Working Capital Loans

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.

According to PricewaterhouseCoopers, average revenues from 2018 to 2019 for businesses were up 10 percent, but many companies still struggled to convert those higher revenues to cash. When a business doesn’t have the cash flow to support daily or growth expenses for any reason, working capital loans might be an option. Find out more about working capital below to help you decide if this funding source is right for your company

What Is a Working Capital Loan?

Working capital loans are a type of funding that helps ensure businesses have the capital they need to continue operating during periods when it might be difficult to cover daily expenses while meeting new demands or growth. For example, if a business has tied up its cash flow in inventory for the holiday rush season, working capital funds can pay the bills—such as employee wages and rent—until holiday revenues are in.

It’s important to note that working capital isn’t meant to make investments or buy long-term assets such as equipment. If you need equipment, you may need to take out a secured loan for it. Working capital loans are meant to cover the standard operating expenses of the business such as regular debt payments, wages, rent and utilities.

Working capital loans help ensure businesses have the capital they need to continue operating during periods when it might be difficult to cover daily expenses while meeting new demands or growth.

Working Capital Financing Options

You can get working capital loans from a variety of sources. Some of the most common options are summarized below.

Short-Term Loan

What is it? You might be able to borrow money for a few months to help fund expenses until seasonal income comes in or a large invoice is paid.

Pros: It might be a good way to balance cash flow during seasonal upticks in expenses or downturns in income.

Cons: Because the terms of the loan are short, the lender may charge a relatively large fee to make money from the deal in lieu of interest paid out over a longer period of time.

Merchant Cash Advance

What is it? A cash advance offered by the bank or agency that handles your payment processes. For example, businesses that accept money through PayPal may be eligible for a Payment Working Capital loan.

Pros: These loans are typically easy to get if you have a solid history processing payments through that bank or agency. That’s because the loan isn’t based on your personal credit or the credit of your business. It’s typically based on how much average revenue you process through that payment method.

Cons: Typically, merchant cash advances are paid back as a percentage of your sales over time. That lowers your cash flow for the immediate future and can make it more difficult to budget for business expenses if you overcommit on the loan.

Bank Line of Credit

What is it? A revolving line of credit that you can draw from and pay back and then draw from again—similar to a credit card.

Pros: A line of credit is flexible and ongoing, which means it’s there when you need it, but you don’t have to draw on it if you don’t need to. It can also be a good way to balance cash flow if your revenue tends to fluctuate.

Cons: You may need decent personal or business credit to get approved for a line of credit. It can also be tempting to rely too heavily on it, temporarily masking serious financial problems until they might be too late to resolve.

SBA Loan

What is it? You can get certain types of loans through programs approved by the Small Business Administration. Some of these loans can be used for working capital.

Pros: While the terms and rates associated with SBA loans vary, they may be more favorable than those of traditional loans.

Cons: SBA loans can be easier to qualify for from a credit perspective, but they do have specific requirements, such as documentation. You may also be limited on what you can use the funds for.

Trade Credit

What is it? Trade credit occurs when you purchase goods on an account and pay for them later. Typically, if you pay within the agreed-upon period, you don’t pay interest on this debt.

Pros: Trade credit is low-cost and is generally a common business practice, which means it might be available to you from various vendors.

Cons: This isn’t a form of credit you can use to cover expenses other than goods purchased, but that might free up some cash for other uses.

Who Offers Working Capital Loans?

Working capital loans are offered by a variety of organizations. Banks, credit card companies and payment networks might all offer working capital loans. Some organizations specialize in this type of lending and work with businesses that can demonstrate a strong historic revenue to provide working capital loans or lines of credit.

Working Capital Loan Interest Rates and Fees

As with any type of lending, working capital loans do cost your business in the form of interest rates and fees. With a few exceptions, such as certain trade credit arrangements, working capital comes with varied rates and costs. If the lender makes money via interest, your own credit or the creditworthiness of the business may be used to determine how much interest is charged.

Some working capital loans don’t include interest. The lender instead charges a flat fee that is incorporated into the total amount paid back during the loan process.

Is a Working Capital Loan Right for Your Business?

As with any form of debt, working capital loans have benefits and disadvantages. Understanding the common pros and cons can help you determine whether working capital loans are a good decision for your business.

Benefits

Working capital can provide the cash influx you need at just the right time. It’s a financial tool for helping businesses cover costs during various seasons or scale up for growth. If you’re careful about how you use the credit associated with working capital loans, they may not be as expensive as some other forms of financing.

Drawbacks

Working capital loans come with some of the same drawbacks of any debt, including interest or other costs. But a bigger potential disadvantage is the temptation to lean heavily on working capital even when you know that your business is in trouble financially. Working capital is meant to be a temporary bridge, not a crutch your business can lean on permanently.

Pros and cons of working capital loans

Other Options for Increasing Your Work Capital

Working capital is a measurement of how well a company can use its current assets to pay its current liabilities. It’s an important statistic for you to be aware of as a business owner, because it indicates how financially healthy your company is. If you need to improve your working capital but don’t want to receive financing from a third party, consider these other ways to increase your working capital:

  • Cutting business expenses, including unnecessary travel or acquisitions.
  • Increasing income by hosting a sale or increasing prices if the market will support it.
  • Collecting past-due invoices.
  • Selling valuable business assets that may not be required at this time.

As you weigh your different options for working capital financing, don’t forget to stay on top of your business credit score and your personal credit score, too. To learn more about the latter, check out Lexington Law’s guide to credit.


Reviewed by Cynthia Thaxton, Lexington Law Firm Attorney. Written by Lexington Law.

Cynthia Thaxton has been with Lexington Law Firm since 2014. She attended The College of William and Mary in Williamsburg, Virginia where she graduated summa cum laude with a degree in International Relations and a minor in Arabic. Cynthia then attended law school at George Mason University School of Law, where she served as Senior Articles Editor of the George Mason Law Review and graduated cum laude. Cynthia is licensed to practice law in Utah and North Carolina.

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

Flexible spending credit card

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.

What Is a Flexible Spending Credit Card?

A flexible spending credit card is similar to a regular credit card, except you have a variable credit limit. This limit changes based on your income, credit score and payment history. It allows users to potentially go over their regular credit card limit if the purchase meets specific requirements. The card issuer will approve or deny the overspending purchases.

First, the user’s regular spending habits are analyzed, and then information such as their recent payment history and income are considered to decide if the purchase is acceptable. This is very different from a regular credit card that has a set limit. When users try to go over a standard credit card’s limit, they’re often denied the purchase and charged a fee.

A flexible spending credit card is not related to a flexible spending account (FSA) in any way, so don’t be confused about that. While the terms are similar, FSAs are saving accounts related to healthcare costs and insurance.

A flexible spending credit card has a limit that changes based on your income, credit score and payment history.

Flexible Spending Cards vs. No Preset Limit (NPSL) Cards

A “no preset limit” credit card (NPSL) has no stated limit attached to the credit card. In actuality, there is a limit, but that number is never shared with the cardholder. Only some NPSLs report the card limit to credit bureaus.

A flexible spending card does have a stated limit that the cardholder is aware of and that limit is reported to credit bureaus.

Both credit cards allow the user to go over their credit limit without penalty. Additionally, both kinds of cards carry some uncertainty with them. With a flexible spending card, you might not be certain that charges above your limit will be approved unless you’re confident you’ve been maintaining good credit card behavior. And with an NPSL, you never know your limit, so you’re uncertain when you’ll max it out.

Pros of Flexible Spending Cards

You Can Go Over Your Limit

With a typical credit card, you can’t go over your limit but you do get charged a fee for trying to do so. A flexible spending card lets you go over your limit (if you’ve been making frequent payments and maintaining a steady income). This is great for individuals who find themselves purchasing big-ticket items every couple of months. Rather than trying to get approved for a credit card limit increase, your flexible card lets you make the large payments when they occur.

Card Terms Are More Customized

How your flexible spending card works for you will depend on you. If you are responsible and both pay off your card every month and don’t consistently overspend for your income bracket, your occasional big purchases will be approved.

Conversely, if you start to be irresponsible with your flexible spending card, the issuer will stop approving purchases over your limit. That’s because the issuer studies your shopping habits, payment history and income to determine if you can afford to go over your limit.

Overall, a flexible spending credit card offers more customized card terms. Many people don’t want to go through the hassle of increasing their credit limit every time a big purchase comes up. Additionally, some people recognize that having a high credit limit might be too tempting. The flexible card option allows the credit card to be there as a contingency plan. You can go over when needed, but you don’t have to most of the time.

