Americans’ Top 7 Retirement Priorities for Biden and Congress

President Joseph Biden
Christos S / Shutterstock.com

With a new president and Congress sworn in, many Americans are wondering what’s next — and how policies of the new administration will impact them.

When it comes to retirement, Americans have a few priorities they’d like to see policymakers address.

The 20th Annual Transamerica Retirement Survey of Workers asked about retirement financial security issues to determine which issues workers consider their highest priorities for the new president and Congress. These topped the list.

7. Increase access to affordable housing

anek.soowannaphoom / Shutterstock.com

Workers who think this should be a priority: 34%

The U.S. is facing a housing affordability crisis, according to a Harvard study sponsored by Habitat for Humanity. The study found that more than 37 million households were “housing cost-burdened” — meaning they spent more than 30% of their income on housing.

More than 17 million were “severely cost-burdened” — spending more than half their income on housing. Finding affordable housing in retirement is an important part of survival.

6. Add financial literacy to school curriculums

Monkey Business Images / Shutterstock.com

Workers who think this should be a priority: 34%

Workers believe that educating Americans early about personal finance issues could help them make better decisions later in life. In fact, a survey from the National Foundation for Credit Counseling (NFCC) reports that 78% of U.S. adults believe they could benefit from financial advice from a professional.

The National Endowment for Financial Education (NEFE) asserts that financial literacy education can help improve Americans’ financial outcomes, and that might be one way for future generations to improve their retirement prospects.

5. Increase access to workplace retirement plans

Myvisuals / Shutterstock.com

Workers who think this should be a priority: 36%

According to a brief prepared by the Congressional Research Service, 71% of workers have access to a retirement plan, but there’s only 55% participation. Among those who do participate, those with lower incomes get a smaller practical tax benefit than those with higher incomes.

Biden proposes “equalizing” the tax benefits of participation, as well as increasing tax benefits to small businesses that offer retirement plans. On top of that, Biden’s proposals include an “automatic 401(k)” for those without access to workplace retirement plans.

4. Make long-term care more affordable

Nursing Home
Photographee.eu / Shutterstock.com

Workers who think this should be a priority: 37%

Depending on the type of long-term care you need, it can cost more than $7,000 per month for a private room in a nursing home, according to the U.S. Department of Health and Human Services. Medicare doesn’t cover long-term care costs, making it difficult for retirees to pay for such care.

As a result, the respondents to the Transamerica survey are interested in having Biden and Congress innovate solutions to make long-term care services more affordable for more people.

3. Address Medicare funding shortfalls

Doctor examining a senior patient
didesign021 / Shutterstock.com

Workers who think this should be a priority: 42%

Medicare premiums and out-of-pocket costs can stress seniors’ finances big time. However, future costs to retirees could be even greater, as Medicare’s finances continue to deteriorate. According to the Social Security Administration, Medicare faces long-term financing shortfalls. With this in mind, respondents to the Transamerica survey are interested in shoring up Medicare funding.

One of Biden’s proposals, lowering the eligible age for Medicare, faces a tough battle in Congress, according to CNBC. While such a move would expand access to health care for those 60 and older, it might not address the funding shortfall.

2. Make health care more affordable

Woman with surprise medical bill
Antonio Guillem / Shutterstock.com

Workers who think this should be a priority: 47%

Health care costs continue to rise, with the Centers for Medicare and Medicaid Services reporting that private health insurance spending grew 3.7% in 2019. On top of that, out-of-pocket spending on health care grew 4.6% in 2019. With national health expenditures projected to grow at a healthy clip, it’s not a surprise that the Transamerica respondents are concerned about affordable health care.

So far, Biden has directed the insurance exchanges created by the Affordable Care Act to be open for a special enrollment period for three months (through May 15). The Kaiser Family Foundation estimates that, through the exchanges, as many as 4 million people could get a plan at no cost to them and an additional 4.9 million could get reduced-cost plans. Biden has promised to protect and build on the Affordable Care Act in an effort to reduce Americans’ health care costs.

1. Address Social Security funding shortfalls

Social Security payments
Steve Heap / Shutterstock.com

Workers who think this should be a priority: 49%

The top priority for American workers is addressing the stability of the Social Security system, according to the Transamerica survey. Respondents want Social Security benefits to be available in the future, and concerns about funding issues continue to weigh on the program.

