In the Market? Here’s What You Should Know About Contingencies

Home contingencies are aspects of home purchase contracts that protect buyers or sellers by establishing conditions that must be met before the purchase can be completed. There are a variety of contingencies that can be included in a contract; some required by third parties, and others potentially created by the buyer. While sellers in the current market prefer to have little to no contingencies, the vast majority of purchase contracts do include them, so here’s a primer to help you navigate any that come your way!

Financing Contingency

The most common type of contingency in a real estate contract is the financing contingency. While the number of homes that sold for cash more than doubled over the last 10 years, the majority of home purchases — 87% of them, in fact— are still financed through mortgage loans.

Why is this important? Because most real estate contracts provide a contingency clause that states the contract is binding only if the buyer is approved for the loan. If a contract is written as cash, in most cases, the financing contingency is removed.

contingenciescontingencies

Why Does The Financing Contingency Exist?

This contingency exists to protect the buyer. If a buyer submits a winning offer, but can’t get approved for a loan to follow through with the purchase, this clause can protect the buyer from potential legal or financial ramifications.

Tip: Homeowners can, and should, request to see a buyer’s prequalification letter before accepting their offer.

Home Sale Contingency

For many repeat homebuyers, they must sell a property in order to afford a new home. Whether they’re relocating for work, moving to a larger home, or moving to a more rural area, 38% of home buyers in a recent survey reported using funds from a previous home to purchase a new one. This is where a home sale contingency comes into play; this clause states that the buyer must first sell their current home before they can proceed with purchasing a new one.

Why Does This Contingency Exist?

This is another contingency that exists to protect the buyer. If their current home sale doesn’t close, this clause can protect the buyer from being forced to purchase the new home. In other words, they can back out of the new home contract without consequence. Keep in mind that in a seller’s market, this type of contingency offer is less desirable to sellers; in fact,  they may rule out your offer completely if this is included.

TIP: In many situations, homeowners can negotiate escape clauses for the home sale which would allow them to solicit other offers and potentially bump the current buyer out of the picture.

Home Inspection Contingency

Not only is it common, it’s also wise to include a home inspection contingency in any offer. Whether it’s a new home or an existing home, there is no such thing as a flawless house. Home inspections can uncover hidden problems, detect deferred maintenance issues that may be costly down the road, or make the home less desirable to purchase completely. A home inspection contingency essentially states that the purchase of a home is dependent on the results from the home inspection.

contingenciescontingencies

Why Does This Contingency Exist?

Whether it’s a roof in need of replacement or an unsafe fireplace, homebuyers need to know the maintenance and safety issues of the properties they’re interested in purchasing. If a home inspection report reveals significant (or scary!) findings, this protects the buyer from the financial burden that repairs would require. This is why agents will tell you it’s never a good idea for a home to be purchased without a home inspection contingency.

TIP: The findings from the report can usually be used to negotiate repairs or financial concessions from the seller.

Sight-Unseen Contingency

Especially during sellers markets, it’s not uncommon for a home to have dozens of showings within the first couple of days of listing. This breakneck pace can create a scenario in which homebuyers may not be able to coordinate their schedules to get a timely showing appointment. To help prevent missing out on the chance to buy a home, buyers in this situation will sometimes make offers on the home, sight unseen.

contingenciescontingencies

There’s no sugarcoating it…this is a high-risk strategy with ample opportunity for negative consequences. However, if this strategy is used, many real estate agents will add a sight- unseen contingency to their offer. This contingency states that the offer for purchase is dependent on the buyer’s viewing of, and satisfaction with, the property.

Why Does This Contingency Exist?

In a market with shrinking inventory, desperate buyers want a fighting chance at a hot property; in some cases, that can only exist by submitting an offer before they can see it in person.

TIP: Sight unseen offers are also high risk to the seller. If you include this contingency in your offer, try to keep other seller requests to a minimum. 

Why Contingencies Can Be Positive

In a seller’s market, buyers may feel the pressure to remove as many contingencies as possible in order to compete. But, it’s important to remember that contingencies are actually safeguards in place to prevent buyer remorse, expensive future repairs, or financial calamity. It’s always crucial for buyers to hire a seasoned real estate agent who can advocate for their best interests, negotiate and strategize in safe and competitive ways, and advises them of the risks of each decision.

Looking to Buy? Don’t Go it Alone!

The homebuying process is a complex one, but that doesn’t mean you’re left with all the heavy lifting. Find your dream home and a local agent on Homes.com, then visit our “How to Buy” section for all the step-by-step insights for a smooth process.


Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.

Source: homes.com

Engagement Ring Cost – How Much of Your Salary Should You Spend?

So, you’ve decided to take the big step and propose to your sweetheart. Congratulations! It’s an exciting moment, but it’s also a nerve-wracking one.

Right now, your mind is probably teeming with questions: What’s the most romantic way to propose? Should you present a ring when you pop the question or hide it for your honey to find? And crucially, how much should you spend on it?

It isn’t just a problem for guys. In 2018, Brides magazine reported that record numbers of women are searching for ways to propose to their significant others — both male and female — and some of those proposals include a ring. But even for women expecting to receive a ring rather than give one, cost is an issue.

Getting married doesn’t just mean joining your lives. For most couples, it also usually means combining your finances. That means whatever sum your partner spends on your engagement ring is coming out of the money you’ll both have to live on in the future. It’s a decision that affects both of you.

The 2 Months’ Salary “Rule”

If you consult bridal magazines and other wedding-related resources, you’ll probably see many references to the “rule” that an engagement ring should cost one, two, or even three months’ worth of the bridegroom’s salary.

But did you ever wonder where this “tradition” came from? It was actually made up by De Beers, a cartel that controls most of the world’s diamond market.

According to the BBC, at the beginning of the 20th century, most engagement rings didn’t even contain diamonds. Beginning in the 1930s, De Beers ran an incredibly successful ad campaign to promote diamond engagement rings, which popularized the idea a ring should cost one month’s salary.

The campaign did so well De Beers pushed the concept even further in the 1980s, raising the suggested ring price for American consumers to two months’ salary. In Japan, it upped the ante still more, proposing three months’ salary as the benchmark price.

Clearly, this “tradition” doesn’t have a lot of history behind it. And yet, in less than 100 years, it’s become overwhelmingly pervasive. Not only do most engagement rings today contain diamonds, but according to The Knot, the amount the average American spent on one was $5,900 in 2019.