Cons of Flexible Spending Cards

You Need to Understand the Fine Print

Some of the fine print might take you by surprise. For example, these types of cards will analyze your situation every time you go over your limit. That means that just because you were approved to go over your limit before doesn’t guarantee it’ll happen the next time. Additionally, there may be fees and automatically modified limits you may want to watch out for.

Your Credit Score Might Be Affected

Unfortunately, there’s a strong possibility that a flexible spending card will negatively impact your credit score. This mostly stems from how your card’s limit is reported to the credit bureaus.

First, this type of card can impact your credit utilization ratio. Credit utilization accounts for almost one-third of your credit score. This ratio looks at how much credit you use versus how much is available to you. Ideally, you want to keep your credit utilization ratio at 30% or lower.

As flexible spending cards usually do not report the credit limit to credit bureaus, it can harm your credit score. That’s because it looks like you’re using a lot of credit without the bureau knowing your limit. For example, if you’re spending $2,000 on your flexible card when you have a limit of $10,000, that’s a decent credit utilization ratio at 20 percent. However, the credit bureau doesn’t know your limit, so it’s being recorded that you’re spending $2,000 without the benefit of the $8,000 buffer.

Alternatively, maybe your flexible spending card does report the limit to the credit bureau. In this case, if you spend way over your limit—even though it’s allowed by your card—the bureau will ding you for it. The bureau doesn’t distinguish between going over on a traditional credit card and a flexible credit card; it just sees someone that went over their allowed limit.

It’s essential you check your credit score once a month to stay on top of how your card impacts you. Note that a flexible spending credit card is sometimes reported in the “Other Debt” section of your credit report.

Pros and cons of flexible credit cards

Where to Get a Flexible Spending Credit Card

You can get a flexible spending credit card from most major financial institutions. However, this type of card isn’t just given out to anyone. It’s typically reserved for people with an excellent credit score and a good financial track record.

If you like a card and its terms but don’t want the flexible limit, you can sometimes decline the flexibility and request a hard credit limit. However, note that if you do this, you may not be able to reverse the decision.

If you ever notice that your credit card is suddenly listed as “flexible spending” in your account, you should immediately contact your card provider for more information. This occasionally happens, but it’s not something you just have to accept. You can ask for the card to be reverted to a hard-limit traditional credit card.

Be Smart With Your Card

No matter what kind of card you have, you should always be careful with your credit cards and how you use them. Always try to keep a low credit utilization ratio, and always pay off as much of your balance(s) as you can every month. You especially want to do this because you don’t want to accrue interest. Interest on credit cards can range anywhere between 15 and 24 percent. If you’re irresponsible with your card and miss payments, make late payments or max out your card, it can impact your credit score. And if you have a low credit score, it can affect your ability to get a mortgage, car financing, student loans and more. By being smart with your credit cards, you’re showing financial institutions that you can be trusted with money. To learn more about credit and credit repair, check out Lexington Law’s resources today.


Reviewed by Cynthia Thaxton, Lexington Law Firm Attorney. Written by Lexington Law.

Cynthia Thaxton has been with Lexington Law Firm since 2014. She attended The College of William and Mary in Williamsburg, Virginia where she graduated summa cum laude with a degree in International Relations and a minor in Arabic. Cynthia then attended law school at George Mason University School of Law, where she served as Senior Articles Editor of the George Mason Law Review and graduated cum laude. Cynthia is licensed to practice law in Utah and North Carolina.

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

12 Cheapest Small Towns in America

Small-town living has plenty of perks: light traffic, a strong sense of community and a slower pace of life. Perhaps best of all, there’s the cost of living, which typically is cheaper in small towns than in expensive big cities.

To get a better sense of what inexpensive small-town living really has to offer, we compiled a list of the 12 cheapest small towns in America, with small towns defined as places with populations of 10,000 to 50,000 people. We based our rankings on the Council for Community and Economic Research’s (C2ER) calculations of living expenses in 269 urban areas. C2ER’s expansive study tracks prices for housing, utilities, healthcare, groceries, transportation and miscellaneous goods and services (such as going to a movie theater or hair salon).

It goes without saying that you should weigh the pros and cons before you pack up and relocate to one of the 12 cheapest small towns in America. While a low cost of living is attractive, it can be offset by issues such as scarce jobs, small paychecks or a lack of things to do in the area. Plan an extended visit to ensure the small town fits your lifestyle.

The most recent Council for Community and Economic Research’s (C2ER) Cost of Living Index, published February 2021, is based on price data collected during the first three quarters of 2020. City-level data on city populations, household incomes and home values come from the U.S. Census Bureau. Unemployment rates come from the U.S. Bureau of Labor Statistics, as of April 7 for the period ended February 2021.

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Benton Harbor, Mich.

photo of lighthouse and pierphoto of lighthouse and pier
  • Cost of living: 12.6% below U.S. average
  • City population: 9,843
  • Median household income: $21,916 (U.S.: $65,712)
  • Median home value: $63,300 (U.S.: $240,500)
  • Unemployment rate: 6.0% (U.S.: 6.0%)

Benton Harbor sits by the shores of Lake Michigan about 50 miles west of Kalamazoo, which is one of the cheapest larger cities in the U.S. The small town’s biggest claim to fame is that it’s home to Whirlpool (WHR), the global manufacturer of washers, dryers, refrigerators and a range of other home appliances.

But despite being host to a Fortune 500 company, Benton Harbor is among America’s cheapest small towns, boasting a cost of living that’s more than 12% below the national average.

True, median income is roughly a third of the national level, but the unemployment rate is in line with the country as a whole. Poverty and crime are also high in Benton Harbor – factors that contribute to a median home value that’s an eye-popping 74% lower than the national median. Indeed, housing-related costs, including rents and mortgages, are 32% cheaper in Benton Harbor, according to C2ER’s Cost of Living Index.

Neighboring St. Joseph, about the same size as Benton Harbor, is a popular beach resort town with significantly higher household incomes and home values.

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Hutchinson, Kan.

Strataca salt mine Strataca salt mine
  • Cost of living: 13.4% below U.S. average
  • City population: 40,914
  • Median household income: $46,927
  • Median home value: $96,300 
  • Unemployment rate: 4.8%

Hutchinson, known as “Hutch” by the locals, is about an hour’s drive northwest from Wichita. Founded in the early 1870s as a railroad town, Hutch soon became known for its salt deposits, which were first discovered in 1887.

Today, Hutch is synonymous with the Kansas State Fair, which it hosts annually. The town is also home to the National Junior College Athletic Association (NJCAA) Basketball Tournament. Local cultural attractions include the Fox Theatre, which opened in 1931. The grand movie palace is considered to be among the finest examples of theater art deco architecture in the Midwest.

Where Hutch stands out among America’s cheapest small towns is that it boasts the lowest housing costs on this list. Indeed, they run 41.3% below the national average. Apartment rents are 43% lower than national average, while home prices come in at a 40% discount.

However, other major costs of living aren’t too far off from what the average American pays. Although prices for groceries are almost 7% lower than the national average, healthcare and miscellaneous goods & services are essentially the same as the U.S. average.

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Meridian, Miss.

photo of a courthousephoto of a courthouse
  • Cost of living: 14.1% below U.S. average
  • City population: 37,848
  • Median household income: $32,422
  • Median home value: $83,300 
  • Unemployment rate: 6.7%

Meridian was rebuilt from 1890 to 1930 after being almost totally destroyed in the Civil War. As a result, it has not one but nine registered historic districts. The Highland Park Dentzel Carousel, dating back to 1909, is one of the more whimsical ones.

Meridian’s other claim to fame is as the birthplace of Jimmie Rodgers, known as the “Father of Country Music.” Music remains a centerpiece of Meridian’s cultural scene to this day.

Today, the federal government plays an important role in its economic life, as Naval Air Station Meridian and Key Field are two of the largest employers.

Happily, the men and women in uniform, and Meridian’s civilian citizens, catch a break on expenses. The cost of living stands 14.1% below the U.S. average; what really pushes Meridian into America’s absolute cheapest small towns are its comparatively modest housing costs. Indeed, housing expenses are a third lower than what the average American pays.

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Burlington, Iowa

photo of a bridge in Iowaphoto of a bridge in Iowa
  • Cost of living: 14.3% below U.S. average
  • City population: 24,974
  • Median household income: $47,540
  • Median home value: $93,200 
  • Unemployment rate: 6.9%

Burlington sits on the Mississippi River, about 165 miles east of Des Moines. Manufacturing has long been a staple of the area economy, but a number of major employers have left over the years. Today, top employers include Great River Health System and American Ordnance, which makes ammunition for the U.S. military.

