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May 8, 2021

Don’t Forget These Five Essentials in Your Apartment

As you prepare to move out of the house or dorm and into your first real apartment, you will have a long list of items you need to buy, borrow or steal. For starters, there is the furniture: a bed frame and mattress, dressers or drawers, a couch and other seating and a table. Then you’ll need staples like dishes and cookware and cleaning supplies.

In the midst of all this shopping and packing, a few things are bound to slip your mind. So before you move, make sure you have these five essential items often left out of a first apartment.

Tool Box

While setting up decorations and picture frames, making small repairs or replacing batteries, you will need a tool kit. However, these handy tools are easily overlooked when moving, especially by girls. You don’t need to make a major investment in your tools (nice and detailed boxes can cost hundreds), but make sure you have the basics: hammer, pliers, screwdriver, wrench, nails and screws. This kit will make your life much easier when a picture falls in the middle of the night or your necklace breaks as you’re about to leave.

Storage Bins

At your childhood home, you are likely to have much more storage room than in your new apartment, so finding places to put all of your stuff in a tighter space may be a challenge. After ciphering through your things and throwing the junk out, buy a few cheap but durable, large plastic bins. Use them to store off-season clothes, school and home supplies, extra blankets, sheets and pillows or books and movies. Then, move the bins to the back of your closet or under your bed.

First Aid Kit

Accidents happen, and you should always be prepared for the medical variety with a first aid kit. Whether you buy it or build it, yours should include: tweezers, ibuprofen, adhesive bandages (several sizes), antibiotic ointment, hydrogen peroxide, medical tape, gauze, rubbing alcohol and gloves.

Read more: How to Baby Proof Your Apartment

Lighting

Since most apartments come equipped with the big lighting fixtures, the smaller ones are often left off apartment checklists. You’ll need lamps for your bedside table and desk and perhaps for extra lighting in your living room. You’ll also need a flashlight and candles in case the power goes out. Therefore, make sure you also have appropriate battery sizes and matches on hand.

Read more: Fire Prevention Tips: 14 Ways to Avoid Setting Your Apartment on Fire

Sewing Kit

You may not be the next fashion designer or expert seamstress, but you should know how to (or at least have the supplies for) re-sewing a button or quickly stitching up a small hole. Sewing kits are cheap and contain a few needles and small spools of the most common colors.

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Source: apartmentguide.com

May 7, 2021

What’s Your Strategy for Maximizing Your Social Security Benefits?

Deciding when to take social security is a bit like playing chess. You’ll need to strategize and think a few moves ahead to maximize your benefit because age and timing matter. Applying at the youngest age possible, 62, reduces a monthly benefit 25% to 30% for the rest of your life than if you had waited until full retirement age. Delay until the latest age possible, 70, and that monthly benefit increases 8% each year you wait past your full retirement age, a bonus of 24% to 32% depending on your birth year.

Your birth year matters because the full retirement age is rising — from 66 for people born between 1943 and 1954, to 67 for those born in 1960 or later. If your birth year falls between 1955 and 1959, the full retirement age rises two months every year.

The retirement age isn’t the only thing that’s changing. The rules for claiming Social Security are different for those born after Jan. 1, 1954. This includes the majority of people filing for benefits today, and the changes especially affect married, two-earner couples.

First, the basics: Individuals pay into Social Security their entire working life in order to receive a steady stream of income in the form of a monthly benefit once they retire. The benefits are based on the person’s 35 highest years of earnings. If you don’t have 35 years of earnings, then zeroes are entered for the remaining years, reducing the monthly benefit.

As pensions disappear and life expectancies rise, a guaranteed lifelong income that isn’t tied to the stock market has tremendous value. “Social Security is the best deal out there,” says Diane M. Wilson, a claiming strategist and founding partner of My Social Security Analyst in Shawnee, Kan. “It’s an annuity that lasts a lifetime, and it’s indexed to inflation.”

Maximizing that benefit has produced a cottage industry of claiming strategists to help retirees determine the best time to start taking benefits, but it’s not a simple calculus. “In the end, it’s a longevity decision,” says Kurt Czarnowski, who counsels clients about Social Security at Czarnowski Consulting in Norfolk, Mass. “If you knew when you were going to die, all this would be a snap.” Instead, people should understand their choices and make an informed decision, he says.

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The Differences Between Restricted Filing and Deemed Filing

For married couples, that decision involves accounting for two people’s earnings and benefits, as well as the likelihood of one spouse outliving the other. Spouses are not only entitled to the benefit based on their own work history, but they also may be eligible for additional money when the spousal benefit is factored in, what Wilson calls “add-ons.” The spousal benefit equals 50% of the higher-earning spouse’s benefit if the lower-earning spouse takes it at full retirement age. The amount is reduced when taken early, and you can’t claim the spousal benefit until your spouse begins taking Social Security. To be clear, you do not get to take two benefits, but rather Social Security increases your benefit to equal half of your spouse’s if the one based on your own work history is smaller.

People born on or before Jan 1, 1954, can maximize benefits while still receiving some Social Security. By taking whichever benefit is lower — their own or a spouse’s — when they first apply, they let the larger benefit grow before switching to it at a later age. That option, known as “restricted filing,” isn’t available for people born after Jan. 1, 1954. For them, there’s no choice. Social Security simply bestows their own benefit and any add-ons the person is eligible for when they file for benefits, a practice known as “deemed filing.”

Let’s say the higher-earning spouse is the husband and the lower-earning spouse is the wife. Under deemed filing, when the wife applies for Social Security at her full retirement age, she is given the highest amount she is eligible for, which in this instance is 50% of her husband’s benefit, assuming he started taking it. If he hasn’t, she will be given only the benefit based on her own work history. Once her husband applies for his benefits, Social Security will increase hers so that it equals half of his. If the wife was the higher earner and her benefit was more than 50% of his, she won’t get any additional money when he starts claiming Social Security. She will simply continue collecting her own higher work benefit.

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Maximizing Social Security Benefits for Married Couples

Deemed filers may have fewer options, but there are other strategies to consider, such as when to start claiming and which spouse should file for Social Security first. Those decisions can change cumulative lifetime benefits substantially, sometimes by as much as six figures, says Wilson. When she advises couples affected by the new rules, she generally recommends the higher earner to delay as long as possible, ideally until age 70, while the lower earner can file, giving the retired couple some income.

The couple’s age difference matters, particularly if the younger spouse is also the lower earner, says Jim Blair, co-owner of Premier Social Security Consulting in Cincinnati. In that case, “if they’re five years or more apart in age, you want the younger person filing as early as possible, at 62, and the older person delaying as long as possible,” he says. “Odds are the younger person is going to receive a survivor benefit before they reach their breakeven point, which is about 12 years past retirement age.” The breakeven point is the age when the total value of cumulative benefits, whether taken early or later, is roughly the same.

If the situation is reversed and the younger spouse is the higher earner, “we’ll look at what the younger individual will need in retirement,” Blair says. “If taking that benefit early at age 62 means a 25% reduction, they’re going to have to live with that for the rest of their life.” There will need to be other income to compensate for the reduction, he adds.

Couples who straddle the 1954 birth year, with one spouse falling under the old rules and the other under the new, have more ways to move the pieces on the Social Security chess board. For instance, if the wife is the younger, lower earner, she may want to apply early, taking her own reduced benefit. That would allow the husband, who was born before the 1954 cutoff date, to use a restricted application and request only a spousal benefit. Meanwhile, his benefit based on his own work history continues to grow 8% per year from his full retirement age until he turns 70. He can switch to his own higher benefit later, whether at 70 or sooner.

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Understanding Social Security Survivor Benefits

Couples should try to postpone taking whichever spouse’s benefit is higher to ensure a larger survivor benefit. This is particularly important when the lower earning spouse is younger and likely to outlive the higher earner by many years. “You want that higher benefit to take care of the survivor,” says Wilson, who warns clients of expenses, like home health aides, that someone living alone will almost certainly have.

A spousal benefit turns into a survivor benefit when a spouse dies, but the benefits are not the same. A surviving spouse who is at least full retirement age can receive 100% of the deceased spouse’s benefit, as opposed to 50% for a spousal benefit. The amount is reduced if the surviving spouse claims the benefit before full retirement age. You can claim a survivor benefit as early as age 60 (50 if you are disabled). But you don’t have to take it early, and you may not want to if you’re still working.

Social Security imposes an annual earnings limit for anyone younger than full retirement age who collects benefits, a rule that also applies to surviving spouses. For every $2 earned above the limit, which is currently $18,960, Social Security will deduct $1 in benefits, with the money restored later in the form of a higher benefit when you reach full retirement age. The earnings rule is more generous the year you reach full retirement age with Social Security deducting $1 for every $3 in earnings above $50,520. There’s no limit on earnings once you are full retirement age.

A widow who is, say, 60 when her husband passes away could hold off and take the survivor benefit when she reaches her full retirement age and stops working. There’s no reason to wait beyond that age because the survivor benefit won’t increase.

A survivor benefit is also not subject to the deemed filing rule. Someone born after the 1954 cutoff date can choose to take either their own or the survivor benefit when applying for Social Security. That opens a whole new avenue of claiming strategies. A widower, for example, could take the survivor benefit first if he needs the income and let his own larger benefit continue accruing delayed retirement credits before switching to it at age 70. If his own benefit is smaller, he could take that early and switch to the larger survivor benefit when he reaches full retirement age. The survivor benefit won’t be reduced because he took his own benefit early. The survivor benefit is only reduced if he takes it before his full retirement age.

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How Death, Divorce and Remarriage Affect Social Security Benefits

A divorced spouse is also eligible for benefits based on a former spouse’s earnings history. If your ex is still alive and both of you are at least age 62, you can collect a spousal benefit even if your ex hasn’t started collecting, provided that the marriage lasted at least 10 continuous years, the divorce was two or more years ago, and you haven’t remarried. Your ex won’t know you’re taking the benefit. A divorced spouse who is full retirement age can get 50% of the former spouse’s benefit; it’s reduced if taken early. Deemed filing rules still apply if you were born after New Year’s Day 1954, with only the highest benefit amount given to you.

If your ex has passed away, you can collect a survivor benefit as early as age 60, but the other requirements — a marriage that lasted at least 10 years and a divorce that was finalized two years ago — remain. You also can’t have remarried before age 60.

If you remarry after age 60, you are allowed to keep the survivor benefit from a former spouse whether you were divorced or not, but timing is everything. Wilson had a client, a widower, who was two months away from turning 60 and collecting a survivor benefit. He was also about to remarry. “I told him about the rule, and he said, ‘I can’t reschedule this now.'” He went ahead with the wedding as planned, sacrificing the survivor benefit at the altar. Wilson points out that her client could collect a survivor benefit from his first marriage if the second one ends for any reason.

As with any survivor benefit, there’s no deemed filing. A divorced spouse has the option of choosing which benefit to take first — their own or the survivor benefit — and let whichever is larger continue to grow before switching to it later on.

Remarriage brings other claiming strategies, such as applying for a spousal benefit based on the new spouse’s work record, but there is a waiting period. To collect a spousal benefit, you generally need to be married one year, Czarnowski says. An exception is made for someone who is already collecting a Social Security benefit and remarries. Then the waiting period is waived, he says. For example, a widow over age 60 who is collecting a survivor benefit and remarries is “immediately eligible to collect 50% of the new husband’s benefit, assuming he is collecting his benefit,” Czarnowski says. You will need to choose which benefit you want — the survivor benefit from an earlier marriage or the new spousal benefit.

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When Singles Should File for Social Security Benefits

For single people who never married, there’s no survivor to consider so the decision of when to claim is based on the need for income and how much they’ll get at any given age between 62 and 70. “It’s really which point along this continuum makes sense,” Czarnowski says. You can get an idea of how much your benefit will be at different ages based on your current earnings by using Social Security’s quick calculator. You can also enter your earnings history for a more precise figure.