The average income for a single American that year was around $49,000, according to the United States Bureau of Labor Statistics, so the average ring price was between one and two months’ salary.

There’s one big problem with this formula: Most Americans don’t have this much cash to spare. According to a 2018 Bankrate survey, fewer than 30% of Americans even have the six months’ worth of living expenses experts recommend keeping in an emergency fund, let alone an extra one to two months’ salary to spend on a ring. And for single Americans, savings figures are even lower.

That means that to spend two or even one month’s salary on an engagement ring, most Americans must either drain their emergency savings or, worse still, start their married lives with debt. For many couples, that gets piled onto additional wedding debt and other debts they accumulated before their marriage, such as student loans.

This shared debt burden weighs on your finances throughout your married life. It hampers your credit scores, making it harder to buy your first home together. It could even affect your decisions about parenthood by putting the cost of having a baby out of their financial reach. Finally, based on a 2020 Fidelity study, it dramatically increases the chances you will fight about money.

In short, the De Beers ad’s message — that buying an expensive ring is the best way to get your marriage off to a happy start — has no basis in fact. In fact, according to a 2014 study at Emory University, the opposite is true. It found that men who spent $2,000 to $4,000 on their partners’ engagement rings were 1.3 times more likely to end up divorced than those who chose more modest rings priced between $500 and $2,000 — that’s an increased risk of 30%.


Setting Your Own Guidelines

As you can see, the two months’ salary rule is neither truly traditional nor particularly helpful. There’s no one-size-fits-all rule for how much to spend on an engagement ring. You have to figure it out based on your situation, factoring in both your finances and your partner’s expectations.

Learn What Your Partner Expects

Before you can even think about shopping for a ring, you need to know what kind of ring your partner wants. If you know them well — and you certainly should if you’re preparing to spend your lives together — you most likely have some idea what kind of jewelry they like.

But an engagement ring isn’t just any piece of jewelry. It’s a symbol of your love and commitment to each other. It’s something your partner is going to wear every day. You want it to be something they feel thrilled about and comfortable with.

Based on the DeBeers ads, it might seem like you can’t go wrong simply choosing the biggest diamond you can afford. However, that’s a vast oversimplification.

There are many differences among diamond rings, including the size and shape of the stone, the design, and the band metal. If your partner wants a gold ring with an emerald-cut solitaire diamond, presenting a platinum ring with a round diamond flanked by sapphires won’t be a pleasant surprise.

In fact, your partner might not want a diamond ring at all. Before the 1930s, most engagement rings didn’t contain diamonds. Maybe they’d prefer an old-fashioned ring with a different type of stone. Also, if they’re the socially conscious type, they may prefer to avoid diamonds because of all the environmental and human rights abuses associated with diamond mining.

It’s also not safe to assume your partner would prefer to have the largest ring possible. For one thing, it’s not the size or price of the ring that makes it meaningful. You could make a much better impression with a ring you had custom-designed to fit your partner’s taste than with a much bigger ring you simply picked out of a display case.

In a 2015 Brilliant Earth survey, nearly half of women and 30% of men said what mattered to them most about an engagement ring was its design, while only 6% of women and 8% of men said the size of the diamond mattered most.

Additionally, a frugal partner might actively hate the idea of spending thousands on a ring when you could put that money to more practical use. In a 2014 ERA Real Estate survey, 50% of women said they would rather skip the large engagement ring and put that money toward the down payment on a house — and 17% said they had already done so.

There are even some people who would prefer not to wear an engagement ring at all. When I got engaged to my husband, I told him I didn’t want a ring because I disliked the idea of wearing a ring when he wasn’t — as if I were spoken for, but he was still a free man until the wedding day.

Instead, we opted for the Elizabethan custom of wearing our wedding bands on our right hands until the ceremony, then switching them over — which also happened to be cheaper.

The easiest way to find out what your partner wants in an engagement ring is simply to ask. If you don’t want to spoil the surprise of the proposal, try strolling past a jewelry store while out on a walk and casually asking which rings in the window they like best. You can also try asking their friends or family if they’ve ever talked about what they want in an engagement ring.

Finally, pay attention to anything they mention on the subject in conversation. Even if you’re trying to keep your proposal plans a secret, there’s a good chance they have an inkling about your intentions. If so, they may be dropping a few hints to help guide your shopping.

Evaluate Your Finances

What kind of ring your partner wants is only half the equation. You also have to figure out how much you can afford to pay for it. That depends on both your financial situation and that of your partner. You’re going to be sharing a home and expenses once you’re married, so the money you spend on this ring is really coming from both of you.

That doesn’t mean you necessarily have to ask outright how much they think you should spend — unless you know your partner would appreciate that kind of upfront approach. But it’s essential the two of you discuss your finances before getting married, and that discussion can give you a better idea of how much you can reasonably afford to spend.

Talking about money may seem unromantic, but it’s something you need to be able to do as a married couple. If you’re ready to make a lifelong commitment to each other, you should be prepared to talk openly about your financial situation. Topics to discuss include:

  • Your Income. The more you make as a couple, both now and in the future, the more you can reasonably afford to spend on a ring. If you have to draw down your savings to buy it, you’ll be able to replenish it quickly. Talk with your partner about how much you each make now and about expectations for future earnings.
  • Your Expenses. You can’t use your earnings to pay for the ring if they’re already committed to other expenses. Talk about how much each of you currently spends on living expenses and how much you’ll spend as a married couple. Then consider how much of your income that will leave to contribute to savings.
  • Your Current Savings. It’s obviously important to know how much you both have right now. If you don’t have enough saved to pay for the ring with cash, you have to go into debt for it, which isn’t the best way to kick your marriage off on sound financial footing.
  • Your Debts. Going into debt for a ring is an even bigger problem if you or your partner already have other debts, such as student loans or credit card debt. Be candid with each other about your current debts and how much they cost each month. This information matters when you’re deciding what type of ring you can afford.
  • Your Financial Goals. Finally, consider what other financial goals you and your partner want to save for. Possibilities include your wedding, paying off debts, buying a home, starting a family, and putting your kids through college. When you list all your goals and consider how much they matter to you, suddenly, a big ring might not seem like such a high priority.

Final Word

If your partner’s preferences are pretty much in line with what you can afford, you have no problem. However, if the ring of your partner’s dreams is simply beyond your means right now, you’ll need to find some way to compromise.

That could mean settling for a smaller ring, waiting longer while you save up for a big one, or looking for ways to make that fancy ring more affordable.

