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Hanover Mortgages

The Refined Mortgage Lending Company & Home Loan Lenders

Pay Off Debt

Apache is functioning normally

September 24, 2023 by Brett Tams
Apache is functioning normally

According to the Federal Reserve, consumer debt in the United States in the second quarter of 2021 totaled more than $4.2 billion. So if you’re struggling with debt, you’re definitely not alone. If you’re looking for a way to dig yourself out of debt, a debt consolidation loan could help.

But what is a debt consolidation loan? Find out if it’s the right option for you by learning more about it, including pros and cons. You’ll also find information about other alternatives.

In This Piece

What Is Debt Consolidation?

Debt consolidation occurs when you bring multiple existing debts under a single umbrella. This usually means you use some type of credit or other financial tool to convert multiple debts into a single debt. Debt consolidation loans are one of the most popular ways to consolidate debt.

What Is a Debt Consolidation Loan?

A debt consolidation loan consolidates, or combines, your various debts under a single account.

Pros of Debt Consolidation Loans Cons of Debt Consolidation Loans
Potentially lower interest rates, especially if you now have the credit score to consolidate high-interest loans under better terms

May require good credit to obtain or get a good rate

A single payment, making it easier to manage your finances Might leave paid-off credit card and other revolving accounts open, creating an opportunity to run up even more debt than you started with
Your debt possibly spreading out over a greater amount of time, making each monthly payment more affordable Could potentially temporarily impact your credit score if it involves closing a lot of other accounts

What’s the Difference Between Debt Consolidation and a Personal Loan?

A personal loan is an unsecured loan that you can use for just about anything. In some cases, you could use the funds from a personal loan to consolidate some debts, making it a debt consolidation loan.

However, a loan specifically for the purpose of debt consolidation may be handled a bit differently. For example, in some cases, the lender may not pay the money directly to you. They might pay off your debts directly instead.

Alternatives to Debt Consolidation Loans

Your options depend on your credit, existing assets, and how much debt you want to consolidate. Some alternatives to debt consolidation loans are highlighted below.

1. Refinance Your Mortgage If You Have Equity

If you have equity in your home, you can refinance it or take out a home equity line of credit, or HELOC. These options give you cash you can use to pay down debt.

Pros of Refinancing a Mortgage to Consolidate Debt Cons of Refinancing a Mortgage to Consolidate Debt

Home equity loans and HELOCs tend to have much lower interest rates than personal loans and credit cards

You use your home as collateral for the debt, which means if you don’t pay it, the lender has a claim on your house

You may be able to deduct interest on home loans to reduce tax burdens Variable-rate loans could come with increased interest in the future
The total number of payments you need to manage each month is substantially reduced Credit cards you pay off could be run up again, leaving you with more debt than you started with
You’re less likely to forget to pay a debt related to your home  

Tip: Don’t pocket the money that refinancing frees up every month. Instead, use it to create an emergency fund. Once that’s set up, use the money as prepayment against your home loan or to boost retirement savings.

2. Use a Balance Transfer Card

Apply for a balance transfer card if your credit is in good shape, or call a card provider to ask if they’d be interested in offering you a balance transfer option on an existing card. This lets you transfer higher-interest credit card debt to a card with lower interest rates. Some balance transfer cards offer 0% APR for six to eighteen months on balance transfers for new account holders.

Pros of Balance Transfer Cards for Debt Consolidation Cons of Balance Transfer Cards for Debt Consolidation

Can substantially reduce the cost of credit card debt

Balance transfers usually come with fees of 3% to 5%—still less than your typical interest costs might be on high-interest credit card debt, but something to keep in mind

Makes it easier to pay off credit card debt It can be tempting to use your old credit cards again, running up more debt and ending up with double the debt you started with
Might let you consolidate multiple cards into a single account for easier management If you don’t pay off the debt in the introductory period, you could end up with expensive interest fees

Tip: Keep your old credit card accounts open for extra benefits to your credit score. It helps your credit utilization rates and credit age. But avoid using those accounts unless you have the money to pay them immediately.

3. Borrow from Retirement Savings

If you have retirement savings, you might be able to borrow from it to pay off debt. Remember, though, that you’ll need that money later. Only consider this option if you can pay back the money quickly so you don’t lose time building your retirement funds.

Pros of Borrowing From Retirement Savings for Debt Consolidation Cons of Borrowing From Retirement Savings for Debt Consolidation

Doesn’t require a credit check, so you don’t need a healthy credit file

You might owe taxes and penalties on the money if you withdraw early from your retirement

Interest rates are low, and you’re actually paying it back to your own account You can borrow against some employer-sponsored retirement plans, but debt consolidation might not be an allowed reason
  You could reduce how much money you have in retirement, especially if you can’t pay back the money

Tip: Consider this option as a last resort loan or if you have some money coming in soon, such as from a tax return. If you can pay the money back within a month or two, you don’t have as much to lose.

4. Ask a Friend or Relative for a Loan

If you know someone who has some extra money, it might be worth asking them for a loan at a low interest rate. You can use the money to pay off your debts and make one monthly payment to the person in question.

Pros of Asking Someone for a Loan for Debt Consolidation Cons of Asking Someone for a Loan for Debt Consolidation

No credit check or requirements

If you blow it, you might ruin an important relationship

Your family member or friend can earn some interest The IRS can be a real pain when it comes to family loans, so consult a tax professional
  Loan payments won’t be reported to your credit reports or potentially help your score

Tip: Treat the transaction as you would with a bank or other lender. Put everything in writing, agree to fees or penalties if you miss payments, and strive to make timely payments.

5. Try Debt Counseling

Debt or credit counseling with a reputable organization can help you create a viable personal budget and potentially negotiate with creditors for better terms. Debt counselors may help you understand how to better manage your income and expenses and leverage debt payoff strategies to get out from under your debt.

Pros of Debt Counseling Cons of Debt Counseling

Can provide you with some tools to better manage debt

May not reduce the overall cost of your debt

May help you see solutions that you didn’t see before May rely on you making personal sacrifices in your budget
Helps you pay off debt with your own resources, which can be satisfying If you don’t work with a reputable organization, you might be scammed out of large fees with promises that the company can’t keep

Tip: Don’t work with debt counseling companies that offer 100% guarantees to reduce or wipe out your debt or that charge excessive fees. These are red flags that could point to scams.

6. Enter a Creditor Assistance Program

Many creditors have assistance programs to help account holders who are experiencing financial distress due to sudden loss of income or an emergency. These programs range from mortgage modifications, which might reduce your interest rate or total monthly payment, to skipping a single payment and having it added onto the end of the loan penalty-free.

Pros of Creditor Assistance Program Cons of Creditor Assistance Programs

May not require good credit, especially if you have a solid payment history with the creditor

Aren’t always available

Could offer a fast, convenient solution to short-term cashflow issues You can typically only take advantage of these tools once or once every so often

Tip: Anytime you’re experiencing financial distress or might be late with a payment, don’t ignore the issue. Call your creditor to find out what they might be able to do to help.

7. Bankruptcy

Bankruptcy is a last-resort option that can help you discharge or restructure your debts and make a new start in a few years.

Pros of Bankruptcy Cons of Bankruptcy

If successful, you can have all or many of your debts discharged

Bankruptcy can be a long and stressful process

You may be able to keep certain assets, such as your home or car It can dramatically impact your credit in the short term
Filing for bankruptcy establishes an automatic stay, so creditors can’t continue to attempt to collect or foreclose unless the bankruptcy is dismissed Depending on what type of bankruptcy you file, you may not be able to get credit for a while

Tip: Talk to a bankruptcy attorney about this option before you take action. Most provide free consultations to help you understand if bankruptcy is a good choice for you.

The Bottom Line on Debt Consolidation

If you’re struggling with debt, you’re not alone. And you do have options. Look into a debt consolidation loan or one of the options above to start working on financial stability for the future.

Source: credit.com

Posted in: Home Buying Tagged: 0% APR, 2, 2021, About, action, affordable, age, All, Alternatives, apr, ask, assets, automatic, balance, balance transfer, Balance Transfers, Bank, bankruptcy, before, Benefits, Borrow, borrowing, Budget, building, car, cash, choice, closing, companies, company, cons, consumer debt, cost, costs, Credit, credit card, Credit Card Debt, credit cards, credit check, Credit Reports, credit score, credit utilization, creditors, Debt, debt consolidation, debt payoff, Debts, double, Emergency, Emergency Fund, employer, equity, existing, expenses, expensive, Extra Money, Family, Federal Reserve, Fees, finances, financial, financial stability, Financial Wize, FinancialWize, first, Free, fund, funds, future, good, good credit, healthy, HELOC, HELOCs, history, home, home equity, home equity line of credit, Home equity loans, home loan, home loans, house, how much debt, How To, impact, in, Income, interest, interest rate, interest rates, irs, lender, leverage, line of credit, loan, Loans, low, LOWER, Make, making, manage, manage debt, management, Managing Debt, member, money, More, Mortgage, most popular, negotiate, new, offer, opportunity, or, organization, Other, Pay Off Debt, payment history, payments, Personal, personal budget, personal loan, Personal Loans, plans, Popular, program, programs, pros, Pros and Cons, rate, Rates, read, Refinance, refinance your mortgage, refinancing, refinancing a mortgage, retirement, retirement funds, retirement plans, retirement savings, return, right, running, savings, Scammed, scams, score, second, short, short term, single, sponsored, states, Strategies, stressful, tax, Tax Return, taxes, time, tools, Transaction, under, united, united states, variable, work, working

Apache is functioning normally

September 11, 2023 by Brett Tams

Warehouse, HELOC, AMC, Rate Lock; Automation, POS Products; Insurance and Disaster News

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Warehouse, HELOC, AMC, Rate Lock; Automation, POS Products; Insurance and Disaster News

By:
Rob Chrisman

4 Hours, 46 Min ago

One of the topics here in Tennessee is how lenders can help real estate agents or clients. Wanna maybe help your client or favorite real estate agent grappling with inventory? HUD has a “Home store” of houses. Worth a shot at 3.5 percent down properties! For something to really start your synapses firing on a Monday morning ahead of a five day work week, the CEO of the California MBA, Susan Milazzo, sent, “The latest effort to pass legislation to address California’s insurance crisis has died. Assembly Democrats felt that the bill favored insurance companies over consumers, and they wanted to add a provision that would prohibit insurance companies from not renewing any business through the end of next year. With no real guarantee of when the commissioner would do the emergency regulations or the contents of those regulations, it amounted to a poison pill.” (More insurance news below in the “disaster” section.) (Today’s podcast can be found here and this week’s is sponsored by SimpleNexus, an nCino Company, and award-winning developer of mortgage technology for modern lenders. Hear an interview with J.D. Power’s Craig Martin on the U.S. Mortgage Servicer Satisfaction Study.

Lender and Broker Software and Services

Credit unions, it’s time to make your mark at the 2023 ACUMA Annual Conference from Oct. 1 – 4. Secondary marketing experts from Optimal Blue will be on-site and ready to discuss ways you can up your game and do even more to maximize success. Whether you’re working to get your members the best possible rates, trying to more effectively mitigate pipeline risk, or aiming to better understand the value of your MSR assets – we’re ready to help you reach your goals. Stop by our booth to learn more.

Your online loan application should win you business, not scare prospective borrowers away. Win borrowers here.

Attention TMC Members! Join Capacity CEO David Karandish and Mike Metz of VIP Mortgage for an exciting 3:15 p.m. session on Monday, September 11th. Learn how VIP Mortgage is springboarding their AI pursuits. Book one-on-one time with our team at TMC Fall, or join the session to learn about our personalized, in-depth AI Assessments. Whether you already use automation tools or you’re just starting to explore, Capacity’s AI Assessments offers a unique way to scale your tech initiatives. Over three meetings, our team will learn about your business needs, identify automation and AI tools opportunities, and provide in-depth resources to guide you through your AI roadmap. Want to jumpstart your AI journey? Meet Capacity at TMC Fall.

“OptiFunder Bringing the Primary and Secondary Markets Together. Nearly 15% of all warehoused loans now go through OptiFunder for warehouse selection and automated funding, shipping, and purchase advice. Since 2019, our mission has been to bring mortgage bankers and warehouse lenders together to optimize selection and streamline the historically manual process of funding mortgage loans. Nearing the top of Inc. 5000’s list of fastest-growing private companies, it’s safe to say we’ve been successful in that mission. As we continue to grow, we’re working on additional opportunities to bring the primary origination and secondary markets together. We’ve spent the last few years making the lives of originators easier; it’s time to put some focus on warehouses. Join the OptiFunder community on Linkedin to keep up with what we’re doing or visit our new website to learn more about OptiFunder.”

Does it feel like your current point-of-sale vendor has lost focus on mortgage? As a mortgage-specialized partner, Maxwell is committed to giving lenders a competitive advantage in a tough mortgage market. Compared to a top competitor, Maxwell Point of Sale averages a 5.9% higher pull-through rate from rate-lock to close. For the average lender using Maxwell POS, this equates to $42MM in additional loan volume. Maxwell also focuses on providing an excellent borrower experience, with a 17% faster turn-time from application submission to conditional approval. Schedule a call with the team to learn how Maxwell Point of Sale can start working for you and your borrowers quickly.

Are you tired of having to adjust head count every time the market changes? The Mortgage Automation Suite, brought to you by Richey May and Zoral, can help. With scalable automated solutions that improve accuracy while reducing repurchases and costs, your business will be well-equipped for any market cycle. Leveraging this powerful automation will allow your team to close loans more easily, helping to retain your best staff. Plus, it adds the extra layer of stability needed during difficult times; something we could all use a bit more of these days! Find out how the Mortgage Automation Suite from Richey May & Zoral can help you today. Email [email protected].

In this market, hustle is everything. You can’t afford to waste a single deal – or a single minute. That’s why ReadyPrice has launched Shop. Lock. Deliver.® It’s an innovative new platform designed to help independent mortgage brokers like you save time and money. Now you can shop competitive loan offerings from multiple lenders, get rate lock guarantees in real time, receive underwriting findings, and deliver the borrower’s complete loan file to lenders – and all on a single platform, at no cost to brokers. It’s already helping brokers around the country thrive and compete in even the toughest market environments. Multiple lenders. One platform. Zero b.s. Check out ReadyPrice today.