Most of Wilson’s single clients start claiming at full retirement age so that their benefits aren’t reduced. Should they wait until age 70 to get the highest possible benefit? “They may want to if they’re still working and they don’t need Social Security,” Blair says. “The flip side is when they pass away, the benefits end. If they pass away at 72, they didn’t collect very long.”

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You Can Pause Your Social Security Benefits

Someone pushes a red button that is labeled "No!"

Social Security also gives people who regret taking a benefit early the chance to reverse that decision. If you change your mind within the first 12 months of claiming your benefit, you can withdraw the application. All the benefits you received will need to be repaid, including any spousal benefits based on your work record, but you’ll get a higher monthly benefit when you restart later on.

The second way is to suspend your benefit, which you can only do once you reach full retirement age. You won’t need to repay the benefits you’ve received, and you earn delayed retirement credits of 8% per year until age 70, enabling you to reverse some of the damage from claiming early. Keep in mind, however, that when you suspend a benefit, you also suspend any other benefits based on your work record, such as a spousal benefit. If your spouse was getting $1,500 per month and $500 was based on your work record, she’ll only get her own $1,000 benefit when you suspend.

Source: kiplinger.com

May 7, 2021

What Is a Bond Mutual Fund – Risks & Different Types of This Investment

Investing is an important part of saving for the future, but many people are wary of putting their money into the stock market. Stocks can be volatile, with prices that change every day. If you can’t handle the volatility and risk of stocks or want to diversify your portfolio into a less risky investment, bonds are a good way to do so.

As with many types of investments, you can invest in bonds through a mutual fund, which gives you easy diversification and professional portfolio management — for a fee.

Are bond mutual funds a good addition to your portfolio? Here are the basics of these investment vehicles.

What Is a Bond?

A bond is a type of debt security. When organizations such as national and local governments, government agencies, or companies want to borrow money, one of the ways they can get the loan they need is by issuing a bond.

Investors purchase bonds from the organizations issuing them. Typically, bonds come with an interest rate and a maturity. For example, a company might sell bonds with an interest rate of 5% and a maturity of 20 years.

The investor would pay the company $1,000 for a $1,000 bond. Each year, that investor receives an interest payment of $50 (5% of $1,000). After 20 years, the investor receives a final interest payment plus the $1,000 they paid to buy the bond.

What Is a Mutual Fund?

A mutual fund is a way for investors to invest in a diverse portfolio while only having to purchase a single security.

Mutual funds pool money from many investors and use that money to buy bonds, stocks, and other securities. Each investor in the fund effectively owns a portion of the fund’s portfolio, so an investor can buy shares in one mutual fund to get exposure to hundreds of stocks or bonds.

This makes it easy for investors to diversify their portfolios.

Mutual fund managers make sure the fund’s portfolio follows their stated strategy and work towards the fund’s stated goal. Mutual funds charge a fee, called an expense ratio, for their services, which is important for investors to keep in mind when comparing funds.

Pro tip: Most mutual funds can be purchased through the individual fund family or through an online broker like Robinhood or Public.

Types of Bond Mutual Funds

There are many types of bond mutual funds that people can invest in.

1. Government

Government bond funds invest most of their money into bonds issued by different governments. Most American government bond funds invest primarily in bonds issued by the U.S. Treasury.

U.S. government debt is seen as some of the safest debt available. There is very little chance that the United States will default on its payments. That security can be appealing for investors, but also translates to lower interest rates than other bonds.

2. Corporate

Corporate bond funds invest most of their assets into bonds issued by companies.

Just like individuals, businesses receive credit ratings that affect how much interest they have to pay to lenders — in this case, investors looking to buy their bonds. Most corporate bond funds buy “investment-grade” bonds, which include the highest-rated bonds from the most creditworthy companies.

The lower a bond’s credit rating, the higher the interest rate it will pay. However, lower credit ratings also translate to a higher risk of default, so corporate bond funds will hold a mixture of bonds from a variety of companies to help diversify their risks.

3. Municipal

Municipal bonds are bonds issued by state and local governments, as well as government agencies.

Like businesses, different municipalities can have different credit ratings, which impacts the interest they must pay to sell their bonds. Municipal bond funds own a mixture of different bonds to help reduce the risk of any one issuer defaulting on its payments.

One unique perk of municipal bonds is that some or all of the interest that investors earn can be tax-free. The tax treatment of the returns depends on the precise holdings of the fund and where the investor lives.

Some mutual fund companies design special municipal bond funds for different states, giving investors from those states an option that provides completely tax-free yields.

The tax advantages municipal bond funds offer can make their effective yields higher than other bond funds that don’t offer tax-free yields. For example, someone in the 24% tax bracket would need to earn just under 4% on a taxable bond fund to get the equivalent return of a tax-free municipal bond fund offering 3%.

4. High-Yield

High-yield bond funds invest in bonds that offer higher interest rates than other bonds, like municipal bonds and government bonds.

Typically, this means buying bonds from issuers with lower credit ratings than investment-grade bonds. These bonds are sometimes called junk bonds. Their name comes from the fact that they are significantly riskier than other types of bonds, so there’s a higher chance that the issuer defaults and stops making interest payments.

Bond mutual funds diversify by buying bonds from hundreds of different issuers, which can help reduce this risk, but there’s still a good chance that some of the bonds in the fund’s portfolio will go into default, which can drag down the fund’s performance.

5. International

Foreign governments and companies need to borrow money just like American companies and governments. There’s nothing stopping Americans from investing in foreign bonds, so there are some mutual funds that focus on buying international bonds.

Each country and company has a credit rating that impacts the interest rate it has to pay. Many stable governments are seen as highly safe, much like the United States, but smaller or less economically developed nations sometimes have lower credit ratings, leading them to pay higher interest rates.

Another factor to keep in mind with international bonds is the currency they’re denominated in.

With American bonds, you buy the bond in dollars and get interest payments in dollars. If you buy a British bond, you might have to convert your dollars to pounds to buy the bond and receive your interest payments in pounds. This adds some currency risk to the equation, which can make investing in international bond funds more complex.

6. Mixed

Some bond mutual funds don’t specialize in any single type of bond. Instead, they hold a variety of bonds, foreign and domestic, government and corporate. This lets the fund managers focus on buying high-quality bonds with solid yields instead of restricting themselves to a specific class of bonds.

Why Invest in Bond Mutual Funds?

There are a few reasons for investors to consider investing in bond mutual funds.

Reduce Portfolio Risk and Volatility

One advantage of investing in bonds is that they tend to be much less risky and volatile than stocks.

Investing in stocks or mutual funds that hold stocks is an effective way to grow your investment portfolio. The S&P 500, for example, has averaged returns of almost 10% per year over the past century. However, in some years, the index has moved almost 40% upward or downward.

Over the long term, it’s easier to handle the volatility of stocks, but some people don’t have long-term investing goals. For example, people in retirement are more concerned with producing income and maintaining their spending power.

Putting some of your portfolio into bonds can reduce the impact of volatile stocks on your portfolio. This can be good for more risk-averse investors or those who have shorter time horizons for their investments.

There are some mutual funds, called target-date mutual funds, that hold a mix of stocks and bonds and increase their bond holdings over time, reducing risk as the target date nears.

Income

Bonds make regular interest payments to their holders and the majority of bond funds use some of the money they receive to make payments to their investors. This makes bond mutual funds popular among investors who want to make their investment portfolio a source of passive income.

You can look at different bond mutual funds and their annual yields to get an idea of how much income they’ll provide each year. For example, if a mutual fund offers a yield of 2.5%, investors can expect to receive $250 each year for every $10,000 they invest in the fund.

Pro tip: Have you considered hiring a financial advisor but don’t want to pay the high fees? Enter Vanguard Personal Advisor Services. When you sign up you’ll work closely with an advisor to create a custom investment plan that can help you meet your financial goals. Read our Vanguard Personal Advisor Services review.

Risks of Bond Funds

Before investing in bonds or bond mutual funds, you should consider the risks of investing in bonds.

Interest Rate Risk

One of the primary risks of fixed-income investing — whether you’re investing in bonds or bond funds — is interest rate risk.

Investors can buy and sell most bonds on the open market in addition to buying newly issued bonds directly from the issuing company or government. The market value of a bond will change with market interest rates.

In general, if market rates rise, the value of existing bonds falls. Conversely, if market rates fall, the value of existing bonds rises.

To understand why this happens, consider this example. Say you purchased a BBB-rated corporate bond with an interest rate of 2% for $1,000. Since you bought the bond, market rates have increased, so now BBB-rated companies now have to pay 3% to convince investors to buy their bonds.

If someone can buy a new $1,000 bond paying 3% interest, why would they pay you the same amount for your $1,000 bond paying 2% interest? If you want to sell your bond, you’ll have to sell it at a discount because investors can get a better deal on newly issued bonds.

Of course, the opposite is true if interest rates fall. In the above example, if market rates fell to 1%, you could command a premium for your bond paying 2% because investors can’t find new bonds of the same quality that pay that much anymore.

Interest rate risk applies to bond funds just as it applies to individual bonds. As rates rise, the share price of the fund tends to fall and vice versa.

Generally, the longer the bond’s maturity, the greater the effect a change in market interest rates will have on the bond’s value. Short-term bonds have much less interest rate risk than long-term bonds. Bond funds usually list the average time to maturity of bonds in their portfolio, which can help you assess a fund’s interest rate risk.

Credit Risk

Bonds are debt securities, meaning they’re reliant on the bond issuer being able to pay its debts.

Just like people, companies and governments can go bankrupt or default on their loan payments. If this happens, the people who own those bonds won’t get the money they lent back.

Bond mutual funds hold thousands of bonds, but if one of the issuers defaults, some of the fund’s bonds become worthless, reducing the value of the investors’ shares in the fund.

Bonds issued by organizations with higher credit ratings are generally less risky than those with poor credit ratings. For example, most people would consider U.S. government bonds to have a very low credit risk. A junk bond fund would have much more credit risk.

Foreign Exchange Risk

If you’re buying shares in a bond fund that invests in foreign bonds, you should consider foreign exchange risk.

Currencies constantly fluctuate in value. Over the past five years, $1 could buy anywhere between 0.80 and 0.96 euros.

To maximize returns, investors want to buy foreign bonds when the dollar is strong and receive interest payments and return of principal when the dollar is weak.

However, it’s incredibly hard to predict how currencies’ values will change over time, so investors in foreign bonds should consider how changing currency values will affect their returns.

Some bond funds use different strategies to hedge against this risk, using tools like currency futures or buying dollar-denominated bonds from foreign entities.

Fees

Mutual funds charge fees, which they commonly express as an expense ratio.

A fund’s expense ratio is the percentage of your invested assets that you pay each year. For example, someone who invests $10,000 in a mutual fund with a 1% expense ratio will pay $100 in fees each year.

Expense ratio fees are included when calculating the fund’s share price each day, so you don’t have to worry about having cash on hand to pay the fee. The fees are taken directly out of the fund’s share price, almost imperceptibly. Still, it’s important to understand the impact fees have on your overall returns.

If you invest $10,000 in a fund that produces an annual return of 5% and has a 0.25% expense ratio, after 20 years you’ll have $25,297.68. If that same fund had an expense ratio of 0.50%, you’d finish the 20 years with $24,117.14 instead.

In this example, a difference of 0.25% in fees would cost you more than $1,000.

If you find two bond funds with similar holdings and strategies, the one with the lower fees tends to be the better choice.

Final Word

Bond mutual funds are a popular way for investors to get exposure to bonds in their portfolios. Just as there are many different types of stocks, there are many types of bonds, each with advantages and disadvantages.

If you don’t want to pick and choose bonds to invest in, bond funds offer instant diversification and professional management. If you want an even more hands-off investing experience, working with a financial advisor or robo-advisor that handles your entire portfolio may be worth considering.

Source: moneycrashers.com

May 4, 2021

How is credit card interest calculated?