However, don’t lose sight of the fact that the ring isn’t the most crucial part of the proposal. What matters most is the person doing the proposing.

If your partner really wants to be with you, it will be the proposal that makes them happiest — not the ring that accompanies it. Presenting a smaller or simpler ring isn’t going to be a deal breaker. And by choosing a ring that fits your budget, you can leave yourself and your partner more money to live happily ever after on.

While you’re at it, you can protect your future finances by looking for ways to save on your other wedding expenses. Check out our marriage archives for tons of ideas.

Source: moneycrashers.com

4 Tips Before You Buy Your Teenager a Car

Roughly 26% of car buyers feel that they overpaid for their vehicle, according to a 2014 survey from TrueCar, Inc. That same survey admittedly also found consumers believe car dealers make about five times more profit on the sale of a new car than they actually do — but whether you truly paid too much for your now-old ride or you simply think you did, there are ways to save the next time you hit up a car dealership. For starters, the rates on auto loans are largely driven by your credit, so simply bolstering your credit score can potentially save you thousands of dollars over the life of your loan. Plus, it never hurts to comparison shop and negotiate when it comes to auto loans and the actual vehicle itself — you may be missing out on savings by doing one and not the other.

But First… How Much Car Can You Afford?

According to Credit.com contributor and car insurance comparison company TheZebra, automotive experts generally suggest auto loans not exceed 10% (if it’s just the loan) to 20% (if it’s the loan and related expenses like car insurance) of your gross monthly income. Of course, that’s a broad rule and every potential car owner is going to have to take a long, hard long at their finances and current debt levels to decide what they can, in fact, afford. Following these three simple cost-cutting steps can help you save big on your auto loan and next car purchase.

/*Chat Animation*/ #animation-wrapper max-width: 450px; margin: 0 auto; margin-bottom: 50px; width: auto; #animation-wrapper .box background-color: rgb(44, 74, 94);color: #fff;text-align: center;font-family: “ProximaNova-Regular”, Arial, sans-serif;height: 153px;padding-top: 10px; .content .box p margin: 0px 0px; .box .btn-primary color: #fff;background-color: #ff7f00;margin: 10px 0px; .chat ul margin: 0px;padding: 0px;list-style: none; .message-left .message-time display: block;font-size: 12px;text-align: left;padding-left: 30px;padding-top: 4px;color: #ccc;font-family: Courier; .message-right .message-time display: block;font-size: 12px;text-align: right;padding-right: 20px;padding-top: 4px;color: #ccc;font-family: Courier; .message-left text-align: left;margin-bottom: 16px; .message-left .message-text max-width: 80%;display: inline-block;background: #e5e6ea;padding: 13px;font-size: 14px;color: #000;border-radius: 30px;font-weight: 100;line-height: 1.5em; .message-right text-align: right;margin-bottom: 16px; .message-right .message-text line-height: 1.5em;display: inline-block;background: #5ca6fa;padding: 13px;font-size: 14px;color: #fff;border-radius: 30px;line-height: 1.5em;font-weight: 100;text-align: left; .chat background: #fff; margin: 0; border-radius: 0; .chat-container height: 450px;padding: 5px 15px;overflow: hidden; .spinme-right display: inline-block;padding: 15px 20px;font-size: 14px;border-radius: 30px;line-height: 1.25em;font-weight: 100;opacity: 0.2; .spinme-left display: inline-block;padding: 15px 20px;font-size: 14px;color: #ccc;border-radius: 30px;line-height: 1.25em;font-weight: 100;opacity: 0.2; .spinner margin: 0;width: 30px;text-align: center; .spinner > div width: 10px;height: 10px;border-radius: 100%;display: inline-block;-webkit-animation: sk-bouncedelay 1.4s infinite ease-in-out both;animation: sk-bouncedelay 1.4s infinite ease-in-out both;background: rgba(0,0,0,1); .spinner .bounce1 -webkit-animation-delay: -0.32s;animation-delay: -0.32s; .spinner .bounce2 -webkit-animation-delay: -0.16s;animation-delay: -0.16s;@-webkit-keyframes sk-bouncedelay 0%,80%,100%-webkit-transform: scale(0)40%-webkit-transform: scale(1.0)@keyframes sk-bouncedelay0%,80%,100%-webkit-transform: scale(0);transform: scale(0);40%-webkit-transform: scale(1.0);transform: scale(1.0); /*Text Ad*/ .ad-container padding: 15px 30px;background-color: #FFFFFF;max-width: 690px;box-shadow: 1px 1px 4px #888888;margin: 20px auto; .ad padding: 10px 6px;max-width: 630px; .ad-title font-size: 20px;color: #0077BB;line-height: 22px;margin-bottom: 6px;letter-spacing: -0.32px; .ad-link line-height: 18px;padding-left: 26px;position: relative; .ad-link::before content: ‘Ad’;color: #006621;font-size: 10px;width: 21px;line-height: 12px;padding: 2px 0;text-align: center;border: 1px solid #006621;border-radius: 4px;box-sizing: border-box;display: inline-block;position: absolute;left: 0; .ad-link a color: #006621;text-decoration: none;font-size: 14px;line-height: 14px; .ad-copy color: #000000;font-size: 14px;line-height: 18px;letter-spacing: -0.34px;margin-top: 6px;display: inline-block; .ad .breaker font-size: 0px; #ad-4 font-family: Arial, sans-serif;background-color: #FFFFFF; #ad-4 .ad-titlecolor: #2130AB; #animation-wrapper .cta-lexcolor: #FFFFFF; width: 80%; #animation-wrapper .lex-logodisplay: inline-block; @media (max-width: 500px) .ad padding: 20px 18px;max-width: 630px;

1. Do a Credit Check

Not checking your credit before you start shopping for a car is a huge mistake. Because your auto loan rates are directly tied to your credit scores, even a small inaccuracy on your credit report could cost you. Before you start shopping for your dream car, take an hour to check all three of your credit reports and credit scores online. You need to check with all three major credit reporting agencies — Equifax, Experian and TransUnion — because you don’t know which one a lender will use for your application. If you have a credit score above 750, you can probably qualify for the best rates available and negotiate an excellent deal on your car. If your credit score is lower, see if you can give it a boost before you apply for a loan.

You can view two of your credit scores, along with your free credit report snapshot on Credit.com. The snapshot will pinpoint what your specific area of opportunities are and what steps you can take to improve. However, as a general rule of thumb, you can raise your credit score by disputing errors on your credit report, paying down high credit card debts and limiting new credit applications.

