What are low-interest credit cards? It depends on what you’re looking for. Some people want a credit card that offers interest rates well below the industry average. Other people want a credit card with an introductory zero interest rate – and 0% intro APR credit cards are among some of the popular cards on the market. If you’re trying to pay off old credit debt, you might be looking for a balance transfer credit card that offers 0% intro APR on transferred balances.
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If you’re thinking about applying for a low-interest credit card, you’ll want to ask yourself what kind of card you’re looking for – and how the card might help you save money on interest charges. Each type of low-interest credit card has its pros and cons, and it’s important to understand how low-interest credit cards work before you fill out any credit card applications. That way, you won’t accidentally end up paying higher interest rates than you were expecting.
Let’s dive into how to evaluate each of your options and decide which low-interest credit card is the best for you.
What are my options for a low-interest card?
If you’re looking for a low-interest credit card, you have three main options to consider – all of which can help you save money on interest charges over time.
First, you could look for a credit card that offers lower interest rates than its competitors. Currently, a credit card that offers interest rates below 16% APR, for example, is likely a good low-interest option.
Second, you could look for a card that offers an introductory zero interest rate. These 0% intro APR cards give you the opportunity to make purchases without accumulating interest charges on your balance – and the best zero-interest credit cards offer intro APR rates that last for a year or more.
Lastly, you could look for a balance transfer credit card. These cards offer temporary zero-interest rates on transferred balances and often extend the 0% intro APR offer to include new purchases as well. If you are trying to pay off old credit card debt, a balance transfer credit card with a zero-interest introductory offer is one of the best ways to pay down your credit card balances while avoiding interest charges.
What is a low-interest credit card?
A low-interest credit card offers lower interest rates than the industry average. Currently, average credit card interest rates are around 16% APR, which means that if you can find a credit card offering interest rates below 16% APR, you have a low-interest credit card on your hands.
We’ve got a list of the best low-interest credit cards to help you get started. Keep in mind that most credit cards offer interest rates in the form of a range – the Discover it® Cash Back card, for example, offers a purchase APR of between 11.99% and 22.99% – and people with better credit are more likely to be offered interest rates in the lower end of that range. This is why it’s a good idea to know your credit score before applying for a low-interest credit card.
What are low-interest cards good for?
Low-interest credit cards are good for people with good credit or excellent credit who occasionally carry a balance on their credit cards. If your credit history is strong enough for you to be offered a credit card with an interest rate below 16%, you can use that low interest rate to finance larger purchases or pay off a balance over time without being overwhelmed by interest charges.
Who shouldn’t get a low-interest card?
If you have average credit or poor credit, you might not get as much benefit out of a low-interest credit card. You’ll probably be offered interest rates at the high end of the card’s interest range if you’re approved for the card – which means that when you carry a balance, your interest charges will be higher than the industry average. That said, it is possible to contact your credit card issuer and request a lower interest rate, especially if you can prove a recent history of responsible credit use.
What are 0% intro APR cards?
Zero percent intro credit cards offer cardholders a temporary interest-free period on new charges. These cards are often called zer0-interest cards – and the best zero-interest credit cards offer introductory rates that last for at least a year. The Bank of America® Unlimited Cash Rewards credit card, for example, offers 0% intro APR on purchases for 15 billing cycles. It also offers 0% intro APR for 15 billing cycles on any balance transfers made within the first 60 days of card ownership, making the Bank of America Unlimited Cash Rewards card both a top 0% intro APR card and a top balance transfer credit card.
What’s an intro APR for credit cards? Essentially, it’s a promotional interest rate that lasts for a certain period of time. When the intro APR runs out, you’ll pay the standard interest rate on any outstanding balances. With the Bank of America Unlimited Cash Rewards card, for example, you’ll pay a variable APR of 13.99% to 23.99%.
What are 0% intro APR cards good for?
Zero percent intro APR cards are good for people who want to cover the costs of a large purchase, such as a vacation or an unexpected bill, and pay off the balance over time. As long as you pay off your balance in full before the zero-interest promotional rate expires, you won’t have to pay interest on any charges made during the promotional period.
Who shouldn’t get a 0% intro APR card?
If you aren’t sure whether you can pay off your balance before the 0% intro APR expires, you might not want to get a 0% intro APR card. Some people treat their zero-interest credit cards as free money – but if you get stuck with a high balance at the end of the zero-interest promotional period, you could end up paying a lot of interest on your charges. If you’re thinking about applying for a 0% intro APR card, make sure you have a plan to pay off any purchases you make on the card before the zero interest rate runs out.
What is a balance transfer card?
What is a balance transfer credit card? Balance transfer credit cards offer the opportunity to transfer old credit card balances onto a new card. Like 0% intro APR cards, balance transfer cards also offer an introductory zero-interest period in which you can pay off those balances without accruing interest charges.
The best balance transfer credit cards offer at least a year of 0% intro APR on balance transfers. The Wells Fargo Active Cash℠ Card, for example, offers 15 months of 0% intro APR on balance transfers made within 120 days of opening the account. The Wells Fargo Active Cash also offers 15 months of 0% intro APR on new purchases, making it a top 0% intro APR card as well – and since its standard APR is a variable 14.99% to 24.99%, it’s also a low-interest balance transfer credit card (for people with high enough credit scores to qualify for the lowest interest rates).
Be aware that balance transfer credit cards charge fees every time you transfer a balance. In most cases, you’ll pay a balance transfer fee of 3% to 5% on all balances you transfer to your card, but many people find that the cost savings associated with the 0% intro APR rate more than cancels out the transfer fees compared to the interest they were accruing on the original card.
What are balance transfer cards good for?
Balance transfer credit cards are good for paying off old debt. In fact, using a balance transfer card to consolidate and pay off debt is one of the most cost-effective debt repayment strategies out there. Once you know how to do a balance transfer, you can transfer your old balances onto your new balance transfer credit card and – with a plan and a budget in place – pay off as much of your balances as possible before the 0% intro APR runs out. In some cases, you might even be able to use a balance transfer credit card to become debt-free.
Who shouldn’t get a balance transfer card?
Like 0% intro APR credit cards, balance transfer credit cards can charge higher-than-average interest rates on any balances that remain after the promotional interest rate ends – so if you’re not sure you can pay off your transferred balances before the 0% intro APR runs out, a balance transfer card might not be the best choice for you.
That said, if you can pay off a significant chunk of your transferred balances before the promotional rate expires, a balance transfer card is still a good idea. Every dollar you pay off at 0% intro APR is a dollar that doesn’t accrue interest.
How do I choose the best low-interest card?
Start by asking yourself what kind of low-interest card is best for you. Do you want a 0% intro APR card that offers zero interest on new purchases for over a year? Are you hoping to use a balance transfer credit card to pay off old debt? Or are you simply looking for a credit card that offers interest rates below the industry average?
Choosing the best low-interest card is all about knowing what options are available and how you can use those options to save money on interest charges. You’ll want to make sure that any low-interest credit card you choose is designed for a person with your credit score – if you are working on building your credit, for example, you might want to use a balance transfer card to pay down old debt (and raise your credit score) before applying for a card that reserves its lowest interest rates for people with good or excellent credit.
Use our guide as a starting point, and remember that there are many different kinds of low-interest credit cards. If you find the right low-interest card for your financial needs, you could end up saving a lot of money.
Even if your new rental unit ticked off most of your must-have boxes â great location, lots of light, budget-friendly â you might be disappointed about one thing: There’s no dishwasher in the apartment.