If you’re like most people repairing their credit card debt, your credit card’s annual interest rate is a mystery to you. You might even avoid thinking about it or looking at it, because it’s such a large number. Interest rates can make it difficult to get out of debt quickly, because you’re working against a large percentage—as much as 16% or even 20% annual interest.

Credit card interest is calculated using a complicated formula that can be confusing to many people. So it often remains a puzzle to borrowers. But it’s important to understand the basics of credit card interest, because it will help you to repair your credit card debt quicker—and to be a smarter credit card user. Here’s how credit card interest works.

How Is Credit Card Interest Calculated?

If you’ve watched your interest rate closely, you may have noticed that it has changed since you first opened your credit card. Many credit cards offer a low introductory interest rate that increases after the period is over. But even after that, your annual interest rate will often go up and down. That can be confusing, and even a bit unsettling.

Your interest rate changes

The first thing you should understand is that your credit card uses a variable interest rate. That means that the interest rate can change over time. A variable rate is tied to a base index—usually the U.S. prime rate. As the U.S. prime rate goes up or down, so will your credit card’s interest rate.

Right now, the U.S. prime rate is 4.25%. But your credit card’s interest rate is probably closer to 18.25%, or even more. That’s because credit card companies charge an additional amount above the U.S. prime rate—perhaps 14%, but it varies from card to card. So your total interest rate will be closer to 18.25%, annually. If the U.S. prime rate raises or lowers, your annual interest rate will also go up or down by the same amount.

The factors that influence the U.S. prime rate are reviewed every six weeks. The prime rate could stay the same for years, or it could change every six weeks. It all depends on current federal economic conditions and forecasts.

Your interest rate is annual

It’s also important to understand that your credit card’s interest rate is an annual rate. So if your annual rate is 18.25%, that amount is applied per year—not per month. But since you’re billed monthly, your interest is calculated each month, using an average daily balance method.

Calculating your interest rate

Here’s how the average daily balance works:

Determine the daily periodic rate (DPR)—the interest rate you pay each day. DPR is your current interest rate (it varies, remember) divided by 365. So, 18.25 / 365 = 0.05%.
Determine the average daily balance for the month. This is done by adding up the balance for each day of the billing period, then dividing that sum by the number of days (either 30 or 31 days—or 28 in February!). If you had a balance of $0.00 for 10 days, then $500.00 for 10 days, then $1000.00 for the last 10 days of the month, your average daily balance would be $500.00.
Multiply the DPR by the number of days in the billing cycle, then multiply that total by the average daily balance. This is your interest for the month. So, a DPR of 0.05% * 30 days = 1.5%. 1.5% * $500.00 = $7.50.

That might not sound like much, but if you’re an average cardholder in the United States, you’re carrying a credit card debt of $16,000.00. That means you’re paying $2,880.00 per year in interest alone, in this scenario.

How Can I Avoid Paying So Much Interest?

When you’re working hard to repair your credit card debt, it can be frustrating to be fighting against a high interest rate. But there are ways you can reduce—or even eliminate—the amount of credit card interest you’re paying each month.

Pay more than the minimum balance due

Your credit card statement lists a minimum amount that you must pay each month. Your interest for the month is rolled into that minimum payment. But if you pay more than the minimum, every dollar above that minimum goes towards your principal balance. There’s no interest charged on it.

In other words, if your minimum payment is $500.00 and you pay $600.00, that extra $100.00 is applied to the amount you borrowed—it’s interest-free. And that benefits you in two ways:

You’re paying off debt without paying interest
You’re lowering the dollar amount of interest you’ll have to pay next month, because your average daily balance will be smaller.

Open a balance-transfer credit card

A balance-transfer card can be a very helpful way to repair your credit card debt. A transfer credit card has a very low introductory interest rate—often as low as 0%. The card lets you transfer your balance from other debt onto the new card. You can then make monthly payments on the transfer card to pay down your existing debt.

But the low interest rate is only valid for a limited time—usually six to 18 months—so you’ll need to pay off the debt before the introductory rate expires. You should also do your homework: some transfer cards charge a transfer fee. And some charge a penalty APR, which allows the credit company to charge you a high interest rate if you miss a payment.

Pay off Your Credit Card Debt Faster

Your credit card’s annual interest rate doesn’t have to be a confusing mystery, and you don’t need to know everything there is to know about interest rates. But when you understand the basics of variable interest rates and how they’re calculated, you can use that information to repair your credit card debt faster and easier. Paying more than the minimum balance due and using a balance-transfer card can be very helpful ways to use interest rates to your advantage.

A reputable credit repair specialist can help you find other ways to successfully get out of credit debt. If you’re tired of struggling on your own, find out how our advisors can help you repair your credit debt. Contact us today.

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Source: lexingtonlaw.com

May 3, 2021

Land a Job with These Must-Have Skills for Your Resume

It’s no secret: job hunting is a pain in the neck. Sending out resume after resume hoping an employer emails you back for an interview can get pretty tiresome after a while — especially if you’re really looking for that perfect dream job.

There’s no surefire process to guarantee a job, but there are big steps that you can take to make your resume more appealing to potential employers. One way to do that is showcasing your skills. Skills are a great resume booster because they show potential employers exactly what you’re bringing to the table. Sure, education and past experience are important to include, but often, employers want a more direct description of your abilities before they seriously consider you for a job.

In this post, we’ll walk you through what you should know about skills for resume building. Read through and apply these tips to your resume today to start seeing better results in the future.

What are the best skills to put on a resume?

Good skills to put on a resume depend on your industry and personal expertise; there’s no one-size-fits-all set of skills that will work for everyone. However, there are some prominent skills that almost every employer will find appealing, including:

Clear, direct communication
Time management
Organization
Team leadership and collaboration
Problem-solving
Basic computer literacy

When listing skills, it’s a good idea to tie them back to some experience that you have. For instance, let’s say that in your current job, you collaborate with a team to produce a budget report every month. When you list your “Team leadership” as a skill, be sure to cite your budget meeting collaboration as an example.

We’ll explain more about how to include and format skills in your resume further down. But first, there’s an important distinction that we should explain.

The difference between hard skills and soft skills

You might have heard recruiters, HR reps, and other professionals mention hard skills and soft skills. It’s not a hard science, but this is how each one works.

Hard skills: Industry-specific skills that often require school or training to achieve
Soft skills: General skills that can be applied to a diverse range of work environments

It’s easier to understand the difference by considering a few examples.

Hard skills: examples for your resume

As mentioned, hard skills are developed through training or in school, and usually apply to one or more specific industries. For example, here are a few hard skills for your resume that employers are often interested in:

Computer programming
Web design
Technical writing
Marketing copywriting
Applied math
Engineering
Heavy machinery operation
Research skills
Legal analysis
Medical diagnostics
Psychological counseling
Electrician skills

Typically, hard skills are part of the hard requirements for a job. If you don’t have chemical engineering as one of your hard skills, you will likely not be hired for any job that requires it. To learn hard skills, it’s a good idea to attend a trade school, junior college, or four-year university and take the necessary classes.

There may also be industry-led training programs that you can apply to, such as initiatives to train employees in programming and other skills for growing industries. If you need a certain set of hard skills to put on your resume in order to succeed in your favored industry, your first step should be to research how you can get those skills.

Soft skills: examples for your resume

On the other hand, soft skills are more general. They can also be developed in a variety of places: in school, on the job, volunteering, and sometimes people are just born with them. Soft skills often involve working with others. A few examples of soft skills for your resume include:

Communication
Cooperation
Time management
Leadership
Empathy
Active listening
Public speaking
Problem-solving
Computer literacy

Soft skills might not be strict requirements for many positions, but that doesn’t mean that they aren’t important. In fact, because many applicants to a given position will likely already have the hard skills required to perform that job, soft skills can make a huge difference when it comes to setting you apart.

For instance, say you’re applying to that chemical engineering position mentioned before. Likely, most of the applicants will have a four-year degree or equivalent training, and will know the basics it takes to get the job done. However, you might be the only one with a proven track record of communicating and collaborating with a diverse team. Highlighting that skill can set you apart from the pack.

How to match your skills to the job description

Something you may have read online or heard from professionals is that it’s smart to match your skills to the skills asked for in a job description. It’s pretty clear why you’d want to do this: potential employers are looking for someone with a certain set of skills, so you want to make it obvious to them that you have those skills.

On top of that, some employers use algorithmic methods to sort out resumes because they get so many applicants. Using the skills mentioned in the job description increases the likelihood that the algorithm will serve your resume to the human hiring manager.

Matching your skills to the job description is pretty simple. Take a look at your resume, then look at the skills the job description asks for. Let’s say that the job description asks for an “effective communicator,” and your resume skills section (more on that in just a sec) says “clear communicator.” These are pretty much the same thing; simply change the wording on your resume to match the wording from the job description.

Where to include a skills section on your resume

We’ve mentioned a few times that it’s a good idea to have a skills section on your resume. These days, having a well laid-out, dynamic resume is important. A simple Word document printed in black and white Times New Roman may still be the standard for some industries, but in many fields, visually standing out is important.

One way to do that is to have clearly labeled sections on your resume, sometimes graphically laid out in modular boxes that are fun and eye-catching. Whatever layout you choose, prominently identifying your skills is usually a good idea. In that section, simply list your skills. Some professionals also recommend giving clear examples of your skills in action.

For instance:

Web design: Build company website from the ground up using HTML and CSS coding.
Clear communicator: Worked collaboratively with a team of designers to improve software UI
Leadership: Stepped up and took the lead on a project when the manager had to step out.

Using evidence to support your skills gives potential employers an idea of what they can expect from you — a critical leg up as they assess their many options. It’s also just part of having a strong, well-rounded resume.

When it comes to placing the section for skills for your resume, there is some debate over where the best location might be. There are some options to choose from:

As the first item on the page: This bold move demonstrates your abilities immediately, before even getting into education or experience. This might work better for jobs that require a number of harder-to-find hard skills.
Near the bottom: Some jobs might be pickier based on education or experience. If that’s the case, you’ll still want to include your skills, but foregrounding those other accomplishments might be the savvier move.
MIxed in with experience: Some resumes pepper skills in with experience. List each job you’ve had, then under it, the specific skills (and accomplishments) that you attained there.

Ultimately, the important thing is that you customize your resume to suit the job you’re applying to. Different industries, different employers, and even different individual hiring managers might all have their own preferences and standards. Doing your research to try to match your resume to those standards is your best bet when trying to stand out.

Pro tip: if you’re headed to a career fair soon, don’t just stop at your resume. Check out our guide to questions to ask at a career fair so you show up informed and prepared.

Resume-boosting skills: the takeaways

Here’s what to remember as you start putting together your professional resume:

The best skills to put on your resume include both hard and soft skills.
Hard skills for your resume usually require education or training, and include skills like:
- Computer programming
- Technical writing
- Medical training
Soft skills are more general, can be learned from experience, and can be applied to many jobs. Good soft skills to put on your resume include:
- Communication
- Leadership
- Computer literacy
One way to help your resume stand out is to phrase your skills so that they match the job description. This lets employers know you’re paying attention, and will help keep you from being sorted out by a resume-sorting algorithm (if they use one).
Different jobs and industries require different resume layouts. However, it’s usually a good idea to highlight your skills in their own section.

Having a well-written resume can increase your earning potential, help you find better jobs, and even help with getting a promotion or salary increase. Try these tips out as you continue your job hunt — and good luck on the market!

Sources

Harvard Business Review | Indeed | Purdue OWL

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Source: mint.intuit.com

May 3, 2021

Credit card convenience checks: the basics – Lexington Law

A couple looks at a computer while holding a credit card.

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

Some credit cards come with checks. Called convenience
checks, they work a lot like the checks that come with your bank account—with a
few notable exceptions. Convenience checks typically have a lot more strings
attached, for example. Learn more about convenience checks below so you can
decide if you should use yours or not.

What Is a Convenience Check?

