6 Biden Stimulus Benefits That Pack the Biggest Punch

The American Rescue Plan Act – the massive, $1.9 trillion economic stimulus package that President Biden signed on March 11 – sends a lot of money in many different directions. Almost every American will be impacted in one way or another. But when it comes to providing significant financial relief directly to Americans suffering the most through the COVID-19 pandemic, a lot of the American Rescue Plan’s provisions really don’t provide a lot of bang for the buck. In other words, they won’t necessarily make an immediate and/or meaningful impact on the financial health of Americans who need help the most.

However, there are a handful of provisions in the new stimulus law that go above and beyond when it comes to putting (or keeping) substantial amounts of money in the pockets of millions of Americans who are struggling financially right now. These six American Rescue Plan provisions will provide the most financial relief for the greatest number of people. As outlined below, most of them involve some sort of tax break, a couple of them provide direct payments, but all of them provide (or could provide) financial assistance that is both deep and wide.

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$1,400 Stimulus Checks

The American Rescue Plan authorizes a third round of $1,400 stimulus checks for each eligible person ($2,800 for couples), plus an additional $1,400 for each dependent (regardless of the dependent’s age). However, as with the first- and second-round payments, the third-round stimulus checks will be reduced – or eliminated – for people with an income above a certain amount.

If you filed your most recent tax return as a single filer, your third stimulus check will start to be “phased-out” (i.e., reduced) if your adjusted gross income (AGI) is $75,000 or more. That threshold jumps to $112,500 for head-of-household filers, and to $150,000 for married couples filing a joint return. Third-round stimulus checks will be completely phased out for single filers with an AGI above $80,000, head-of-household filers with an AGI over $120,000, and joint filers with an AGI exceeding $160,000. Use our Third Stimulus Check Calculator to estimate the amount of your stimulus payment.

Nonresident aliens and anyone who can be claimed as a dependent on someone else’s tax return do not qualify for a stimulus check.

Eligible Americans who don’t receive a third stimulus check, or don’t receive the full amount, can claim the difference as a Recovery Rebate credit when they file their 2021 tax return next year.

For more information, see Your Third Stimulus Check: How Much? When? And Other FAQs.

Unemployment Benefits

Last March, the CARES Act was a life saver for people who lost their job because of the pandemic. Unemployment benefits were provided to self-employed people, independent contractors, and others out of work because of the coronavirus pandemic who don’t otherwise qualify for benefits. Weekly unemployment checks were also increased by $600 through July 2020. Benefits were made available for a longer period of time, too.

In December, the COVID-Related Tax Relief Act extended benefits for people who usually don’t qualify for unemployment. An extra payment was also authorized, but at $300 per week instead of $600 per week. The number of weeks of benefits someone may claim was increased from 39 to 50, too. However, these benefits were set to expire on March 14.

Under the American Rescue Plan, the enhanced unemployment benefits are extended to September 6, 2021. That includes the $300-per-week of additional payments beyond the normal unemployment compensation allowed. (Progressives wanted a minimum of $400 in extra weekly benefits, but the amount was pushed back down to $300 during negotiations in the Senate.)

There’s also a new tax break for the unemployed. Thanks to the American Rescue Plan, the first $10,200 of unemployment benefits received in 2020 are exempt from tax for households with an adjusted gross income of $150,000 or less (although unemployment compensation received doesn’t count toward the $150,000 cut off). The IRS is figuring out how people who already filed their 2020 tax return can claim this new tax exemption. They will probably be able to automatically issue a refund to affected taxpayers – so don’t file an amended return at this point. (Also remember that state taxes may still apply to the full amount of unemployment benefits you received in 2020.)

For more information on these new developments, see American Workers Get Enhanced Unemployment Benefits as Biden Signs Stimulus Package.

Child and Dependent Care Tax Credit

Finding and affording childcare is one of the more difficult challenges workers are facing during the pandemic. To help address the childcare affordability crisis, the American Rescue Plan significantly expands the child and dependent care tax credit for one year.

For the 2020 tax year, if your children were younger than 13, you were eligible for a 20% to 35% non-refundable credit for up to $3,000 in child-care expenses for one child or $6,000 for two or more. The percentage decreased as income exceeded $15,000.

The American Rescue Plan makes a number of enhancements to the credit for the 2021 tax year. First of all, the new stimulus law makes the credit refundable for this year. That helps lower-income people the most, since they are more likely to lose all or some of the credit’s worth when it’s non-refundable. It also bumps the maximum credit percentage up from 35% to 50% for 2021.

More of your childcare expenses are subject to the credit, too. Instead of up to $3,000 in childcare expenses for one child and $6,000 for two or more, the American Rescue Plan allows the credit for up to $8,000 in expenses for one child and $16,000 for multiple children in 2021. When combined with the 50% maximum credit percentage, that puts the top credit for this tax year at $4,000 if you have just one child and $8,000 for more kids.