Not to worry! Here are some tips, tricks and shortcuts that take the drudgery out of washing dishes â and you may even end up enjoying the task.
1. Plan meals that use fewer dishes
Instead of dirtying piles of cooking utensils, try incorporating some one-pot meals into the rotation. Slow cookers, instant-pots, woks and sheet pans will all minimize the amount of mess.
When baking, measure your dry ingredients first and then reuse the same measuring cups and spoons for wet ingredients.
You can also line your pans with aluminum foil before roasting vegetables or baking lasagna to cut down on washing time afterward.
Also, read a recipe through before you start cooking to see how many dishes you will need. By thinking ahead, you’ll have less to wash when you’re done eating.
2. Clean up as you cook
As you prepare your meal, get in the habit of tossing food scraps into the compost bin or garbage can. Plan to wash what you use as you’re cooking or place dirty dishes into the sink as you go.
Before you start chopping any ingredients, fill the sink with warm soapy water and soak your dirty dishes so food doesn’t become dry and caked on. Wash your prep tools as your food cooks.
3. Get the right tools for the job
Toss that stinky kitchen dishcloth and pick up a few smart gadgets that will almost make you forget you don’t have a dishwasher in your apartment.
A dishwashing brush can handle even the crustiest food remnants, plus it dries completely â no more damp, germ-infested sponges lying around.
If you prefer a sponge, get a washable microfiber one that you can toss into the washing machine.
Silicone scrubbing gloves protect your hands, plus they provide some scrubbing power.
Using a blade brush is a safer way to clean sharp knives.
A food scraper or dish squeegee makes dishwashing easier and keeps your sudsy water cleaner.
4. Protect your drain
The last thing you need when you have no dishwasher in your apartment is a clogged kitchen sink.
Never pour oil or grease down the drain because they can coat the pipes and cause a blockage. Use a sink strainer to catch food particles and empty it regularly while you’re cleaning up.
5. Be efficient by learning how to clean stubborn dishes
For about $10, you can upgrade your kitchen faucet with a swivel tap aerator, which helps get into the nooks and crannies for more effective dishwashing.
Wash items from least to most dirty: Glasses and silverware first, then plates and bowls. Save the largest, dirtiest things for last. Some dishes, like glassware or anything oily need extra-hot water to get clean, while others do better with cold.
For example, dairy and starch rinse off easily under cold water, which prevents the residue from getting sticky. For scorched pots and pans, head to your laundry room to grab a dryer sheet: Soaking it with the pan in warm soapy water for an hour will remove caked-on grime.
6. Use the right kind and amount of dish soap
If you don’t like wearing latex gloves to protect your hands, use a natural dish soap that will be gentler on your skin. For very greasy dishes, you might need a more advanced dish cleaner.
Don’t use too much soap, because it can leave a sticky residue on your dishes â one or two tablespoons per load is all you need.
Pouring your soap into a touchless foaming soap dispenser controls how much you use, saving you money.
7. Purchase space-saving drying racks
Why double the amount of work to hand-dry all your dishes when you can let them air-dry instead?
Since small apartment kitchens usually lack counter space, ditch the bulky dish-drying rack in favor of a more streamlined solution, such as hanging a wire shelf over the sink, or using a roll-up drying rack that stores away when not in use. Or, use a silicone dish-drying mat â it’s better than a fabric one because it prevents mold growth.
8. Treat yourself to a few luxuries
Just because there’s no dishwasher in your apartment doesn’t mean you should dread cooking great meals for yourself or your loved ones. One thing that makes the task easier is creating the right mood for the job.
Pick up some great-smelling dish soap and soft linen kitchen towels, which dry faster than cotton and are naturally anti-microbial. Set up a waterproof Bluetooth speaker or wear wireless headphones so you can listen to your favorite tunes or podcast or light a few aromatherapy candles to make washing dishes more enjoyable.
9. Invest in a countertop dishwasher
Speaking of treating yourself: Sometimes, especially if you have a family to feed three times a day, hand-washing everything is just not realistic. Apartment dwellers have another option: A countertop dishwasher.
These appliances â ranging in size from 16 to 22 inches wide â sit on your counter, hook up to the faucet and wash up to six place settings at once. These dishwashers cost about $400.
Adapt to having no dishwasher in your apartment
While living in an apartment with no dishwasher can seem challenging at first, the transition to a wash-as-you-go lifestyle is easier when you plan ahead, use the right tools and shift your mindset.
The post 9 Ways to Survive With No Dishwasher in Your Apartment appeared first on Apartment Living Tips – Apartment Tips from ApartmentGuide.com.
I’ve been chugging along on the Hood Canal Cottage design – I know I am SO overdue for an update for you, but when you’re in the throes of design deadlines it can be really hard to find a moment to pause and recap everything. But I swear, it’s coming slowly. In recent weeks I’ve moved on from major architectural design and finish decisions into the interior design side of things. It’s been a tad overwhelming, as I haven’t decorated a space from scratch since we moved to San Francisco nearly 10 years ago (did you ever catch the tour of my first place in SF? I’m almost embarrassed to share it, but I was SO proud of it at the time).
Designing the Hood Canal Cottage is a unique situation to be in for a hobby designer like me. Usually, you move and take pieces with you, but since the cottage won’t serve as a full-time residence, I’m starting from a literal blank slate.
My focus this week has been on the dining room – or in this case dining space as the dining area sits within a great room that also houses the kitchen and living room. I’ve been shopping around like a madwoman trying to hone in on the look and feel I want to bring to life in the dining area. I want it to feel distinct and anchored – its own little zone within the larger room. And the idea I keep coming back to again and again is banquette seating.
Banquettes and built-ins have been having a moment for a while now, but I would argue for very good reason. A built-in banquette is a great space saver in a smaller space and increases the capacity around a dining table. Since I envision the Hood Canal Cottage as our hub for future Thanksgiving dinners and holiday gatherings, I definitely want to be able to cram as many people around the table as possible.
Like many of the examples you see here in this post, our dining table will also run parallel to a long wall, rather than float in the middle of the room. This actually limits the ability to pull back a dining chair. I would probably have to use a bench on that side of the table, but a banquette will allow the table to sit a little closer to the wall and not have legs you have to work around, saving precious floor space.
I also love how a banquette offers the opportunity to add big long seat cushions, back pillows, or both! Adding cushy upholstery to a dining space softens areas often dominated by hard surfaces. I love how that brings a sense of coziness, inviting you to sit and linger over your morning coffee, or pour that last little bit of wine and stay up talking. I want this home to encourage anyone who stays there to slow down and enjoy the little moments. Kinda like you’re living on vacation. That is the goal.
Adding a major upholstered piece at the dining table will also help me bridge the living room space and kitchen.
While I am obviously leaning toward jumping on the banquette bandwagon, I do have some convincing to do. Not everyone in my household is into the idea of a banquette. To add to that resistance, I’m not finding any good off-the-shelf options so it’s likely I’d have to go custom to create my vision. Custom is certainly not the most affordable of options.
So what say you? Do you happen to have a banquette in your home?? Do you like it? Have you found it comfy? Useful? Are there downsides you’ve dealt with? I think I’m pretty committed to this design choice at this point, but I would love to hear what you think! Please share in the comments section.
Catch up on the Hood Canal Cottage HERE.
Check out more design ideas HERE.
images vincent van duysen | home designing | mr & mrs white | danthree | amber interiors shoppe / larritt-evans design | poppy talk | nicole franzen | decus interiors /Â
The post Banquette, Baby! appeared first on Apartment34.
