The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Agriculture (USDA) have settled on new energy-efficiency standards for the construction of new single-family and multifamily homes. This fulfills a requirement laid out in a 2007 law that directs the departments to adopt the most recently published energy-efficiency standards following reviews by the U.S. Department of Energy (DOE) and HUD itself.
The “Adoption of Energy Efficiency Standards for New Construction of HUD- and USDA-Financed Housing” was published on Friday in the Federal Register, and will go into effect on May 28.
The Energy Independence and Security Act of 2007, signed into law by President George W. Bush that December, featured a statutory requirement directing HUD and USDA to “jointly adopt the most recently published energy efficiency standards for single family and multifamily homes, subject to an energy efficiency determination by the [DOE] and a cost-benefit housing ‘affordability and availability’ test by HUD,” according to an announcement from the Federal Housing Administration (FHA).
A preliminary determination was published by HUD and USDA in May 2023, based on energy-efficiency standards developed by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) and the International Energy Conservation Code (IECC).
These standards will “lower energy costs for owners of newly-constructed homes, benefitting homeowners, FHA, and communities,” the announcement stated. “HUD expects this to be particularly beneficial for low-income and rural homeowners who typically face disproportionately high energy cost burdens.”
The implementation timeline varies based on the type and location of new construction. For FHA-sponsored single-family homes, new construction must comply with the 2021 IECC if building permit applications are submitted 18 months or later following the May 28 effective date.
For new construction in persistent rural poverty areas, as defined by the USDA Economic Research Service, compliance with the 2021 IECC will be required 24 months after the May 28 effective date. Within the next month, USDA will “publish a map of rural areas covered by this extension no later than 30 days after the effective date of this notice.”
FHA will also publish a mortgagee letter with additional implementation details for its single-family programs sometime prior to the May 28 effective date.
This announcement in the latest in a series of actions HUD has announced in pursuit of greater climate resiliency. On Thursday, HUD detailed a slew of actions and initiatives it has undertaken to bolster climate resiliency while supporting green housing initiatives that stem from Inflation Reduction Act funding. It also recently announced plans to combat the effects of extreme heat.
Living with family members can be both a comforting and challenging experience, especially when those family members happen to be siblings. As adults, the dynamics change, and considerations extend beyond just familial bonds. When siblings decide to live together and potentially invest jointly, a unique set of opportunities and obstacles arise. Let’s delve into the pros and cons of such an arrangement.
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Pros
Shared Financial Responsibilities: Pooling resources with siblings can ease the burden of financial responsibilities. Whether it’s splitting rent, utilities, or groceries, dividing costs can lead to significant savings for all parties involved.
Greater Purchasing Power: When siblings join forces to invest, they can leverage their combined financial resources to access opportunities that might be out of reach individually. This could include purchasing a larger property, investing in stocks, or starting a business together.
Built-In Support System: Living with siblings means having a built-in support system readily available. Whether it’s help with chores, emotional support during tough times, or simply having someone to share a meal with, the presence of siblings can provide a sense of comfort and security.
Shared Goals and Values: Siblings often share similar upbringings, values, and life goals, which can facilitate smoother decision-making processes when it comes to investments and lifestyle choices. Aligning on common objectives can lead to a more cohesive living and investing experience.
Potential for Long-Term Wealth Building: By combining resources and investing strategically, siblings can work towards building long-term wealth for themselves and future generations. Real estate investments, for example, can appreciate over time, providing a valuable asset for the family.
Cons
Conflict and Tension: Living with siblings can sometimes lead to conflicts over finances, household responsibilities, or personal space. Differing lifestyles and personalities may clash, potentially causing tension within the household and complicating investment decisions.
Dependency Issues: Dependence on siblings for financial support or decision-making can hinder individual autonomy and personal growth. It’s essential to strike a balance between mutual support and independence to avoid feelings of resentment or overreliance.
Risk of Financial Disputes: Entering into joint investments with siblings carries the risk of financial disputes and disagreements. Differences in risk tolerance, investment preferences, or future plans may lead to conflicts regarding asset management and distribution of profits.
Limited Privacy: Sharing a living space with siblings means sacrificing some level of privacy. While it can foster closeness and bonding, it may also restrict personal freedom and make it challenging to carve out individual spaces within the home.