Utilities in Burlington are close to 12% more expensive than the national average and healthcare costs are essentially the same. Inexpensive housing is what makes Burlington a truly affordable small town. Housing-related costs are 35% cheaper compared to what the average American pays. Rents, on average, are almost 40% lower than the national average.

True, median incomes are 28% lower than the national figure, but then, median home values are cheaper by more than 60%.

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Ponca City, Okla.

photo of a courthouse in Ponca City, OKphoto of a courthouse in Ponca City, OK
  • Cost of living: 14.5% below U.S. average
  • City population: 24,134
  • Median household income: $44,043
  • Median home value: $96,600 
  • Unemployment rate: 5.8%

Ponca City traces its lineage back to the days of the Land Run of 1893, when pioneers decided to build a town in north-central Oklahoma near the Arkansas River and a freshwater spring. Not long after its founding, enterprising oil men successfully drilled wells in the area, and Ponca City remains an oil town to this day. The area’s largest employers include energy companies such as Schlumberger (SLB), ConocoPhillips (COP) and Phillips 66 (PSX).

Household incomes are well below the national median, but housing is a heck of a deal. The median value of a Ponca City home is just $96,600. Nationally, it’s $240,500. Indeed, total housing costs are just two-thirds of what the average American pays, according to C2ER’s Cost of Living Index. Residents also catch a break on healthcare, which is 12.4% less expensive.

Although it’s among the cheapest small towns in America, Ponca City’s low costs of living do come at a cost of their own: The town sits pretty much in the middle of Tornado Alley.

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Martinsville, Va.

photo of Martinsville Speedwayphoto of Martinsville Speedway
  • Cost of living: 15.2% below U.S. average
  • City population: 12,852
  • Median household income: $34,371
  • Median home value: $87,700 
  • Unemployment rate: 9.8%

Martinsville needs no introduction to race fans. The tiny Virginia town, an hour’s drive south of Roanoke, lays claim to the Martinsville Speedway of NASCAR fame. Racing enthusiasts laud the short track for its tight turns and intimate seating.

Beyond the track, manufacturing has always been central to the area’s economy, and although a number of firms have moved on over the past decades, factory work remains important. Major employers include Eastman Chemical (EMN), a manufacturer of plastics, and Monogram Foods.

Martinsville has a rich history dating back to colonial times, and the town boasts multiple historic districts and historic sites including the John Waddey Carter House and the Dry Bridge School.

But Martinsville also is notable as one of America’s cheapest small towns. Housing expenses are 32% below the national average. Fittingly for a racing town, gasoline is about 6% cheaper per gallon.

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Salina, Kan.

photo of downtown Salina, KSphoto of downtown Salina, KS
  • Cost of living: 16.4% below U.S. average
  • City population: 46,998
  • Median household income: $50,490
  • Median home value: $129,300 
  • Unemployment rate: 4.3%

The small town of Salina sits at the intersection of Interstates 70 and 135, about 90 miles north of Wichita and 180 miles west of Kansas City.

Manufacturing and healthcare are among the town’s most important industries. Major employers include Schwan’s Company, the maker of Tony’s frozen pizza; Great Plains Manufacturing, which serves the agricultural industry; and the Salina Regional Health Center. Salina is also home to several institutions of higher education, including the University of Kansas School of Medicine Salina Campus and Kansas State University Polytechnic Campus.

This economic mix is producing both low unemployment and low living costs. Housing expenses run two-thirds of the national average, according to C2ER. Groceries are cheaper too, running about 8% lower than the national average.

Utility bills, however, take a bit of a bite. In Salina, they’re almost 2% higher than the U.S. average.

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Statesboro, Ga.

courthouse Statesboro, GAcourthouse Statesboro, GA
  • Cost of living: 16.8% below U.S. average
  • City population: 31,495
  • Median household income: $29,203
  • Median home value: $113,600 
  • Unemployment rate: 5.8%

As home to the flagship campus of Georgia Southern University, Statesboro offers many of the benefits of college-town living but at exceedingly affordable prices. Thanks to its status as an academic hub, cultural attractions tied to the local university include a performing arts center, symphony, museum, planetarium and botanic gardens.

Another perk? The charming city of Savannah is just an hour’s drive to the southeast.

Although the university is the area’s largest employer, manufacturing jobs also play an important part in the local economy. At the same time, it should be noted that Statesboro has a high poverty rate, or 41.8% vs. 13.3% for the state of Georgia as a whole.

Statesboro’s place among America’s cheapest small towns is largely due to housing costs, which are about 32% lower compared with the national average, while healthcare runs roughly 14% below average. For example, a visit to a doctor costs about 24% less in Statesboro. Dental care is about a fifth less expensive, according to the C2ER’s Cost of Living Index.

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Tupelo, Miss.

photo of house where Elvis Presley was bornphoto of house where Elvis Presley was born
  • Cost of living: 19% below U.S. average
  • City population: 38,271
  • Median household income: $50,694
  • Median home value: $145,400 
  • Unemployment rate: 5.6%

Tupelo’s biggest claim to fame is being the birthplace of Elvis Presley. Indeed, the town, 100 miles southeast of Memphis’s Graceland, is looking forward to hosting its 23rd annual Elvis Festival in June. (Last year’s gathering was a virtual-only affair.)

Not a fan of The King? The cultural scene also includes the North Mississippi Symphony Orchestra and the Tupelo Automobile Museum. But Tupelo’s second-biggest claim to fame is arguably its super-low living costs. Electric and gas bills are about 12% lower than the national average, according to the Cost of Living Index. Housing is 34% cheaper and groceries go for 16% less.

For residents not making a living as Elvis impersonators, major employers include North Mississippi Health Services, Cooper Tire & Rubber (CTB) and BancorpSouth (BXS), which is headquartered in Tupelo.

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Richmond, Ind.

Amish man in horse and buggyAmish man in horse and buggy
  • Cost of living: 19.1% below U.S. average
  • City population: 35,539
  • Median household income: $39,724
  • Median home value: $88,400 
  • Unemployment rate: 5.1%

Few cities of any size can claim Richmond’s place in the early history of recorded jazz. Some of the first jazz records were made in this small town, featuring greats such as Hoagy Carmichael, Duke Ellington and Louis Armstrong. There’s a Walk of Fame celebrating jazz and other artists who recorded with Richmond’s Gennett Records.

While jazz will always be part of its history, today’s Richmond, which is an hour’s drive west from Dayton, Ohio, is known more for its colleges and seminaries. They include Indiana University East, the Earlham School of Religion (part of Quaker-influenced Earlham College) and the Bethany Theological Seminary.

Inexpensive housing is a key to Richmond’s place among our nation’s cheapest small towns. Residents spend 34% less on housing than the average American does. Apartment rents are about half the national average. Average home prices are 26% less. Healthcare is also a bargain. For example, a visit to the eye doctor costs about 50% less than the national average. An appointment with a physician is cheaper by a third.

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Muskogee, Okla.

museum in Muskogee, OKmuseum in Muskogee, OK
  • Cost of living: 19.2% below U.S. average
  • City population: 37,624
  • Median household income: $38,194
  • Median home value: $92,300 
  • Unemployment rate: 6.3%

Muskogee packs a lot of history, culture and colleges into a small package.

Located about 50 miles south of Tulsa, the town traces its roots back to 1817. It’s home to four institutions of higher learning, as well as the Oklahoma School for the Blind. Jim Thorpe – All-American, the 1951 film starring Burt Lancaster, was shot on the campus of what was then known as the Bacone Indian University in Muskogee. The town also boasts six museums and the Oklahoma Music Hall of Fame.

And let’s not forget what is arguably the town’s most famous appearance in popular culture – Merle Haggard’s hit song “Okie from Muskogee,” which became an emblem of Vietnam-era America. 

Today, the area’s employers include the U.S. Department of Veterans Affairs, a VA medical center and paper company Georgia-Pacific.

But what really puts Muskogee on the map is its ultra-low cost of living. The biggest break comes from housing-related expenses, which are more than 35% lower than the national average, according to C2ER’s Cost of Living Index. Transportation, groceries and healthcare are notably cheaper, too.

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Pittsburg, Kan.

Russ Hall at Pittsburg State UniversityRuss Hall at Pittsburg State University
  • Cost of living: 19.4% below U.S. average
  • City population: 20,171
  • Median household income: $34,956
  • Median home value: $88,500 
  • Unemployment rate: 4.4%

The cheapest small town in America is Pittsburg, Kan., based on the 269 urban areas analyzed by C2ER’s Cost of Living Index.

Pittsburg is about a two-hour drive due south from Kansas City on Route 69. When you get there, you’ll find a small town with a cost of living more than 19% below the national average.