2. Shop Online

Unless you have a credit score in the 800s and can qualify for a 0% auto loan offer, you are probably not going to get the best deal on a loan from the dealership. Auto loan rates and fees offered by online auto lenders are usually a lot lower than the rates offered by dealership financing programs. Plus, you can shop and compare rates online without causing damaging inquiries to your credit report (provided you’re not formally applying for every offer you see). Most online lenders have calculators or rate guides that show you what rate you could receive based upon your credit score. (Note: Be sure to vet any lender, whether online or within a dealership, before taking them up on an offer.)

With many online loans, you fill out the application and receive an approval by email within a few hours. Then the lender mails you a check that is ready to be made out to the person or business selling the car. If you end up not buying a car or not using the loan, you toss the check (shredding it first, of course). Plus, the check from the lender usually specifies a certain price range (for example, $9,000-$10,000). This leaves you with some room for negotiating a lower price with the seller even after you have received your loan approval. Speaking of which …

3. Negotiate the Price

Many people may wind up overpaying for a car simply to avoid negotiating the price of a car with a salesperson. Luckily, the Internet makes negotiating with car dealers a whole lot easier. Before you start shopping, look up the listed price, invoice and MSRP of the car you want through an unbiased site like Kelley Blue Book and request free price quotes online. Armed with these facts, you’ll have an advantage over the salesperson when you start the negotiations. You should be able to save a couple hundred dollars, if not a few thousands, by negotiating with the car salesperson before you decide to buy.

Proving It

You may be thinking: This is all fine and dandy, but does it really add up to $3,000 in savings? Let’s crunch the numbers using this auto loan calculator.

According to data from Experian, the average interest rate on a new car loan for prime customers as of the last quarter of 2015 was 3.55%. The average rates on a new car for non-prime customers and subprime customers during that timeframe were 6.24% and 10.36%, respectively.

So, let’s say you wanted to buy a $16,000 car and had $1,000 saved for a down payment. If you chose a loan repayment period of 60 months, had a non-prime credit score (think just below 700), and got a loan through a dealership, you could receive about a 6.3% annual percentage rate (APR).

  • Dealership option: $292 a month – $17,525 total costs

However, if you checked your credit reports and scores before you applied and found a way to boost your score to prime (think around 750), your interest rate from the dealership could drop to about 3.5%.

  • Improved score: $273 a month – $16,373 total costs

You would have already saved $1,152 dollars, just by checking your credit reports! That’s a pretty good return on your investment. Next, you might be able to reduce your rate even more by shopping for a loan online with your new credit score of 750. Let’s suppose, for argument sake, you qualify for a 2.7% APR (the average interest rate for super-prime customers during the last quarter of 2015, according to Experian).

  • Online loan: $268 a month – $16,052 total costs

You would have saved almost $1,473 by working on your loan options using Step 1 and 2. Finally, if you went to negotiate with the salesperson you could probably make a deal with the seller to reduce the price of the car down to $14,000. In this case, you would only have to borrow $13,000 with your 2.7% APR loan from an online lender.

  • Negotiated deal: $232 a month – $13,912 total costs

Your total savings from following these three simple steps would equal $3,613 over the life of your auto loan!

Source: credit.com

Benefits of an Employer Tuition Reimbursement Program & Policy

While they may not have a line item on a balance sheet, employees are your company’s most important asset. Their knowledge, skill sets, and expertise impact your ability to keep customers or clients satisfied and improve your bottom line.

A tuition reimbursement program is an employee perk that shows you’re invested in their long-term success.

What is Tuition Reimbursement?

Just as it sounds, tuition reimbursement in an employee benefit program or policy where the employer pays back employees for education expenses. Although the program’s rules vary from employer to employer, most cover the cost of tuition as well as textbooks and other required course materials.

Employees still have to pay out of pocket for the courses they take, but when the course is over, the employee can get back some or all of their tuition expenses. At some institutions, students with financial constraints qualify to defer payment until their coursework is complete.


Advantages of an Employer Tuition Reimbursement Program

The Society for Human Resource Management (SHRM) 2019 Employee Benefits survey notes more than half of employers (56%) offer some sort of tuition or student loan repayment assistance for employees, so education is clearly a priority for businesses.

1. More Skilled Employees

As the International Labour Organization (ILO) states, “Many of today’s skills won’t match tomorrow’s jobs, and skills acquired today may quickly become obsolete.” So workers need to update their skills on an ongoing basis.

Investing in your employee’s education can help you custom-build the skills, talent, and expertise you need to grow your business today and in the future.

2. Higher Retention Rates

Employees who take advantage of tuition reimbursement tend to stay with the company longer.

The Harvard Business Review noted one powerful example: when Fiat Chrysler Automobiles partnered with Strayer University to allow its dealership employees and their families to earn a degree free of charge, participating dealerships saw employee retention rates increase by nearly 40%.

3. Lower Recruiting Costs

Companies can promote educated employees to higher-level positions, saving the company time and money compared to filling vacancies with outside talent.

According to SHRM, the average cost of hiring a new employee is $4,425, or $14,936 for hiring an executive. That includes the cost of advertising the position, training, conducting interviews, and providing new hire orientation. Plus, it can take months for the new hire to acclimate to company culture and become fully productive.

On the other hand, promoting people from within generates little if any additional cost to the company.

4. Tax Breaks

The IRS allows employers to write-off up to $5,250 of tuition reimbursements per employee per year. These reimbursements are considered a tax-free fringe benefit, so they aren’t included in the employees’ wages, and the employer doesn’t have to pay Social Security, Medicare, federal or state unemployment taxes on the reimbursement.

To qualify for this tax perk, the tuition reimbursement plan has to be in writing and meet other requirements, including:

  • The program can’t favor highly compensated employees — generally defined as someone who owns at least 5% of the business or received more than $130,000 of compensation in the prior year.
  • The program doesn’t provide more than 5% of its benefits to shareholders, business owners, or their spouses or dependents.
  • The program doesn’t allow employees to opt to receive cash or other benefits instead of educational assistance.
  • All eligible employees have to receive reasonable notice of the program.

You can find more information about the IRS requirements for educational assistance benefits in IRS Publication 15-B.


Eligibility for Reimbursement

Employers can determine their conditions for reimbursement of employee tuition. Some common conditions include:

Length of Service and Performance

The first condition that may limit eligibility is length of service. Many employers offer tuition reimbursement only to full-time employees who have worked at the company for at least six months to a year. They also require the employee to still be employed with the company when they complete the course.