It wasnât until a few months after my husband and I got married that I decided to check both our credit scores. While my husbandâs credit score wasnât horrible, it certainly didnât qualify as âexcellent.â This got me thinking about how newlywedsâ financial histories can affect both spousesâ finances moving forward, and how critical it is to acknowledge this realityâideally before getting hitched.
Why Itâs Important to Have a Good Credit Score
Manisha Thakor cuts right to the chase in her book On My Own Two Feet: âYour credit score is essentially your financial reputation in numeric form.â
Aiming for an excellent credit scoreâgenerally defined as 750 or moreâis a worthy goal, owing to the range of ways in which it can save you money. Credit scores are critical when applying for loansâfor instance, car loans and mortgages. In addition, many employers consider prospective employeesâ credit scores during the hiring process.
A high credit score means you can access lower interest rates when borrowing, because creditors will view you as reliable. The perceived risk that youâll default on your loan is lower compared to those with poor credit scores. Lower interest rates, especially on large amounts borrowed over significant timeframes, can save you thousands and thousands of dollars!
A poor credit score can indirectly hurt your financial efforts as well; consider the fact that when youâre paying over the odds in debt repayments, youâre committing fewer dollars to saving and retirement planning.
photo credit: LendingMemo via photopin cc
Till Debt Do Us Part
Marriage makes you one combined financial unit.
However, that doesnât mean your credit scores are merged; your credit history continues to be maintained on an individual basis. One spouseâs poor credit cannot directly damage the individual score of the other spouse.
That being said, if you apply for a loan as a married couple, creditors look at both your credit scores to determine your eligibility and terms. So, if one of you has the credit of an angel whereas the otherâs credit history is limited or even littered with missed payments and liens, you may find your application is denied.
But, this is not just about loan applicationsâpoor credit can belie more than just a few bad credit card habits. Other financial follies, like paying taxes late, not focusing on saving, and day-to-day overspending, could be lurking in the closet.
What Do You Do After Youâve Said I Do?
While bad credit isnât good news, itâs not necessarily a reason not to get married. And, itâs not necessarily the precursor to divorce! It is, however, an alarm signaling that it is time to get clear on your joint financial situation and start communicating. Make sure you do this respectfully and compassionately to minimize blame and financial stress. (If youâre the type of person whoâd like to know this information from prospective partners before things get serious, there are now dating sites catering just to you.)
Once youâve identified that one of you has less-than-optimal credit, itâs time to take action. Here are four top tips for taking immediate action:
1. Check your credit report for mistakes: Errors are, unfortunately, pretty common and can be really detrimental. Check your report at least once per year.
2. Make payments on time: Yes, this is stating the obvious, but it needs to be said! Mary Beth Storjohann of Workable Wealth says, â35% of your credit score is based on how you pay your bills (making this the biggest determining factor for your score)! Are you often late of missing payments? The impact of just one 90-day late payment goes way beyond the three months you took to pay, so set up automatic bill payments.â
3. Lower your debt-to-credit ratio:Â This is how much debt you have as a proportion of your overall credit limits. 30% of your credit score is based on the amount of money you owe versus the amount of credit available to you. The higher the amount of credit youâre utilizing, the more negative the impact on your score. Keep the debt level as low as possible (30% of your limits, or less).
4. Pay down your debt faster:Â Make more than the minimum payments wherever possible by utilizing the snowball method or targeting the balance with the highest interest rate to pay down first.
photo credit: natloans via photopin cc
Alongside these tips, itâs super important to remember that improving your credit score wonât happen overnight. The length of time it takes for your score to improve is directly related to reasons for the drop. It can take anywhere from a few months to several years for your credit report to reflect the positive changes youâre making. As Mary Beth notes, âThe most important thing is to be proactive in clearing up any issues.â In addition, two of the criteria factored into your score are the length of your overall credit history and the average age of your accounts.
So, donât be discouragedâbe patient and give it time.
And, Finally, Some Tips on What Not to Do!
There are always two sides to every coin so, while youâre following the tips above, make sure that youâre not unwittingly hurting your score and negating your good work.
Be mindful of the following ways that you could be hurting your credit score:
1. Opening too many new accounts:Â This comes back to the point that the average age of your accounts is a key factor. Opening lots of new accounts reduces that average.
2. Closing too many old accounts:Â Older accounts indicate that you have managed payments for a long time and increase the average age of your accounts. When you close credit card accounts, this also decreases the amount of credit available to you, which can reflect negatively if you have other accounts that are still carrying high balances (it essentially increases your debt to credit ratio).
3. Signing up for lots of retail incentive programs:Â Every time you apply for credit, the company issuing the credit will request information about you from the credit bureaus. Too many of these requests can reduce your score.
4. Over-utilizing your credit. Mary Beth advises, âIf youâre depending on your credit cards to fund your daily expenses and lifestyle needs, but arenât able to pay them off in full at the end of each month, something needs to change. Start tracking your spending and get a handle on your expenses.â
In summary, start taking positive steps, be aware of actions that can hurt your credit, and focus on building solid financial foundations for the future.
This post was written by Erika Torres of GoGirl Finance. GoGirl Finance is a fast-growing community of women seeking and providing financial wisdom across money management, lifestyle, family and career. For more finance tips, follow GoGirl Finance on Twitter @GoGirlFinance
The post Spouse Has Bad Credit? How It Affects You. appeared first on MintLife Blog.
How much does college cost? This is a question many wonder. There’s rarely a week that goes by where I don’t receive an email from a student or parents of a student who are looking for ways to cut college costs. That’s why today I want to talk about college costs and how you can create a college budget that works so that you can save money in college.
College is very expensive – there is no doubt about that.
However, I want you to know that it IS possible to get a valuable college degree on a budget!
The average public university is over $20,000 per year and the average private university totals over $45,000 once you account for tuition, room and board, fees, textbooks, living expenses and more.
Even with how expensive college can possibly be, there are many ways to cut college expenses and create a college budget so that you can control rising college costs.
Continue reading below to read about the many different ways I cut college costs. While I was not perfect and still racked up student loan debt, I did earn three college degrees on a reasonable budget.
Related articles:
How I Graduated From College In 2.5 Years With 2 Degrees AND Saved $37,500
How I Paid Off $38,000 In Student Loan Debt In 7 Months
The Benefits of Paying Off Student Loan Debt Early
Should I Ruin My Retirement By Helping My Child Through College?
How To Save Money – My Best Money Saving Tips
1. Take classes at a community college to cut college costs.
Whether you are in college already or you haven’t started yet, taking classes at a community college can be a great way to save money.
Earning credits at a community college usually costs just a small fraction of what it would cost at a 4-year college, so you may find yourself being able to save thousands of dollars each semester.
There is a myth out there that your degree is worth less if you go to a community college. That is NOT TRUE at all. When you finally earn your 4-year degree, your degree will only say where you graduated from and it won’t even mention the community college credits at all. So this myth makes no sense because your degree looks the exact same as everyone else’s’ who you went to college with. You might as well save money because it won’t make much of a difference.
I only took classes at a community college during one summer semester where I earned 12 credits, and I still regret not taking more. I probably could have saved around $20,000 by taking more classes at my local community college.
Also, you are most likely just taking general credits at the community college, so it’s not like you would be missing much by taking classes there instead of a college that has a better reputation for the major you are seeking.