Once upon a time, the town was known for its abundance of coal and the Southern and Eastern European immigrants who worked the mines. Today, the area relies more heavily on higher education, thanks to the presence of Pittsburg State University. Famous alumni of Pittsburg’s local university include actor Gary Busey and Brian Moorman, retired two-time Pro Bowl punter for the NFL’s Buffalo Bills.

Although median incomes are almost $31,000 below the national average, median home prices are a whopping $152,000 cheaper. That helps make housing costs 37.2% less expensive than what the average American pays. A myriad of other items are cheap, as well. For example, a haircut will set you back an average of $14.82 vs. $18.88 nationally. Shampoo costs 89 cents, whereas the average American pays $1.05.

Source: kiplinger.com

Gift Aid vs Self Help Aid For College

College tuition can be costly whether you are seeking an undergraduate and graduate degree, attending an out-of-state public university, or taking classes at a private university.

If you do not have adequate savings to pay for classes, room and board, food, travel and other necessities, then you may be considering how to pay for college.

The costs of attending college continue to rise each year for both public and private colleges and universities. The average tuition and fees at a public in-state college was $9,687 and at or private schools it $35,087 for the 2020-21 school year. Obtaining financial aid is one way students can afford to attend college.

One common type of financial aid is called gift aid and typically comes in the form of federal and state grants and a wide range of scholarships that are given by private donors, foundations, non-profit organizations and even the universities themselves.

These grants and scholarships do not have to be paid back, which is helpful for students who are on a tight budget or are considering obtaining a graduate degree.

Another type of aid is called self help aid and usually comes in a form of work study programs and student loans. Some work study programs are sponsored by the federal government and they provide part-time jobs for students who need help paying their tuition. These jobs can be either on the campus of the college or university or off campus nearby.

Self help aid also includes federal student loans which have to be paid back after a student graduates.

There are advantages and disadvantages of both gift aid and self help aid. Undergraduate and graduate students may only qualify for one type of aid, depending on their financial circumstances, where they are obtaining their college degree or other factors.

What Are The Pros and Cons of Gift Aid?

Grants and scholarships are considered gift aid. One common form of grants are called Pell grants. These are grants provided by the federal government and Pell grants are given to undergraduate students who have demonstrated financial need.

The maximum federal Pell grant award is $6,345 for the 2020–21 award year (July 1, 2020, to June 30, 2021), but amounts can change annually.

The main drawback of gift aid is that you may not know what amount you will receive and you may need to supplement paying for college by seeking more scholarships and grants or getting a part-time job.

Federal work study programs are available for both undergraduate and graduate students to help them pay for tuition and other educational costs. The program’s jobs are related to the student’s course of study and also include community service work.

Both full-time or part-time students may qualify for part-time employment while they are enrolled at their university or college and it is available to undergraduate and graduate and professional students who demonstrate financial aid.

The work study programs are operated by a college and university financial aid office and you will receive at least the federal minimum wage. These jobs are available both on-campus and off-campus which can be beneficial for students who do not have other means of transportation.

Students who work off campus typically work for a nonprofit organization or a public agency and the goal of the job is geared to be in the public interest. The number of jobs is limited, so students should apply early to ensure that they have a position for the following academic year.

Federal and Private Student Loans

Another type of self-help aid are federal and private student loans. Federal student loans are based upon the financial need of a student and their family. They are either subsidized or unsubsidized direct loans and may offer lower interest rates than private loans. One drawback is that the federal government will limit how much money you can borrow.

Undergraduate students may qualify for subsidized loans that are given based on their financial need. One benefit is that the federal government will pay the interest on these loans while you are attending school or at least taking classes half-time, during your grace period or when you have deferred the loan.

Both undergraduate and graduate students may qualify for unsubsidized loans and they are not based on financial need. These loans accrue interest while students are taking classes, during the loan’s grace period, or when you have deferred the loan.

Private student loans can be used to help make up the gap in what is needed to pay the remainder of tuition or living expenses. While both federal and private student loans may help students pay for their tuition; they must be repaid once a student graduates.

If you do not complete your course study and do not receive a degree, the student loans still have to be repaid.

Federal student loans have protections that private student loans do not offer. Students who have received federal student loans can seek several options after graduation to repay their loans including income-driven repayment programs.

Federal student loans also offer borrowers’ the ability to put loans in forbearance or deferment, allowing them to temporarily pause payments in certain situations.

Some borrowers will choose to refinance their federal student loans into new private student loans. But this option means that you lose the protection of the federal repayment plans. Private student loans have both fixed and variable interest rates.

Fixed interest rates are beneficial for people who want to know the exact amount of their loans each month helping them to budget more easily. The interest rate on variable student loans are sometimes lower than fixed rates but that means your payment amounts can fluctuate from month to month.

Shopping around can help you find the best private student loan that fits your financial needs and the amount that you can repay each month.

Qualifying For Gift Aid or Self Help Aid?

Qualifying for either gift aid or self help aid might depend on your financial circumstances. Students may want to apply early for grants, scholarships, work-study programs and student loans.

completing a FAFSA®, or Free Application for Federal Student Aid. This application must be completed every year.

Some states and colleges may have their own FAFSA deadlines , so double check to avoid missing any. Missing a deadline can mean forgoing some financial aid.

While some gift aid such as scholarships are given to students based on merit, grades or other accomplishments, grants, work study programs and student loans are typically based on your financial needs and the cost of tuition at your university.

Some universities use data from the FAFSA to determine gift aid like scholarships too. Students can also apply for scholarships and grants that aren’t associated with the FAFSA®.

Private Student Loans with SoFi

In some cases gift aid and federal aid aren’t enough to help students pay for their tuition. In that case, some students may consider private student loans.

SoFi offers private student loans with no late fees or origination fees with flexible repayment options. There are also interest rate discounts for eligible SoFi members.

Interested applicants can find out what rate and terms they could pre-qualify for in just a few minutes. Learn more.



SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF SEPTEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Source: sofi.com

Working Capital Loans – 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.

According to PricewaterhouseCoopers, average revenues from 2018 to 2019 for businesses were up 10 percent, but many companies still struggled to convert those higher revenues to cash. When a business doesn’t have the cash flow to support daily or growth expenses for any reason, working capital loans might be an option. Find out more about working capital below to help you decide if this funding source is right for your company

What Is a Working Capital Loan?

Working capital loans are a type of funding that helps ensure businesses have the capital they need to continue operating during periods when it might be difficult to cover daily expenses while meeting new demands or growth. For example, if a business has tied up its cash flow in inventory for the holiday rush season, working capital funds can pay the bills—such as employee wages and rent—until holiday revenues are in.

It’s important to note that working capital isn’t meant to make investments or buy long-term assets such as equipment. If you need equipment, you may need to take out a secured loan for it. Working capital loans are meant to cover the standard operating expenses of the business such as regular debt payments, wages, rent and utilities.

Working capital loans help ensure businesses have the capital they need to continue operating during periods when it might be difficult to cover daily expenses while meeting new demands or growth.

Working Capital Financing Options

You can get working capital loans from a variety of sources. Some of the most common options are summarized below.

Short-Term Loan

What is it? You might be able to borrow money for a few months to help fund expenses until seasonal income comes in or a large invoice is paid.

Pros: It might be a good way to balance cash flow during seasonal upticks in expenses or downturns in income.

Cons: Because the terms of the loan are short, the lender may charge a relatively large fee to make money from the deal in lieu of interest paid out over a longer period of time.

Merchant Cash Advance

What is it? A cash advance offered by the bank or agency that handles your payment processes. For example, businesses that accept money through PayPal may be eligible for a Payment Working Capital loan.

Pros: These loans are typically easy to get if you have a solid history processing payments through that bank or agency. That’s because the loan isn’t based on your personal credit or the credit of your business. It’s typically based on how much average revenue you process through that payment method.

Cons: Typically, merchant cash advances are paid back as a percentage of your sales over time. That lowers your cash flow for the immediate future and can make it more difficult to budget for business expenses if you overcommit on the loan.

Bank Line of Credit

What is it? A revolving line of credit that you can draw from and pay back and then draw from again—similar to a credit card.

Pros: A line of credit is flexible and ongoing, which means it’s there when you need it, but you don’t have to draw on it if you don’t need to. It can also be a good way to balance cash flow if your revenue tends to fluctuate.

Cons: You may need decent personal or business credit to get approved for a line of credit. It can also be tempting to rely too heavily on it, temporarily masking serious financial problems until they might be too late to resolve.

SBA Loan

What is it? You can get certain types of loans through programs approved by the Small Business Administration. Some of these loans can be used for working capital.

Pros: While the terms and rates associated with SBA loans vary, they may be more favorable than those of traditional loans.