Attention Lenders and Real Estate Appraisers: In a September 6th article found in Housing Wire, it was pointed out the 1/2 of all appraisers claimed “fee pressure” by AMCs was their biggest challenge this year. Also included were “technology fees” appraisers are forced to pay has become a major issue. AMCs are taking an increasing cut of the appraisal fees and at the same time selecting appraisers who are willing to work for relatively lower fees. The Private Asset & Management Group, LLC has launched its new platform allowing retail and wholesale lenders the ability to use they’re ‘own’ roster of approved appraisers, with realistic fees for their market areas, self-manage the process with 1 dashboard from a state-of-the-art software system with absolutely “NO” cost! And it reduces the appraisal fee to the borrower by 25%-35%. For further information contact David Cedar (631-319-6161).

TPO Programs for Correspondents and Brokers

In this most challenging of rate environments for the industry, Luxury Mortgage (“LMC”) continues to show steadfast commitment to all its business partners. LMC strives to offer competitive rates and products to assist brokers in closing more loans. Due to overwhelming popular demand, LMC is stepping up again and extending last month’s unprecedented purchase specials. Full and Alt Doc loans (including Bank Statement, 1099 Only, and Asset Qualifier) will receive up to a 100-bps price improvement (yes, you read that correctly!), and DSCR loans will receive a 50-bps price improvement! Click here for complete details of these special offers. If you are not yet an approved broker, now is the perfect time to become one. Click here to begin the process of becoming an approved wholesale broker.

Sometimes, your clients’ needs are as simple as a safety net. A HELOC is a perfect product to provide them with financial liquidity, stability, and support – especially in today’s market! Symmetry’s HELOC offers your borrowers the ability to purchase a home with less cash down, afford home renovations or repairs, purchase a 2nd home or investment property, consolidate and pay off debt, and many more benefits… Not sure how to best present Symmetry’s HELOC to your borrowers? Contact your area manager to build a plan that works for you!

Disaster Updates

Several top insurance companies (like Farmers, State Farm and Allstate) have reduced their footprint in California over the last several months. State Farm and Allstate say they’re not writing any new homeowner insurance policies in California moving forward due to it being too expense. And just ask a homeowner in a low-lying area of Florida, Louisiana, or the Carolinas how it’s going.

Last month the Biden administration urged a federal judge to reject a challenge by Florida and other states to an overhaul of the National Flood Insurance Program that has led to higher premiums for many property owners.

Meanwhile, the FDIC sent out, “The Federal Deposit Insurance Corporation, the Federal Reserve Board, the National Credit Union Administration, the Office of the Comptroller of the Currency, and state financial regulators, collectively the agencies, recognize the serious impact of Hurricane Idalia on the customers and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision. The agencies encourage institutions operating in the affected areas to meet the financial services needs of their communities.

“The agencies encourage financial institutions to work constructively with borrowers in communities affected by Hurricane Idalia. Prudent efforts to adjust or alter terms on existing loans in affected areas are supported by the agencies and should not be subject to examiner criticism. In accordance with U.S. generally accepted accounting principles, institutions should individually evaluate modifications of existing loans to determine whether they represent troubled debt restructurings or modifications to borrowers experiencing financial difficulty, as applicable. In making this evaluation, institutions should consider the facts and circumstances of each borrower and modification. In supervising institutions affected by Hurricane Idalia, the agencies will consider the unusual circumstances these institutions face. The agencies recognize that efforts to work with borrowers in communities under stress can be consistent with safe-and-sound practices as well as in the public interest.”

FEMA Disaster Declarations are in the news. Georgia Hurricane Idalia – DR-4738-GA. Florida Hurricane Idalia – 4734-DR-FL, Amendment 001, Amendment 002, Amendment 003.

AmeriHome spread the word that on August 31, 2023, with DR-4734, the Federal Emergency Management Agency (FEMA) declared that federal disaster aid with individual assistance has been made available to counties in Florida to supplement recovery efforts in the areas affected by Hurricane Idalia from August 27, 2023, to September 4, 2023. On September 1, 2023, with Amendment No. 1, FEMA granted Individual Assistance to 6 additional counties. On September 3, 2023, with Amendment No. 2, FEMA granted Individual Assistance to 1 additional county.

On September 4, 2023, with Amendment No. 3, FEMA announced an Incident Period End Date of September 4, 2023. On September 9, 2023, with Amendment No. 5, FEMA granted Individual Assitance to 2 additional counties.

On 9/3/2023, with Amendment No. 2 to DR-4734, FEMA declared federal disaster aid with individual assistance has been made available to an additional Florida county, Pinellas, affected by Hurricane Idalia from 8/27/2023 and continuing. See AmeriHome Mortgage Disaster Announcement 20230902-CL for inspection requirements.

On 9/4/2023, with Amendment No. 3 to DR-4734, FEMA provided an Incident Period End Date of 9/4/2023, for Florida counties affected by Hurricane Idalia from 8/27/2023 to 9/4/2023.

See AmeriHome Mortgage Disaster Announcement 20230903-CL for inspection requirements.

On 9/7/2023, with DR-4738, FEMA declared federal disaster aid with individual assistance has been made available to 3 Georgia counties Cook, Glynn, and Lowndes affected by Hurricane Idalia on 8/30/2023. See AmeriHome Mortgage Disaster Announcement 20230905-CL for inspection requirements.

Capital Markets

There’s anxiety (isn’t there always?) over the Federal Reserve turning more “hawkish” and impacting investor sentiment, and therefore bonds and stocks. While the Fed is largely considered to be nearing the end of its hiking cycle, the “terminal rate” is still unknown, of course. Federal Reserve speakers, typically the presidents of each district, are in a blackout period ahead of the FOMC meeting scheduled for September 19-20, which will give this week’s economic reports extra weight.

So, what is the financial press yammering about? Student loans having to be repaid, the latest jump in oil prices in the past few days driven by longer-than-expected production cuts by key oil nations Saudi Arabia and Russia, and data showing a tight labor market in the form of initial jobless claims falling for a fourth straight week.

Think about it. Despite the rapid rise in interest rates and restrictive monetary policy, the U.S. economy remains resilient. August’s employment report and last week’s ISM Services Index provided evidence that the post-pandemic economic expansion continues. The ISM Non-Manufacturing PMI Increased From 52.7 in August to 54.5 in September, its highest level since February, highlighting continued growth in sectors accounting for the majority of U.S. economic activity such as: services, mining, construction, and public administration. This series has been in expansion territory for all of 2023. There was a small increase in the prices paid index due to higher fuel costs, indicating that services inflation is far from returning to pre-pandemic levels.

The Fed’s Beige Book also reported an uptick in economic activity from July to August. However, unlike the ISM indices, the Beige Book showed inflation moderating in some parts of the country. A revision to unit labor costs – which gauges wage inflation – showed a 2.2 percent annualized increase compared to the initial estimate of 1.6 percent while productivity growth was revised down to 3.5 percent from the initial estimate of 3.7 percent. It is likely not the last revision for these data series from the Department of Labor as they are difficult to measure in real time. Elsewhere, the trade deficit has narrowed over the last few months but remains wider than pre-pandemic levels.

Even with a slight decrease last week, mortgage rates have ticked back up over the last couple weeks. The market has priced in “higher for longer” rate expectations from the Fed and are about one percent higher than the lows seen in February. Mortgage applications have declined six of the last seven weeks as higher rates erode affordability. Mortgage purchase applications reach a low not seen since April 1995. This week includes the $99 billion mini-Refunding as well as key inflation reports with CPI on Wednesday, PPI and retail sales on Thursday, and import / export prices as well as Michigan sentiment on Friday. No Fed speakers are currently scheduled with the FOMC in blackout period ahead of the September 19/20 FOMC meeting. Today’s economic calendar is limited to a Treasury auction of $44 billion 3-year notes. We begin the week with Agency MBS prices slightly worse, the 10-year yielding 4.29 after closing last week at 4.26 percent, and the 2-year at 4.98.

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Apache is functioning normally

September 8, 2023 by Brett Tams

Looking for an app that does it all – automate savings, track spending, investing, and get a free $250 cash advance?

Welcome to my Albert App Review.

Looking for an all-in-one personal finance app that will help you manage your money, save for your future, or even get a free cash advance when you need it?

In that case, you’ve come to the right spot!

In this Albert App Review, I’ll go over everything you need to know about the popular Albert app, and I will discuss its features, benefits, how the app can help you, and more.

You can sign up for the Albert app here.

The Albert app is becoming more and more popular as a money tool that can simplify your life. Instead of needing a bunch of different financial apps, Albert can help you consolidate your phone and need less. The app is a one-stop shop for your monthly financial needs – it automates savings, helps you manage your budget, and has spending, borrowing, and investing tools. With this easy app and the wide range of tools that you can use, Albert has many benefits.

This app reduces the need for multiple apps since it offers a wide range of tools and features.

If you’re looking for a money saving app, Albert can be a great option to start with. There’s a reason why it’s one of the top money apps in the App Store!

9

Albert is one of the most popular personal finance apps, and it is designed to make it easier to save and invest all in one place. This app has features for saving, investing, and budgeting.

Quick Summary – Albert App Review

  • Albert app is a financial management tool that helps you to save, spend, and invest right in the app
  • The Genius feature allows you to ask any money question and get a real response from a real person
  • Albert app’s cash advance feature can get you up to $250
  • The app is free, but some features do require a monthly subscription

Albert App Review

What Is The Albert App?

The Albert app is a personal finance app that will help you manage your money better by making it easier to save and invest all in one place. This app has features for saving, investing, budgeting, and more.

It has many different features, such as budgeting tools, real-time alerts, and a helpful service where you can ask an expert money questions and get real answers catered to your situation. The app strives to make financial management easier and more organized for everyone.

Albert makes it easy to manage your finances, eliminating the need for visits to physical bank branches or formal phone calls with a financial expert. With the ease of using an app, you can easily track your financial well-being, helping you stay organized, reach goals, and find smart ways to save, spend, and invest. Albert stands out by simplifying your personal finances, all while keeping things very easy to use.

Albert also has a feature where you can get a small cash advance of up to $250 with no late fees, interest, or credit check. This advance is repaid from your next paycheck, giving you the option to avoid high-interest personal loan lenders for those in need of quick cash.

There are no hidden fees, and it is free to sign up. They do have a paid subscription plan that you can sign up for which will give you access to different features such as financial advice from experts. I talk about the paid part further below.

Does The Albert App Give You Money?

Albert provides instant cash advances to users who need small amounts of money before their payday. They do not charge late fees, interest, or run a credit check for this feature.

This can be a great way to not pay high rates on payday loans for when you just need a little bit of cash.

How it works is that the Albert app will send you up to $250 from your next paycheck straight to your bank account. Then, you simply repay them when you get paid. You can pay a small fee to get your money instantly, or you can wait 2-3 days and get the cash advance for free.

Albert Instant is available to all members of the Albert app who qualify, whether they are a paid subscriber or not. Now, not everyone will qualify. To determine your eligibility for a cash advance, they look at things such as if your income is direct deposited into your connected bank account, if your bank account has been open for at least 2 months and has a balance greater than $0, and if you’ve received consistent income in the past 2 months from the same employer.

Albert App Features

The Albert App has many other features, such as:

Banking with Albert

Albert has a user-friendly banking service through its partnership with FDIC-insured Sutton Bank. This includes features like no minimum balance requirement and access to your paycheck up to two days early.

With an Albert account, you can also earn cash back rewards, such as getting a cash back bonus on gas, groceries, and more when you purchase items with your Albert debit card. You can earn an average of $2.00 per gas tank fill-up. You do need to be a Genius subscriber to take advantage of this benefit.

The app also has fee-free ATMs for their paid subscribers at over 55,000 ATMs (when using the Albert Mastercard debit card).

Albert Savings

Albert Savings is the app’s automatic savings tool that is available to Genius subscribers. It saves money from your linked bank account to your Albert Savings account.

This automated savings tool helps you build up your funds without the stress of manual transfers. It analyzes your income and expenses to calculate the amount you can save comfortably. Or, you can manually set your own savings schedule.

The Albert saving feature can help you to save more money and reach your goals.

The money in your Albert Savings account is yours, and you can withdraw it at any time.

Albert Budgeting

The Albert Budgeting feature is super handy and packed with a bunch of useful tools to help you manage your money with ease.

The Albert app has budgeting tools to help you track your income and expenses, find fees that you shouldn’t be paying, and watch your financial progress. The app will send real-time alerts and notifications to help you stay on track with your budget. But, that’s not all.

Other features of Albert Budgeting include:

  • The Albert app can negotiate your bills so that you can save money. The app will help you lower your bills such as for cable TV, internet, cell phone, and more.
  • The Albert app also makes it easy to see all of your budgeting info in one quick place, such as tracking your recent bills, seeing how much you’re spending in different categories, and more.
  • The app will categorize your spending so that you can see where your money is going (this can help you to realize where you may need to cut back)
  • Also, the app will help you find hidden charges and subscriptions that you may not be using.

These are all very helpful features that can help you save a lot of money in the long run.

Albert Investing

If you’re new to investing or you’re looking for an easier way to invest, the Albert Investing side of the app can make getting started much, much easier.

With Albert Investing, you can start an investment portfolio that matches the amount of investment risk you want to take on and your financial goals. The app even provides investment guidance and lets you start investing without any minimum investment amount needed.

So, that means that you can start investing with Albert Investing with just $1.

You can get started investing in the app by answering some questions (the app wants to learn more about you so that it can make selections based on your personal situation). The app will then choose individual stocks or funds for you to invest in (or, you can choose these yourself if you know what you want to invest in). You can even ask the app to only invest in themes as well, such as companies that are interested in sustainability and the environment. You can then continue to invest automatically or on a recurring schedule. The auto-investing feature can be a great tool if you are looking to save time and invest regularly without really thinking about it.

Albert Genius

This is one of my favorite parts in the app.

The Albert Genius service gives you financial advice from a team of expert financial advisors (this is a team of real human experts that you are able to talk to – not a robot), available through a paid monthly subscription in the app.

