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Apache is functioning normally

December 2, 2023 by Brett Tams

When you have a new baby on the way, you may be eager to create a nursery that’s comfortable, functional, and stylish. You can drop big bucks to turn a spare room into a dream nursery. But if you’re willing to put in some elbow grease and think outside the box, you could get the job done for much less.

Here are some creative DIY nursery ideas that won’t break the bank.

Use Paint to Make a Big Impact

If home improvement shows have taught us anything, it’s that paint can be a powerful — and cheap — way to change things up. In fact, for the cost of a few gallons of nontoxic paint, a roll of painter’s tape, and drop coverings, you can completely transform any room.

The options are limited only by your imagination. Paint all four walls the same shade to create a cohesive look, or focus the color on one wall to make a real statement. Use painter’s tape to create shapes or patterns, like stripes or chevrons, that pack the same punch as wallpaper but without the mess. If you’re artistic, paint a mural with animals or popular cartoon characters. Or considering all the time your baby will spend in their crib, you may decide to spiff up the ceiling with a pop of color.

Price tag: $125 to $250
💡 Quick Tip: Need help covering the cost of a wedding, honeymoon, or new baby? A SoFi personal loan can help you fund major life events — without the high interest rates of credit cards.

Get a Soft Rug

If you have hardwood floors, a soft rug won’t just help your feet stay warm when you come in for late-night feedings. You’ll also want a cozy surface for your baby to play, and later, learn to crawl.

You can get an area rug at a local hardware or furniture store that can bring out some of the colors in your decor and provide a soft buffer between your baby and the floor.

Price tag: $200

Make Your Own Art

Blank walls are boring, but art can be expensive to buy. So why not make your own creations?

One idea: Get jumbo letters from the local craft store that spell out your baby’s name and hang them on the wall.

Or figure out the theme of the room to help you come up with other ideas. For example, you can go to the zoo with a camera and then print out pictures of animals for an animal-themed room. Or become inspired by the night sky and put up sparkly stars and a moon on the walls. You can also find cool fabric and tack it onto a canvas for a fabric panel.

Price tag: From $25

Help Baby Sleep

Having a newborn goes hand in hand with frequent wake-up calls. But there are ways you can help baby settle down after a 3 a.m. feeding or stay asleep during a mid-afternoon nap.

Blackout curtains are a great way to prevent sunlight from seeping through window coverings — and interrupting a good nap. Making a set is doable with the help of a sewing machine and a trip to the local fabric store.

Hanging a mobile above the crib can also keep your little one entranced until their eyes start to close. You can make your own with everyday household and craft supplies, like pom poms, fabric, or paper. Simply attach the items to a string or embroidery floss, attach to a lightweight frame or embroidery hoop, and hang.

Price: From $10

Get Creative With Storage

Even if you’re a minimalist, chances are your baby will require a lot of stuff: clothes, toys, diapers, pacifiers, books…you get the idea. As you’re putting together your nursery, be sure you have ample places to store all those things. Bins, boxes, shelves, and drawers can make clean-up a breeze.

Storage systems don’t have to be expensive. You can get budget-friendly ones at local discount furniture stores. Or check online or garage sales for a used piece of furniture that you can refinish or repaint.

Just remember to fasten all the furniture to the wall so that when your baby starts pulling themselves up and walking, nothing topples over on them.

Price: From $100

Recommended: 25 Tips for Buying Furniture on a Budget

How Do You Pay for a Nursery Room Renovation

DIY-ing a nursery may save you money, but you’ll still need to make room in the budget. This can be a challenge if you’re also trying to balance the cost of hospital bills, doctor’s visits, and pricey essentials like a stroller, car seat, or crib. Here are some options you may want to consider.

Personal Savings

Tapping into your savings allows you to access the cash you need right away. However, if you’re planning to take unpaid maternity leave or are budgeting for medical expenses, you may decide it makes more sense to leave your emergency fund untouched.

Credit Card

Like personal savings, a credit card lets you pay for DIY nursery supplies now. However, at the end of the month, you’ll be billed for whatever you’ve spent. It’s important to make at least a minimum payment by the due date to avoid a late fee. But to avoid paying interest entirely, you’ll need to pay off the balance in full each month.

Recommended: Tips for Using a Credit Card Responsibly

Personal Loan

Generally speaking, a personal loan can be used for virtually anything, including decorating a nursery. Interest rates are relatively low, which means that you can likely get a loan at a low rate compared to a credit card. For that reason, it might be a much better idea than putting the expenses on a credit card, which typically have higher interest rates.

A typical term length for a personal loan is anywhere from one to 10 years. Extending your repayment over multiple years could reduce your monthly payments. But keep in mind, the longer the term length, the more you’ll pay in interest over the life of your loan.

When looking for a loan, you may want to look into securing a fixed interest rate so that you can lock in your low rate over the life of your loan.
💡 Quick Tip: Some personal loan lenders can release your funds as quickly as the same day your loan is approved.

The Takeaway

When you’re expecting a new baby, you naturally want to give them the world. This may include a room they’ll be happy to call their own. Fortunately, you can get the nursery of your dreams without having to spend a lot of money. There are creative, affordable ways to create a statement, like painting the walls or ceiling a fun shade or designing an adorable mural. Not as crafty? Explore simple, inexpensive projects, like making a mobile to hang over the crib.

If much of your budget is already earmarked for baby essentials and medical bills, you may want to explore alternate ways of paying for a nursery renovation. You could draw from your personal savings, use a credit card, or explore taking out a personal loan.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2023 winner for Best Online Personal Loan overall.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPL1123002

Source: sofi.com

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Apache is functioning normally

November 27, 2023 by Brett Tams

Long-term personal loans can be an attractive option if you’re facing large expenses like medical bills or home repairs. By spreading out repayment over a longer period of time, long-term loans may allow for lower monthly payment amounts that can make major costs more affordable.

However, long-term loans can have drawbacks, too. They may have higher cumulative interest than short-term loans and can be difficult to qualify for since they’re often unsecured.

Here’s what you need to know if you’re deciding whether or not a long-term, unsecured personal loan is right for you:

What Is a Long-Term Loan?

As its name suggests, a long-term loan is one whose repayment period, or term, is fairly lengthy. Generally, long-term personal loans carry terms between 60 and 84 months, or five to seven years.

Mortgages and student loans are also examples of long-term loans. Mortgages, for instance, are frequently repaid over as many as 30 years.

For the purposes of this article, we’re talking about long-term, unsecured personal loans, which borrowers can use for a variety of things. These loans can allow consumers to make big purchases or pay expensive bills by paying the total off over several years’ time.
💡 Quick Tip: A low-interest personal loan from SoFi can help you consolidate your debts, lower your monthly payments, and get you out of debt sooner.

Benefits of Long-Term Personal Loans

There are plenty of reasons why a long-term loan might be a worthy consideration for large expenses.

Large Loan Amounts

While short-term loans and credit cards may cap out at a few thousand dollars, long-term, unsecured personal loans are available at much higher amounts — up to as much as $100,000.

So depending on what you need the money for, a long-term personal loan might give you more leverage than other types of funding.

Affordable Monthly Payments

Since long-term personal loans are paid off over many months, the monthly payments are often lower than they would be with a shorter-term loan.

However, that doesn’t mean a long-term loan is less expensive in the long run.

Flexibility

Unlike secured loans, which are tied to a physical piece of collateral or the need to be used for a specified purpose, unsecured personal loans can be taken out for a wide range of intended purposes. Common reasons borrowers take out personal loans include:

• Home renovations or repairs.

• Medical expenses.

• Wedding loans or funeral expenses.

• Debt consolidation.

Affordable Monthly Payments

Since long-term personal loans are paid off over many months, the monthly payments are often lower than they would be with a shorter-term loan.

However, that doesn’t mean a long-term loan is less expensive in the long run.

Drawbacks of Long-Term Personal Loans

There are also some drawbacks worth considering before you apply for an unsecured personal loan.

Potentially Higher Interest Rates

Although long-term, unsecured personal loans may have smaller monthly payments, they may carry higher interest rates than shorter-term, unsecured personal loans. And even at the same interest rate, they cost more over time.

Personal loan interest rates can range from as little as 6.99% to as much as 35.99% APR.

For example, imagine you take out a $10,000 loan at an interest rate of 10%. To repay the loan in a single year, you’d have to pay a whopping $879 per month, but you’d only pay a total of $550 in interest over the lifetime of the loan.

To repay the loan in seven years, you’d pay only $166 per month, but you’d also pay $3,945 in interest along the way.

So while long-term, unsecured personal loans can make large purchases feasible, factoring in the total cost over the lifetime of the loan before you sign those papers is also important.

Long-Term Debt

Along with higher interest rates, long-term loans do, obviously, mean going into debt for a longer period of time — unless you plan to pay off your loan early. A thorough review of the loan agreement will disclose prepayment penalties or other fees that can be costly in their own right.

Furthermore, the future is unpredictable. Five to seven years down the line, that promotion you were counting on might fall through or another life circumstance might supersede your repayment plans.

If you find yourself in a situation where you need to borrow more cash, it can be difficult to increase your personal loan amount.