Cons: SBA loans can be easier to qualify for from a credit perspective, but they do have specific requirements, such as documentation. You may also be limited on what you can use the funds for.

Trade Credit

What is it? Trade credit occurs when you purchase goods on an account and pay for them later. Typically, if you pay within the agreed-upon period, you don’t pay interest on this debt.

Pros: Trade credit is low-cost and is generally a common business practice, which means it might be available to you from various vendors.

Cons: This isn’t a form of credit you can use to cover expenses other than goods purchased, but that might free up some cash for other uses.

Who Offers Working Capital Loans?

Working capital loans are offered by a variety of organizations. Banks, credit card companies and payment networks might all offer working capital loans. Some organizations specialize in this type of lending and work with businesses that can demonstrate a strong historic revenue to provide working capital loans or lines of credit.

Working Capital Loan Interest Rates and Fees

As with any type of lending, working capital loans do cost your business in the form of interest rates and fees. With a few exceptions, such as certain trade credit arrangements, working capital comes with varied rates and costs. If the lender makes money via interest, your own credit or the creditworthiness of the business may be used to determine how much interest is charged.

Some working capital loans don’t include interest. The lender instead charges a flat fee that is incorporated into the total amount paid back during the loan process.

Is a Working Capital Loan Right for Your Business?

As with any form of debt, working capital loans have benefits and disadvantages. Understanding the common pros and cons can help you determine whether working capital loans are a good decision for your business.

Benefits

Working capital can provide the cash influx you need at just the right time. It’s a financial tool for helping businesses cover costs during various seasons or scale up for growth. If you’re careful about how you use the credit associated with working capital loans, they may not be as expensive as some other forms of financing.

Drawbacks

Working capital loans come with some of the same drawbacks of any debt, including interest or other costs. But a bigger potential disadvantage is the temptation to lean heavily on working capital even when you know that your business is in trouble financially. Working capital is meant to be a temporary bridge, not a crutch your business can lean on permanently.

Pros and cons of working capital loans

Other Options for Increasing Your Work Capital

Working capital is a measurement of how well a company can use its current assets to pay its current liabilities. It’s an important statistic for you to be aware of as a business owner, because it indicates how financially healthy your company is. If you need to improve your working capital but don’t want to receive financing from a third party, consider these other ways to increase your working capital:

  • Cutting business expenses, including unnecessary travel or acquisitions.
  • Increasing income by hosting a sale or increasing prices if the market will support it.
  • Collecting past-due invoices.
  • Selling valuable business assets that may not be required at this time.

As you weigh your different options for working capital financing, don’t forget to stay on top of your business credit score and your personal credit score, too. To learn more about the latter, check out Lexington Law’s guide to credit.


Reviewed by Cynthia Thaxton, Lexington Law Firm Attorney. Written by Lexington Law.

Cynthia Thaxton has been with Lexington Law Firm since 2014. She attended The College of William and Mary in Williamsburg, Virginia where she graduated summa cum laude with a degree in International Relations and a minor in Arabic. Cynthia then attended law school at George Mason University School of Law, where she served as Senior Articles Editor of the George Mason Law Review and graduated cum laude. Cynthia is licensed to practice law in Utah and North Carolina.

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 I Flip Garage Sale Items On eBay As A Side Hustle

Hello! Please enjoy this article from a reader, Rush Walters, on how he flips garage sale and auction items on eBay as a side hustle to make extra income.

Depending on who you ask, there are pros and cons to being a high school teacher. One con: income, One pro: having summers off.How I Flip Garage Sale Items On eBay As A Side Hustle

How I Flip Garage Sale Items On eBay As A Side Hustle

Both my wife and I are teachers in a small mid-Missouri town. During my first year (2015) as a high school teacher and head boy’s tennis coach I was making a whopping $38,000 a year.

Needless to say, the budget was tight some months.

When I got married in 2018, I thought a second income would be very helpful, but a second salary would not come until 2019. Long story short, my wife is from Bolivia and was not able to legally work for a year until she received her permanent residency status (green card).

Two people living off of one middle-class paycheck, let alone a teacher’s paycheck, was challenging. Thankfully my wife and I were decent at budgeting, and have been using a successful budgeting process since we have been married, but I’ll save that story for another day.

Financially we were fine, but what about the fun money? What about going out to eat with friends during the weekends? What about going to the movies? What about my “want” purchases?

This is when the idea of flipping items on eBay from garage sales & auctions came into full effect.

At the time, I heard about one of my coworkers making a significant amount of money from flipping sports memorabilia on the side. I thought to myself, “I could do that, I don’t have much of a sports background, but I do have an eBay account and I have been to garage sales before.”

So I began waking up Saturday mornings at 6am, grabbing my coffee thermos, heading to the local gas station to purchase the local newspaper, and marking up the classifieds with my pen.

(Sifting through the junk at garage sales to find the gold!)

Sifting through the junk at garage sales to find the gold!

I would circle all of the sales that started that day only. Forget the 2-day garage sales that started the day before. I am not saying that you cannot find anything of value at these sales, but everything has already been picked through and all the good stuff has been bought. 

Flipping items on eBay quickly became my side hustle! Starting out I sought some advice from my coworker I mentioned earlier.

I mean this guy is really into it, he would travel on the weekends to trade shows in other states and if he was going solo he would sleep in his car to save money. He is frugal, well some people like to call it “cheap,” haha.

Along with advice from him, I honestly learned a lot through experience. Trials & Tribulations. From a good flip I gained money and joy, from a bad flip I learned a lesson. Throughout this process I also learned about the value of my time.

Is it worth spending half a day at auction just for one item that may bring me $20?

I am going to share with you my step by step process for beginners flipping items on eBay. I have made mistakes and I have enjoyed successes, but most importantly is that I learned from my experiences. Experience is one of the best teachers you can find.

Related content:

How I make extra money reselling items on eBay.

Step 1: Mining for Diamonds

You will be mining for the “diamond(s) in the ruff” as they say.

There are three specific tools you will need before you hit the ground running. Let’s start with the most obvious: cash money. Make an effort to go to the bank the day before you go garage saling.

In the morning when I would buy the newspaper at the gas station, I would ask the register if they could change a $20, but I quickly found out that changing a $20 at the local gas station isn’t always reliable. Some gas stations have enough one dollars bills to spare, some do not. That being said, I have done it many times, but sometimes I am only able to get 10 or 15 one dollar bills at a time.

This limits my bartering power. You are not going to be able to go to the bank in the morning because they are closed and ATMs do not output dollar amounts in increments of 1.

My top tip for cash is to always carry $1 bills on you. Reason being, when you barter you will need to have the ability to pay any amount, not just increments of $5. I try to carry twenty one $1 bills on me at all times when I’m garage saling. If you make a purchase that you have larger bills for, use your large bills. Only use your dollar bills when needed.

Tool #2 is the newspaper. Always buy your local newspaper the day of the sale. Your local gas stations should always have a copy. As soon as you get in your car, pull out the classifieds portion of the paper, throw the rest in your backseat, pull out your pen and start circling all the garage sales that open for the first time that morning. Make a mental note of the times, obviously you want to go to the earliest ones first. Don’t spend forever doing this, you are on a schedule!

Have a game plan, you know the town you live in, take the most strategic route you can. Do not go all the way out to the East side of town then turn right around to go all the way to the West side of town. Go to the East side and hit up all the sales along the way. There isn’t a specific game plan that I can give you for what sales to hit first, only some pointers.

Obviously hit the first ones that are open first. Hit the ones that are in the same vicinity. Hit what you are looking for. I personally like to flip old video games for a number of reasons, so if I see a listing mentioning video games, I will put that sale on the top of my list. The final thing you need to consider is the type of garage sale listing. Here are the top 3 listings you need to know:

Moving Sales – The name the game is in the title: “moving.” These sellers are motivated to move and get rid of their items. Sure, getting some extra money is a plus, but they just want to get rid of items so they can move without having to worry about them. They are motivated to sell and are very open to deals.

Estate Sales – The best of the best in my opinion. These sellers are not moving, but they want to get rid of everything. I would argue that they are more motivated to sell compared to anyone else because they are just cleaning the estate of everything, sometimes for any price.

The normal “Garage Sale” – The most common sale, these sellers are more motivated to make money rather than to get rid of items. They are the hardest to barter with, but have some of the most valued items because they are priced to sell.

(Online Garage Sale Ad from my local newspaper)

Online Garage Sale Ad from my local newspaper

All in all, you can probably find deals at any of these sales, the title of them only helps me prioritize which one I am going to first. If both a garage sale and estate sale begins at 7am you better be dang sure that I am going to the estate sale first.

