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Life Events

A Survival Kit for the Gig Economy

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Survival kit for the gig economy man with bike makes food delivery service
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Long gone are the days when working a single 9-to-5 job was the standard for most people in the U.S. Today, a growing percentage of the workforce needs to have multiple jobs and several sources of income to make ends meet.

According to a Gallup poll, 36% of U.S. workers participated in the gig economy in some capacity in 2018. Gallup’s sample here includes people holding either a primary or secondary freelance job, including both part-timers and workers holding multiple jobs. That’s roughly 57 million people.

Some see the rise of gig economy jobs as a negative development that hurts workers, while others praise the flexibility they offer. Whichever way you feel, we’d like to offer you some sound advice on how to succeed in this type of economy.

What is the gig economy?

The gig economy is that part of the labor market where people find temporary jobs or work with flexible hours to replace — or even add alongside — a traditional full-time job. In the gig economy, hourly and even salaried workers are replaced by freelancers and independent contractors.

Gig economy jobs range from adjunct college professors, to Lyft drivers, to freelance writers. Finding a gig doesn’t always have to be in your professional wheelhouse, either. Many gig economy workers turn their hobbies into money-making activities.

Why do people take gig economy jobs?

A 2017 LinkedIn survey found that the top reason cited for taking gig economy jobs was to make more money, while the second most common reason was respondents’ desire to control their own schedules. Other responses included work/life flexibility, being one’s own boss, trying something new and financial hardship.

Interestingly, nearly as many (40%) expressed other reasons related to money: 21% said they were motivated by financial hardship, while 19% responded that they turned to gig work to have some sort of income while between jobs. A number of respondents — 41% — indicated that they freelance in addition to their full-time or part-time job.

How to survive the gig economy

Your reason for entering the gig economy might be different from your neighbor’s rationale. Nevertheless, there are common tips and tricks that can help you navigate this brave new world.

Stay organized

In the gig economy, you can end up with many sources of income. Develop a reliable system to keep track of job opportunities, clients, sent and unpaid invoices and other gig-related stuff. Organize your invoices in a spreadsheet to keep on top of which ones are filled and which remain unpaid, and get a filing cabinet to keep on top of paperwork. If your paperwork is digital, maintain well-organized file folders on your computer so everything has its own place.

Track your earnings

Staying on track in the gig economy means understanding your income. Sure, organizing your invoices is part of it, but more importantly you need to record and analyze your earnings every month. Income can be unpredictable, and rigorously tracking on a spreadsheet can create a more manageable view of your month-to-month budget. Check out Tiller, which helps you build Excel and Google spreadsheets that are automatically updated with your freelance earnings and expenses.

Think of yourself as a business

In the gig economy, you are your own boss and your own PR department. When you take jobs or communicate with potential clients, pay plenty of attention about how you represent yourself and your business.

According to a representative of TaskRabbit, a service for finding gig economy jobs, the best freelancers are those who build strong ratings and reviews, which helps to increase the number of jobs they’re able to book. The representative advises freelancers to highlight their precise experience and abilities, as it provides a strong impression of competence. Most importantly, clients appreciate freelancers who provide prompt responses.

Shelli Fitzgerald, who works with TaskRabbit, echoed these keys to success. “Always remember to be kind, trustworthy; make your client comfortable. Be creative, market yourself, ask for referrals from clients and friends.”

Watch out for taxes

Employers don’t automatically withdraw taxes from your gig economy paychecks, leaving you responsible for figuring out your estimated tax payments on IRS Form 1099 each quarter and paying the amount to the IRS yourself. The IRS also assesses a self-employment tax to collect Social Security and Medicare taxes, at a rate of 15.3%. If you’re working for multiple employers in a year, you’ll have several 1099 forms to track and file.

Save as much as you can

Without a steady paycheck every two weeks, it can be hard to save regularly. Closely tracking your income can help you focus on savings, especially to prepare for those quarterly tax filings and for retirement, not to mention an emergency fund to help you through lean months.

Trying setting up automatic and recurring deposits into your savings account. That can be $25, $100 or as little as $5. As long as you save something — and stash it in a high-yield savings account — you’ll have a financial cushion to fall back on. This can also help you avoid taking on debt from loans or credit cards to cover even the smallest expenses.

“Money is not always steady, so you need to keep a cushion,” Fitzgerald advised. “You also have to save money for the slow times. Never depend on one stream of income.”