Although unsecured personal loans can be helpful when life throws big expenses your way, they’re still a form of consumer debt, and, ideally, minimizing debt is a smart thing to do.

Qualification Difficulties

Long-term, unsecured personal loans may have more stringent qualification requirements than other types of credit. That’s because, from the lender’s perspective, they’re riskier than loans for smaller amounts or those that come attached to physical collateral.

Along with your credit score and history, a potential lender might also require proof of income and employment or a certain debt-to-income ratio. Depending on the stability of your financial situation, you may or may not qualify for the best interest rates and terms or be considered eligible to take out the loan at all, at least without a cosigner or co-borrower.
💡 Quick Tip: Generally, the larger the personal loan, the bigger the risk for the lender — and the higher the interest rate. So one way to lower your interest rate is to try downsizing your loan amount.

Alternatives to Long-Term Loans

Ideally, the best way to pay for a large purchase is to save up the cash and pay for it without going into debt at all. Of course, this may not always be possible or realistic.

If you’re not sure about taking out a long-term, unsecured personal loan, there are other alternatives to consider. However, each of these comes with its own risk-to-reward ratio as well.

You might consider borrowing money from friends and family, but those important relationships can suffer if your repayment doesn’t go as planned. A written repayment agreement can go a long way toward making the transaction as transparent as possible, with expectations of both parties clearly outlined.

Another option might be saving part of the money you need and applying for a short-term, unsecured personal loan for the remainder. This means delaying a purchase until savings can accumulate, and might not work if the money is needed sooner rather than later.

The Takeaway

Long-term loans are those whose repayment periods generally span between five and seven years, which can help borrowers fund expensive purchases while making affordable monthly payments.

However, the longer-term can also mean more interest charges over time, making these unsecured personal loans more expensive relative to shorter-term lending options. And like any form of consumer debt, they carry risk.

Your credit score and/or personal financial situation can suffer if you find yourself unable to repay the loan.

That said, when used responsibly, long-term, unsecured personal loans can be a smart financial choice, particularly if you shop around for a lender who offers affordable, fixed interest rates, low fees, and great customer service to ensure you’ll always be in the know and in control.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2023 winner for Best Online Personal Loan overall.

Photo credit: iStock/Melpomenem


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPL1023022

Source: sofi.com

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Apache is functioning normally

November 23, 2023 by Brett Tams

The average rate of return on 401(k)s is typically between 5% and 8%, depending on specific market conditions in a given year. Keep in mind that returns will vary depending on the individual investor’s portfolio, and that those numbers are a general benchmark.

While not everyone has access to a 401(k) plan, those who do may wonder if it’s an effective investment vehicle that can help them reach their goals. The answer is, generally, yes, but there are a lot of things to take into consideration. There are also alternatives out there, too.

Key Points

•   The average rate of return on 401(k)s is typically between 5% and 8%, depending on market conditions and individual portfolios.

•   401(k) plans offer benefits such as potential employer matches, tax advantages, and federal protections under ERISA.

•   Fees, vesting schedules, and early withdrawal penalties are important considerations for 401(k) investors.

•   401(k) plans offer limited investment options, typically focused on stocks, bonds, and mutual funds.

•   Asset allocation and individual risk tolerance play a significant role in determining 401(k) returns and investment strategies.

Some 401(k) Basics

To understand what a 401(k) has to offer, it helps to know exactly what it is. The IRS defines a 401(k) as “a feature of a qualified profit-sharing plan that allows employees to contribute a portion of their wages to individual accounts.”

In other words, employees can choose to delegate a portion of their pay to an investment account set up through their employer. Because participants put the money from their paychecks into their 401(k) account on a pre-tax basis, those contributions reduce their annual taxable income.

Taxes on the contributions and their growth in a 401(k) account are deferred until the money is withdrawn (unless it’s an after-tax Roth 401(k)).

A 401(k) is a “defined-contribution” plan, which means the participant’s balance is determined by regular contributions made to the plan and by the performance of the investments the participant chooses.

This is different from a “defined-benefit” plan, or pension. A defined-benefit plan guarantees the employee a defined monthly income in retirement, putting any investment risk on the plan provider rather than the employee.

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Benefits of a 401(k)

There are a lot of benefits that come with a 401(k) account, and some good reasons to consider using one to save for retirement.

Potential Employer Match

Employers aren’t required to make contributions to employee 401(k) plans, but many do. Typically, an employer might offer to match a certain percentage of an employee’s contributions.

Tax Advantages

As mentioned, most 401(k)s are tax-deferred. This means that the full amount of the contributions can be invested until you’re ready to withdraw funds. And you may be in a lower tax bracket when you do start withdrawing and have to pay taxes on your withdrawals.

Federal Protections

One of the less-talked about benefits of 401(k) plans is that they’re protected by federal law. The Employee Retirement Security Act of 1974 (ERISA) sets minimum standards for any employers that set up retirement plans and for the administrators who manage them.

Those protections include a claims and appeals process to make sure employees get the benefits they have coming. Those include the right to sue for benefits and breaches of fiduciary duty if the plan is mismanaged, that certain benefits are paid if the participant becomes unemployed, and that plan features and funding are properly disclosed. ERISA-qualified accounts are also protected from creditors.

💡 Quick Tip: Before opening an investment account, know your investment objectives, time horizon, and risk tolerance. These fundamentals will help keep your strategy on track and with the aim of meeting your goals.

Boost your retirement contributions with a 1% match.

SoFi IRAs now get a 1% match on every dollar you deposit, up to the annual contribution limits. Open an account today and get started.

Only offers made via ACH are eligible for the match. ACATs, wires, and rollovers are not included. Offer ends 12/31/23.

401(k) Fees, Vesting, and Penalties

There can be some downsides for some 401(k) investors as well. It’s a good idea to be aware of them before you decide whether to open an account.

Fees

The typical 401(k) plan charges a fee of around 1% of assets under management. That means an investor who has $100,000 in a 401(k) could pay $1,000 or more. And as that participant’s savings grow over the years, the fees could add up to thousands of dollars.

Fees eat into your returns and make saving harder — and there are companies that don’t charge management fees on their investment accounts. If you’re unsure about what you’re paying, you should be able to find out from your plan provider or your employer’s HR department, or you can do your own research on various 401(k) plans.

Vesting

Although any contributions you make belong to you 100% from the get-go, that may not be true for your employer’s contributions. In some cases, a vesting schedule may dictate the degree of ownership you have of the money your employer puts in your account.

Early Withdrawal Penalties

Don’t forget, when you start withdrawing retirement funds, some of the money in your tax-deferred retirement account will finally go toward taxes. That means it’s in Uncle Sam’s interest to keep your 401(k) savings growing.

So, if you decide to take money out of a 401(k) account before age 59 ½, in addition to any other taxes due when there’s a withdrawal, you’ll usually have to pay a 10% penalty. (Although there are some exceptions.) And at age 73, you’re required to take minimum distributions from your tax-deferred retirement accounts.

Potentially Limited Investment Options

One more thing to consider when you think about signing up for a 401(k) is what kind of investing you’d like to do. Employers are required to offer at least three basic options: a stock investment option, a bond option, and cash or stable value option. Many offer more than that minimum, but they stick mostly to mutual funds. That’s meant to streamline the decision-making. But if you’re looking to diversify outside the basic asset classes, it can be limiting.

How Do 401(k) Returns Hold Up?

Life might be easier if we could know the average rate of return to expect from a 401(k). But the unsatisfying answer is that it depends.

Several factors contribute to overall performance, including the investments your particular plan offers you to choose from and the individual portfolio you create. And of course, it also depends on what the market is doing from day to day and year to year.

Despite the many variables, you may often hear an annual return that ranges from 5% to 8% cited as what you can expect. But that doesn’t mean an investor will always be in that range. Sometimes you may have double-digit returns. Sometimes your return might drop down to negative numbers.

Issues With Looking Up Average Returns As a Metric

It’s good to keep in mind, too, that looking up average returns can create some issues. Specifically, averages don’t often tell the whole story, and can skew a data set. For instance, if a billionaire walks into a diner with five other people, on average, every single person in the diner would probably be a multi-millionaire — though that wouldn’t necessarily be true.

It can be a good idea to do some reading about averages and medians, and try to determine whether aiming for an average return is feasible or realistic in a given circumstance.

Some Common Approaches to 401(k) Investing

There are many different ways to manage your 401(k) account, and none of them comes with a guaranteed return. But here are a few popular strategies.

60/40 Asset Allocation

One technique sometimes used to try to maintain balance in a portfolio as the market fluctuates is a basic 60/40 mix. That means the account allocates 60% to equities (stocks) and 40% to bonds. The intention is to minimize risk while generating a consistent rate of return over time — even when the market is experiencing periods of volatility.

Target-Date Funds

As a retirement plan participant, you can figure out your preferred mix of investments on your own, with the help of a financial advisor, or by opting for a target-date fund — a mutual fund that bases asset allocations on when you expect to retire.

A 2050 target-date fund will likely be more aggressive. It might have more stocks than bonds, and it will typically have a higher rate of return. A 2025 target-date fund will lean more toward safety. It will likely be designed to protect an investor who’s nearer to retirement, so it might be invested mostly in bonds. (Again, the actual returns an investor will see may be affected by the whims of the market.)