You can ask their experts any money question that you have, whether it’s a big or small question, a general question, or something more specific to your personal situation. Your questions can be about anything from credit cards, budgeting, student loans, investing, credit card rewards, life insurance, your personal financial life, and more. These experts will help you answer your questions 7 days a week too. And, there’s no limit to the amount of questions you can ask.

This is a very nice feature to have access to.

Some of the questions you can ask include:

  • How do I start a budget?
  • How do I lower my car insurance? Am I paying too much?
  • How much can I personally afford to spend on a house?
  • How can I improve my credit score?
  • How much money should I have in my emergency fund?
  • Should I use extra cash to pay off debt or invest?
  • Can you help me to better under travel miles and credit cards?

There are so many different questions that you can ask the team at Albert!

Albert Protect

Albert Protect is a feature for paid subscribers on the app.

The Albert Protect feature monitors your money around the clock. The app will alert you if something suspicious comes up for any of your connected financial accounts or your identity. The app continuously watches for suspicious activity on your credit report, the dark web, data breaches, and unusual charges.

How Does The Albert App Work?

Signing up for Albert is easy!

Simply click here to get started.

Or, you can head to the Google Play or App Store, depending on your device (Android or iOS), and download the app. Once installed, the app will walk you through the setup process. There’s no need to worry about a credit check as Albert doesn’t require one for signing up.

Next, you’ll be asked some questions about yourself such as your name and age. The app is trying to learn more about you. Here’s what Albert says specifically about the questions that they ask: “We do this in order to best serve your needs: a 19-year-old single student has different financial objectives and priorities than a 37-year-old professional with two kids who will be starting college soon.”

Then, you’ll be asked to connect your financial accounts to the app. So, you may connect your bank account that your bills come out of, your credit card accounts, student loans, mortgage, investments accounts, and more. You can connect as many or as little as you want. This information helps the app better serve you so that it can give you recommendations, track your spending, give you alerts, and more.

After you sign up, you’ll have access to the many features mentioned above to help you manage your finances. As you learned above, there are a lot of tools in this app, so I recommend just playing around in the app at first to better familiarize yourself with it and see how it can help you. Maybe sit down for a few minutes at a time until you understand how to use the app in the best way for your financial situation. That’s exactly what I did when I first downloaded the app because it was a little intimidating at first trying to see all of the different things that the app can do. But, it’s so nice that everything can be done right from one app!

To sign up for the app, they do require that you be a U.S. citizen or resident, be at least 18 years old, and have a bank account with a U.S. financial institution. Unfortunately, at this time, the app is not available to those outside the U.S.

How Much Does Albert App Cost?

The Albert app has a lot of different features, so you may be wondering what the cost is or if there are any monthly fees.

The great thing is that many of the tools and features on the Albert app are free.

For example, the Albert App has a fee-free cash advance feature to help you cover unexpected expenses. If you need some extra cash until your next paycheck, you can get up to $250 as a cash advance, with no cost. There are no late fees, overdraft fees, or maintenance fees associated with this service.

You can also start investing with as little as $1 and use the free cash advances feature (as long as you meet eligibility requirements) without the need for a subscription.

Now, the Genius subscription does have a cost.

If you’re looking to unlock all of Albert’s helpful budgeting, saving, and investing tools, you might want to consider their Genius subscription. This subscription starts at just $14.99 per month and gives you access to some helpful benefits like cash bonuses and personalized financial advice. Keep in mind that the true value of the Genius subscription depends on how often you use the app and all its features. So, if you’re a frequent user of the app, it could be a great investment in your financial well-being.

Is Albert App Safe to Use?

Yes, Albert is safe to use.

Let’s start with the basics – the Albert app isn’t a bank, but it teams up with FDIC-insured Sutton Bank to offer you banking services. That means that the money in your Albert Cash account is safe because it’s protected by the Federal Deposit Insurance Corporation (also known as FDIC). That’s a fancy way of saying your funds are insured for up to $250,000.

Your Albert Savings accounts are held at FDIC-insured banks, including Coastal Community Bank, Axos Bank, and Wells Fargo.

When it comes to data security and privacy, Albert takes that seriously too. The app has security measures to protect your sensitive personal and financial information.

As for customer service, if you ever face any issues with the Albert app, you can easily reach out to their support team for assistance. Many Albert app reviews have mentioned their responsive customer service.

Pros and Cons of Albert

Like with any personal finance app, there are pros and cons. I can’t write an Albert app Review and not talk about the pros and cons, so that you can make the best decision for yourself.

Some of the benefits of using Albert include:

  • The app aggregates all of your accounts – Albert gives you an overview of your financial life by combining all your accounts in one place.
  • Savings and investments – The app offers customizable savings goals and can create a custom portfolio for your investment needs. It will also keep track of your transactions and help you identify potential savings opportunities as well as avoid late fees.
  • The Albert app is safe – Your information is kept safe with the same level of security used by major banks, as well as FDIC insurance.
  • Albert Genius – This feature provides personalized money advice from financial experts (real people, not a robot!) to help you make smarter financial decisions. You can ask any money question and will get personalized advice.
  • Free cash advance – Get a cash advance on your next paycheck without any late fees using Albert Instant, or access your paycheck up to two days early with direct deposit.
  • Free ATM withdrawals – This is a feature paid monthly members get to have.

While Albert has many helpful tools and features, there are some potential downsides to using the app such as:

  • App-only functionality – All features of Albert are limited to the app, which may be inconvenient for some people who prefer to be on their computer instead of their cell phone.
  • Fees – While many features in Albert are free to use, some, such as the Albert Genius service, require a subscription fee. The fee is quite affordable for the services you receive, though.
  • No phone calls – If you need to talk to customer support, there is no phone number to call. Instead, it’s all done through the app, text message, or email.

Frequently Asked Questions

Here are answers to commonly asked questions about the Albert app.

Is Albert a trustworthy app?

Yes, Albert is a trustworthy app. Your banking money is FDIC-insured, with coverage up to $250,000, and your investments are SIPC-insured. The app has many financial tools and you can even get personalized advice from experts.

How much can you borrow with Albert?

The maximum for a cash advance is $250.

How do you get $250 from Albert app?

Albert offers a cash advance feature called Albert Instant. After you enable this feature and meet the requirements, you can access funds quickly, sometimes up to $250.

Does Albert give you money right away?

In some cases, Albert can provide instant cash advances or help you get your paycheck up to two days early via direct deposit, depending on your employer and banking situation.

How long does it take to get money from Albert?

Getting your hands on the cash you need from Albert is all about the service you’re using. If you’re in a hurry, instant cash advances could have those funds in your pocket right away. But for paycheck advances and other features, it might take a couple of days before you see the money.

What are the requirements to get a cash advance on Albert?

Requirements for a cash advance with Albert include a history of consistent income, using the Albert app for a certain period, and having a bank account linked.

Does Albert hurt your credit?

Albert does not directly impact your credit score as it is not a lender. However, using the app’s guidance to improve financial management can help you work towards building or maintaining a higher credit score.

Does Albert need your social security number?

Yes, when signing up for the Albert app, it will ask you for your SSN. This is because it is an investment app and they need to verify that it is actually you signing up.

Is Albert or Chime better?

Albert and Chime are different financial apps with different features. Albert focuses on money management, investing, and advice, while Chime is a mobile banking app offering checking and savings account services. Your choice should depend on your financial goals and preferences.

Why is Albert taking money from my account?

If you’re already an Albert user, this may be a troubleshooting question that you have (and perhaps you searched Google and found this blog post). Albert takes money from your account (such as your bank checking account) to fund the services you’ve opted into, such as investments or automatic savings. You can check the app’s settings or contact Albert to learn more,

Is Albert app affiliated with a specific local bank?

Albert is backed by Sutton Bank.

Is the Albert app reliable and secure for banking?

Yes, Albert is a reliable and secure app for managing your finances. It is FDIC and SIPC-insured and has a variety of financial tools and resources to help you improve your financial situation.

How is Albert app customer service?

I did some research and I found great Albert app reviews on their customer service. The Albert app has customer service options within the app and online. They do not have an option to call their customer service and speak on the phone. But, if you’re like me, you probably prefer to get your questions answered via text message or email anyways.

Is Albert app legit?

Yes, the Albert app is a legitimate personal finance app that can help you manage and improve your finances. Millions of people (last I checked, over 10,000,000 people use this app) use the app’s many helpful tools. The app is available for people on Apple or Android devices and it has great reviews.

Who is Albert app best for? Who should not use it?

The Albert app is a helpful all-around financial app that can help many different people. If you’re looking for an all-in-one app to help you save, spend, borrow, and invest, Albert might be a good fit for you. The app is helpful for people who:

  • Want fee-free cash advances up to $250 (this is a feature that many people like because they don’t have to sign up for high-interest rate loans when they just need something for a short amount of time)
  • Need an app that gives you an overview of all your accounts in one place
  • Are interested in automatic savings and easy investing tools

Albert takes the work out of managing your finances and may be helpful for people who are trying to stay on top of their personal budget without having to juggle multiple apps.

However, Albert may not be the best fit for everyone and not everyone needs to have it. So, if you fall into any of the below, then this may not be the app for you

  • If you’re an experienced investor looking for more advanced trading tools, then this may not be the best investing app for you (the Albert app is basic in this area because I think it caters more to those who are new investors or are looking for something easier to manage)
  • If you’re someone who doesn’t feel comfortable linking their bank accounts to a third-party app (you will need to link accounts in order to get full use of the app – I understand that some people may not want to do this)

Albert App Review – Summary

I hope you enjoyed my Albert App Review.

I think this is a very helpful app, and I can see why it’s one of the most popular money apps today.

Albert is an app designed to help manage your saving, budgeting, investing, and more, all in one easy app. The app has all of the different money tools that you would want, plus some extras that you may have not realized you needed yet.

Albert is an app that helps you to manage many different parts of your financial life right from your cell phone (it’s not available on computers).

They even have the Genius feature (one of my favorite parts of the app), which is an in-app chat where you can ask one of their experts anything related to money, from credit cards, buying a car, student loans, and more. This is very helpful if you ever have questions about money.

And, if you need cash now, Albert may be able to give you a small advance of up to $250. There are no late fees, interest, or a credit check. If you want to avoid personal loan lenders who have high-interest rates, and only need a small cash advance, then Albert may be a place to start with. How this works is that they send you $250 from your next paycheck. You simply repay them when you receive your next paycheck.

You should keep in mind that investment options don’t include retirement plans and customer service can only be reached via email and text. Though the app’s budgeting tools are more basic compared to budgeting-focused apps, the Albert app still has many, many benefits to help you manage your finances effectively and it’s all from one easy-to-use app.

You can learn more about Albert here.

What’s your favorite personal finance app? Do you use the Albert app?

Source: makingsenseofcents.com

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Apache is functioning normally

August 27, 2023 by Brett Tams

If you find yourself with $100,000 to invest your first job is to decide what you need from this money – income or growth. You will also need to determine your risk tolerance, time horizon, and the level of involvement you want to have with your investment.

If you want long-term growth with little to no involvement, then index funds or mutual funds might be your speed.

If you are looking for income then you might consider bonds or real estate, depending on how much involvement you want to have.

But no matter what you decide, make sure that your financial house is in order before you start and ensure that you are well diversified as you invest.

Before You Start Investing

If you’ve received a $100,000 windfall you’ll want to make sure your financial house is in order before you begin investing it. First, ensure that you have an emergency fund in place. The last thing you want is to invest this money and then need to sell an investment because you have an emergency. Next, you’ll want to consider paying off any debts you have.

Emergency Fund

Having an emergency fund is an important part of a solid financial plan. It can provide a safety net during difficult times and help you stay on track to achieve your long-term financial goals. If you don’t already, you’ll want to have six months of living expenses saved up. Having to dip into your investments unexpectedly can disrupt your plans to save for the future and may result in penalties, taxes, or just poor investment timing.

You’ll want this money in a safe and easy-to-access place. A high interest savings account is likely your best option.

Here are our favorite high yield savings accounts.

Pay off debt

Before you start investing consider paying off your debts. The interest rates on most consumer debts, such as credit cards and personal loans, are typically higher than the returns you can expect to earn from most investments. By paying off high-interest debt first, you are effectively earning a guaranteed return on your money equal to the interest rate on the debt.

Paying off debt also reduces risk and frees up cash flow, which can put you in a better position to invest for the long term, as it makes it less likely you will need to access your investments for emergencies.

Determine Your Investment Needs and Risk Tolerance

The best way for you to invest $100k will be different than how someone else should invest $100k. What you want to use the money for, how soon you’ll need it, and your risk tolerance are all factors in determining the best way to invest.

What are Your Investment Goals

You’ll first want to determine your investment goals. Ask yourself what you want to achieve with your investments. For example, do you want to save for retirement, build a college fund for your children, or save for a down payment on a house?

Each of these goals would require different investment vehicles. Also, keep in mind that you don’t need to use all the money for one thing. You can work towards several goals at once.

If your goal is to use the money to provide income, you would consider different investments than you would if your goal was to grow the balance of the account.

What is Your Risk Tolerance?

How much risk you are willing to take? This really means – how comfortable are you with the potential for losing money.

In general, the more risk you are willing to take the more potential growth there is. For example, if you have a very high risk tolerance you could consider investing in emerging markets. If your tolerance for risk is low, you’ll want to consider more stable investments such as bonds or real estate.

The longer your time horizon the more risk you can take since you will have longer for the markets to recover before you need the money. This is why you’ll want to have a robust emergency fund – so you don’t need to access the funds before it’s time.

When Will You Need the Money?

Consider the time frame you have to achieve your financial goals. Are they short-term goals that you want to achieve within the next few years, or are they long-term goals that you want to achieve over the next several decades?

If you are investing for the long term (over 5 years) then depending on your risk tolerance you can afford to be more aggressive, consider a portfolio of well-diversified stocks and bonds. If you are saving for retirement you’ll want to consider a tax-advantaged account such as an IRA.

If you are saving for a short-term goal (less than 5 years) such as a down payment on a house, you’ll want something with less risk and easier access, such as a CD.

How to Invest $100k

Stocks

If you have $100,000 to invest, stocks will likely be a part of your portfolio. You have several options on how to buy stocks.

