5 Tips for Breaking the Payday Loan Cycle

An Amscot store, which provides payday loans, is pictured in Orlando, Fla., on Friday, July 19, 2017.

An Amscot store, which provides payday loans, is pictured in Orlando, Fla., on Friday, July 19, 2017. Tina Russell/The Penny Hoarder

A payday loan can offer a quick reprieve from unexpected expenses or a spell of tough luck.

But if you don’t have enough money to pay back the loan on your next payday, you may need to take out another loan — or roll your balance into a new loan with interest rates that can be well over 300%.

Almost 70% of payday loan borrowers take out a second payday loan within one month. And according to the Consumer Protection Financial Bureau, 1 in 5 new borrowers end up taking out at least 10 payday loans.

This payday loan cycle can turn a short-term loan of a few hundred dollars into a growing mountain of debt totaling thousands of dollars. The average repeat borrower pays $458 in fees on top of their principal over the course of a year.

And when you’re that far behind, it’s hard to ever get ahead.

If this sounds familiar, read on for practical tips for getting payday loan relief.

Tips to Stop the Pay Day Loans Cycle
Kristy Gaunt – The Penny Hoarder

1. Cut Your Costs

Reducing your expenses can be one of the toughest ways to get out of the payday loan cycle if you’re already living on a tight budget and struggle to find ways to save. If you can’t cut costs, you may need to ask for help to defray some of your costs temporarily.

Asking for help takes strength, but it might make it easier to find extra money in your budget, even if just for a month or two. You may be able to access free meals for your school-age children or visit a local food pantry to get by on a lower grocery budget. College students may be able to request help from an emergency financial assistance fund.

Your church or local community groups may be able to get you temporary help. You can also call 211, the United Way’s health and human services referral line, which can direct you to services in your area, or visit 211.org to locate resources.

2. Earn More Income

Kisha Howard of Orlando stands in front of the Amscot store she used to borrow money from after her mother suffered from a stroke.
Kisha Howard of Orlando stands in front of the Amscot she used to borrow money from after her mother suffered from a stroke. Tina Russell/The Penny Hoarder

Kisha Howard of Orlando, Florida turned to payday loans when she felt like she was out of options to make ends meet. “At the end of the day, if you didn’t have the money in the first place, you still won’t have it,” she warns.

To overcome her financial gap, she worked as much overtime as she could to boost her income. “Each pay period, I decreased the amount of the loan needed until I no longer needed the additional funds and was able to cover the bills with my income,” she says.

If you have any spare time and energy, it might be worth it to pick up a side gig. Think about selling your services as a pet sitter, weed puller or errand runner — these side hustles don’t require much in the way of startup costs.

3. Use a Windfall for Payday Loan Relief

Lisa Servon, a professor at the University of Pennsylvania, has studied the payday loan landscape for years, talking to hundreds of borrowers about their experiences.

She said getting out of the payday loan cycle often requires some sort of windfall, recalling one woman she interviewed who used her tax refund to pay off her loan. “She really targeted her tax refund from the earned income tax credit, paid off the loans and then really cut back on spending and watched her expenses,” Servon says.

Getting a huge tax refund isn’t ideal, but if you expect to get a little bit back from Uncle Sam, it can help get you out of that payday loan hole.

4. Ask for Payment Arrangements

Looking back at her payday loan experience, Howard regards it as “a very expensive shortcut.” She says it’s “better to budget accordingly and request arrangements for bills when necessary. Companies work with you when you communicate.”

You may be able to negotiate lower bills on essentials like utilities or set up an interest-free payment plan to make larger bills more manageable.

5. Talk About it

“Advocacy and organizing is the way out,” says Maurice BP-Weeks, co-director of Action Center on Race & the Economy.

He compares the payday lending landscape to the housing crisis of the recession. “If you’ve gotten into the spiral, it’s really not your fault,” he says. “Contact the CFPB or your local representative and explain your situation. This is not fair. Companies shouldn’t be allowed to peddle these products.”

Similarly, it can help to be open about your situation with friends and family. You may be able to provide valuable advice before someone you know turns to payday loans in a time of need.

More than a dozen states have banned high-interest, short-term loans, but it’s still easy to get a payday loan — and get trapped in the debt cycle — in three-quarters of the country.

Lisa Rowan is a writer and producer at The Penny Hoarder.

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Source: thepennyhoarder.com

Senior Home Equity Booms: Should You Get a Reverse Mortgage?

Senior couple at home
Photo by wavebreakmedia / Shutterstock.com

Homeowners who are 62 or older are sitting on a record amount of home equity, according to new figures from the National Reverse Mortgage Lenders Association.

From the first quarter of this year to the second quarter, housing wealth among those 62 and older grew by 1.8% — or $134 billion — and now totals $7.7 trillion.

All of that locked-up wealth may tempt some seniors into considering a reverse mortgage, particularly during these tough times brought on by the coronavirus pandemic.

What is a reverse mortgage?

A reverse mortgage is like the home loans we all are familiar with, but with an important twist. With this type of mortgage, you borrow money against your house and get cash every month.

Other types of reverse mortgages give you money as a lump sum or let you use the mortgage to establish a line of credit.

To get a reverse mortgage, you must be 62 or older. But is a reverse mortgage a good idea?

Advantages of reverse mortgages

Money Talks News founder Stacy Johnson says reverse mortgages can make sense for some homeowners. As he has written:

“If you’ve got a lot of equity in your house and Social Security just isn’t doing it for you, well, maybe this is a great way for you to increase your monthly income by tapping your home equity without leaving your home.”

Stacy notes that people who take out reverse mortgages generally plan to stay in their homes until they die. After a homeowner with a reverse mortgage dies, the home is sold to pay off the loan, or simply turned over to the lender.

