your total amount of credit available across all your revolving lines of credit — makes up another 30%.

No fees

Tally does not charge any fees for its services. There is no origination fee on the line of credit and it does not charge a late fee if you miss a payment or make a late payment. Although you wouldn’t pay a fee, Tally does report payments to the credit bureaus.

Willing to work with you

If you miss a payment with Tally, the company’s customer success team will reach out and try to work with you to customize a payment plan, Brown told MagnifyMoney.

“As long as they will collaborate with us we will come up with a plan to work with their situation,” said Brown. However, he added that if someone isn’t willing to communicate or collaborate and refuses to pay, Tally will be forced to turn the account over to collections.

After a user misses two payments and they are unresponsive, Tally begins the collections process.

No compound interest

Most credit cards accrue and compound interest daily. The Tally line of credit accrues interest daily but does not add it to your principal balance.

What’s not so great about Tally

It’s complicated

If Tally approves you for a line of credit large enough to cover all your credit card debt and at a rate that’s lower than all your credit card rates, it’s easy to understand how Tally saves you money — it’s simple debt consolidation.

It gets confusing if your Tally line of credit can’t cover all your debt. The idea with Tally is you don’t have to worry about it — Tally automates the debt-payoff process to save you money — but the bite-by-bite debt consolidation by way of a middleman is difficult to envision. It also makes it difficult to know how much debt you have, because until it’s all consolidated, you’ll continue to get bills from multiple creditors. You have to remember that Tally will distribute all your payments appropriately.

It’s particularly complicated if any of your credit cards have a lower APR than your Tally line of credit, because you will hit a point at which you’re merely using Tally as a payment intermediary. When that happens, you’re likely better off setting up automatic payments with your credit card issuer.

Limited availability

Tally is currently only available to residents of the following 16 states: California, Texas, Florida, New York, Illinois, Ohio, Michigan, New Jersey, Washington, Massachusetts, Wisconsin, Colorado, Minnesota, Utah, Louisiana and Arkansas.

Brown tells MagnifyMoney the company aims to be available in all 50 states by the end of 2018. He adds the states where Tally is already licensed to operate are home to nearly 60% of the American population.

Not for subprime borrowers

As of this writing, those who fall below the minimum required 660 FICO credit score cannot use Tally. While the average FICO score may be 700, about a third of U.S. consumers have scores that fall below 660 and would not be able to take advantage of any of Tally’s features.

Avalanche isn’t for everybody

The debt avalanche method helps people save the most money in the long run, but not everyone finds this approach motivating. Even though it doesn’t save as much money, the debt snowball method (paying off small debts quickly) gives some people the momentum they need to get out of debt.

Doesn’t discourage spending

As Tally consolidates your high-interest credit card debt with the personal line of credit, it frees up space on your credit card. Seeing your credit card bill go down — even though the debt has merely moved to a different creditor — may tempt you to keep spending. And because Tally may not pay off all your credit card balances immediately, it can be hard to tell how much debt you have and how much you’re adding to it by continuing to use your credit cards.

Not the best rates

The high end of Tally’s rate range on its personal line of credit (19.90%) is higher than the average APR on credit cards. The low end of the range (7.90%) is competitive, but borrowers may be able to qualify for a better, fixed rate with a personal loan.

Maxed out line of credit

Even though Tally doesn’t perform a hard inquiry on your credit report in the approval process, using Tally can still affect your credit. The company reports your line of credit activity to the credit bureaus. Because using Tally may not consolidate all your debts immediately, you will have more revolving accounts with outstanding balances, which can hurt your credit score. And because the credit line is designed to consolidate as much of your credit card debt as possible, you will have a maxed-out revolving credit line on your credit report (also not great).

Who Tally is best for

Tally’s services may be appealing to those who have been unsuccessfully trying to dig out of credit card debt, carry a balance most months and find it difficult to manage multiple credit card payments.

For those struggling to get out of debt, Tally comes up with a strategy and takes action automatically. The app sorts and pays off your eligible credit cards in an efficient way. All you need to do at that point is make one payment to Tally each month and avoid putting more debt on the credit cards.

How to sign up for Tally

To sign up for Tally, you must first download the app. You create an account in the app by entering your:

  • first and last name
  • email address
  • password
  • mailing address

Tally then asks about your credit rating. You can choose from four options:

  • excellent
  • good
  • fair
  • rebuilding

Then, Tally asks you to scan in your card information, which you can do using the camera on your mobile device.

Note: Tally currently does not support some retail store cards and the camera has some difficulty scanning the card if the numbers are on the back.

In the event you have trouble scanning the card, you can manually enter the card’s number.After scanning the cards, you must link the accounts by entering your login information for each creditor.

Then it’s time to see if you qualify for a Tally line of credit. You must be at least 18 years old and have either a Social Security number or an equivalent ID number. Enter your date of birth, phone number and income, then agree to a soft pull to see if Tally approves you for a line of credit.