When it comes to addressing a projected shortfall, Biden has proposed raising payroll taxes for those with more than $400,000 in earnings. In 2021, payroll taxes are limited to only a worker’s first $142,800 in earnings. Biden’s proposal would levy new payroll taxes on earnings above $400,000.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

Americans’ Top 7 Retirement Priorities for Biden and Congress

President Joseph Biden
Christos S / Shutterstock.com

With a new president and Congress sworn in, many Americans are wondering what’s next — and how policies of the new administration will impact them.

When it comes to retirement, Americans have a few priorities they’d like to see policymakers address.

The 20th Annual Transamerica Retirement Survey of Workers asked about retirement financial security issues to determine which issues workers consider their highest priorities for the new president and Congress. These topped the list.

7. Increase access to affordable housing

anek.soowannaphoom / Shutterstock.com

Workers who think this should be a priority: 34%

The U.S. is facing a housing affordability crisis, according to a Harvard study sponsored by Habitat for Humanity. The study found that more than 37 million households were “housing cost-burdened” — meaning they spent more than 30% of their income on housing.

More than 17 million were “severely cost-burdened” — spending more than half their income on housing. Finding affordable housing in retirement is an important part of survival.

6. Add financial literacy to school curriculums

Monkey Business Images / Shutterstock.com

Workers who think this should be a priority: 34%

Workers believe that educating Americans early about personal finance issues could help them make better decisions later in life. In fact, a survey from the National Foundation for Credit Counseling (NFCC) reports that 78% of U.S. adults believe they could benefit from financial advice from a professional.

The National Endowment for Financial Education (NEFE) asserts that financial literacy education can help improve Americans’ financial outcomes, and that might be one way for future generations to improve their retirement prospects.

5. Increase access to workplace retirement plans

Myvisuals / Shutterstock.com

Workers who think this should be a priority: 36%

According to a brief prepared by the Congressional Research Service, 71% of workers have access to a retirement plan, but there’s only 55% participation. Among those who do participate, those with lower incomes get a smaller practical tax benefit than those with higher incomes.

Biden proposes “equalizing” the tax benefits of participation, as well as increasing tax benefits to small businesses that offer retirement plans. On top of that, Biden’s proposals include an “automatic 401(k)” for those without access to workplace retirement plans.

4. Make long-term care more affordable

Nursing Home
Photographee.eu / Shutterstock.com

Workers who think this should be a priority: 37%

Depending on the type of long-term care you need, it can cost more than $7,000 per month for a private room in a nursing home, according to the U.S. Department of Health and Human Services. Medicare doesn’t cover long-term care costs, making it difficult for retirees to pay for such care.

As a result, the respondents to the Transamerica survey are interested in having Biden and Congress innovate solutions to make long-term care services more affordable for more people.

3. Address Medicare funding shortfalls

Doctor examining a senior patient
didesign021 / Shutterstock.com

Workers who think this should be a priority: 42%

Medicare premiums and out-of-pocket costs can stress seniors’ finances big time. However, future costs to retirees could be even greater, as Medicare’s finances continue to deteriorate. According to the Social Security Administration, Medicare faces long-term financing shortfalls. With this in mind, respondents to the Transamerica survey are interested in shoring up Medicare funding.

One of Biden’s proposals, lowering the eligible age for Medicare, faces a tough battle in Congress, according to CNBC. While such a move would expand access to health care for those 60 and older, it might not address the funding shortfall.

2. Make health care more affordable

Woman with surprise medical bill
Antonio Guillem / Shutterstock.com

Workers who think this should be a priority: 47%

Health care costs continue to rise, with the Centers for Medicare and Medicaid Services reporting that private health insurance spending grew 3.7% in 2019. On top of that, out-of-pocket spending on health care grew 4.6% in 2019. With national health expenditures projected to grow at a healthy clip, it’s not a surprise that the Transamerica respondents are concerned about affordable health care.

So far, Biden has directed the insurance exchanges created by the Affordable Care Act to be open for a special enrollment period for three months (through May 15). The Kaiser Family Foundation estimates that, through the exchanges, as many as 4 million people could get a plan at no cost to them and an additional 4.9 million could get reduced-cost plans. Biden has promised to protect and build on the Affordable Care Act in an effort to reduce Americans’ health care costs.

1. Address Social Security funding shortfalls

Social Security payments
Steve Heap / Shutterstock.com

Workers who think this should be a priority: 49%

The top priority for American workers is addressing the stability of the Social Security system, according to the Transamerica survey. Respondents want Social Security benefits to be available in the future, and concerns about funding issues continue to weigh on the program.