Employers can also require that the employee is meeting all performance expectations for their current position or require that the employee hasn’t been formally disciplined during the previous six to 18 months. The definition of discipline can vary from company to company but typically includes written warnings, demotions, or suspensions.

Program of Study

The next condition that may hinder eligibility is course of study. Many employers require that the courses or degree program can be applied within the organization. For example, a consulting firm may broadly define relevant subjects; on the other hand, a small IT firm may only reimburse specific technology-related courses.

The program can also require the employee to take classes only at a pre-approved educational institution such as a local university or community college or an accredited online college.

Cost

Another potential condition is the level of cost the company is willing to reimburse. Most tuition reimbursement programs have an annual cap on what they’ll cover. This limit varies greatly from company to company, but most employers base their caps on IRS limits.

As mentioned above, the IRS allows employers to deduct up to $5,250 of tuition costs per employee each year. Employers who pay more than $5,250 for an employee’s educational benefits during the year have to include it in the employee’s wages and pay all applicable payroll taxes, thus negating the tax benefits of the program.

Grades

An employer can require the employee to earn a passing grade to qualify for tuition reimbursement. For example, the policy may require that the employee passes the course with a letter grade of C or better.

Employers can also have scaled grade requirements. For example, the employer’s tuition reimbursement plan may specify that an A grade receives full reimbursement, a B grade receives 80% reimbursement, a C grade garners 60% reimbursement, and anything below a C is not eligible.


Final Word

A tuition reimbursement program is an attractive benefit that can help companies find, develop, and hold on to skilled talent. How you design your program depends on the needs of your business and employees.

If you want to try it out, consider starting by reimbursing employees for one work-related course per year, subject to manager approval. This will give you an idea of how popular the program will be with your employees, and you can decide whether to expand it in the future.

Source: moneycrashers.com

[Rumor – Update] American Express To Increase Personal Platinum Annual Fee

Update 4/7/21: Given the recent confirmation regarding the Centurion lounge changes I feel more comfortable sharing the rest of this rumor from work4amex:

  • $695 annual fee
  • $300 equinox credit
  • $240 entertainment credit, $20 monthly (magazine/news subscriptions, video streaming services and audio/music streaming services)
  • $200 credit for prepaid hotel bookings
  • Annual CLEAR membership will replace TSA Precheck, but Global Entry seems like it’ll stay
  • $100 temp Resy credit

Original post: According to FT user ThroughTheGrapevine, American Express plans to increase the annual fee on the personal Platinum card in Q3 2021 for new accounts and existing accounts will have the current fee apply until January 2022. The fee is rumored to be increasing to $695, but it’s possible a $745 or $795 price point could apply as well. The aim is for benefits to shift from travel to lifestyle.

Earlier this year American Express sent out a survey regarding possible changes to the business card and a new annual fee of $695 so I wouldn’t be surprised if this annual fee increase does happen but I have no idea how reliable this poster is. An increased annual fee would also make it easier to introduce a new mid level card (AmEx Optio).

Source: doctorofcredit.com

The Problem With Mortgage Rate Surveys

Every week, mortgage financier Freddie Mac comes out with a mortgage rate survey, which reveals the average interest rate (and points) charged by lenders for popular types of home loans.

About 125 lenders from across the nation, including thrifts, mortgage lenders, credit unions and commercial banks, take part in the survey that dates back to 1971.

The survey data is collected from Monday to Wednesday, and the results are posted on Freddie Mac’s website on Thursday of each week.

Come Thursday morning, the media goes nuts with the data in the report, known as the Primary Mortgage Market Survey (PMMS).

And just minutes after its release, you’ll see startling headlines like, “mortgage rates fall again,” or “mortgage rates climb higher.”

Mortgage Rate Surveys Use Old Data

  • The biggest flaw with the survey is that the rates are delayed
  • Because mortgage rates aren’t static
  • They are constantly in flux, both daily and intraday changes can take place
  • So you’re really just getting yesterday’s news at best

Unfortunately, whatever the message may be for a given week, it’s often old news by the time the media gets their grubby hands on it.

You see, mortgage rates can and will change daily, and sometimes swing dramatically, depending on what’s going on that week.

Lately, there have been plenty of swings thanks to all the uncertainty regarding the direction of the economy.

So a mortgage rate quote (yes, they’re just quotes in the survey) given to a handful of borrowers on Monday may be completely different by Thursday.

Sure, it could be exactly the same too, but chances are it won’t be. And the direction of rates often highlighted in news reports may be completely wrong as well.

Imagine opening up a newspaper on Thursday morning and viewing stock quotes from a few days earlier. That wouldn’t do you much good, would it? Especially if you had to act on it.

Assumptions Aplenty

  • Like all other rates you see advertised or surveyed
  • They make a series of assumptions
  • Such as a 20% down payment or a 740 credit score
  • Which may or may not actually apply to you

Okay, so the data isn’t as timely as the media might make it appear, even if it’s “weighted” and “averaged” and “algorithmically adjusted.”

Yes, I’m making up phrases here, but the point is the data is only as good as the day it is released, at least for the purposes of a prospective borrower shopping rates.

On top of that, the rates in the survey assume the world of you, the borrower.

The rates are based on first-lien (first mortgage) prime (great credit) conventional (non-government) conforming mortgages (small loan amounts) with a loan-to-value ratio of 80% (big down payment).

In other words, if you’re not putting down 20%, the rate in the survey isn’t for you. And if your credit score isn’t tip-top, you should also ignore the rates in the survey unless you want to be disappointed.

If you’ve got a jumbo loan, again, don’t bother reading the survey if you’re curious what rate you’ll actually receive.

Are the Mortgage Rate Surveys a Waste of Time?

  • Averages and old data don’t sound very useful
  • But the weekly mortgage rate surveys do have some value
  • In measuring interest rates over time for research and perspective
  • However for rate shopping they’re probably not all that helpful

I know I sound overly negative about the survey, but back in the day, I used to report on it just like every other major media outlet.

I stopped after I realized it wasn’t adding much value, not to mention the fact that 1000 other news outlets wrote about the very same stuff every Thursday morning.

The surveys aren’t inherently bad, they’re just not a very effective tool for borrowers shopping rates. If anything, they’re good to measure interest rates over time.

And a researcher may use the data to explain something that happened in the past, or to attempt to predict something that may happen in the future.