In addition, the full credit will be allowed for families making less than $125,000 a year (instead of $15,000 per year). After that, the credit starts to phase-out. However, all families making between $125,000 and $440,000 will receive at least a partial credit.

See Child Care Tax Credit Expanded for 2021 for more information.

Child Tax Credit

Another way to help families with children is to increase the child tax credit. For 2020 tax returns that you’re filing this year, the credit is worth $2,000 per child age 16 or younger. It also begins to disappear as income rises above $400,000 on joint returns and above $200,000 on single and head-of-household returns. For some lower-income taxpayers, the credit is partially “refundable” (up to $1,400 per qualifying child) if they have earned income of at least $2,500. That means the IRS will issue you a refund check for the refundable amount if the credit is worth more than your income tax liability.

The American Rescue Plan provides a dramatic, one-year expansion of the child tax credit for the 2021 tax year. One of the biggest changes is to the amount of the credit. For 2021, it jumps from $2,000 to $3,000 for most children – but to $3,600 for children 5 years old and younger. The extra amount ($1,000 or $1,600) is reduced – potentially to zero – for families with higher incomes, though. For people filing their tax return as a single person, the extra amount starts to phase-out if their adjusted gross income is above $75,000. The phase-out begins at $112,500 for head-of-household filers and $150,000 for married couples filing a joint return. The credit amount is further reduced under the pre-existing $200,000/$400,000 phase-out rules.

Another important change is that the 2021 credit is fully refundable. That means refund checks triggered by this year’s credit can be greater than $1,400. The $2,500-of-earned-income required is dropped for 2021, too.

Children age 17 also qualify for the 2021 credit. That will make a huge difference for parents with kids turning 17 this year – that’s an additional $3,000 they weren’t expecting.

Last but not least, half of the 2021 credit amount will be paid in advance through periodic payments issued between July and December of this year. We expect the periodic payments to be monthly, but that will be up to the IRS (they might make payments on a different schedule). You’ll claim the other half of the credit on your 2021 tax return, which you’ll file next year. Kiplinger’s 2021 Child Tax Credit Calculator lets you know how much your credit will be for 2021 (including how much your advance payments will be if paid monthly).

For more information about the 2021 child tax credit, see Families Get a $3,000 Child Tax Credit for 2021.

Earned Income Tax Credit

The earned income tax credit (EITC) provides an incentive for people to work. And, for 2021, many more workers without qualifying children will be able to claim this valuable credit, including both younger and older Americans. The “childless EITC” amounts will be higher, too. Plus, there are other changes that will help the bottom line for lower-income Americans as well.

For the 2020 tax returns that people are filing now, the maximum EITC ranges from $538 to $6,660 depending on your income and how many children you have. But there are income limits for the credit. For example, if you have no children, your 2020 earned income and adjusted gross income (AGI) must each be less than $15,820 for singles and $21,710 for joint filers. If you have three or more children and are married, though, your 2020 earned income and AGI can be as high as $56,844. (Note: People can use their earned income from 2019 to determine the EITC for the 2020 tax year if it results in a higher credit amount.) If you don’t have a qualifying child, you must be between 25 and 64 years old at the end of the tax year to claim the EITC.

The American Rescue Plan expands the 2021 EITC for childless workers in a few ways. First, the new law generally lowers the minimum age from 25 to 19 (except for certain full-time students). It also eliminates the maximum age limit (65), so older people without qualifying children can claim the 2021 credit, too. The maximum credit available for childless workers is also increased from $543 to $1,502 for the 2021 tax year. Expanded eligibility rules for former foster youth and homeless youth apply as well.

As with the 2020 EITC, you can use your 2019 earned income instead of your 2021 income if that will boost your credit amount. That will help many people who were laid off, furloughed, or otherwise suffer an income loss this year.

There are also a few permanent EITC changes in the American Rescue Plan. For instance, workers who otherwise wouldn’t be able to claim the credit because their children can’t satisfy the identification requirements can now claim the childless EITC. Certain married but separated couples can now claim the EITC on separate tax returns, too. The limit on a worker’s investment income is also increased from $3,650 (for 2020) to $10,000 (adjusted for inflation after 2021).

Student Loan Debt

Our final power punching piece of the American Rescue Plan won’t affect very many people right now. But it will save millions of Americans big bucks if it’s eventually paired with another financial benefit on President Biden’s wish list – student loan forgiveness.

Normally, the amount of any debt that is canceled, forgiven, or discharged for less than the full amount you owe is taxable and must be reported on your tax return. For example, if you have a $20,000 loan that is forgiven for some reason, you must report $20,000 of additional income on your tax return. There are several exceptions to this general rule, but in most cases forgiven student loans currently result in a higher tax bill.