Most 401(k) plans offer target-date funds, and they make investing easy for hands-off investors. But if that’s not what you’re looking for, and your 401(k) plan makes an advisor available to you, you may be able to get more specific advice. Or, if you want more help, you could hire a financial professional to work with you on your overall plan as it relates to your long- and short-term goals.

Multiple Retirement Accounts

Another possibility might be to go with the basic choices in your workplace 401(k), but also open a separate investing account with which you could take a more hands-on approach. You could try a traditional IRA if you’re still looking for tax advantages, a Roth IRA (read more about what Roth IRAs are) if you want to limit your tax burden in retirement, or an account that lets you invest in what you love, one stock at a time.

There are some important things to know, though, before deciding between a 401(k) vs. an IRA.
💡 Quick Tip: Can you save for retirement with an automated investment portfolio? Yes. In fact, automated portfolios, or robo advisors, can be used within taxable accounts as well as tax-advantaged retirement accounts.

How Asset Allocation Can Make a Difference

How an investor allocates their resources can make a difference in terms of their ultimate returns. Generally speaking, riskier investments tend to have higher potential returns — and higher potential losses. Stocks also tend to be riskier investments than bonds, so if an investor were to construct a portfolio that’s stock-heavy relative to bonds, they’d probably have a better chance of seeing bigger returns.

But also, a bigger chance of seeing a negative return.

With that in mind, it’s going to come down to an investor’s individual appetite for risk, and how much time they have to reach their financial goals. While there are seemingly infinite ways to allocate your investments, the chart below offers a very simple look at how asset allocation associates with risks and returns.

Asset Allocations and Associated Risk/Return

Asset Allocation Risk/Return
75% Stock-25% Bonds Higher risk, higher potential returns
50% Stock-50% Bonds Medium risk, variable potential returns
25% Stock-75% Bonds Lower risk, lower potential returns

Ways to Make the Most of Investment Options

It’s up to you to manage your employer-sponsored 401(k) in a way that makes good use of the options available. Here are some pointers.

Understand the Match

One way to start is by familiarizing yourself with the rules on how to maximize the company match. Is it a dollar-for-dollar match up to a certain percentage of your salary, a 50% match, or some other calculation? It also helps to know the policy regarding vesting and what happens to those matching contributions if you leave your job before you’re fully vested.

Consider Your Investments

With or without help, taking a little time to assess the investments in your plan could boost your bottom line. It may also allow you to tailor your portfolio to better accomplish your financial goals. Checking past returns can provide some information when choosing investments and strategies, but looking to the future also can be useful.

Plan for Your Whole Life

If you have a career plan (will you stay with this employer for years or be out the door in two?) and/or a personal plan (do you want to buy a house, have kids, start your own business?), factor those into your investment plans. Doing so may help you decide how much to invest and where to invest it.

Find Your Lost 401(k)s

Have you lost track of the 401(k) plans or accounts you left behind at past employers? It may make sense to roll them into your current employer’s plan, or to roll them into an IRA separate from your workplace account. You might also want to review and update your portfolio mix, and you might be able to eliminate some fees.

Know the Maximum Contributions for Retirement Accounts

Keep in mind that there are different contribution limits for 401(k)s and IRAs. For those under age 50, the 2023 contribution limit is $22,500 for 401(k)s and $6,500 for IRAs. For those 50 or older, the 2023 contribution limit is $30,000 for 401(k)s and $7,500 for IRAs. Other rules and restrictions may also apply.

Learn How to Calculate Your 401(k) Rate of Return

This information can be useful as you assess your retirement saving strategy, and the math isn’t too difficult.

For this calculation, you’ll need to figure out your total contributions and your total gains for a specific period of time (let’s say a calendar year).

You can find your contributions on your 401(k) statements or your pay stubs. Add up the total for the year.

Your gains may be listed on your 401(k) statements as well. If not, you can take the ending balance of your account for the year and subtract the total of your contributions and the account balance at the beginning of the year. That will give you your total gains.

Once you have those factors, divide your gains by your ending balance and multiply by 100 to get your rate of return.

Here’s an example. Let’s say you have a beginning balance of $10,000. Your total contributions for the year are $6,000. Your ending balance is $17,600. So your gains equal $1,600. To get your rate of return, the calculation is:

(Gains / ending balance) X 100 =

($1,600 / $17,600) X 100 = 9%

Savings Potential From a 401(k) Potential by Age

It can be difficult to really get a feel for how your 401(k) savings or investments can grow over time, but using some of the math above, and assuming that you keep making contributions over the years, you’ll very likely end up with a sizable nest egg when you reach retirement age.

This all depends, of course, on when you start, and how the markets trend in the subsequent years. But for an example, we can make some assumptions to see how this might play out. For simplicity’s sake, assume that you start contributing to a 401(k) at age 20, with plans to start taking distributions at age 70. You also contribute $10,000 per year (with no employer match, and no inflation), at an average return of 5% per year.

Here’s how that might look over time:

401(k) Savings Over Time

Age 401(k) Balance
20 $10,000
30 $128,923
40 $338,926
50 $680,998
60 $1,238,198
70 $2,145,817

Using time and investment returns to supercharge your savings, you could end up with more than $2 million through dutiful saving and investing in your 401(k). Again, there are no guarantees, and the chart above makes a lot of oversimplified assumptions, but this should give you an idea of how things can add up.

Alternatives to 401(k) Plans

While 401(k) plans can be powerful financial tools, not everyone has access to them. Or, they may be looking for alternatives for whatever reason. Here are some options.

Roth IRA

Roth IRAs are IRAs that allow for the contribution of after-tax dollars. Accordingly, the money contained within can then be withdrawn tax-free during retirement. They differ from traditional IRAs in a few key ways, the biggest and most notable of which being that traditional IRAs are tax-deferred accounts (contributions are made pre-tax).

Learn more about what IRAs are, and what they are not.

Traditional IRA

As discussed, a traditional IRA is a tax-deferred retirement account. Contributions are made using pre-tax funds, so investors pay taxes on distributions once they retire.

HSA

HSAs, or health savings accounts, are another vehicle that can be used to save or invest money. HSAs have triple tax benefits, in that account holders can contribute pre-tax dollars to them, allow that money to grow tax-free, and then use the holdings on qualified medical expenses — also tax-free.

Retirement Investment

Typical returns on 401(k)s may vary, but looking for an average of between 5% and 8% would likely be a good target range. Of course, that doesn’t mean that there won’t be up or down years, and averages, themselves, can be a bit misleading.

While your annual return on your 401(k) may vary, the good news is that, as an investor, you have options about how you save for the future. The choices you make can be as aggressive or as conservative as you want, as you choose the investment mix that best suits your timeline and financial goals.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

FAQ

What is the typical 401(k) return over 20 years?

The typical return for 401(k)s over 20 years is between 5% and 8%, assuming a portfolio sticks to an asset mix of roughly 60% stocks and 40% bonds. There’s also no guarantee that returns will fall within that range.

What is the typical 401(k) return over 10 years?

Again, the average rate of return for 401(k)s tends to land between 5% and 8%, with some years providing higher returns, and some years providing lower, or even negative returns.

What was the typical 401(k) return for 2022?

The average 401(k) lost roughly 20% of its value during 2022, as increasing interest rates and shifting economic conditions over the course of the year (largely due to increasing inflation) caused the economy to sputter.


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Apache is functioning normally

November 20, 2023 by Brett Tams

Whether you’re purchasing a new pair of eyeglasses, stocking up on over-the-counter medications, or paying for your child’s daycare, there may be certain expenses your health insurance plan doesn’t cover.

In those cases, having a flexible spending account, or FSA, could help you save money. This special savings account lets you set aside pretax dollars to pay for eligible out-of-pocket healthcare expenses, which in turn can lower your taxable income.

Let’s take a look at how these accounts work.

What Is an FSA?

An FSA is an employer-sponsored savings account you can use to pay for certain health care and dependent costs. It’s commonly included as part of a benefits package, so if you purchased a plan on the Health Insurance Marketplace, or have Medicaid or Medicare, you may no longer qualify for a FSA.
There are three types of FSA accounts:

•   Health care FSAs, which can be used to pay for eligible medical and dental expenses.

•   Dependent care FSAs, which can be used to pay for eligible child and adult care expenses, such as preschool, summer camp, and home health care.

•   Limited expense health care FSA, which can be used to pay for dental and vision expenses. This type of account is available to those who have a high-deductible health plan with a health savings account.

How Do You Fund an FSA?

If you opt into an FSA, you’ll need to decide on how much to regularly contribute throughout the year. Those contribution amounts will be automatically deducted from your paychecks and placed into the account. Whatever money you put into an FSA isn’t taxed, which means you can keep more of what you earn.

Your employer may also throw some money into your FSA account, but they are under no legal obligation to do so.

You can use your FSA throughout the year to either reimburse yourself or to help pay for eligible expenses for you, your spouse, and your dependents (more on that in a minute). Typically, you’ll be required to submit a claim through your employer and include proof of the expense (usually a receipt), along with a statement that says that your regular health insurance does not cover that cost.