When it comes to addressing a projected shortfall, Biden has proposed raising payroll taxes for those with more than $400,000 in earnings. In 2021, payroll taxes are limited to only a worker’s first $142,800 in earnings. Biden’s proposal would levy new payroll taxes on earnings above $400,000.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

Northwestern Mutual Expands New York City Presence

MILWAUKEE, Feb. 17, 2021 /PRNewswire/ — Northwestern Mutual, a financial security company focused on comprehensive financial planning through both insurance and investments, is announcing the opening of two new offices within the New York City area in Harlem and Cedarhurst.

Northwestern Mutual. (PRNewsFoto/Northwestern Mutual)

“This exciting expansion is an opportunity to deliver financial planning solutions to historically underserved communities,” said Tim Gerend, chief distribution officer, Northwestern Mutual. “We’re looking forward to developing deep community relationships in both Harlem and Cedarhurst – providing meaningful financial guidance to clients and offering rewarding career opportunities to current and future advisors.”

Financial Advisor Anthony Williams will oversee the Harlem office, comprised of several financial professionals who grew up in the neighborhood or nearby in the Bronx. The group plans to draw on their understanding of area residents to identify opportunities for financial education and support for businesses owned by Black, Latinx and other historically underrepresented groups. As the team works to grow its presence in the area, they will focus recruiting efforts locally and within Historically Black Colleges and Universities.

Financial Advisor Moshe Alpert will lead the Cedarhurst office in the predominately Orthodox Jewish community of Five Towns Long Island.

Williams and Alpert will work in close partnership with Managing Partner Steve Abbass, who collaborated with Northwestern Mutual’s new Distribution Growth Ventures group to identify the opportunities in Harlem and Cedarhurst. Northwestern Mutual Distribution Growth Ventures is focused on underpenetrated market expansion, competitive recruitment and other innovation within the company’s distribution system.

About Northwestern Mutual
Northwestern Mutual has been helping people and businesses achieve financial security for more than 160 years. Through a holistic planning approach, Northwestern Mutual combines the expertise of its financial professionals with a personalized digital experience and industry-leading products to help its clients plan for what’s most important. With $290.3 billion in total assets, $29.9 billion in revenues, and $1.9 trillion worth of life insurance protection in force, Northwestern Mutual delivers financial security to more than 4.6 million people with life, disability income and long-term care insurance, annuities, and brokerage and advisory services. The company manages more than $161 billion of investments owned by its clients and held or managed through its wealth management and investment services businesses. Northwestern Mutual ranks 102 on the 2020 FORTUNE 500 and is recognized by FORTUNE® as one of the “World’s Most Admired” life insurance companies in 2021.

Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM)(life and disability insurance, annuities, and life insurance with long-term care benefits) and its subsidiaries in Milwaukee, WI. Subsidiaries include Northwestern Mutual Investment Services, LLC (investment brokerage services), broker-dealer, registered investment adviser, member FINRA and SIPC; the Northwestern Mutual Wealth Management Company® (investment advisory and trust services), a federal savings bank; and Northwestern Long Term Care Insurance Company.

SOURCE Northwestern Mutual

For further information: William Polk, 1-800-323-7033, mediarelations@northwesternmutual.com

Source: news.northwesternmutual.com

Credit report vs credit score: what’s the difference? – Lexington Law

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

When learning about your credit history, you’ll find it’s usually based on two factors: your credit score, which is a number between 300 and 850 used to grade your creditworthiness, and your credit report, which is a documentation of all the factors that make up your credit score. Learning to check and manage both your credit score and your credit report are important parts of maintaining your overall financial health.

chart comparing credit scores vs credit reports

What is a credit score?

Your credit score is a number between 300 and 850 that is used by lenders to grade your creditworthiness, or how good of a candidate you are for an extension of credit (i.e. a loan or credit card).

There are many different scoring models, but the one used most commonly to make credit decisions is the FICO® score. It offers a variety of specialized scores for credit cards, home loans and more. Another relatively common score issuer is VantageScore.

Credit scores are updated monthly and determined based on a variety of factors to predict how likely you are to be a responsible borrower, such as:

  • Your history of late and on-time payments
  • How long you’ve had your credit accounts
  • How much debt you have overall
  • The diversity of your credit accounts (across credit cards, mortgages, student loans, etc.)
  • How much money you owe compared to your credit limits
  • What percentage of your credit limit you’re currently using
  • How many new credit cards or loans you’ve applied for recently

All of these things weigh into one personal three-digit number. While scoring models vary, overall, anything above 800 is considered exceptional, the 740–799 range is considered very good and 670–739 is considered good. Any score below 670 could stand to be improved, and scores below 580 are considered very poor and will severely limit a person’s creditworthiness.

What is a credit report?