The American Rescue Plan adds a temporary exception to the general rule for student loans. From 2021 to 2025, forgiven student loan debt is not subject to federal income tax. (To be clear, the American Rescue Plan doesn’t forgive any student loan debt. At this time, the tax exemption only applies to debt cancelled under current student loan forgiveness programs.)

Right now, relatively few people have their student loans wiped away. But President Biden promised to forgive up to $10,000 of student loan debt per person when he was running for office. If he keeps that promise, the tax exemption could save millions of people thousands of dollars. If, for example, you’re in the 22% tax bracket, having $10,000 of forgiven student loan debt taken off your tax return will save you $2,200. So, as you can see, the tax exemption for forgiven student loan debt has a lot of potential.

For more on this development, see Forgiven Student Loan Debt Will Be Tax-Free.

Source: kiplinger.com

The States With the Highest Car Insurance Rates

This Article was Updated July 5, 2018

When you are looking to buy a vehicle, the first thing you should do is apply for a preapproved loan. The loan process can seem daunting, but it’s easier than you think and getting preapproval prior to going to the car dealer may help alleviate a lot of frustration along the way.

Here are five steps for getting a car loan.

  1. Check Your Credit
  2. Know Your Budget
  3. Determine How Much You Can Afford
  4. Get Preapproved
  5. Go Shopping

1. Check Your Credit

Before you shop for a loan, check your credit report. The better your credit, the cheaper it is to borrow money and secure auto financing. With a higher credit score and a better credit history, you may be entitled to lower loan interest rates, and you may also qualify for lower auto insurance premiums.

Review your credit report to look for unusual activity. Dispute errors such as incorrect balances or late payments on your credit report. If you have a lower credit score and would like to give it a bit of a boost before car shopping, pay off credit card balances or smaller loans.

If your credit score is low, don’t fret. A lower score won’t prevent you from getting a loan. But depending on your score, you may end up paying a higher interest rate. If you have a low credit score and want to shoot for lower interest rates, take some time to improve your credit score before you apply for loans or attempt to secure any other auto financing.

2. Know Your Budget

Having a budget and knowing how much of a car payment you can afford is essential. You want to be sure your car payment fits in line with your other financial goals. Yes, you may be able to cover $400 a month, but that amount may take away from your monthly savings goal.

If you don’t already have a budget, start with your monthly income after taxes and subtract your usual monthly expenses and how much you plan to put in savings each month. For bills that don’t come every month, such as Amazon Prime or Xbox Live, take the yearly charge and divide it by 12. Then add the result to your monthly budget. If you’re worried, you spend too much each month, find simple ways to whittle your budget down.

You’ll also want to plan ahead for new car costs, such as vehicle registration and auto insurance, and regular car maintenance, such as oil changes and basic repairs. By knowing your budget and what to expect, you can easily see how much room you have for a car payment.

3. Determine How Much You Can Afford

Once you understand where you are financially, you can decide on a reasonable monthly car payment. For many, a good rule of thumb is to not spend more than 10% of your take-home income on a vehicle. In other words, if you make $60,000 after taxes a year, you shouldn’t spend more than $500 per month on car payments. But depending on your budget, you may be better off with a lower payment.

With a payment in mind, you can use an auto loan calculator to figure out the largest loan you can afford. Simply enter in the monthly payment you’d like, the interest rate, and the loan period. And remember that making a larger down payment can reduce your monthly payment. You can also use an auto loan calculator to break down a total loan amount into monthly payments.

You’ll also want to think about how long you’d like to pay off your loan. Car loan terms are normally three, four, five, or six years long. With a longer loan period, you’ll have lower monthly payments. But beware—a lengthy car loan term can have a negative effect on your finances. First, you’ll spend more on the total price of the vehicle by paying more interest. Second, you may be upside down on the loan for a larger chunk of time, meaning you owe more than the car is actually worth.

4. Get Preapproved

Before you ever set foot on a car lot, you’ll want to be preapproved for a car loan. Research potential loans and then compare the terms, lengths of time, and interest rates to find the best deal. A great place to shop for a car loan is at your local bank or credit union. But don’t stop there—look online too. The loan with the best terms, interest rate, and loan amount will be the one you want to get preapproved for. Just know that preapproved loans only last for a certain amount of time, so it’s best to get preapproved when you’re nearly ready to shop for a car.

However, when you apply, the lender will run a credit check—which will lower your credit score slightly—so you’ll want to keep all your loan applications within a 14-day period. That way, the many credit checks will only show as one inquiry instead of multiple ones.

Get matched with a personal loan that’s right for you today.

Learn more

When you’re preapproved, the lender decides if you’re eligible and how much you’re eligible for. They’ll also tell you what interest rate you qualify for, so you’ll know what you have to work with before you even walk into a dealership. But keep in mind that preapproved loans aren’t the same as final auto loans. Depending on the car you buy, your final loan could be less than what you were preapproved for.