Some employers offer an FSA debit card or checkbook, which you can use to pay for qualifying medical purchases without having to file a reimbursement claim through your employer.
💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.

What Items Qualify for FSA Reimbursement?

The IRS decides which expenses qualify for FSA reimbursement, and the list is extensive. Here’s a look at some of what’s included — you can see the full list on the IRS’ website.

•   Health plan co-payments and deductibles (but not insurance premiums)

•   Prescription eyeglasses or contact lenses

•   Dental and vision expenses

•   Prescription medications

•   Over-the-counter medicines

•   First aid supplies

•   Menstrual care items

•   Birth control

•   Sunscreen

•   Home health care items, like thermometers, crutches, and medical alert devices

•   Medical diagnostic products, like cholesterol monitors, home EKG devices, and home blood pressure monitors

•   Home health care

•   Day care

•   Summer camp

Are There Any FSA Limits?

For 2023, health care FSA and limited health care FSA contributions are limited to $3,050 per year, per employer. Your spouse can also contribute $3,050 to their FSA account as well.

Meanwhile, dependent care FSA contributions are limited to $5,000 per household, or $2,500 if you’re married and filing separately.

Does an FSA Roll Over Each Year?

In general, you’ll need to use the money in an FSA within a plan year. Any unspent money will be lost. However, the IRS has changed the use-it-or-lose-it rule to allow a little more flexibility.

Now, your employer may be able to offer you a couple of options to use up any unspent money in an FSA:

•   A “grace period” of no more than 2½ extra months to spend whatever is left in your account

•   Rolling over up to $610 to use in the following plan year. (In 2024, that amount increases to $640.)

Note that your employer may be able to offer one of these options, but not both.

One way to avoid scrambling to spend down your FSA before the end of the year or the grace period is to plan ahead. Calculate all deductibles, copayments, coinsurance, prescription drugs, and other possible costs for the coming year, and only contribute what you think you’ll actually need.

Recommended: Flexible Spending Accounts: Rules, Regulations, and Uses

How Can You Use Up Your FSA?

You can consider some of these strategies to get the most out of your FSA:

•   Buy non-prescription items. Certain items are FSA-eligible without needing a prescription (but save your receipt for the paperwork!). These items may include first-aid kits, bandages, thermometers, blood pressure monitors, ice packs, and heating pads. Check out the FSA Store to find out which items may be covered.

•   Get your glasses (or contacts). You may be able to use your FSA to cover the cost of prescription eyeglasses, contact lenses, and sunglasses as well as reading glasses. Contact lens solution and eye drops may also be covered.

•   Keep family planning in mind. FSA-eligible items can include condoms, pregnancy tests, baby monitors, fertility kits. If you have a prescription for them, female contraceptives may also be covered.

•   Don’t forget your dentist. Unfortunately, toothpaste and cosmetic procedures are not covered by your FSA, but dental checkups and associated costs might be. These could include copays, deductibles, cleanings, fillings, X-rays, and even braces. Mouthguards and cleaning solutions for your retainers and dentures may be FSA-eligible as well.
💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

Flexible Savings Account (FSA) vs. Health Savings Account (HSA)

You may have heard of a health savings account (HSA). It’s easy to confuse it with an FSA, as they share some similarities.

Both types of accounts:

•   Offer some tax advantages

•   Can be used to pay for co-payments, deductibles, and eligible medical expenses

•   Can be funded through employee-payroll deductions, employer contributions, or individual deductions

•   Have a maximum contribution amount. In 2023, people with individual coverage can contribute up to $3,850 per year, while those with family coverage can cset aside up to $7,750 per year.

That said, there are some key differences between HSAs and FSAs:

•   You must be enrolled in a high deductible health plan in order to qualify for an HSA.

•   HSAs do not have a use-it-or-lose-it rule. Once you put money in the account, it’s yours.

•   If you quit or are fired from your job, your HSA can go with you. This happens even if your employer contributed money to the account.

•   If you’re 55 or older, you can contribute an additional $1,000 to your HSA as a catch-up contribution — similar to the catch-up contributions allowed with an IRA.

•   If you withdraw money from your HSA for a non-qualified expense before the age of 65, you’ll pay taxes on it plus a 20% penalty.

•   If you withdraw money from your HSA for any type of expense after age 65, you don’t pay a penalty. However, the withdrawal will be taxed like regular income.

Recommended: Benefits of Health Savings Accounts

The Takeaway

Flexible spending accounts are offered by employers and can be a useful tool for paying for health care- or dependent-related expenses. Notably, you fund the account with pretax dollars taken from your paycheck, which can lower your taxable income and help you save money.

You typically need to spend your FSA money within a plan year, though your employer may give you the option to either roll over a portion of the balance into the next year or use it during a grace period. There are also guidelines around what you can spend the FSA funds on and how much you can contribute to your account.

Take control of your finances with the SoFi Insights money tracker app. Connect all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

SoFi helps you stay on top of your finances.


SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com

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Apache is functioning normally

November 16, 2023 by Brett Tams

When you’re planning a trip, looking at travel insurance is usually a good idea. That said, Global Rescue isn’t really travel insurance in a traditional sense. It doesn’t require you to file a claim, pay a deductible or request a reimbursement of upfront costs. The services provided are covered once you pay the membership fee, so you don’t need to pay anything upfront in case of an emergency.

If you’re traveling to a place with fewer medical facilities, less infrastructure or a chance for civil unrest, a travel insurance policy from Global Rescue could provide help. Here’s a look at Global Rescue travel insurance, how it works and what’s covered if you become a member.

What is Global Rescue?

Since 2004, Global Rescue has provided medical, security and crisis management services to travelers, including things like field rescue, medical evacuation and 24/7 emergency assistance. Services are provided in the field by health care and security professionals. They also include a pre-departure destination report, which includes entry requirements, health and security assessments and required immunizations.

There are some positives and negatives to this type of coverage. Here’s an overview:

Pros

  • Short-term and annual coverage available.

  • COVID-19 emergencies are covered.

  • No activity restrictions.

  • Exclusive partnership with Johns Hopkins Department of Emergency Medical Division.

Cons

  • Security evacuations aren’t included in countries on the Do Not Travel list.

  • High cost.

  • Standard travel insurance benefits such as trip cancellation, baggage loss and rental car coverage cost extra.

What does Global Rescue membership cover?

Traditional travel insurance covers you financially if something unexpected — like an overnight delay, lost luggage or a medical emergency — disrupts your trip. This is typically done in the form of a reimbursement after the fact. Global Rescue provides boots-on-the-ground help in case of an emergency, instead of reimbursing you for the cost.

For example, if you have a scuba diving accident in Fiji, contract malaria in Nigeria or break your ankle on a hike in Peru, you’ll be rescued by a highly skilled team. Lose your passport or run out of prescription medication? You’re covered as well.

Global Rescue provides the following services to its members:

  • Worldwide field rescue.

  • Evacuation and advisory services.

  • Pre-departure destination reports.

  • Real-time safety notifications.

  • No activity restrictions.

  • No mileage requirements.

  • No COVID-19 restrictions.

  • Security upgrade (optional).

  • High-altitude evacuation upgrade (optional).

  • Emergency assistance 24/7/365.

“Field rescue” means Global Rescue will send help if you’re injured, in danger or unable to get to a hospital. This doesn’t necessarily mean the closest hospital, either. If you need to go home to your preferred medical facility, it can be arranged.

“No activity restrictions” means that you can participate in high-risk sports, such as hang gliding or BASE jumping — which are usually excluded from most travel insurance plans — and still be covered. Unlike most travel insurance policies, you don’t have to be more than 100 miles from home for the coverage to kick in.

If you choose to add on the security package, Global Rescue has experienced nurses, paramedics and veterans of military special operations on staff. They will bring you to safety in case of civil unrest, a natural disaster or a war if there is risk of bodily harm. High-altitude evacuation is another optional add-on that provides services to members who require medical attention above 15,000 feet.

Because Global Rescue isn’t a travel insurance provider, self-arranged medical treatment or rescue services won’t be reimbursed. However, you do have the option to purchase Global Rescue’s travel insurance add-on, which is available through IMG. This policy provides traditional travel insurance benefits, such as trip cancellation, trip interruption, baggage delays and rental car damage and theft. It also covers medical expenses up to $100,000.

Global Rescue membership types

Global Rescue is available to residents of any country, and you can purchase it for short-term coverage or annually.

Short-term plans cover periods of seven, 14 or 30 days. To purchase an annual plan, you’ll be asked for the duration of your longest trip in the coming year. Options range from 45, 90, 180 or 365 days.

Additionally, you can cover yourself or your whole family. Family memberships are extended to the primary member, their spouse or domestic partner and up to six children younger than 26.

Special memberships are also offered for students and older adults. Student memberships are available to full-time students younger than 35. Extended Travel memberships are available to travelers from 75 to 84 years old, and TotalCare Silver memberships are available for those ages 85 to 99.

Global Rescue membership cost and coverage

Here’s how much Global Rescue membership costs based on various parameters, such as number of travelers (individual or family), length of trip and add-ons.

The example below is how much a Global Rescue membership would cost for a single traveler or a family without adding a security package or high-altitude evacuation upgrade.