Drawbacks of reverse mortgages

A reverse mortgage does not always make sense. That is especially true if you have heirs who would like to own your home after you die. As Stacy explains:

“Remember, the mortgage is getting bigger and bigger. When you die, or when you move to a nursing home, etc., someone will have to pay off that mortgage if you want to keep the house in the family.”

Should you get a reverse mortgage?

It can be difficult to decide whether a reverse mortgage is right for you.

Stacy recommends sitting down with an expert at a nonprofit credit counseling agency and discussing your options. Such counseling is not free — Stacy estimates it will cost between $100 and $125. However, paying that fee is a lot less costly than making a big mistake.

Additionally, counseling is required before you can close on a reverse mortgage. So, even if you decide to go ahead with a reverse mortgage, the counseling cost will not be money wasted.

If you decide a reverse mortgage is not right for you, consider any of the “10 Alternatives to a Reverse Mortgage.”

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

Source: moneytalksnews.com

7 Reasons to Carry Mortgage Debt Into Retirement

Senior couple in front of their home
Photo by Andy Dean Photography / Shutterstock.com

Paying off a home mortgage before you retire is a common goal, but it isn’t always the best financial strategy.

It could end up costing you in the long run — such as by leaving you without cash savings to cover an unexpected expense, or without the flexibility to take advantage of an opportunity to earn a better return on your money.

Here are some financially shrewd reasons to carry your mortgage debt into retirement.

1. You plan to sell your home

Many people decide to downsize before or in retirement. They find that a smaller, less expensive home better fits their retirement lifestyle, as we detail in “7 Surprising Advantages of Downsizing as a Retiree.”

If you think you may be selling your home soon, think hard before paying off the mortgage on that home. Selling a dwelling may provide money to repay your home loan without having to deplete savings.

2. You plan to rent out your home — or a room

Does your retirement plan include relocating and renting out your present home? There’s no pressing need to pay off a home loan if the tenants’ rent payments will cover future mortgage costs.

You could avoid tapping into savings to pay off the loan. You might even realize a profit after your mortgage bill is paid each month.

That could be true even if you remain in the home and simply rent out a spare room through a vacation rental site.

A 2018 analysis by Homes.com found that in some cities, a homeowner could make enough money by renting out a room just four or five nights per month to cover a monthly mortgage payment. We detailed the analysis findings in “Do This a Few Days Each Month and Watch Your Mortgage Disappear.”

3. It’s more important to repay debts with higher interest rates

Before you commit to paying off a mortgage, determine whether there are better ways to spend your money.

For example, if you’ve purchased or refinanced a home in the past decade, your home loan likely has a relatively low interest rate. And if that’s the case, you will be better off financially if you first repay debts with higher interest rates, such as credit card debt.

Paying off the debt with the highest interest rate first will save you more money in interest payments over the life of the debt.

4. You’re still saving for retirement

Not everyone completes their career with enough money to enjoy a comfortable retirement. That’s why many Americans continue to work after age 65, the traditional retirement age.

If you’re contributing to a retirement account, such as an individual retirement account (IRA) or a 401(k), it may make more sense to use any extra money you have to build retirement savings rather than to repay the mortgage ahead of schedule.

Retirement accounts are tax-advantaged. So, saving money in one will likely enable you to lower your taxable income now or avoid taxation when you withdraw funds from the account in retirement, depending on whether the account is Roth or traditional.

To learn more, check out “Confused by Retirement Accounts? Roth, Regular IRAs and 401(k)s Made Simple.”

5. You’re low on cash reserves

Maintaining an emergency fund is critical for financial stability. If paying off a mortgage will drain cash reserves, it could leave you in a weakened position. No one can predict when an emergency will happen.

Corey Vandenberg, a mortgage banker in Lafayette, Indiana, says people who pay off their mortgages early often end up with lots of home equity, but no money in the bank.

“This position is not financially healthy,” he tells Money Talks News. “You have to have an emergency fund for life’s unexpected events.”

6. You’d rather maximize income through investments

If you pay off the mortgage, you will have less cash to invest. Much of your wealth will be tied up in the value of your home. The only way to get at it will be to sell the home or borrow against your home equity.

Without any liquid funds on hand, it will be more difficult to take advantage of an investment opportunity.

7. You want to deduct mortgage interest

One of the benefits of being a homeowner is the ability to deduct the interest you pay on a home loan on your tax form.

The Tax Cuts and Jobs Act of 2017 — the federal tax reform law — placed new limits on the deduction, but it’s still beneficial to homeowners, says Eric Tyson, co-author of “Mortgages for Dummies.”

For loans taken out after Dec. 15, 2017, most homeowners can deduct the interest they paid on up to $750,000 of qualified personal residence debt on a first and/or second home, Tyson tells Money Talks News. Married couples filing separate tax returns can deduct up to $375,000.

The previous limits were $1 million and, for married taxpayers filing separately, $500,000. If you took out your home loan before Dec. 16, 2017, you’ll be allowed to deduct interest under those old limits.

Mortgage interest is an itemized deduction, however. That means you can only take advantage of it if you itemize deductions, as opposed to taking the standard deduction. And the 2017 tax reform substantially increased the standard deduction.

As a result, far fewer taxpayers now opt to itemize deductions on their tax returns, since claiming the new standard deduction gains them more money.

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

Source: moneytalksnews.com

12 Ways to Maximize Your Social Security Checks

Happy retirees at home
Dragana Gordic / Shutterstock.com

If you have focused all retirement planning energy on your 401(k), you may be missing a key piece of the puzzle: Social Security.

You can influence your eventual payout from this old-age safety net to a surprising degree by making some adjustments, or by making changes in retirement planning.

The time to get started pumping up your Social Security checks is now, even if you’ve got decades to go before retirement. Following are some of the best ways to do just that.