Index funds

If you are new to investing in stocks, or just don’t have a lot of time to research and manage a portfolio, then index funds, mutual funds, and ETFs are great options. These investments are mostly hands-off, yet allow you to get access to a diversified portfolio.

Index funds aim to match a particular index that tracks the market. For example, you could invest in a fund that tracks the S&P500 or the Dow. You could even buy a fund that tracks the stock market as a whole.

The benefits of index funds are that it’s easy to get a lot of diversification and they often have very low fees as they require very minimal human research and management.

The drawbacks of index funds are that they aim to match the returns of the index they track, so you will never outperform the index – however, they also aren’t likely to underperform.

Also, with index funds you can become over-invested in a particular sector without realizing it as there can be an overlap of companies across different indices.

Mutual funds

Mutual funds are similar to index funds in that they pool together funds from multiple investors to buy a collection of stocks. The difference is that they are run by professional managers who follow the investment objectives of the fund, rather than following a specific index.

The benefits of mutual funds are good diversification and professional management. Unlike index funds, mutual funds are not limited to a set selection of investments. As long as the investments follow the stated objectives of the fund the manager is allowed to invest as she thinks best based on her knowledge of the markets and investment experience.

The drawbacks of mutual funds are fees and the possibility of underperformance. Since mutual funds are managed by a real person they have higher expenses than index funds, which are managed by a computer. This will reduce your returns.

Mutual funds also have the potential to underperform the market. While index funds aim to track a sector of the market they typically won’t under or overperform. Mutual funds have a lot more flexibility, so while they may overperform some years, they also risk underperforming as well.

ETFs

Exchange-Traded Funds, are a type of investment vehicle that allows investors to buy and sell a diversified portfolio of stocks or bonds in a single transaction, similar to an index fund. However, ETFs are traded on stock exchanges like individual stocks, and their prices fluctuate throughout the day as investors buy and sell shares.

ETFs are designed to track the performance of a specific index or benchmark, such as the S&P 500, and their holdings are usually disclosed on a daily basis. This allows investors to gain exposure to a broad market or sector with a single investment.

The benefits of ETFs are low expenses and diversification. Because they are managed by computers, like index funds, they tend to have very low expense ratios. They also allow you access to a broad range of investments.

The drawbacks of exchange traded funds are trading costs and the potential for underperformance. ETFs have the potential to be actively traded – if you partake in this activity you will likely have fees when you buy and sell shares. Also, if you actively trade shares you have the potential to underperform (or overperform if you are luck) the market.

Individual Stocks

Rather than buy collections of stocks via a mutual fund or ETF you could invest in individual stocks, if you have the time, knowledge, and inclination to do so.

Investing in individual stocks has more risks due to the fact that it’s difficult to build a diversified portfolio. Plus, you are also limited by your own knowledge and research abilities.

However, some people love to research stocks and investing strategies. If that’s you, and your risk tolerance is high enough you may find a lot of satisfaction in choosing your own investments. You could potentially beat the market – although you could also underperform the market as well.

Even if this appeals to you, I recommend investing in individual stocks with only a small percentage of your portfolio, while the bulk of your money remains in index funds or mutual funds.

Here are our favorite stock trading apps.

Dividend Stocks

If income is your goal you may want to consider dividend stocks. These are stocks that pay out a portion of their earnings to shareholders in the form of dividends. Dividends are typically paid out quarterly, and the amount of the dividend can vary depending on the company’s earnings and dividend policy.

Dividend stocks are typically issued by established, mature companies that have a history of stable earnings and strong cash flow. These companies may not offer high growth potential, but they are often viewed as more stable and less volatile than growth stocks.

The benefits are that they can provide investors with a regular stream of income and lower volatility than growth stocks.

The drawbacks are they have limited growth potential and can make dividend cuts at any time.

Here is how to find the best dividend paying stocks.

Real Estate

If you are looking to invest $100k you’ve probably thought of real estate. You have a lot of options when it comes to owning property. You could buy an individual property to rent or you could be more hands off with REITs or crowdfunding.

Buying Rental Property

Buying individual rental properties can be an attractive investment option for individuals seeking to generate passive income and build long-term wealth through real estate.

The benefits of real estate is passive income and appreciation potential. When you have a rental property you get rent each month from your tenants and the value of the property will likely go up over time. If the rent is high enough to cover all your expenses you could have a fairly passive income stream.

The drawbacks of real estate are that there are high upfront costs as well as ongoing costs. There is also market risk and tenant risk.

Plus, real estate is illiquid. If you want to sell it will take weeks, even in a strong market. If the market is weak at the time of the sale it could potentially take years to find a buyer and make a sale.

REITs

REIT stands for Real Estate Investment Trust, which is a company that owns or operates income-producing real estate properties, such as apartments, shopping centers, office buildings, hotels, and warehouses.

REITs allow individual investors to invest in real estate without having to purchase, manage, or finance the properties themselves. Instead, investors can buy shares of a REIT, which represent ownership in the underlying real estate portfolio.

This eliminates many of the drawbacks of individual real estate. You can participate in the rental income and price appreciation of a property without having to deal with tenants or broken hot water heaters.

They are also more liquid than individual properties. Shares of Real Estate Investment Trusts are traded like stocks, so if you want to sell a portion of your holdings you can easily do so.

REITs are the only way to get in and out of real estate quickly.

Real Estate Crowdfunding

Real estate crowdfunding is a relatively new form of investment that allows multiple real estate investors to pool their money together to invest in real estate projects. Crowdfunding platforms provide a digital marketplace where investors can browse and select from a range of real estate investment opportunities, typically offered by developers, sponsors, or real estate companies.

Crowdfunding is like a cross between buying an individual property and REITs. Like REITs, it allows you to invest in real estate for a lower entry amount and avoid having to be a landlord.

However, unlike REITs (and more like owning an individual property) your money is invested in a particular property, rather than in a fund that has multiple properties. The rent you receive and property appreciation is linked to your specific property.

Also, crowdfunding is typically not very liquid. Crowdfunding platforms usually have a set amount of time, often five years or more, before you are allowed to draw your funds out of the investment.

Here’s more information on real estate crowdfunding.

Bonds

Bonds are a type of fixed-income security that represents a loan made by an investor to a government, corporation, or other entity. In essence, an investor who buys a bond is lending money to the bond issuer in exchange for regular interest payments and the promise of a the return of their principal investment at the bond’s maturity date.

If your goal is to generate income, then bonds are worth considering. They can provide a regular stream of income in the form of interest payments, which can be particularly attractive for investors who are looking for steady, predictable income.

Bonds can provide diversification in an investment portfolio, as they tend to have a lower correlation with stocks and other assets. This can help to reduce overall portfolio risk and volatility.

However, bond prices and yields are inversely related, meaning that when interest rates rise, bond prices tend to fall. This can result in capital losses for bond investors. Also, bond issuers may default on their payments, which can result in capital losses for investors. You can lessen credit risk by only buying bonds from governments and large stable companies.

Here’s how to invest in bonds.

Certificates of Deposit

Certificates of Deposit similar to a savings account except that your money is locked away for a set period of time in exchange for a higher interest rate. They are good investments when your primary goal is safety of principal but don’t need access to the money for a fixed period of time.

The benefits of CDs are that they are very low risk. Your money is insured and not invested in any market so you have no risk of losing your principal. They also offer CDs offer a fixed rate of return, which is nice if you are looking for a predictable source of income.

However, they also have fairly low returns. Depending on the interest rate environment the returns may not even keep up with inflation – so you may even be actually losing purchasing power over the long term.

Here are the best CD rates.

Taxes

Investing means dealing with taxes – even investing in a retirement account will have some sort of tax implications.

Capital Gains Tax

If you are investing outside of retirement accounts you will want to consider capital gains taxes. Capital gains occur anytime you sell an investment for more than you paid. If you’ve held the asset for less than a year when you sell, then you will be taxed at your ordinary income tax rate.

However, if you’ve held the asset for more than year you will be taxed at your capital gains rate, which is likely 15% (and likely lower than your ordinary income tax rate).

Capital losses can also occur. If you sell at a loss you can use your losses to offset any other capital gains you had that year. If your losses exceed your gains you can carry them over indefinitely.

Income

If you are receiving income from your investments, for example, rent, dividends, or interest payments you will likely pay your ordinary income tax rate on this income.

An exception is some dividends are tax advantaged. Dividends can be “qualified” or “non-qualified” which will affect their tax status. Here is some information from the TurboTax on this.

Also income from government issued bonds may be tax advantaged as well. Income payments from municipal bonds are exempt from federal taxes and state taxes if the issuing state is also the state where you live.

Income from federal bonds are exempt from state taxes and local taxes.

Retirement Accounts

If you are investing for retirement then using a tax advantaged retirement account is your best bet.

Common accounts are Traditional and Roth IRAs. Both are individual retirement accounts but they are taxed differently.

Traditional IRAs give you a tax break when you contribute to the account but withdrawals in retirement are considered taxable income and you’ll pay taxes as your ordinary income tax rate.

Roth IRAs do not receive a tax break when you contribute but withdrawals in retirement are tax free. Meaning the growth is actually never taxed.

IRAs have annual contribution limits. You can find out more about that here.

Diversify

As you start investing, keep in mind that you don’t have to invest your money all in one place. If you like the idea of long-term growth but feel nervous about putting it all in the stock market, that’s ok. You can split it up between an index fund and a real estate investment trust.

Maybe you sock most away in a well-diversified index fund but want to keep a little bit set aside to trade in individual stocks and try your hand at individual stocks.

It’s your money and ultimately you get to decide what to do.

Hire a Financial Advisor

If you don’t feel confident enough to invest $100k on your own you can always ask for help from a financial advisor. They typically have expertise in various areas of finance, such as investments, retirement planning, tax planning, and estate planning.

Financial advisors get paid in a few different ways:

  • Commission-based: Some earn commissions on the products they sell, such as mutual funds, insurance policies, or annuities. This model can create a conflict of interest, as advisors may be incentivized to recommend products that may not be in the client’s best interest.
  • Fee-only: Fee-only advisors charge clients a fee for their services, typically based on a percentage of the assets they manage. This model eliminates the potential conflict of interest associated with commissions, as advisors are not incentivized to recommend specific products.
  • Fee-based: Fee-based advisors charge both a fee for their services and may also receive commissions for the products they sell. This model can also create a conflict of interest, as advisors may be incentivized to recommend products that generate higher commissions.
  • Hourly or project-based: Some financial advisors charge clients an hourly rate or a flat fee for specific projects or services, such as creating a financial plan or reviewing investment portfolios.

It’s essential to understand how a financial planner is compensated before working with them, as their compensation structure can influence the advice they provide. Fee-only financial advisors are often considered the most transparent and unbiased, as they are not incentivized to recommend specific products.

It’s important to find an investment advisor that you trust. They will be helping you make some of the most important financial decisions of your life.

How to find a financial advisor.

Summary of How to Invest $100k

Investing $100,000 can be an overwhelming task, but with the right approach and mindset, it can be a fruitful one. The first step is to create an emergency fund/ savings account and pay off high-interest debt to ensure financial stability.

Ultimately, the key to successful investing is to develop a diversified portfolio that aligns with your investment goals, risk tolerance, and financial objectives. With the right strategy and mindset, investing $100,000 can be a smart move towards securing a better financial future.

Source: doughroller.net

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Apache is functioning normally

August 26, 2023 by Brett Tams

One of the critical strategies involved in purchasing and owning rental properties is using leverage. In a perfect scenario, you will purchase a property primarily using borrowed money. Then, the rent income from the property will not only pay the mortgage, but it will also provide you with a small profit. Over many years, that profit will grow, and your mortgage will shrink. Eventually, you will have a property that’s a virtual cash machine.

But there may be times between now and then when you will consider whether or not you should ever pay off the mortgage on your rental property early. It’s not an easy decision, and here are some considerations.

Why You SHOULD Pay Off Your Rental Property’s Mortgage Early

1. When You Have a Negative Cash Flow on the Property

If the monthly mortgage payment makes you lose money on the property, you effectively subsidize your tenant’s residency. But if you can turn that into a positive cash flow by paying off the mortgage, the property will instantaneously become a successful investment, and more so as the future cash flow builds.

A positive cash flow is important because repairs are an inevitable part of owning a rental property. Keeping cash aside for those repairs means staying ahead of the game.

2. When You Need an Income More Than a Tax Write-Off

Many times, the reason for owning rental property is to generate tax write-offs. Those write-offs reduce your tax liability on other sources of income.

One of the reasons rental property can be so effective in generating tax write-offs is that the taxable loss of the property is usually related to depreciation. That means you have a “paper loss” on the property rather than an actual loss.

For example, let’s say that you break even on the property based on actual rent income and cash expenses. But because of depreciation, it generates a tax loss of $5,000 for the year. Even though it isn’t a real loss in terms of dollars, it can be used to reduce your tax liability on other income sources.

But if you need an actual income property, it may be better to pay off the mortgage. For example, let’s say that you have a $100,000 mortgage on the rental property. By paying it off, you’ll have an actual cash income of $800 per month. That would be an excellent reason to pay off the mortgage on the rental property.

Related: Investing in commercial real estate with RealtyMogul is an exciting way to multiply your investment in ways that aren’t often possible with small-scale real estate.

3. If It’s Time to Retire

As a general rule, debts of all types should be paid off once you reach retirement. Just as is the case in the example above, by paying off the mortgage on the rental property, you will maximize the monthly income that it produces. In addition, if you decide to sell the property after you retire, you will receive more cash on the sale of the property if it has no mortgage on it.

4. When the Return on the Paid Mortgage Is Higher Than What Else You Can Invest In

This is where you have to crunch some numbers. Let’s say that the mortgage on the rental property has an interest rate of 6%. You have also been averaging an annual rate of return of 4% on your investment portfolio over the past several years.

Since the interest rate on the mortgage is higher than the rate of return on your portfolio, you’ll come out ahead by paying off the mortgage. You may be exchanging money invested in your portfolio at 4% per year to pay off a 6% mortgage. That will represent a return on your money that is 2% higher than what you are currently getting.

Related Question: Should You Invest or Pay Off Debt?