A credit card convenience check is a check issued by your credit card company. It’s tied to a credit card account in the same way regular checks are tied to a checking account. When you write a convenience check, you’re actually writing against your credit card limit just as if you “swiped” the credit card.

For example, if you have a credit card limit of $1,000 and
you write a convenience check for $300, you’ll have a credit card balance of
$300 and an available limit of $700 after the check clears. In effect, writing
the check is similar to using your credit card to make a purchase—you create
credit card debt for yourself that might come with fees and interest.

Your credit card issuer often sends convenience checks
when they’re making you an offer of some kind. It might be that you’re a new
credit card account customer and you get a few convenience checks to encourage
you to start spending on your account.

In other cases, you might receive convenience checks as
part of an offer for limited lower interest rates on qualified purchases. And in
some cases, you can request convenience checks from your credit card company if
you intend to use your card credit limit to make a large purchase.

What Are Convenience Checks Typically Used for?

It might seem silly to write a check when you can just
swipe your card; however, convenience
checks make it easier to pay for large-ticket items or transfer money between
credit cards. Convenience checks can be used for a variety of purposes,
including:

Purchases. You can use a convenience check to pay for goods or services almost anywhere checks are accepted.
Cash advances. You can write a convenience check to yourself and cash it to get a cash advance on your credit card.
Balance transfers. You can write a check to pay off another credit card, effectively transferring the balance to your new credit card account.

Where Can You Cash a Convenience Check?

Generally, you can cash a convenience check anywhere you can cash a regular check. That includes your own bank and check-cashing services. As with any personal check, banks and other service providers might limit the dollar amount you can cash.

Your bank might allow you to deposit a convenience check
in a large amount when it won’t let you cash one immediately. In these cases,
the total amount deposited might not be available in your account for a few
business days. That’s because the bank is waiting to ensure that the check
clears.

4 Drawbacks of Convenience Checks

While convenience checks are exactly what they sound
like—a convenient way to access some of your available credit—they do have some
drawbacks. Some of the biggest disadvantages of using convenience checks are
summarized below.

1. Transaction Fees

The checks might come with transaction fees that
increase the cost of the purchase you’re making. Read all of the information
that comes with your convenience checks or review your credit card terms of
service before you use the checks. It’s important to know how much the check
might cost you so that you can make an educated financial decision.

2. Time Restraints

Your convenience checks might come with a deadline for using them. Read all the information that comes with the checks so you know if they expire on a certain date. You don’t want to plan on using your convenience checks only to find out that they don’t work.

3. Limited Terms

Many convenience check offers include a limited low-interest rate period. For example, you might receive checks from your credit card company with an offer for 0% APR for 12 months on any balance you carry with the checks. That can be a great way to make a big purchase on credit without paying extra in interest; however, you have to ensure that you can pay the total amount off within the promotional period. If you don’t, you could be looking at debt with a hefty interest rate that makes it harder to pay off the debt incurred via the convenience check.

4. Impact on Your Credit Score

Don’t forget that using your convenience checks does drive up your credit card balance. That can increase your credit utilization ratio.

Credit utilization refers to how much of your available balance you’ve used. If you have a $10,000 credit card limit and you write convenience checks totaling $6,000, you’ve used 60% of your balance. Credit utilization accounts for roughly 30% of your credit rating, so using convenience checks in this manner is likely to have a negative impact.

4 drawbacks of convenience checks: transaction fees, time restraints, limited terms and impact on your credit score.

Is It Ever a Good Idea to Use a Convenience Check?

The decision to use convenience checks—and the manner of use if you decide to do so, —is a personal matter. In some cases, convenience checks can be a positive tool to help you transfer high-interest credit card balances to pay down debt faster or make a large credit purchase at a low-interest rate.

To benefit the most, though, you have to manage your credit card account responsibly—which includes the use of convenience checks.

What Should You Do With Unused Convenience Checks?

You may not use all the convenience checks a credit card company sends you. But if you simply toss them in the trash whole, you open the door to the possibility of identity theft. Someone could easily write one of those checks in your name, effectively stealing from you. They might also be able to use the check to collect personal information about you to help them steal your identity.

To best protect yourself against identity theft, write “void” across unused convenience checks and then shred them. You should also be able to call your credit card issuer and ask that they stop sending you checks. In addition, make sure to regularly review your credit report and look for potential signs of fraud or other inaccurate information.

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

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

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

Source: lexingtonlaw.com

May 1, 2021

What Are Bonds – Basics of Investing in Corporate vs. Municipal Bonds

When building a balanced investing portfolio, you’ll want to include bonds in your asset allocation. These assets provide safety and stability, offering relatively slow growth and reliable returns.

As you begin to research which bonds to buy, you’ll realize there are several different types of bonds, with the two most common being corporate bonds and municipal bonds.

What’s the difference, and what are the pros and cons that come along with investing in each type of bond? Let’s review the basics of bonds and then look at the two types side by side to help you choose which is right for you.

What Are Bonds?

Bonds are a form of fixed-income security known for providing a relatively safe store of value that are often used to offset risk in a well-balanced investment portfolio. Bonds are essentially loans given to the issuer by the investor, making them a debt instrument.

Investors make money by investing in bonds in one of two ways:

Coupon Rates. The most common return on investment derived from bonds is known as the coupon rate, or the interest rate on the bond. As with many other types of loans, the investor pays the full face value of the bond upon purchase and receives interest payments until the maturity date of the bond, at which point their initial investment is returned to them.
Premium. In some cases, bonds can be purchased at a discount to their face value. When the bond matures, the investor receives the full face value of the asset, providing a return on investment. For example, an investor may purchase a $1,000 bond for $950. Once the bond matures, the full $1,000 is repaid, leaving the investor with $50 in profits.

What Are Municipal Bonds?

Municipal bonds are commonly referred to as muni bonds, or simply munis. These bonds are issued by local governments, generally on the state or county level, and should not be confused with Treasury bonds, which are issued on a federal level and backed by the full faith and security of the U.S. federal government.

There are two common types of munis on the market today:

Revenue Bonds. Revenue bonds are bonds issued by a municipality that are backed by the revenue generated from a specific project. For example, local municipal governments often issue water and sewer bonds, which are paid back with the revenue collected by the local government for the provision of clean drinking water and sewage services to residents within the locality.
General Obligation Bonds. General obligation bonds aren’t backed by any project revenue. Instead, they’re backed by the taxing authority of the issuers at hand and paid back with tax dollars paid for local income taxes, sales taxes, property taxes, or any other tax revenue received by the local authorities that issued the muni.

What Are Corporate Bonds?

Rather than being issued by a local, state, or federal government, these bonds are debt instruments issued by corporations; they act as loans made from the bondholder to the corporation that issued the security. There are different categories of corporate bonds, including:

Collateral Trust Bonds. Collateral trust bonds use collateral other than real estate to secure the bond. For example, a company may secure bond issues with shares of stock, bonds, or other securities.
Debenture Bonds. Debenture bonds are corporate bonds that aren’t secured by any collateral. These bonds are generally issued by corporations with the best credit ratings, because companies with poor credit won’t be able to attract investors to these securities.
Convertible Debentures. Convertible bonds give the investor the ability to convert the bond into a specified number of shares at a specified time. For example, a company may sell a convertible bond that may be converted into 25 shares of its common stock after two years. Because these bonds can be converted into common stock, they are generally more attractive to investors, but it’s a tradeoff. These types of bonds generally come with low coupon rates.
Guaranteed Bonds. Guaranteed bonds are guaranteed not only by the corporation that issues them, but also by a second company. This greatly reduces the level of risk because another company guarantees to step in and fulfill the obligations of repaying the bond if the original borrower defaults.
High-Yield Bonds. High-yield bonds, also known as junk bonds, are bonds that have been rated by rating agencies to be below investment grade. These companies generally have significantly high credit risk and must offer higher yields in order to attract investors.

Key Factors to Consider

There are several factors you should take into account when making a decision to buy either corporate or municipal bonds. Some of the most important of these factors include the quality of the entity issuing the bond, the tax implications, yield, liquidity, and how the money raised through the issuance of the bond will be used.

Here’s how corporate and municipal bonds compare:

Quality of Issuer

One of the first details you should look into before purchasing a bond or any other debt instrument is the quality of the issuer. Bond issuers will have different credit ratings, meaning that when you invest in the securities they’ve made available, you’ll be taking on credit risk.

There are two agencies that provide bond issuer credit ratings: Moody’s and Standard & Poor’s. Moody’s rating scale ranges from C to AAA, with AAA being the best possible rating. Standard & Poor’s follows a scale ranging from D to AAA, with AAA also being the best possible rating.

Higher ratings mean the bond is generally at lower risk of the issuer defaulting. After all, if the entity that issues the security fails to meet its obligations, those who invest in it stand to lose.

Corporate Bonds Come With Higher Default Rates

Corporate bonds are issued by corporations, and every corporation is different. Some make more money than others, some are managed by better management teams, and some will fulfill their obligations consistently while others fail.

Compared to municipal bonds, instruments issued by corporations come with a higher default risk, making it especially important to pay attention to how rating agencies rate the bond in question before you invest.

The good news is that even corporations rarely default. According to the Corporate Finance Institute, only about 0.13% of corporations that issue a bond will default.

Municipal Bonds Come With Lower Default Risk

Municipal bonds are generally an even safer bet than corporate bonds. According to ETF.com, only about 0.08% of munis end up in default. Because these bonds are issued by local governments, entities known for top-notch credit quality, and generally rated AAA by S&P Global, investors can rest assured that they will be paid as agreed in the vast majority of cases.

Tax Implications

Any time you make money — whether from a side hustle, income from your day job, or investment returns — you typically have to pay taxes. However, not all income is taxed equally. Here are the tax implications you’ll need to consider when deciding whether to invest in corporate or municipal bonds.

How Corporate Bonds Are Taxed

Bonds issued by corporations are often called taxable bonds because earnings generated through these investments will be susceptible to both federal income tax and state income tax at the general income tax rate. The exact rate you’ll pay on your returns depends on your tax bracket.

How Municipal Bonds Are Taxed

Gains generated through investments in municipal bonds are always tax exempt on the federal level and are often tax free on the state level as well. The tax exemption is essentially a “thank you” from both federal and local governments for using your investment dollars to invest in projects that support your community.

While in the vast majority of instances, munis are exempt from state and local taxes, there are some cases in which this is not true. For example, if you purchase a municipal bond offered by a municipality other than the one in which you reside, your local authorities may choose to tax returns on that bond at the standard local income tax rate.

For example, if you live in New York City and you invest in a municipal bond issued by a government body in Florida New York City may charge you its normal local tax rate on the returns generated through that investment.

Yields

Returns on bonds are known as yields, and they vary wildly from one to another depending on the credit of the issuing entity, the maturity date of the bond, and other factors.

Generally speaking, here’s how yields compare between corporate and municipal bonds:

Corporate Bonds Generally Have Higher Yields

Local governments are highly trusted entities that are known for maintaining excellent credit. On the other hand, corporations will vary wildly in financial strength and creditworthiness.

Because corporations are usually less creditworthy than governments, bonds issued by corporations generally offer higher interest rates. After all, if the yields on corporate bonds were the same as the yields on government bonds, nobody would lend to riskier corporations. Who would want to buy a bond from a corporation when the same returns can be generated by investing in lower-risk munis?

Munis Provide Small Gains

Bonds issued by the government come with a lower default risk and therefore are the safer option for investors. However, when investing, safer options generally provide lower returns, and municipal bonds are no exception.

The extremely low default risk is considered in the pricing of these bonds, resulting in lower interest rates, smaller interest payments, and lower overall returns.

That is, until you account for taxes. For example, a high income earner may find that investing in municipal bonds is a better fit because they are exempt from state and federal taxes. By contrast, much of the returns on corporate bonds would be erased by taxes for an investor in the highest tax bracket.