In most cases, if you secure a pre-approved loan, you shouldn’t have any problems getting a final loan. But being preapproved doesn’t mean you’ll automatically receive a loan when the time comes. Factors such as the info you provided or whether or not the lender agrees on the value of the car can affect the final loan approval. It’s never a deal until it’s a done deal.

If you can’t get preapproved, don’t abandon all hope. You could also try making a larger down payment to reduce the amount you are borrowing, or you could ask someone to cosign on the loan. If you ask someone to cosign, take it seriously. By doing so, you are asking them to put their credit on the line for you and repay the loan if you can’t.

When co-signing a car loan, they do not acquire any rights to the vehicle. They are simply stating that they have agreed to become obligated to repay the total amount of the loan if you were to default or found that you were unable to pay.

Co-signing a car loan is more like an additional form of insurance (or reassurance) for the lender that the debt will be paid no matter what.

Usually, a person with bad credit or less-than-perfect credit may require the assistance of a co-signer for their auto financing and loan.

5. Go Shopping

Now you’re ready to look for a new ride. Put in a little time for research and find cars that are known to be reliable and fit into your budget. You’ll also want to consider size, color, gas mileage, and extra features. Use resources like Consumer Reports to read reviews and get an idea of which cars may be best for you.

Once you have narrowed down the car you are interested in, investigate how much it’s worth, so you aren’t accidentally duped. Sites such as Kelley Blue Book or Edmunds can help you figure out the going rate for your ideal car. After you’re armed with this information, compare prices at different car dealerships in your area. And don’t forget to check dealer incentives and rebates to get the best possible price.

By following these steps, you’ll be ready to make the best financial decision when getting a car loan. Even if you aren’t ready to buy a car right now, it doesn’t hurt to be prepared. Start by acquiring a free copy of your credit summary.

It is always a good idea to pull your credit reports each year, so you can make sure they are as accurate as they should be. If you find any mistakes, be sure to dispute them with the proper credit bureau. Remember, each credit report may differ, so it is best to acquire all three.
If you want to know what your credit is before purchasing a car, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get a free credit score updated every 14 days.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

Image: istock

Source: credit.com

How 2017 Rate Volatility Impacts Home Affordability

Prospective home buyers may feel disheartened when they see rates rise. Here’s what it really means for them.

Rising mortgage rates decrease how much home you can afford, but you have more flexibility than you might think because of how lenders qualify you.

Let’s recap the wild ride rates have been on since November, then review how this impacts affordability, and how you can qualify for the most home possible.

2017 rate recap and outlook

Mortgage rates rose .75 percent between the election and Christmas last year, driven by a belief that the new administration’s proposed policies of infrastructure spending, tax cuts, and deregulation would be inflationary if enacted.

Rates rise on inflation threats, and this is what happened post-election.

We said back then the dramatic rate spike might level off, and now that’s happening, albeit in a very volatile way. Rates are up and down daily as investors react to new government policies. One day investors bet inflation will be muted by policy delays or roadblocks (lower rates), and another day investors return to the post-election inflationary bet (higher rates).

The net effect is that rates are off post-election highs, and now are up about .5 percent since the election.

Rate volatility will continue as investors and the Federal Reserve try to predict rate direction under the new administration, so let’s see how it impacts your home-buying plans.

How rates impact home affordability

On a $350,000 home purchase with 20 percent down, a rate spike of .5 percent reduces the home price you can afford by about $17,000.

This measure can make you think you’re doomed to a smaller house or worse neighborhood. But if you understand how lenders think, you can find solutions.

Mortgage lenders use a debt-to-income (DTI) ratio to qualify you, meaning they divide your bills (for housing, car payments, credit cards, etc.) by your income to get a percentage of how much of your monthly income you spend on bills. Most lenders don’t lend to you if your monthly bills are more than 43 percent of your income.

If you earn $65,000 per year and have car, student loan, and credit card bills totaling $615 per month, you qualified for that $350,000 home purchase when rates were .5 percent lower, but now you don’t.

The reason: your DTI percentage was below 43 percent pre-election, but now it’s above 44 percent after rates rose.

On the surface, the only solution would be to reduce your purchase price by $17,000 to $333,000 to get your DTI back below 43 percent.

How to increase home affordability

But instead of reducing your price by $17,000, you can reduce your other non-housing bills.

For example, let’s say your credit card payment was $125 on a balance of $3,125. You need to get that payment down to $45 to qualify for your original $350,000 home purchase price, and you can do so by paying down the balance by $2,000.

That’s a lot better than reducing your purchase price by $17,000, and if you’re light on cash, you can negotiate a seller credit at closing to recoup the $2,000.