If you do not qualify: You can ask to be notified when Tally expands to cover users who are not approved for a line of credit. You can also choose to close your account at this point, given you can’t use any of Tally’s features if you’re not approved for a credit line.

The bottom line

If you want to better manage your debt, Tally’s features may help you learn to be a better credit card user. However, if your goals are to save the most money on your debt payoff and simplify your repayment, a personal loan may be worth considering as an alternative to Tally. Here are a few reasons why:

  • If you have the required minimum 660 FICO score to qualify for line of credit with Tally, you may also qualify for a personal loan.
  • You could use the personal loan to consolidate your credit card debt right away instead of in chunks, like with Tally.
  • Consolidating all of your debt right away at a lower rate could save you money as your debt is immediately removed from your high interest credit card(s).
  • A personal loan generally carries a fixed interest rate as opposed to Tally’s variable interest rate, so you will have the same payment each month. This isn’t guaranteed with Tally.
  • A personal loan has a fixed repayment term, so you know the exact date you’ll be done with your debt, which may help to motivate your payoff.

Additionally, a personal loan may carry a lower rate than the Tally line of credit, so it’s worth shopping and comparing your terms with multiple lenders before you decide. In either case, you have to be serious about getting out of debt, or else you run the risk of racking up more debt if you use up the newly available credit on the consolidated cards.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Mortgage

After a Hurricane: A Guide to Homeowners Insurance, Disaster Relief and More

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Hurricane Florence aftermath
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Recovering from a major hurricane can be overwhelming. Many families facing large out-of-pocket storm costs may wonder what the first steps are to begin rebuilding.

To help you get started, we’ve rounded up advice for how to proceed, sort out which insurance will — or won’t —cover and tap financial resources available to the underinsured.

Step 1: Figure out your coverage

The first thing you should do is print out a complete copy of the most recent insurance policies you have on your home, said Amy Bach, co-founder and executive director of United Policyholders, a national insurance consumer advocacy organization.

Many homeowners make the mistake of calling the insurance company and getting things started before they know what kind of coverage they have, Bach said. Many adjusters are overworked, especially right after a natural disaster. “They have lots of clients and sometimes they try to take shortcuts to tell you what coverage you have,” Bach said. “Sometimes they may be right, but they may be wrong.”

She added: “You have the biggest stake in getting the most money out of your insurance so it’s up to you to do your homework.”

You can contact the insurance company directly and ask them to email you a complete copy of your policy. If you worked with an agent, you can try contacting them directly for a copy, too. If you can’t remember who your insurer is or how to get in touch with them, Bach recommends you contact your state’s insurance department for help.

The declaration page

Once you have a copy of the policy in hand, focus on the declaration page, a summary of the policy and how much coverage you have available.

Coverage is usually split into four main buckets:

  • Dwelling: Covers the home itself.
  • Contents (personal property insurance): Covers the items you own inside the home.
  • Other structures: Covers items that are not part of the dwelling but on the property such as detached garages, driveways, fences, sheds and pools.
  • Loss of use: Coverage for any expense you have to incur because you cannot live in your home.

You may or may not have each type of coverage and the extent to which you’re covered will depend on your policy. It may also include personal liability protection and coverage for guest medical payments (when someone else gets hurt at your home).

Flood insurance vs. homeowners insurance

Standard homeowners and renters insurance policies do not cover damage from storm surges and other flooding. That requires separate policies, typically purchased from the U.S. government.

But they should cover damage from, say, a neighbor’s tree that fell on your house and left a hole in the roof where water came through. Questions about claims can generally be answered by your state’s insurance department.

Flood insurance

Homes financed with a federally-insured mortgage in a high-risk flood area, also called a special flood hazard area (SFHA), are required to buy flood insurance from the National Flood Insurance Program, run by the Federal Emergency Management Agency (FEMA), or as a separate policy through a private insurer. SFHAs are areas that have a minimum 1% chance of flooding in any given year. These are also known as 100-year flood plains.

If you live in a moderate- to low-risk area or don’t have a federally-backed mortgage, purchasing flood insurance is optional. However, a lender can also require you to purchase flood insurance, even if you live in a moderate- to low-risk area.

National Flood Insurance Program provides up to $250,000 of coverage for the structure of a single-family home and up to another $100,000 for personal possessions. Alternatively, or in addition to NFIP flood insurance, you can purchase “first dollar” or primary flood insurance policy from a private insurer.

According to federal data, the average paid loss to NFIP policyholders after the four most-recent major hurricanes in 2016 and 2017 were:

  • $55,978 to 581 policyholders after Hurricane Maria in September 2017
  • $115,430 to 75,865 policyholders for Hurricane Harvey in September 2017
  • $47,202 to 21,824 policyholders for Hurricane Irma in September 2017, and
  • $39,249 to 16,547 policyholders for Hurricane Matthew in October 2016

Issues with flood insurance

“The problem with flood insurance is that it does have some very nit-picking requirements,” Bach told MagnifyMoney. Sometimes, companies will say they’ll only pay for items that physically came into contact with water.