Liquidity

Liquidity should always be a consideration for investors, whether they’re investing in bonds or any other asset. Liquidity refers to the ease or difficulty of converting an investment back into cash if desired.

Investors will find it difficult to convert bonds with low levels of liquidity into cash prior to their maturity dates, while bonds with high levels of liquidity are easy to offload and turn into spendable money on demand.

Corporate Bonds Are Often Less Liquid

While any form of bond can be sold on a secondary market, for a bond to be sold, there must be a buyer. In some cases, investments in high-risk bonds and other bonds issued by corporations may become illiquid if no other investors are interested in purchasing them.

Moreover, bond liquidity decreases in general in times of economic and market positivity. During bull markets, investors tend not to want their money tied up in fixed-income assets, instead focusing on the larger potential for returns offered by stocks.

Municipal Bonds Are Highly Liquid

The municipal bond market is very active, with these bonds often being easier to offload than bonds issued by corporations. That’s because muni bonds are issued by entities that are all but guaranteed to cover their obligations while providing tax benefits, making them attractive investments for high income earners.

How Funds Are Used

Investors are becoming increasingly concerned with the way in which their investments are spent. In fact, there’s an entire movement surrounding social impact investing, or investing in assets that use your funds to make an impact for causes you care about.

So, how exactly is your money spent when you invest in these two different types of bonds?

How Corporations Use Money Raised Through Bond Sales

Corporations may be looking to raise money for a wide variety of reasons. Some of the most common are:

Working Capital. It costs money to make money, and running a business can be a very expensive endeavor. In some cases, corporations will have their money tied up in inventory, new equipment, and other assets necessary to keep it moving in the right direction and need working capital for general purposes. Companies can issue bonds as a way to raise cash for their operational needs today by promising to repay investors in the future.
Acquisitions. Companies often acquire one another, merging two companies into one in transactions where the sum of all parts has a greater value than the original assets. However, acquisitions are expensive business, and corporations often need additional funding to execute merger and acquisition agreements.
Research. Research and development are major expenses for just about every publicly traded company on the market today. In some cases, corporations will issue bonds in order to fund this research.

How Municipalities Use Money Raised Through Bond Sales

The vast majority of bonds issued by government agencies are issued to fund public projects.

For example, when a major thoroughfare is riddled with potholes or your county’s library is in need of repair, governments often issue bonds in order to cover the costs associated with these projects. Governments can repay investors either through revenue generated by the project they fund or through tax revenues.

The Verdict: Should You Choose Corporate or Municipal Bonds?

As you can see above, there are several reasons to invest in both types of bonds, with each having its own list of pros and cons. As with any other investment vehicle, each type of bond will be suitable for different investors with different goals.

You Should Invest In Corporate Bonds If…

Bonds issued by corporations are best suited for bond investors who have a relatively low income tax burden and are looking to generate larger gains out of their safe-haven investments. These bonds are best suited for investors who:

Are In a Low Tax Bracket. Returns from bonds issued by corporations are taxed at the standard income tax rate, which varies wildly depending on the amount of money you earn on a regular basis. As your tax rate increases, bonds issued by corporations become less attractive than tax-exempt munis.
Are Willing to Accept Higher Levels of Risk. Based on historical default rates, corporations are nearly twice as likely to default on bond obligations than governments. As a result, corporate bond investors should be comfortable with a higher level of risk.
Want to Generate Larger Returns. Due to the higher risk associated with bonds issued by publicly traded companies, these bonds come with higher yields than bonds issued by governments.

You Should Invest In Municipal Bonds If…

Municipal bonds are worth considering if you’re an investor with a generally low risk tolerance, you’re a high income earner and tax implications mean quite a bit to you, or you’re interested in funding public projects with your safe-haven investing dollars. These bonds are best suited for you if:

You’re In a High Tax Bracket. High-income earners are taxed at a higher rate. Because bonds issued by the government are generally tax-free investments, they are well suited for investors who have a relatively high tax burden, acting not only as safe havens, but also tax havens.
You Have a Low Risk Tolerance. Municipal bonds are about as safe as investments come. Most local governments have never defaulted and enjoy a high credit rating; investments in these entities are very unlikely to result in default.
You’re Looking For a Store of Value. Investments in bonds issued by the government are a great store of value, which is what makes them so attractive as safe-haven investments. Even in times of economic concern, these bonds are known to generate returns rather than losses.
You’re Interested in Funding Public Projects. Government bonds are used to fund public projects that improve conditions for the community around you. Not only are these investments capable of generating returns and stability, there’s a feel-good effect involved in making these investments.

Both Are Great If…

If you aren’t in the uppermost income tax brackets, have a moderate tolerance for risk, and are looking to generate greater diversification across your safe-haven investments, you might invest in a mix of corporate and municipal bonds. This approach offers you a balance of the larger gains from corporate bonds and the tax benefits from munis. Investors who would benefit most from a mix between the two:

Want Higher Returns While Minimizing Tax Burden. By investing in both types of bonds, you’ll reduce your tax burden compared to corporate bond investments alone while enjoying higher earnings potential than provided by municipal bond investments alone.
Have a Moderate Tolerance for Risk. Bonds in general — with the exception of junk bonds — are relatively safe investments. However, some assets within the class are safer than others. Mixing corporate investments into your portfolio of municipal investments will lead to a slight increase in the overall risk level across your portfolio. As an investor, you’ll have to be comfortable with that added risk in exchange for the greater returns.
Want High Levels of Diversification. Diversification helps to reduce risk across investment portfolios. By investing in multiple assets across multiple categories, investors don’t have to fear detrimental declines should one, or even a handful, of these assets experience losses.

Final Word

Deciding between corporate and municipal bonds is a decision that should be based on your comfort with risk and your needs for yield and liquidity from your safe-haven investments

It’s also important to consider your returns from a tax perspective. Compare the yields on bonds issued by corporations to those on available munis to make sure the increased returns aren’t outweighed by the taxes you’d pay on your gains.

As is always the case, investors should take the time to research the bonds they’re investing in, considering historic returns, the issuer of the bond, and where the money they’re investing is going. By doing your research before making your investment, you’ll rest assured that they fall in line with your goals.

Source: moneycrashers.com

April 30, 2021

How to Start an Amazon FBA Business – Complete Guide for Beginners

When it comes to e-commerce, there’s no denying that Amazon is the leader in much of the world. In the United States, Amazon already dominates e-commerce, with over 40% of the market share. Considering how easy it is to shop and save on Amazon, it’s not surprising so many people turn to Amazon for their online shopping needs.

Amazon isn’t just a winning solution for shoppers. In fact, if you want to start an online business with a low start-up cost, Amazon is a platform also worth considering.

With Amazon’s Fulfillment By Amazon (FBA) service, you can start an online business without having to worry about complicated logistics or hiring employees. Plus, you can benefit from selling products on the same platform you probably do most of your online shopping.

Starting an Amazon FBA business isn’t a project you should take on lightly. However, if you’re looking for a new side gig that also has full-time potential, selling on Amazon is worth trying.

What Is Amazon FBA?

Amazon FBA is one of the most popular options businesses and independent sellers use to sell their products on Amazon.

Like dropshipping, Amazon FBA largely removes the need for you to store inventory and process orders. With Amazon FBA, you ship inventory to Amazon warehouses instead of storing it yourself. When you make a sale, Amazon handles shipping and fulfillment, taking that logistical step off your plate. In exchange, you pay Amazon storage and fulfillment fees.

The genius of Amazon FBA is that it leverages Amazon’s expertise and infrastructure for order fulfillment. This lets you focus on sourcing products and optimizing your listings rather than worrying about endless customer service problems.

Amazon FBA is incredibly popular and profitable because of this business model. More than 50% of goods sold on Amazon come from third-party sellers. Additionally, in 2018, more than 50,000 small and medium-sized businesses exceeded $500,000 in sales by using Amazon, according to the company. Clearly, Amazon is a lucrative marketplace if you learn how to make the most out of FBA.

Advantages & Disadvantages of Starting an Amazon FBA Business

Advantages

If you’re on the fence about starting an Amazon FBA business versus other e-commerce ventures, consider some of the advantages of sticking with Amazon:

Existing Market. Amazon is already one of the largest e-commerce marketplaces in the world. Although selling on Amazon is competitive, Amazon FBA lets you reach an existing customer base rather than starting your own store from scratch.
Simple Logistics. Amazon FBA’s competitive advantage over running your own operation is that you leverage Amazon’s logistical expertise. Once you learn how to package and ship your inventory to Amazon, selling on FBA becomes incredibly simple from a fulfillment standpoint. Plus, you can pay additional fees to have Amazon handle packaging on your behalf if you don’t want to complicate things.
Amazon Prime. Amazon FBA products are automatically eligible for Amazon Prime, so customers get free and fast shipping. This encourages customers to purchase your products over listings that aren’t Prime-eligible, creating an easy competitive advantage for your business.
Multichannel Fulfillment. You can sell Amazon FBA inventory on third-party platforms like Shopify and other e-commerce platforms. This multichannel fulfillment option makes it easier to expand your online presence.
International Customers. If you sell on Amazon.com, you store inventory in U.S. Amazon warehouses. However, international customers can still order plenty of products from Amazon.com, granting you instant access to an international audience. Furthermore, you can also try Pan-European FBA if you’re selling in Europe. Amazon still handles international shipping and logistics, letting you sell globally.

Disadvantages

Despite simplifying logistics and being one of the largest e-commerce marketplaces on Earth, there are several disadvantages to selling on Amazon:

Fees and Upfront Cost. Amazon FBA simplifies logistics, but this comes at a cost. Between seller account fees, storage, and shipping, your profit margin takes a hit for the sake of convenience. Plus, you have to invest in inventory upfront, which is different from dropshipping or using websites like Etsy, where you typically manufacture products as you make sales.
Competition. Sales from third-party Amazon sellers continue to grow as more sellers join the platform. Amazon has a wide customer base, but this is still one of the most competitive channels for selling goods online.
Slow Inventory Costs. Amazon charges monthly storage fees based on how much space your inventory takes up. Additionally, you pay a long-term storage fee if units don’t sell within 365 days. This means slow-selling inventory is a consistent, growing pain for your bottom line. If you’re willing to fulfill orders yourself when starting out, storing inventory in your garage or house is more affordable.
Learning Curve. Learning how to run a successful e-commerce business takes time. Successful Amazon selling won’t come quickly, and you might have to try selling several products before you find one that sells. When you consider the upfront inventory cost for testing products, starting an Amazon FBA business isn’t a casual side hustle.

How to Start an Amazon FBA Business

If you want to create your own Amazon FBA store, the process is fairly straightforward:

Step 1: Create an Amazon Seller Profile

You need to create an Amazon seller profile to sell anything on Amazon. You can choose between two plans depending on how serious you are about selling:

Individual: Pay $0.99 to Amazon every time you make a sale.
Professional: Pay $39.99 per month regardless of sales volume.

Amazon also charges a referral fee for each sale regardless of your plan. If you’re trying Amazon FBA for the first time, starting with an individual plan is an affordable way to test the platform.

When signing up, you also provide the following information:

A business email address or Amazon customer account
Your credit card and bank account information for where you want to deposit revenue
Government ID for identity verification
Tax information
Your phone number

Step 2: Find Products to Sell

Amazon FBA is a fulfilment model, but there’s a surprising amount of flexibility in terms of what you can sell.

Typically, Amazon FBA store owners use three strategies to find products to sell:

Product Reselling. This is a popular way to open your Amazon FBA store. With product reselling, you purchase inventory from in-store or online retailers and then resell it on Amazon at a markup. This form of retail arbitrage typically relies on wholesale shopping or buying products on clearance to help widen your profit margin. Alternatively, you can buy cheap goods from overseas wholesale websites like AliExpress.
Private Label. With private labeling, you sell products from existing manufacturers under your own brand. For example, you could purchase shirts from a wholesale manufacturer but add your own logo, branding, and packaging to create your own brand. This typically involves contacting manufacturers and negotiating on prices and agreeing to sell their product under your own brand.
Sell Your Own Product. If you create your own product, there’s no reason why you can’t use Amazon FBA for fulfillment. This is obviously more difficult than reselling someone else’s product, but if you’re already starting a business that sells physical products, you should consider using FBA as a sales channel.