If you do decide to go to a community college, always make sure that the 4-year college you plan on attending afterwards will transfer all of the credits. It’s an easy step to take so do not forget! You should do this before you sign up and pay for any classes as well as to make sure that ALL of the classes will transfer succesfully.
2. Take advantage of high school classes to lower your college budget.
Many high schools allow you to take college classes to earn both college and high school credits at the same time.
This is something I highly recommend you look into if you are still in high school, as it saves time and is one of the best ways to save money on college costs.
When I was in my senior year in high school, nearly all of my classes were dual enrollment courses where I was earning college and high school credit at the same time. I took AP classes and classes that earned me direct college credit from nearby private universities. I left high school with around 14-18 credit hours (I can’t remember the exact amount). This way I knocked out a whole semester of college. I could’ve taken more, but I decided to take early release from high school and worked 30-40 hours a week as well.
3. Take all the credits you can to stay within your college budget.
At many universities, you pay a flat fee. So whether you take 12 credit hours or 18 credit hours, you are paying nearly the exact same price.
For this reason, I always recommend that a student take as many classes as they can if they are going to a college that charges a flat fee tuition.
If you think you can still earn good grades and do whatever else you do on the side, definitely get full use of the college tuition you are paying for!
4. Apply for scholarships to lower your college costs.
Before you start your semester, you should always look into scholarships, grants, FAFSA, and more. You usually have to turn in any paperwork around spring time for the following semester, so I highly recommend doing this right now if you are going to college in the fall.
Another myth will be busted right now. Many believe that all scholarships are impossible to have or it means you have to win a contest. That is just a myth.
I received around $16,000 a year in scholarships to the private university I attended. That helped pay for a majority of my college tuition. The scholarships were easy for me to get as they were all just because I earned good grades in high school and scored well on tests. I received scholarships to all of the other colleges I applied for as well just for good grades, so I know they can be found as long as you do well in high school!
There are other ways to find scholarships as well. You can receive scholarships from private organizations, companies in your town, and more. Do a simple Google search and I am sure you will find many free websites that list out possible scholarships for you to apply to.
Tip: Many forget that you usually have to turn in a separate financial aid form directly to your college. Don’t forget to do this by the deadline each year!
5. Search for cheaper textbooks to lower your college budget.
Students usually spend anywhere from around $300 to $1,000 on textbooks each semester, depending on the amount of classes they are taking and their major.
For me, many of my classes required more than one book and each book was usually around $200 brand new. This means if I were to buy all of my college textbooks brand new, I probably would have had to spend over $1,000 each semester.
I saved a decent amount of money on college textbooks by renting them and finding them used. Renting them was nice because I just had to pay one fee and didn’t ever have to worry about what to do with the textbook after the class was done, as I only had to return them. There was no worrying about the book being worthless if a new edition came out, which was nice! Buying books used was nice occasionally as well just because sometimes I could make my money back.
I recommend Campus Book Rentals if you are looking for textbook rentals. Their rentals are affordable and they make getting the textbooks you need easy.
Read: How To Save Money On Textbooks + Campus Book Rentals Review
6. Skip the high price of living on campus to cut your college budget.
To save more money, I decided to live on my own. I didn’t have the option of living at home after high school and living on campus would have cost me a ton of money.
Instead, I found a very cheap rental house (the house was VERY small and probably could have been considered a tiny home) and was able to somewhat easily commute to work and college from it. I probably saved around $500 a month by living on my own instead of on campus, and I learned a lot by living on my own at a young age as well.
If you can live at home though and want to save money, I highly recommend it if it’s an option for you. You can save thousands of dollars a semester by doing this!
I understand that some are against this because it may impact your “college experience,” but I think most people would be fine not living on campus, especially if it’s not in the budget. You could probably save around $40,000 over the years on your degree by living at home.
How did you cut college costs and control your college budget? How much student loan debt did you have when you graduated?
The post 6 Ways I Saved Money On College Costs appeared first on Making Sense Of Cents.
How far you live from work, school and other places you frequent can cost you time, money and health. The U.S. Census says that the average commute takes Americans 27.6 minutes each way. Thatâs more than 240 hours annually, if you commute twice every workday in 2021. And now that many people have cut back their commutes by working from home during the COVID-19 pandemic, you might be thinking about how to save money by carpooling or biking, or you might consider moving to shorten the commuter distance. In either case, SmartAsset examined the largest cities in America to uncover the worst commutes in 2021. Find out how your commute measures up against them.
We compared data from the 100 largest U.S. cities and ranked the worst commutes by six key metrics: commuters as a percentage of workers, average travel time to work, five-year change in average travel time, percentage of workers with a commute of more than 60 minutes, five-year change in percentage of workers with a commute of over 60 minutes, and transportation as a percentage of income. For details on our data sources and how we put all the information together to create our final rankings, check out the Data and Methodology below.
This is SmartAssetâs second study on the worst commutes in America. Check out the 2020 version here.
Key Findings
California leads the country as the state with the worst commutes. Eight out of the 11 cities on this list are located in the Golden State, averaging 33.6 minutes in travel time to work. Commuters in those cities need twice as long as those with the shortest commute â in Lubbock, Texas, which averages a little more than 16 minutes on a trip to work.
The overwhelming majority of workers in America are commuters. On average, 94.3% of workers in the 100 largest U.S. cities are commuters, based on the most recently available Census data from 2019. Scottsdale, Arizona has the smallest percentage of commuters, but it still has 82.1% of its workers traveling to their jobs. Newark, New Jersey has the highest percentage, with 98% of workers averaging almost 35 minutes commuting.
The Midwest still offers better commutes. Cities in Northeastern, Southern and Western states tend to rank in the worst third of the study for their less-than-ideal commutes. While Chicago, Illinois and Cincinnati, Ohio crack the top 35 cities with the worst commutes, all other Midwestern cities rank in the bottom half of the list for their relatively short commutes.
1. Riverside, CA
Ranked as the worst commuting city in America, Riverside, California takes the greatest toll on its workers in transit, with 18.6% of them averaging more than 60 minutes on a trip to work. And data shows that commutes are getting longer, with a 3.7% five-year increase (2014 to 2019) in workers traveling for more than one hour. Riverside commutes average 33.9 minutes each way, and this travel time has also increased 13.38% over the same five years.
2. Stockton, CA
Ranking second-worst, Stockton, California saw an increase of 18.68% in average travel time over the five-year period from 2014 to 2019. Data shows that 17.8% of workers in this Central Valley city average more than 60 minutes on their commute to work, the fifth-highest percentage for this metric across all 100 cities we studied. The average travel time for residents there is 32.4%, ranking 11th overall.
3. Hialeah, CA
Commute times in Hialeah, Florida, a Miami suburb, have spiked more than any other city in the study with a 26.81% jump between 2014 and 2019. Hialeah has also seen the biggest percentage 2014-to-2019 increase for workers commuting longer than 60 minutes, a 6.1% uptick. However, it is important to note that the cityâs percentage of commuters is relatively small: With just 91% of all workers traveling to work, this city ranks 90th out of 100 for this metric in our study.
4. Glendale, AZ
Between 2014 and 2019, the number of workers in Glendale, Arizona with commutes longer than an hour increased 5.6%. This is the second-highest uptick for this metric overall. The percentage of workers with a commute longer than 60 minutes is 12.1%, ranking 16th-highest out of 100. Data shows that with 94.9% of Glendale workers commuting, they average 31.5 minutes on each trip.