That strategy might actually make sense in today’s super low-interest rate environment. In truth, it’s much more valid to compare the rate of return on fixed-rate investments with the interest rate you are paying on a mortgage. That’s because both rates are certain.

Returns on a stock portfolio may not be entirely valid because they fluctuate over time. There are years in which stocks will easily outperform the rate you’re paying on the mortgage. There are others when they will seriously underperform.

In that regard, paying off the mortgage on your rental property may be an even better long-term bet. This is especially true if you believe that the stock market is heading down or is entering what could prove to be a long-term bear market trend. Paying off a 6% mortgage on a rental property could prove to be a windfall when compared to a market in which you may lose 25% or more of your stock portfolio over the next three or four years.

Related: 8 Ways to Pay Off Your Mortgage Early

Why You Should NOT Pay Off The Mortgage Early

1. If You Need Leverage to Buy More Rental Properties

The most basic problem with paying off the mortgage on a rental property early is that it requires capital. In fact, it usually requires a lot of it. Once you pay off the mortgage, you lose access to that cash. It represents capital that can be used to purchase other rental properties.

If you have one rental property that’s providing a comfortable return on the investment, you may want to purchase other rental properties in the future. Paying off your current rental property early will certainly improve the cash flow on that particular investment. However, it may deny you the ability to purchase similar investments in the future.

2. When You Need a Tax Write-Off

If you do need a tax write-off to reduce taxable income sources, you may not want to pay off the mortgage early. Of course, this usually only makes sense when the loss on the rental property is the type of paper loss that we discussed earlier. That’s the kind where you’re at least breaking even on the property on a cash basis, but depreciation expense is creating a taxable loss.

If that tax loss is important to your income tax situation, you’ll almost certainly want to keep the mortgage outstanding.

3. You Have a Positive Cash Flow, Even With the Mortgage

If you have an actual positive cash flow on the property even with the mortgage – meaning that the rental income more than covers the mortgage payment, property taxes, insurance, maintenance, and other expenses – you probably won’t want to pay it off.

Related: The 1% Solution – How to Determine if a Rental Property is a Good Investment

The basic idea is that the rental income is both providing you with a monthly profit while at the same time gradually paying down the mortgage until it is paid in full when your cash flow will really take off. That’s a successful real estate investment. It’s also one that’s probably best left undisturbed by major strategies – like paying off the mortgage early.

4. You Can Earn a Higher Return on Your Capital Than You’re Paying in Interest on the Mortgage

Let’s say you’re earning 7% on your investment portfolio, and the property’s mortgage has a rate of 6%. By paying off the mortgage early, presumably by liquidating part of your investment portfolio, you’ll actually lose money on the exchange. That’s because the rate of return on your investment portfolio is higher than the interest rate on the rental property mortgage.

Just be careful that you’re comparing “apples to apples” when doing this. In other words, be sure that the rate of return you will receive on your investment portfolio represents at least a relatively stable income. That means primarily your interest or dividend income. Since higher-yielding investments, including interest and dividend-yielding securities, tend to be riskier at higher returns, you also have to factor your current level of portfolio risk into the mix.

Related: A Step-by-Step Guide to Rebalancing Your Investments

The Bottom Line

If you’re considering whether to pay off the mortgage on your rental property early, you’ve got some thinking to do. It will all depend upon your personal circumstances. You should take into account the rate you’re paying on the mortgage. And, of course, ask the opportunity cost question of, ”What else could I be doing with the money?” other than paying off the mortgage.

And if you decide to pay off the mortgage and realize that it was a mistake, you always have the fallback option of taking equity out of the home. It’s a touch expensive, but available in a pinch.

Source: doughroller.net

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Apache is functioning normally

August 25, 2023 by Brett Tams

When struggling to pay off debt, especially a high amount, it’s not uncommon to come across companies offering debt consolidation. However, many for-profit companies offering “consolidation” are actually selling a debt settlement service.

Debt settlement is where a third-party company can try to reduce someone’s debt by negotiating with their creditors or debt collectors on their behalf. While some debt settlement companies might be successful in lowering the amount of debt, these programs can be risky because of how they are structured.

Paying off less debt might sound like an easy win, but debt settlement can come with some big financial risks, possibly affecting the debtor’s credit score and ability to access credit in the future, and costing more along the way.

What Is Debt Settlement and How Does It Work?

Debt settlement is an agreement with a creditor to pay less than the total amount owed. It’s sometimes referred to as “debt relief” or “debt adjustment.”

Typically, a debt settlement program focuses on unsecured debts, which aren’t tied to a physical asset like a house or car. Examples of this include credit cards, store cards, personal loans, and medical bills. Other types of debt, such as mortgages, car loans, student loans, and tax debt, usually don’t qualify for these programs.

While debt settlement might provide some relief for debtors who are at the end of their financial rope, it’s by no means a simple solution. The process may take years, could require you to pay high fees, and can damage your credit score. Plus, it won’t wipe out all of your debts.

Though it’s a potential alternative to bankruptcy, it should be considered as a last resort.

💡 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.

How Debt Settlement Works

How does debt relief work? Let’s take a look.

You can negotiate a debt settlement on your own. If you decide to go this route, start by contacting each creditor and confirming whether you owe the debt. If you do, determine a realistic payment plan, and propose it to the creditor. During the negotiating process, you’ll continue to make regular payments on what you owe.

However, the debt settlement process can be confusing and could take years to complete. You might decide to enlist the help of a trusted third party, like a debt settlement company, to negotiate on your behalf.

During the negotiation process, you may be required to enter a debt settlement program. These programs typically encourage debtors to stop paying creditors and instead make monthly payments into a savings account. Once a settlement is reached, the company may take its fees out of that account first and use the balance to pay off the debt.

It’s important to note that if you choose to stop paying creditors, your credit score may be negatively impacted and you could face late fees and penalties.

What Do Debt Relief Companies Do?

The goal of debt settlement companies, also known as debt relief companies, is to work with people to get a better payment plan to help reduce debt. They typically charge fees for these services, usually between 15% to 25% of the total enrolled debt. However, you should only be charged once your debts have been settled or resolved.

Debt relief companies often require an initial consultation so they can determine whether you qualify for their debt relief program and which option might fit your situation. You also might be asked to provide basic information regarding your current creditors, debt balances, monthly income, and expenses.

Once you enroll in a debt relief program, you’ll probably be required to make monthly payments into a bank account that you’ll control. Typically, the debt settlement company will negotiate with a creditor once the account contains enough money for them to make a lump-sum offer.

In the meantime, the company may also advise you to stop paying your creditors. Note that doing so may cause your account(s) to flow further into delinquency or even charge-off, which can cause significant harm to your credit health and your ability to access credit in the near and long term.

Why Is Debt Settlement Risky?

Though debt settlement can be a viable alternative to bankruptcy, it has drawbacks. Here are risks to keep in mind:

Debt Settlement Can Be Expensive

By law, a debt relief company can’t charge you any fees until after they settle or reduce at least one of your debts. And you won’t have to pay if a creditor flat-out refuses your settlement. But once a debt is lowered or settled, you’ll likely incur charges that, when added up, could end up being more than what you originally owed.

What’s more, you may have to pay taxes on any debt that’s been forgiven, as the IRS considers that as income. Consider talking to a tax professional about any tax repercussions you may face if you settle your debt.

Debt Settlement Can Damage Your Credit

If you stop paying your creditors, you may be hit with late fees, penalty payments, higher interest charges, and other fees that can increase your overall debt. Late or missed payments can also be reported to the credit bureaus, and your credit score will likely be seriously damaged.

Something else to keep in mind: Though not as serious as bankruptcy, settled accounts are generally seen as negative events in credit history and can stay on credit reports for up to seven years.

There’s No Guarantee Debt Settlement Will Work

Creditors are under no obligation to accept a settlement proposal, and not all creditors will negotiate with a debt relief company. If your settlement is rejected, you may want to consider creating a debt management plan and start making payments.

How Does Debt Settlement Affect Your Credit Scores?

When you’re trying to settle a debt, your credit scores can take a hit. Late or missed payments, being sent to a collection agency, and even a settled account can all have a negative impact on your credit scores for years afterward.

What’s more, if you try to settle a debt and fail — and you have no other options — you may end up considering bankruptcy as a solution. Depending on the type of bankruptcy settlement you choose to file, it could stay on your credit report for seven to 10 years. It may also make it difficult to get credit, buy a home, or in some cases, get hired for a job.

How Is Debt Relief Different From Debt Consolidation?

Though these two debt payoff strategies sound similar, debt relief and debt consolidation work differently.

With debt consolidation, you take out a loan or line of credit and use it to pay off other debts. Once you consolidate those existing loans into a single loan, you have just one predictable, monthly payment and one (hopefully better) interest rate. Consolidation can help make budgeting and bill paying easier, and if you’re able to secure a lower interest rate, you may even save money by reducing how much interest you pay over time.

Debt settlement, on the other hand, involves negotiating the terms of your debt with your creditor so you end up paying less than what you owe, usually in one lump sum.

What Are the Pros and Cons of Working With a Debt Settlement Company?

Before jumping into debt settlement, there are some pros and cons a debtor might want to consider first. On the plus side, that anxiety about answering phone calls for fear a collection agency is on the line could go away.

In addition, all those debts could be consolidated into a single bill, so the debtor wouldn’t have to pay numerous bills a month on debt. And, of course, debt settlement could reduce debt long term and help avoid bankruptcy.

However, there are some potential negative financial implications:

•   Debt settlement companies typically encourage those who enroll in their services to stop sending payments to creditors during the negotiation period. This can seriously affect credit scores, incur late fees, and build up interest, actually digging a deeper hole. Creditors can also sue for repayment even when a debtor is working with a debt settlement company, and can take money directly from someone’s wages or force repayment in other ways.

•   Creditors are not under any obligation to work with debt settlement companies. Even saving the monthly amount the programs require is no guarantee the two parties will be able to settle some of the debts.

•   Debt settlement companies could still charge fees even if the entire debt wasn’t settled. While debt settlement agencies cannot charge fees until a settlement is reached, and at least one payment is made as part of the agreement, each time they successfully settle a debt with one creditor, the company can charge another portion of its full fee.

Beware of Debt Settlement Scams

Before deciding to enroll in a debt settlement program, it’s important to check the company with the local state attorney general and local consumer protection agency . These agencies can help determine if there are any customer complaints on file about the debt settlement company.

Also, a quick internet search of the company name and “complaints” could reveal any current lawsuits or deceptive and unfair practices. One easy method to find the top debt settlement companies is to look for those with good grades from the Better Business Bureau.

Some common red flags when researching any company promising to settle debt:

•   Charging any fees before settling any debt. This is prohibited by the FTC’s Telemarketing Sales Rule.

•   Promising to settle all debt for a specific percentage. Debt settlement companies cannot guarantee the amount of money or percentage of debt that could be saved by using their services. They also can’t guarantee how long the process will take.

•   Claiming there is a “new government program” that they are assisting with

•   Guaranteeing to eliminate debt entirely

•   Explicitly giving instructions to stop communications with creditors, and not explaining the serious financial consequences of doing so

•   Saying they can stop all debt collection calls or lawsuits

•   Starting enrollment without any review of an individual’s financial situation

The FTC advises people to avoid any sort of organization, whether they are offering credit counseling, debt settlement, or any other financial service, that fails to explain the risks associated with their programs, makes grandiose promises, and asks for any money upfront.

Debt Settlement Alternatives

Credit counseling

In contrast to some debt settlement companies that are profit-driven, reputable credit counseling organizations might be available to offer help with managing money and debts, developing a budget, and providing free educational tools and workshops.

Counselors should be certified and trained and help develop an individual plan for solving money problems. One place to start could be this list of nonprofit agencies certified by the Justice Department, which offer counseling and debt management plans.

Credit counselors might suggest a debt management plan, where one monthly payment is made to the credit counseling organization, and then they make all of the individual monthly payments to creditors. Counselors do not typically negotiate any reduction in debts owed, but could help lower monthly payments by working to increase the loan terms or lower interest rates.

Talking to Creditors

A debtor could take the DIY approach and talk to the creditor personally, even if negotiations for a lower rate or debt reduction have not worked in the past. Instead of paying a company to talk to a credit card company or other debt creditor on their behalf, remember that anyone can do it themselves for free.

The conversation could be approached with the goal of figuring out a modified payment plan to reduce payments to a manageable level.

Creditors and their collection agencies are typically willing to negotiate, even if they have already written off a debt as a loss.

According to the Consumer Financial Protection Bureau, many creditors and debt collectors will not negotiate how much they are willing to settle for, meaning debt settlement companies likely can’t get better terms than an individual could get by talking to the creditors themselves.

Balance Transfer

A balance transfer could also help when it comes to consolidating credit card debt.

A balance transfer is when someone moves debt from one credit card to another, usually taking advantage of a 0% interest offer on the newer card. While the 0% rate only lasts for a specific amount of time, this offers the opportunity to pay off more of the credit card debt during that promotional period since new interest isn’t accruing.

💡 Quick Tip: If you’ve got high-interest credit card debt, a personal loan is one way to get control of it. But you’ll want to make sure the loan’s interest rate is much lower than the credit cards’ rates — and that you can make the monthly payments.

Fixed-Rate Personal Loan

Rather than looking to a debt settlement company to fix high debt, another alternative that could be considered is a fixed-rate personal loan, which might be easier to manage and could help save money in the long run. By consolidating qualifying high-interest debt into one low-interest personal loan, a borrower could simplify by only having one fixed monthly payment.

The Takeaway

In certain situations, debt relief programs can be a viable alternative to bankruptcy — and for some, a debt solution that provides some relief. But in general, they’re seen as a last resort for those at the end of their financial rope. The process may take a long time and often involves paying high fees, which could bite into any savings you would have received from a settlement. And if you decide to stop paying your creditors and instead pay into a savings account, you may incur penalties, and your credit score will likely be damaged. There are alternatives to debt relief programs that may be worth considering, including negotiating with creditors yourself, credit counseling, and balance transfers.

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.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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.