Some local newspapers have a digital version of the classifieds listed as well as a paper copy. The only benefit I’ve found to this compared to the paper copy is that it helps me make my decision on whether or not I want to go garage selling the next day. Typically my paper posts the day-of classifieds for Saturday online starting at midnight, which makes sense. You will have to do your own research if your paper offers this.

So if I see that the online classifieds are only listing two garage sales for the next morning, chances are I will not go unless the listing description is promising/convincing.

Also, people do post ads on Facebook and they should be considered, but I have found that if it is on Facebook it will be listed in the paper too, at least if it’s worth going to.

As soon as you’re done marking up the classifieds and establishing your game plan, head to your first sale, it never hurts to be early. I am going to repeat this, it never hurts to be early. I stress this because although the listing may say that they open at 7am, I have seen them open at 6:50am. Yes 10mins. makes a difference! A 10min window could be your chance to cash in on a great deal or could be a missed opportunity to cash in on a great deal if you show up at 7:00am. If you are there before it opens, no worries, wait in your car until they open. Yes I know I know, it may seem creepy to wait in your car outside their house but hey it will not be creepy when you’re walking away with great items to flip.

Always make every effort to be first.

You need to be the first person at the sale so that you are the first person to see what they have to offer and the first person to land the best deal. People are vultures out there, they want the best meat first and do not care who is in the way.

Last but not least, you will need your smartphone charged and the eBay app up and running. On the app you are able to conduct a search for previously sold items. This tool is your key for finding the current values of items. This tool is great because it is always updated and always accurate.

You find the “Sold Items” button under the filter when searching for a specific item, as shown in the picture below.

Left image: “Sold Items” button              Right image: Sold Items Search Results

Once you have learned more about what sells and what does not, you can move quicker.

Again you are on a schedule, I am not saying you need to run from sale to sale, but if you don’t find any deals at one you are wasting your time just walking around.

Your time could be spent better at another sale, where you could be beating someone else to the punch.

Step 2: Bartering

Here comes the pivotal point. When to say yes, when to say no, what price to ask?

When bartering for objects in the $20 and under range, I most often start by offering half of what they are asking. Example: the item is priced at $10 so I will offer $5. Now I know that 8 out of 10 times I am probably not going to get the item for half off, but it’s a starting point to get the item for at least 25% off the original price. So why do I shoot for half off you might ask?

There is a good chance that they are going to counter your original offer, therefore if you start your offer at 25% off the original price they could counter with 10% off the original price. The seller, as well as the buyer, wants to get that satisfied feeling. You as the buyer are satisfied with getting a deal whereas the seller is still happy with making money although it might be a little lower than what they were asking.

You also need to take in mind that most garage sellers are not out there to make money for a living. Their purpose is to get rid of items they do not want anymore and it is a bonus if they are able to get cash in return, it’s not like they are running a pop-up business. Most of the time they are more motivated to get rid of items compared to just making money.

When you are bartering you also need to establish your stopping point. What is too expensive for you?

The lower the price you purchase your item for, the larger window of opportunity you have to make money. This decision all depends on how much you want to make. The details are in the margins, if you see a video game that sold on eBay for $15 and you bought it for $5 that’s a decent amount of profit.

You tripled your money.

When you look up an item on eBay  you need to be as specific as possible, so your search results are as accurate as possible. If you cannot find an exact copy of the item that was sold, find the most closely related item and use it to set your standard for the value of an item and establish what you are willing to pay for it.

Do not get caught up in the excitement of the deal. Yes it’s exciting and yes it’s enjoyable to have success flipping products, but do not let it cloud your judgement or your knowledge. I am going to be honest, money does not care about your feelings.

Stay focused, get what you set out to get for the right price.

When I run into an item that I am still learning about I always ask myself is it worth the risk of X amount of dollars?

Are you comfortable with potentially losing X amount of dollars?

Risk is always involved.

I can remember when I purchased some collectible Harley-Davidson Steins. I did not know too much about them, I saw what they sold for on eBay and then decided to take a risk. The seller gave me a price that I was comfortable with so I purchased two of them. I broke positive, but only made a few bucks for a good amount of work. I am glad I did not lose money, but I lost my time.

My time is valuable and so is yours.

Behind every flip, there is a lesson to be learned.

Before we get into the final step, I am going to share with you lessons I have learned from my faults and successes.

Lessons to be learned

After dropping my wife off at the airport in the city, I figured I might as well hit up some auctions on my way back home.

At the time, I had been to auctions before so I knew the routine, but I had never been to an auction with the goal in mind to flip items. I had a few successful garage sale flips under my belt so I figured auctions are the next level in my side hustle pursuit.

I saw this collection of old American coins, mostly Kennedy half dollars and some steel pennies that were made during the war due to the shortage of copper.

I did the math, if I sold 50 of them at $5 a pop I would make $250 so I’d be comfortable with spending $200 for the lot. I remember that I liked that fact the coins are a small item so they would be easy to mail. I also liked that it was a collection therefore I could build my inventory without having to go to multiple garage sales to keep my eBay listings updated. I bought the coins, but I had to bid against others which drove up the price and my valuation was wrong 😬.

I did not know much about coin collecting and on top of my little knowledge of the items, I did not have good cell phone service in the building so I could not follow my rule of valuing items on eBay.

I knew that there was a market for collectible coins, but I did not take into consideration the specifics of coin collections. Collecting coins and currency is a whole other ball game. Let alone the quality certifications behind them.

Let’s just say I was in the negative on this flip. I believe I sold around $50 – $70 of the around $200 I spent on them. I also bought a collection of lighters that day for around $90 and sold them for around $20 – $30.

Sad day.

On the flip side of things my first big sell was a fishing lure. I bought a small tackle box of fishing lures and gear for $15 at a local garage sale.

When I was evaluating the price of the lures on eBay I was confident that I could make my money back and I was comfortable with risking $15. I had trouble choosing a listing price for the lures, I just did not know what to start them at.

Let me remind you that this was when I was first starting out. I asked my coworker what he thought, he suggested that I start auctioning them at 99 cents. So that’s what I did. That way I could see if they are worth anything and learn from my first attempt at selling lures.

Certain Fishing lures are very collectible.

I sold one for $100!!

This was my first big sale and I was ecstatic! I caught the eBay fever!

My first big flip: collectable fishing lure

My first big flip: collectable fishing lure

Step 3: Quality eBay Listings

I am not going to go through how to list an item step by step by step, but I am going to discuss my top recommendations when listing an item.

The reasoning I’m not going to go through it step by step is because eBay does a great job at outlining what is required for item listings.

I am going to give you what you need to take your listings from a default basic level to a high quality level.

By now if you were using the “sold items” feature on eBay during step 1, you should already have the eBay app installed on your phone. To list items you need to make a free account on eBay. The company does a great job and gives you a straightforward process for setting up an account.

I don’t have much complaints to say about the app, it provides an easy and understandable process for listing items.

Starting out, I would recommend that you focus on the “auction” listing more than anything else. You have the potential to make money and you can learn how expensive people value your specific item.

When you set up a “buy it now” listing, you set a constant price that won’t change.

Whereas buyers in auctions determine the final price; the sky’s the limit.

Another beautiful aspect that auctions offer is that they drive competition! Think about it, say you’re missing the last few presidents in your campaign button collection and president #3 is up for auction. President #3 is hard to come by so you know that you’re going to do whatever it takes to obtain his button……so is the next guy…..and the next guy…..and the next guy.

That means one thing for you: $$$$$$. I think you get the picture.

I believe this is what happened with my $100 fishing lures. Two guys were going at it, to add to their collection.

Now this doesn’t happen with all items, not all items are a part of a collection. The principle of supply and demand rings true and through auctions you are able to witness this process as a seller.

Let’s get into pricing.

Always start your auction at a price below what the previous item sold for. This may seem like common sense, but I have seen plenty of auction listings starting at the price they are valued at. Let me remind you that they have zero bids!

I wonder why. 😐

My rule of thumb is that the lower the starting price, compared to what it is valued at, the higher attention your listing is going to attract.

With a low starting point, potential buyers are going to see it as a deal to be made! I typically start the listing from $10 to sometimes $20 below what it is valued at. Also do not forget to take into account eBay’s 10% listing sellers fee. For most items eBay only takes 10% of your sold price. Here is a detailed list of eBay’s fees.

Once you have an idea for a ballpark price, you are going to want to take quality pictures of your product.

Display:

  • the back
  • the front
  • the sides, and
  • a bird’s eye view

Display every picture necessary to give potential buyers a full understanding of your item.

Once your pictures are uploaded you need to complete the description of the item, this is often overlooked/partially completed.

Now do not over do it, but your item’s description needs to be specific.