5. Los Angeles, CA
Los Angeles, California has seen a five-year (2014 to 2019) increase of 3.3% in workers commuting longer than 60 minutes, the ninth-biggest jump for this metric in the study. With 93.5% of the workforce commuting, 15.4% of Angeleno workers need more than one hour each way to their jobs, the 11th-highest percentage for this metric overall. That said, they only spend 7.91% of their income on commuting, ranking 77th out of 100 for this metric.
6. Oakland, CA
Workers in Oakland, California average 34.4 minutes on each trip to work, the seventh-longest travel time in the study. Oaklanders also rank seventh-highest for the percentage of workers with trips longer than 60 minutes, with 16% of them making treks longer than an hour to the office in 2019. However, Oakland has one of the cheapest commutes, as workers there spend only 5.45% of their income on travel to work, the fourth-lowest rate for this metric overall.
7. Fremont, CA
Fremont, California has seen a 4.3% increase in five years for workers commuting longer than 60 minutes on each trip, the fifth-highest in the study. Residents there also have the third-longest travel time, averaging 36.4 minutes on each commute, and the second-largest proportion of the workforce commuting longer than one hour, at 20.2%. Fremont workers, however, spend only 5.45% of their income on travel to work, tying for fourth-lowest for this metric.
8. San Jose, CA
Located in the heart of Silicon Valley, San Jose, California has the most affordable transportation on our list. Workers there spend only 5% of their income on travel to work. Despite those relatively low costs, San Jose still ranks as the eighth-worst commuting city on our list. Workers average 31.7 minutes on each commute, and they have seen a 14.44% increase in travel time over the five-year period from 2014 to 2019. Data also shows that San Jose has seen a 4.8% increase over that time period in commuters traveling more than one hour per trip.
9. San Francisco, CA
San Francisco, California averages 34.7 minutes on each commute, the sixth-longest travel time in the study. The Bay Area city also has one of the largest groups of workers commuting the longest, with 15.7% needing more than 60 minutes to commute one way. That said, San Francisco workers have a relatively affordable commute, as residents there spend only 5.45% of their income on travel for work. The city ties for fourth-lowest out of 100 for this metric.
10. New York, NY (tie)
New York City ties with Long Beach, California for the final spot in the 11 cities where residents have the worst commutes. The average travel time for New Yorkers is 41.7 minutes, the longest travel time in our study. New York City also has the highest percentage of workers who travel more than 60 minutes each way, at 27.2%. Despite the duration, the city ranks 16th-lowest out of 100 for transportation costs, with workers spending less than 8% of their income on commuting.
10. Long Beach, CA (tie)
Long Beach, California ties with New York as the 10th-worst U.S. city for residentsâ commutes. Residents there have seen a 2.1% increase over the five-year period from 2014 to 2019in the number of workers traveling more than one hour to work each day. Long Beach has the 12th-longest commute on our list, averaging 32 minutes for each trip. And 14.9% of the workforce is traveling for longer than 60 minutes during each trip, the 12th-largest for this metric in the study.
Data and Methodology
To find the cities with the worst commutes, we compared the 100 largest cities in the country across the following metrics:
Commuters as a percentage of workers. Data comes from the Census Bureauâs 2019 1-year American Community Survey.
Average travel time to work in 2019. Data comes from the Census Bureauâs 2019 1-year American Community Survey.
Five-year change in average travel time. Data comes from the Census Bureauâs 2019 and 2014 1-year American Community Surveys.
Percentage of workers with a commute of longer than 60 minutes. Data comes from the Census Bureauâs 2019 1-year American Community Survey.
Five-year change in percentage of workers with a commute of longer than 60 minutes. Data comes from the Census Bureauâs 2019 and 2014 1-year American Community Surveys.
Transportation as a percentage of income. Data comes from the Census Bureauâs 2019 1-year American Community Survey and the March 2020 MIT Living Wage Study.
First, we ranked each city in each metric. We then found each city average ranking, giving all metrics an equal weight except for average travel time, which received a double weight. Next, we ranked the cities based on this average, giving the city with the highest average an index score of 100 and the city with the lowest average an index score of 0.
Tips for Managing Your Money While on the Go
Locate a one-stop shop for expert financial support. Need something to do on a long commute? Think about finding a financial advisor. Finding the right financial advisor that fits your needs doesnât have to be hard. SmartAssetâs free tool matches you with financial advisors in your area in five minutes. If youâre ready to be matched with local advisors that will help you achieve your financial goals, get started now
Take a new route in your budget management. If transportation is eating up a lot of money, consider creating a budget using SmartAssetâs free budget tool.
Plan your road to retirement. Itâs never too early â or too late, for that matter â to start saving as much as you can for retirement. Get ready for your golden years by saving using a 401(k) or other workplace retirement plan.
Questions about our study? Contact press@smartasset.com.
If you have an irregular income, you know how great the good times feelâand how difficult the lean times can be. While you can’t always control when you get paid or the size of each paycheck if you’re a freelancer, contractor or work in the gig economy, you can take control of your money by creating a budget that will help you manage these financial extremes.
Antowoine Winters, a financial planner and principal at Next Steps Financial Planning, LLC, says creating a budget with a variable income can require big-picture thinking. You may need to spend time testing out different methods when you first start budgeting, but, âif done correctly, it can really empower you to control your life,” Winters says.
How do you budget on an irregular income? Consider these four strategies to help you budget with a variable income and gain financial confidence:
1. Determine your average income and expenses
If you want to start budgeting on a fluctuating income, you need to know how much money you have coming in and how much you’re spending.
Of course, that’s the basis for any budget. But it can be particularly important if you’re trying to budget on an irregular income because you may have especially high- or low-income periods. You want to start tracking as soon as possible to build up accurate data on your average income and expenses.
For example, once you have six months’ worth of income and expenses documented, you can divide the total by six to determine your average income and expenses by month.
Many financial apps and websites can help with the tracking, including ones that can connect to your online bank and credit card accounts and automatically pull in your transactions. You may even be able to pull in previous months’ or years’ worth of data, which you can use to calculate your averages.
If you’re budgeting on a fluctuating income and apps aren’t your thing, you can use a spreadsheet or even a pen and notebook to track your cash flow. However, without automated tracking, it can be difficult to consistently keep your information up to date.
2. Try a zero-sum budget
“There are several strategies you can use to budget with an irregular income, but one of the easiest ones is the zero-sum budget,” says Holly Johnson. As a full-time freelance writer, she’s been budgeting with a variable income for over seven years and is the coauthor of the book Zero Down Your Debt.
With a zero-sum budget, your income and expenses should even out so there’s nothing left over at the end of the month. The trick is to treat your savings goals as expenses. For example, your “expenses” may include saving for an emergency, vacation or homeownership.
“There are several strategies you can use to budget with an irregular income, but one of the easiest ones is the zero-sum budget.”
Johnson says if you’re budgeting on a fluctuating income, you can adopt the zero-sum budget by creating a “salary” for yourself. Consider your average monthly expenses (shameless plug for tip 1) and use that number as your baseline.
For example, if your monthly household bills, groceries, business expenses, savings goals and other necessities add up to $4,000, that’s your salary for the month. During months when you make over $4,000, put the extra money into a separate savings account. During months when you make less than $4,000, draw from that account to bring your salary up to $4,000.
“We call this fund the ‘boom and bust’ fund,” Johnson says. “By building up an adequate amount of savings, you will create a situation where you can pay yourself the salary you need each month.”