How to make the right decisions

Just like all real estate is local, all lending is individual.  So don’t automatically assume rising rates push down the price you qualify for.

A good lender will examine your full financial profile and goals, then dive into the math to find solutions for you.

Looking for more information about mortgages? Check out our Mortgage Learning Center.

Related:

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

Source: zillow.com

My New Favorite Planner For my Money & my Life

This post may contain affiliate links. Please read my disclosure for more information.

Want a peek into my life? I am notorious for having a separate monthly and weekly calendar, notebook for to-do lists, meal planning, and grocery lists, and that’s just what’s at my bedside. I also have a scrap piece of paper with our debt pay off goals/progress and I am constantly scribbling on whatever I can get a pen on.

The Struggle is Real

And I’ve never been into big, beautiful, personalized planners. They sound nice, but with everything I’m trying to keep track of, I’d still need my scraps of paper to keep everything recorded.

But when Lauren Greutman posted about her new planner in one of my Facebook groups I wanted to do some research. Lauren is a best-selling personal finance author and mother of 4 who’s passionate about helping women gain financial freedom. And she designed a planner that helps them do just that.

The big difference between the Personal Finance Planner and others is its focus on specifically helping you get out of debt. So if you’re not in debt this may not be the most useful planner for you. If you are actively working to pay off debt and your entire schedule is affected by it, then this planner is going to answer some of your prayers.

When you purchase the planner Lauren walks you through how to use all the features in an eleven-minute video and you instantly have access to a private Facebook group of other people using the planner. Here are just some of the features Lauren includes in the planner.

Personal Finance Planner

Personal Finance Planner

Start/ Pick up Wherever You Are

Probably my favorite feature, the tabs of the planner are unlabeled. There are stickers in the back that you can label tabs to start on whatever month you want. Or if you get sidetracked and forget about the planner for a month, you can pick back up without wasting a single page.

Bill Priority Sheets for Irregular Income

If your income is different every paycheck it’s hard to know how to budget each month. Lauren has included 12 pages for you to list your bills in priority to determine what gets paid every month. She’s even included a list of budget categories and bills so you don’t forget anything. Think of it as a visual representation of your wallet, when the money runs out on paper you can’t spend it in real life.

Personal Finance Planner

Personal Finance Planner

Meal Planning and Shopping Lists for Every Week

I have been an advocate for meal planning and never shopping without a list since we started budgeting. Eating out and overspending on groceries are the #1 way to blow your budget. I always plan my list on spare notebook paper but the Personal Finance Planner has a little spot on every day to schedule a meal and the sheet next to it contains shopping lists for every day. While I’m not grocery shopping every day having a daily list will help me to not forget anything that’s recipe specific.

Pay off/ Financial Goals & a Debt Calculation Area

These pages speak volumes to the value of this planner. Every month you can go through these worksheets to establish, on paper, a purpose for the month. You can see concrete progress and reflect on setbacks. We do this verbally but having it visual is going to make it that much more fun.

11-01-16-02-23-59_planner8

11-01-16-02-23-59_planner8

STICKERS

I’m kind of a sticker nut. If it’s funny and sticks on something, I’m a fan. There are not only month label stickers in here but stickers to label your (included) cash envelopes, budget nights, and pay days.

I haven’t paid for any budget, money classes, or books to help me get out of debt. After 13 months of student loan payments behind me though, I am really excited to make this investment in my day-to-day debt crushing life.

For less than $65 (Which I hear is very good for a planner that does all this) you can get epic portable resources at your disposal that will help guide you over the next year. And it offers the convenience needed for people who don’t want piles of scrap papers littering their lives. If you’re interested you can get more info and pics here.

Disclaimer: This post contains affiliate links. Making a purchase using these links pays for what could potentially be my new planner addiction. Who knows?

Personal Finance Planner

Personal Finance Planner

Jen Smith is a personal finance expert, founder of Modern Frugality and co-host of the Frugal Friends Podcast. Her work has been featured in the Wall Street Journal, Lifehacker, Money Magazine, U.S. News and World Report, Business Insider, and more. She’s passionate about helping people gain control of their spending.

Source: modernfrugality.com

December 2016 Budget

This post may contain affiliate links. Please read my disclosure for more information.

Are you ready for this?

We paid $5,000 of our student loan debt in one month.

That’s crazy even for us! We were able to do this for two reasons: the budget and some discipline.

UPDATE: As of August 31, 2017 Travis and I are STUDENT LOAN FREE! We paid off $77,646.54 in 23 months!

We never have the perfect budget. In the 14 months we’ve been doing this we’ve always had to tweak here and there to make it work but paying off our student loans is the priority and that puts all spending into perspective. Over the last

Over the last year we’ve built discipline, it didn’t happen overnight. (It didn’t even happen in the first 3 months.)