Length of a trip

Single traveler

7 days (short-term).

14 days (short-term).

30 days (short-term).

45 days (annual).

90 days (annual).

180 days (annual).

365 days (annual).

Here’s how much a membership costs for a single traveler or a family with a security package and high-altitude evacuation upgrade included.

Length of a trip

Single traveler

7 days (short-term).

14 days (short-term).

30 days (short-term).

45 days (annual).

90 days (annual).

180 days (annual).

365 days (annual).

Who is Global Rescue membership for?

Although Global Rescue advertises to leisure travelers and extreme adventurers, a membership most likely best suits adventure travelers — those who visit off-the-beaten-path destinations, participate in high-adrenaline activities and need more coverage than regular travel insurance provides. It can also be for travelers who are heading to countries that are politically unstable or lacking basic infrastructure.

But its price tag might deter casual travelers, especially families, from enrolling.

How to get a Global Rescue membership quote online

You’ll need to visit the Global Rescue website to get a price estimate. On the home page, there is a form to fill out for a price estimate. Make your selections to receive a quote.

Select who the membership is for — yourself or family. Decide if you want an annual or short-term membership. Then, select the trip duration and whether you’d like to add the security package or high-altitude evacuation upgrade. After you’re done, the estimate will appear immediately.

What isn’t covered by Global Rescue travel insurance?

A standard Global Rescue membership doesn’t include usual travel insurance benefits, such as:

However, you can get this coverage by purchasing an IMG Signature Travel Insurance plan.

Is a Global Rescue membership worth it?

Seeing that you’d have to pay a premium for a Global Rescue membership, only you can decide whether it’s worth it for you and your family.

It’s certainly nice to have medical professionals and former military members in your corner when things go wrong, but you’ll likely have to purchase both traditional travel insurance coverage and a Global Rescue membership to cover all the bases. In any case, it could be worth looking into, especially if your travels take you to extreme destinations.

How to maximize your rewards

You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for:

Source: nerdwallet.com

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Apache is functioning normally

November 5, 2023 by Brett Tams

If you feel that your cost for health insurance is too high, you’re definitely not alone: A recent analysis from the National Health Interview Survey (NHIS) found that 7% of Americans did not have health insurance in the first three months of 2023. 

To help offset the costs and help Americans avoid crippling medical debt, the federal government offers tax relief for those with high-deductible plans if they choose to open a Health Savings Account to set aside funds to pay for medical costs. A Health Savings Account (HSA) might be just the thing to help alleviate your financial pain, but you’ll first need to qualify for the program.

What Is an HSA?

An HSA is a dedicated savings account created in 2003 to help people with high-deductible health insurance plans afford their medical bills. It is not the same thing as a Flexible Spending Account (FSA), an employee benefit that allows you to set aside pre-tax dollars to cover medical spending. Notably, an FSA is a “use it or lose it” plan: If you don’t spend the funds you had deducted from your paycheck by the end of the plan year, you forfeit the money.

An HSA, on the other hand, can be set up by an individual or by an employer, and the money you contribute is yours to keep for life. Like FSAs, HSAs provide tax benefits; however, HSAs are not available to everyone.

Who Is Eligible for an HSA?

HSAs are available exclusively to people who are insured under a high-deductible health plan. These plans may be offered by their employers or purchased individually. As of tax year 2015, IRS rules state that a high deductible must be at least $1,300 for individual coverage or $2,600 for a family plan. If your deductible meets those minimums, you can open an HSA.

Are HSA Contributions Tax Deductible?

Yes. Contributions to your HSA can be deducted from your taxes, even if you opt for the standard deduction instead of itemizing. This will reduce the amount of money you need to pay taxes on and will either lower your overall tax bill or increase your refund. If your employer takes HSA contributions directly out of your paycheck, those funds are considered pre-tax dollars and result in the same tax savings.

Are Distributions From an HSA Taxable?

Maybe. When you use funds from your HSA to pay for qualified medical expenses, you will not pay taxes on the money you withdraw. You may use the funds immediately or wait for years before dipping into your HSA account to pay your doctor’s bills. You will also not pay taxes on any interest earned in your HSA account if it is used to pay medical expenses.

Once you reach age 65, you may withdraw funds without penalty to pay for anything. If you use the money for non-medical expenses, however, you’ll be expected to pay income tax on the money. For many people, this will still result in tax savings, as most retirees are in a lower tax bracket than they were while they were working, and won’t be charged as much on the money as they would have been in their prime earning years.

Are There Limits to HSA Contributions?

Yes. For tax year 2023, savers with an individual health plan can contribute a maximum of $3,850. Those increase in 2024 to $4,150. Those with a family plan can contribute up to $7,750 for the year and $8,300 in 2024. 

Are HSAs Connected to the Affordable Care Act?

Not exactly. HSAs were first offered in 2003 under President George W. Bush. Although each year changes are made to the contribution limits and deductible requirements, changes in the Affordable Care Act (also known as “Obamacare”) would not necessarily have an impact on these accounts.

How Does an Individual Open an HSA?

If your employer doesn’t offer an HSA plan as part of your benefits package, or if you buy insurance on your own, you can open an HSA with any HSA bank as long as your health plan qualifies. It’s always a good idea to shop around for the best interest rates and lowest fees to make the most of your investment.

Source: credit.com

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Apache is functioning normally

November 3, 2023 by Brett Tams

Little things are worse than going through all the work of planning a trip only to have something change on you at the last minute. Whether it’s a broken bone, a canceled flight or a sudden sickness, a lot is on the line when you’re making vacation plans. That’s why many travel companies offer travel protection.

If you’re wondering what travel protection is, you’ve come to the right place. We’ll also talk about how vacation protection works, what it covers and the difference between travel insurance versus travel protection.

What is trip protection?

Trip or travel protection is a limited type of cancellation coverage that you purchase directly from a travel provider. The coverage is typically self-insured by the company through which you buy the protection.

For example, a cruise line may offer its own trip protection option when booking a cruise to allow you to recoup costs if you need to cancel. Likewise, an online travel agency (OTA) might offer protection for a flight and provide you with a voucher in case of cancellation.

Travel protection vs. travel insurance

The terms travel protection and travel insurance are often used interchangeably, and both aim to protect you financially if you have issues during your travel.

Although it can offer some of the same benefits as travel insurance, trip protection is not insurance, and it doesn’t have the same regulatory oversight that insurance policies do. Therefore, it’s important to know what the protection plan covers before you purchase it so you don’t have any unpleasant surprises down the road.

The coverage that trip protection offers is usually quite specific — often, it’s limited only to cancellation. While it may help you out if your trip needs to be canceled, it typically won’t cover medical expenses or reimburse you for lost baggage. For this reason, many travelers opt for more comprehensive coverage in the form of travel insurance.

What does trip protection cover?

The coverage on any trip protection plan you purchase will vary with your individual policy.

For example, Carnival Cruise Line offers Carnival Vacation Protection. This plan provides both insurance and non-insurance coverage at once. The plan includes trip cancellation coverage, provided by Carnival, along with travel insurance underwritten by Nationwide.

If you need to cancel your trip for a covered reason, you’ll receive a full refund in cash. If you cancel for any other reason, you’ll receive 75% of your trip cost in the form of a Carnival voucher.

But what is travel protection for flights? Is there such a thing? While many airlines offer you the option to purchase insurance when you book your flight, some travel providers still offer trip protection instead.

For example, until recently, the OTA company GoToGate offered its own self-funded cancellation protection that reimbursed airfare expenses for covered events. However, it has now switched to a regulated travel insurance provider.

Another common trip protection offering is travel assistance services. These can include referrals to medical services, help with translation, managing travel documentation and aiding with lost or damaged luggage.

How does travel protection work?

The way your travel protection plan works depends on the specific policy. If you need to use it, you’ll likely coordinate directly with the travel provider for a claim.

For example, Carnival’s plan will give you a cash reimbursement or a voucher for future travel, depending on the reason for your cancellation. Either way, you’ll work directly with Carnival to obtain your compensation — not a third-party insurance agency.

Should you buy travel protection?

It can be tempting to purchase travel protection, especially if your vacation includes many moving parts or is expensive. This is especially true if your plans aren’t solid — cancellation protection can provide reimbursement if you need to alter your bookings.

However, travel insurance is a better option if you’re looking for more comprehensive coverage. This is because there tends to be a much broader scope of protection included with travel insurance.

Here are some of the most common travel insurance inclusions that you won’t find in most trip protection plans:

Common types of travel insurance

Check your credit cards for complimentary coverage

Before buying either trip protection or travel insurance, check the benefits of your credit cards. Many travel credit cards offer complimentary travel insurance as a perk of being a cardholder.

To be eligible for this insurance, you’ll need to charge the trip to your card. Once done, you’ll be covered automatically. The types of insurance and the policy limits you’ll receive will depend on which card you hold.

The Platinum Card® from American Express, for example, provides trip cancellation coverage, trip delay reimbursement, lost luggage insurance, trip interruption insurance, rental car insurance and Premium Global Assist services. Note AmEx will reimburse you for expenses incurred due to a lost bag, it doesn’t cover instances where your luggage is simply delayed.