Uncertain Future Dynamics: Life is unpredictable, and circumstances can change over time. Siblings may experience shifts in career paths, relationships, or financial situations that impact their living arrangements and investment plans. Anticipating and adapting to these changes requires open communication and flexibility.
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When both parents and kids in one family have student loans, you may benefit from a game plan about how to handle the debt and the stress that can go along with it. Perhaps the student is still in college and the parent is reaching the end of their payments. Or maybe the parent is currently getting a degree, and the child with student loans has just graduated and is living at home.
Whatever your particular situation may be, there is a silver lining when parents and kids both have student loans. You can all work together as a unit toward the same goal: to pay them off in the most manageable way possible.
Here, you’ll learn about the financial impacts of student loans, repayment strategies, how to prioritize financial security, and how to support each other. While being in debt can be hard, arming yourself with knowledge is a solid step forward.
Understand the Financial Impact
Student loans can have several impacts on individuals of any age. It can alter your budget and your debt-to-income ratio (also known as your DTI), meaning the amount of debt you carry versus your earnings. This, in turn, can make lenders less likely to offer you loans or credit, or do so at the most favorable rates.
To look at the big picture, student debt could affect your ability to do the following:
• Purchase housing, including renting an apartment or qualifying for a mortgage
• Get married due to financial setbacks and can also add stress to a marriage
• Commit to attending graduate school
• Build long-term savings
But keep in mind, plenty of people have student loans and achieve these things, whether the debt means a delay in plans or they find a way to forge ahead. And know that people without student loans also face financial challenges: Perhaps they have a lot of credit card debt or a mortgage that is difficult to pay. Know that you are not alone in having financial challenges.
If student debt proves to be really unmanageable, it can affect other areas of your life as well, and the consequences of default can range from ineligibility for more federal financial aid, having a default reported to credit bureaus, credit score impact, and paycheck garnishment.
Of course, you want to avoid these scenarios. So if your family unit has multiple members with student loans, it’s wise to start by having open communication between parents and kids. Take the following steps:
1. Talk with each other. Don’t sweep the topic under the rug. Talking about it together can help you both share knowledge, support one another emotionally during what can be a difficult time, and come up with ideas for tackling your debt.
2. Total it up. Identify the total student loan debt for parents and kids. Break it up individually and figure out how much you both owe and the types of loans you have. Federal or private? High interest rate or low interest rate? When does the loan interest accrue? Only after you map it all out can you see exactly what’s going on.
3. Explore the implications of student loan debt on future financial goals. How will student loan debt affect your future financial goals? Writing down your future financial goals can help you create goals for moving forward.
4. Budget together. Finding a budget that helps you manage and track your finances is crucial. Share learning about the different budgeting techniques available, experiment with them (including apps that may be provided by your bank), and land on a system that helps you.
💡 Quick Tip: Often, the main goal of refinancing is to lower the interest rate on your student loans — federal and/or private — by taking out one loan with a new rate to replace your existing loans. Refinancing makes sense if you qualify for a lower rate and you don’t plan to use federal repayment programs or protections.
Create a Repayment Strategy
Next, you can create a repayment strategy. Both parents and students can follow these steps:
• Understand the loans. Particularly in the child’s case, do they understand all the terms, including interest rate, repayment schedule, and cosigned loans? Cosigning means that the parents signed to obtain loans on their behalf. A Direct PLUS loan is a loan made to a parent to pay for a student’s education and cannot transfer to the child. The parent is legally responsible for repaying the loan.
• Look into repayment plans. Will you stick with the Standard Repayment plan or would a Graduated or Extended plan work better? Reach out to your loan servicer to find out if you qualify for an income-driven repayment plan. An income-driven repayment plan bases your payments on income and family size. It can help ensure that you make manageable payments every month.
You might also benefit from learning about the SAVE Plan, which replaces the REPAYE Plan, and can make debt repayment more manageable for some borrowers.
• See if you qualify for student loan forgiveness. If a government or nonprofit organization employs you, you might qualify for the Public Service Loan Forgiveness Program, or PSLF. If you qualify, you could have the remaining balance on your federal student loans forgiven. In other words, you won’t have to pay them back.