We went really ambitious last month because we are committed to having my student loan paid off by Christmas. That means December is going to be another $5,000 loan payment to finish it off.

(Spoiler alert, we did it!)

Real great timing right? But we’ve decided our goals are more important than Christmas crap and the best gift we can give each other is financial freedom.

I did surprising well staying within budget this month, we went over on eating out (like every month) but made up for it in spending less on groceries. I also budgeted $100 for Black Friday shopping and spent a whopping $43, $20 of which was online.

It wasn’t because I didn’t find things I liked, I did. But I’ve been more passionate lately about conscious consumption.

I want to make sure the items I purchase have purpose and are good for the environment.

To do this I ask “do I already have one?” “Can I have something better later if I pass on this?” and “Is this going to improve my life?”

So let’s dive into December’s budget. It’s going to look even slimmer than November’s:

EveryDollar

EveryDollar

You can also see we’re able to put $5K toward the loan because we have $7200 net coming in and we’ve spent time and attention to keeping our standard of living to $1200 per month.

You might think, “of course, they can do that with over 7 grand coming in.” But if you’re not in the same financial state as us (ie. taking extra jobs to boost our income) you can still examine your budget and make cuts.

When reading articles like this we click for the big numbers but the real advice is to think in percentages.

Making 5% changes every month can change your life. Every little move in the right direction is worth it. And don’t feel that just because your numbers can’t be as big as some random person’s with a blog on the internet that you can’t start right now. Everyone starts somewhere, so start where you are and nowhere else.

Onward,

EveryDollar copied November’s budget to December and we tweaked accordingly. I’ve tried multiple budgeting apps and the manual entry of EveryDollar works best for us. If you like your transactions automatically updated I highly recommend Personal Capital. It has a beautiful mobile interface and people who use it regularly have nothing but good things to say.

While we’re not exchanging gifts (besides the cereal I’m wrapping and giving Trav for Christmas) we aren’t total Scrooges. Any gifts we do buy we’re buying with gift cards we already have. Hence no gift budget.

We cut eating out down to nothing this month. I already have it spent because we’re going out to a fancy [for us] dinner dessert when we pay off my loan. So stoked for that. And I have given myself a small personal fund because I’m going out of town for a wedding.

And here’s another kicker,

this is the last month I will pay on my student loan.

Did you just read that!? I just scheduled my second-to-last payment on my loan and the one after is going to be the whole shebang. I plan on recording it via Facebook Live so make sure you like my Facebook page to join in the celebration. I’m taking suggestions on how to celebrate. 😉

Paid off Debt

Paid off Debt

Jen Smith is a personal finance expert, founder of Modern Frugality and co-host of the Frugal Friends Podcast. Her work has been featured in the Wall Street Journal, Lifehacker, Money Magazine, U.S. News and World Report, Business Insider, and more. She’s passionate about helping people gain control of their spending.

Source: modernfrugality.com

5 Ways You’ll Spend Money on Your New Construction Home After Closing

Save some room in your budget for expenses after move-in.

By the time you get the keys to your new construction home, you might feel stretched thin in the finance department. From earnest money and design center upgrades, to closing costs and moving expenses, buying a brand-new home is never cheap.

As you take a look at the costs on the horizon, it’s wise to look a little past your closing date. There are a few post-closing costs that are unique to brand-new homes and some that are familiar to all new homeowners.

Set aside a little money for these expenses now, and it’ll be smooth sailing once the “sold” sign is out front.

Appliances

Unless you’ve negotiated a washer and dryer into the price of the home with your builder, your new laundry room will likely be a big empty space when you move in — no washer and dryer to be found.

Many builders don’t include a refrigerator either, opting instead to let homeowners choose a style that suits their needs.

Here’s a tip to ease your wallet woes: Start shopping appliance sales once you know your approximate close date. Many appliance stores will let you purchase ahead of time to take advantage of a good price, then delay your delivery until you move in.

Utilities

If you’re upgrading to a larger home, your utilities will likely increase, especially heating and cooling. And if you’re moving to a new city or a location with a different utility company, you may have to pay a deposit to start service.

If you’re interested in services like cable, satellite TV, or Internet, you may have to install some equipment that would already be installed if you were buying a pre-owned home.

Window coverings

Look at all those big, beautiful windows in your new home! And then notice that they’re bare — no blinds or curtains in sight.

Most new homes do not come with window coverings, and they’re definitely something you’ll want to quickly look into when you move in. There are better ways to introduce yourselves to the neighborhood than through wide-open windows — or bedsheets pinned up for privacy.

Furniture

There’s nothing more exciting than picking up some great new furnishings and decor for a brand-new space. You may have pieces that worked well in your old space but don’t fit your new home’s layout.