Your credit report is a documentation of all the historical factors that are used to calculate your credit score, but it doesn’t include the actual three-digit “grade” assigned to you each month. Credit reports list:

  • Every account you currently hold
  • All of your closed accounts
  • All hard inquiries into your credit
  • A list of both your late and on-time payments
  • A record of any accounts that needed to be sent to a collection agency

There are three credit bureaus that generate credit reports: Experian, TransUnion and Equifax. Annually, you can order one copy of your credit report for free from each bureau. It’s recommended to request these copies one at a time throughout the year and check regularly for any potential errors that could damage your credit and hurt your chances at getting a loan.

 Credit Score vs. Credit Report: What’s the Difference? A credit report shows your borrowing history; this information is then used to generate your credit score. Credit Score: Your credit score is a numerical grade of your creditworthiness at any given time. Credit Report: Your credit report may list every piece of your financial history that affects your creditworthiness.

Who uses credit scores and who uses credit reports?

When applying for a new line of credit, it’s important to know what your lender will be looking at: your credit score or credit report. Generally, here’s who will be looking at what:

  • Both credit report and credit score: Auto lenders, collection agencies, mortgage lenders
  • Only credit score: Credit card companies, landlords (occasionally)
  • Only credit report: Employers, insurers, landlords

No matter whether your lender will be looking at just your credit report or your credit score, it’s recommended to check both your score and report before applying for new credit. This way, you can examine your overall credit health and see if there are any potential issues in the way of you getting approved, or if applying for a new line of credit is a good idea at all.

Do people know the difference between a credit score and a credit report?

It’s important to be informed on what a credit score and credit report are, as well as how to monitor both and report any discrepancies. But how many people are actually getting this essential financial education?

We surveyed over 3,000 people to learn how many people know the key differences between a credit score and a credit report. Here are some key takeaways we found:

  • One in four people don’t know that there is a difference between a credit score and a credit report.
  • Less than 20 percent know how to read their credit report.
  • Seventy percent of people don’t know how long credit history remains on a credit report.

The first survey question asked whether or not there’s a difference between a credit score and a credit report.

  • In a group of over 1,000 respondents, just under 75 percent correctly answered that there is a difference between a credit score and credit report.
  • 83 percent of respondents aged 55 and older answered correctly.
  • 50 percent of respondents ages 18–24 knew the differences between a credit score and credit report.
Is there a difference between a credit score and a credit report? 1 in 4 people incorrectly believe there’s no difference between a credit score and credit report. 75% answered yes, there is a difference, while 25% answered no, there is no difference.

The second of the two survey questions quizzed participants on what is and isn’t true of a credit score or a credit report.

  • Across both surveys, just over 50 percent of respondents answered a majority of the six total choices incorrectly.
  • About 12 percent completed the quiz with one or no mistakes.
Most common credit report/score misconceptions based on survey results. Almost 70% of respondents don’t know how long late payments remain on their credit report; over a quarter believe a credit report also includes a credit score; less than 20% know how to determine if credit is good or bad using their credit report.

How do I access my credit score and credit report?

It’s recommended that you check both your credit report and credit score before applying for new credit, such as a home loan, a new credit card or a student loan. This gives you a chance to see what shape your credit is in and take steps to improve it if necessary.

You can access a free credit report from each of the three national credit bureaus (Experian, Transunion and Equifax) once every 12 months at AnnualCreditReport.com. Once you have your credit reports, carefully check them for accuracy and any factors or accounts that could be hurting your credit score.

Contrary to popular belief, checking your credit scores does not make your score go down. You can access your score each month on a number of different banking websites, including your personal credit card site. Become familiar with your score and look out for any sudden dips that might signal possible negative items.

Whether you need to brush up on the basics of credit or are curious about what differentiates credit scores and reports, taking these steps to secure your financial future is important. Knowing these key differences can help you prepare for a financially healthy future and ensure you have the knowledge and the means to buy a house, take out a student loan or any other situation where your credit is involved.


Reviewed by Kenton Arbon, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.

Kenton Arbon is an Associate Attorney in the Arizona office. Mr. Arbon was born in Bakersfield, California, and grew up in the Northwest. He earned his B.A. in Business Administration, Human Resources Management, while working as an Oregon State Trooper. His interest in the law lead him to relocate to Arizona, attend law school, and graduate from Arizona State College of Law in 2017. Since graduating from law school, Mr. Arbon has worked in multiple compliance domains including anti-money laundering, Medicare Part D, contracts, and debt negotiation. Mr. Arbon is licensed to practice law in Arizona. He is located in the Phoenix office.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

Credit report vs credit score: what’s the difference?