• Consider consolidating federal student loans. Consolidating means combining one or more federal education loans into a new Direct Consolidation loan to lower your monthly payment amount or gain access to federal forgiveness programs.
• Pay extra toward the principal. You can pay extra toward the principal, meaning you make more payments toward your loans every month — the principal is the amount you owe on your loans. This can help speed up repayment and potentially lower the amount of interest you pay over the life of the loan.
• Consider refinancing student loans. You can also explore refinancing your student loans, which means replacing your current student loans with private student loans. This might enable you to get a simpler single monthly payment that is more affordable. However, it’s important to know these two facts:
◦ When you refinance federal student loans with private ones, you forfeit federal benefits and protections, such as deferment and forgiveness. For this reason, think carefully about which option best suits your needs.
◦ When you refinance with an extended term, you may get a lower monthly payment, but you could pay more interest over the life of the loan. This knowledge can help you make an informed decision.
Yes, that’s a lot of information to digest and contemplate. What’s the right student loan debt solution? Ultimately, it’s determining the repayment strategy that will help you meet your financial goals while paying off your loans. Talking to your loan servicer about options can help, as can speaking with a nonprofit credit counselor who specializes in managing student loans.
Take control of your student loans. Ditch student loan debt for good.
Prioritize Financial Security
What does it mean to prioritize financial security? Financial security means having the money to cover the necessities in your life, like food, water, and shelter, and having a safety net, like an emergency fund and having money stashed away for your future retirement. It also means balancing loan repayments with these other financial obligations.
Building financial stability could also include:
• Creating a budget: Creating a budget involves totaling up your income and subtracting your expenses, choosing a budgeting system, like an app, and tracking your expenses. Many experts recommend the 50/30/20 budget rule, which advocates spending 50% of your budget on necessities, 30% on wants, and 20% on savings and additional debt repayment.
• Putting together an emergency fund: Try to put some money aside for an emergency fund. Many experts recommend at least $1,000 to start and then go on to save three to six months’ worth of emergency expenses. That said, $1,000 can be a significant chunk of money. Setting up automated deductions from checking into a high-yield savings account ($20 or so per paycheck is fine) can get you started.
Building an emergency fund can help you combat unexpected expenses that may come up, like a job loss.
• Setting long-term financial goals: What long-term financial goals do you have? Set some long-term financial goals, such as saving for retirement or achieving homeownership with student loans. Both parents and college-aged or newly graduated kids can do this with a financial advisor who can help everyone balance loan repayments alongside other financial aspirations.
Support Each Other
This is a biggie, emotionally and financially. As you discuss your money goals, consider creating a joint plan. Kids should remember that parents still need support throughout this journey, and the reverse is true. Paying off debt and staying motivated during your repayment journey can be incredibly stressful.
Reach out to the people who will support you in your journey, and that includes resources and support networks for guidance, such as your student loan servicer, a financial advisor, and, if stress is an issue, a mental health provider.
Planning for the Future
Planning for the future may seem overwhelming while managing student loan debt. However, you don’t have to go it alone. Consider meeting with a financial advisor to discuss how to balance today (as in, your student loan repayment strategies) and tomorrow, such as putting away some funds for retirement.
It can be a good idea to have an objective, outside expert come in and evaluate your situation so they can help you devise a plan of action — in both kids’ and parents’ situations. You may feel as if you can’t possibly save for the future while focused on paying off your student debt, but a trained professional can often offer wise guidance.
Both parents and students may also wonder how to save for college for future generations. Ultimately, it’s important to secure your financial path first to reach your long-term financial goals and achieve financial freedom before worrying about future generations. After all, grandchildren can also borrow for college, but you can’t borrow for retirement. That said, this is another good topic to broach with a financial expert who is familiar with student loans and saving.
The Takeaway
Student debt can be challenging on its own, but when two generations of the same family are paying off their loans, it can feel overwhelming. It’s important to remember that student debt is a phase you are moving through, like paying off a car loan or mortgage. It doesn’t define you, nor is it with you forever. By supporting one another emotionally, budgeting well, and exploring repayment options, families can take control of their debt and pay it off in the most manageable way possible.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
FAQ
How does student debt affect families?