Once you identify products you want to sell on Amazon, you have to purchase the inventory to send to Amazon’s warehouses. This is different from starting a dropshipping store where you only pay for inventory after you make a sale.

Ultimately, this means you need enough startup capital to purchase some inventory upfront. However, as a first-time Amazon FBA seller, you don’t need to spend thousands of dollars on products; a small batch of inventory should be enough to test whether your products sell well on Amazon.

You should also consult Amazon FBA’s restricted product list to ensure you can actually sell your inventory through the platform. This list is quite extensive, but you can search for restrictions by product category to understand selling regulations for your niche.

Additionally, there are FBA product restrictions you should read. For example, knock-off and illegally replicated products aren’t eligible. Similarly, some categories require a professional seller account or approval to sell. Product categories also allow different product condition levels — for example, beauty and clothing products must be new, but you can sell used electronics and books.

Step 3: Create Your Listings

You should create Amazon product listings once you receive your inventory. While it might be tempting to create listings ahead of time, it’s a good idea to inspect your inventory before listing to ensure there aren’t defects and that you have an accurate inventory count.

To create an FBA listing, you upload products individually or in bulk depending on how many unique products you’re selling. As a new FBA seller, start with individual uploads to learn the process.

If the product you’re selling already exists on Amazon, you can match your inventory to an existing product listing. Matching to an existing listing is easy. You can find your product in Amazon’s catalogue or use product identifiers like UPC codes. Once you find your product, you enter your price, product condition, quantity, and shipping options.

You only have to create new listings if the product you’re selling doesn’t exist on Amazon. Creating a new product listing takes more time. You still enter the product identifier and offer details the way you would for preexisting listings. However, you must also write your own product description, create a listing title, and upload product images.

Learning how to write effective product descriptions takes time. Selling products on any platform online is competitive, and Amazon isn’t an exception. Ultimately, writing strong product descriptions that explain the benefits of your product is critical for convincing customers to buy. You should also upload high-quality product photos that show your product from different angles and photos of your product in use.

One reason many FBA sellers stick with retail arbitrage to sell on Amazon is because creating the listings is easier — the product descriptions and images are already on the platform. Plus, if a product already exists on Amazon, that’s generally proof of existing demand for that product. The downside of this strategy is that you have to compete with other sellers. However, if you can cheaply source your products, you can compete on pricing with other sellers to drive sales.

Step 4: Prepare Products and Ship

Once received, Amazon stores your inventory in its warehouses and handles shipping to customers. However, you have to follow specific shipping protocols so Amazon can safely store and ship your orders.

Amazon has comprehensive packing guidelines and shipping and routing requirements. Packaging requirements vary by category, and some categories require additional packaging precautions, such as glass items or products with sharp components. You can also opt for the FBA Prep Service where Amazon packages and prepares your inventory for a fee.

Once you package your inventory, you’re ready to ship to Amazon. You create a shipping plan that includes the products you’re sending, the quantity, your shipping method, and whether you’re using FBA Prep for packaging.

At this stage, you might feel overwhelmed about starting your own Amazon FBA business because of all the steps. However, it’s important to remember that like any online business, practice makes perfect. Over time, you become more familiar with selling requirements, packaging rules, and what products have the potential to sell well on Amazon.

Plus, if you’re worried about handling the logistics, you can outsource that responsibility. Freight-forwarding companies like Flexport deliver inventory from overseas manufacturers to Amazon warehouses, removing the need for you to receive and package products. Granted, freight forwarding narrows your profit margin, but it’s a service you can use to turn a profitable Amazon FBA business into a more passive stream of income.

Tips for Starting an Amazon FBA Business

As mentioned, more than 50,000 small and medium-sized businesses earn more than a half-million dollars by selling on Amazon. Plus, there are even more smaller sellers who use Amazon FBA to make extra cash on the side.

However, Amazon is extremely competitive. If you want your Amazon FBA business to succeed, you need to have a game plan to find winning products.

1. Source Quality Products

You might think successful FBA selling requires finding the cheapest overseas products to maximize your profit margin. Selling cheaply-made goods can certainly generate profit early on. However, if you want your store to have longevity, you need to focus on selling high-quality products.

Amazon reviews are your best friend as an Amazon seller. Reviews help rank your product higher on Amazon’s marketplace. Plus, positive reviews inspire trust in potential buyers. If you sell knock-offs and cheap merchandise, your reviews are bound to take a hit.

Finding quality products ultimately means you need to do product research. Jungle Scout is one of the most popular Amazon product research tools and has been a longtime favorite for FBA sellers.

With Jungle Scout, you can:

Learn what’s selling on Amazon with the opportunity finder tool
Track specific product prices and sales trends
Easily review product data like reviews and customer ratings, best seller rank, historical sales, and an overall opportunity score
Use Jungle Scout’s FBA Profit Calculator to factor in Amazon fees to your product choices
Research Amazon keywords and optimize your listings for greater visibility

Overall, Jungle Scout is the complete package for anyone looking to sell on Amazon FBA. Furthermore, it’s a valuable resource for beginners because of the wealth of information in its resource library.

Jungle Scout costs $19 per month for a basic plan, which has enough functionality to start researching products. If you find a winning product by using Jungle Scout, the monthly price is absolutely worth it.

2. Conduct a Trial Run

Wholesale websites become more cost effective if you buy greater quantities. Therefore, spending thousands on your first inventory order to secure a more competitive price might seem wise.

For novice sellers, this is a recipe for disaster. First, you should always order a sample of a product you’re going to sell to test shipping times and product quality. Wholesale websites like AliExpress and AliBaba have incredible selection, but they’re also rife with knock-offs and cheaply manufactured products that won’t perform well on Amazon.

Additionally, the last thing you want is to store hundreds of pieces of inventory in your house — or, even worse, in an Amazon warehouse — without generating sales. Amazon charges storage fees, so unsold inventory is a FBA owner’s worst nightmare. Plus, you also pay product removal fees if you ask Amazon to return or dispose of your inventory.

Start out slow with your first Amazon FBA business and scale with your profits. Making money on Amazon is a marathon, not a race, so pace your inventory purchasing accordingly.

3. Don’t Chase Trends

Another common FBA mistake for new sellers is to focus on selling trending products. This might sound good on paper because you know there’s demand. However, in reality, chasing trends is riskier than selling products that are in steady demand.

When a new trend starts, experienced FBA sellers move quickly, and soon Amazon has a plethora of listings for that product. Big-box retailers also tend to get in on the action. A prime example of this was the fidget spinner, which saw tremendous sales for a few months before quickly falling off, leaving businesses and online sellers holding thousands of pieces of inventory.

The likelihood that you can move fast enough to list on Amazon before dozens or hundreds of other sellers is slim. Plus, trending products usually have a short lifespan. There’s a level of high-risk, high-reward with selling trends through Amazon FBA. Ultimately, you’re better off sticking with the basics as a beginner.

4. Guard Against Counterfeits and Pirated Products

According to Amazon’s anti-counterfeiting policy, sellers and suppliers bear the responsibility of sourcing, selling, and fulfilling only authentic products. In other words, you can’t sell:

Counterfeit or pirated products
Products that have been illegally replicated, reproduced, or manufactured
Products that infringe on intellectual property rights

If you violate this policy, Amazon can immediately terminate your seller profile. Additionally, Amazon can destroy your inventory without reimbursement and withhold existing payments to you.

It’s easy to avoid selling counterfeit products because these products typically mimic existing, higher-profile brands. For example, although you might find a number of knock-off Apple AirPods on AliExpress, you shouldn’t sell them on Amazon and pretend they’re an official Apple product.

Researching patents is tricker, especially because many overseas manufacturers blatantly disregard U.S. patents altogether. To avoid patent infringement, you should:

Check whether multiple sellers are already selling that product or if there’s just a single listing. A single listing can indicate that a patent is preventing other sellers from creating their own listings. You should also read listing descriptions because they sometimes mention patents.
Contact the manufacturer and ask for additional legal information.
Search for your product on the United States Patent and Trademark Office and Google Patent.

Navigating patents can be difficult when buying products overseas. However, this step is critical for protecting your Amazon seller profile, so the effort is worth it.

5. Optimize Your Listings

As a beginner Amazon seller, you might despair if you don’t generate sales in the first few weeks. However, getting better rankings on Amazon takes time and practice.

Before you give up on a product, consider optimizing several key parts of your listing:

Product Title. Amazon gives you 200 characters for a product title. Make sure you include phrases buyers might search for and certain benefits or use-cases for your product in the title. This helps buyers immediately understand your product and improves your chance to rank higher on Amazon search results.
Listing Keywords. Incorporate the keywords you want your listing to rank for in your product description. Don’t artificially stuff your listing with keywords, but make an effort to naturally include relevant keywords.
Optimize Images. Amazon listings show seven images. An easy way to optimize your listing is to use all seven image slots and to include a variety of photos that show your product and how it’s used in real life. The more information you can provide for potential buyers, the better. Just remember that there are specific photo upload requirements.
Encourage Reviews. Selling quality products and writing honest product descriptions are the best ways to get positive reviews. However, you can also send a message through Amazon’s platform to purchasers to request reviews. This is good practice, and the more positive Amazon reviews you get, the better your listing ranks.

If you spend time optimizing your listing and still can’t generate sales after months of effort, your niche might be too competitive or too narrow. However, you should always give your products the best chance of success before pulling the plug and getting rid of inventory.

Final Word

It’s never been easier to start an online business thanks to the power of technology, and Amazon FBA is the perfect example. After all, few business models let you access millions of customers and take care of logistics and customer service for you.

Just remember to start out slow and to scale with your profits. Selling on Amazon isn’t easy money, and the worst thing you can do as a new seller is to hop on a trend and spend too much money upfront in inventory.

As long as you have patience and are willing to put in the work to learn Amazon’s rules, there’s no reason why you can’t turn Amazon FBA into a lucrative side hustle.

Source: moneycrashers.com

April 29, 2021

12 Hotel Chains With Free Breakfast – Everything You Need to Know

I confess I’ve grown spoiled in my expectations of free breakfasts. If I’m staying at a hotel rather than an alternative like Airbnb, I only book properties where I can enjoy free breakfast.

Yes, it saves me a little money and helps keep my travel habit affordable. But it also makes traveling easier, scratching one less worry off each day’s itinerary. You just stumble to the elevator, and the next thing you know you have a cup of coffee in one hand and a croissant in the other.

Of course, not all hotel breakfasts are created equal. While some hotel chains offer free breakfasts to everyone, others only provide it to guests with elite reward member status.

Whether you’re looking to save money, time, effort, or all of the above on your next vacation, you can count on free breakfasts from the following hotel chains.

Different Types of Hotel Breakfasts

Hotel breakfasts come in three varieties: continental, buffet, and a la carte. This gets slightly confusing because continental breakfasts are served as buffets.

Continental Breakfast

At the low end of the hotel breakfast spectrum lie continental breakfasts. Although set up as a buffet, continental breakfasts lack any precooked food or heat platters.

Common options include cereal, oatmeal, yogurts, pastries, bread, and sometimes deli meats and cheeses. If you’re lucky, they might include a self-operated waffle iron along with premixed batter. They also usually include beverages like coffee, tea, and juices.

A continental breakfast isn’t so much a balanced meal as a breakfast-shaped snack, sufficient to hold you over until you find a good bagel shop or an early lunch.

Buffet Breakfast

What distinguishes a continental breakfast set up as a buffet from a true buffet breakfast?

Hot food.