3. Separate your saving and spending money
Physically separating your savings from your everyday spending money may be especially important when you’re creating a budget on an irregular income. You may be tempted to pull funds from your savings goals during low-income months, and stashing your savings in a separate, high-yield savings account can force you to pause and think twice before dipping in.
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An easy way to put this tip into action when creating a budget with a variable income is to have all of your income deposited into one account, then disburse it into separate savings and spending accounts. “Transfer a set amount on the first of every month to a bill-paying account and a set amount to a spending account,” Winters, the financial planner, says.
“The bill pay account is used to pay for all of the regular expenses, like rent, insurance, car payments, student loans, etc.,” Winters says. These bills generally stay the same each month. The spending account can be used for your variable expenses, such as groceries and gas.
When considering your savings accounts, Winters also suggests funding a retirement account, such as an Individual Retirement Account (IRA).
If you’re budgeting on a fluctuating income as a contract worker or freelancer, you may also want to set money aside for taxes because the income and payroll taxes you’ll owe aren’t automatically taken out of your paychecks.
4. Build up your emergency fund
“The best way to weather low-income periods is to prepare with an adequate emergency fund,” freelancer Johnson says. An emergency fund is money you set aside for necessary expenses during an emergency, such as a medical issue or broken-down vehicle.
Generally, you’ll want to save up enough money to cover three to six months of your regular expenses. Once you build your fund, you can put extra savings toward other financial goals.
When you’re budgeting on a fluctuating income, having the emergency fund can help you feel more at ease knowing that you’ll be able to pay your necessary bills if the unexpected happens or when you’re stuck in a low-income period for longer than anticipated.
A budget can make living with a variable income easier
It can be challenging to budget on an irregular income, especially when you’re first starting. You might have to cut back on expenses for several months to start building up your savings and try multiple budgeting methods before finding the one that works best for you.
“Budgeting requires a mindset change regardless of which type of budget you try,” Johnson explains.
“The best way to weather low-income periods is to prepare with an adequate emergency fund.”
However, once in place, a budget on an irregular income can also help free you from worrying about the boom-and-bust cycle that many variable-income workers deal with throughout the year.
The goal is to get to the point where you can budget with a variable income and don’t have to worry about when you’ll get paid next because you set your budget based on your averages, planned ahead during the high times and have savings ready for your low times.
The post 4 Tricks for Budgeting on a Fluctuating Income appeared first on Discover Bank – Banking Topics Blog.
The job of an airline pilot has a certain glamour to it. However, unconventional working hours and plenty of time away from home can be a recipe for stress and burnout. This could be why airline and commercial pilots are compensated fairly well, earning a median annual salary of $115,670. That one number doesnât tell the whole story, though, as it varies depending on whom you fly for and where youâre based.
The Average Salary of a Pilot
According to the Bureau of Labor Statistics (BLS), the median salary of the group the BLS calls airline and commercial pilots was $115,670 per year in May 2018. The BLS also tracks the job outlook for the careers it studies, measuring how many jobs the career will add between 2016 and 2026. The BLS job outlook for Airline and Commercial Pilots is 4%, which is about as fast as the average across all careers. According to the BLS, the U.S. will add 4,400 airline and commercial pilots between 2016 and 2026.
Where Pilots Earn the Most
When it comes to tracking state- and city-level earnings data, the BLS looks at commercial pilots and âairline pilots, copilots and flight engineersâ separately. Letâs take a look at where commercial pilots earn the most.
The mean annual wage for commercial pilots is $96,530 per year. According to BLS data, the top-paying state for commercial pilots is Georgia, where commercial pilots earn a mean annual wage of $130,760. Other high-paying states for commercial pilots are Connecticut, New York, Florida and Maryland. The top-paying metro area for commercial pilots is Hilton Head Island-Bluffton-Beaufort, SC, where the annual mean wage for commercial pilots is $128,600. Other high-paying metro areas for commercial pilots are Savannah, GA; Seattle-Tacoma-Bellevue, WA; Bakersfield, CA; Fayetteville-Springdale-Rogers, AR-MO and Spartanburg, SC.
Now letâs take a look at where airline pilots, copilots, and flight engineers earn the most. The top-paying state in this field is Washington, with a mean annual wage of $237,150. Other high-paying states for this profession are Michigan, Nevada, Oregon and California. Of the metro areas for which the BLS has data, the top-paying metro area for airline pilots, copilots and flight engineers is San Francisco-Oakland-Hayward, CA, with a mean annual wage of $247,120. Other high-paying metro areas for this field are Seattle-Tacoma-Bellevue, WA; Las Vegas-Henderson-Paradise, NV; Denver-Aurora-Lakewood, CO; Tampa-St. Petersburg-Clearwater, FL and Chicago-Naperville-Elgin, IL-IN-WI.
Becoming a Pilot
Typically, itâs easier to become a commercial pilot than an airline pilot. Because of this, many airline pilots start their career as commercial pilots. To be a pilot of any kind, youâll need to have a commercial pilotâs license from the Federal Aviation Administration (FAA). To be an airline pilot, youâll need an additional document known as a Airline Transport Pilot (ATP) certificate. This is also issued by the FAA.
In terms of education, you will need a high school diploma and a commercial pilotâs license to become a commercial pilot. To become an airline pilot, you will likely need a bachelorâs degree, although it can be in any subject.
The typical path to becoming a commercial pilot is to complete an FAA-certified flight training program. These are held both at independent flight schools and through colleges and universities. Once youâve assembled enough flying hours, you can get a job as a commercial pilot.
Regional and major airlines typically require significantly more flight experience for new hires. This is another reason why many people start out as commercial pilots and then move on to working for an airline. According to the BLS, many commercial pilot jobs require a minimum of 500 flying hours, whereas entry-level airline jobs require somewhere around 1,500.
Bottom Line
Have you ever flown out of an airport and wondered what it would be like to be a pilot? With an average annual salary of $102,520, pilots earn a good living. Not just anyone can become a pilot, however. Commercial pilots must earn a commercial pilot certificate, while airline pilots, copilots and flight engineers must earn the Federal Air Transport certificate and rating for the specific aircraft type they fly. Being a pilot is also a dangerous job, so itâs not surprising that pilotsâ compensation is high.
Tips for Saving Responsibly
The median pilot salary is enough to live comfortably in most areas of the country, but itâs still important to make sure youâre saving some of that money for emergencies and retirement.
A financial advisor can be a big help in managing your money and choosing smart investments that grow your nest egg. Finding the right financial advisor that fits your needs doesnât have to be hard. SmartAssetâs free tool matches you with financial advisors in your area in 5 minutes. If youâre ready to be matched with local advisors that will help you achieve your financial goals, get started now.
The post The Ultimate List of More Than 50 Budget Categories You Must Use appeared first on Penny Pinchin' Mom.
It is no secret that you need a budget. But, it is imperative that it includes everything. Take the time to review your spending and don’t leave anything off of it. Below you will find a list of household budget categories you need to include. Forgetting even one off might be a big mistake.
It is no secret that the number one thing you must do to take control of your finances is to create a budget. Â Without one, you really can’t see where your money goes. Â Or, more importantly, you don’t get to direct your money to be spent as you would like for it to be!
While there are posts on how to create a budget, one question I get frequently is, “What categories should I include in a budget?”  When you are new to making a budget, something such as a personal budget categories list can help. I agree.
As you create yours for the first time, it is important you don’t leave off anything important. A successful budget is one that includes a line item for every way you spend your money.