That means flood insurance often won’t pay for a damaged foundation or water that ran up a wall, Bach said. Or, it may only provide coverage that can seem partial to homeowners. For example, the coverage may replace the lower cabinets in your kitchen, but they may not match the cabinets that weren’t affected by the flooding.

Problems meeting code. Flood insurance also may not cover code upgrades. If your home was built in the 1960s, for example, and had an old electrical system, the insurance company usually won’t pay to upgrade it, but the county may not allow you to put back old wiring either.

In those cases, Bach said to “go back to the policy and say ‘I cannot replace unless I comply.’” The insurer may require you to provide documentation from the local government as proof. And sometimes, flood insurance policies only cover code upgrades if the damage done to the system is 50% or more.

Finally, Bach tells MagnifyMoney that flood insurance generally does not cover the costs of living elsewhere while your home is repaired. In those cases, your homeowners insurance policy may cover your displacement costs.

Wind. Wind must be insured separately and sometimes this coverage is available only from a state-run insurer of last resort.

What if I don’t have flood insurance?

Excluded from homeowners insurance coverage is flooding caused by rising water, which Bach said is going to be most people’s problem. But, the United Policyholders executive director added: “A little argument goes a long way.”

Homeowners whose insurance does not cover hurricane-related expenses may qualify for disaster aid or low-interest loans, which we’ll cover below.

Step 2: Document the damage

Do the best you can to document all of the damage using pictures and videos. Do this before you start cleaning up or making repairs.

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Step 3: Prevent further damage

Do what you can, within reason and with consideration of your health and safety, to prevent further damage to your home. At this point, you may want to reach out to the insurer and begin the claim process. If your policy covers the cost, the insurer can send someone to help drain the water, patch up holes and dry out your home.

“You want to try to get that done as quickly as possible so that you don’t have a mold problem,” Bach said.
If the insurer cannot get out to your area quickly or your coverage does not cover temporary repairs and drying out, then you may elect to do what you can on your own or hire a professional in your area.

Either way, take care to keep swatches of carpeting, wallpaper, furniture upholstery and window treatments — things that may impact the amount payable on the claim. Try to avoid tossing out damaged items until you file a claim, and the insurance adjuster pays a visit to your home (described below). You can learn more about proper flood cleanup in this federal Homeowner’s and Renter’s Guide to Mold Cleanup After Disasters.

“If you can afford it, you should hire somebody and get them to do it as soon as you can,” Bach said. “But don’t hire the first person you can, because disasters do bring out scam artists.

If FEMA or state emergency services are in your area, they may be able to assist you with drying out your home. And, if there is a local assistance center set up near you, you can go there for help and information. Find a disaster recovery center near you here.

Step 4: File a claim with your insurance company

If you didn’t notify your insurance company before you started cleaning, you should contact them to file a claim as soon as possible. The insurance company should send you claim forms to fill out and you should try to return them as soon as possible to avoid delay in service.

The insurer should then arrange for an insurance adjuster to come out and assess the damage to the property. The adjuster will inspect the property to estimate how much the insurance company will pay for the loss. They will likely interview you, too.

Be prepared to show the adjuster any structural damage and compile a list of damages so the visit is efficient and you don’t forget anything. If you have receipts for any of the damaged items you should present copies to the adjuster. Be sure to ask any questions you may have about your policy and the coverage it may provide.

Finally, if you had to relocate and your policy covers loss of use, keep those receipts and record all additional expenses you had to take on as part of your temporary relocation since you will need to provide proof of those costs.

Step 5: File for federal disaster assistance

If your home is in a presidentially declared disaster area, you can apply for FEMA individual disaster assistance. If you do not have internet access, you can call 800-621-3362.

Disaster aid may cover:

  • Temporary housing
  • Lodging reimbursement
  • Home repairs
  • Home replacement
  • Permanent or semi-permanent housing construction
  • Child care expenses
  • Medical and dental expenses
  • Funeral and burial expenses
  • Essential household items, clothing, tools required for your job and necessary educational materials
  • Heating fuel
  • Cleanup items
  • Damage to an essential vehicle
  • Moving and storage expenses

However, FEMA disaster grants are generally small — see the following chart for average amounts from recent storms. The organization emphasizes that these figures are from only one program, and housing grant money is intended to help survivors get a roof over their heads and not to rebuild a home to its pre-disaster condition. FEMA encourages homeowners to consider the federal grant program as a last resort after insurance and federal loan programs, and not to factor federal grant assistance into disaster preparedness planning.

Below is a breakdown of the average grant payout for recent disasters from the Individuals and Households Program, one the of several disaster assistance programs FEMA offers.