Don’t forget about retirement

Just because you don’t have an employer-sponsored 401(k), you can still save for retirement while you’re self-employed in the gig economy — check out individual retirement accounts (IRAs). Traditional IRAs allow you to deposit pre-tax money, then pay taxes on your withdrawals in retirement. With a Roth IRA, contributions are made from after-tax income, and withdrawals are tax-free. Keep in mind that your deposits, whether Roth or traditional, must fall within the annual IRA contribution limits set by the Internal Revenue Service (IRS).

Gig economy workers should check out simplified employee pension (SEP) IRAs to see if they’d be a good choice for them. SEP IRAs are simple to administer and can augment your retirement strategy, but they’re not always the right choice. Check out our explainer on SEP IRAs for more details.

You may also open a solo 401(k). Like an employer-sponsored 401(k), you contribute a portion of your income to the account, which will then grow tax-free. A solo 401(k) is a good option if your income exceeds IRA limits.

Get ready for the health insurance bill

When you enter the gig economy, you’ll most likely have to fund health insurance yourself or hop onto your spouse’s plan, if available.

Natasha Ishak, a freelance writer in New York City, cited being on her partner’s health plan as a big factor in her ability to freelance full time: “Without that, I am not sure I would have survived solely on freelancing full-time, even though I was hustling 24/7.”

Additionally, check out the healthcare marketplace at healthcare.gov, where you can compare insurance plans from private insurance companies.

Take mental health breaks

In the gig economy, there will be times when it can seem like you should be giving 110% at all times, but that kind of lifestyle isn’t sustainable for everyone. Allowing some time to yourself in a busy schedule can help you stay sane and able to organize your projects.

“One of the biggest things that enabled me to keep on juggling all my different assignments was making sure that I didn’t reach the point of over-exhausting myself,” Ishak shared.

Cut yourself some slack and ease up on the grind for a day or two if you ever start to feel overwhelmed by the work. Even better, breaks like that can help you refresh and overcome any mental blocks.

Tools and apps for the gig economy

Technology is a major enabler of this type of economy. A wide variety of apps and tools give you access to a potentially vast range of job opportunities.

TaskRabbit features gig economy jobs like handyman work, deliveries, and cleaning. It allows you to set your own prices for jobs, too. Plus, freelancers can access educational resources from other people who use the site, as well as perks like discounts on phone bills, financial planning, and rental cars.

“TaskRabbit’s platform acts as [our users’] marketing team, payment facilitator and scheduler,” said a company representative, as well as helping users with fraud prevention and providing them with educational resources and other perks.

Upwork helps you find work that is done online, from animation to customer service to criminal law jobs. It provides both freelancers and clients the ability for easy collaboration through chat, video call and file shares.

The Steady app takes this model a bit further. It helps you find jobs, and also track your gigs so you can continue to find the best opportunities. Steady also includes features to help you keep track of your payments.

Time to join the gig economy

If you’re just starting out in the gig economy, identify what you like to do and what you’re good at. Good with tools? Browse TaskRabbit for repair jobs in your neighborhood. Just browsing gig economy apps can help you find jobs you connect with. There’s a ton of opportunity out there, just waiting for you to grab 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.

Lauren Perez
Lauren Perez |

Lauren Perez is a writer at MagnifyMoney. You can email Lauren here

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Life Events, Mortgage

The Hidden Costs of Selling A Home

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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When you decide to sell your home, you may dream of receiving an offer well above your asking price. But putting your home on the market requires you to open your wallet, which could cut into your potential profit.

While some line items probably won’t come as a surprise, you may find that there are a handful of hidden costs.

Below, we highlight those unexpected expenses and everything else you need to know about the cost of selling a house.

The hidden costs of selling a home

It’s easy to fixate on the money you expect to make as a home seller, but don’t forget the money you’ll need to cover the cost to sell your home.

A joint analysis by Thumbtack, a marketplace that connects consumers with local professional services, and real estate marketplace Zillow, found that homeowners spend nearly $21,000 on average for extra or hidden costs associated with a home sale.

Many of these expenses come before homeowners see any returns on their home sale. Money is spent in three main categories: location, home preparation and location.

Location

Your ZIP code can influence how much you pay to sell your home. Many extra costs are influenced by regional differences — like whether sellers are required to pay state or transfer taxes.