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

When learning about your credit history, you’ll find it’s usually based on two factors: your credit score, which is a number between 300 and 850 used to grade your creditworthiness, and your credit report, which is a documentation of all the factors that make up your credit score. Learning to check and manage both your credit score and your credit report are important parts of maintaining your overall financial health.

chart comparing credit scores vs credit reports

What is a credit score?

Your credit score is a number between 300 and 850 that is used by lenders to grade your creditworthiness, or how good of a candidate you are for an extension of credit (i.e. a loan or credit card).

There are many different scoring models, but the one used most commonly to make credit decisions is the FICO® score. It offers a variety of specialized scores for credit cards, home loans and more. Another relatively common score issuer is VantageScore.

Credit scores are updated monthly and determined based on a variety of factors to predict how likely you are to be a responsible borrower, such as:

  • Your history of late and on-time payments
  • How long you’ve had your credit accounts
  • How much debt you have overall
  • The diversity of your credit accounts (across credit cards, mortgages, student loans, etc.)
  • How much money you owe compared to your credit limits
  • What percentage of your credit limit you’re currently using
  • How many new credit cards or loans you’ve applied for recently

All of these things weigh into one personal three-digit number. While scoring models vary, overall, anything above 800 is considered exceptional, the 740–799 range is considered very good and 670–739 is considered good. Any score below 670 could stand to be improved, and scores below 580 are considered very poor and will severely limit a person’s creditworthiness.

What is a credit report?

Your credit report is a documentation of all the historical factors that are used to calculate your credit score, but it doesn’t include the actual three-digit “grade” assigned to you each month. Credit reports list:

  • Every account you currently hold
  • All of your closed accounts
  • All hard inquiries into your credit
  • A list of both your late and on-time payments
  • A record of any accounts that needed to be sent to a collection agency

There are three credit bureaus that generate credit reports: Experian, TransUnion and Equifax. Annually, you can order one copy of your credit report for free from each bureau. It’s recommended to request these copies one at a time throughout the year and check regularly for any potential errors that could damage your credit and hurt your chances at getting a loan.

 Credit Score vs. Credit Report: What’s the Difference? A credit report shows your borrowing history; this information is then used to generate your credit score. Credit Score: Your credit score is a numerical grade of your creditworthiness at any given time. Credit Report: Your credit report may list every piece of your financial history that affects your creditworthiness.

Who uses credit scores and who uses credit reports?

When applying for a new line of credit, it’s important to know what your lender will be looking at: your credit score or credit report. Generally, here’s who will be looking at what:

  • Both credit report and credit score: Auto lenders, collection agencies, mortgage lenders
  • Only credit score: Credit card companies, landlords (occasionally)
  • Only credit report: Employers, insurers, landlords

No matter whether your lender will be looking at just your credit report or your credit score, it’s recommended to check both your score and report before applying for new credit. This way, you can examine your overall credit health and see if there are any potential issues in the way of you getting approved, or if applying for a new line of credit is a good idea at all.

Do people know the difference between a credit score and a credit report?

It’s important to be informed on what a credit score and credit report are, as well as how to monitor both and report any discrepancies. But how many people are actually getting this essential financial education?

We surveyed over 3,000 people to learn how many people know the key differences between a credit score and a credit report. Here are some key takeaways we found:

  • One in four people don’t know that there is a difference between a credit score and a credit report.
  • Less than 20 percent know how to read their credit report.
  • Seventy percent of people don’t know how long credit history remains on a credit report.

The first survey question asked whether or not there’s a difference between a credit score and a credit report.

  • In a group of over 1,000 respondents, just under 75 percent correctly answered that there is a difference between a credit score and credit report.
  • 83 percent of respondents aged 55 and older answered correctly.
  • 50 percent of respondents ages 18–24 knew the differences between a credit score and credit report.
Is there a difference between a credit score and a credit report? 1 in 4 people incorrectly believe there’s no difference between a credit score and credit report. 75% answered yes, there is a difference, while 25% answered no, there is no difference.

The second of the two survey questions quizzed participants on what is and isn’t true of a credit score or a credit report.

  • Across both surveys, just over 50 percent of respondents answered a majority of the six total choices incorrectly.
  • About 12 percent completed the quiz with one or no mistakes.
Most common credit report/score misconceptions based on survey results. Almost 70% of respondents don’t know how long late payments remain on their credit report; over a quarter believe a credit report also includes a credit score; less than 20% know how to determine if credit is good or bad using their credit report.

How do I access my credit score and credit report?