At a minimum, buffet breakfasts should include a heat platter with scrambled eggs and bacon or sausage. But they could include many more hot food options as well, in addition to cold fare like cereal and fruit.

A La Carte Breakfast

The best breakfast buffets also include made-to-order stations, where staff members cook omelets or other dishes to your custom specifications.

In some cases, you can also order off an a la carte menu. Or there may be no buffet at all, and you order the entire breakfast from a menu, all included with your stay at the hotel.

Hotel Chains That Offer Free Breakfasts to All Guests

Now that we’re clear on terminology, which hotel chains include free breakfasts for everyone?

Surprisingly, free breakfasts dominate the lower- and mid-ranges of the hotel market, not its upper echelons. At least, free breakfasts for all guests, not just elite-level members.

1. Hilton Brands

Many of Hilton’s 15 hotel brands offer free breakfast of one sort or another. Keep an eye out for the following Hilton hotel brands to eat cheap on your next vacation.

Hampton by Hilton. The Hampton by Hilton chain offers continental breakfasts, but most do include a waffle iron and oatmeal with hot water for at least a couple of hot breakfast options. One nice twist Hampton offers on the continental breakfast is free on-the-go breakfast bags you can snag on your way out the door.
Home2 Suites by Hilton. A step up the breakfast food chain, Home2 Suites offers a couple more hot breakfast options. They rotate hot “artisan-style” breakfast sandwiches and bowls daily, in addition to the standard continental fare and a waffle iron. Other highlights include hard-boiled eggs, grits sometimes rotated with the oatmeal, and an “Inspired Table™” in the breakfast area with power outlets to charge your devices.
Tru by Hilton. Hilton’s Tru brand offers a limited hot buffet breakfast with scrambled eggs, chicken sausages, and of course waffles, plus the standard-issue yogurts, cereals, and so on. Tru touts an impressive 35+ toppings available for your breakfast creation.
Homewood Suites by Hilton. Homewood Suites features basic hot breakfast foods like scrambled eggs, sausages, bacon, and breakfast potatoes. It also includes pastries, cereals, oatmeal, fruit, and other continental breakfast staples.
Canopy by Hilton. Although they don’t claim all properties provide it, this smaller Hilton brand offers a complimentary artisanal breakfast with fresh ingredients and local produce in many of its locations. Double-check with the hotel though before assuming they provide it for free.
Embassy Suites by Hilton. With a full hot buffet breakfast including eggs, bacon, and oatmeal, the Embassy Suites also features a made-to-order omelet station. After chowing down on a la carte omelets, be sure to squeeze some fresh fruit in your breakfast from the cold foods section as well.

2. Best Western Hotels

Best Western claims more than 4,500 franchised hotels around the world, with roughly 2,000 of them in North America. Almost all include free breakfast, as the brand strongly encourages but doesn’t require franchisees to offer it.

The quality and quantity of options of those breakfasts vary by location. Some go all out with full hot breakfast buffets with eggs, sausages, bacon, potatoes, and even breakfast sandwiches and a la carte omelet stations. Others limp by with yogurts and other continental breakfast options.

Most offer at least a waffle iron, pancake griddle, or French toast to add another hot option beyond oatmeal. Plus most include a healthy assortment of fruits.

3. InterContinental Hotels Group (IHG)

Several of IHG’s chains advertise free breakfasts, although they vary both by chain and property. Again, do your homework before counting on a gourmet spread.

Holiday Inn Express. Given a makeover in 2018, the free breakfast at Holiday Inn Express hotels now includes items like egg white omelets, bacon and sausages, cinnamon rolls, and a one-touch pancake machine. They also spruced up the continental side of their breakfast foods, with Chobani yogurts and whole wheat English muffins. If you oversleep, they also provide prepacked to-go breakfast bags as well.
Staybridge Suites. This IHG brand promises a hot buffet breakfast, which includes scrambled eggs, bacon, and waffles. Don’t expect any bells and whistles, but you can find the full continental breakfast along with a basic hot breakfast buffet.
Avid Hotels. The breakfast at Avid Hotels looks more continental, mostly consisting of oatmeal, fruit, cereal, slices of breads, and yogurts. They do also provide hard-boiled eggs and some on-the-go options such as breakfast bars you can grab on your way out.

4. Country Inn & Suites by Radisson

Most Radisson hotels do not provide free breakfasts, at least not without elite member status. But Country Inn & Suites proves an exception.

Hotels in this chain provide two rotating hot breakfast entrees every day, and I confess they sound pretty tempting. Customizable breakfast burritos, biscuits and gravy, an omelet station, eggs Benedict, French toast, and bacon with eggs and toast are all featured in the rotation.

Beyond the hot entrees, you can expect the usual waffles, oatmeal, fruits, and cereals. One standout option is the parfait station, allowing guests to build their own perfect yogurt parfait.

5. Marriott Brands

With 30 hotel brands, most of Marriott’s hotels don’t offer complimentary breakfast. But a handful do, at least outside the Asia Pacific region, where the conglomerate does not require properties to offer breakfast.

Residence Inn by Marriott. The extent of these breakfasts vary by location, but the brand promises a “full American breakfast.” Expect a basic continental breakfast with a couple of hot options.
Springhill Suites by Marriott. Although mostly continental fare such as yogurt and fruit, some locations offer hot eggs, spinach, and other minimal hot buffet items.
TownePlace Suites by Marriott. Similarly, most TownePlace Suites properties offer a basic hot buffet breakfast that includes eggs, sausages, and waffles in addition to the cold continental options.
Fairfield Inn & Suites by Marriott. This brand offers a few hot options such as eggs and breakfast meats, along with a waffle iron, fruit, toast, and the usual corporate breakfast items.
Element by Marriott. Although Element offers the standard Marriott limited hot buffet breakfast, what sets it apart is actually its afternoon offering: a complimentary adult beverage in many locations.

6. Wyndham Brands

Many Wyndham chains provide at least a continental breakfast, and a few offer basic hot items as well.

La Quinta Inn & Suites. I once lived at a La Quinta for three weeks when my travel nurse girlfriend’s employer failed to produce corporate housing for us on time. For the first few days, I enjoyed the continental breakfast of cereal, yogurt, fruit, and waffles. After three weeks of it, though, I didn’t eat waffles again for several years.
Wingate by Wyndham. Wingate hotels offer a basic hot buffet breakfast with eggs, bacon, waffles, as well as continental breakfast options.
Hawthorn Suites. Similarly, Hawthorn Suites provides simple hot options such as eggs, breakfast meat, bagels, and oatmeal.
Travelodge. Most Travelodge locations offer a free continental breakfast with minimal frills, but you should at least get some fruit, toast, yogurt, and other basics.
Howard Johnson. HoJo offers a free “Rise & Dine” continental breakfast in most locations. Expect the usual cold options.
Baymont Inn & Suites. While Baymont advertises a “hot breakfast,” the only hot items at most locations are waffles and coffee. Expect a standard continental breakfast.
Days Inn. Wyndham knows its marketing, and in this case pushes the “healthy breakfast” angle. Again, it’s a standard continental breakfast.
Super 8. This chain also provides continental standards, including waffles, fruit, and cereal.
Microtel Inn & Suites. This brand provides a continental breakfast, which usually includes bagels and a toaster in addition to the classics.

7. Choice Hotels Brands

Most Choice Hotels chains offer free breakfast in one form or another.

Sleep Inn. This basic hotel chain includes a free hot breakfast buffet for all guests, including eggs and breakfast meats. They rotate the exact options, but sometimes include biscuits and gravy or sausage patties, and pancakes in addition to waffles.
Quality Inn. This chain offers a similar hot buffet breakfast to that of the Sleep Inn brand.
Comfort Inn. Another standard of Choice Hotels’ lineup, Comfort Inns also provide free hot buffet breakfasts. The waffles sometimes have multiple flavor options for some variety across multiple mornings.
Clarion Pointe. In 2018, Choice Hotels separated its Clarion brand into several sub-brands, and most standard Clarion hotels stopped offering free breakfasts. The slightly higher grade Clarion Pointe branded properties do still offer a free basic hot buffet breakfast with eggs and breakfast meats in most cases.
MainStay Suites. The MainStay Suites brand offers free continental breakfast, although many properties include an oatmeal station so guests can customize their hot oatmeal with a range of toppings.
Econo Lodge. This basic hotel chain provides a standard free continental breakfast.

8. Drury Hotels

Most Drury Hotels provide all guests with a complimentary hot buffet breakfast. It includes eggs, sausage, breakfast potatoes, the ever-present waffle iron, fresh fruit, oatmeal, and all the cold continental options.

The family-owned hotel chain touts that “the extras aren’t extra” as its slogan, and its free breakfast doesn’t disappoint.

Hotel Chains That Offer Free Breakfast With Elite Status

Some hotels charge standard guests for breakfast but offer it as a free incentive for guests with some sort of elite status with the brand. Each hotel chain has its own travel loyalty program and tiers, with different pricing and perks. Some are even free. Research each individually before committing, as some offer far greater value than others.

9. Marriott Properties

Many of the higher-end Marriott brands charge for breakfast — unless you have elite status with them.

Marriott features six status tiers currently: Member, Silver Elite, Gold Elite, Platinum Elite, Titanium Elite, and Ambassador Elite. Customers in the highest three tiers enjoy free breakfasts at many Marriott properties around the world.

Those properties include:

Marriott Resorts (not hotels)
Sheraton Hotels
Westin Hotels
Marriott Courtyard (if the property has a lounge)
Four Points Hotels
Protea Hotels

Breakfasts range from a full hot buffet up to completely customized a la carte breakfasts.

Joining the Marriott membership program comes with a suite of other benefits too, and makes for an alternative way to earn travel rewards without a credit card. Just remember that it doesn’t make sense to spend more than you would have otherwise to save a little money on breakfast. Spending an extra $50 to earn $25 in benefits is a losing proposition.

10. Hyatt Properties

The Hyatt corporation offers a four-tiered membership program called World of Hyatt. Tiers include World of Hyatt Members, Discoverists, Explorists, and Globalists at the top.

Different membership types earn you free breakfast at different Hyatt hotel brands. For example, Hyatt Place hotels provide free breakfast for members at all four tiers. Many other Hyatt brands only provide free breakfast for members at the Globalist level.

As you explore the following Hyatt brand hotels, verify specifically whether they offer a free breakfast for World of Hyatt members, and at which minimum tier:

Park Hyatt
Grand Hyatt
Hyatt Regency
Hyatt Zilara/Ziva
Hyatt Place
Hyatt House
Andaz
Alila
Thompson
Hyatt Centric
The Unbound Collection
Destination
Joie de Vivre
Hyatt Small Luxury Hotels and Resorts

At all properties, diners can expect at a minimum a full hot breakfast buffet, often with a la carte options such as an omelet station, and in some cases a full a la carte breakfast menu.

As a final thought on Hyatt hotels, some offer complimentary breakfast if you book directly through Hyatt’s website rather than a third-party website like Expedia or Travelocity. Check Hyatt’s own website first when making reservations for a Hyatt hotel.

11. Hilton Hotels

Similarly, the Hilton Honors loyalty program includes four tiers and features free breakfasts for some members. The levels include Member, Silver, Gold, and Diamond.

Gold and Diamond members receive free breakfast at any Hilton hotel in the world. The brand’s hotel list includes:

Conrad
Canopy
Curio
DoubleTree
Embassy Suites
Hampton Inn
Hilton
Hilton Garden Inn
Home2 Suites
Homewood Suites
LXR
Motto
Signia
Tapestry Collection
Tru
Waldorf Astoria

The hotel breakfasts across this group vary considerably. Some hotel brands offer only a continental breakfast. Others offer a hot buffet breakfast, and still others offer full a la carte breakfasts.

Do your homework on individual hotels and their breakfast offerings before booking.

12. Radisson Hotels

The Radisson Rewards program also features four tiers: Club, Silver, Gold, Platinum. Only Platinum members get free breakfasts, and only at participating properties.