For example, if you’re in a major California metropolitan area like Los Angeles, you may pay more than double the national average in hidden costs when selling your home.

Below, we highlight 10 of the metros analyzed in the Thumbtack/Zillow study, their median home price and their average total hidden costs.

Metro Area

Median Home Price*

Average Total Hidden Costs of Selling

New York, NY

$438,900

$33,510

Los Angeles-Long Beach-Anaheim, CA

$652,700

$46,060

Chicago, IL

$224,800

$18,625

Dallas-Fort Worth, TX

$243,000

$19,350

Philadelphia, PA

$232,800

$21,496

Houston, TX

$205,700

$17,477

Washington, D.C.

$405,900

$34,640

Miami-Fort Lauderdale, FL

$283,900

$24,241

Atlanta, GA

$217,800

$18,056

Boston, MA

$ 466,000

$35,580

Source: Thumbtack and Zillow analysis, April 2019.


*As of February 2019.

Generally, selling costs correlate with the home price, so expect to pay a little more if you live in an area with a higher-than-average cost of living or one that has a lot of land to groom for sale.

Home preparation

Thumbtack’s analysis shows home sellers may spend $6,570 on average to prepare for their home sale. These costs can include staging, repairs and cleaning.

Buyers are generally expected to pay their own inspection costs; however, if you’ve lived in the home for a number of years and want to avoid any surprises, you might also consider paying for a home inspection before listing the property for sale. Inspection fees typically range from $300 to $500.

Staging is often another unavoidable expense for sellers and can cost about $1,000 on average, according to HomeAdvisor. Staging, which involves giving your home’s interior design a face-lift and removing clutter and personal items from the home, is often encouraged because it can help make the property more appealing to interested buyers.

It also helps to have great photos and vivid descriptions of the property online to help maximize exposure of the property to potential buyers. If your agent is handling the staging and online listing, keep an eye on the “wow” factors they include. Yes, a virtual tour of your house looks really cool, but it might place extra pressure on your budget.

You could potentially save hundreds on home preparation costs if you take the do-it-yourself route (DYI), but expect a bill if you outsource.

Closing costs

Closing costs are the single largest added expense of the home selling process, coming in at a median cost of $14,,281, according to Thumbtack. Closing costs include real estate agent commissions and local transfer taxes. There may be other closing costs, such as title insurance and attorney fees.

Real estate agent commissions range from 5-6% of the home price, according to Redfin. That amount is further broken down by 2.5-3% being paid to the seller’s agent and the other 2.5-3% being paid to the buyer’s agent.

The taxes you’ll pay to transfer ownership of your home to the buyer vary by state.

Other closing costs include title search and title insurance to verify that you currently own the home free and clear and there are no claims against it that can derail the sale. The cost of title insurance varies by loan amount, location and title company, but can go as high as $2,000.

If you live in a state that requires an attorney to be present at the mortgage closing, the fee for their services can range from $100 to $1,500.

There are also escrow fees to factor in if you’re in a state that doesn’t require an attorney. The cost varies and is usually split the homebuyer and seller.

If you have time to invest, you could try listing the home for sale by owner to eliminate commission fees. One caveat: Selling your home on your own is a more complicated approach to home selling and can be more difficult for those with little or no experience.

Other home selling costs to consider

Now that you have an understanding of the costs that may get overlooked, remember to budget for the below expenses as you prepare to sell your home.

Utilities

It’s important that you make room in your budget to keep the utilities — electricity and water — on until the property is sold. (This is in addition to budgeting for utilities in your new home.) Keeping these services active can help you sell your home since potential buyers won’t bother fumbling through a cold, dark property to look around. It may also prevent your home from facing other issues like mold during the humid summertime or trespassers.

Be sure to have all of your utilities running on the buyer’s final walk-through of the home, then turn everything off on closing day and pay any remaining account balances.

Homeowners insurance

Budget to pay for homeowners insurance on the home you’re selling as well as your new home. You’ll still need to ensure coverage of your old property until the sale is finalized. Check the terms first, as your homeowners insurance policy might not apply to a vacant home. If that’s the case, you can ask to pay for a rider — an add-on to your insurance policy — for the vacancy period.

Capital gains tax

If you could make more than $250,000 on the home’s sale (or $500,000 if you’re married and filing jointly), take a look at the rules on capital gains tax. If your proceeds are less than the applicable amount after subtracting selling costs, you’ll avoid the tax. However, if you don’t qualify for any of the exceptions, the gains above those thresholds could be subject to a 15% capital gains tax, or higher. Consult your tax professional for more information.