It’s recommended that you check both your credit report and credit score before applying for new credit, such as a home loan, a new credit card or a student loan. This gives you a chance to see what shape your credit is in and take steps to improve it if necessary.

You can access a free credit report from each of the three national credit bureaus (Experian, Transunion and Equifax) once every 12 months at AnnualCreditReport.com. Once you have your credit reports, carefully check them for accuracy and any factors or accounts that could be hurting your credit score.

Contrary to popular belief, checking your credit scores does not make your score go down. You can access your score each month on a number of different banking websites, including your personal credit card site. Become familiar with your score and look out for any sudden dips that might signal possible negative items.

Whether you need to brush up on the basics of credit or are curious about what differentiates credit scores and reports, taking these steps to secure your financial future is important. Knowing these key differences can help you prepare for a financially healthy future and ensure you have the knowledge and the means to buy a house, take out a student loan or any other situation where your credit is involved.


Reviewed by Kenton Arbon, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.

Kenton Arbon is an Associate Attorney in the Arizona office. Mr. Arbon was born in Bakersfield, California, and grew up in the Northwest. He earned his B.A. in Business Administration, Human Resources Management, while working as an Oregon State Trooper. His interest in the law lead him to relocate to Arizona, attend law school, and graduate from Arizona State College of Law in 2017. Since graduating from law school, Mr. Arbon has worked in multiple compliance domains including anti-money laundering, Medicare Part D, contracts, and debt negotiation. Mr. Arbon is licensed to practice law in Arizona. He is located in the Phoenix office.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

How My Wife and I Lived on $2,000 Per Month for 3 Years During a Financial Hardship

Hello! Today, I have a guest post from Dave at The Dollar Blogger. Dave lost his job, and then 2 weeks later his wife was laid off. This is their story of how they got by, their sacrifices, strategies, and more.

I’ll be honest – I’m not one for excessive frugality. I wouldn’t consider myself frivolous, at least, not anymore, but my wife Mary and I were hit with a solid dose of reality when we lost all of our income over the course of two weeks in 2012. One wrong turn and a layoff two weeks later took Mary and me from making over $100,000 in a year to zero income.

In this post, I’m going to share with you this scary financial hardship that rocked our world, and how the two of us got through it successfully and back on our feet.

We also learned some life-changing lessons about money, which is excellent for anyone who suffers a sudden and total income loss.

In the end, we lived on $2,000 a month, for just over three years.

Related content:

From $100,000 to Zero in Two Weeks

In 2012, I was working as a software engineer making $75,000 a year, and Mary was making $12/hr as an intern at a local business, with a potential raise to $15/hr once hired.

This put us at roughly $100,000 a year, and boy, we were excited.

We had been scraping by for the past couple of years after moving to a new state where we hoped to start life anew.

We were so sure that life could only go up that we were meeting up for lunch daily, spending up to $100/week during the week on lunch alone. We would then spend an additional $100-$200 per weekend eating out, sometimes twice a day.

With a fully-owned townhouse, our only major expenses were HOA fees, taxes, utilities, food, and basic necessities.

But, my job was causing me undue amounts of stress, and I left it voluntarily, under the assumption that a web design business I started as a side hustle would take off. I also assumed my wife’s internship would turn into a full-time job. Both accounts didn’t happen.

Once we both lost our jobs, our income fell to zero. Mary had another year of grad school, and we didn’t want her to withdraw.

Before we could even think about creating a budget, we had to address one of the top reasons that can lead to divorce – financial problems.

The Initial Toll on Our Marriage

Now, I’m no counselor, but I have learned over the years that financial issues are one of the leading causes of divorce. In fact, according to Insider, over one-third of all people polled stated that financial problems led to their divorce.

Mary and I had and still have a strong marriage, but this financial hardship tested us. Here’s what we did before we even examined the budget.

  • Assess what to do: We sat down and talked about how we would live off zero income and how we could recover while keeping her in school. We went on a spending freeze for as many days of each month as we could. Mary and I discussed who could work where and for how much.
  • Disability Claim: I have Asperger’s Syndrome (an Autism Spectrum Disorder), however in my adult life, it hadn’t really gotten in my way as far as work. Some people with this disorder gradually get worse over time. I decided to get evaluated for such to see if I could claim a disability.
  • Could Family Help? Mary’s family offered to send us cash every month while we got back on our feet. While only so much was available, it did help us make a budget.

In the end, Mary got a temporary job at a local gas station/minimart, and I helped Mary’s father work on his business. Combined with getting a little extra money from Mary’s family, we ended up with $2,000 per month in income after living with no income for several months.