Or maybe you have a new guestroom to furnish, a deck that is begging for patio furniture, or beautiful hardwood floors that need area rugs. Set aside some money now so you can start decorating right after move-in day.

Landscaping

Did you know that some builders only landscape the front yard, leaving the backyard unfinished and unfenced? And, if your new neighborhood has a homeowner’s association, the rules may require you to finish your yard within a certain time period.

That means you foot the bill for landscaping your new home’s yard, and whether you do it yourself or hire a professional, it’s still an expense you shouldn’t overlook.

Setting foot in your brand-new, just-finished home is an exhilarating experience, and something you won’t soon forget. With just a little planning and saving in advance, you can spend more time making your new house a home, and less time stressing over how you’re going to pay for it all.

If you’re home shopping, check out our Home Buyers Guide for valuable tips and resources.

Related:

Source: zillow.com

Building Credit 101: Tips for Recent Grads

Your diploma represents a vital step on the road to success. Next up: establishing a good credit history.

If you’re a recent college grad, you’ve likely heard speeches about pursuing your passions and believing in yourself, but you probably haven’t heard much about establishing a good credit history. Here’s what you need to know.

It matters — a lot

Qualifying for mortgages, auto loans, apartments and even jobs has become dependent, to some degree, on your credit history.

Find out where you stand

The first step is knowing your current status. Access your credit report by visiting Annual Credit Report.com. Make sure all the information on the report is accurate, because errors can — and do — occur. Damaging discrepancies need to be corrected right away.

Build a credit history

Your credit history is one of the key factors making up your credit score, the all-important three-digit number that determines the rates you pay on everything from credit cards to mortgages to auto insurance.

The best time to build a credit history is when you’re young, and the best way to start a credit history is to get a credit card. This may sound counterintuitive, but if you don’t have a credit card, the scoring system has no information to go on for assessing your creditworthiness, so you come across as a credit risk.

Research credit card options

While many of the major issuers offer cards geared toward new applicants with little or no credit history, you might stand a better chance of getting a card at a credit union. Size up your card options on a site such as LowCards.com.

Gas cards and department store cards are also typically easy to get and can be a good place to start if your options are limited.

Another possibility — especially if you don’t have any credit history or your credit is damaged — is to get a secured card. These cards work just like a regular credit card, except that you place a security deposit with the credit card issuer to obtain one. They typically require $200 or more for the deposit, and this amount becomes the credit line for the account.

Use credit responsibly

The way to keep your credit score high is to spend responsibly within your means. Don’t use more than 30 percent of your available credit, and pay off your balances in full and on time every month. Your payment history contributes to 35 percent of your credit score, so this point is important.

Chip away at student loans

Student loans are a form of debt, and are therefore taken into account as part of your credit score. And while you may be worried about a lender seeing all of this debt (likely tens of thousands of dollars), there’s no need to be concerned if you’re handling your finances properly. Just be sure you’re managing your debt obligations and repaying them on time, every time.

Related:

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

Originally published May 29, 2015.

Source: zillow.com

Free Printable Thermometer to Track Debt Payoff!

This post may contain affiliate links. Please read my disclosure for more information.

When we started paying our debt off there were a bunch of things I could say about how it sucked. But somewhere along the timeline of the last 12 months, I changed my mind.

I used to complain about wanting to take a vacation (specifically a cruise) and not wanting to cook at home every night. I even had to unfollow friends on Instagram because watching their adventures was making me miserable.

I don’t know when it happened but I noticed it on my anniversary weekend. Everyone asked me what we were going to do for our first anniversary and I was like ¯_(ツ)_/¯. My husband kept asking me if I was okay (maybe based on the fact I never shut up about cruises) and really, I was. For the first time, I didn’t have any FOMO or vacay envy.

“But Jen, how do I achieve ultimate debt repayment enlightenment as you have?”

I can hear you asking it and honestly, ¯_(ツ)_/¯. But I can share some things we’ve done that I know have made this season suck a lot less. And when you see firsthand that living frugally is surprisingly simple, it becomes less of a “season you have to endure” and more of a lifestyle. One that I’ll likely carry with me long after the debt is gone.

Vision Cast

I may talk mostly about paying off debt but only because that’s where I’m at. Ultimately, it’s just a means to the end of a vision we’ve cast for our future. And deciding on this vision was essential for making the small everyday decisions seem more eternal.

A road trip without google maps is a road trip I do not want to be on. Same with your life. having a reason for doing what you’re doing is going to be the big push that keeps you going.

So sit down and write out a vision for your future. Think big, that’s what millionaires do. Include dream trips and how many kids you want but also what you’d like to do when you retire and then figure out when you want to retire and how much you’ll need to do it.

Casting a vision for your life shouldn’t constrict you to the plan, road trips have plenty of unplanned bathroom breaks and coffee stops. But a vision will keep you heading toward each goal in the right direction and at the right pace.