How to save money when selling your home

Keep the following tips in mind when you decide to put your home on the market:

  • Shop around and negotiate. Don’t settle on the first companies and professionals you come across. Comparison shop for your real estate agent, home inspector, closing attorney, photographer, etc. It could also work in your favor to try negotiating on the fees they charge to save even more.
  • Choose your selling time carefully. The best time to sell your home is during the spring and summer months. If you wait until the colder months to sell, there may not be as much competition for your home.
  • DIY as much as possible. Anything you can do on your own to spruce up your home — landscaping, painting, minor repairs, staging — can help you cut back on the money you’ll need to spend to get your home sold.

The bottom line

There are several upfront costs to consider when selling your home, but planning ahead can help you possibly reduce some of those costs and not feel as financially strained.

List each cost you’re expecting to pay and calculate how they might affect the profit you’d make on the home sale and your household’s overall financial picture. If you’re unsure of your costs, try using a sale proceeds calculator to get a ballpark estimate of your potential selling costs. Be sure to also consult a real estate agent.

If you’re starting from scratch on your next home, here’s what you need to know about the cost to build a house.

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.

Crissinda Ponder
Crissinda Ponder |

Crissinda Ponder is a writer at MagnifyMoney. You can email Crissinda here

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Life Events, Pay Down My Debt

23 Ways to Get an Engagement Ring Without Going Into Debt

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

23 Ways to Get an Engagement Ring Without Debt

A marriage proposal can lead to much happiness, but it also can mean having to purchase an expensive engagement ring and, subsequently, getting into debt. If the diamond industry has anything to say about your engagement ring purchase, you’ll spend anywhere from one to three months’ salary on a diamond engagement ring. On average, couples spent $4,000 on engagement rings in 2012, according to a 2013 report from Jewelers of America.

However, a little forethought and some creativity can lead to significant savings and even a debt-free engagement ring. Think of it this way: It can be far more romantic to propose with a paid-for ring than to drag the equivalent of a car payment into your marriage. Here’s how you can purchase that ring without breaking your bank.

Set a budget

1. The first step you should take in the ring-buying process is setting a realistic budget for yourself. Don’t just go shopping with no maximum price in mind, as that may lead to you making a purchase you can’t really afford. If you know what you want to spend beforehand, and make sure you stick to that, you are already showing the kind of discipline that can help you avoid serious debt.

Heirlooms are a wallet’s best friend

Jewelry passed from generation to generation denotes sentimentality and fiscal prudence. Ask your family, or your future spouse’s family, if they have any heirlooms they would like to pass on. Keep in mind: Heirloom jewelry will be free, but the service and upgrades can run from a few hundred to several thousand dollars. If you do obtain an heirloom ring, consider these three options.

2. Leave the ring intact (except for resizing and repair).

3. Create a new setting for an heirloom diamond.

4. Incorporate a new band into the old ring design.

Buy your diamond on the cheap-ish

Real diamonds are never truly inexpensive, but knowing what and when to buy can save you a bundle.

5. Shop in the summertime. Because winter proposals are very popular (think Valentine’s Day), it can make a lot more financial sense to buy your diamond in the off-season. The summer months can offer stable pricing at a discount.

6. Buy diamonds shy of critical weights. If you want a full-carat diamond, look for something around .9 carats instead. You’ll get close to the same look at a nice discount.

7. Look before you buy. Compare diamonds at various areas of the color and clarity spectrum. If you can’t tell the difference in the diamond’s appearance, choose the less-expensive option. Also, be sure to comparison shop at different retailers; don’t just go with the first ring you love, as you may find something very similar, for less, at another shop.

Replace the diamond, save the difference

Thanks to the diamond industry’s multi-decade, multi-billion dollar advertising campaign, diamonds remain the most popular stone in engagement rings, but forgoing the traditional gem can save you thousands. Consider these emerging trends.

8. Choose synthetic diamonds. Diamonds created in labs share the same properties as mined diamonds, but they cost up to 75% less than traditional diamonds, and they are a great choice for those seeking to avoid conflict diamonds.

9. Replace a diamond with moissanite. A gemologist will never tell you this, but moissanite (a synthetic material) is the hardest gemstone used in jewelry next to diamonds, and it ranks high on clarity and color scales, too. It’s not a valuable gem, but it is beautiful. (Pro tip: Ask your future spouse before you go this route. Many people do prefer authenticity.)