The key take-away that I got from this exercise was that in a financial hardship, it’s crucial to be on the same page with your spouse.

Had we resorted to fighting and finger-pointing, everything would only get worse.

The Tightest Budget We Ever Made

It’s always been my job in the relationship to draft updates to our household budget and finances. Mary certainly has her say and must agree to everything, but I do all the initial drafting.

I had $2,000 to closely allocate to all of our expenses, including around $8,000 in credit card debt that had wracked up before the loss and in the several months that we had zero income.

After mulling over the numbers for some time, our budget looked something like this:

Let’s break this budget down, shall we?

First of all, notice there is no line item for credit card debt.

When I wrote this budget, I was so desperate to fit everything in that I left out a key item. What ended up happening was, I used our Buffer / Margin of Error, combined with what was leftover each month from our Semi Variable Costs, to pay as much of the credit card debt as possible.

In hindsight, I would have lowered our Electric / Gas / Water bills through more strict usage. The financial hardship started in winter, and we could have cut back on electric heat by wearing several layers of clothing. With a near $250 electric bill in the winter, mostly from heat, I imagine we could have saved $50-$100 simply by wearing heavy sweaters or jackets while inside the house. This was an oversight and something one can consider if they are on an incredibly tight budget.

Mary and I have clean driving records, and at the time, she had no accidents, and I had one fender bender in the past eight years. If we had shopped around more, we could have lowered our auto insurance further, saving us more money while living on $2,000 per month. In a situation where money is incredibly tight, always contact all providers and negotiate your bills.

Negotiating Bills and Cutting Back

Here are some of the bills we negotiated from the above list:

Car insurance: We called our provider and stated our financial situation and asked if we would qualify for a lower rate after being a loyal customer for so many years. They worked with us, and we saved $25 per month. As I mentioned above, we likely could have saved more switching to another provider, which we did a few years later.

Homeowner’s Insurance: Our homeowner’s insurance wasn’t bundled with our car insurance. We moved our homeowner’s insurance to the same company that had our car insurance, which allowed us to pay only $15 per month for our policy. Also note that we lived in a townhouse, where policies are less because the HOA has a master policy that covers the outside of the home. Our original policy cost us $35 per month, so a savings of $20 a month total.

Internet/Landline: Most people don’t realize this, but you can generally talk your internet/cable/phone bill down significantly by politely telling your cable company that you are planning to take your business elsewhere if they won’t lower your rate. We used both the financial hardship and data found online that said we were paying well over the average national rate for internet to haggle with our provider. In the end, we agreed to a 24 month extended contract at the introductory rate, which was $40 per month less than what we were currently paying. I’m not one for contracts, but there were no other decent internet providers where we lived at the time, so I took it. That’s $480 per year saved for two years.

Additionally, we cut back on the following:

Utilities (Electric / Water / Gas): I mentioned above that our financial hardship started in the winter. We budgeted $300 per month for utilities, $250 of which we estimated for electricity due to electric heat. It gets incredibly cold up here in New Hampshire during the winter, and heating bills go through the roof. We were fortunate enough not to go over our limit by wearing heavier clothes. I’m sure we could have lowered our heating bill further had we worn jackets, long johns, and doubled-up our socks on the coldest of days.

Groceries: During the financial hardship, we had two cats. We include their food and litter in our grocery bill, and as you can imagine, feline family members can cost a bit to feed and keep healthy. We tackled groceries by shopping for generic brands and using coupons. We only bought what we needed to eat, versus snacks and other fun foods. This cut our estimated grocery costs from $400 to $300 per month, saving us $100 monthly.

We couldn’t save much on medical due to my disability and requiring health insurance plus doctor visits and treatment. This has always been a tough situation that is certainly not unique for those who suffer from any form of physical and/or mental illness that requires temporary or permanent treatment.

A Curve Ball Set Us Back Again – But We Didn’t Give Up

Mary had a semester left to go when we started to stabilize. We had gotten used to our $2,000 per month lifestyle, but we were still in a lot of debt, and we weren’t happy.

When she graduated with a Masters in Marketing a term later, she looked for work.

Unfortunately, we lived in an area where there weren’t many marketing jobs. This, on top with what we were already going through, was gut-wrenching.

Did we just make another mistake?

What do you do when your plans go south again and again?

You don’t give up.

Since my disability claim was for SSDI (Social Security Disability Insurance), I was legally allowed to work at a very limited capacity. I picked up a few more hours per week for my father-in-law and gained an additional couple hundred dollars per month. Mary left the gas station that was 15 miles away and started working at a private grocery store that just opened 2 miles down the road. The pay and hours were better, and by being right near us, she saved on gasoline and other car maintenance.