But for mortgage rate shopping, the Freddie survey (or any of the many, many other surveys out there) won’t do you much good. If anything, it could just frustrate you (and your loan officer) when the numbers don’t match up.

Zillow launched a weekly mortgage rate update a while back that is released every Tuesday.

They actually note that theirs isn’t a survey and the rates aren’t “marketing rates,” but rather are based on custom mortgage rate quotes submitted daily, reflecting the most recent market changes.

Again, take them with a grain of salt because there is no one-size-fits-all in mortgage lending.

So if you want the real skinny, get daily mortgage pricing from the bank or lender you’re working with.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

Stock Market Today: Markets Settle Down, But Backdrop Remains Rosy

Monday’s blowout session that sent the Dow Jones Industrial Average and S&P 500 to new heights was followed by much calmer, more horizontal, trading on Tuesday.

But it wasn’t for a lack of additional positive ammunition following Friday’s blockbuster jobs report.

This morning’s Job Openings and Labor Turnover Survey (JOLTS) was another window into an improving employment situation, showing that U.S. job openings hit a two-year high in February. Also, the International Monetary Fund (IMF) upgraded its 2021 outlook for both U.S. economic growth (from 5.1% to 6.4%), and global economic expansion (from 5.5% to 6.0%).

Still, the major indices spent Tuesday digesting the prior session’s gains; the Dow slipped 0.3% to 33,430, the S&P 500 was off 0.1% to 4,073, and the Nasdaq Composite was marginally off to 13,698.

Recovery-oriented stocks were among the day’s individual winners, especially those in the restaurant industry. Yum Brands (YUM, +3.1%), Domino’s Pizza (DPZ, +2.4%) and Chipotle Mexican Grill (CMG, +2.4%) all finished solidly in the black.

Sign up for Kiplinger’s FREE Investing Weekly e-letter for stock, ETF and mutual fund recommendations, and other investing advice.

Other action in the stock market today:

  • The small-cap Russell 2000 declined by 0.3% to 2,259.
  • U.S. crude oil futures improved by 1.2% to $59.33 per barrel.
  • Gold futures also were higher, by 0.8%, to $1,743 per ounce.
  • Bitcoin prices closed 1.3% lower to $58,242. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
stock chart for 040621stock chart for 040621

E-Commerce Can Still Get It Done

As great as “reopening plays” have been of late, don’t fall into the trap of thinking that all of 2020’s COVID-assisted trends are duds.

Take e-commerce, for instance.

While you might imagine a vaccinated America abandoning its keyboards for the malls, the smart money recognizes that COVID only further entrenched the already growing digital-spending trend, and they see further promise even as more people get ready to go out.

“The convenience offered by eCommerce will continue to be an important consideration to consumers as they return to travel and social activities, and those people who tried shopping online for the first time during COVID are likely to continue using these services with greater frequency moving forward,” says a team of Canaccord Genuity analysts.

Many of the best individual plays are the very same stocks that enjoyed a COVID lift, and some are considered among the market’s most innovative companies — an important quality that can drive outsized long-term returns.

But if you’re hesitant to put all your chips on one or two individual names that could get choppy over the short term, we don’t blame you, and we have a solution: e-commerce funds. Read on as we highlight nine e-commerce ETFs that leverage the growth in digital spending in a variety of ways, and explain how each one might suit different individual investors’ tastes.

Source: kiplinger.com

The Secret to Beating a Car Dealer

Roughly 26% of car buyers feel that they overpaid for their vehicle, according to a 2014 survey from TrueCar, Inc. That same survey admittedly also found consumers believe car dealers make about five times more profit on the sale of a new car than they actually do — but whether you truly paid too much for your now-old ride or you simply think you did, there are ways to save the next time you hit up a car dealership. For starters, the rates on auto loans are largely driven by your credit, so simply bolstering your credit score can potentially save you thousands of dollars over the life of your loan. Plus, it never hurts to comparison shop and negotiate when it comes to auto loans and the actual vehicle itself — you may be missing out on savings by doing one and not the other.

But First… How Much Car Can You Afford?

According to Credit.com contributor and car insurance comparison company TheZebra, automotive experts generally suggest auto loans not exceed 10% (if it’s just the loan) to 20% (if it’s the loan and related expenses like car insurance) of your gross monthly income. Of course, that’s a broad rule and every potential car owner is going to have to take a long, hard long at their finances and current debt levels to decide what they can, in fact, afford. Following these three simple cost-cutting steps can help you save big on your auto loan and next car purchase.