This contrasts the coverage offered by the Chase Sapphire Reserve®​, another premium travel credit card. Like AmEx, the Chase Sapphire Reserve® provides reimbursement for a bag that’s lost or damaged, but it’ll also cover delayed luggage by providing up to $100 per day for five days to purchase necessities.

Terms apply.

If you’d like to purchase travel protection

Purchasing trip protection may be tempting if you’ve made a lot of travel plans or you’re worried you’ll need to cancel your trip.

However, because travel protection isn’t actually insurance, it’s not subject to the same regulations as standard travel insurance policies. You’ll want to be sure that any trip protection coverage you purchase is from a legitimate company — read the fine print to be sure.

Otherwise, consider purchasing comprehensive travel insurance for your vacation or using your travel credit card’s complimentary travel insurance offerings for coverage.

How to maximize your rewards

You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for:

Source: nerdwallet.com

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Apache is functioning normally

October 27, 2023 by Brett Tams

Inside: Do you want to claim your partner as a dependent on your taxes? This guide will explain the rules of claiming dependents whether girlfriend or boyfriend and help you take the necessary steps to do so.

Navigating the waters of tax credits can be tricky, especially when it involves claiming an unmarried partner as a dependent.

The Internal Revenue Service (IRS) does permit the declaration of a non-relative adult as a dependent, provided certain conditions are met.

And that is where it gets tricky for the tax novice.

That is where we are going to reference the IRS guidance, so you can determine whether or not you qualify for this deduction.

By pointing you in the right direction, you can understand the specific tests and requirements to avoid any tax-related complications.

This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.

Understanding dependency in the context of taxes

The word “dependent” might remind you of a newborn baby or an elderly family member. But in tax terms, the meaning broadens.

In the IRS terms, a “dependent is a person, other than the taxpayer or spouse, who entitles the taxpayer to claim a dependency exemption.” 1

This might be a child, an adult family member, a significant other, or even a close friend. This term “qualifying relative” is crucial in IRS parlance for its implications on your tax dues.

Typically, any person can qualify as a dependent if more than half of their financial support, including living and medical expenses, is taken care of. Also, it’s an opportunity to boost one’s tax return by up to $500 with the Other Dependent Tax Credit.

What qualifies a person as a dependent?

The IRS bases dependents on two categories: “Qualifying children” and “Qualifying relatives.”2 You might think of a qualifying child as your son or daughter. Expanding the scope, a qualifying relative can be a sibling, a parent, or even a significant other.

The essence lies in their financial reliance on you and the nature of your relationship. They ought to:

  1. Be related to you via blood, marriage, or adoption;
  2. You provide over 50% of their financial support including housing, food, medical care, and other expenses
  3. They are U.S. citizen.
  4. The income of the possible dependent.

These nuanced rules might sound overwhelming, but IRS guidance and tax experts like TurboTax can help lighten the load.

Now, let’s address this sticking point: Can you actually claim your partner as a dependent? The following section unravels the mystique.

TurboTax

TurboTax® is the #1 best-selling tax preparation software to file taxes online. Easily file federal and state income tax returns with 100% accuracy.

This is how I have filed my personal taxes for many years.

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Can I Claim My Partner as a Dependent?

You can claim your partner as a dependent on your tax return, provided they meet certain criteria explained by the IRS, including passing the non-qualifying child test, the citizen or resident test, the joint return test, the income test, and the dependent taxpayer test.

I know this is where it gets difficult to follow for the average person.

So, we are here, to break this terminology down into layman’s terms, as such you can then make the best decision for your tax situation.

If you are still confused, then consult with an online tax software like TurboTax or a tax professional for guidance on your personal taxes.

Basic requirements for claiming your partner as a dependent

This essentially means that your partner should be financially dependent on you, where you bear more than half of their living expenses.

In essence, claiming your partner as a dependent revolves around these fundamentals: 2

  1. Residency: Your partner must have been living with you for the full tax year.
  2. Income limit: Your partner’s gross income should not exceed $4,700 for the year 2023.
  3. Support Requirement: You are the main pillar for your partner’s financial needs by covering over half of their total expenses.
  4. Anyone Else Claiming Them: None else should claim your partner as their dependent.
  5. Unmarried. Your partner must be unmarried legally.

All fulfillment of these criteria moves you a step closer to enjoying some tax relief.

Confirm with an accountant or tax expert as exceptions can exist, such as temporary absences due to illness, education, business, and others.

Common scenarios where you can claim your partner as a dependent

Claiming a partner as a dependent isn’t as fancy as it sounds, but it’s plausible. Here are common scenarios enabling you to do so:

  1. Co-habiting Before Marriage: You and your partner share a home, and you pay more than half of your partner’s living costs. However, your living situation cannot violate local laws, as in some states, “cohabitation” by unmarried people is against the law.
  2. Unemployed Partner: Your partner’s tie with working life is severed (e.g., due to health issues or being laid off), and you bear most of the living expenses.
  3. Supporting Student Partner: Your partner pursues their education, and you shoulder the majority of their expenses.

Take this interactive IRS quiz to determine whom I may claim as a dependent.

How much will I get if I claim my girlfriend as a dependent?

Now the pivotal question: what’s the advantage in dollars and cents?

In essence, claiming your partner as a dependent will slash your taxable income by $500 with the Other Dependent Tax Credit. 3

If you already qualify for Head of Household status with another dependent, then it is possible your deduction may be more. 4

Remember, there’s no one-size-fits-all answer. When tax complexities strike, consult an expert!

Is it better to claim my girlfriend as a dependent?

Honestly, like most tax questions, the answer is: it depends.

If you’re covering your partner’s majority expenses and they’re fulfilling all IRS criteria, then claiming them can bring solid tax savings.

Yet, bear in mind:

  1. If your partner earns substantial income (greater than $4,700), they might lose personal benefits by becoming your dependent.
  2. By claiming your partner, their Social Security or medical benefits may take a hit.

So, assess your partner’s income, benefit entitlements, and your tax situation. Then, tread wisely.

e-file

E-file makes tax season a breeze with its user-friendly interface, ensuring a seamless and stress-free experience for filers.

Simplify your tax journey by choosing E-file.

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Important Rules to Keep in Mind When Claiming Your Partner

When filing taxes, it’s crucial to understand that both parties are responsible for the accuracy of each other’s tax reporting and liability.

It’s worth noting that tax advantages and disadvantages exist in the scenario of being married and filing jointly, such as potential reductions in your tax bracket and sharing of business losses. So, it may be something to consider.

Can I claim my girlfriend as a dependent if she has no income?

In a nutshell, yes! If your girlfriend had no income in the tax year, you might claim her as a dependent. Given you provide over half of her total support and she lived with you all year, you’re golden.

For 2023, your partner’s gross income should not exceed $4,700.

However, keep in mind that in cases where public assistance or Social Security benefits are her primary financial sources, claiming her could negatively impact those benefits.

Learn the answer to do you have to file taxes if you have no income.

Remember: tax waters are often murky. When in doubt, lean on a tax professional’s shoulder!

Support factors

Answering the support question plays a hefty role in determining who qualifies as a dependent.

You shouldn’t just share the living cost; you should pay more than half of it. Remember, it includes an array of expenses, like food, clothing, education, or medical expenses.

The implication of your partner being claimed by someone else

Here’s a key rule: if someone else is claiming your partner as a dependent, you’re out of the game. The IRS rules say a person can be claimed as a dependent by only one taxpayer in a single tax year.

  • This could happen if your partner perhaps lives part of the year with someone else like a parent.
  • Another possibility is if your partner is legally married still, then they would have to file a married, filing separately return.

So, if your partner qualifies as someone else’s dependent, even if they don’t claim them, you can’t claim your partner.

Frequent Situations Where You Can’t Claim Your Partner as a Dependent

Considerations for Non-resident or Non-citizen partners

If your partner isn’t a U.S. citizen, resident, or national, the dependent claiming game changes. Notably, nonresident aliens cannot be claimed as dependents.

However, if your partner is a resident of Canada or Mexico or a U.S. national, you may claim them. But they should be living with you full-time. 2

This rule extends to partners awaiting changes in their residency or citizenship status. In such cases, you must wait until their status changes before claiming them.

When your partner earns more than the stipulated income threshold

When your partner’s income level sails past the IRS limit ($4,700 in 2023), claiming them as a dependent slips off the table. 2

Any part-time job, seasonal work, or income source counts, even those seemingly negligible. As soon as they cross this threshold, regardless of how heavily they rely on you or where they reside, they can’t qualify as your dependent.

Make sure to stay updated on IRS rules. They adjust the income limit for inflation annually, which changes this income ceiling. Keep an eye peeled for those IRS updates!

TurboTax

TurboTax® is the #1 best-selling tax preparation software to file taxes online. Easily file federal and state income tax returns with 100% accuracy.

This is how I have filed my personal taxes for many years.

Get Started

How to Officially Claim Your Partner on Your Taxes

To officially claim your partner as a dependent on your tax return, you will do this when you file your taxes.

Thankfully, this is made easier with online software companies like TurboTax or H&R Block.

The same is true when you are trying to figure out how to file taxes without a W2.