1. Raise your income

standret / Shutterstock.com

Because the amount of your Social Security checks is based partly on your earnings, doing what you can do now to grow your income will fatten your Social Security checks in the future.

Some ways to boost your income:

  • Focus on regular raises. Assess your value at work and approach your employer the smart way.
  • Consider changing jobs if your salary has topped out in your current job.
  • Plan for professional growth, including evaluating whether more schooling would be worth the cost, or whether you should enter a new line of work.

2. Avoid claiming benefits too early

Still Life Photography / Shutterstock.com

The age at which you start collecting Social Security makes a big difference in the size of your checks.

You generally can start claiming benefits as early as age 62. But your benefits checks will be smaller if you claim any time before you reach what the Social Security Administration calls your “full retirement age.”

For example, if you start receiving benefits immediately, at age 62, your checks will be forever 20% to 30% smaller than if you had waited until you reached your full retirement age. Here are “7 Reasons You Should Not Claim Social Security Early.”

Some people have no choice, though. Many retirees stop working earlier than planned because of illness or unemployment, or to be caregivers for a family member, for example. If this is the case for you, try using other sources of income if possible, so you can hold off claiming benefits until you’re older.

On the other hand, if you don’t expect to live to a very old age, it may be a good idea to claim that money now. It depends on your circumstances. Here are “5 Reasons You Should Claim Social Security ASAP.”

3. Hold on until age 70

Lucky Business / Shutterstock.com

Just as claiming Social Security before your full retirement age can lead to a smaller check, delaying claiming until after reaching full retirement age can lead to a bigger check.

The Social Security administration gives these examples to illustrate the value of waiting:

  • “67, you’ll get 108% of the monthly benefit because you delayed getting benefits for 12 months.
  • 70, you’ll get 132% of the monthly benefit because you delayed getting benefits for 48 months.”

After age 70, however, there is no more benefit to waiting. At that point, you’ve maxed out the value of waiting. Don’t hold off claiming benefits beyond your 70th birthday.

4. Get professional help

Social Security advisor
Iakov Filimonov / Shutterstock.com

In many instances, an informed decision about when to claim which Social Security benefits can boost benefits by tens of thousands of dollars over your lifetime, especially for couples.

Various companies will prepare a customized analysis revealing exactly when to claim Social Security benefits to receive the maximum lifetime payout.

Social Security Choices sells one such product for $39.99 and, in partnership with Money Talks News, offers a $10 discount. Use coupon code “moneytalks” when buying a report. Stop by our Solutions Center and read “A Simple Way to Maximize Your Social Security” to learn more.

5. Look into spousal benefits

Rawpixel.com / Shutterstock.com

Married people have an advantage in the Social Security system. A married person may be able to receive up to half the amount of his or her spouse’s full retirement benefit. Even a spouse who never worked may be able to claim benefits.

A divorced person who was married 10 years or longer may also qualify for spousal benefits.

6. Pump up your spouse’s survivor’s benefits

Older couple practicing yoga
wavebreakmedia / Shutterstock.com

When you die, your Social Security benefits end, but your widow or widower may be eligible to receive survivor’s benefits on your Social Security record.

The amount of survivors benefits that your spouse would be eligible to receive depends in part on your earnings history. So, do all you can now to increase your earnings.

7. Weigh the cost of working while claiming benefits

PointImages / Shutterstock.com

If you claim Social Security benefits before reaching full retirement age and also work, it can cost you. The government could reduce your Social Security checks by as much as $1 for every $2 in earnings over a certain amount, up until you reach full retirement age.

The amount you are dinged, however, eventually will be paid back to you, the SSA says.

Once you reach full retirement age, your monthly benefit will increase to account for the withheld benefits. You just have to live without it for the period during which you are still working but have yet to reach full retirement age.

We explain this in detail in “The Danger of Working While Collecting Social Security.”

8. Pay off debts

bacho / Shutterstock.com

Social Security checks can be garnished for certain debts and other financial obligations. These can include:

  • Child support
  • Alimony
  • Overdue federal taxes
  • Federal student loans

If possible, pay these off before retirement so you can keep your entire benefit check.

9. Check for errors

WAYHOME studio / Shutterstock.com

Monitor your Social Security statements, looking them over to ensure your income is reported correctly. Getting credit for every penny you’ve earned will boost your eventual benefit checks.

You can do this all online by creating a SSA.gov account.

Also, creating an account is the best way to guard your Social Security from thieves.

10. Collect benefits for minor children

Karunyapas / Shutterstock.com

Once you start collecting Social Security benefits, your unmarried dependent children may be eligible for benefits also.

The definition of “children” here can include biological and adopted children, stepchildren and dependent grandchildren, depending on the child’s age and other circumstances.

11. Work more years

Poznyakov / Shutterstock.com

The size of your Social Security benefit checks is generally decided by a formula that is effectively based on your 35 highest-earning years of work. If you work for fewer than 35 years, the formula uses zeros for the missing years’ earnings.

Years of zero earnings will lower your benefits. So, at least work for 35 years before you stop working.

12. Watch out for taxes

Christian Delbert / Shutterstock.com

If your only income in retirement will be from Social Security, you probably won’t have to worry about paying income taxes. But if you have income from other sources, you can be taxed on up to 85% of your benefits.

Federal taxes on Social Security benefits are based on your tax filing status and, if you are married, on what the SSA calls your “combined income.” Combined income comprises your adjusted gross income, half your Social Security benefits and any nontaxable interest.

Some ways of reducing your federal income tax bill in retirement might be to choose investments that would lower your tax liability or reduce your spending to draw less income from your retirement savings each year.

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

Source: moneytalksnews.com

7 Surprising Things That Damage Your Credit Score

Woman sitting on exercise ball
Photo by cunaplus / Shutterstock.com

The next time you check your credit score, you might discover it has taken a tumble because of a seemingly small mishap on your part.