We were now 24 months into our three years of living at $2,000 per month.

We got savvier with our money.

We contacted our credit card company and told them we were going to start paying down our balance more aggressively. We requested an APR decrease and cited that otherwise, we would have to consider getting a balance transfer card at a different bank.

The representative transferred us to their supervisor, and the supervisor lowered our APR by 3% after we shared our situation and discussed that we had never missed or had a late payment in the over six years that we had an account with them.

A quick math note: A 3% APR change on a $5,000 credit card balance, when you’re only paying the minimum payments, can save you over $400 in interest payments over the course of paying down the card. It can save you over $1,000 in interest payments if you also pay an additional $100 per month on top of the minimum payments.

When in doubt, always contact your creditors and work with them.

We also started using apps to save money on shopping. Ibotta, for example, is an app where you can save around 8% on many grocery and retail store purchases. We took advantage of this to put as much money back in our pocket as possible.

I also started doing Swagbucks, which earned me around $3/hour, 1-2 hours per day. This didn’t add up to much, but when money is tight, and you have a credit card to pay, every dollar counts.

The Letter That Changed Everything

This next part is something that won’t happen to most people. But to contrast it with typical results, this was the resolution to the financial hardship. Every situation has a resolution – some take longer, some results are better than others, and all vary widely.

In my case, the social security administration approved my claim and back-dated payments for 2 years.

We received a lump sum for 24 months of disability payments, which left us feeling more ecstatic than I can possibly convey here, as you may imagine.

We were now approaching the 36-month mark, and my SSDI payment amount raised our income a fair share. But we weren’t out of hot water yet. We had a financial lifestyle problem to address. How could we avoid this from ever happening again?

Mary and I sat down for another meeting.

Our Next Steps and What We Learned From This Financial Hardship

We paid off our debt with the lump sum and banked the rest. But, our living expenses compared to our income was still tight.

We needed to enact serious financial change.

Here’s what we did:

We flipped our house and downsized: Our house was valued at just over twice what we paid for it, and we didn’t need all of the space. We sold our house and used the cash to buy a comfy mobile home a few towns over, replenish our emergency fund, pay off all debt, and take a budget vacation to an old favorite place that we hadn’t visited in the three-year hardship. I had considered selling the house when the hardship originally happened, but I’m glad we waited because the value increased so much as the housing market boomed over those three years.

Over the years and going forward, we track our finances monthly: From the end of the hardship in 2016 to the present, we track our finances monthly with Personal Capital, an easy-to-use app where we plugin our bank, credit card, and investment accounts. It also lets you track any other assets and liabilities as well as individual transactions on each account.

We now live greatly within our means: We learned that anything can happen with the drop of a hat. Instead of living just below our means, we live as much below our means as possible. While we aren’t extremely frugal, we are nowhere near the spend-thrifts that we used to be. We check with each other any time one of us wants to spend money. We allocate “fun” money each month and don’t exceed it unless saving across multiple month’s fun money to buy a bigger purchase.

We learned that there is so much we don’t actually need: Everywhere you go, you are told “YOU NEED THIS” – the reality is, you don’t need much of anything. You want many things, but when it comes to needs, you need food, shelter, clothing, and transportation, among other small necessities. You don’t need a fancy car. You don’t need extravagant vacations. And, you certainly don’t need to eat out all the time.

Fast forward to 2020, our income has had its ups and downs, but we have not had an issue with it. By using apps such as Personal Capital, and keeping track of our money with a budget Excel spreadsheet, we seem prepared for anything that comes our way. If you’re not good with spreadsheets, I’ve also used YNAB – You Need A Budget – which is the perfect site for tracking your money.

Wrapping It Up

It doesn’t matter if you’ve never had a financial education or if you write about money every day – financial hardships will happen. When they happen, remain calm, stay focused, and find opportunities to work your way out of them. If you’re married, get on the same page, and be an amazing team, rather than panic and turn on one another.

We got through this hardship over the course of 3-4 years. We still live on just over $2,000 per month, minus the two months each year where we travel.

Tough times happen, but staying strong, coming up with a plan, and then executing on it is your surest way to recovery.

Author Bio:Dave Bochichio is the Owner and Writer for The Dollar Blogger. When he’s not writing about personal finance, Dave enjoys spending time with his wife and two cats, and eating exotic and international foods. Dave also writes fiction, with one book published and two more on the way.

What is your monthly budget? What have you done to cut expenses?

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