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

August 11, 2023 by Brett Tams

Hello! Today, I have a great debt payoff story from a reader, Ashlee Binderim. This is how she paid off $162,000 in debt. Enjoy! When you get married, you’re supposed to ride off into the sunset and live happily ever after, right? Well, not for us. That “honeymoon phase” came to a screeching halt when…

Hello! Today, I have a great debt payoff story from a reader, Ashlee Binderim. This is how she paid off $162,000 in debt. Enjoy!

When you get married, you’re supposed to ride off into the sunset and live happily ever after, right?

Well, not for us. That “honeymoon phase” came to a screeching halt when we quickly realized our financial situation wasn’t ideal (to say the least).

Let me set the stage for you – we were in our early twenties, still going to college full-time, and working part-time jobs when we said “I do”.

We were barely making ends meet and money was really tight.

We knew that we were walking into this marriage with debt, but we didn’t actually know how that would impact our financial future. 

My husband was in that sweet spot where his parents made too little money to send him to college but too much money to qualify for financial aid. This resulted in him taking out $150,000 in student loans.

During his time in college his student loans accrued $15,000 in interest. Bringing his grand total to $175,000 in student loans.

I put myself through college and was able to qualify for financial aid and I also received some scholarships but it didn’t cover everything. I took out $11,000 in private loans and $20,000 in student loans. I worked part-time and was able to pay back about $10,000 while in college, leaving $21,000 that I brought into our marriage.

Finally, we decided to purchase a brand new car at $29,000. 

Bringing the grand total to: $225,000 in debt.

We were barely old enough to legally drink and had $225,000 in debt. 

With an income of less than $3,100 a month starting out, our debt felt like we were chipping away at Mount Everest with a pickaxe. 

These loans were holding us back in just about every area of life. We were already paying a mortgage payment for a student loan, so we knew that we couldn’t afford to purchase a house. 

We were trying to pay off debt as quickly as possible which meant investing took a backseat. 

We had to say no to just about everything that we wanted to do or buy. Especially during the first year of our marriage because we could barely afford to eat.

So, how did we pay off $162,000 in debt in 6 years? I’m going to walk you through year-by-year our income and approximately how much we put towards debt each year. 

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How we paid off $162,000 in debt in 6 years

2016 –  I made around $25,000 that year and my husband made $35,000. We brought in $3,100 a month – collectively. With rent on a small one bedroom apartment at $1,050 which is the cheapest place that we could find. That left us with $2,050 for the rest of our basic necessities. My husband and I were still in college so we didn’t have a student loan payment yet. We knew that we wanted to pay off debt as quickly as possible so we put all of our extra income (which wasn’t much) towards debt. That first year, we were able to pay off $13,800 in student loans. 

2017 – I graduated college and got a full-time job as an Instructional Designer where I made $51,000 a year. My husband worked part-time and attended college full-time. He made about $35,000 a year. Which brought our collective income to $86,000 a year or $5,100 take home a month. 

In 2017, we also moved from our apartment to a larger apartment. Well, apartment may not be the right word, it was the converted hayloft of a barn. We had an agreement with our landlord that we would do things around the property, like yard work, maintenance, and other miscellaneous things. This agreement meant that we only paid $760 for rent and utilities. 

We had to pause our financial goals for a couple months during 2017 because my husband was experiencing loss of vision which resulted in dozens of doctors appointments and specialists to diagnose a rare medical condition. Luckily, we had insurance with a low deductible so we only had to pay a very small amount out of pocket and any travel expenses.

That year we put $22,100 towards paying off debt and saving to pay off my husband’s student loans. 

2018 –  My husband graduated college and was hired full-time as a Project Manager for a construction company with a starting salary of $71,000. With my $51,000, we made a combined income of $122,000. After medical insurance, taxes, and retirement our monthly take home was around $7,500.

We refinanced my husband’s student loans from his parents name to his, because that was the verbal agreement that they had upon him entering college. 

Quick note from Michelle: Companies, such as Credible, help you to refinance your student loans. With refinancing, the average person can save thousands of dollars on their loan, and that’s incredible! You can save a lot of money with student loan refinancing, such as with Credible, especially if you have high interest federal or private loans.

The best interest rate we could get was 6.5% on $175,000 – which meant that over half of the monthly payment of $1,315 went towards interest. According to our student loan provider, we should’ve been in debt for 15 years but knew that we needed to get out of debt as quickly as possible. After doing the math, we were looking at paying over $135,000 in interest alone over the lifetime of the loans.This would’ve brought the total amount of the loan to $310,000 – which as you can imagine, we weren’t ok with. 

So, in 2019 we really buckled down and linked arms to make major changes to our finances and put everything we had towards paying off debt which also meant making some hard decisions.

We put $24,229 extra towards debt in 2018 on top of our monthly payments of $1,315 bringing the total towards debt to $40,009 (but remember, only half of our payment was actually going towards the principal). 

2019 – This year we got really serious about paying off debt. We were making the most money that we had ever made and we were honestly really tired of saying no to everything. We knew that it was going to take some hard decisions and we needed to refocus our priorities but we knew that it was going to be worth it in the end.

My husband and I both received a raise and were now making a collective $139,000 a year. Monthly take home was around $7,900. 

We cut back much of our spending in many areas including insurances, monthly streaming services, and we made one of the hardest financial decisions – we sold our car back to the dealership. 

It was a really humbling experience. The car salesman was pretty surprised that we wanted to sell our brand new car back but in just a couple of hours we paid off $21,393 and walked out of the dealership with a paid for car that ran just fine for $1,500. It didn’t have all the fancy bells and whistles but it drove and meant we were able to achieve our financial goals faster. I still drive this car around today and love it!

Again, we experienced another financial setback due to health issues. I received a diagnosis that required several specialized treatments that our insurance didn’t cover. Despite this setback, we were still able to knock down our debt. 

We put $57,820 in debt in 2019 alone (a big portion of that was the car that we sold back to the dealership).

Through our debt journey I learned that I really have a passion for helping other people reach their financial goals and decided to pursue a financial coaching certificate and started to build a financial coaching business. 

Because we were paying off debt left and right our credit score dramatically increased and we decided to refinance our student loans for a lower interest rate of 4% but kept our monthly payments the same.

Refinancing for an interest rate just 2% smaller drastically changed how much money was going towards the principle. We went from paying about $600 a month in interest to $250 from a 20 minute phone call with our student loan provider. 

2020 – I quit my job in February to pursue working full-time on my financial coaching business – our income took a huge hit as world events hit the U.S. in March of 2020 and I focused on helping people for free during this tumultuous time. Although we didn’t pay off as much debt as we wanted to, I knew I was helping people gain some semblance of security during an unprecedented time and that was worth our financial goals taking a small backseat.

By November we were under $100,000 in debt and for the first time our debt finally felt more tangible and like we were making serious headway in becoming debt free! 

That year we brought in $106,000 and our monthly take home was around $6,000. We received several stimulus checks that we also put towards debt which really helped and my husband also received a company car which cut down on our monthly insurance payments and gas budget almost completely. 

In 2020, we put about $33,488 towards debt during such an unprecedented time which we were very grateful for making any progress towards our goals because we knew that wasn’t the case for a lot of families out there.

2021 –  As of today, our income is around $112,000 with a monthly take home pay of $6,400. Now that we’re in the home stretch – we’re doing everything that  we can to pay off the remainder of debt. This year we’ve sold a travel trailer, small fishing boat, extra vehicle, and many other miscellaneous things around the house. I also started a fine art painting business to sell some paintings that I’ve done over the years.

We just refinanced our student loan again to get an all time low interest rate of 2.25% which will save us about $1,500 a year that will go directly to the principal instead of interest! 

Literally anything and everything we can do to pay off this debt – we’re doing it!

By the end of this year, we’re looking at approximately $42,000 in debt and we have a goal of becoming debt free by September 2022! 

As you can see, there were a lot of things that came up during paying off debt. But I wanted to give you a really clear and honest picture of what our payoff story looked like!

I feel like there’s a lot of stories out there that don’t show you the hard parts of paying off debt – which for us, there were several moments where we felt like we were stalled out and not gaining any forward momentum.

But, each and every month that we put money towards debt we feel just lighter, more secure in our future, and that much closer to hitting our goals. Despite the setbacks, it’s still worth it. 

Let’s dive into the three specific things that we did to pay off $162,000 in debt in 6 years and not lose sight of our goals. 

1. Get on the same page 

This is one of the most important steps that you can take if you’re married or in a committed relationship.

If you’re not on the same page with finances, you’re going to pull in opposite directions and make little progress.

But, when you both agree on working together and in the same direction, you’ll gain momentum faster and also hold each other accountable to achieving your financial goals. 

In order to get on the same page, I recommend that you sit down at the beginning of the month to create a budget and have that budget readily available to look at.

Hang it on the fridge if you need to.

This way it’s a constant reminder of what you’re working towards and will keep you moving forward together with momentum.

2. Set priorities 

You can’t accomplish everything in a year, so set your top 3 financial priorities that you want to focus on in that given year and only focus on those three things. 

For example, let’s say you make $65,000 a year and your priorities are paying off $15,000 in debt, taking a $4,000 vacation, and saving $3,000 in an emergency fund. 

You can’t, however, max out your retirement, Roth IRA, take 3 luxurious vacations, save $100,000 for a down payment on a house, and do everything else that I mentioned above.

It’s just not feasible. 

Not only that, but you would be setting yourself up for failure because your goals are not realistic and probably would feel very overwhelming and limit you from taking any steps forward.

By focusing on our top three priorities, it helped us to say no to things that didn’t fit into our priorities and kept us on track to hitting our financial goals.

3. Still have fun

As a financial coach, I’ve done a ton of research on human psychology around money. I’ve learned that your brain’s sole job is to keep you safe – to your brain, that means the same.

Because anything different from what you’re doing is scary, uncomfortable, and maybe even a little painful and your brain will do anything to make sure you don’t feel those feelings to keep you safe.

So, let’s say that you have a goal to pay off $50,000 in the next 2 years.

In order to do that, you will likely have to do a couple of things: ask for a raise, cut your spending back, sell things around the house you don’t use anymore, or pick up a side job.

All of these things are outside of your normal routine which means the brain goes on high alert and you might feel stressed out.

When you feel stress over something, your brain will try and keep you from feeling those uncomfortable emotions so it’ll have you focus on something else instead.

When you feel stress, your brain will get you to do something else that brings you happiness or at least procrastinating from the feelings that you’re feeling – like scrolling on social media, binging Netflix, eating that pint of ice cream, etc. Then you feel stress that you didn’t make any forward progress and you rinse and repeat.

Achieving your financial goals doesn’t have to be so difficult when you help your brain understand the benefits to achieving that goal.

To circumnavigate human psychology, it’s important that you still have fun while you’re going after your financial goals. I’m not talking about taking a luxurious vacation every month.

But I am saying that you need to set aside a little money to have fun! This will actually help your brain adapt to new habits and help you achieve that financial goal faster because you’re not fighting against your brain.

It also helps to know that it’s going to be a marathon, not a sprint.

Financial goals, especially large ones, are going to take some time. Unless you win the lotto (that you likely don’t even play), it’s going to take an extended amount of time to accomplish your goals and that’s a good thing!

Long-term financial goals can teach us the importance of patience, delayed gratification, and finding joy in the little things.

This can be translated to everyday life. You learn to say no to the little things because you’re so focused on the long term goal.

Because my husband and I have paid off over $162,000 in debt we know that we can tackle any financial goal that we set for ourselves and we’re actually stronger and a better team because of it!

There are several areas where we saved money that might help you as well – 

  1. Car insurance – We were able to lower car insurance by shopping around regularly. If we felt like our car insurance was too expensive or when they raised the prices after a year, we would shop around for a better quote. On average we save $700 a year by shopping around.
  2. Phone bill – We switched from Verizon to PureTalk to cut our phone bill by $120 a month! Now, I only pay $31 a month for the same service. 
  3. Sold stuff – We sold many many things over these 6 years. We sold a total of 4 cars, a travel trailer, small fishing boat, furniture, vegetables from our garden, old artwork from college, and many other things that I’m sure I’m forgetting! 
  4. Get creative with housing – The housing market is insane right now so I know how hard it can be to find affordable housing. When you think outside the box and find creative solutions you’ll be surprised with how much money you can actually save. You can live in a mother-in-law suite, buy a trailer and rent someone’s backyard to park it on, live in a van, or do a work-trade for discounted housing like we did. 
  5. Refinance student loans – A fun fact about student loans is that you can refinance them as much as you want to. We refinanced our student loans 3 times to get a better interest rate and it’s usually pretty painless.

When we first refinanced our student loans the best interest rate that we could get was 6.5% meaning that about $600 a month was only going towards interest and not even touching the principle. When we refinanced our student loan again a year or so later we were able to save about $350 a month!

As you can see our journey in paying off $162,000 in debt wasn’t a clear path.

It had bumps in the road, things came up that we couldn’t foresee and that’s okay. That’s life! But, you shouldn’t let those bumps completely halt your progress.

We never exceeded $140,000 a year in our income and were still able to pay off our debt in half the time. I’m not saying that it’s easy, but it’s possible. We got on the same page, focused on our main priorities and still had fun in the process.

We’ve traveled to Texas, Montana, Oregon, Utah, Colorado, Nevada, Washington, and California while paying off debt. 

I hope that reading through our journey to paying off $162,000 in debt has been inspiring and given you hope. 

If you want to watch our journey to become financially free by September 2022 and pay off $63,000 in debt, you can follow us over on Instagram where we’ll be giving regular updates! 

Author bio: Ashlee and her husband started their marriage with over $225,000 in debt. They were both working part time, going to college full time, and barely making ends meet. After years of struggling they finally figured out how to link arms and tackle financial goals together. Current debt payoff: $162,000 to date! Now, she’s a certified financial coach and on a mission to help other couples reach their goals by getting on the same page with their finances so they can set up a secure future. You can find her on her website Beyond Millions as well as on Instagram.

Do you have debt? Are you trying to pay it off?

Source: makingsenseofcents.com

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Apache is functioning normally

August 6, 2023 by Brett Tams

Robert Kiyosaki, Robert Allen, and Loral Langemeier would have you believe that in order to get rich all you need to do is throw your money into real estate, sit back, and let the profits come. It’s not that simple. There’s risk involved. You have to know what you’re doing.