If you are just learning about budgeting, you will want to check out our page — How to Budget.
There, you will learn everything you want to know about budgets and budgeting.
To help you get a jump start on with your budget, and to make sure you don’t leave off any categories, download our free budget template. Â This form has helped thousands get started with creating a budget.
SIMPLE BUDGET CATEGORIESÂ
Once you have your form, you are ready to figure out your budget categories! Â While you may not have each of these as individual line items on your form, just make sure you include them all somewhere in your budget!
DONATIONS OR CHARITY CATEGORIES
These are all of the monthly donations you make to various charities. Â Don’t forget about those you may make only once or twice a year as well!
Church
Medical Research
Youth Groups
SAVINGS CATEGORIES
While not needed to live, it is crucial that you always pay yourself before you pay anyone else. Â Once you meet your necessary expenses, ensure you are saving enough each month.
If you are in your employer’s retirement plan, you pay those before you get your paycheck, so you would not include them. However, make sure you account for the different types of savings accounts you may have.
Emergency Fund Savings
Annual Fees, such as taxes, insurance, and dues
College Savings
Investments
Christmas/Birthdays/Anniversaries
Additional Retirement (outside of your employer’s plan)
Read More: Â Yearly Savings Challenge
CATEGORIES FOR HOUSING
No one will forget to add housing to their budget. But, make sure you include the amount you may save for repairs and other expenses. To figure out how much to budget, look over your prior year spending and divide that total by 12. You will add this to your savings, but you can track it under your housing budget category.
First Mortgage
Second Mortgage (if applicable)
Property Taxes
Insurance
Home Owner’s Association Dues
Maintenance
Housekeeper/Cleaning
Lawn Care
PERSONAL BUDGET UTILITIES CATEGORIES
You can’t live without your water and electricity. It is essential that you don’t leave any of these off of your budget either! These are some of the basic budget categories most people will not intend to forget, but just might.
Electricity
Water
Gas/Oil
Sewer
Trash
Cable/Satellite/Streaming Services
Internet (if not part of your cable bill)
Phone
Read more: Â How to Lower Your Utility Bills
FOOD
You have to eat. There are only two ways that happens — you cook or you eat out. Make sure you include both of these categories in your budget.
Groceries
Dining Out
TRANSPORTATION CATEGORIES
You have to be able to get around. Â That doesn’t always mean a vehicle as it could mean using other means of transportation. Â Whatever method you use, make sure you include all of those expenses in your budget.
Remember that you may not have to pay for some of these items each month, but it is essential you budget for them monthly so that the funds are available when needed.
Vehicle payment (make sure you include all payments for all vehicles)
Fuel
Insurance
Taxes
Tags/Licensing
Maintenance
Parking Fees
Taxi/Bus Fares
CLOTHING
A line item many people leave off of their budget is clothing. They forget that it is a necessary expense.  While this doesn’t mean you should go and buy new clothes all of the time, it does allow you to replace items which are worn out.
It is also essential that parents include this item as kids need clothes a bit more frequently.
Adult Clothing
Kids Clothing
CATEGORIES FOR HEALTH
Don’t forget your health expenses when determining a budget. Â Make sure you include the money you pay towards your co-pays during the year.
Health Insurance
Dental Insurance
Eye Insurance
Doctor Visits
Dental Visits
Optometrist
Medications
Deductible Savings
PERSONAL ITEMS CATEGORIES
Personal is a “catch-all” category which may contain much of your discretionary spending! Â Some of the most common types you need to include:
Haircuts/Manicures/Pedicures
Life Insurance
Child Care/Babysitting
Toiletries (if not included in your grocery budget above)
Household Items (if you did not already include in your groceries budget above)
Education/Tuition
Dry Cleaning/Laundry
School Dues/Supplies
Magazines
Gym Memberships
Organization Dues
Postage
Pet Care (food, grooming, shots, boarding)
Photos (school and family photos)
Random Spending (always useful as a way to pay for the things you may not have broken out in your budget)
RECREATION
We all love to spend some time doing things we love. Â Don’t forget to include your entertainment category when determining your budget.
Entertainment (movies/concerts)
Crafts
Hobbies
Parties
Vacations
DEBTS
Once you pay off your debt, these will go away entirely and will no longer be needed. Â You can learn how to get out of debt and get started with that (once you have your budget).
Credit Cards (all debt)
Unsecured loans
Home equity loans
Student loans
Medical loans
Now you have the categories you need for your budget! Â Take the first step in getting control of your finances by putting this to work for you.
The post The Ultimate List of More Than 50 Budget Categories You Must Use appeared first on Penny Pinchin' Mom.
Could logging in to your computer from a deluxe treehouse off the coast of Belize be the future of work? Maybe. For many, the word freelance means flexibility, meaningful tasks and better work-life balance. Who doesn’t want to create their own hours, love what they do and work from wherever they want? Freelancing can provide all of thatâbut that freedom can vanish quickly if you don’t handle your expenses correctly.
“A lot of the time, you don’t know about these expenses until you are in the trenches,” says freelance copywriter Alyssa Goulet, “and that can wreak havoc on your financial situation.”
Nearly 57 million people in the U.S. freelanced, or were self-employed, in 2019, according to Upwork, a global freelancing platform. Freelancing is also increasingly becoming a long-term career choice, with the percentage of freelancers who freelance full-time increasing from 17 percent in 2014 to 28 percent in 2019, according to Upwork. But for all its virtues, the cost of being freelance can carry some serious sticker shock.
“There are many hats you have to wear and expenses you have to take on, but for that you’re gaining a lot of opportunity and flexibility in your life.”
Most people who freelance for the first time don’t realize that everythingâfrom taxes to office supplies to setting up retirement plansâis on them. So, before you can sustain yourself through self-employment, you need to answer a very important question: “Are you financially ready to freelance?”
What you’ll find is that budgeting as a freelancer can be entirely manageable if you plan for the following key costs. Let’s start with one of the most perplexingâtaxes:
1. Taxes: New rules when working on your own
First things first: Don’t try to be a hero. When determining how to budget as a freelancer and how to manage your taxes as a freelancer, you’ll want to consult with a financial adviser or tax professional for guidance. A tax expert can help you figure out what makes sense for your personal and business situation.
For instance, just like a regular employee, you will owe federal income taxes, as well as Social Security and Medicare taxes. When you’re employed at a regular job, you and your employer each pay half of these taxes from your income, according to the IRS. But when you’re self-employed (earning more than $400 a year in net income), you’re expected to file and pay these expenses yourself, the IRS says. And if you think you will owe more than $1,000 in taxes for a given year, you may need to file estimated quarterly taxes, the IRS also says.
That can feel like a heavy hit when you’re not used to planning for these costs. “If you’ve been on a salary, you don’t think about taxes really. You think about the take-home pay. With freelance, everything is take-home pay,” says Susan Lee, CFP®, tax preparer and founder of FreelanceTaxation.com.
When you’re starting to budget as a freelancer and determining how often you will need to file, Lee recommends doing a “dummy return,” which is an estimation of your self-employment income and expenses for the year. You can come up with this number by looking at past assignments, industry standards and future projections for your work, which freelancer Goulet finds valuable.
“Since I don’t have a salary or a fixed number of hours worked per month, I determine the tax bracket I’m most likely to fall into by taking my projected monthly income and multiplying it by 12,” Goulet says. “If I experience a big income jump because of a new contract, I redo that calculation.”