Necessary steps to claim your partner on your taxes

You will first identify them as “other qualifying dependent” or “other qualifying relative”.

  1. Gather the facts first: Confirm your partner’s income, residency, and who has been supporting them for more than half the year.
  2. Document expenses: Keep track of all relevant bills and receipts to demonstrate your majority support.
  3. Use tax software or a professional: Follow prompts about dependents in tax software like TurboTax. They could guide you through the process and specifics.
  4. Complete relevant Tax Forms: Prepare the necessary forms such as Form 1040 and Schedule H and have proof of residency, financial support, gross income information, and certification of your domestic partnership to support your claim.
  5. File your return: Don’t forget to include your partner’s details and tick the correct boxes.

Remember, the devil is in the details. So carefully evaluate your situation to avoid missteps, and consult with a tax professional when in doubt.

Pitfalls to avoid while filing tax returns

While preparing to file your tax returns, beware of these common pitfalls:

  1. Incorrect income calculation: Ensure you tally your partner’s gross income accurately. Reminder: it should not eclipse $4,700 in 2023.
  2. Overlooked Living Qualification: Your partner must have resided with you the entire year. Temporary absences (illness, education) can be exceptions.
  3. Ignoring Other Claimants: If someone else is poised to claim your partner as a dependent – even if they don’t – you can’t claim them.
  4. Emergency Funds Consideration: If your partner taps into their savings for a large expense, this could speak against you providing most of their support.
  5. Forgotten Documents: Maintain a record of bills, receipts, and other expense documents.

The IRS overlooks no mistakes, so take care and stay informed. When in doubt, professional tax help is a button away.

Frequently Asked Questions (FAQ)

Intriguing question! Here’s the short answer: Your partner’s marital status may indeed affect your ability to claim them as a dependent.

For instance, if your partner is married and files a joint tax return with their spouse, you can’t claim them as a dependent.

Remember, tax rules are lock-key specific, and bending them can lead to penalties. Always seek advice from a tax professional.

While you might be able to claim your partner as a dependent, laying claim on their children as dependents is unlikely. IRS rules are clear: you can claim a dependent only if they’re your child or relative.

Since your partner’s children don’t fulfill this requirement, you can’t claim them unless they can be considered your qualifying relative AND you provide more than half of their support.

As always, it’s best to run this by a tax professional for clarity on your unique situation. All we tax-seers can do is guide; the decision falls on your shoulders.

Here’s the hard truth: if your partner didn’t live with you all year, you couldn’t claim them as a dependent. IRS rules are stringent about this: your partner must have the same home as you for the entire year. That is 365 days, no less.

However, IRS grants a green light to temporary separations due to special circumstances like illness, education, military service, or even a holiday. The key lies in their intent to return and, of course, their follow-through.

Stay wise and stay informed, and consult with a tax analyst to seal your decision with assurance.

Get Online Help

Navigating tax rules and regulations doesn’t need to be overwhelming. With the advent of online help, understanding whether you can claim your partner as a dependent becomes considerably more manageable. Here are a few benefits of seeking online help:

  • Convenience: With online help, you can access the information you need anywhere, anytime. No need to schedule appointments or deal with traffic to get to a tax office. You can get the updates and instructions right from the comfort of your own home.
  • Accessibility: Some great examples of accessible platforms are TurboTax, e-File, and H&R Block which provide 24/7 support and resources. They offer a wealth of information and experts at your fingertips.
  • Expertise: Apart from the convenience, these websites employ tax experts who deliver professional analysis and guidance tailored to your specific needs. Specifically, you can use TurboTax Live Full Service for someone to do your taxes from start to finish. Or you can ask questions with TurboTax Live Assisted.

File your own taxes with confidence using TurboTax. This can greatly simplify the process and minimize potential missteps.

Now, Can I Claim my Unmarried Partner as a Dependent is Up to You

As they say, “Ignorance of the law is no excuse”. The same holds true for tax rules.

Falsely claiming a dependent can lead to severe penalties, not just a dinging of your wallet. You’d be sailing the choppy waters of tax evasion, which can bring on hefty fines or even dark days behind bars.

In blatant cases, the IRS could impose a Civil Fraud Penalty. That means a penalty amounting to 75% of the unpaid tax amount resulting from fraud. 5

In short, play by the rules! Accurate and clear tax filing may seem tedious, yet it will steer clear of any legal trouble. Remember, it’s always safer to ask if you are unsure!

Now, are you wondering why do I owe taxes this year?

Source

  1. Internal Revenue Service. “Tax Tutorial.” https://apps.irs.gov/app/understandingTaxes/hows/tax_tutorials/mod04/tt_mod04_glossary.jsp?backPage=tt_mod04_01.jsp#dependent. Accessed October 23, 2023.
  2. Internal Revenue Service. “About Publication 501, Dependents, Standard Deduction, and Filing Information.” https://www.irs.gov/forms-pubs/about-publication-501. Accessed October 23, 2023.
  3. Internal Revenue Service. “About Publication 501, Dependents, Standard DeductionUnderstanding the Credit for Other Dependents.” https://www.irs.gov/newsroom/understanding-the-credit-for-other-dependents. Accessed October 23, 2023.
  4. Intuit TurboTax. “Guide to Filing Taxes as Head of Household.” https://turbotax.intuit.com/tax-tips/family/guide-to-filing-taxes-as-head-of-household/L4Nx6DYu9. Accessed October 23, 2023.
  5.  Internal Revenue Service. “25.1.6 Civil Fraud.” https://www.irs.gov/irm/part25/irm_25-001-006. Accessed October 23, 2023.

Know someone else that needs this, too? Then, please share!!

Did the post resonate with you?

More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!

Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.

Source: moneybliss.org

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Apache is functioning normally

October 17, 2023 by Brett Tams
Apache is functioning normally

Like human health insurance, pet insurance helps cover unexpected medical expenses for our furry friends. One crucial component of that coverage is your pet insurance deductible. Understanding how deductibles work can help you choose the right plan for you and your pet.

What is a pet insurance deductible?

A pet insurance deductible is the amount you pay out of pocket for your pet’s veterinary care before the insurance company starts covering costs. It’s a set amount you choose when you purchase your policy.

For example, if your deductible is $250 and your pet’s vet bill is $1,000, you’ll pay the first $250, and the insurance company will help cover the remaining $750, depending on your policy’s terms. If you have an annual deductible, you’d have to pay this amount only once per year.

How do pet insurance deductibles work?

A deductible is a way for insurance companies to share the cost of vet bills with pet owners. Once you’ve met your deductible, the pet insurance company will pay any remaining portion of your vet bills that qualify for coverage.

In most cases, you’ll need to pay the full vet bill yourself and then file a claim for reimbursement with your pet insurance company. If there are any expenses insurance doesn’t cover, like taxes or waste disposal, the company will subtract them along with your deductible before reimbursing its share of the bill.

Raising or lowering your deductible will affect how much you pay for pet insurance. Selecting a higher deductible usually lowers your insurance premium but means you’ll pay more out of pocket when your pet needs care.

🤓Nerdy Tip

The amount you pay for routine care like vaccines or wellness visits usually doesn’t count toward your deductible. Even if you have separate coverage for preventive care, the deductible typically applies only to covered illnesses and accidents.

Types of pet insurance deductibles

There are two main kinds of deductibles: annual and per condition.

Annual pet insurance deductible

An annual pet insurance deductible is a set amount you pay each year before insurance starts covering your vet bills. You pay this deductible only once per policy term. It doesn’t reset until your policy renews, regardless of how many claims you make. This is the most common type of pet insurance deductible.

Say you have a $300 annual deductible. If your pet has a minor accident and the vet bill is $150, you pay the entire amount since it’s less than the deductible. (Note that you’d still want to file a claim so your pet insurance company can apply the amount you’ve paid toward your deductible.)

Later in the same year, your pet gets sick and racks up a $500 bill. You’d pay the remaining $150 of your deductible, and the insurance would cover a portion of the remaining $350, depending on your policy’s terms.

If your pet has more health issues within the same year, the insurance would continue to help cover the costs since you’ve already met the deductible. But once your policy renews, your deductible will reset and you’ll need to pay it again before receiving more insurance coverage.

Per-condition deductible

With a per-condition deductible, you pay a set amount out of pocket for each illness or condition your pet has. This type of deductible may also be called a per-incident deductible.

For example, if your pet gets an ear infection and later breaks a leg, you would pay your deductible twice: once for the ear infection and once for the broken leg.

After you pay the deductible for a specific condition, insurance helps cover additional costs for that condition over the life of your pet. This is beneficial if your pet develops a chronic problem that needs ongoing treatment each year. Once you meet the deductible for that condition, you don’t pay it again, whereas you’d pay it each year with an annual deductible.

The downside is that if your pet needs care for an unrelated problem later in the same year, you’re stuck paying the deductible all over again.

Did you know…

Very few pet insurers offer per-incident deductibles. Most have annual deductibles, so pet owners have to meet the limit only once per year.

Deductibles vs. copays and reimbursement rates

Deductibles, copays and reimbursement rates are different parts of how you and your insurance company share costs. Once you’ve paid your deductible, the insurance company uses the copay and reimbursement rate to calculate how much of the remaining vet bill it will cover.