This happened to me once because I misplaced a bill for a whopping $12.70. My nonpayment ended up being reported to credit bureaus, also known as credit-reporting agencies.

The result was an 80-point decrease in my credit score and several months of regret. My credit score rebounded, but this small oversight still haunts me.

With my precautionary tale in mind, here are some other types of mishaps that can damage your credit score.

1. Car rental reservations

Planning to rent a car? If you use a debit card to make the reservation, the rental car company might require a credit screening. That can ding your credit score, as we detail in “9 Things You Should Never Pay For With a Debit Card.”

Here’s a better option: Confirm the reservation with your credit card to avoid the unnecessary credit inquiry. Then, settle the final bill with your debit card upon returning the vehicle.

2. Closing credit cards

Closing a credit card account sounds smart, but it actually can hurt your credit score. In fact, we cite it in “10 Common and Costly Credit Missteps.”

Closing an account affects what’s known as your credit utilization ratio. That is the percentage of your available credit that you are using.

This ratio affects both FICO credit scores and VantageScore credit scores. The lower your ratio — meaning the least of your available credit that you’re using — the better your credit score will be.

Closing a credit card account you’re not using decreases your available credit, however. That increases your credit utilization ratio, hurting your credit score.

3. Past-due rent payments

Fail to pay the rent on time, and the landlord might report your delinquency to credit bureaus.

If you’re having trouble with the rent, meet with your landlord and propose an alternative payment plan until you’re caught up. That way, you can salvage your good name and credit.

4. Defaulting on recurring bills

If you are even slightly past due on a bill from a cellphone or utility company or other provider of recurring services, chances are you’ll receive several notices before services are terminated.

But once the provider has had enough, expect to be turned over to debt collectors and subsequently reported to the three main nationwide credit-reporting companies — Equifax, Experian and TransUnion. Don’t ignore correspondence or fail to settle outstanding obligations.

5. Breached gym membership contracts

Even if you are tired of forking over hard-earned cash each month for a gym membership you aren’t using, don’t just walk away.

Properly close the account, or it could cost you in the form of early termination penalties and a damaged credit score.

6. Outstanding medical bills

If you’re having trouble paying medical bills, make sure you tend to the matter promptly. Request a payment plan, for example.

Ignoring collectors by muting the ringer on your phone or sending their calls to voicemail can eventually result in a blemish — in the form of a collection account — on your credit report.

Due to credit industry changes announced several years ago, medical debts are reported only after a 180-day waiting period designed to allow enough time for insurance payments to be applied. And in general, credit-reporting agencies are placing less weight on outstanding medical debt.

Still, tending to medical bills promptly can help you avoid a credit blemish in the first place.

7. Too many credit card applications

Ten percent of your FICO credit score is determined by how you shop for credit. According to Fair Isaac Corp., or FICO, the company behind FICO scores:

“People tend to have more credit today and shop for new credit more frequently than ever. FICO Scores reflect this reality. However, research shows that opening several new credit accounts in a short period of time represents greater risk — especially for people who don’t have a long credit history.”

So, remember this the next time you’re offered a store credit card at the checkout counter as part of a deal that could save you some significant cash on the purchase. The price of that one-time savings might be a lower credit score.

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

Source: moneytalksnews.com

10 Mistakes That Cost You Money at Warehouse Stores

Unhappy shoppers
Pressmaster / Shutterstock.com

Being a member of Costco, Sam’s Club or BJ’s might seem like a steal when you find great deals. But there’s a chance you’re wasting more money than you’re saving.

Sure, deals abound at warehouse stores. However, if you’re not approaching shopping trips smartly, you could be throwing money away, regardless of which warehouse store you go to.

Following are some key ways you might be overspending at these membership clubs — likely without even realizing it.

1. Not earning cash back

grocery shopping
Stokkete / Shutterstock.com

Hopefully, you already know there are multiple ways to earn cash back when shopping online — including on wholesale clubs’ websites. But you’re leaving money on the table if you aren’t also earning cash back every time you shop at a Costco, Sam’s Club or BJ’s store.

A free app called Ibotta routinely offers cash rebates on purchases from these three chains’ brick-and-mortar stores — among many other retailers’ stores.

To start using Ibotta, sign up for an account, which is free. Then, download the app and launch it. From there, you can select Costco, Sam’s Club or BJ’s from the list of retailers to see what cash rebates Ibotta is currently offering for purchases from those wholesale clubs.

Of course, you can also always earn cash back by paying with a cash-back credit card. Go to our Solutions Center to find the right credit card for your needs.

2. Assuming that you need a membership

ARTYOORAN / Shutterstock.com

There is a lot you can buy at a wholesale club without a membership, especially if you’re open to buying items online or shopping with a friend or relative who has a membership to the store.

In fact, some people will save money overall by paying nonmember surcharges instead of an annual membership fee.

Let’s take Costco, for example. Becoming a member will cost you at least $60 a year, while not joining means you will pay a 5% nonmember surcharge on most purchases.

So, technically, if you spend less than $1,200 per year at Costco, you save money by paying the surcharge instead of the membership fee.

To learn more, check out:

3. Not planning your meals

Woman in pantry
VH-studio / Shutterstock.com

Large packages of cheap goods such as rice and pasta make bulk shopping seem enticing. And for families who go through such items quickly, they’re a great investment. But if your family seldom uses these things, you’ll only end up with a lot of food going to waste.

Before you hit the warehouse store, plan meals for the next few weeks so you know what to buy.

If you’re new to the concept of meal planning, check out our primer, “This Habit Saves Me Money and Stress All Week Long.”

4. Not reviewing the ads and deals

working from home
Monkey Business Images / Shutterstock.com

Warehouse stores already have good prices on a lot of things compared with regular stores. But most warehouse clubs give even deeper discounts.