Jon forwarded a link to what he calls “a personal finance trainwreck”. He writes: “If this guy is for real (and there appears to be some suspicion about that) then, wow. Unbelievable.” Casey at iamfacingforeclosure.com thought he could make a killing at real estate. He wanted to reach Financial Independence quickly.

I’m a 24-year-old aspiring real estate investor from Sacramento, California. After going to few seminars I bought eight houses in eight months across four states with no money down. I fixed and sold two and then ran out of cash. I am now facing foreclosure on six five houses. I’m learning my lessons, finding solutions and blogging about it.

Casey’s story is fascinating. Here’s a young man who read Kiyosaki and Allen, and who is trying to find riches by following their advice. He’s trying to make money quickly, and is struggling, but is willing to share the gory details. In one entry, Casey writes that he and his wife are running out of money. They’ve been living on credit cards, which are now maxed out. He’s afraid he might have to get a job.

I can’t just do a job. I do not want to give up my dream of financial independence. If I get a full-time job, I will continue doing my business and investing on the side. Finding time to do both will be hard (tried it before many times). If I must do that, I will. But it will probably take much longer to reach my goals.

An hourly job has limited earnings potential. Getting a 3% raise every year is not my idea of upwardly mobile. Making $25/hour writing code seems like a waste of time when I can sell a real estate contract for $5,000 after doing 5 hours of work = that’s $1000/hour!

So if I can work really hard for one month and find just 2 deals, I can make $10,000. That’s much better return on my time.

Casey received many responses (the comments are the best part of the site), some helpful, some angry, some flabbergasted. Some are all of these at once.

You’ve just nailed the difference between fantasy and reality. […] You are in the process of learning the difference between GAMBLING and INVESTING. Everything you’ve done so far has been gambling. Investing requires that one balance the risk with the rewards, diversify, and be dedicated. Some investments will fail, but a wise investor won’t have too much tied up in any single thing (like real estate purchased on a guru-drunken binge). Investments are made with money that one could stand to lose. Investing is not done by leveraging oneself up to the eyeballs and beyond, hoping for a miracle.

You can see television interviews with Casey (choose “House Flipper Part One” or “House Flipper Part Two” from the menu in the middle of the page). His story is also featured in two articles from the San Francisco Chronicle:

Langemeier, Kiyosaki, and Allen are inspirational. Some of their ideas may even be useful. (Prlinkbiz — who I’m sure will have something to say about this entry — is a huge Kiyosaki fan, and seems to be making his principles work for her.) But these folks preach that their methods are sure-fire ways to wealth and success. They overpromise in an attempt to sell books and seminars. Langemeier says she’s created 200 millionaires, and that she can make one out of anybody. Yet I can find no independent evidence that this has occurred. I’m not saying that it hasn’t happened, but I’m skeptical.

The only sure-fire way to wealth and success is to spend less than you earn, to save the difference, and to invest that savings for growth.

Follow-Up on Casey Serin, the Man Who Would Be Rich

Casey stopped by Get Rich Slowly yesterday and had this to say:

I don’t see why a person CANNOT get rich quick… but still do it in an honest and safe way. Whenever you hear “Get Rich Quick” you think somethhing bad.

And yes, if you read my story, it DOES sound like i’m just a big screw-up. AND YES.. I did do some stuff that I am NOT proud of (liar loans). However, I am learning my lessons and hoping to make a comeback.

I am determined to find a way to make an honest buck in real estate in a down market. My mentor “Rich Dad” did it. It took him only about 10 years. Now he has 20K+/mo in PASSIVE income from REAL ESTATE.

Is 10 years too quick? What about 5 years?

That’s an interesting question. How quick is too quick?

It’s not impossible to get rich quickly — the day before I wrote about Casey, I shared advice on how to handle sudden wealth — but it’s dangerous to focus on quick wealth as a goal. I’m convinced that people get rich quickly by chance, not by intention. If get rich quick schemes worked, more people would do them. You’d read and hear documented tales of success. But they don’t work. They’re mostly scams designed to transfer money from saps like Casey into the hands of others.

My advice for Casey is this:

If you have a burning passion to make these sorts of plans succeed, then pursue them with only a portion of your finances. Follow tried and true personal finance wisdom with most of your money. Take 90% of what you earn, and do the boring stuff with it: pay off debt, start an emergency fund, invest for retirement. You are so young right now, that if you would invest just $5000 each year until you’re 50, you could retire then as a millionaire. (Assuming 10% returns.) This is with almost no risk. Why try to get rich all at once? Why not ride it out?

If you’re dead-set on trying to get rich quickly, then don’t use all of your capital to do so. Do the safe stuff with 90% of your money. Save the remaining 10% to make real estate purchases. If you strike it rich, great. But if you don’t, then at least you haven’t mortgaged your future. This isn’t ideal for most people, but you have the drive and desire, so it gives you something to play with. But this means that you’ll have to work in order to meet your goals.

I don’t want to kick Casey’s dreams. Dreams are good, and I think people should pursue them with gusto. Too many people make a practice of telling others why their plans won’t work instead of lending support. But when your dreams are at odds with reality, you need to re-evaluate.

$2 Million in Debt in Two Years

Casey Serin of I Am Facing Foreclosure held a two-hour conference call to take questions from readers and to explain his situation. I didn’t hear the call, but I did read the entire transcript (part one, part two).

For those of you unfamiliar with him, Casey Serin is the Napoleon Dynamite of real estate investing. He took real estate seminars from Russ Whitney and read books by Carleton Sheets. He bought into the “get rich quick” mentality. In October, the San Francisco Gate wrote:

After spending a year and upward of $15,000 (borrowed on credit cards) going to real estate seminars and buying home education courses from everyone from Russ Whitney to Bruce Norris and, of course, the aforementioned Robert “Rich Dad, Poor Dad” Kiyosaki, Serin embarked on his brilliant career as a real estate flopper, er, flipper. “I wanted to move toward financial independence,” he told me by phone from his home in Sacramento, referring to “passive income,” a key tenet of the “Rich Dad, Poor Dad” scriptures (“Don’t work for money, allow money to work for you”).

Most people take these seminars and read these books but never do anything. Serin heeded the advice of these gurus. In his own words, he “bought 8 houses in 8 months in 4 states with no money down looking to fix ‘n flip.” He bought these houses between October 2005 and May 2006, after the U.S. real estate market had already begun to decline. He ended up $2.2 million in debt, and he’s been blogging about it ever since.

Serin’s story bugs a lot of people. He made many mistakes. He lied on his loan applications (and continues to rationalize this by saying it’s “industry standard policy”). He exhibits no regret. He continues to live a normal (even lavish) lifestyle despite being deep in debt. He refuses to pay anything on his debt because he doesn’t think it’ll make any difference. He refuses to take a job. He doesn’t take any action to improve his situation. He seems to be a publicity whore. Despite his failures, he believes that he can still get rich quick in real estate if he only finds some sweet deals.

I don’t get angry at Serin. I just think he’s dumb. He continues to pursue a way of life that is just not tenable. He’s trying to bypass the “hard work” portion of the American Dream. I consider his story a stark counterpoint to my message of “get rich slowly”. (Trivia: Casey went to high school with Ramit of I Will Teach You to Be Rich. The former tried to get rich quickly and failed. The latter teaches sensible entrepreneurship and personal finance advice, and has succeeded.)

As I said, I read the entire transcript of Serin’s two-hour conference call. It’s an amazing glimpse into the mind of a young man who wants wealth now. Since I know most people don’t have the time to wade through the entire thing, I’ve culled the best parts to share here.

The first thing that strikes you when reading Serin’s stuff is that he doesn’t seem to have learned his lesson. He’s two million dollars in debt, but he’s still convinced that there’s a quick fix for this mess.

Besides real estate, I’m also looking at other opportunities. With this exposure I’ve had, I’ve made a lot of interesting contacts in different industries, not just real estate. I’m talking with a gentleman in Southern California who’s a silver broker, for example. The silver and gold and precious metal market right now is on the rise, and whenever there’s turbulence, or any kind of a war, or anything crazy with the economy, that’s a good place to put your money. I’m definitely looking at that. I’m looking at stocks, but individual stocks, not mutual funds — the performers, the companies that are about to take off, that you’re able to make some money; for example, with penny stocks.

I want to mail Serin a box of personal finance books. I want to send him Dave Ramsey, Your Money or Your Life, the words of John Bogle. I want him to read real personal finance advice that works. But I’m afraid the books would go unread. (Does anyone have his address or know how to get it? Maybe I really will send him some personal finance books.)

At times Serin seems to have learned something. Regarding “no money down” deals, he says:

If I was putting my own cash down, I would have been a lot more careful. That’s what happens when you have a real down payment. Anybody out there who’s looking to do a no money down deal, I say, you have to be careful. Don’t treat the no money down as just a free deal for you.

But other times it seems he hasn’t learned a thing:

I love those no doc loans, they’re the best because you’re never stating anything so no one can ever go back and say you were lying on your application.

One caller tried to explain the concept of “buy low, sell high” to Serin, but he didn’t want to hear it.

CS: Well, you know, if you’re going to do flipping in a down market, here’s the biggest thing. Buying is going to be easy. There’s tons of people giving houses away, including myself. You come to me; I’ll give you my houses away. Just take them over, or whatever; save me from foreclosure. So, buying is not going to be the hard part. Selling is the tough part. You have to get really good at selling your properties, and in a down market, you probably don’t want to buy anything that’s not a first-time-buyer home.
[…]
SC2K2: I just can’t handle how brainwashed you’ve been by all those seminars.
CS: Oh, yeah?
SC2K2: The way you make money in a down market, is you wait for the prices to bottom; you buy in paying very little; and then you sell when they’ve gone way up. Yeah, your Rich Dad probably —
CS: That’s the long-term strategy. Are you saying you can’t do quick flips on the way down?
SC2K2: You know, Casey, there’s no way you would be able to handle quick flips.

Serin isn’t interested in a long-term strategy. He wants his money now. He doesn’t see that this is precisely where he’s going wrong. While he’s focused on quick riches, he’s neglecting basic personal finance. For example:

I thought at the beginning it would be such an awesome story, a comeback story and show so much success to be able to pay everything back, but at the same time I think I had a bit of a wishful thinking going on, because I didn’t realize when I first started what kind of a hole I was in. The hole’s so big that at this point, I’m really out of options.

Yeah, but here’s what’s going to happen. I pay a credit card — even fifty bucks — that doesn’t do anything to the collection process. Here’s what happens: it’s going to go and get discharged, and then they’re going to try to sue me and try to get that money. So that fifty bucks could have been used better in something where I can actually make money, perhaps doing another deal —

And:

GDS: What’s your FICO now?
CS: I actually don’t know because I haven’t logged into Washington Mutual in a while and I probably should have done that before this call, but last time I checked it was in the high 400’s, 490 I believe or something along those lines. It might be lower now because I’m going to have two official foreclosures showing up on my record any time.
GDS: Well, it doesn’t go below 450, so it doesn’t get much —
CS: It might be interesting to see if I might be a person that actually gets a 450 FICO score. I might be one of the few amongst some of my friends. I’m hoping other people don’t do the same thing I did.

The end of the conference call is the best part. A caller named Nacho tries to push Serin to think about his situation, about the things he’s done.

CS: Not everyone’s going to be successful and self-employed. But don’t you know self-employed doctors or lawyers or successful realtors or anybody who doesn’t have a W-2 but still makes money? It’s not like W-2’s the only…
NACHO: But you haven’t been successful! So isn’t it time to try something else? Supplement your side jobs with a real job.
CS: Well, you know, I never said I’m not going to get one. I’m definitely considering that, and since I do still have money coming in through some of those other sources, it allows me to stay flexible so I can still kind of be in real estate a little bit, and other opportunities.
NACHO: Do you understand that the real estate market is tanking? Do you have a grasp of that?
CS: Oh, yeah. That’s why I’m looking at other investing opportunities, not just real estate.
NACHO: And do you understand that you bought in at the worst possible time? You do understand that, right?
CS: It’s not like you can’t make money in a down market. My local Rich Dad, he made his fortune in the last downturn in California. But of course he had a lot more experience.
NACHO: Did he have decent credit? Was he able to secure loans?
CS: Well, he could secure loans. He had money partners. He had mentors. See, I kind of started off without any mentors guiding me, and that’s kind of one of my problems. And I didn’t have any construction experience.
NACHO: You know what, Casey? I don’t think mentors is your problem. I think you’ve got enough with these guru mentors. I think that that’s the last thing you need. What you need is a swift kick in the ass, from somebody who’s going to tell you the truth. Seriously. Someone who’s going to tell you the truth.
CS: I appreciate you being upfront and giving me a little dose of reality, as you said.
NACHO: Well, that’s how I roll. I’m always trying to keep it real. I’m just trying to let you know, man, that you need to start looking at things differently. You’ve been going a certain way and it’s not working out for you, and you really need to change the way you’re viewing life.
CS: Well, I appreciate it.
NACHO: Because everybody that you owe money to is going to get shafted, and then, in turn, taxpayers are going to have to pay — you know, foot the bill.
NACHO: Are you worried about going to jail?
CS: I’ve already kind of addressed it, but the thing is, if I live my life in fear, what good is that going to do?
NACHO: And you don’t think that you deserve to go? You don’t think that what you did was basic thievery?
CS: Well, the thing is I wasn’t out to rob banks, I was out to make a business, and I screwed up.
NACHO: But Casey, you got everything fraudulently. Come on, you knew in your heart that that was the wrong thing to do.
CS: Part of me was thinking that maybe I shouldn’t be doing stated income loans, because even though everyone seems to be OKAY with it, I had a little bit of a gut instinct. I should have listened to it; you’re right.
NACHO: And you understand that when you do things wrong like that, sometimes you have to pay the piper?
CS: Oh, yeah. And do you think I’m paying the piper?
NACHO: No, not yet. Not by any means, no.
CS: You don’t think that all the financial stress and the issues I’m going through is not enough?
NACHO: Absolutely not, Casey. I think you should be out there working your ass off — two jobs if necessary — paying five bucks a month on every single bill if that’s what it takes to pay this stuff down. I think you should be calling your creditors and making some sort of payment arrangement for you to —
CS: You know what? Check this out; put yourself in my shoes. Even if I get three or five or ten jobs right now I’m not going to be able to catch all my loans up, so they’re going to go to collections, and they’re going to start suing me. So if the only good thing I can really do right now is bankruptcy protection or refinance all those loans.
NACHO: If you pay five dollars a month on any bill, they can’t send it to collection, Casey, do you understand that?
CS: Sure, they can.
NACHO: No, they can’t.
CS: If I don’t pay the full monthly payment — I can’t just keep letting them go… That means I can just pay a dollar on all my loans and they’ll just keeping indefinitely. They’re not going to do that.
NACHO: I’m not talking about the foreclosure loans, I’m talking about the credit card bills.
CS: Even the credit cards.
NACHO: Casey, you have to do something to try and right this wrong. Who’s the guy who has the blog – I am [$334,442 in unsecured debt. I am 23. Will I make it ?] dollars, whatever the hell it is, in debt.
CS: Yeah, the guy eating Ramen and stuff. Yeah, he’s eating Top Ramen; he’s doing all this other stuff.
NACHO: He’s doing the right things. If you would do those things, people would be behind you. People would be giving you suggestions and telling you what to do. Do you understand that?
CS: Well, you might have a good point there. But I wonder if that guy’s really for real, though. Do you think a person can survive on Top Ramen for six months?
NACHO: Oh, yeah. Sure.
CS: Do you think he can eat that crap and still be healthy and still be safe?
NACHO: Yeah, throw some vegetables in there. Casey, the last thing you need to worry about right now, seriously, is eating your vegan — your mildly vegan — seriously, you throw some vegetables and a little bit of whatever, some chicken in the Top Ramen, and it’s fine. Have some beans and rice; that’s fine. Buy a big-ass bag of beans and a big-ass bag of rice and cook it up. Have oatmeal for breakfast —