A copayment, or copay, is your share of the vet visit cost after you’ve met your deductible. The reimbursement rate is the percentage of the bill the insurer will pay. For example, if your policy has a 70% reimbursement rate, that means your copay is 30%.

To see how these policy limits work together, imagine you have a $200 deductible, a 20% copay and an 80% reimbursement rate. If your pet’s vet bill is $1,000, you’d pay the $200 deductible first. Then, of the remaining $800, the insurance would pay 80% ($640), and you’d pay the 20% copay ($160). So, for a $1,000 vet bill, you’d pay $360, and the insurance would cover $640.

In general, a policy with a higher reimbursement rate will be more expensive, but the insurance company will cover more of your vet bills.

🤓Nerdy Tip

In addition to deductibles, copays and reimbursement rates, most pet plans have an annual coverage limit, which is the most your insurer will reimburse for vet care in a 12-month period. This limit is often customizable, and you may have the option to choose unlimited coverage. Your annual coverage limit is another factor that can influence the cost of pet insurance.

How to choose a pet insurance deductible

The goal when choosing a deductible is to strike a balance between good coverage and manageable out-of-pocket expenses.

First, determine how much you can comfortably pay for vet care. Imagine if your pet needed to visit an emergency vet tomorrow. How much of a deductible could you afford to pay? You shouldn’t struggle to cover your deductible in an emergency, so choose an amount that fits your budget.

Remember, the deductible is just one part of your policy. Consider it alongside copays, reimbursement rates and annual coverage limits to get the full picture. The more costs you take on yourself, the less you’ll pay for insurance, and vice versa.

If you’ve had your pet for a while, looking at what you’ve spent in vet care over the past year may help you predict future costs.

Compare deductible options from popular pet insurance companies

Pet insurance company

Deductible options

$100 to $1,000 annually.

$100 to $500 annually.

$100 to $1,000 annually.

$250 to $2,500 annually.

$100 to $1,500 annually.

$100 to $500 annually.

$100 to $1,000 annually.

$100 to $500 annually.

$250 to $1,000 annually.

$0 to $2,500 annually.

$250 annually. (Other options may be available.)

$50 to $1,000 annually.

$100 to $1,000 annually.

$100 to $1,000 annually.

$0 to $1,000 lifetime per-condition deductible in most states; some states have no deductible.

Source: nerdwallet.com

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Apache is functioning normally

October 13, 2023 by Brett Tams
Apache is functioning normally

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.

Unsecured debts are loans or credit lines without collateral. This includes credit card debt, medical bills, personal loans and student loans. Failure to pay unsecured debt can result in collection efforts and damage to credit.

Are you overwhelmed by all the different loan options? Are you searching for a sustainable debt solution? Depending on your financial situation, unsecured debt may be the right option for you.

You can make informed financial judgments by understanding unsecured debt and its implications. This article will delve into the world of unsecured debt, explain its definition and give examples, explore the differences between secured and unsecured debt, shed light on the impact of bankruptcy and more.

Let’s explore unsecured debt and how it can impact your finances.

Key takeaways:

  • Unsecured debt refers to loans or credit lines without collateral.
  • Credit card debt, medical bills and personal and student loans are common examples of unsecured debt.
  • Failing to pay unsecured debts can lead to collection efforts and hurt your credit.
  • Prioritizing debt repayment is crucial, and understanding the differences between secured and unsecured debts can help you make strategic decisions.

What is an unsecured debt?

Unsecured debt is a financial obligation that does not require collateral. Unlike secured debt, backed by specific assets, unsecured debt relies solely on the borrower’s creditworthiness and promise to repay. Examples of unsecured debt include credit card debt, medical bills, personal loans and student loans.

  • Credit card debt: When you make purchases using a credit card, you accumulate unsecured credit card debt. The credit card company extends you a line of credit without requiring collateral.
  • Medical bills: Unforeseen medical expenses can result in significant unsecured debt. These bills typically arise from medical procedures, treatments or hospital stays.
  • Personal loans: You can obtain these from banks, credit unions or online lenders. They have various purposes, such as debt consolidation, home improvements and unexpected expenses.
  • Student loans: Student loans are used to finance education expenses. The government or private lenders offer them, and they can have long repayment terms.

What happens if you don’t pay an unsecured debt?

If you fail to pay your unsecured debt, there may be significant consequences. While specific actions may vary depending on the creditor, here are some potential outcomes to beware of:

  • Collection efforts: Creditors may employ collection agencies or pursue legal action to recover the debt. These efforts can involve phone calls, letters or even lawsuits.
  • Negative impact on credit: Unpaid unsecured debt can harm your credit. Late payments, defaults and charge-offs can contribute to a lower credit score, making obtaining future credit or loans more challenging.
  • Legal proceedings: In extreme cases, creditors can file lawsuits to obtain a judgment against you. This can result in wage garnishment or liens on your property.

Secured debt vs. unsecured debt

Understanding the differences between secured and unsecured debt is crucial for effective financial management. Simply put, secured debt is backed by specific collateral, such as a car or house, while unsecured debt lacks collateral. In the event of default, secured creditors can seize the specified assets, while unsecured creditors do not have this option.

Additionally, secured debtors usually need fewer eligibility requirements, their interest rates may be lower and they can qualify for higher loan limits since there is less risk from the lender’s point of view. But there can be a few disadvantages, like dealing with foreclosure, repossession or losing assets if the borrower cannot pay.

For unsecured debtors, the loan limit is usually lower, and interest rates tend to be higher. Still, there are a few advantages of unsecured loans, like there is no risk of losing assets, your credit can improve over time and you can set up the loan to require smaller payments for a more extended period.

What happens to secured and unsecured debts during bankruptcy?

Bankruptcy affects secured and unsecured debts differently. According to Chapter 7 of the United States Bankruptcy Code, unsecured debts are typically discharged, meaning you no longer have to repay them. However, secured debts may require surrendering the collateral or restructuring the debt through a reaffirmation agreement.

In Chapter 13 bankruptcy, often called “reorganization bankruptcy,” you create a repayment plan to gradually pay off your debts over a specific period, usually three to five years. Both secured and unsecured debts are included in this plan, with priority given to secured debts.

Remember that bankruptcy laws and procedures can vary by country, and the chapter designations mentioned above specifically apply to bankruptcy filings in the United States. It’s always advisable to consult with a legal professional or consultant knowledgeable about the bankruptcy laws in your specific jurisdiction.

Is secured or unsecured debt better?

Whether secured or unsecured debt is better for you depends on different factors, including your financial situation and credit, what you can or cannot risk and your goals. It is generally advisable to prioritize secured debts due to the potential collateral loss. Falling behind on mortgage or car loan payments can lead to foreclosure or repossession. However, neglecting unsecured debts can still have significant consequences, including damage to credit scores and collection efforts.

It is also important to see it from the lender’s perspective—secured debt tends to be better for them since it is less risky. Lenders can always claim the collateral so they can regain the lost funds. This makes secured debt riskier for borrowers since they can lose their assets if payments are impossible.

Unsecured debt FAQ

As you continue to explore the world of unsecured debt, we want to address some frequently asked questions.

What is an example of unsecured debt?

An example of an unsecured debt is credit card debt. When you make purchases using a credit card, you incur an unsecured debt with the card issuer without requiring collateral.

What are two types of unsecured debt?

Two other types of unsecured debt are personal loans and medical bills. Personal loans are funds you borrow from a lender without collateral, while medical bills accumulate when you receive healthcare services and don’t require collateral.

What is an unsecured debt called?

Unsecured debt is commonly referred to as personal debt. It is a financial obligation that is not tied to specific assets.

What happens if an unsecured debt is not paid?

If you don’t pay an unsecured debt, the creditor may employ collection efforts or pursue legal action to recover the debt, and your credit will likely take a hit.

Can unsecured debts harm your credit?

Defaults, collection actions and late or unpaid payments can harm unsecured debtors’ credit scores. Prioritizing timely debt repayment is crucial to maintaining healthy credit. On the other hand, your credit rating can improve if you pay on time regularly since that shows your commitment.

In conclusion, understanding unsecured debt is essential for making informed financial decisions. By grasping the concept, differentiating it from secured debt and recognizing its implications, you can strategize debt repayment and protect your credit.

Unsecured debts and credit repair

If you’re concerned about your credit, see if the team at Lexington Law Firm can help. Empower yourself with the knowledge to make informed decisions and work on your credit with our services. Reach out to Lexington Law today to get a free credit assessment and learn more about how we could help.

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.

Reviewed By

Vince R. Mayr

Supervising Attorney of Bankruptcies

Vince has considerable expertise in the field of bankruptcy law.

He has represented clients in more than 3,000 bankruptcy matters under chapters 7, 11, 12, and 13 of the U.S. Bankruptcy Code. Vince earned his Bachelor of Science Degree in Government from the University of Maryland. His Masters of Public Administration degree was earned from Golden Gate University School of Public Administration. His Juris Doctor was earned at Golden Gate University School of Law, San Francisco, California. Vince is licensed to practice law in Arizona, Nevada, and Colorado. He is located in the Phoenix office.

Source: lexingtonlaw.com

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