To find them, check the ads and fliers just like you would at a regular grocery store.

I tend to check the Costco app to see what offers are coming up. You can also find Costco’s periodic discounts on its Warehouse Savings webpage. Meanwhile, Sam’s Club’s periodic discounts are on its Instant Savings Book webpage.

5. Not figuring what you actually need

Nomad_Soul / Shutterstock.com

If you’re going to buy that big pack of batteries, make sure you’re prepared to use them all before the expiration date. Just like many items sold in bulk, batteries have a shelf life.

Before you make this kind of purchase at a warehouse store, ask yourself how many of the items you actually will use. If they go bad before you expect to use them all up, the bulk package isn’t the deal it might seem to be.

6. Keeping things you don’t need

return policy
Stockbakery / Shutterstock.com

Have you ever bought something that you later realized you didn’t need, want or like? Have you held on to it or thrown it away — barely used — because you didn’t think you could return it?

Before stashing or trashing it, check the return policy of the store where you bought it.

For example, Costco has one of the best return policies for both online and in-store purchases. Some things do have a return window — like 90 days for many electronics — but you can return most things at any time.

7. Not splitting what you can

coffee
idelem / Shutterstock.com

In my household of three, we know there are plenty of things bought in bulk that we won’t go through. So, if there’s a sale on something we want but we know it’s too much for just us, we try to split it with someone else. Such things might be food, paper goods or coffee. If it’s a great deal, we find a way to make it work.

Consider shopping with a friend or family member and splitting some of your purchases. What might be too much for one household can be perfect when it gets broken up for two.

8. Ignoring your household size

single life
szefei / Shutterstock.com

Bulk goods are meant to feed and care for a lot of people. So, determine which products best fit your household.

If you’ve got kids at home or your parents live with you, it’s easier to justify larger quantities. But if it’s just you and your partner, reconsider some purchases — or split them with another household.

9. Forgetting your home’s space limits

small bathroom
Ehpoint / Shutterstock.com

You might think that buying toilet paper in bulk will save you a few dollars — and it might. But do you have a place to put all those extra rolls?

Larger bulk items are not worth buying if you don’t have a spot to store the excess. So, evaluate your home’s space before splurging on larger quantities.

10. Not being flexible about your shopping list

free samples
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Sure, eating the samples at a warehouse store is like having an extra lunch. But they could help you make better shopping decisions, too.

Wouldn’t you rather buy something that you know is good than buy something blindly? That’s why samples exist — to give you the chance to try something you wouldn’t otherwise eat. Sure, warehouse stores know you’re likely to buy the food you sampled — that’s why they have samples.

It’s OK to change up your shopping list if you taste something you’d like to cook soon. And it’s even better if it’s on sale.

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

Source: moneytalksnews.com

The Worst Ways to Borrow Money — and What to Do Instead

A scam.

That’s what financial writer Robert Kiyosaki calls the common advice to get out of debt.

Of course, he’s not in favor of bigger credit card balances. He advises borrowing to buy wealth-building assets, like a rental property.

Many financial experts make a distinction between “bad” and “good debt,” the latter referring to investment and business debt.

But the definition may be a bit limited, because there are several good reasons to borrow money. They include…

To Make Money in Various Ways

Borrowing for investment and business purposes are obvious examples.

But good debt can also include educational debt that leads to a degree, boosting lifetime earnings. If getting a car loan is the only way you can make it to work, it also might be a good reason to borrow.

To Save Money in Various Ways

Good debt can also include borrowing for purposes that help you save more money than the debt costs.

The most obvious example is borrowing to buy a house when it’s cheaper than renting. Another example is borrowing to insulate an attic, permanently reducing heating bills.

To Cover Emergency Expenses

This is a tricky area. “Emergencies” can largely be prevented — in theory.

For example, you know you’ll eventually have an expensive car repair. You could save for it, rather than let it become an emergency that requires going into debt.

On the other hand, borrowing for crucial (and unpredictable) medical care is an example of good, and often necessary, debt.

Clearly, there are times when you should go into debt.

But to borrow smart, you also have to consider how you borrow. Here’s a look at some of the best and worst ways to borrow money.

The Worst Ways to Borrow Money

When you carry credit card debt, you pay more for everything in interest charges.

If you can afford loan payments for a car, boat or vacation, you can afford to save for those instead. Why add interest to the cost?

In general, consumer debt is all “bad debt.”

But even when you have a good reason to borrow, some ways to do it are worse than others. The worst may be…

Payday Loans

“On average, payday loans carry a 391% APR (annual %age rate),” or about 100 times higher than mortgage rates, according to the Center for Responsible Lending.

And since the average payday borrower has numerous annual transactions, it’s not likely this is true emergency borrowing.

Even the next option on our list is probably better than a payday loan.

Pawn Shops

Depending on state regulations, annualized interest rates at pawn shops can get as high as 240%, Nolo.com points out.

Rather than borrowing against things you value (and risking their loss), find things you no longer need and sell them to raise the cash you need. Here’s a guide to selling your stuff.

Credit Card Cash Advances

The average credit card cash advance interest rate is 24.24%.

It’s better than pawn shops and payday loans, but there’s more to the story. The cash advance fee is often 5% of the amount borrowed.

A credit card cash advance loan of $2,000 for three months with 5% upfront plus 24% interest has a true annual rate close to 44%.

Credit Cards

Putting what you need on a credit card is better than getting a cash advance.

There’s no extra fee and the average purchase interest rate is 6% lower. Of course, you should still avoid borrowing at 18% interest as much as possible.

Smart Ways to Borrow Money

Good debt improves your life in lasting ways, usually by increasing your income or reducing expenses.

But even for a good purpose, you don’t want to pay too much for the money you borrow.

Fortunately there are many affordable ways to borrow, and one of the following will probably work for your situation.

1. Social Lending Websites

Peer-to-peer lending platforms like Lending Club and Prosper allow you to borrow large amounts (up to $50,000 on Lending Club) from groups of people who each invest a little bit into your loan.

Interest rates start as low as 5.32% and go as high as 35.97% on Prosper. But loan origination fees (up to 5% upfront) increase the real cost.

P2P websites let you borrow money for just about any reason.

For example, you might save money on existing debt by getting a consolidation loan at a lower interest rate — but be sure to calculate all the costs.

Lending Club also offers small business loans of up to $300,000 at rates as low as 5.9%.

2. Cash Advance Alternatives

See my post on five alternatives to costly cash advances for ideas on how to borrow strategically when you need a short-term loan.

3. Home Mortgage Loans

You can get a standard mortgage loan (new or to refinance), a home equity loan or a home equity loan line of credit.

Comparing these options is tricky, but they all have better interest rates than the previous alternatives. The line of credit is the most flexible, allowing you to borrow only what you need when you need it.

This can be a smart way to borrow and buy income-producing assets, thanks to the typically low interest rates on home loans.

“The interest you pay on a mortgage on a home other than your main or second home may be deductible if the proceeds of the loan were used for business, investment, or other deductible purposes,” the IRS reports.

Talk to your accountant to be sure you set things up right when you borrow for business or investment purposes.

4. 401(k) Loans

There are times when it makes sense to borrow from your 401(k) plan, like when you have an emergency or need a car to avoid losing a job.

One big advantage is all the “interest” goes right back to you, instead of a lender.

That’s assuming you pay back everything as planned, of course. Otherwise, you’re just sabotaging your retirement.

5. Student Loans

Borrowing for college is an investment that can pay big returns, and many student loans have real advantages over other forms of borrowing.

They may have low interest rates, and deferred payment options.

And if you run into financial trouble, there are loan forgiveness options you don’t get with other types of debt.

6. Investment Property Loans

Financing rental properties has become more difficult.

But if you can find a bank willing to loan you the money, the key thing to watch for is: Will you make money every month after all costs?

Borrowing for investments that produce positive cash flow is one of the smartest ways to use debt.

7. Bank Business Loans

If you’re borrowing for a business purpose, a bank or other traditional lender can be your best option.

You might get a better rate borrowing against your home or from a friend — but if things get tough, you could lose your home or your friend.

Also, a business lender is likely to notice flaws in your business plan or projections — which might save you from serious trouble.

8. Family and Friend Loans

If you have a good purpose for the money and a solid repayment plan, borrowing from family and friends makes sense.

You’ll avoid loan fees and get a lower interest rate.

Put it all in writing and pay at least the current Applicable Federal Rate, so your lender doesn’t have tax problems. The IRS will tax the lender based on at least that rate.

Your Turn: Have you borrowed money in any of these ways?

Steve Gillman is the author of “101 Weird Ways to Make Money” and creator of EveryWayToMakeMoney.com. He’s been a repo-man, walking stick carver, search engine evaluator, house flipper, tram driver, process server, mock juror and roulette croupier, but of more than 100 ways he has made money, writing is his favorite (so far).

Source: thepennyhoarder.com

33 Home Upgrades That Cost Less Than $100

Woman painting her home
Monkey Business Images / Shutterstock.com

Sometimes home improvements are out of reach for the moment. A kitchen upgrade can cost tens of thousands of dollars you might not have to spend right now.

Other improvements are unavoidable, but also expensive and unsatisfying at the same time — take a roof replacement for one example.

But if you’re in the mood to spruce up your home, there are plenty of doable projects that make a real difference and won’t cost you an arm and a leg.

The following improvements should run you less than $100 but will help make your home look and feel like a million bucks.

1. Paint the front door

Front door on old brick home
1000 Words / Shutterstock.com

Painting your whole house? That’s an expensive project that takes time. On the other hand, painting the front door gives the front of your house a fresh, new look in an afternoon. It can also increase your home value, as we explain in “Painting With This Color Can Boost Your Home’s Sale Price by $6,000.”

2. Add a bird feeder

Perky-Pet bird feeder on Amazon
Perky-Pet / Amazon

Add a bird feeder for your feathered friends to visit near a kitchen or living room window, and you’ll draw a bit of natural beauty and song to your yard. A feeder needn’t be fancy — you will find a range of options and price points.

The one pictured above, by Perky-Pet, promises anti-squirrel features — and that is key. If left to their own devices, squirrels will consume all your bird feed.

3. Add path lighting

Enchanted Spaces solar yard lights.
Enchanted Spaces / Amazon

Add a little romance to your sidewalk or garden path with solar-powered lights, and you’ll also add curb appeal and safe stepping for guests in the evenings.

The lights shown here, by Enchanted Spaces, cost well under $100 for a set of six.

4. Paint the porch floor

Porch with rocking chairs
Christopher Edwin Nuzzaco / Shutterstock.com

Painting the front porch floor is an easy, cheap way to improve curb appeal.

Depending on the size of your porch, it should only take a gallon or two of paint plus the cost of a roller and pan. You can use a pressure washer to prep the surface. Choose a paint or stain that’s tough enough for use underfoot and that’s meant to be used outdoors.

5. Paint the garage door

Garage doors on town homes
Elena Elisseeva / Shutterstock.com

As with the front door and the porch floor, the garage door is a good place to make a difference with a fresh coat of paint or stain.

Once again, make certain to ask your paint store professional to sell you a product made for the purpose and material you have in mind.

6. Add mulch

Garden bed with mulch
Ozgur Coskun / Shutterstock.com

Laying down mulch on your garden beds or around the base of trees can quickly make your yard look tidier. It can also spare you a lot of weeding, prevent erosion, save water and, depending on what material you use, improve the soil.

Mulch comes in a variety of colors, textures and materials. Check out Home Depot’s buying guide to learn more. Unless your yard is massive, you can get plenty of mulch to go around for less than $100.

7. Update a light fixture

Woman changing light bulbs
YuryRyzhenko / Shutterstock.com

You can run up a big bill with fancy track lighting and other expensive fixtures, but there are plenty of less costly pendant lights and lanterns available to hang over a kitchen table or spruce up a hallway.

A great place to search for fun household items like fixtures is Cost Plus World Market, which sells this pendant lamp for well under $100. For hundreds of styles and ideas, check out the offerings on a home renovation site like Houzz.com.

8. Replace the porch light

Olga Steckel / Shutterstock.com

Has your affection dimmed for the porch light that came with the house? Or, maybe you think it’s wise to install an additional exterior light out by the back door or garage.

This sconce on Houzz costs right around $50. If you are handy and install it yourself, you could add two for just under $100.

9. Make a chalkboard wall

Chalkboard wall in kitchen
Photographee.eu / Shutterstock.com

Chalkboard paint can transform a kitchen wall into a place to keep a grocery or chores list, and an art spot where family and guests can doodle. In a child’s room, a chalkboard wall is a pallet for art that changes as the occupant grows up. In a home office … well, it just looks hipper than a whiteboard.

Chalkboard paint is usually available at home improvement stores like Home Depot. If you want to get really crafty, make your own chalkboard paint using latex paint and grout. Doing so is certainly cheaper, and allows you to choose any color you like.

10. Add a fire pit

Teens roasting marshmallows around a firepit
Monkey Business Images / Shutterstock.com

You can make a fire pit in your backyard with simple pavers or bricks, buy a smaller, tasteful one from Amazon for under $100, or spend thousands of dollars on a gas-fed designer fire pit for your elegant poolside patio.

Whatever your budget, it’s nice to gather around a fire in the backyard and chat.

11. Seal or stain your wood deck

Person staining a wooden deck.
Dagmara_K / Shutterstock.com

Wood decks don’t last forever. But they will last a lot longer and look better if you stain or seal them every couple of years.

The cost of stains or sealants will vary depending on the size and surface of your deck. Ask a paint store expert for help choosing the right product.

Whatever you spend, it will be far less than the deck replacement that will be required if you neglect the original deck for too long. But it may require some serious elbow grease. Take a look at this Lowe’s guide to preparing your deck and apply stain or sealant.

12. Insulate water pipes

Pipe insulation
Wichien Tepsuttinun / Shutterstock.com

Admittedly, this upgrade is boring. But it’s easy, and it will save you money.

You can insulate pipes that carry hot water through a cold basement or crawl space with foam pipe insulation, pre-slit, hollow-core, flexible “sleeves” made of polyethylene or neoprene foam.

Before shopping, make sure you know the diameter of the pipes you are insulating.

13. Paint anything

Syda Productions / Shutterstock.com
Syda Productions / Shutterstock.com

There’s no quicker fix than a can of fresh paint.

Use it to give new life to dingy wood furniture. Try a new color in your bedroom or bathroom. Or paint the ceiling a soft sky blue.

HGTV has 50 ideas for projects requiring a single can of paint.

14. Update a bathroom faucet

Lucien Milasan / Shutterstock.com
Lucien Milasan / Shutterstock.com

This Old House says replacing an old faucet with a shiny new one is an easy project that takes about two hours, and the site gives step-by-step instructions.

Tip: Find a new faucet with the same finish as your other bathroom fixtures. Although prices range widely, you’ll find plenty of choices under $100.

15. Dress up an old sofa

Andreas G. Karelias / Shutterstock.com
Andreas G. Karelias / Shutterstock.com

Give the couch new life by pulling a slipcover over its tired old self.

Amazon has dozens of inexpensive slipcovers in solid colors and floral prints.

With any remaining cash, jazz up your “new” couch with some new throw pillows.

16. Update cabinet hardware

Ceramic cabinet pulls
Wings of Twisted Tapestry / Amazon

If your kitchen and bathroom look dated but you can’t replace the cabinets, replacing the cabinet hardware gives rooms a new look.

Shopping tips:

  • Remove one handle or drawer pull to see the number of screws and spacing required. Your new hardware will need to have the same configuration.
  • Before shopping, take stock of your room’s style and browse home decorating magazines to identify the look of the hardware you want. For example, do you want pulls or handles? Sleek and modern? Old world? Recycled and eclectic?

There is a huge selection of pulls and knobs on Amazon — including the ceramic pulls pictured above — and also on Houzz. If you are looking for a vintage look or trying to match the hardware on an older house, check out building salvage stores in your area.

17. Create order with pegboard storage

Galushko Sergey / Shutterstock.com

The old-fashioned workshop staple of pegboard storage is still a great system for bringing order to any room.

You can purchase and assemble the components individually. Or use a kit, like this kitchen organizing system. You’ll find many variations to suit different size spaces and needs — whether it’s a garage organizing system or a setup for garden tools.

18. Tackle carpet stains

Dragon Images / Shutterstock.com
Dragon Images / Shutterstock.com

Take a Saturday morning and give your carpets some TLC at virtually no cost, using a solution of white vinegar and water to tackle stains. Or read consumers’ reviews to find carpet cleaning products you want to try.

For carpets stained beyond your powers of restoration, consider using a professional carpet cleaning service. Have only the most heavily trafficked room done if you need to keep costs low.

When looking for a professional service, make sure you’re comparing apples with apples: Some services charge by the room, others by the square foot.

19. Reupholster an ottoman

Oleksandr Berevsky / Shutterstock.com
Oleksandr Berevsky / Shutterstock.com

Grab a staple gun, a little fabric and a simple piece of furniture — like an ottoman — and give it new life.

Brooke Ulrich, DIY blogger at All Things Thrifty, explains how to tackle reupholstering. Here’s a quick video with a genius trick for removing old fabric from furniture, which she says is one of the hardest parts of the job.

Shop for fabric and a piece of furniture with simple lines at a Habitat for Humanity ReStore, a thrift shop or Craigslist. Or search online for “fabric outlet” and “discount upholstery fabric.”

Another source: JoAnn fabrics and craft stores’ frequent sales, discounts and coupons allow for big savings.

20. String fairy lights

indoor fairy lights coffee tablet sweater interior
Alena Ozerova / Shutterstock.com

Having trouble letting go of your holiday lights? No worries. String up some lights indoors to cheer you up when the nights are long. Here’s an example, at Amazon, of copper wire string lights that you can shape as desired.

Caution: Read all instructions carefully and make certain that, if they’re going outdoors, you’ve chosen waterproof products designed for outside use.

21. Make a faux tile backsplash

NantukelPhotography / Shutterstock.com
NantukelPhotography / Shutterstock.com

This is more than a simple painting job but offers amazing results. A painted kitchen backsplash mimics the contemporary look of stone and glass tiles, minus the costly tile. The project requires a lot of preparatory taping.

For instructions and photos, check out those of the blog Reality Daydream.

22. Make a Mason jar lamp

Ezume Images / Shutterstock.com
Ezume Images / Shutterstock.com

Mason jar lamps are trendy. A YouTube video by TheSorryGirls takes you step by step through the process of making one.

If a single-jar lamp isn’t enough of a challenge, and you have plenty of Mason canning jars, look for instructions online for making a Mason jar chandelier. Stick to using found materials to keep your costs down.

23. Swap out your shower curtain, bath mat and towels

Bathroom with colorful shower curtain
Artazum / Shutterstock.com

There are so many beautiful shower curtains to choose from on Amazon and Overstock — functional bathroom art!

With this inexpensive upgrade, you might also consider replacing those threadbare towels with new bath towels. These few changes will improve the look of your bathroom.

24. Install a front door kick plate

Bobkeenan Photography / Shutterstock.com
Bobkeenan Photography / Shutterstock.com

A kick plate is a broad strip of polished metal used horizontally along the bottom edge of a front door to protect it from scratches, kicks and dog paws. Kick plates are decorative as well as functional.

Change your old kick plate for a new one, or install a kick plate if you haven’t used one before. Choose one with a finish that meshes with the finish on your existing exterior hardware.

25. Paint exterior shutters and trim

Serenethos / Shutterstock.com
Serenethos / Shutterstock.com

A fresh coat of paint or two on shutters and trim provides a quick, easy shot in the arm for your home’s exterior. Paint all of the trim or just the window trim. If you are short on time or materials, repaint only the front-facing trim. It’s safest to use an exterior paint color that’s already part of your home’s exterior color scheme.

26. Install new door handles

Door handle
Titikul_B / Shutterstock.com

Put attractive new knobs or handles on interior doors and closets. For family members who are aging, arthritic or disabled, make life easier by replacing knobs with easier-to-grasp door levers like these at Home Depot.

27. Make a new headboard

Everything / Shutterstock.com
Everything / Shutterstock.com

Craft a new headboard or refurbish your old one. If you scrounge for free and cheap materials, you can do it for less than $50.

DIY Network has 15 ideas and photos for upgrading headboards. This Old House shows how to make an upholstered headboard in eight steps.

28. Rearrange bookshelves

Evgeny Karandaev / Shutterstock.com
Evgeny Karandaev / Shutterstock.com

“Style” the contents of your bookshelves with artistic flair. Better Home & Gardens has inspiration and tips. This is a fun, creative project, so spend some time and enjoy it.

Among BHG’s tips:

  • Treat each shelf as a display, and then stand back and make sure all the shelves work well together.
  • Position some items off-center on a shelf.
  • Place some books in horizontal stacks and use the stacks as bookends for books shelved vertically.
  • For a designer look, cover the inside of a bookcase with fabric or wallpaper.
  • Don’t pack treasures and collections on every shelf.
  • Pieces of pottery make nice, solid bookends.
  • Stack a pyramid of books and put one of your favorite objects atop the stack.
  • Use bookshelves as a gallery for framed photos or art.

29. Rearrange furniture

Alex_Po / Shutterstock.com
Alex_Po / Shutterstock.com

Ask someone whose home styling skills you admire to help you see your home and possessions in a new light. Stay open to change and new ideas.

30. Add container plants

photoiconix / Shutterstock.com
photoiconix / Shutterstock.com

New plants dress up your home’s porch and garden and create great curb appeal. You can start plants from seed or relocate existing plans into pots to save money.

If you want to buy plants, your local garden store or nursery may have a half-price area from which it sells cast-offs. Often, watering and care is all they need.

31. Install new house numbers

Frontier Sights / Shutterstock.com
Frontier Sights / Shutterstock.com

Change out your old house numbers. Find new ones with an online search or at hardware stores. Or, shop for handmade house numbers at Etsy.

32. Give light-switch covers new life

A man flips a light switch
SpeedKingz / Shutterstock.com

Give those grimy old light-switch covers new life: Toss them out and treat yourself to new ones. Or, for a fun project that will save money, cover your existing plates with decoupage.

33. Give your home a deep cleaning

Yuganov Konstantin / Shutterstock.com
Yuganov Konstantin / Shutterstock.com

If you’re stuck in a rut, try using Oprah.com’s checklist, timeline and instructions for deeply, thoroughly cleaning your home in eight hours. Oprah.com calls it “spring cleaning,” but don’t let that stop you from doing it in any season. You’ll feel wonderfully virtuous for doing it.

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

Source: moneytalksnews.com