Example, if I am selling a video game that I have never tested on a console and the case is missing the original manual I would put the following in the description:“Untested and missing manual as seen in pictures.”

By saying this, it both informs your buyer and covers your butt. I have had it happen to me a few times where a buyer will purchase a produce that has a defect, that I mentioned in the description and showed pictures of 🙃, complaining that it is broken or not what they originally purchased. I then reference my original posting and they can’t win the argument. I will not refund them their purchase because they did not read the description.

What about reviews from the buyer!?!

If a buyer who is in the wrong attempts to give you a bad review, you can call eBay’s customer service, explain the situation, and ask for it to be taken down. Of course eBay must agree that you are in the right, but if you are right they will back you up.

1 point eBay, 0 points grumpy buyer.

Last tip on listing an item: shipping.

When starting out, always have the buyer pay for shipping. Ebay has a good system in place that calculates how much it will cost per person based upon their location.

All you have to do is enter the item’s weight and dimensions of the box/package that you plan to ship it in. When filling out the shipping portion of your listing, be sure that everything is correct otherwise you will be charged for extra shipping if your items actually cost more than you anticipated.

This is a lesson that I had to learn more than once.

Conclusion

  1. Establish your game plan for garage selling. Know where and how to mine for gold.
  2. Barter like it’s nobody’s business! The lower the price the greater the window of opportunity you have to make money.
  3. Simply follow directions when creating a listing, be thorough with your pictures and description.

Finally and most importantly, learn as you go.

After you do your research and read up on how to flip items on eBay, you need to try it! Experience is one of the best teachers.

I have experienced bad flips and good flips.

The path to success is not perfect otherwise everybody would be doing it.

Author bio: Rush is a Mid-Missouri high school engineering teacher and tennis coach. He and his wife Mia have no kids, only a smart Bernese Mountain dog named Zion. Along with teaching, he runs one blog; Clim & Joe’s. He enjoys exploring, cooking, board games, and time spent with his wife and family. 

Are you interested in flipping items for resale? What questions do you have for Rush?

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Source: makingsenseofcents.com

5 Reasons You Should Pay for a Pre-Drywall Inspection

When building a new home, there are architectural requirements along with city and state codes that the builder must follow; and while general builder inspections are required along the way, it’s still a good idea to pay for your own inspections, especially the pre-drywall inspection. 

If you’re building (or thinking about building) a new home, congratulations! Unlike buying an existing home, you get to select everything you want from top to bottom, inside and out, to create your dream home. We’re currently building our new home and recently had our pre-drywall inspection. You usually don’t hear much about these kinds of inspections, so I wanted to share with you why we did a pre-drywall inspection, and what we learned.

pre-drywall inspectionpre-drywall inspection
Our soon to be new home!

Isn’t the Builder’s Pre-Drywall Inspection Enough?

During the builder’s inspection, the builder will go over anything you added during the design process,  explain how things work, and show you where things are located inside your walls before the drywall is added. It’s the perfect time to ask questions — but what if you don’t know what to ask? This is where a pre-drywall inspection is beneficial.

Think of it as more of a pre-drywall “walk through”  and not so much of a traditional inspection. The purpose is to look at every aspect of the home, not just the pretty parts. If there are potential issues with the foundation, plumbing, electrical or roof, it’s better to address them sooner and not after signing the papers and moving in.

(READ MORE: The Pros and Cons of Building vs. Buying as a First-time Homeowner)

What the Process Looked Like for Us

We used Chad Brittingham with Cardinal Home Inspections, LLC out of Charleston, SC. The timing of this inspection was perfect because we scheduled to meet with the builder for their pre-drywall walk through a few days later.

Mr. Brittingham went through the house several times and with each pass, looked at different building aspects. The first pass involved the foundation, followed by framing, plumbing, electrical, HVAC, and the roof. We walked with him and he explained the reason for certain building items, pointed out any issues and took pictures for his report, and also took the time to explain how certain systems worked. As an inspector, his job was to comb through the fine details and find potential issues that we as buyers may overlook because we just don’t know. 

pre-drywall inspectionpre-drywall inspection
Chad Brittingham, home inspector, testing the window function.

5 Benefits of a Pre-Drywall Inspection

  1. It can address any issues: Once the drywall is installed it will be more challenging to fix any issues involving the internal items behind the drywall. Cracks in foundation, poor building materials, mold, etc., will simply be a lot harder to see later.
  2. It can check on any modifications you added during your design meeting: We added recessed lighting to some rooms, extra outlets, a security light and a few other things. But, during our pre-drywall inspection, we discovered that a few of those items were not there. It’s a lot easier to add them before the dry wall; like the builder put it, it would be like doing surgery on your house and then leaving scars!
  3. You can visualize where important pieces are in your wall: Word of advice, take pictures. When you move in and you need to find a stud, you’ll have a better idea where they are located within the wall. Most importantly, you’ll know where plumbing, gas lines, and electrical lines are located so you can avoid them before you hang anything or secure anything to your walls. 
pre-drywall inspectionpre-drywall inspection
Taking pictures before hanging drywall will help you avoid any costly repairs when affixing items to the wall.

4. It can reveal workmanship and materials: While builders have a construction manager who oversees everything, each part is handled by a different subcontractor. Getting a chance to see the work of the electrical team, plumber, roofer, HVAC, etc can not only ensure they’re not only using the proper materials, but that these systems are installed within code.

5. It can protect your investment and your peace of mind: You’ll have a written record of the issues that were found and you can document how it was fixed. This is your home that you’re spending your money on and you want to know that your home is sound. After the inspection was over, we were more confident that we picked a great home for our family.

Man bending over pointing to the floor in partially constructed house. Man bending over pointing to the floor in partially constructed house.
Mr. Brittingham pointing out construction details.

After the Pre-Drywall Inspection: Next Steps

At the end of the pre-drywall inspection, Mr. Brittingham gave us a couple items that he felt were of a greater concern to keep an eye on, but overall felt that the items he found were typical for this stage in the building process. Mr. Brittingham provided us with a full inspection report, including the items he found with pictures of areas that needed to be addressed, which I forwarded to the builder prior to our walkthrough. As the buyer, we definitely felt our inspection better prepared us for the walk through with the builder.

While the builder is bound by certain laws and codes, and their own inspections, the pre-drywall inspection we paid for independently, is acting on our behalf as the buyer. I definitely don’t believe our builder is trying to “slide anything past us,” and we did our research on the builder prior to signing. This was just one more step to further protect our investment, which will ultimately protect our family. 

Need More Home Building Advice?

Be sure to check out the Homes.com “How to Build” section, with videos and articles covering a range of topics that’ll carry you on the building journey from start to finish!


Brooke has a lifestyle blog called Cribbs Style and currently lives in Charleston, SC. This wife, mom of two almost tweens, and mom of three fur children enjoys all things DIY and organizing. When she’s not helping others tackle the chaos of life, she’s either working out, at the beach, or just enjoying time with family and friends.

Source: homes.com

Solid Marks for Gabi Insurance Review

When it comes to my 401(k), daily alarm clock or, yes, even my rotisserie chicken, I’ve embraced the set-it-and-forget-it mantra. But for car insurance? You’re doing yourself a disservice if you aren’t shopping for better car insurance rates at least once a year.

That’s what makes tools like Gabi so helpful. In our Gabi insurance review, we’ll weigh the pros and cons of using an insurance comparison tool, instead of directly working with insurance agents, when shopping for new car insurance rates.

What Is Gabi Insurance?

Gabi Insurance is a newcomer to the insurance scene. The San Francisco insurance company was founded in 2016, four years after The Zebra (another car insurance comparison site that I had mixed feelings about; get the full scoop in my Zebra car insurance review). While Gabi is known primarily for its auto insurance quotes, users can also rely on Gabi to compare insurance providers for renters insurance, home insurance, condo insurance, landlord insurance and umbrella insurance. (I could not find an option for life insurance.)

Gabi is a fully licensed insurance broker in 50 states plus the District of Columbia, meaning they can underwrite, price and sell policies and handle claims. It also means that, when you generate quotes on the site, you can buy directly on the site. One of the issues with sites like The Zebra is that, after generating your auto insurance quote, you’d have to leave the site and go to the actual insurance company’s site to complete the process.

Gabi works with more than 40 top insurance agencies to help you find the best rate for your car(s), driving history and budget. Among those insurance companies are Nationwide, Travelers, Progressive, Clearcover and Safeco.

Gabi claims it saves drivers an average of $961 per year and can provide quotes in a matter of minutes. It’s time to test those promises.