/*Chat Animation*/ #animation-wrapper max-width: 450px; margin: 0 auto; margin-bottom: 50px; width: auto; #animation-wrapper .box background-color: rgb(44, 74, 94);color: #fff;text-align: center;font-family: “ProximaNova-Regular”, Arial, sans-serif;height: 153px;padding-top: 10px; .content .box p margin: 0px 0px; .box .btn-primary color: #fff;background-color: #ff7f00;margin: 10px 0px; .chat ul margin: 0px;padding: 0px;list-style: none; .message-left .message-time display: block;font-size: 12px;text-align: left;padding-left: 30px;padding-top: 4px;color: #ccc;font-family: Courier; .message-right .message-time display: block;font-size: 12px;text-align: right;padding-right: 20px;padding-top: 4px;color: #ccc;font-family: Courier; .message-left text-align: left;margin-bottom: 16px; .message-left .message-text max-width: 80%;display: inline-block;background: #e5e6ea;padding: 13px;font-size: 14px;color: #000;border-radius: 30px;font-weight: 100;line-height: 1.5em; .message-right text-align: right;margin-bottom: 16px; .message-right .message-text line-height: 1.5em;display: inline-block;background: #5ca6fa;padding: 13px;font-size: 14px;color: #fff;border-radius: 30px;line-height: 1.5em;font-weight: 100;text-align: left; .chat background: #fff; margin: 0; border-radius: 0; .chat-container height: 450px;padding: 5px 15px;overflow: hidden; .spinme-right display: inline-block;padding: 15px 20px;font-size: 14px;border-radius: 30px;line-height: 1.25em;font-weight: 100;opacity: 0.2; .spinme-left display: inline-block;padding: 15px 20px;font-size: 14px;color: #ccc;border-radius: 30px;line-height: 1.25em;font-weight: 100;opacity: 0.2; .spinner margin: 0;width: 30px;text-align: center; .spinner > div width: 10px;height: 10px;border-radius: 100%;display: inline-block;-webkit-animation: sk-bouncedelay 1.4s infinite ease-in-out both;animation: sk-bouncedelay 1.4s infinite ease-in-out both;background: rgba(0,0,0,1); .spinner .bounce1 -webkit-animation-delay: -0.32s;animation-delay: -0.32s; .spinner .bounce2 -webkit-animation-delay: -0.16s;animation-delay: -0.16s;@-webkit-keyframes sk-bouncedelay 0%,80%,100%-webkit-transform: scale(0)40%-webkit-transform: scale(1.0)@keyframes sk-bouncedelay0%,80%,100%-webkit-transform: scale(0);transform: scale(0);40%-webkit-transform: scale(1.0);transform: scale(1.0); /*Text Ad*/ .ad-container padding: 15px 30px;background-color: #FFFFFF;max-width: 690px;box-shadow: 1px 1px 4px #888888;margin: 20px auto; .ad padding: 10px 6px;max-width: 630px; .ad-title font-size: 20px;color: #0077BB;line-height: 22px;margin-bottom: 6px;letter-spacing: -0.32px; .ad-link line-height: 18px;padding-left: 26px;position: relative; .ad-link::before content: ‘Ad’;color: #006621;font-size: 10px;width: 21px;line-height: 12px;padding: 2px 0;text-align: center;border: 1px solid #006621;border-radius: 4px;box-sizing: border-box;display: inline-block;position: absolute;left: 0; .ad-link a color: #006621;text-decoration: none;font-size: 14px;line-height: 14px; .ad-copy color: #000000;font-size: 14px;line-height: 18px;letter-spacing: -0.34px;margin-top: 6px;display: inline-block; .ad .breaker font-size: 0px; #ad-4 font-family: Arial, sans-serif;background-color: #FFFFFF; #ad-4 .ad-titlecolor: #2130AB; #animation-wrapper .cta-lexcolor: #FFFFFF; width: 80%; #animation-wrapper .lex-logodisplay: inline-block; @media (max-width: 500px) .ad padding: 20px 18px;max-width: 630px;

1. Do a Credit Check

Not checking your credit before you start shopping for a car is a huge mistake. Because your auto loan rates are directly tied to your credit scores, even a small inaccuracy on your credit report could cost you. Before you start shopping for your dream car, take an hour to check all three of your credit reports and credit scores online. You need to check with all three major credit reporting agencies — Equifax, Experian and TransUnion — because you don’t know which one a lender will use for your application. If you have a credit score above 750, you can probably qualify for the best rates available and negotiate an excellent deal on your car. If your credit score is lower, see if you can give it a boost before you apply for a loan.

You can view two of your credit scores, along with your free credit report snapshot on Credit.com. The snapshot will pinpoint what your specific area of opportunities are and what steps you can take to improve. However, as a general rule of thumb, you can raise your credit score by disputing errors on your credit report, paying down high credit card debts and limiting new credit applications.

2. Shop Online

Unless you have a credit score in the 800s and can qualify for a 0% auto loan offer, you are probably not going to get the best deal on a loan from the dealership. Auto loan rates and fees offered by online auto lenders are usually a lot lower than the rates offered by dealership financing programs. Plus, you can shop and compare rates online without causing damaging inquiries to your credit report (provided you’re not formally applying for every offer you see). Most online lenders have calculators or rate guides that show you what rate you could receive based upon your credit score. (Note: Be sure to vet any lender, whether online or within a dealership, before taking them up on an offer.)

With many online loans, you fill out the application and receive an approval by email within a few hours. Then the lender mails you a check that is ready to be made out to the person or business selling the car. If you end up not buying a car or not using the loan, you toss the check (shredding it first, of course). Plus, the check from the lender usually specifies a certain price range (for example, $9,000-$10,000). This leaves you with some room for negotiating a lower price with the seller even after you have received your loan approval. Speaking of which …

3. Negotiate the Price

Many people may wind up overpaying for a car simply to avoid negotiating the price of a car with a salesperson. Luckily, the Internet makes negotiating with car dealers a whole lot easier. Before you start shopping, look up the listed price, invoice and MSRP of the car you want through an unbiased site like Kelley Blue Book and request free price quotes online. Armed with these facts, you’ll have an advantage over the salesperson when you start the negotiations. You should be able to save a couple hundred dollars, if not a few thousands, by negotiating with the car salesperson before you decide to buy.

Proving It

You may be thinking: This is all fine and dandy, but does it really add up to $3,000 in savings? Let’s crunch the numbers using this auto loan calculator.

According to data from Experian, the average interest rate on a new car loan for prime customers as of the last quarter of 2015 was 3.55%. The average rates on a new car for non-prime customers and subprime customers during that timeframe were 6.24% and 10.36%, respectively.

So, let’s say you wanted to buy a $16,000 car and had $1,000 saved for a down payment. If you chose a loan repayment period of 60 months, had a non-prime credit score (think just below 700), and got a loan through a dealership, you could receive about a 6.3% annual percentage rate (APR).

  • Dealership option: $292 a month – $17,525 total costs

However, if you checked your credit reports and scores before you applied and found a way to boost your score to prime (think around 750), your interest rate from the dealership could drop to about 3.5%.

  • Improved score: $273 a month – $16,373 total costs

You would have already saved $1,152 dollars, just by checking your credit reports! That’s a pretty good return on your investment. Next, you might be able to reduce your rate even more by shopping for a loan online with your new credit score of 750. Let’s suppose, for argument sake, you qualify for a 2.7% APR (the average interest rate for super-prime customers during the last quarter of 2015, according to Experian).

  • Online loan: $268 a month – $16,052 total costs

You would have saved almost $1,473 by working on your loan options using Step 1 and 2. Finally, if you went to negotiate with the salesperson you could probably make a deal with the seller to reduce the price of the car down to $14,000. In this case, you would only have to borrow $13,000 with your 2.7% APR loan from an online lender.

  • Negotiated deal: $232 a month – $13,912 total costs

Your total savings from following these three simple steps would equal $3,613 over the life of your auto loan!

Source: credit.com

Short Term vs. Long Term Disability Insurance

Your income is one of your biggest assets, and losing it can quickly take a toll on your financial well-being.

According to a Lifehappens.org survey, two-thirds of working Americans could not go six months before financial difficulties would set in, while 14 percent would be negatively impacted immediately.

Disability insurance can offer an important safety net because it pays you a percentage of your salary if an illness or injury ever prevents you from working.