DisasterAverage IHP award

Hurricane Sandy (2012)

$7,950.17

Hurricane Matthew (2016)

$3,409.11

Hurricane Harvey (2017)

$4,365.75

Hurricane Irma (2017)

$1,354.72

Hurricane Maria (2017)

$2,666.10

Hurricane Florence (2018)

$3,653.18*

Hurricane Michael (2018)

$3,836.98*

*As of Nov. 15, 2018

You can find information about other kinds of individual assistance FEMA provides like disaster unemployment assistance and crisis counseling in this factsheet.

FEMA may require you to provide evidence that your insurance company declined your loss claim and will not cover your disaster-caused loss. When you apply for disaster assistance, you’ll need to provide identifying information like your Social Security number and a current mailing address.

Delays with disaster assistance

It’s important to remember some FEMA funds are funneled through the state government, so depending on how your state allocates its resources, your reimbursement or assistance may take months.

According to a FEMA spokesperson, those still waiting on aid from a previous disaster may qualify for FEMA assistance.

Where else can you turn for help?

Loans are now increasingly needed to help people get back on their feet after a storm. “Insurance does fall short a lot more than you would expect,” said Bach, who has been working in insurance consumer advocacy for 26 years.

Below are a few loan options you can turn to for help.

Government assistance programs

The U.S. government provides the following programs that may assist eligible borrowers who need assistance with home repair, replacement, restoration or improvement financing.

Homeowners with an existing mortgage may also find relief with their loan servicer — many lenders will temporarily reduce or suspend payments in a process called forbearance. The Mortgage Bankers Association says one of your first calls following a hurricane should be to your mortgage servicer. The Consumer Financial Protection Bureau provides information on this and other financial problems following a natural disaster here.

SBA disaster loans

The U.S. Small Business Administration provides financial assistance not only to business owners, but also to homeowners and renters in federally declared disaster areas. These low-interest loans may cover up to $200,000 to repair or replace the primary residence to its pre-disaster condition. Collateral is required to secure loans over $25,000. Secondary homes and vacation properties are not eligible for an SBA home disaster loan. Homeowners may also borrow up to an additional $40,000 with a property disaster loan to replace damaged personal property.

For some homeowners, the SBA may be able to refinance all or part of an existing mortgage up to $200,000 if they:

  1. Don’t have credit available anywhere else.
  2. Suffered a substantial amount of disaster damage that isn’t covered by insurance.
  3. Intend to repair the damage.

If you are already paying back an SBA disaster loan from a previous storm, you can still take out another as long as your home was in a declared disaster area and you are current on all of your payments.

FHA 203(h) mortgage

The Federal Housing Administration’s 203(h) loans are government-insured mortgages that may be used to purchase, improve, remodel or rebuild a home. To be eligible, the borrower must reside in a federally designated disaster area and the home must be damaged or destroyed to an extent that requires reconstruction or replacement.

One of the biggest benefits of a 203(h) mortgage is that it does not require a down payment. However, borrowers must pay closing costs and mortgage insurance, which is collected as one upfront charge at the time of purchase and monthly premiums tacked onto the regular mortgage payment. FHA mortgage limits apply and can be found here.

Other types of government loans

SBA disaster loans and the 203(h) mortgage are programs specially designed for disaster victims, but there are other government programs — available to anyone — to help homeowners who want to make repairs.

FHA 203(k) loans

The Federal Housing Administration’s 203(k) program is designed to fund a home renovation. Homeowners can use this loan to refinance their current mortgage to pay for repairs. The minimum credit score to qualify is relatively low, but there are several requirements you will have to meet, including working with an FHA-approved lender and possibly a 203(k) consultant. Read more about the different types of 203(k) loans here.

You can use the Section 203(k) rehabilitation mortgage program along with the HUD Title I Property Improvement Loan program, described here by LendingTree, MagnifyMoney’s parent company.

USDA Home Repair program

The Department of Agriculture offers the Section 504 Home Repair program for low-income homeowners. The program provides loans to repair, improve or modernize homes. It also provides loans or grants to low-income elderly homeowners to remove health and safety hazards.

The USDA offers repair loans up to $20,000 and grants up to $7,500. You can combine a loan and grant to borrow a total of up to $27,500. The property must be in an eligible area. To learn more about the home repair program, you can contact a USDA home loan specialist in your area. You can check income eligibility here.

VA rehab loans

The Department of Veterans Affairs in April 2018 updated its alteration and repair purchase and refinance loan program. The VA allows eligible borrowers to refinance a mortgage based on what the appraised value of the property would be after renovations, up to $227,500. The borrower can also finance closing costs. You can apply for a VA loan through a VA-approved lender.

Fannie Mae HomeStyle® Renovation mortgage

Fannie Mae offers a HomeStyle Renovation mortgage that can help finance home repairs. Homeowners could, for example, refinance the costs into an existing mortgage. Borrowers can finance up to 75% of the appraised value of the property after the renovations are completed. Read more about the HomeStyle program here.