After you estimate your income, learning how to budget as a freelancer means working to determine how much to set aside for your tax payments. Lee, for example, recommends saving about 25 percent of your income for paying your income tax and self-employment tax (which funds your Medicare and Social Security). But once you subtract your business expenses from your freelance income, you may not have to pay that entire amount, according to Lee. Deductible expenses can include the mileage you use to get from one appointment to another, office supplies and maintenance and fees for a coworking space, according to Lee. The income left over will be your taxable income.
Pro Tip:
To set aside the taxes you will need to pay, adjust your estimates often and always round up. “Let’s say in one month a freelancer determines she would owe $1,400 in tax. I’d put away $1,500,” Goulet says.
2. Business expenses: Get a handle on two big areas
The truth is, the cost of being freelance varies from person to person. Some freelancers are happy to work from their kitchen tables, while others need a dedicated workspace. Your freelance costs also change as you add new tools to your business arsenal. Here are two categories you’ll always need to account for when budgeting as a freelancer:
Your workspace
Joining a coworking space gets you out of the house and allows you to establish the camaraderie you may miss when you work alone. When you’re calculating the cost of being freelance, note that coworking spaces may charge membership dues ranging from $20 for a day pass to hundreds of dollars a month for a dedicated desk or private office. While coworking spaces are all the rage, you can still rent a traditional office for several hundred dollars a month or more, but this fee usually doesn’t include community aspects or other membership perks.
If you want to avoid office rent or dues as costs of being freelance but don’t want the kitchen table to pull double-duty as your workspace, you might convert another room in your home into an office. But you’ll still need to outfit the space with all of your work essentials. Freelance copywriter and content strategist Amy Hardison retrofitted part of her house into a simple office. “I got a standing desk, a keyboard, one of those adjustable stands for my computer and a squishy mat to stand on so my feet don’t hurt,” Hardison says.
Pro Tip:
Start with the absolute necessities. When Hardison first launched her freelance career, she purchased a laptop for $299. She worked out of a coworking space and used its office supplies before creating her own workspace at home.
Digital tools
There are a range of digital tools, including business and accounting software, that can help with the majority of your business functions. A big benefit is the time they can save you that is better spent marketing to clients or producing great work.
The software can also help you avoid financial lapses as you’re managing the costs of being freelance. Hardison’s freelance business had ramped up to a point where a manual process was costing her money, so using an invoicing software became a no-brainer. “I was sending people attached document invoices for a while and keeping track of them in a spreadsheet,” Hardison says. “And then I lost a few of them and I just thought, ‘Oh, my God, I can’t be losing things. This is my income!’”
Digital business and software tools can help manage scheduling, web hosting, accounting, audio/video conference and other functions. When you’re determining how to budget as a freelancer, note that the costs for these services depend largely on your needs. For instance, several invoicing platforms offer options for as low as $9 per month, though the cost increases the more clients you add to your account. Accounting services also scale up based on the features you want and how many clients you’re tracking, but you can find reputable platforms for as little as $5 a month.
Pro Tip:
When you sign up for a service, start with the “freemium” version, in which the first tier of service is always free, Hardison says. Once you have enough clients to warrant the expense, upgrade to the paid level with the lowest cost. Gradually adding services will keep your expenses proportionate to your income.
3. Health insurance: Harnessing an inevitable cost
Budgeting for healthcare costs can be one of the biggest hurdles to self-employment and successfully learning how to budget as a freelancer. In the first half of the 2020 open enrollment period, the average monthly premium under the Affordable Care Act (ACA) for those who do not receive federal subsidiesâor a reduced premium based on incomeâwas $456 for individuals and $1,134 for families, according to eHealth, a private online marketplace for health insurance.
“Buying insurance is really protecting against that catastrophic event that is not likely to happen. But if it does, it could throw everything else in your plan into a complete tailspin,” says Stephen Gunter, CFP®, at Bridgeworth Financial.
A good place to start when budgeting as a freelancer is knowing what healthcare costs you should budget for. Your premiumâwhich is how much you pay each month to have your insuranceâis a key cost. Note that the plans with the lowest premiums aren’t always the most affordable. For instance, if you choose a high-deductible policy you may pay less in premiums, but if you have a claim, you may pay more at the time you or your covered family member’s health situation arises.
When you are budgeting as a freelancer, the ACA healthcare marketplace is one place to look for a plan. Here are a few other options:
Spouse or domestic partner’s plan: If your spouse or domestic partner has health insurance through his/her employer, you may be able to get coverage under their plan.
COBRA: If you recently left your full-time job for self-employment, you may be able to convert your employer’s group plan into an individual COBRA plan. Note that this type of plan comes with a high expense and coverage limit of 18 months.
Organizations for freelancers: Search online for organizations that promote the interests of independent workers. Depending on your specific situation, you may find options for health insurance plans that fit your needs.
Pro Tip:
Speak with an insurance adviser who can help you figure out which plans are best for your health needs and your budget. An adviser may be willing to do a free consultation, allowing you to gather important information before making a financial commitment.
4. Retirement savings: Learn to “set it and forget it”
Part of learning how to budget as a freelancer is thinking long term, which includes saving for retirement. That may seem daunting when you’re wrangling new business expenses, but Gunter says saving for the future is a big part of budgeting as a freelancer.
“It’s kind of the miracle of compound interest. The sooner we can get it invested, the sooner we can get it saving,” Gunter says.
He suggests going into autopilot and setting aside whatever you would have contributed to an employer’s 401(k) plan. One way to do this might be setting up an automatic transfer to your savings or retirement account. “So, if you would have put in 3 percent [of your income] each month, commit to saving that 3 percent on your own,” Gunter says. The Discover IRA Certificate of Deposit (IRA CD) could be a good fit for helping you enjoy guaranteed returns in retirement by contributing after-tax (Roth IRA CD) or pre-tax (traditional IRA CD) dollars from your income now.
Pro Tip:
Prioritize retirement savings every month, not just when you feel flush. “Saying, ‘I’ll save whatever is left over’ isn’t a savings plan, because whatever is left over at the end of the month is usually zero,” Gunter says.
5. Continually update your rates
One of the best things you can do for yourself in learning how to budget as a freelancer is build your costs into what you charge. “As I’ve discovered more business expenses, I definitely take those into account as I’m determining what my rates are,” Goulet says. She notes that freelancers sometimes feel guilty for building business costs into their rates, especially when they’re worried about the fees they charge to begin with. But working the costs of being freelance into your rates is essential to building a thriving freelance career. You should annually evaluate the rates you charge.
Because your expenses will change over time, it’s wise to do quarterly and yearly check-ins to assess your income and costs and see if there are processes you can automate to save time and money.
“A lot of the time, you don’t know about these expenses until you are in the trenches, and that can wreak havoc on your financial situation.”
Have confidence in your freelance career
Accounting for the various costs of being freelance makes for a more successful and sustainable freelance career. It also helps ensure that those who are self-employed achieve financial stability in their personal lives and their businesses.
“There are many hats you have to wear and expenses you have to take on,” Goulet says. “But for that, you’re gaining a lot of opportunity and flexibility in your life.”
The post Everything You Need to Know About Budgeting As a Freelancer appeared first on Discover Bank – Banking Topics Blog.
How much does college cost? This is a question many wonder. There’s rarely a week that goes by where I don’t receive an email from a student or parents of a student who are looking for ways to cut college costs. That’s why today I want to talk about college costs and how you can create a college budget that works so that you can save money in college.