Casey Serin may or may not be a good guy. I can’t tell. He seems likeable enough. But he has succumbed to the idea that the best way to make money is through tricks and games. I’m not saying that you have to be a wage slave all your life in order to get money to save for retirement. But there are clear, safe paths to wealth and happiness. They take time. They take effort. My goal is explore these paths with you. It’s too bad Casey’s not along for the journey.

Source: getrichslowly.org

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Apache is functioning normally

August 6, 2023 by Brett Tams

Many of you wrote last week to say that I was too harsh on my friend Gillian, the woman with the “I can’t” attitude. Perhaps you’re right — I may have given up too early. I used to live like she does, and if I can turn it around, anyone can.

For a decade I was a deficit spender. I spent more than I earned. I used credit cards to fund a lifestyle that was beyond my means. Eventually I wised up — I destroyed my credit cards and cancelled my accounts, but my worries weren’t over yet. I wasn’t digging any deeper, but I was still stuck at the bottom of a hole: I was living paycheck-to-paycheck.

Twice a month I would deposit my paycheck, pay my bills, and then look to see how much was left. Whether the surplus was $20 or $200, I made plans for it: comic books, video games, clothes, whatever. I used to joke that I was an expert at spending every penny I had. Except that it was no joke. Late at night, when I couldn’t sleep, I would wonder why I could never get ahead.

I lived like this for years. You can maintain a paycheck-to-paycheck lifestyle for a long time if you’re not taking on new debt (and if disaster doesn’t strike). Here’s another way to look at it:

  • If you spend more than you earn, you are acquiring debt.
  • If you spend about what you earn, you are living paycheck-to-paycheck.
  • If you spend less than you earn, you are acquiring wealth.

I don’t know about you, but my goal is the latter. Escaping the paycheck-to-paycheck lifestyle means building positive cash flow, getting ahead of your expenses. Instead of spending exactly what you earn, you need to save something every month; even $25 or $50 can make a difference. Once you start, this amount has a tendency to snowball. For me, a $25 surplus grew into a $100 surplus, which grew into $300 per month and more!

But how do you start generating this surplus? How do you escape from the paycheck-to-paycheck pit? Here are some ideas that worked for me — one or more of them may work for Gillian. Or for you.

  • Start a savings account. For years I resisted the idea of opening a savings account. “Why should I?” I said. “I don’t have money to save. I barely have anything in my checking account!” But when I finally did open a savings account three years ago, a funny thing happened. I started finding money to stash there. It wasn’t much at first — $20 here, $75 there — but in time, it made a difference. Before long I had developed the savings habit.
  • Pay yourself first. The best way to begin your escape is to save first, before you do anything else with your paycheck. I know this can be difficult. You worry that you won’t have enough for your bills, for gas, for food. But the danger is that if you don’t set the money aside first, you’ll just spend it. Have a small amount — $25? $50? — automatically deducted from your paycheck and placed into savings. Chances are you won’t even miss the money.
  • Spend with purpose. You may want to consider a budget. Budgets aren’t scary, and they’re not difficult. Some people find them liberating. There are a variety of computer budgeting tools available, including:

    A budget can be handy, but even if you can’t bring yourself to use one, you should know where your money needs to go.

  • Draft a spending plan. I don’t keep a budget, but I do create a financial plan every few months. It’s nothing more than a quick financial snapshot showing my income and expenses. I also list upcoming major outlays. This helps me keep my financial goals in mind as I go about my daily life. It’s easier for me to decide not to buy the latest Spider-Man comic when I remember that I’m saving for a trip to Europe.
  • Attack your debt. These methods are great, but if you really want to free up cash, pay off a debt. I recommend using a debt snowball to tackle your obligations one after the other. But if your goal is to ease financial pressure ASAP, you may want to try a slightly different approach. Pay off your debt with the smallest balance, but instead of rolling the freed cash flow into the next debt, use it to establish a savings buffer.
  • Cut costs. This one’s obvious, but can be difficult. My friend Gillian views cutting costs as deprivation. If you’re willing to look behind the immediate sacrifices to the long-term gains, cutting costs is an excellent, quick way to free up cash. There are a million little things you can do to save money now.
  • Boost your income. Many people have suggestions for how to cut costs, but few remember there’s a second side to the wealth equation. Earning extra money helps just as much as practicing frugality, and sometimes hurts less. But how do you get extra cash? Find a part-time job for a few months. Sell some of the stuff you’ve acquired over the years. Ask your boss for a raise. Find a way to make money from your hobbies.
  • Avoid lifestyle inflation. A final way to escape the paycheck-to-paycheck purgatory is to opt out of lifestyle inflation. When you get a raise, don’t adjust your standard of living to match. Use part of this new money to pay off debt, and another part to accelerate your savings. When your friends show you their new iPhones, ooh and aah, but resist the urge to get one yourself. Learn to love what you already have.

When I became serious about my finances, I realized that living paycheck-to-paycheck was dangerous. I was always one disaster away from returning to the credit bandwagon. I made a resolution to stop living on the edge and to start saving. It was difficult at first. Old habits die hard. But with time and persistence — and with the habits above — I made the switch. Now, a couple years further on, I’m just beginning to profit from my hard work. I have a monthly cash surplus. I have escaped from the paycheck-to-paycheck lifestyle.

Source: getrichslowly.org

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Apache is functioning normally

August 5, 2023 by Brett Tams

Initial public offerings (IPO) are a common tool for companies to raise capital, and the funds raised in an IPO are known as IPO proceeds.

When investors purchase IPO stocks, the company gets to keep the proceeds, after paying underwriters, the exchange, and others that helped with the IPO process.

By opening up to public investment, a previously private company can bring in significant funds that can be used for various activities, rather than turning to debt as a means of expansion.

Companies can use the capital brought in through an IPO in a variety of ways, but they must disclose their plans to investors.

IPO Proceeds Defined

When a company holds an initial public offering (IPO) they must publish their plans for how they will use the proceeds. This helps investors understand how the company will use their money, and decide whether they agree with the company’s plans before they invest.

This is important because even though the IPO process is highly regulated, it’s also highly risky. Some companies that issue their stock for the first time can see the stock price soar; others can see it plunge. It’s also possible for the IPO to have an IPO pop, or price spike, before dropping. This kind of volatility is common to IPOs, which is why investors must proceed with caution.

Companies preparing for an IPO file an S-1, a several-hundred-page document, with the Securities and Exchange Commission (SEC) which includes a disclosure about the planned use of IPO proceeds.

They must also show investors a business plan. Potential investors can evaluate the business plan and see if they think they will receive a satisfactory return on their investment if they buy stock in that IPO.

While companies get to keep most of their IPO proceeds, a portion also goes to all investment banks, accountants, lawyers, and others who helped them with the IPO process, including valuing the company and setting an IPO cutoff price. According to PWC, underwriting fees alone eat up 3.5% to 7% of IPO proceeds.
💡 Quick Tip: Keen to invest in an initial public offering, or IPO? Be sure to check with your brokerage about what’s required. Typically IPO stock is available only to eligible investors.

What Are IPO Proceeds Used For?

There are a few areas where companies tend to spend IPO proceeds. Generally companies mention multiple uses in their S-1 filings, and it may also be something that they discuss with investors during their IPO roadshow. These might include:

General Corporate Purposes

General corporate purposes is a very common area companies talk about in their use of proceeds statements. It is a broad category that covers a lot of uses such as capital expenditures, operating expenses, and working capital, and getting more money for this is a major reason that many companies go public. Companies can use this term to describe broad activities without going into detail about their plans.

This allows them to keep their plans private and also lets them keep their options open and decide exactly how to spend money at a later date. Some companies do go into greater detail about the meaning of their general corporate purposes statement.

Research & Development

Companies might also use proceeds from an IPO to fund research and development. They spend funds developing new products and services, which can take years and significant amounts of money. Since R&D is so expensive, it is a major reason companies choose to hold IPOs.

Without R&D, some companies might struggle to keep up with competition and stay relevant in their industry. Some companies go into detail about the types of R&D projects they plan to work on using IPO proceeds, while others keep their plans vague.

Company Growth

Companies often choose to hold an IPO to raise funds for company growth. Company growth plans often appear in their business plan, and can include capital expenditures, working capital, sales and marketing plans to help a company grow its reach and revenue.

Companies want to create long-term, sustainable growth so that a company can stay in business for a long time. Like other uses of IPO proceeds, companies may go into detail about their plans for company growth expenditures or they may keep their plans vague.
💡 Quick Tip: All investments come with some degree of risk — and some are riskier than others. Before investing online, decide on your investment goals and how much risk you want to take.

Acquisitions

Companies can use IPO proceeds to merge with or acquire other businesses, something that can be very expensive. Without holding an IPO a company might not have the funds required to complete an acquisition. Acquisitions and mergers can help a company grow their customer base, eliminate competition, and expand their product and service offerings.

When a company includes an acquisition in its S-1 filing, they must state which company they intend to acquire. If they don’t yet have a company in mind to acquire, they can just list acquisitions as one possible use of IPO proceeds. A company does not have to state the exact company they are interested in acquiring if it will harm the potential of the acquisition plan.

Some companies take a unique path to acquisitions using IPO proceeds, known as a “blank check” IPO or special purpose acquisition company (SPAC). Companies create a shell company that they take public with an IPO and then use the IPO proceeds to complete an acquisition.

Debt Repayment

Another common use of IPO proceeds is to pay off debt. By paying off any existing debts, companies no longer have interest payments, so they reduce their operating costs, and they can also gain access to more funds from loans. Although it can be beneficial to a company to pay off their debts, this use of IPO proceeds is not popular with investors.

Other uses of IPO Proceeds

In addition to the uses described above, there are many other ways companies can use IPO proceeds, including paying taxes and charitable actions.

SEC Requirements on IPO Proceeds

The SEC requires companies file a “use of proceeds” section in their S-1 IPO submission. The S-1 explains to investors the goals of the IPO and what the company plans to do following the IPO, including how they will use proceeds. Requirements for what must be included in the S-1 are fairly broad, so companies can choose how much to share with potential investors, and they have a lot of choice about how they can use IPO proceeds.

There are several specific requirements for what must be included in the S-1, a document scrutinized by investors as part of their IPO due diligence. The “use of proceeds” section must include a brief outline of how proceeds from an IPO will be used. The requirements for what the brief outline includes are broad, giving companies a lot of freedom in what they want to disclose. Companies are allowed to use broad statements about planned use of funds, such as listing the categories described above.

Later sections in the S-1 submission require companies to go into greater detail about spending plans if they plan to use funds for certain activities. Just because a company states they plan to use funds in a certain way doesn’t legally bind them to actually use the funds in that way. However, companies need to inform investors that plans may change later if that is the case.

The Takeaway

With many companies going public per year, knowing how a company is going to use its IPO proceeds — the funds earned from the public offering itself — is important if you’re thinking about investing in that company’s IPO. You can find that and other useful information about a planned IPO in a company’s S-1.

Common uses for IPO proceeds include paying off debt; funding additional research and development; general corporate purposes, and more.

Whether you’re curious about exploring IPOs, or interested in traditional stocks and exchange-traded funds (ETFs), you can get started by opening an account on the SoFi Invest® brokerage platform. On SoFi Invest, eligible SoFi members have the opportunity to trade IPO shares, and there are no account minimums for those with an Active Investing account. As with any investment, it’s wise to consider your overall portfolio goals in order to assess whether IPO investing is right for you, given the risks of volatility and loss.

Invest with as little as $5 with a SoFi Active Investing account.

FAQ

Who gets the proceeds from an IPO?

When a company holds an IPO, they receive money from banks and institutional investors who have agreed to invest prior to the start of the IPO. The company receives proceeds from the initial sale of stock. Any money exchanged after the IPO from the sale of stock doesn’t go directly to the company.

What are secondary IPO proceeds?

Primary proceeds are those made from the initial sale of stock in an IPO. Secondary IPO proceeds are those made in the stock market following the IPO.

How does an IPO raise money?

An IPO raises money by offering shares of stock in a company to institutional and retail investors. When investors purchase those stocks, the company gets to keep the proceeds, after paying underwriters, the exchange, and others that helped with the IPO process.


Photo credit: iStock/Charday Penn

SoFi Invest®
The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results.
Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

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For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A.

Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement. IPOs offered through SoFi Securities are not a recommendation and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation.

New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For SoFi’s allocation procedures please refer to IPO Allocation Procedures.
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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