There are two main types of disability insurance–short term disability insurance, often offered through employers, and long term disability insurance, which may need to be purchased separately.

As their names imply, short term disability insurance lasts for a shorter period of time than long term disability insurance.

But there are other key differences between short term and long term disability (or STDI vs. LTDI), including how quickly coverage kicks in, as well as costs.

Here, we’ll take a close look at both types of disability insurance to help you determine what type of coverage might work best for you.

What is Short Term Disability Insurance?

Short term disability insurance (also called short term disability income insurance, or STDI) is a type of insurance that will provide supplemental income in the event of an injury or illness that may keep you from working.

The amount of time you can receive benefits (or supplemental income), is known as the benefit period.

Short term disability policies typically have a benefit period of three to six months, though some may even last up to a year. The shorter the benefit period, the less you or your employer will pay in premiums for coverage.

Benefits vary by plan, but these policies typically pay anywhere between 50 to 70 percent of your pre-disability salary during that time.

Disability policies also have specific start dates when your payments begin. This waiting period is typically referred to as the elimination period.

Short-term disability policies often have an elimination period of 14 days (though this can range from 7 to 30 days). That means payments would start 14 days after your disability occurs (or the last day you were able to work).

Some employers have policies that require employees to take all of their sick days or, if the injury happened on the job, workers’ compensation benefits, before short-term disability is paid.

Employers may also require you to show proof from a doctor that you have undergone an illness or injury that prohibits you from working.

They also may require you to see an approved healthcare provider for regular updates on your condition while you are out of work. Many of the rules for short-term disability coverage are determined by your state.

How Do I Purchase Short Term Disability Insurance?

Most commonly, people get disability insurance through their employer. Companies often offer this benefit for no or very low cost.

In some states it’s mandatory for employers to offer this and you may pay a small fee for this from payroll deductions. Your employer is generally the easiest and most cost-efficient way to get short-term disability insurance.

If you are self-employed, or your employer doesn’t offer this benefit, you may be able to purchase short term disability insurance from a private insurer. The hitch is that few carriers offer private short-term insurance and, if they do, it tends to be costly.

You could pay anywhere from one to three percent of your annual salary for a benefit that may only last a few weeks or months.

You may find it makes more sense to invest in long term disability insurance.

What is Long Term Disability Insurance?

Long-term disability insurance (also known as long term disability income insurance or LTDI) is an insurance policy that protects employees from loss of income in the event that they are unable to work due to an illness, injury, or accident for a long period of time.

The benefit period (or the amount of time you’ll receive benefits) for long term disability insurance is often a choice of five, 10, or 20 years, or even until you reach retirement age, depending on the plan. In general, the longer the benefit period, the more you’ll pay in premiums.

Long-term disability insurance typically pays about 50 to 60 percent of your pre-disability salary, depending on the policy. In most cases, the higher that number, the higher the premium.

Some policies will also make up the gap in your income if you must return to work at a lower wage job because of an illness or injury. That coverage may also come with a higher premium.

The elimination period (the amount of time you must wait until benefits begin) for long term disability insurance usually includes several options, including 30, 60, 90, 180 days, or a full year.

In general, the longer the elimination period, the less you will pay in premiums. The most common elimination period is 90 days.

But if you can’t afford a policy with that elimination period, you may be able to reduce your premium costs by electing a longer period of time until benefits start.

You may want to keep in mind, however, that a longer elimination period means that you would have to go without income for a longer period of time, and might need to have savings or other resources to cover living expenses.

Each long-term disability insurance policy has different conditions for payout, diseases, or pre-existing conditions that may be excluded, and various other conditions that make the policy more or less useful to an employee.

Some policies, for example, will pay disability benefits if the employee is unable to work in his or her current profession. Others expect that the employee will take any job that the employee is capable of doing—that’s a big difference and could be consequential to the employee.

How Do I Purchase Long Term Disability Insurance?

Some employers offer subsidized long term disability insurance policies to employees at discounted group rates.

If your employer doesn’t offer this, you may be able to purchase long term disability insurance from a private insurer. Unlike short term disability insurance, these policies are widely available.

Also unlike short term disability insurance, private insurers typically offer individuals a range of long term disability policies to choose from.

Long term disability insurance is also sometimes available for purchase through professional associations, potentially at discounted group rates.

The cost of long term disability insurance can vary depending on the benefit period, the elimination period, your age, health, occupation, along with other factors. In general, these policies tend to run between one and three percent of your annual salary.

This is about the same as if you purchased a short-term disability policy outside of your employer.

If you were to use the insurance, however, you would benefit for years, not months, making long term disability insurance more cost-efficient than short term disability insurance.

Do I Need Short Term Disability if I Have Long Term Disability?

When possible, it can be beneficial to pair short term and long term disability insurance together.

Short term disability is intended to cover you immediately following a serious illness or injury, and long term disability insurance is intended to maintain supplemental income if your condition keeps you out of work past the end of your short term disability benefit period, even to retirement, depending on your plan.

If you have both short term and long term disability policies in place, short term disability can pay you benefits during the elimination or waiting period before your long term disability coverage begins, at which point you would transition from one policy to the next to receive benefits.

The combination can help you achieve the smallest possible income gap should you need to use disability insurance.

The best combination for you will depend on what options your employer offers, how much money you have saved in an emergency fund, and what you may be able to afford to purchase on your own.

The Takeaway

Disability income insurance offers an important way to protect your livelihood should you find you can no longer work at the same capacity you were expecting.

The primary distinction between short and long term disability insurance is the coverage period.

Short term policies generally cover just the first few months you’re unable to work. Long-term policies, on the other hand, can last for years—decades even—after you’re unable to work and may see you through retirement.

Because long term disability insurance benefits don’t start right away, it can be beneficial to pair long term disability benefits with short term disability insurance.

If your employer does not offer short-term disability coverage free or for a very low fee, another good option is to put together your own short term disability coverage by saving three to six months of expenses in an emergency fund.

That way, If you get sick or injured and have to take time off work for a few months, your savings can fill in the gaps until you get back on your feet.

If your emergency fund is currently small (or nonexistent), you may want to consider signing up for SoFi Money®. SoFi Money is a cash management account that allows you to earn, spend, and save–all in one place.

With SoFi Money’s special “vaults” feature, you can easily set up a separate emergency fund, and also sign up for recurring deposits to help build your back-up fund faster.

Start building your emergency fund with SoFi Money today.



SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank.
SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
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.
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.

SOCO21019

Source: sofi.com