10. Pick an alternative gemstone. Pearls or jade are popular choices outside of the United States, and garnet and topaz are gaining popularity stateside. If you want something out of the ordinary, consider alternative gemstones, but be aware that some gemstones are actually even more expensive than diamonds.

11. Skip gemstones altogether. Ornamental rings (especially knots) are popular choices for those who want to skip traditional gemstones. Handcrafted gold rings can be purchased for as little as $200 on Etsy.

Forgo tradition

Some of the best ways to save money on engagement rings involve breaking tradition, and some couples are more open to an alternative ring style than others. These are a few ring choices that definitely buck tradition.

12. Wooden rings: Wooden engagement rings occupy a large niche in the market, and can be a cost-effective alternative to precious metals. Wooden rings run anywhere from $50 for simple bands to several thousand dollars for rings that include ornate details and gemstones.

13. Tattooed rings: Some couples chose to get tattoos instead of rings, citing that nothing says forever quite like a tattoo. Keep in mind that this may be a dangerous option, as you will have a much harder time removing a tattoo than a ring if your relationship ends (either before or after the marriage).

14. Leather rings: Leather rings can include braiding, engraving and colored beads, among other stylings, and will certainly save you a bundle compared to a diamond. If you don’t want to go with real leather, faux leather can work as well.

15. Go dutch. If the ring in question is outside of your price range, consider asking your sweetheart to split the cost with you. As you’ll be combining finances after you’re married, this may actually lead to some great money-focused conversations.

Save money now, upgrade later

If your partner has a big diamond taste, but you’ve got a small budget, then consider upgrading later on. Here’s how.

16. Propose with costume jewelry. If you think you can save up for the real ring by the time of your wedding, an inexpensive piece of costume jewelry may be just right for the proposal.

17. Build as you go. Start with a simple band and stone, and add more or bigger gems for anniversary milestones, or upgrade when you can afford it.

Buy used

Consider buying a ring that already has a history. You can have the ring professionally cleaned to give it new beauty and make it “yours.”

18. Visit pawn shops. You may be buying the ring of a recent divorcee, but the savings can be irresistible.

19. Search estate sales. If you regularly shop estate sales, you might uncover a vintage ring at a spectacular price. Rings that aren’t presented with a certificate of authenticity will give you room to negotiate on price, but you may accidentally buy overpriced junk. This technique is best for people with an eye for authenticity.

20. Shop on eBay. Pre-owned rings from eBay can represent about a 30% discount over identical new rings, and many owners provide certificates of authenticity.

Creative ways to get cash

Whether you’ll spend a few hundred dollars or thousands, an engagement ring doesn’t have to mean big debt. Consider a few creative ways to save the cash you need to pay for a ring in full.

21. Sell your memorabilia. Your partner may not be too enthusiastic about your KISS memorabilia, or your 27 signed hockey jerseys. Selling these to help pay for an engagement ring will be a double sign of your love.

22. Save up, way in advance. If you’re not currently in a serious relationship, but you think you’re the marrying kind, consider setting aside some cash for a future ring purchase. While some people may find this a strange thing to do, there is no harm in being over-prepared. If you don’t end up using the money to buy a ring, it will be on-hand for other potential purchases (think a wonderful vacation, or a luxury item you really want).

23. Get a side hustle. People are increasingly taking on side hustles to earn extra cash, even if they have full-time jobs. This can include selling your artistic creations on Etsy, becoming an Uber or Lyft driver or writing freelance articles. Then you can put all the extra money you earn into an account for a ring.

Consider a personal loan

It is definitely ideal to be able to purchase an engagement ring without going into debt at all. However, if you simply have to finance at least part of the ring’s purchase, you might consider a personal loan, as you may be able to get a better interest rate than with a credit card, depending on your own credit and where you are able to obtain your loan.

Bottom line

Getting married can be an expensive undertaking, and you don’t want to put yourself in a difficult financial place just by purchasing the engagement ring. Keep in mind the alternatives to the traditional pricey diamond, and also remember that the love you share with your partner should be far more important than buying a ring with a sky-high price tag. Avoiding debt as much as you can also means you’ll be starting off your new marriage on a financially healthy note.

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.

Hannah Rounds
Hannah Rounds |

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah here