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NEXA Mortgage has sued its former president, Mat Grella, for allegedly causing the failure of a hangar-office property purchase, acting to defame the firm and his partner Mike Kortas, illegally changing corporate documents, and keeping two company cars after his termination. In response, Grella said that the allegations are a “manipulation of the truth.”
The lawsuit was filed April 29 in the Arizona Superior Court of Maricopa County. It accuses Grella and his wife, Sheridan Murray-Grella, of breaching contractual and fiduciary duties, tortious interference with business expectancies, actual fraud and defamation by false light, among other claims.
NEXA was founded in Arizona in 2017 by Kortas and Grella after they left Equity Prime Mortgage. The firm became the largest U.S. mortgage brokerage firm, with 2,477 licensed loan officers and 236 active branches as of Monday, per the Nationwide Multistate Licensing System (NMLS).
Grella was terminated from NEXA in March amid negotiations of a buyout and a lawsuit accusing Kortas of making aircraft-related purchases with company money without his consent. Kortas denies his former partner’s allegations.
The lawsuit filed by NEXA against Grella states that in March 2024, NEXA entered into a letter of intent to purchase a five-acre airplane hangar leasehold in Mesa, Arizona, for $23.95 million. The leasehold included 75,000 square feet of existing hangar and office space.
According to NEXA, the purchase would allow the company to have a “physical home base“ — which it’s currently lacking — where it could host events and save $500,000 a year on other venues. It would also consolidate company aircraft into one space and potentially increase income through renting aircraft space to others.
NEXA leases aircraft hangar space, and it owns and operates a charter company, which generates revenue from charter flights and offers tax advantages for aircraft ownership, per the lawsuit. The company said that Grella was fully informed and had authorized these moves.
According to the lawsuit, Grella sent messages to the hangar’s broker, seller and title company that were “disparaging, knowingly untrue,“ stating that NEXA was not authorized to purchase the property. This caused the transaction to fail and harmed the company, NEXA alleges.
Grella told HousingWire that the purchase “doesn’t fit the needs of NEXA“ as the brokerage firm focuses on mortgages. Grella added that NEXA “started growing exponentially as a remote company,“ meaning it does not need an office space. Also, he had not acknowledged or consented to the transaction that he believed would “almost entirely deplete the firm’s cash account.“
In a message to HousingWire, James Brody, a senior partner at Garris Horn LLP and attorney for NEXA, said that it’s important to ask “whether there could have been concern that monies might get tied up that would potentially affect monies available for the buyout, which in my opinion was the true catalyst for the disputes at issue.“
Still, “at the end of the day, we are hopeful that the parties can find a way to amicably resolve these disputes,“ Brody said.
The NEXA complaint also discusses the brokerage firm’s ownership structure. NEXA’s lawsuit states that, per the company’s operating agreement signed in 2019, Kortas is its sole manager, with a 50.5% ownership stake, followed by Grella’s 49.5% stake.
But on March 22, Grella reportedly submitted documents to the Arizona Corporation Commission stating that he was NEXA’s “new manager,“ including only his signature. NEXA, which attached the document to the lawsuit, said Grella “attempted to usurp the manager’s powers.“
Grella, in his complaint against Kortas, said his partner converted NEXA funds and made unauthorized credit card purchases, which have reduced Kortas’ ownership percentage to below that of Grella’s, such that Grella is “now the majority owner of Nexa.“ In addition, the complaint states that he added his name as co-manager and did not change Kortas’ manager status from the documents.
Brody said a change of manager or the addition of a co-manager would have required a vote of members, and since there was no such vote, “it’s difficult to understand how any such filing by Grella with the Arizona Corp. Commission was not done improperly.“
The company’s lawsuit states that, “On account of Grella’s actions in causing harm to the company and his impending buyout, he was terminated from the employment of NEXA.“
According to the NEXA complaint, Grella required documents after his termination that only employees could access. He also “contacted different states’ licensing departments with claims that NEXA is operating without a qualified individual for mortgage license,“ which the company said is untrue.
Grella said he contacted NEXA employees and state regulatory agencies to update his status as a former employee, since NEXA had not updated it by March 23. He has “never harmed or sought to harm NEXA, and hopes to see the company run effectively in the near future, for the sake of all of NEXA’s stakeholders.“
Brody said NEXA did not terminate the relationships in NMLS regarding Grella’s ownership, which would have been improper, as “many states require the registration of owners in the NMLS, even if they are not employees.“
NEXA is also accusing Grella of selling a Cadillac Escalade in 2022 without authorization. The company bought the car in 2019 for $76,500 as an exclusive benefit to the owners while they were company employees. But “Grella kept or otherwise diverted the funds received for the trade,“ the lawsuit states. The company also seeks the return of a 2019 Nissan GT-R bought for company purposes for $104,490.50.
Grella said the company’s vehicles were kept at the partners’ residences, with Kortas having two other company cars. Early in the buyout negotiations, however, the partners agreed to keep the vehicles in their possession. “Kortas was to keep the Maserati and the Range Rover, and I, the Escalade and the Nissan GTR. I remain an owner of approximately half of NEXA and its assets,“ Grella said.
According to Brody, the company understands that the vehicles were intended for use during the partners’ tenures as NEXA employees, which was the case for Grella early in the buyout negotiations.
In the lawsuit, NEXA asks, among other things, for an injunction against Grella, ordering that he cease any further public statements about NEXA or Kortas.
Source: housingwire.com
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Explore car buying in 2024, from Carvana’s process to the electric vehicle surge and how to maximize your car’s sale value.
Budgets Beyond the Numbers: How do you manage the emotional aspects of budgeting? What’s the car buying market like in 2024? Hosts Sean Pyles and Elizabeth Ayoola discuss personal budgeting and the future of car buying to help you understand how to navigate financial decisions with confidence. They begin with a discussion of budgeting “beyond the numbers,” with tips and tricks on categorizing expenses into their emotional impacts to make budgeting feel more personal.
Today’s Money Question: Is Carvana a good service? Should you buy an electric vehicle if you’re in the market for a new car? NerdWallet autos writer Shannon Bradley joins hosts Sean Pyles and Sara Rathner to delve deeper into the future of car purchases and the electric vehicle revolution. They explore the evolution of electric vehicles, the current state of the car market for both buyers and sellers, and strategies to get the best deal when selling your vehicle. The conversation aims to provide insights on choosing the right time to buy an electric car, understanding the market dynamics, and ensuring a smooth car selling experience.
Check out this episode on your favorite podcast platform, including:
NerdWallet stories related to this episode:
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
What’s in a budget? If you look at the 50/30/20 budget, you have your needs, wants along with extra debt payments and savings. But we all know a budget can be much more than that. We get into it this episode. Welcome to NerdWallet’s Smart Money Podcast, where we help you make smarter financial decisions, one money question at a time. I’m Sean Pyles.
Elizabeth Ayoola:
And I’m Elizabeth Ayoola.
Sean Pyles:
This episode we answer a couple listeners’ questions about car buying and selling, including what to know about the electric car market right now. But first, we’re exploring what’s really in a budget beyond the numbers and Elizabeth, this is something that you are especially interested in, right?
Elizabeth Ayoola:
I am, Sean, because budgeting gets a bad rep, but it can be fun too, especially when you have something you really want and are working towards, but it can be equally stressful. I’m not going to deny that.
Sean Pyles:
Totally. When people hear the word budget, they might just think about numbers in a spreadsheet or about restricting themselves from purchasing something that they want. Neither is really fun. And don’t get us wrong, we are still big proponents of having a budget and we think the 50/30/20 budget, where you have half of your income going towards needs, 30% going towards wants and 20% going towards extra debt, payments and savings, can be a really accessible and flexible framework for most people, but it doesn’t get to the more personal parts of our finances. So Elizabeth, you like getting into those deeper parts of a budget and you do this by breaking it into three general categories: something stressful, something exciting, and something confusing. Can you talk about why you are thinking about your budget in this way and what’s the purpose of each category?
Elizabeth Ayoola:
So I feel like by doing this, it gives our budget some personality, it creates some interesting conversation around our budgets. I think we all know that budgets can be monotonous, so breaking it up like this helps me stay engaged with my budget and also have something to feel excited about. You know what I’m saying, Sean? So the confusing one especially is a chance for me to challenge myself to untangle areas of my budget where I’m winging it or I’m just disorganized and usually I’m winging it or disorganized because I’m overwhelmed and don’t understand something.
Sean Pyles:
This reminds me of a game that I sometimes play with my friends called Rose, Thorn, and Bud. The rose is something good that happened to you, the thorn is as you might expect, something that’s a little bit thornier or unpleasant and the bud is something that is in progress or something that you are excited about. This is kind of like that, but for your finances, it’s a way to categorize items of your budget under broader themes, which can help you process them in that more personal and emotional way. Is that how you think about it too?
Elizabeth Ayoola:
Exactly. You just put it in a fancy way. Thank you, Sean.
Sean Pyles:
Thank you.
Elizabeth Ayoola:
And I also have a new game that I’m playing with my friends because I’m stealing your idea.
Sean Pyles:
Happy to hear it.
Elizabeth Ayoola:
As of recent, I’ve been asking them when I go on girlfriend dates, what’s one thing they hope happens this year? But I’m definitely going to swap it out for your idea.
Sean Pyles:
Oh, I love that. Well, to help our listeners understand this way of thinking about budgeting, Elizabeth, I would love to hear what you are finding stressful, exciting, and confusing in your budget right now?
Elizabeth Ayoola:
As a recovering over sharer, I am definitely going to share that. So let’s start with stressful. Start with the worst, a moving budget. So just please anybody rescue me on a red carpet and make sure you bring a margarita with you because moving is stressing me out. I’m trying to make the move as cost-effective as possible because it’s looking like I’m going to spend a couple of thousand dollars right now and that’s really hurting my feelings.
Sean Pyles:
Yeah, it’s a lot of money.
Elizabeth Ayoola:
So now let’s get into the exciting thing, a love sack. I don’t know if any of our listeners or you, Sean, have heard of love sacks before, but they’re essentially these giant beanbags and in my fantasy of living out the Bohemian dream in my household, I have something like a love sack where I can read books and watch Netflix and do whatever else I want to do on it. So I’ve wanted one for years, but they are pretty pricey. They can start around the $900 range and go up to a thousand dollars, but I am budgeting for that and I’m looking forward to it. The only thing I’m worried about is my son putting his Cheeto hands all over my stuff.
Sean Pyles:
That’s a fair concern. Also, you might want to wait to get that until after you’re moved because that would be just one other thing to haul across state lines.
Elizabeth Ayoola:
Oh fact, I’m definitely not buying that now, so I’m going to buy it once I move. So it’s also giving me more time to save towards it or to budget for it. Another exciting thing I’m also budgeting for is to go to Nigeria. So I am Nigerian for the listeners and I haven’t been since I had my son maybe like four or five years ago, and he’s been asking me to go. That’s kind of what inspired the trip, but it does cost a couple of thousand dollars, so I’m budgeting towards that as well, but excited. And lastly, what is confusing? Balancing business and personal budgets at the same time is very confusing for me right now.
So I’m trying to kind of figure out how much to put towards retirement saving because my expenses just keep changing and I’m also trying to ensure that I don’t commingle, which is when you’re mixing kind of your business finances with your personal because we don’t want the IRS to come knocking. So all these kind of things are just confusing and maybe a little bit stressful as well. Then lastly, my son is going to a private school in August, so my budget is going to change. I’m trying not to be hard on myself because I really like saving big chunks of money and him going to private school might mean I have to save less, but it’s all good.
Sean Pyles:
See, I feel like this really shows how your budget is being enacted to help you meet the short and long-term life goals that we talk about so much on Smart Money and also the various emotions that come with meeting your goals or trying to meet them and the compromises that are just inherent in this conversation you have with yourself and your finances. Also, Elizabeth, last week you said that you were financially boring, and I’m going to say that all of these things are interesting. I’m especially excited about your trip to Nigeria, so let me know how that goes. And also let me know where you land on your savings when your son starts private school.
Elizabeth Ayoola:
Of course, I’m going to share that with you guys, so watch out for that. It has been so long since we’ve been to Nigeria, so we’re looking forward to it. And private school, well all the listeners with kids know that kids swallow up your dollars, but I hope to get a good return on investment on this. So what are yours, Sean? Tell me about your things that are stressful, exciting, confusing.
Sean Pyles:
Okay, well this is where I reveal that I am actually boring. Something stressful is that I’m in the middle of a season of travel right now, which is not boring. It’s very exciting actually. But I went down to San Francisco for a concert a couple of weeks back and I’m about to fly out to the East coast to see some friends in New York and DC and it’s going to be great to see these friends and it was great to see San Francisco again where I lived for many years, but boy, oh boy, traveling is very expensive. It’s much more expensive than working from home day in day out and the adjustment from making my breakfast every morning and having my coffee and a nice little ritual for myself, going from that to spending $20 on the sandwich and a coffee every single morning is a little bit painful and a little bit stressful for my budget, but I’ll make it work.
And then something exciting, this might be a little bit premature because it’s not actually going to happen for nine months, but I’m getting relatively close to paying off my car. I’ve had this car loan since 2020 and I know I took a longer car loan than we typically recommend, but that’s just where my finances were at the time. And I’m kind of lucky to have a pretty affordable car payment. But I am also very excited about having that extra $350 that I pay for my car each month back in my budget, even though I will likely direct most of that into my car savings bucket. Confusing? To be honest, nothing is too confusing for me right now fortunately, but as ever, I am in this continual dialogue with myself and my ADHD impulses that tell me to buy random things that I sincerely do not need. And what’s helped me recently to shake myself from buying things online is just asking what do I expect this thing to do for me? And the answer is usually nothing meaningful. So that helps me break the spell.
Elizabeth Ayoola:
Oh, I love that. And I can relate with you re ADHD. I think in a previous episode I told y’all that I was emotional buying and I’m so glad to update y’all that that has stopped.
Sean Pyles:
Oh, congratulations.
Elizabeth Ayoola:
Thank you. No more random Zara shops every other week. So I’ve been doing pretty good and I can understand what you’re saying, re travel because I have lots of upcoming trips as well and it’s so expensive. But Sean, I’m excited about the car. $350 a month sounds really good to do something else with. And that’s about how much my payment is too. So I’m going to tap into your excitement and hopefully I will be there next year.
Sean Pyles:
Manifesting that for us, yes. Well listener, I hope this exercise has helped you think about your own budget in a new way. Before we get into this episode’s money question segment, let’s check in on our nerdy question of the month, which is what is your weird money habit, behavior, or principle that you live by?
Elizabeth Ayoola:
Here’s one weird money habit that a listener texted us. I just listened to your podcast of a person with dozens of credit cards. I’m one of those individuals too. To be clear though, the only balances I carry are those on temporary 0% promo offers and ones that are paid off monthly. My system is to carry five to six cards in my wallet and rotate them, then return those cards to the bottom of my home credit card stack. Another side gig hobby I do is entering sweepstakes online daily. It’s an easy but exciting activity that can lead to surprise winnings at any given time. My biggest win to date is $24,000 minus taxes, of course. That’s a large chunk of cash.
Sean Pyles:
Oh, that’s an interesting one. Thanks for sharing that. So listener, let us know: what is your weird money habit? Do you only use cash for all of your transactions or are you a hardcore credit card point maximizer?
Elizabeth Ayoola:
Or maybe you have 10 billion bank accounts like Sean. Okay, he just has 10. It’s not 10 billion, it’s just 10.
Sean Pyles:
I didn’t really think that was weird until recently. I was talking with a friend who was considering getting her very first high yield savings account, and she looked at me like I had two heads when I mentioned that I have 10 accounts. So maybe that’s also a good way to think about this. What is something that you do with your finances that seems maybe totally normal to you, but everyone else around you thinks is a little bit off? We want to know.
Elizabeth Ayoola:
Yes, we do. So tell us your weird money habit by texting us or leaving a voicemail on the Nerd hotline at (901) 730-6373. That’s (901) 730-N-E-R-D. Or you can email us a voice memo at [email protected].
Sean Pyles:
And while you’re at it, send us your money questions too. We know how confusing money can be and we want to help you make smarter financial decisions. And a quick reminder that we are running another book giveaway sweepstakes ahead of our Nerdy Book Club episode.
Elizabeth Ayoola:
Our next club guest is Jake Cousineau, author of How to Adult: Personal Finance for the Real World. The book offers tips to young people on how to get started with managing their money.
Sean Pyles:
To enter for a chance to win our book giveaway, send an email to [email protected] with the subject ‘book sweepstakes’ during the sweepstakes period. Entries must be received by 1159 P.M. Pacific Time on May 17th. Include the following information: your first and last name, email address, zip code, and phone number. For more information, please visit our official sweepstakes rules page. All right, now let’s get into this episode’s money question segment with our co-host, Sara Rathner, after a quick break, stay with us.
We’re back and answering your money questions to help you make smarter financial decisions. This episode we’re taking on a couple questions about cars, how to buy and sell them, and how electric vehicles fit in. And we’re joined by NerdWallet autos writer Shannon Bradley to help us navigate the winding roads of car buying in 2024. Shannon, welcome back to Smart Money.
Shannon Bradley:
Thanks for having me back. Let’s get to the first listener’s question. This comes from a voicemail.
Listener Voicemail:
Hello. The reason I’m calling is we were wondering what do you think about the company Carvana? We’re thinking about selling our vehicle to them because if we maybe try to sell it at a car dealership or something, we’re not really thinking that we’re going to get a good deal for it. But we don’t know as far as us selling a vehicle to them, not us purchasing one from them, if they’re reputable with regards to that. We’ve never used them.
Sean Pyles:
So Shannon, can you start by giving us a quick explanation of how Carvana works?
Shannon Bradley:
Yeah. Carvana is an online only car retailer and they sell and buy used cars only. They also take trade-ins. And based upon the listener’s question, I think the most important thing is that you can request an offer for your car right on the Carvana website as long as it’s a 1992 model or newer. And it’s a pretty simple process. They’re going to ask you for your 17 digit vehicle identification number, more commonly known as your VIN, or your license plate number. They’re going to ask you for mileage, the vehicle condition, vehicle options, and then if you have a loan or a lease on the car, they’ll ask you for information about that too.
Sara Rathner:
So other than Carvana’s iconic car vending machines that you see dotting the landscape in different cities, what makes it different from going to a dealership or to CarMax?
Shannon Bradley:
Well, let’s talk about CarMax first. CarMax is an online retailer too, and they’re very similar to Carvana. I think one of the biggest differences when you sell your car between the two is how you get your car to the retailer. With Carvana, you can finalize the entire sale remotely. They will come to your house, they’ll pick up your car, do the inspection there. You do have to be within one of their service areas, and there could be a small fee depending upon how far you are from their hub. CarMax, on the other hand, they offer pickup, but only at limited locations in four states.
So more than likely you’re going to have to take your car to a CarMax store for inspection. And depending upon where you live, that could be quite a distance. So if you compare these types of online retailers to a dealership, I think two of the biggest differences are convenience and being able to negotiate what’s offered for your car. Again, with Carvana, you can potentially complete the entire process of selling your car right from your home, but when you get an offer from Carvana or CarMax, it’s not negotiable. Whereas if you sell to a dealership, you can attempt to negotiate that offer.
Sean Pyles:
So car buying and selling is a notoriously frustrating process. Are there any common complaints about how Carvana handles this process that maybe are distinct from other ways of buying and selling a car?
Shannon Bradley:
On the selling side, I’m not aware of too many complaints. In fact, it was kind of funny, over the weekend I had a friend on Facebook ask this very question, and so I was monitoring responses of people and they were saying that it was a fast and easy process to sell their car to Carvana. On the buying side, I think the thing is, you have to remember that when you buy a car from Carvana, you can’t test drive it, you can’t inspect it. And on occasion, I’ve heard of people receiving a car that they didn’t feel really matched what was represented online. But I think the thing to keep in mind there is that Carvana offers a seven-day money-back guarantee with a limit of 400 miles. So when you get your car, just take that time to really test drive it and get a very thorough inspection done.
Sean Pyles:
So people go with Carvana because it seems like a really easy way to buy or sell a car and you can potentially just have the car dropped off at your front door. But that doesn’t mean that you still don’t have to do your due diligence and then get that inspection to make sure the car is as good as they are telling you it is.
Shannon Bradley:
Yes, exactly. They will allow you to, I think return up to three vehicles. There is some leeway there. And then the other thing that I was just going to mention, because I think a lot of people have heard about this because there was a lot of media coverage about it. This was in late 2022, early 2023, there was an issue with Carvana buyers. They would buy a car, they didn’t get their title in a timely manner, and so they couldn’t even register and drive the cars. And that’s something that our autos team has been monitoring. It doesn’t seem to be the issue that it has a year ago, but we still recommend for people to ask for proof of title. It’s just given that there were issues a year and a half ago, it’s just not a bad idea to do that.
Sara Rathner:
So our listener, like so many others, is interested in getting a good deal when selling their car. Do we know if places like Carvana offer better or worse deals than other places where you can sell your car?
Shannon Bradley:
Well, when you compare Carvana to CarMax, I’d say that’s kind of a toss-up. I think a lot depends on the vehicle you’re selling. Is it one that the retailer needs in their inventory at that time? And if it is, they may be more inclined to make you a better offer, but that’s why it’s so important to get more than one offer. And then you asked about dealerships. Traditionally you can get more selling your car to an individual, but of course that’s not going to be as easy as selling to someone who’s going to come right to your door and pick it up or even being able to go to the dealership down the road, but dealerships, their offers tend to be the lowest. But again, it depends on the car that you’re selling. Right now we’re seeing that both new and used cars are low inventory for Toyota. So if you have a type of car that a dealer is really needing on their lot, you may be able to negotiate a better deal.
Sean Pyles:
So the car market has been on a wild ride over the past few years, really since the pandemic began. So what is the car market looking like right now both for buyers and sellers?
Shannon Bradley:
Well, I would say wild ride is kind of an understatement. As someone who’s been covering the car market for the last three years, it has been a wild ride. It is not back to where it was before the pandemic. But from a car buyer aspect, several things are improving. For one, inventory is returning to normal. And actually you have some auto manufacturers who have overshot and are overstocked and those particular manufacturers, they’re starting to offer incentives again. We’re hearing you may be able to negotiate below the manufacturer’s suggested retail price, which was really unheard of during the pandemic. And then on the downside, we all know how vehicle prices are still high. I think actually this morning I saw that the average transaction price for a new vehicle is still at $47,000. That’s not small change by any means.
Sean Pyles:
No, it’s a lot of money.
Shannon Bradley:
But you can find deals out there, especially if you’re flexible about what you’re buying. And then leasing has some good deals. And if you buy or lease an EV right now, you could qualify for the federal tax credit of up to $7,500 on top of the other incentives that are out there.
Sara Rathner:
So how about sellers in the current climate? How are things looking for people who are selling their car right now?
Shannon Bradley:
Well, I would say they’re not faring quite as well as the buyers. Depends on what you’re selling, but if you recall, during the pandemic the vehicle shortage meant that individuals were actually selling their cars for a lot more than they paid for them. And with car supplies returning to normal for most manufacturers, selling isn’t what it was during the pandemic. You shouldn’t anticipate a huge profit like we were seeing in the past several years, but you should expect to receive a fair price and you can do that by researching the current market value of your car.
Sean Pyles:
So how can people get the most money for their vehicle?
Shannon Bradley:
Well, I go back to research. Research is key. If I was selling my car right now, I definitely wouldn’t put all of my eggs in one basket. If you get only one offer, which is something a lot of people do, they just don’t want to take the time to get more than one offer, you won’t ever know if there was a better offer out there. And the thing is, nowadays, it’s easy to do your research. You have online pricing guides where you can find estimates like Edmunds or Kelley Blue Book. And as we’ve been discussing, you can request actual offers from sites like Carvana, CarMax or TrueCar. And there’s not any cost or obligation to do that. Something we recently launched at NerdWallet, we can also make an offer on your car. We now have NerdWallet Automotive and you can find that when you Google NerdWallet buy my car.
Sean Pyles:
Alrighty. Well now let’s turn to the next question, which comes from a listener’s text message. They wrote, what is the fuel of the future? I’ve been researching about buying a new car and they’re saying that cars in the future are going to be electric, but if there’s a new fuel of the future, should I just wait until the new fuel comes out or just buy an electric car now? So Shannon, if you don’t mind, please bring out your crystal ball or industry research and tell us is there a new fuel of the future or does it seem like electric vehicles are the automotive energy of the coming years?
Shannon Bradley:
Well, we’re hearing a lot about research of different alternative fuels like natural gas, propane, or hydrogen fuel cells, which is really just another way of generating electricity. But these are all really in their early stages of development and adoption. So while I think development of various ways to lower vehicle emissions will definitely continue, my crystal ball says that in the near future, the emphasis will still be on EVs.
Sara Rathner:
And is that because EVs have just been around longer and have an advantage in the market over these other fuel types?
Shannon Bradley:
Yes, Sarah, it is. Many people don’t realize that the first electric vehicles were actually introduced in the late 1800s, then they kind of fell by the wayside and interest renewed in the 1970s. So it’s actually taken a long time for us to reach a point where electricity is accepted as a fuel source as it’s becoming today. According to Kelley Blue Book, EVs represent the fastest growing car sales category, and last year nearly 1.2 million U.S. vehicle buyers went electric. We don’t expect that pace to slow down with federal and state legislation as well as so many car makers devoting many resources to the transition to EVs. I just don’t see a quick pivot to other fuel sources that are going to take more time to build that infrastructure and to build that adoption rate.
Sean Pyles:
So the EV market has been developing rapidly over the past few years, but many anxieties that would-be buyers might have around electric vehicles like range, affordability, finding chargers are pretty persistent. Have any of these issues gotten better?
Shannon Bradley:
They have gotten better. For comparison, before 2016, when you’re looking at range, the median range of a new EV was below 100 miles and the top performing option couldn’t travel 300 miles without a charge. Today you can buy an EV that has a 250-mile range for less than $40,000 and the high-end models can have a range of more than 400 miles per charge. When you’re talking about the charging infrastructure, that’s improving too. We now have about 60,000 charging stations across the country, and that’s more than twice the number that we had five years ago. And there are a lot of incentives out there to help with installing home chargers, like from some auto manufacturers or your local electric company.
Sara Rathner:
What about the price of these cars? EVs are generally more expensive than gas powered cars. Is this changing?
Shannon Bradley:
That’s improving too. I think the Tesla price drops have driven other car makers to follow suit. There are a lot of EV incentives out there to help reduce the cost. As I said earlier, you could qualify for the federal tax credit of up to $7,500 and that can usually be stacked with other incentives from car manufacturers, state and local government and electric companies. The U.S. Department of Energy actually has a site, you can find it by searching alternative fuels U.S. Department of Energy, that has a database where you can research all of the various incentives that are available. Late last year, I talked to someone who was an EV buyer in California and he used multiple incentives to knock $8,000 off the price of a Chevy Bolt. And then right now there are a lot of EV leasing deals, and that’s a great option if you’re someone who just isn’t sure that you want to go ahead and buy an EV right now.
Sean Pyles:
Okay. So Shannon, I have to ask you, as a consumer and also someone who writes about this stuff a lot, how are you thinking about electric vehicles? Have you made the jump or are you planning to?
Shannon Bradley:
I haven’t made the leap yet, but it isn’t because I don’t want one. I’m pretty frugal with my money and I bought a gas-powered car right before the pandemic, so I was able to buy it before car prices skyrocketed. And I’m in a fortunate position right now where I’m no longer supporting children. I was receiving, like everyone, stimulus funds during COVID, so I was able to pay down that car and I actually don’t have a car payment right now. I am environmentally conscious. So I think that eventually I will buy or lease an EV, but for right now, I’m enjoying taking a vacation from car payments and putting that money into my retirement savings.
Sean Pyles:
Well, that does sound like a very smart financial decision. I’ll say that. Well, Shannon, thank you so much for joining us on Smart Money.
Shannon Bradley:
Well, thanks for having me.
Sean Pyles:
And that is all we have for this episode. Remember, listener, we are here for you and your money questions. So if you have anything that you want the Nerds to help you out with, call us or text us on the Nerd hotline at (901) 730-6373. That’s (901) 730-N-E-R-D. You can also email us at [email protected]. Also visit nerdwallet.com/podcast for more info on this episode. And remember to follow, rate and review us wherever you’re getting this podcast. This episode was produced by Tess Vigeland who also helped with editing. Sara Brink mixed our audio. And a big thank you to NerdWallet’s editors for all their help.
Sara Rathner:
And here’s our brief disclaimer, we’re not financial or investment advisors. The nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Sean Pyles:
And with that said, until next time, turn to the Nerds.
Source: nerdwallet.com
The average for a 30-year fixed-mortgage is 7.34% today, up 0.02% over the last week. The average rate for a 15-year fixed mortgage is 6.74%, which is a decrease of -0.02% from the same time last week. For a look at mortgage rate movement, see the chart below.
Because inflation data hasn’t been improving, the Federal Reserve has been pushing off rate cuts. Though mortgage rates could still inch down later in the year, housing market predictions change regularly in response to economic data, geopolitical events and more.
Mortgage rates change every day. Experts recommend shopping around to make sure you’re getting the lowest rate. By entering your information below, you can get a custom quote from one of CNET’s partner lenders.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
Each mortgage has a loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. With a fixed-rate mortgage, the interest rate is set for the duration of the loan, offering stability. With an adjustable-rate mortgage, the interest rate is only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the market. Fixed-rate mortgages are a better option if you plan to live in a home in the long term, but adjustable-rate mortgages may offer lower interest rates upfront.
The 30-year fixed-mortgage rate average is 7.34% today. A 30-year fixed mortgage is the most common loan term. It will often have a higher interest rate than a 15-year mortgage, but you’ll have a lower monthly payment.
Today, the average rate for a 15-year, fixed mortgage is 6.74%. Though you’ll have a bigger monthly payment than a 30-year fixed mortgage, a 15-year loan usually comes with a lower interest rate, allowing you to pay less interest in the long run and pay off your mortgage sooner.
A 5/1 adjustable-rate mortgage has an average rate of 6.74% today. You’ll typically get a lower introductory interest rate with a 5/1 ARM in the first five years of the mortgage. But you could pay more after that period, depending on how the rate adjusts annually. If you plan to sell or refinance your house within five years, an ARM could be a good option.
Over the last few years, high inflation and the Federal Reserve’s aggressive interest rate hikes pushed up mortgage rates from their record lows around the pandemic. Since last summer, the Fed has consistently kept the federal funds rate at 5.25% to 5.5%. Though the central bank doesn’t directly set the rates for mortgages, a high federal funds rate makes borrowing more expensive, including for home loans.
Mortgage rates change daily, but average rates have been moving between 6.5% and 7.5% since late last fall. Today’s homebuyers have less room in their budget to afford the cost of a home due to elevated mortgage rates and steep home prices. Limited housing inventory and low wage growth are also contributing to the affordability crisis and keeping mortgage demand down.
Most housing market experts predict rates will end the year between 6% and 6.5%. Ultimately, a more affordable mortgage market will depend on how quickly the Fed begins cutting interest rates. The central bank could start lowering interest rates in the fall, but it will depend on how the economy fares in the coming months.
Mortgage rates fluctuate for many reasons: supply, demand, inflation, monetary policy, jobs data and market expectations. Homebuyers won’t see lower rates overnight, and it’s unlikely there will ever be a return to the 2-3% mortgage rates we saw between 2000 and early 2022.
“We are expecting mortgage rates to fall to around 6.5% by the end of this year, but there’s still a lot of volatility I think we might see,” said Daryl Fairweather, chief economist at Redfin.
Every month brings a new set of inflation and labor data that can influence the direction of mortgage rates, said Odeta Kushi, deputy chief economist at First American Financial Corporation. “Ongoing inflation deceleration, a slowing economy and even geopolitical uncertainty can contribute to lower mortgage rates. On the other hand, data that signals upside risk to inflation may result in higher rates,” Kushi said.
Here’s a look at where some major housing authorities expect average mortgage rates to land.
Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stay within your means. CNET’s mortgage calculator below can help homebuyers prepare for monthly mortgage payments.
Though mortgage rates and home prices are high, the housing market won’t be unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right.
Source: cnet.com
The National Association for the Self-Employed’s membership has grown dramatically over the last few years, says Keith Hall, the group’s president and CEO. And while that growth has slowed since its COVID-era peak in 2022, he thinks flexible work is here to stay.
The boom in self-employment started when “a lot of people had to do it because of COVID. They didn’t choose to do it; they had to do it,” Hall says. “Many others saw and learned and read that you can do this. You don’t need to be tied to the desk in corporate America.”
Below is NerdWallet’s 2024 list of the 10 best U.S. metro areas for freelancers and the self-employed. Our analysis used recent metro-area data from the U.S. Census Bureau and state-level data from the Tax Foundation. The top metro areas are those where a significant percentage of the workforce is self-employed already, rent is relatively affordable, unemployment is low, worker mobility is high and state income taxes are relatively low.
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Nashville-Davidson-Murfreesboro-Franklin, Tennessee.
North Port-Bradenton-Sarasota, Florida.
Chattanooga, Tennessee.
Knoxville, Tennessee.
Austin-Round Rock-San Marcos, Texas.
Lancaster, Pennsylvania.
Boise City, Idaho.
Columbus, Ohio
Bridgeport-Stamford-Danbury, Connecticut.
Portland-South Portland, Maine
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Of our top 10 cities, Bridgeport-Stamford-Danbury, Connecticut, and North Port-Bradenton-Sarasota, Florida, have the largest percentages of the workforce that are already self-employed (8.5% and 8.2%, respectively). The median of all metro areas in our dataset is 5.3%.
Housing affordability continues to benefit communities like Chattanooga and Knoxville, Tennessee; Lancaster, Pennsylvania; and Portland, Maine — all places in which more than half of renters spend less than 30% of their income on rent.
Tennessee, Florida and Texas all have no state income tax, which can keep a portion of income in self-employed workers’ pockets. That said, “It’s rare when I personally hear an individual relocating states just because of the tax code,” Hall says.
Columbus, Ohio, was boosted by a significant increase in the number of people moving to the city for work between the end of 2022 and the beginning of 2023. While those people weren’t necessarily freelancers, we use this data point to better understand economic vibrancy.
What might self-employment look like for you? That depends on what you hope to get out of it.
Though some industries have shifted broadly toward remote work, others still benefit from proximity.
Brian Rood, a certified financial planner and owner of Artisan Financial Planning, knows that firsthand: He spent 27 years playing trumpet in the Kansas City Symphony before shifting to financial planning and now works primarily with artists.
In highly specialized fields like the performing arts, “you really do go where the work is,” Rood says. That might mean an industry-specific location, like New York or Los Angeles, or a small city where you landed an orchestra job and then built a network of students and professional contacts.
Seth Hodes, co-founder and managing partner at Able Wealth Management, also works primarily with artists and creatives. He says his clients often move from creative agencies to tech companies to freelance portfolios and then back again based on what opportunities arise. Living in regions that have active job markets and lots of opportunities in their industries helps facilitate such mobility.
“The artist freelancer has always been adaptable,” Hodes says. “It’s a grind out there — you’re going to have to survive and work up a certain kind of cultural capital.”
Self-employed workers typically need to set aside 25% to 30% of their income for tax payments.
Next, Rood adapts the 50/30/20 budget to each client; the budget is a framework that recommends spending 50% of your income on expenses, 30% on “wants” and 20% on savings. “It’s a little high on the first parts and a little low on the savings,” he says, but it’s a useful jumping-off point.
Rood encourages self-employed clients to have a larger-than-average emergency fund. For some performing artists, he recommends six to 12 months of living expenses.
That math can get difficult when the cost of living is high, and it can tempt people to move, especially if they can take work with them or are scaling back on hours.
When his clients leave a high-cost-of-living city, Rood says, “it’s because they either are going to retire, and so they want to go somewhere cheaper and they don’t need the work, or the rat race is too much and they want to do something else.”
Hall says he’s seen lots of older Americans strike out on their own, too. If your freelance work is a transition step out of full-time work, you may lean toward the place where you want to spend your retirement.
Self-employment can afford you the freedom to live in a place for personal reasons, not just professional or financial ones.
For some, self-employment may support a move that lets them live more safely. According to a 2022 survey from the National Center for Transgender Equality, 5% of trans people had moved out of state due to laws targeting their community and 47% of respondents had thought about it.
And Hall says family ties and hometown memories are common reasons for relocation.
“We do hear a lot from NASE members and from small-business owners moving to a different community,” Hall says. “Maybe they grew up in a small city when they were younger and they had the need to go to the big city, because that’s where the jobs were. Now they’re going back home.”
Hodes says he works with his clients to find harmony between their financial goals and how they want to live their lives more broadly.
“You have to plan for the future, but it has to be a balance,” Hodes says. “Don’t sacrifice too much in the present.”
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To create the Best Cities for Freelancers and Self-Employed Workers 2024 list, NerdWallet pulled data for major U.S. metropolitan areas from the U.S. Census Bureau. We also pulled state tax rates from the Tax Foundation and calculated the tax rate for a household earning the median U.S. household income. We weighted the impact of each factor depending on how important we felt that factor would be in the potential financial success of a freelancer. We excluded metro areas for which there was negative or no Job-to-Job Flows Census data.
NerdWallet’s analysis includes data from the following sources:
U.S. Census 2022 American Community Survey data for the unemployment rate, percentage of people in Census-designated metro areas who identified as self-employed in non-incorporated businesses, and percentage of renters in a Census-designated metro area who spend less than 30% of their household income on rent.
U.S. Census Q4 2022 and Q4 2023 Job-to-Job Explorer data.
The 2024 state tax rate for the median U.S. household (which earned $74,580 in 2023, according to Census data), according to the Tax Foundation.
Source: nerdwallet.com
There haven’t been many appealing options for borrowers in the last two years.
With inflation problematic, interest rates were elevated to help rein it in. And while that caused inflation to drop from a decades-high in June 2022, interest rates have been stuck at their highest level in 23 years. On Wednesday, the Federal Reserve elected to maintain that level, keeping the benchmark interest rate range unchanged between 5.25% and 5.50%. This has resulted in higher borrowing costs for everything from mortgages and auto loans to personal loans and credit cards.
One alternative that has remained cost-effective, however, has been home equity. By tapping into their equity via a home equity loan or home equity line of credit (HELOC), homeowners have gained access to large sums of money, often at much lower interest rates compared to the alternatives. But an even lower interest rate is always preferable, leading some to wonder if home equity loan rates will drop further this month. Below, we’ll break down what to expect now.
See what home equity loan rate you could secure online today.
While the Federal Reserve kept interest rates unchanged this week, the implication that higher rates may be staying high for longer was clear. Even absent a formal increase in rates, rates on borrowing products like home equity loans and HELOCs may rise slightly if lenders believe that a rate hike is imminent.
So not only is it unlikely for home equity loan rates to fall in May — they may actually rise. That possibility could become more pronounced if the next inflation report, scheduled to be released on May 15, shows inflation rising yet again. If that happens, an interest rate hike becomes more likely — and rates on home equity products could rise.
Against this backdrop, then, homeowners may want to be proactive. Home equity loan rates are fixed (unlike HELOCs, which are variable). So by pursuing a home equity loan today, owners can lock in today’s low rate before it potentially rises further. And, if rates somehow drop in the months to come, owners could refinance their loan then. What they shouldn’t do, however, is rate for a better rate climate. Instead, get started now and lock in the lowest rate you can find.
Explore your home equity loan options here to learn more.
A lower interest rate isn’t the only selling point for home equity loans now. Here are two other reasons why you may want to pursue this option today:
Home equity loan rates are unlikely to fall in May and they could even rise as the month goes on. But because of that likelihood, and because of the low rate borrowers can secure now, it may be beneficial to act promptly. Combined with beneficial features like access to large sums of money and potential tax deductions for qualifying uses, a home equity loan can be your go-to credit option now. As with all financial products, however, be sure to weigh the pros and cons of this unique loan, as you could risk losing your home in the process if you can’t pay back what you borrow.
Source: cbsnews.com
Housing experts say mortgage rates are likely to hover in the 7 percent range in May, amid elevated inflation that is keeping the Federal Reserve from reducing borrowing costs.
The high cost of home loans may keep buyers at bay as they await the decline of rates before they can make the leap toward homeownership.
Read more: Find the Lowest Rates From Top Mortgage Lenders
The Federal Reserve raised interest rates starting in March 2022 to its current two-decade high of 5.25 to 5.5 percent, a move geared to fight soaring inflation. This contributed to the push-up of borrowing costs, including for home loans. Inflation is still struggling to cool down to the 2 percent central bank target, which has forced policymakers to retain the high interest rate environment.
The 30-year fixed rate, for the week ending April 19, rose for the third week in a row to 7.24 percent—the highest level since November 2023.
Economic data, particularly around inflation, have come in higher than expected over the last few weeks. In March, inflation jumped to 3.5 percent on a yearly basis, up from 3.2 percent the prior month.
Unless inflation surprises in the coming weeks, mortgage rates are likely to stay in the 7 to 7.5 percent range, according to Realtor.com’s chief economist Danielle Hale. Fed policymakers are set to conclude their latest meeting on May 1, and they are unlikely to change their current stance on rates.
“Of all the data, I think that the inflation, specifically the [Consumer Price Index] out May 15, will have the biggest impact,” Hale told Newsweek. “Inflation and labor market data has come in higher and hotter than expected. This change in the data, which is driving a change in the outlook, has pushed interest rates, including mortgage rates, higher across the board.”
Read more: How to Get a Mortgage
High mortgage rates will depress buyers’ ability to buy homes.
“I expect homebuyers to approach the housing market more tepidly, and sales will reflect that trend,” Hale told Newsweek.
Orphe Divounguy, a senior economist at Zillow Home Loans, echoed Hale’s perspective on what will drive mortgage rates as inflation remains elevated.
“The fact that government borrowing remains high relative to demand for U.S. Treasury bonds is likely to continue to push yields—which mortgage rates follow—elevated,” he told Newsweek. “Looking into May, we can expect more rate volatility as investors and the Fed wait for more conclusive evidence of a return to low, stable and more predictable inflation.”
Buyers are still likely to be waiting for rates to fall but the key to the trajectory of rates will be how inflation performs over the coming months, said Holden Lewis, a home and mortgage expert at NerdWallet.
“Inflation remains stubbornly above the Fed’s target of 2 [percent], and mortgage rates won’t fall significantly until the inflation rate consistently drops for multiple months in a row,” Lewis told Newsweek. “Potential home buyers are holding back and waiting for mortgage rates to decline. The slowdown in home sales will allow the inventory of unsold homes to increase. That won’t stop home prices from going up, but it might slow down the pace of home price increases this summer.”
In May, policymakers from the Fed will reveal their latest rate decision and provide insights on the trajectory of borrowing costs. Also in May, the CPI inflation data reading for April will give insight into how prices are performing, which will give a signal to how rates might unfold over the next few weeks.
For the housing market, one silver lining may come from buyers who have to acquire homes due to personal situations.
Read more: How to Buy a House if You Have Bad Credit
“Purchases are likely to be dominated by movers who feel like they don’t have a choice to wait out higher rates, but rather, they have to move now for personal reasons,” Hale said.
Zillow’s Divounguy suggested that with mortgage rates expected to stay high, lower-priced homes could see escalated competition.
“We continue to expect significant competition this spring, especially for attractive listings on the lower end of the price range. New construction homes are selling well too; they’re available, and builders are offering financial incentives—such as rate buydowns and covering closing costs—to potential home buyers,” he said. “Remember, higher rates mean the home price a buyer can afford is lower, so if you’re shopping for a home in the mid-tier or lower, it’s best to assume you’ll run into some competition.”
Hale suggested that sellers, who can also be buyers, enter the housing market.
“With 80 [percent] of potential sellers having thought about selling for 1 to 3 years, it could be that higher rates are less of a deterrent this year than in the recent past,” she said.
The perspective from lenders appears to be that the 10-year treasury yields, currently at around 4.7 percent, will drop in the coming weeks to 4 percent and narrow the difference between mortgage rates and treasury rates.
“We expect the spread will tighten further by the end of 2024. The combination implies a 30-year fixed mortgage rate mostly unchanged in the coming weeks but eventually moving closer to 6.5 percent by the end of 2024,” Joel Kan, Mortgage Bankers Association’s deputy chief economist, told Newsweek.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Source: newsweek.com
Having children brings many joys. But for women, it can also have a financial dark side. Becoming a mother often results in a loss of pay and opportunities for career advancement, a phenomenon known as the motherhood penalty. In fact, women experience a 60% decrease in income compared to men in the decade after their first child is born, according to PricewaterhouseCoopers’ 2023 Women in Work Index.
Many factors contribute to the motherhood penalty, and not every woman experiences it in the same way. Understanding the motherhood penalty can help women — and their families — sidestep this financial setback.
If you want to avoid the motherhood penalty and keep your budget on track, it pays to know your enemy. According to a 2023 article published in the scientific journal PNAS, women’s diminished earnings after the birth of a child is driven by both a reduction in employment and by lower earnings for those who remain employed. Let’s look at each of these factors.
Despite the fact that women today have achieved historic levels of education and are working at senior levels in the corporate world, they are still more likely than men to cut back on their working hours or stop working altogether after a baby is born. Some women may choose jobs that allow for more flexibility in hours even if those roles pay less.
Discrimination is a more insidious factor: Women make up nearly half of all U.S. workers and do the bulk of consumer spending, yet some hiring managers still believe that women’s earnings are not as critical as men’s for household support. (A quick look at any parent’s money tracker app would reveal just how untrue this stereotype is.) When two women are similarly qualified for a job, the one without children tends to earn more than the one who has kids. And when men and women hold similar positions, fatherhood seems to confer a salary advantage in many occupations.
Recommended: The Highest-Paying Jobs in the US
Dual-income households have been the norm among married couples for decades, and most households composed of married couples with children have two working parents, according to 2023 data from the Bureau of Labor Statistics. Families with two healthy incomes are most likely to be able to afford a home, and to be able to cover other large expenses, including the cost of kids. (A 2022 report from the Brookings Institution suggests that the average middle-income family today will spend more than $310,000 to raise a child to age 17.)
But the motherhood penalty takes an especially hard toll on families led by women. According to the 2023 Census, 21% of U.S. children are growing up in a household led by a single mother, who often has no other source of income than her own earnings. The motherhood penalty may contribute to the fact that nearly 30% of single-parent families are living below the federal poverty level.
As noted above, the unspoken ideas that women belong at home caring for their children, or that women are not vital contributors to their family finances, continue to be a driver of the motherhood penalty. This is despite the fact that households where two parents work outside the home is now the norm in the U.S.
But there is another troubling scenario. Women may leave their job because childcare costs more than they earn. The cost of caring for an infant in a childcare center averages $15,417 per year per child. In big cities, the number climbs even higher: Washington, D.C. averages $24,243, for example. And even when women don’t stop working, they may scale back their hours, or take more flexible but less well-paid positions.
The motherhood penalty is unfair, and one additional factor adds to the unfairness: In households with two working parents, where each parent earns roughly the same amount, women still spend more time on caregiving responsibilities than men do — 12.2 hours per week on average, compared with 9 hours for men, according to a 2023 Pew Research Center report. Women also spend 4.6 hours doing housework to men’s 2 hours. Women’s work may be valued less, but as the old saying goes, it’s never done.
Recommended: Pros and Cons of Salary vs Hourly Pay
So what can women do to safeguard their finances from the motherhood penalty?
Consider your career choice. Women can begin to protect their financial future while they are still contemplating a career path. Some research suggests that the motherhood penalty disappears for mothers who work in business and post-secondary education. And in STEM careers, and fields such as medicine and law, mothers actually appear to earn more than women who don’t have kids.
Stand up for fair earnings. Exercise your right to be fairly compensated with every step you take in the working world. Applying for a job? Do your research to learn what is a good entry-level salary. Offered a position? Learn how to ask for a signing bonus — with unemployment relatively low, employers in industries from retail to engineering may pay you to come on board.
Change jobs. Women may be less likely to change jobs after becoming mothers, as switching jobs can be stressful and time off is often allotted based on seniority. Yet changing jobs is one way to bump up your salary. When you do switch, make sure you understand what is a competitive pay rate. A growing number of states, including California, Colorado, and New York, have passed pay transparency laws that require employers to post salary ranges when they advertise job openings.
Don’t share your status. It’s unlikely that you’ll be asked during a job interview if you have caregiving responsibilities, as doing so may violate federal and state laws. But many women casually disclose that they are parents during the interview process without thinking twice about it. Avoid talking about your personal life when interviewing for a job and consider that many employers examine applicants’ social media feeds during their screening process.
Advocate for fair pay and families. Research suggests that moms in women-dominated and low-paid professions face the greatest motherhood penalty. To help promote equitable pay that can sustain families, you can support raising the minimum wage. Lifting your voice in favor of government support for affordable childcare and for mandatory paid parental/caregiver leave can also help ensure that women who want to stay in the workforce after having a child can afford to do so.
Despite the fact that women are working outside the home in historic numbers, the motherhood penalty still exacts a perilous price for many women and their families. Acknowledging that women are financially penalized for becoming parents is a first step in fighting back against the stereotyping and discrimination that is often at the root of this problem.
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The motherhood penalty refers to the fact that women’s earnings suffer after they have children, sometimes due to discrimination in hiring or the awarding of promotions, and sometimes because women scale back on work or stop working altogether after having a child.
The motherhood penalty results in lower earnings, and because future earnings are often based on current salary, the diminishment in income often persists as a woman progresses up the ladder.
A primary way to avoid the motherhood penalty is to know your worth. Do your research on salary before taking a job, and reevaluate your salary at least yearly by looking at comparable positions.
Photo credit: iStock/Pekic
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So where does this leave us? Let’s look at my labor economic model that started on April 7, 2020, and see where are we today.
1. The current state of the labor market results from a series of events, with COVID-19 being a significant catalyst. I wrote the COVID-19 recovery model on April 7, 2020, and retired it on Dec. 9, 2020. By that time, the upfront recovery phase was done, and I needed to model out when we would get the jobs lost back.
2. During the early stages of the labor market recovery, when we observed weaker job reports, I remained steadfast in my belief that job openings would reach 10 million in this recovery. Despite the unexpected job report in May 2021, I was confident in the recovery trajectory. Job openings reached as high as 12 million and are now at 8.5 million. Today the labor market is less tight, but the Fed would love to see this number even lower, down to 7 million.
Currently, the job opening quit percentage and hires data are below pre-COVID-19 levels. We are getting closer to having a single handle on this data, which, when coming from an elevated level, means any Fed member talking about a tight labor market is smoking some good stuff.
3. I wrote that we should get back all the jobs lost to COVID-19 by September 2022. This would be a speedy labor market recovery but it happened right on schedule.
4. This is the key one right now: If COVID-19 hadn’t happened, we would have between 157 million and 159 million jobs today, based on the job growth rate in February 2020. Today, we are at 158,286,000. This is vital because given this level, job growth should be cooling down now. We will be more in line with where the labor market should be when the average is 140,000 to 165,000 monthly.
Today’s job print of 175,000 is still above my target level for where jobs should be and we are getting closer to that 159 million total nonfarm payroll number. I will be shocked if we are still trending above 165,000 per month once we break over 159 million total employed people. With that said, the labor market is still outperforming my model.
Looking at the six-month average of job-growth data, we are running at 242,000, even with all the revisions. I am still above my 165,000-per-month level, but we are heading in that direction.
From BLS: Total nonfarm payroll employment increased by 175,000 in April, and the unemployment rate changed little at 3.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in social assistance, and in transportation and warehousing.
Here are the jobs that were created and lost in the previous month:
In this jobs report, the unemployment rate for education levels looks like this:
A critical part of this report is that wage growth is cooling down, which is key to many of the Federal Reserve’s concerns. The Fed likes a 3% wage growth trend because they believe productivity is 1%. As you can see below, wage growth is continuing to head in that direction.
We now have multiple data lines that show the labor market isn’t as tight as it once was. The Federal Reserve is now considering this since they have been talking more about their dual mandate as opposed to just being a single mandate Fed. This is positive for mortgage rates because once they pivot, we can see a more sustained move lower in rates instead of what we have had to deal with since 2022. We still have some work to get wage growth back down to a 3%-3.5% level, but it’s at least heading that way.
Source: housingwire.com
Rates have been in retreat as bond market investors who fund most mortgage loans react to the latest economic news and scaleback in tightening by Fed policymakers.
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Mortgage rates retreated for the third day in a row Friday as the latest numbers from the Labor Department showed employers added fewer jobs than expected in April, pushing unemployment closer to 4 percent, a level not seen in more than two years.
The U.S. economy added 175,000 jobs in April, down from 315,000 in March and the most anemic growth since October 2023. Economists had expected April employment growth of 240,000 jobs.
The report came on the heels of Wednesday’s announcement by Federal Reserve policymakers that they intend to slow the pace of “quantitative tightening” — an unwinding of the central bank’s $7 trillion balance sheet — to $40 billion a month, less than half the pace envisioned two years ago.
Change in employment, by month. Red bars are the latest forecast, including revisions to previous estimates for February and March. Source: U.S. Bureau of Labor Statistics.
“This report is nothing like bad enough to trigger a wholesale rethink at the Fed, but things will be different if the July numbers are weaker still, as we expect,” economists at Pantheon Macroeconomics said in a note to clients. “The downshift in payroll growth has come exactly when the [National Federation of Independent Business] suggested it would, and the signal for the future is unambiguous.”
Futures markets tracked by the CME FedWatch Tool last week predicted that the odds were against the Fed making more than one 25-basis point rate cut this year. On Friday, investors had repositioned their bets in line with expectations that there’s a 61 percent chance of two or more Fed rate cuts by the end of the year, with the first move now expected in September rather than December.
Pantheon economists are sticking to their forecast that the central bank will bring the federal funds rate down by a full percentage point, starting in September.
“Businesses — especially small firms — are responding to the lagged effect of the huge increase in interest rates and the tightening in lending standards, which have made working capital much more expensive and harder to obtain,” Pantheon economists said. “At the margin, this is depressing hiring and lowering the bar to layoffs.”
Unemployment, which dipped below 4 percent in February 2022, is once again flirting with that level, hitting 3.9 percent in April, up half a percentage point from a year ago.
The Fed doesn’t have direct control over long-term rates, but bond market investors who fund most mortgage loans are reacting to this week’s news.
Yields on 10-year Treasurys, which often predict trends in mortgage rates, fell 7 basis points Friday to 4.50 percent, a 25-basis point drop from the 2024 high of 4.75 percent registered on April 25.
Surveys of lenders by Mortgage News Daily showed rates for 30-year fixed-rate loans dropping for a third day in a row Friday, to 7.28 percent, down 24 basis points from a 2024 high of 7.52 percent, also registered on April 25.
Data tracked by Optimal Blue, which lags by one day, showed borrowers were locking in rates on 30-year fixed-rate mortgages Thursday at an average rate of 7.21 percent, down 6 basis points from the 2024 high of 7.27 percent recorded on April 25.
Borrowers taking out jumbo loans have seen spreads over conventional mortgages widen as higher interest rates and defaults on commercial loans weigh on regional banks that are often the source of those loans.
The rates published by Mortgage News Daily (MND) are higher than those reported by Optimal Blue because MND’s rate index is adjusted to account for points that borrowers often pay to get a lower rate. Optimal Blue uses actual rates provided to borrowers for rate locks, whether they paid points or not.
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Source: inman.com
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The Reserve has a $550 annual fee, while the Sapphire Preferred’s is considerably less at $95.
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Chase wouldn’t disclose when these limited-time offers would expire. However, previous Chase sign-up bonus promotions lasted just a few months.
Source: nerdwallet.com