Nonprofit and charitable aid

You may be able to get assistance from national and local nonprofit organizations or charitable institutions. Such groups include the American Red Cross, Habitat for Humanity, Mennonite Disaster Service and the Saint Bernard Project.

Beyond meeting hurricane victims’ immediate needs, these organizations and others may help rebuild homes in your area, so it may be worth reaching out to a local charity regarding grants and other services.

Habitat for Humanity helps low-income survivors rebuild or repair their home if they meet Habitat’s requirements. Contact your local Habitat for Humanity office.

Other financing options

If you have a good credit score and the project’s costs are relatively low (between a few hundred and a few thousand dollars), you may want to consider taking out a personal loan or using a credit card to finance repairs. Bach told MagnifyMoney you might also elect to do this if you don’t have cash on hand to cover temporary living, cleanup and minor repairs that may be later reimbursed by insurance.

Personal loans

Personal loans typically have fixed rates and terms. You can usually borrow anywhere from $1,000 to $35,000 at rates between 6% and 36% APR. There are a few pros and cons with personal loans:

Pros

  • Unsecured: This means you won’t risk losing an asset if you are unable to repay a personal loan.
  • Fast turnaround: You can generally apply for a personal loan in minutes online and, if you qualify, you may receive the lump-sum amount in your bank account as soon as 24 hours.

Cons

  • Credit requirements: Borrowers generally must have a good credit score and a low debt-to-income ratio to qualify. Borrowers with the highest credit scores and lowest debt ratios generally receive the best terms.
  • Fees: You may be charged a loan origination fee or a prepayment penalty.

To get the best offer available to you, compare loan terms and rates at LendingTree.

Credit cards

If you plan to use a credit card for storm-related expenses, one idea is to apply for a new credit card with a 0% APR introductory offer on all purchases. Note that if you’re still carrying a balance once the promotion ends, the new interest rate on the card will apply to whatever balance is left. Some lenders may charge deferred interest, meaning they may charge interest on everything you’ve charged during the promotional period.

Credit cards charge an average APR around 15%, but there are cards with lower (and higher) rates. Generally, lenders offer the lowest interest rates to borrowers with the highest credit scores.

Credit cards typically charge a variable rate and it may change based on your daily balance, so the minimum amount you are required to pay back each month may fluctuate.

When to consider bankruptcy

A homeowner may consider bankruptcy if the cost of repairs exceeds the value of the property, said John C. Colwell, a bankruptcy attorney and president of the National Association of Consumer Bankruptcy Attorneys. He compared it to a vehicle that’s been totaled in a car accident.

But first, Colwell said, homeowners should check for any state protection that may make bankruptcy unnecessary.

California law, for example, protects homeowners after a foreclosure. If a $600,0000 house with a $400,0000 mortgage burns down in a fire, the homeowner can walk away and let the bank foreclose on the home. If the bank forecloses for $300,000, the original homeowner does not owe $100,000 to the bank to satisfy the mortgage. While the homeowner must face the consequences of a foreclosure, they would not need to file for bankruptcy.

But in most other states, the mortgage company has the legal right to try and sue the homeowner to collect the remaining balance on the mortgage. In those cases, it may be appropriate for a homeowner to file for bankruptcy, Colwell said.

Final thoughts

If you were affected by a major hurricane or other natural disasters, help is available. Sources of financial assistance range from your own insurance policies to government assistance and loans, to charitable organizations, to simply borrowing from a private lender. Rebuilding may be costly and seem overwhelming, so look to resources like United Policyholders and the Insurance Information Institute, or your state’s emergency management office.

We also have a supplemental guide for homeowners affected by Hurricane Florence.

If you need advice when deciding between options, consult a fee-only financial professional who has experience working with homeowners following a disaster.

If you are considering bankruptcy, it’s recommended you speak with a bankruptcy lawyer about the options available to you and any protections provided by your state.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Do I Spend More Than I Earn Each Month?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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It can be difficult to know if you’re spending more than you earn each month if you’re not necessarily falling behind on any bills or financial responsibilities. But if you’re not tracking your spending, you may not be aware if you’re digging yourself into debt. In fact, 42% of Americans use credit cards to fill in the occasional shortfall in their budget, according to a survey from CompareCards. (Disclosure: LendingTree is the parent company of both CompareCards and MagnifyMoney.)

Knowing if you are spending more than you earn each month requires paying attention to your money and doing some simple math. Here’s how to do it — and figure out if you need to make adjustments to your budget and spending habits.

Getting started: Track your spending

First, you need to figure out where your money has been going.

“Actually getting the data to visualize your finances can be one of the most powerful exercises you can do to begin your journey of cash flow management,” said Dan Andrews, CFP at Well Rounded Success based in Fort Collins, Colo.

But, before you can even do that, you need to decide which tracking method you want to use. There are several strategies for figuring out what you spend your money on, and we’ve listed a few of the most popular ways to track your spending below.

The automated option: Budgeting apps

Budgeting apps make tracking your spending easy because — depending on which app you use — the app may do most of the work for you. Most budgeting apps like Mint, YNAB or EveryDollar link directly to your bank accounts, credit cards and retirement accounts. After you’ve linked all of your accounts, the app will automatically pull in and categorize your transactions.

“The apps are fantastic because they generally pull in 3 months of information, and 3 months of data is generally good to see spending habits,” says Krista Cavalieri, senior adviser at Evolve Capital Financial Planning based in Columbus, Ohio.

Once the app does its job, all you need to do is check in regularly to correct any mistakes in categorizing or add in any cash expenses, if the app allows. The apps generally learn to categorize things properly after you correct them. Budgeting apps also generally allow you to visualize your spending in charts and graphs.

Understandably, budgeting apps aren’t for everybody. If you’re in that camp, you could try tracking all of your spending manually using a spreadsheet or spending journal.

Spreadsheets

In a spreadsheet, you can simply record what you spent money on and how much you spent. If you want, you can use formulas to make the process easier and to automatically calculate sums, percentages and other parts of your spending habits you’re curious about. Several budgeting templates exist within spreadsheet programs and online to help you get started.

A written spending journal

You can also try keeping a digital or physical spending journal. Every time you spend money, record it by hand in a pocket journal or in a notes application on your phone. At the end of each day or week you can spend time reviewing, categorizing and adding up what you’ve spent.

Check-ins

Check in on your spending challenge regularly to get an idea of where your money went and make adjustments accordingly. For example, it may take 10 to 30 minutes to do a weekly review, so pick a recurring day and time when you know you’ll be free for about half an hour. If you notice during your period check-ins that you are overspending, make some changes then and there to correct yourself, suggested Cavalieri.

Choose the budgeting and check-in method that’s the easiest for you to manage so you can see exactly where your money is going, said Cavalieri. She recommends tracking your expenses for three months to get a good sense of your spending, but recording all your transactions for 30 days will give you a sense of how your regular expenses stack up against your monthly income. A 30-day spending challenge using one of the tracking tactics above will give you the figures you need to answer the question, “Do I spend more than I earn?”

Understand the jargon

Before calculating whether or not you’re spending more than you earn each month, you’ll need to understand the components of the equation.

  • Income — Any and all sources of after-tax income coming into your budget. Examples of income would be:
    • Salary or hourly wages
    • Tips
    • Commission
    • Income from a side gig
    • Social Security or disability income
    • Cash windfalls like a tax refund or gifted money
    • Child support or alimony
    • Any other source of money coming to you
  • Necessary expenses — Necessary expenses are the basics required in your household budget to keep you functioning and gainfully employed. Fixed expenses are non-negotiables like:
    • Rent or mortgage to keep a roof over your head
    • Groceries to cook food at home
    • Transportation
      • For example, your car payment, if having a vehicle is necessary to get yourself and members of your household to their obligations, plus fuel and required maintenance for that vehicle
      • Public transit fare
    • Insurance
    • Health care expenses
    • Child care expenses
    • Utilities necessary to live or communicate like electricity, gas, water, internet and phone bills
    • Any debts owed to the government like child support or alimony payments, tax payments and federal student loan debt. (Exclude credit card debt or collection items, as you will deal with that debt separately.)

When you are tallying up your expenses, take care to account for any recurring quarterly, semiannual or annual payments, too, so they don’t catch you off guard, Andrews said. Those may be things like your vehicle registration or tax payments. You may need to plan to save for those month to month so you will have the money on hand when it comes time to make the payment.

  • Everything else — Everything else, sometimes called flexible expenses, is just what it means: Every other thing in your budget that is — technically — optional spending. This would include things like:
    • Debts
    • Buying lunch or dining out
    • Shopping
    • Subscription payments
    • Vacations
    • Any other line items that don’t fall into the “needs” category in your budget

Now that you understand the important parts of the equation, it’s time to crunch some numbers and get to the answer you’ve been waiting for:

Do the math

    • Step 1 – Income: The question you want to answer is: How much do I make, after taxes, each month? Be sure to include all consistent income streams and any additional windfalls you are expecting during the time period. Write down that number.
    • Step 2 – Necessary expenses: Write down and add up every expense you have that’s vital to meet your basic needs. (To account for fixed annual, semiannual or quarterly payments, figure out how much you’d need to set aside each month to cover that payment when it’s due.)
    • Step 3 — Subtract necessary expenses: Now, subtract your necessary expenses from your income. The equation (so far) should look like:

Income – Necessary Expenses = Amount you have left for flexible expenses.

For example, if your salary (income) is $4,000 a month after taxes, you receive a $1,000 monthly child support payment and your necessary expenses total $3,500, then $5,000-$3,500 = $1,500 left over for flexible spending.

If the number you get is negative, that means your necessary expenses total more than your income and that’s not-so-good news.

“If we are not even making this much per month then we really need to take a look at our life and say what’s our living status,” said Colin Overweg, CFP at Advize Wealth Management based in Grand Rapids, Mich. Look to see if you can increase your income or decrease your expenses. You may be able to pick up a side hustle to increase income or ask for a promotion at work that comes with a raise.

If you realize you can’t cover your fixed expenses, take a look at your standard of living to see where you can cut back, Overweg advised. Consider the following options among other fixed expenses:

      • Can you downsize your home?
      • Can you switch to a car that won’t cost you as much to own and maintain?
      • Can you trim your phone bill by switching plans or carriers?
      • Are you spending too much money on groceries?
      • Can you lower your insurance premiums somehow?
      • Can you negotiate some of your bills down?
    • Step 4 – Subtract everything else:

This is where the math can sometimes get a little messy.

Cavalieri said the hardest part about budgeting is figuring out where the expendable income in your budget is going, because all of those little expenses here and there add up. Before you know it, the money’s gone and you may feel like you have no idea what you spent it on. But if you’ve been diligently tracking your spending, as described in the first section of this guide, this part gets a lot easier. It’s important to record our “everything else” expenses so you know you can cover your spending and not reach for that credit card.

Speaking of credit cards, this is the time to address your debt obligations and factor in the minimum payments you are responsible for paying each month in to your budget. Here’s the equation:

For “everything “else,” you may be able to insert the number you got from your 30-day spending challenge.

Ideally, the number you get in the end will be equal to or larger than zero. If it’s negative, you are definitely spending more than you earn each month.

What to do if you spend more than you earn

If you are spending more than you earn, you are likely carrying a credit card balance each month, and it’s growing. You need to trim back your spending, or else you will continue to dig yourself into debt.

“Understand the needs versus wants expenses, and cut out as many “wants” as possible to either get out of debt, or start having your expenses be less than your income,” Andrews said. “You might have to get uncomfortable for a short-term period to get on track.”

He recommended you start saying “no” to a lot of things to start the trim. “No to expensive vacations, no to expensive bars no to expensive gadgets is a start,” said Andrews.

You can try a spending freeze or other challenge aimed at cutting back your unnecessary expenses. A spending freeze challenges you to not buy anything that’s not a necessary expense for a period of time. You can do a less-inclusive version of a spending freeze and limit yourself to not spending any money at your favorite retailer, or commit to making coffee at home or in the office instead of visiting a coffee shop.

Challenge yourself to adjust your spending

Now that you know where your money is going, you may realize you need to reroute it. There are several tactics you can use to change the way you spend. In addition to using one of the tracking methods mentioned earlier (an app, spreadsheet or spending journal), try one of these exercises:

Ask, “Why?”

Look at what you spent money on and think about why you made that purchase.

“It does benefit a person to bring awareness to spending habits by understanding the psychology of impulse buying,” said Andrews.

Or, you could take a different approach: Before looking at the numbers, guess how much you’ve spent.

“Track what you think you are spending versus what you are actually spending, and check in with yourself at least once a week to see how it’s going,” Cavalieri suggested. The exercise could serve as a much-needed reality check before your spending gets out of control.

Money mantra

Andrews suggested that those who are prone to making impulsive purchases try using a money mantra — a short phrase that can help you ground yourself at the checkout line. For example, you could make it a habit to ask yourself, “Do I really need this?” before you swipe your card.

An accountability partner

Try asking a friend or professional financial planner to join you in tracking your spending habits. Andrews said this tactic may work best for people who are looking for a different perspective on their habits and don’t have an emotional connection to the way the person is spending money. He suggested that those who need a professional choose a fee-only, fiduciary, certified financial planner.

30-day cash diet with a spending journal

Try using cash instead of a debit or credit card for a while. The cash will be a physical reminder of your budget. Take out exactly what you need for a certain spending category, and you’ll be forced to spend within that limit.

What to do if you spend less than you earn but are in debt

If you have room in your budget after accounting for all of your expenses but have debt, you should plan to aggressively address your debt with the money you have left over.

Two common methods used to get out of debt are the debt snowball and debt avalanche. The method you choose will depend on your personality type and what will best motivate you to kill off your debts. Click here to view our Snowball vs. Avalanche calculator.

The debt snowball orders your debts from lowest balance to highest. You will then throw all of the money you can at the debt with the lowest balance first and keep making minimum payments on all of the other debts. The snowball method may help those who will feel more motivated by quickly paying off smaller debts before tackling the larger ones.

The debt avalanche works by listing and paying off your debts in order of highest to lowest interest rate. This method saves borrowers the most money in future interest payments, but may not be the most motivational if the debt with the highest interest rate is also a large debt that will take the a long time to eliminate.

Debt consolidation is another option. Consolidating debt into a personal loan is a good way to save money from eliminating high-interest rates. You can read more about it here.

What to do if you spend less than you earn and are not in debt

If you realize you have wiggle room in your budget and don’t have any debt, the experts suggest you funnel your extra funds into savings and investments.

This is the time to think of your future goals. Are you planning to buy a home? Do you want to start a college savings fund for your child? Would you like to travel or go on vacation soon?

The money left over in your budget can be put toward these savings goals. In addition, you could simply put even more money away for your nest egg. If you are behind in saving for retirement, Overweg suggested you send any leftover income into tax-advantaged retirement plans.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
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Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Resources for Repairing Your Home After Hurricane Florence

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Hurricane Florence
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Many homeowners are beginning to make repairs after Hurricane Florence’s devastating crawl across the Carolinas and Virginia in September 2018.

According to real estate data provider CoreLogic, the storm affected 624,000 homes, the vast majority unprotected by flood insurance. Standard homeowners and renters insurance policies do not cover damage from storm surges and other flooding. That requires a separate policy, typically purchased from the U.S. government, but consulting and actuarial firm Milliman said fewer than 10% of homeowners in the Carolinas had such coverage.

Many families facing large out-of-pocket costs from Hurricane Florence may be wondering what the next steps are to begin rebuilding. To help you get started, we’ve rounded up some resources available to people in the Carolinas affected by the storm.

If you’re looking for more general information on options for repairing your home after a hurricane, see our guide here.

Answers to insurance questions after Hurricane Florence

Flood insurance vs. homeowners insurance

While standard homeowners and renters insurance policies do not cover damage from storm surges or other flooding, they should cover damage from, say, a neighbor’s tree that fell on your house and left a hole on the roof where water came through. South Carolina residents with questions about claims may visit the S.C. Department of Insurance. North Carolinians can visit NCHurricClaims.com for information. Insured residential damages in that state may total as much as $7.5 billion while uninsured damages may nearly be twice as much. Total storm damage in the Carolinas and Virginia is expected to add up to $28.5 billion.

Wind insurance

Wind must be insured separately and sometimes this coverage is available only from a state-run insurer of last resort. In North Carolina, the Coastal Property Insurance Pool is available to coastal homeowners, with a similar wind pool in South Carolina.

Filing for federal disaster assistance after Hurricane Florence

If your home is in a declared presidential disaster area, you can apply for FEMA individual disaster assistance. If you do not have internet access, you can call 800-621-3362.

Coverage

Disaster aid may cover:

  • Temporary housing
  • Lodging reimbursement
  • Home repairs
  • Home replacement
  • Permanent or semi-permanent housing construction
  • Child care expenses
  • Medical and dental expenses
  • Funeral and burial expenses
  • Essential household items, clothing, tools required for your job and necessary educational materials
  • Heating fuel
  • Cleanup items
  • Damage to an essential vehicle
  • Moving and storage expenses

Disaster areas

As of this writing, DisasterAssistance.gov shows residents in the following North Carolina counties may be eligible for disaster assistance after Hurricane Florence:

  • Anson
  • Beaufort
  • Bladen
  • Brunswick
  • Carteret
  • Chatham
  • Columbus
  • Craven
  • Cumberland
  • Duplin
  • Durham
  • Greene
  • Guilford
  • Harnett
  • Hoke
  • Hyde
  • Johnston
  • Jones
  • Lee
  • Lenoir
  • Moore
  • New Hanover
  • Onslow
  • Pamlico
  • Pender
  • Pitt
  • Richmond
  • Robeson
  • Sampson
  • Scotland
  • Union
  • Wayne
  • Wilson

In South Carolina, Chesterfield, Darlington, Dillon, Florence, Georgetown, Horry, Marion and Marlboro counties are federally declared disaster areas. As of this writing, there are no declared disaster areas in Virginia.

FEMA may require you to have evidence that your insurance company declined your loss claim and will not cover your disaster-caused loss. When you apply for disaster assistance, you’ll need to provide identifying information like your Social Security number and a current mailing address.

It’s important to remember some FEMA funds are funneled through the state government, so depending on how your state allocates its resources, your reimbursement or assistance may take months. Some North Carolina survivors are still waiting on FEMA disaster assistance aid from Hurricane Matthew in 2016.

According to a FEMA spokesperson, those still waiting on aid from a previous disaster may still qualify for FEMA assistance.

Final thoughts

If you were one of the estimated 624,000 homeowners affected by Hurricane Florence, help is available. Sources of financial assistance range from your own insurance policies, to government assistance and loans, to charitable organizations, to simply borrowing from a private lender.

Rebuilding may be costly and seem overwhelming, so look to resources like United Policyholders and the Insurance Information Institute or your state’s emergency management office. North Carolina residents may visit ReadyNC. South Carolina residents may go here.

If you need advice when deciding between options, consult a fee-only financial professional who has experience working with homeowners following a disaster.

If you are considering bankruptcy, it’s recommended you speak with a bankruptcy lawyer about the options available to you and any protections provided by your state.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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