Start a Blog

I used to judge people with blogs. But seriously you guys, this whole “sharing my feelings thing” has been majorly cathartic. Being able to help people and hearing how I’ve helped you has been an amazing and motivating experience. It also takes up a lot of my time so I forget about all the things I could be spending money on.

Start one for free at WordPress.com or go all out with your own domain name through Bluehost. It’s super easy and connects you to hundreds of other personal finance bloggers with the same mindset who are currently or have paid off massive amounts of debt.

Purge

You’de think it’d be a bummer to sell your stuff or worse, throw it away. But it’s the most freeing feeling you can have with two feet on the ground. We started posting things on Craigslist and OfferUp and took clothes to Plato’s Closet. Then what we couldn’t sell we took to Goodwill.

We were able to finish paying off my car and got rid of a lot of superfluous stuff lying around. I’ve now made it a habit to purge every few months.

Mystery Shop

We started mystery shopping after reading about it on The Penny Hoarder. We do a lot of restaurant shops and it doesn’t come out of the budget because you get reimbursed! I’ve also been paid to test drive a car and ask questions at a bank. It’s fun to feel like a secret detective and not have to do the dishes when you get home.

Color in the Lines

We started coloring in a debt thermometer a few months ago and it’s been a game changer. It’s disgustingly big and not cute at all but at the end of every month we take turns coloring in the section we’ve accomplished and every time we turn the the the A/C up or down (we put it by the thermostat, real clever huh?) we’re reminded of our progress and what lies ahead.

I’ve made a color-in debt thermometer for you for FREE at this link so you can get started today on visualizing your goal.

Jen Smith is a personal finance expert, founder of Modern Frugality and co-host of the Frugal Friends Podcast. Her work has been featured in the Wall Street Journal, Lifehacker, Money Magazine, U.S. News and World Report, Business Insider, and more. She’s passionate about helping people gain control of their spending.

Source: modernfrugality.com

October 2016 Budget

This post may contain affiliate links. Please read my disclosure for more information.

Today is our first anniversary! I remember thinking the day would never come and now it’s been a year. Crazy. Our first year has been pretty great. I only cried a few times and they were both on our honeymoon so I got it out of the way early.

smithwedding-14

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Related: 3 Habits for Blissful Money Management

I started this blog last month to keep me motivated and help people who want to get out of debt. When I started I didn’t even know what financial freedom was or what it looked like. I want to help you discover that there’s so much more to money than buying stuff.

So I’ll offer you our biggest asset right now, a transparent look at our budget.

As the nerd of the family, I’ve studied and refined this budget over the past year to get us paying as much debt per month as possible while not living under a rock. It’s tight and by no means sustainable but we’re comfortable and we have a good time.

I’ll start with a recap of September’s debt payment. We paid $3800 over 3 payments, that’s 55% of our total income for the month. I get paid weekly and Travis gets paid bimonthly so I set the payments set up to come out on the days his check gets put in our account and on the 28th, the random day the auto-pay is set up for.

I’ll be honest, we went way over budget this month, luckily Travis had unexpected overtime. Funny how that happens. 😉 I had a tire blow out and Travis needed tires so we just got 5 at the same time (from a guy off Craigslist.) And I knew I wanted to go to #FinCon17 next year so I snagged tickets at their early bird sale, an expense I wasn’t anticipating so soon. But thanks to a thin buffer and a little extra income we didn’t have to touch our emergency fund (which is $1000 we keep at a credit union.)

Now the fun stuff. The cash flow plan.

There are a lot of ways you can categorize the line items. We use EveryDollar, it’s a simple minimalist design, which appeals to me, and the free version requires you to input transactions manually. The inconvenience of manual entry is key to being intentional about your spending, especially if you’re not on the envelope system.

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october-copy

Related: Budgeting is a B Word – Budget Myths Debunked

I’m attempting my first shopping ban this month. Inspired by powerhouse minimalist Cait Flanders I‘m following her guidelines and nixing my “personal” line item this month. Since purchasing my FinCon ticket was double my normal allotted budget I thought this was fair. I’ll let you guys know how it goes next month.

We’re paying $3800 again on my student loan. That’s 57% of our income. Normally I would add a holiday sinking fund in October but we’re going to use the last of our wedding gift cards for present purchases so our expense will be minimal.

If you have any questions about the budget feel free to ask! We’ve done lots of research to get payments as low as possible so I love talking about sculpting budgets.

October 2016 Budget

October 2016 Budget

Jen Smith is a personal finance expert, founder of Modern Frugality and co-host of the Frugal Friends Podcast. Her work has been featured in the Wall Street Journal, Lifehacker, Money Magazine, U.S. News and World Report, Business Insider, and more. She’s passionate about helping people gain control of their spending.

Source: modernfrugality.com