Guests need to read the fine print carefully, too. The member must be the registered guest — as opposed to, say, their spouse — and only the member receives free breakfast.

As free breakfast benefits go, the Radisson Rewards program wins the award for most stingy.

Credit Card Hotel Networks Offering Free Breakfasts

One other way to score free hotel breakfasts includes elite credit cards, which include a range of travel benefits through a network of hotels. It makes for another opportunity for travel perks, even without specifically owning a travel rewards credit card.

Amex Fine Hotels & Resorts Network

Platinum American Express cardholders get a wide range of perks within the Amex Fine Hotels & Resorts network. It includes more than 1,000 hotels around the world.

Cardholders see benefits similar to those earned by elite hotel memberships. Some of those benefits include:

Daily free breakfast for two guests
Early check-in when available (usually noon)
Guaranteed 4pm late checkout
Room upgrades
Complimentary Wi-Fi
Other amenities unique to individual properties

Many of the hotels in the network are high-end luxury hotels, offering either upscale hot buffets or a la carte breakfasts. In other words, expect breakfasts to impress.

Chase Luxury Hotels & Resorts Collection

Chase’s network operates extremely similarly, where more exclusive cardholders get access to hotel perks at an equally large network. Chase advertises access to their Luxury Hotels & Resorts Collection as a perk with the following cards:

However, I’ve informally heard that some other Chase cardholders also get access to the network. The following cardholders can try accessing the network as well:

Visa Signature Luxury Hotel Collection

Holders of Visa Signature cards get access to a similar network of upscale hotels with over 900 properties worldwide through the Visa Signature Luxury Hotel Collection.

Hotels in the network offer similar perks, including free breakfast, early check-in, late checkout, and so on. But one unique benefit to Visa’s network is that it guarantees the lowest available rate. Cardholders never pay more than the rate advertised elsewhere online, unlike some hotels in the other two credit card networks, which may charge more for customers availing themselves of the benefits.

Final Word

There may be no such thing as a free lunch, but a free breakfast? Well, sometimes.

Keep in mind that many hotel chains are owned by franchisees, and not all properties participate in the overall company structure for free breakfasts. Even among corporate-owned hotels, some properties don’t offer the standard free breakfast either. Be sure to check each individual hotel before booking to ensure it offers free breakfast for guests.

Source: moneycrashers.com

April 28, 2021

16 Hidden Freelancer Expenses & Costs That Contractors Have to Cover

Deciding to become a freelancer may seem as simple as choosing to make a go of it on your own and riding off into the freelance sunset. But there are a variety of factors you should consider before making it your full-time gig — not least of which are the expenses you have to cover out-of-pocket.

While employees don’t need to worry about calculating their taxes or budgeting for sick time, freelancers do. And they also have to cover office supplies, health care, and accounting fees as well as a variety of other business-related costs. All of these play into the hourly rate they charge their clients.

Before you make the decision to go from being an employee to a freelancer, here are some of the expenses and costs you should be aware of.

Freelancing Expenses Contractors Have to Cover

From basic office supplies to legal fees, freelancers have to cover a lot of different business expenses that employees don’t. Here are some of the most common costs to take note of before deciding whether the freelance life is for you.

1. Office Space

Many freelancers can work from home or even from a coffee shop, but those who don’t have room for a home office or who frequently need to meet with clients may need to rent out a commercial office space. The costs can vary greatly between cities and buildings, but some affordable options include:

Coworking spaces
Daily office rentals
Sharing a private office with another freelancer

The size, type, and location of the office space you choose will depend on your budget and needs. Unlike employees, you will be responsible for researching, negotiating, and paying for office space if you need it to provide your freelance work to clients and customers.

2. Office Supplies

Whether your office is in your home or in a commercial building, you’ll need to pay for supplies and furniture to fill it. Start with basics such as:

A comfortable office chair
A desk
Business cards
Pens, pencils, and notepads
A desk or floor lamp
A filing cabinet
Printer paper and ink

As you grow your business, you can upgrade items to better suit your needs and budget. For example, once you have a few contracts under your belt, you may consider purchasing a standing desk or an ergonomic chair.

3. Hardware and Electronics

One of the biggest costs freelancers have to cover is the hardware and electronics they need to do their jobs. Depending on the services you offer, you may need to purchase:

A desktop computer and monitor
A laptop
A tablet
A keyboard and mouse
Speakers
Headphones
A smartphone
A camera and microphone
A printer

Fortunately, many of these items last for at least a few years, so you won’t have to repurchase them on a regular basis. As an added bonus, they’re typically tax deductions, which means they can help to reduce the overall tax amount you have to pay the IRS.

4. Software, Licenses, and Subscriptions

Once you have hardware, you need to purchase any software required to provide your freelance services to clients and customers. For example, depending on what you do, you may need to purchases licenses or subscriptions for:

Keep in mind that most platforms offer discounted pricing to individuals, so do your research before committing to an annual subscription or license with a hefty price tag. Look for free alternatives to traditional platforms, like Word Online or Google Docs to cut costs while still benefiting from the tools you need to do your job.

5. Advertising

While employees don’t typically have to worry about paying for advertising costs, freelancers do. In order to get new clients and build up a full-time roster, freelancers have to spread the word about their services. You can do so by advertising your business through:

Social media ads on Facebook, Twitter, Instagram, or LinkedIn
Pay-per-click (PPC) ads on Google, Bing, or other search engines
Newspapers, magazines, and other print publications
Websites such as Craigslist
Professional associations

Before emptying your wallet for expensive ads and self-promotion, research the options available to you and select the method you think will get you the best return on your investment.

There are a number of free options you can choose from, such as joining a virtual or in-person networking group, posting in professional forums, or creating professional social media profiles and sharing information about your services and availability.

You can also post your services on freelancer websites such as Upwork, which typically allow freelancers to post their professional profiles at no cost.

6. Professional Website

Most freelancers need a professional website that prospective clients can visit to learn more about their skills, experience, and services. This could be a basic website similar to a digital portfolio, or it could include a number of additional features such as online booking and digital payments.

Whatever type of functionality you choose, your website will come with some standard costs, including:

Design
Development
Hosting
Domain name registration

Although you can reduce your expenses by choosing a free website building platform like WordPress or Wix, you’ll still have to pay for your domain and hosting at the very least. If you want to include a blog, you’ll also need to consider the costs associated with hiring a freelance writer or editor unless you plan to provide your own content.

7. Self-Employment Taxes

Because taxes don’t automatically come out of your freelance invoices, you are responsible for calculating and setting aside your self-employment taxes throughout the year, the current rate of which is 15.3%.

Thankfully, many of your expenses will count as write-offs, which you can include in your annual tax returns, reducing your total amount you owe. However, it’s still a good idea to calculate an approximate tax amount from each invoice and to keep the cash in a separate account, so you aren’t left owing an unexpected amount with no way to pay for it come tax time.

8. Health Benefits

From glasses and prescriptions to medical appointments and emergencies, freelancers are responsible for their own medical costs — either by securing their own health insurance or paying out of pocket.

Fortunately, you have options when it comes to self-employed health insurance that can save you money and stress. Be sure to do your research and choose an option that works for you both practically and financially to support personal and professional health.

9. Retirement Savings

As with taxes, freelancers don’t have the same retirement plans to contribute to as employees. Instead, freelancers must plan and save for retirement on their own. For example, you can choose to set up a solo 401(k) or an IRA, similar to how you would if you were working for a company.

Unfortunately, you won’t benefit from having an employer match your contributions, but you will be setting yourself up for future financial security while still owning your own business.

10. Professional Development

Seminars, conferences, courses, and certifications are all an important part of staying up-to-date in your profession. And they all cost money. Small-business owners like freelancers don’t have employers with perks like professional development budgets, so they have to cover these costs on their own.

But even though these endeavors come with upfront costs, they can end up providing you with a lot of long-term benefits. After all, the more you hone your skills, network with others, and expand the services you offer, the better chance your freelance business has to succeed.

While you may be more cost-conscious about how you approach professional development when you’re footing the bill, it should still be something you budget for and make a point of pursuing. Some professional development options are relatively low-cost or even free, but still offer new information that can help you to learn more about industry trends and best practices.

11. Vacation and Sick Time

One of the biggest hidden costs of freelancing is budgeting for time off. Many freelancers inadvertently overlook the fact that they have to set aside money to cover any vacation or sick time they take throughout the year. Because they don’t have an employer paying for time off, it’s up to them to calculate and set aside the appropriate amount.

You have a couple of options when it comes to saving up for sick time and vacation days. For example, you can:

Take a small amount from each freelance job you complete and save it in a separate account
Calculate the amount you need to make to live and then use extra income as vacation pay
Work additional hours to cover the amount of time you want to take off each year

As a new freelancer, you’ll probably be starting out with no vacation or sick time, but as you get more clients and start to build up your average monthly income, you’ll have a better idea of how to start banking extra hours and saving for some well-deserved time off.

12. Accounting and Legal Costs

When you’re an employee, it’s easy to take your accounting and legal departments for granted. They track your hours, deposit your paychecks, and provide your employment contract, all without you having to lift a finger. Freelancers have to handle their own accounting, develop their own contracts, and keep track of their own records — or else pay someone to do it for them.

If you aren’t comfortable managing the financial and legal aspects of your freelance business alone, you may want to hire someone to do it for you or, at the very least, purchase software that will help you to do accounting tasks like:

Invoicing
Drafting quotes and contracts
Tracking your billable hours
Monitoring payment statuses
Documenting business expenses

13. Administrative Tasks

Freelancers don’t typically get paid for the time they spend completing the routine administrative tasks that come with doing business like responding to emails, listening to voicemails, or talking to customer service about a technical issue. That means they need to consider how to cover their non-billable hours so they don’t end up working for free.

The best way to do this is to calculate non-billable work into your hourly rate. That way, you don’t get paid directly for your administrative tasks, but you still make enough money to cover the time you spend doing them.

14. Business-Related Bills

Whether you have a home office or you rent an office space somewhere else, you still have to pay for utilities, Internet, and a phone to run your business. Even if you decide to freelance from home, you could be looking at higher bills due to:

Being at home more often
Needing an upgraded Internet connection speed or data plan
Using more cellphone data at coffee shops or other remote workplaces

Expect an increase in any business-related bills when you start freelancing, regardless of whether you choose to work from a home office, rent a space, or take advantage of a public workspace.

15. Travel

Business travel is expensive but sometimes necessary. From transportation and event tickets to meals and lodging, making a trip to attend a conference or to meet a client can be a pricey undertaking that freelancers typically have to cover on their own.

Occasionally, clients may pitch in or even pay for costs if they require the freelancer to travel specifically for their project. Depending on the freelance work that you offer, you may not have to travel at all. However, if your services require you to fly or drive to meet clients, don’t be surprised if you have to pay your own way.

When possible, take advantage of video conferences and phone calls to get some of the benefits of face-to-face meetings without the associated costs.

16. Transportation

If your freelance business requires you to visit client homes or businesses on a frequent basis, you’ll need to pay for your own transportation costs. For example, you’ll need to have enough to cover your:

Vehicle payments
Fuel
Insurance
Bus or transit pass
Parking fees
Repairs and maintenance

If you’re used to having a company vehicle and credit card to cover gas expenses as an employee, having to pay for these yourself can be a tough pill to swallow — especially if you’re new to freelancing. But these are important costs to include in your pricing calculations and quotes to help you avoid losing money on your freelance jobs.

Final Word

Before making the decision to go from being a full-time employee to pursuing a freelance career, it’s important to understand exactly what you’re getting into. There’s a big difference between taking advantage of the gig economy and starting a sustainable and profitable freelance business of your own.

Consider all the expenses you will have to pay and whether you can afford to cover them based on the clients and contracts you have lined up. If you can’t, don’t give up hope. You can always start by offering your services on the side and gradually move toward a full-time freelance career in the future.

Source: moneycrashers.com