How Gabi Works: A Review

Getting your Gabi insurance quotes can be relatively painless, depending on the route you take. You have three options:

  1. Don’t provide any of your current auto insurance information.
  2. Provide your car insurance login information.
  3. Upload a PDF of your current auto insurance policy.

Because I’m private by nature (and because I just had the pleasure of dealing with a fraudulent unemployment claim in my name), I was hesitant to provide any login information. I first tried to advance without providing any information, but as we’ll see, this doesn’t get you very far. Eventually, I uploaded a PDF of my policy.

To get a quote for Gabi insurance, you start here.
To get a quote, your journey to cheaper car insurance starts here.

Getting started is easy. First you’ll make your decision re: providing insurance information or not (more on that below). Then you’ll enter your name. (Like I did when reviewing The Zebra, I started the process with the very real, honest name of Joe Schmoe.)

This screenshot shows a portal where Gabi insurance asks what your email is. The reviewer typed in Joe Schmoe.
Mr. Schmoe as he signs up for car insurance quotes.

After providing your name, Gabi will ask for a handful of other contact info: birthday, address, whether you own or rent your home, email address and cell phone number. When asking for the email address, Gabi promises your information is never sold or shared. The Zebra says something similar, yet Geico conveniently sent an email to my inbox addressing me as Joe just minutes after I hit submit on The Zebra’s site.

Gabi Insurance asks for your email address in this screen shot.
Gabi says they won’t share or sell your info; thus far, they’ve held up their end of the bargain.

Contact update: As of two hours after creating my account, I have received one text and two emails from Gabi, but none from any third-party insurance providers. Could it be that Gabi is telling the truth when they say they won’t share or sell your data?

To Provide Insurance Info Or Not to Provide Insurance Info? That Is the Question

That’s what Hamlet said, right?

As I mentioned, in my first attempt at using Gabi’s car insurance comparison platform, I resisted their pleas for my personal info. “They don’t need to know anything about me to build a quote tailored to me,” I foolishly asserted.

But when I got to the magical part where Gabi was supposed to tell me I’m a schmuck who has been paying too much for auto insurance, I was instead given a list of common insurance companies, all with blue buttons that said “View My Quote.”

“Surely I must just click each and see a quote at the ready, despite the platform having no knowledge of my car, driving history or policy preferences,” I told myself. Oh, Joe Schmoe, what a fool you are.

Gabi Insurance shows various options that can help you save money in this screen shot.
When you don’t provide your current insurance policy to Gabi, this is the type of screen you can expect to see.

I quickly learned, upon clicking into Liberty Mutual, Allstate and Progressive, that giving Gabi such limited info meant the site would merely direct me to individual insurance companies to provide more detailed personal information to generate a quote.

That’s right: In that instance, Gabi serves no purpose, because you must start from scratch on every insurance company’s site to compare.

If you’re unwilling to provide either your login info for your current insurance company or a PDF of your auto insurance policy, then Gabi is not right for you.

In the name of research, I decided I was comfortable enough downloading a copy of my policy from Allstate and then uploading it into Gabi. While it does have some personal data within it, my email and password were still safe with me.

It took only a few seconds for the artificial intelligence on Gabi’s site to read my policy and tell me in intricate detail what those pages contained. (This is either really convenient for insurance shoppers or a warning sign that robots are just days away from taking over.)

From there, I was able to input more personal information about myself as a driver, my partner (who is also on my policy) and our car. I tried to remove my partner for a good five minutes just for kicks and eventually gave up. Later on, I learned if I had just waited a few more clicks, I would have had the option of toggling secondary drivers on and off. If Gabi had made that clear, it would have saved me time and frustration.

Actually generating my quotes did take about a minute, which is notably fast. However, I had just used The Zebra a few days before, and that experience was faster, so Gabi seemed slow by comparison.

The Car Insurance Quotes I Got from Gabi

I was pleasantly surprised to see a few insurance agencies whose names I recognized among my top results. And the savings were quite large.

Gabi provides more insurance companies that can help you save money.
My top auto insurance quotes from the Gabi insurance comparison platform.

My top quote came from Stillwater and would save me $622 a year. I was dubious upon seeing that, so I clicked into the “View Details” portion of the quote and did find some discrepancies. The largest: My property damage coverage dropped from $500,000 with my current policy to $100,000 with this potential new policy.

Still, the changes were so minor that it ultimately felt like a good deal. But buyer beware: You shouldn’t necessarily expect your current policy and quoted policy to be one-to-one. Go through and make sure all the coverages you want are still represented by the new policy.

Quotes two and three purported to save me $573 and $468 a year, respectively, but again, those quotes weren’t an apples-to-apples comparison with my current policy, as some of the coverages differed.

That said, all three quotes were large improvements over my current auto insurance. My current auto policy is bundled with my homeowners insurance and thus linked to my escrow, so I’ve got some calls to make, but I can safely say I will be using Gabi again soon to find a better bundled policy for auto insurance and home insurance.

What We Like About Gabi Insurance

Clearly, as someone who has just publicly stated he’ll be using Gabi to generate a real quote down the road, I’m a fan. Here’s some of what I liked about Gabi:

  • You don’t have to leave the site. If you find a quote you like, you are able to purchase the insurance on Gabi’s own platform, as long as you are in the United State, since Gabi is a fully licensed insurance broker.
  • It’s got an easy-to-read gauge during the process. It’s a small thing, but I can’t breeze past a good website UX when I see one. I found Gabi’s top-of-the-page tracker for percentage of completion to be a nice touch, especially for a site that is all about efficiency in generating a quote.
Gabi shows how far along you've made it in the process.
Gabi makes it easy to see how far along you are in the process.
  • Uploading my policy was easy. Assuming you want your new coverage at the same or similar levels you’re used to, you can get a quote in minutes by uploading your current policy.
  • You can bundle home insurance with auto insurance. I currently bundle my auto and home coverage, and I would like to continue. It’s convenient to have all my insurance policies in one app, and it earns me discounts.
  • I would legitimately save money. While I haven’t pulled the trigger yet, Gabi could deliver real savings over the course of a year from one of several different insurance companies. More than $600 for me; Gabi truly means it when they promise to find the best insurance company for your needs.

What We Don’t Like About Gabi Insurance

I may be a new Gabi fanboy, but that doesn’t mean I’m onboard with the entire experience. Here’s where I found the car insurance comparison platform fell short:

  • There isn’t an option to describe the policy you want. Gabi pushes you into a scenario where you have to hand over your current insurance account login information or uploading a copy of your policy. If you’re strict about who has access to your data, this could be problematic, as it’s the only way to get quotes to compare on the site.
  • It can sometimes take days. Though I did not provide my login information, some customers have complained that it could take up to two days (depending on the current insurance provider) for Gabi to get into the account and grab the relevant information. That takes the speed out of the process that is supposed to be a hallmark of Gabi.
  • The policies I was provided weren’t perfect matches for my current policy. And Gabi wasn’t upfront about this. I had to do some digging to realize that, by opting for the No. 1 policy choice, some of my coverages would be reduced.
  • They required my cell phone number. I understand needing my number if I decided to move forward with one of the policies, but for the general comparison purposes, I don’t think customers should have to input their numbers.

What Customers Are Saying About Gabi Insurance

Overall, I had favorable opinions of Gabi, but I wanted to see what other customers were saying about the company.

I started with Better Business Bureau and was actually shocked to see that, despite having a BBB rating of an A-, it has an average 1.77 out of 5 stars based on 22 customer reviews. Ouch.

Reviews on the Better Business Bureau website were largely around problems with the actual Gabi service, but some have said working with customer service is not a pleasant experience either, whether due to agent miscommunications or just generally slow customer service response time.

These poor customer reviews are notably absent on Gabi’s site, where it instead shows off its 4.8 out of 5 stars based on “third-party verified reviews” that are certainly not at all curated to paint a favorable picture.

Gabi does score well in terms of its mobile app. In the App Store, it currently has a 4.1 rating. I could not easily find it on Google Play.

The Bottom Line

So should you try Gabi? If you are actually ready to make the switch to a new car insurance provider and don’t mind a little leg work, absolutely. The Zebra is easier since you don’t have to relinquish your personal information, but I found The Zebra to be dishonest about its spam policy, frustrating to use and not really much of a money-saver. With Gabi, you’ll have to actually take the time to give the platform access to your current policy, but in doing so, big savings and an easy sign-up process could be on the horizon.

Timothy Moore is a market research editing and graphic design manager and a freelance writer and editor covering topics on personal finance, travel, careers, education, pet care and automotive. He has worked in the field since 2012 with publications like The Penny Hoarder, Debt.com, Ladders, WDW Magazine, Glassdoor and The News Wheel. 

Source: thepennyhoarder.com