Student debt can affect families in many ways, from stretching the family budget thin to making it difficult to save for long-term financial goals. However, families that devise a plan and explore their loan repayment options can pay off their debt and work towards future goals successfully.
What is the average student loan debt?
The average student loan debt is $37,718 on average per borrower of federal loans — about 92% are federal student loans and the remaining are private student loans. Including both federal and private loans, borrowers in the U.S. owe about $1.75 trillion in student loan debt.
Are children responsible for parents’ student loan debt?
No, children are not responsible for parents’ student loan debt. However, parents may be legally obligated to repay student loans on behalf of a child if they took out Parent PLUS loans.
Photo credit: iStock/Daniel Balakov
SoFi Student Loan Refinance If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.
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.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Learn how scammers deceive victims by using AI for voice cloning and learn how you can protect yourself from other AI-related fraud.
How can you protect yourself from AI-driven scams that target your finances?
What new scams are happening as technology advances?
Hosts Sean Pyles and Sara Rathner discuss the alarming use of AI in scams and the future of fraud to help you understand how to safeguard your personal security. They begin with a discussion of AI-driven voice scams, with tips and tricks on recognizing potential fraud, staying informed about scam tactics, and the importance of open discussion to empower against scammer tactics.
Then, scam expert Bob Sullivan, author of “Stop Getting Ripped Off” and host of the podcast The Perfect Scam, joins Sean to discuss the broader implications of AI technology in scams. They discuss the potential for AI to personalize phishing attacks, the ease of creating convincing fake audio, and the importance of skepticism in the face of unexpected calls. Plus: the need for technology companies to embed safeguards, the role of societal learning in approaching unexpected calls, and the importance of verifying any financial requests you receive.
Check out this episode on your favorite podcast platform, including:
NerdWallet stories related to this episode:
Episode transcript
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
We already know that our robot overlords are coming, but in the meantime, while they plot, their artificial intelligence skills are being put to use by bad actors all over the world, utilizing technology to bilk people out of their money. That includes using AI to copy someone’s voice and demand ransom for a non-existent kidnapping.
Jennifer DeStefano:
I had a full conversation with my daughter. It was interactive. There was no pause. There was no break. There was nothing that would lead me to believe that it wasn’t her. So when the mom that stepped outside called 911, she came back in and she said, “Hey, 911 tipped me off that there’s a scam where they use AI and they can replicate anyone’s voice.” I didn’t believe it. It gave me hope, but I didn’t believe it.
Sean Pyles:
Welcome to NerdWallet’s Smart Money Podcast. I’m Sean Pyles.
Sara Rathner:
And I’m Sara Rathner. And Sean, that clip is as creepy as it gets.
Sean Pyles:
It is, and the story we’re going to hear today is as creepy and as awful as it gets as we wrap up our Nerdy deep dive into scams and identity theft and how to protect yourself from all of it so you don’t lose your life savings. Today we’re going to examine the future of the scam industry and the expanding role of AI.
Sara Rathner:
Yeah, I have to say, and I know you’ve touched on this in several of your interviews already, this is exhausting. I mean, it’s hard to listen to this and not think, yeah, no matter what, I’m screwed. They’re going to get me unless I spend all this time and effort protecting myself. And who has the time for that?
Sean Pyles:
I hear you, Sara, and it’s easy to feel somewhat defeated by all these organized criminals whose sole job is to steal our identities, which technology seems to make easier and easier for them, and to scam us in ways that we can’t even conceive of until it happens.
Sara Rathner:
I mean, I’d rather spend more time taking naps, honestly. I don’t do that enough and I’m really sleep-deprived, which is probably making me more susceptible to scams, honestly.
Sean Pyles:
Yeah, I am totally there with you. But Sara, I think we’ve also provided listeners, you included, with some really practical ways to fully arm ourselves that don’t take an undue amount of effort. And as we’ve been saying, one of the most important takeaways from this series, I think, is for everyone to realize that there is no immunity here. This stuff can happen to anyone regardless of how old you are, how much schooling you’ve had, or how much money you make, where you live. It’s a universal risk, and the more we talk about it, the more power we take away from the bad actors.
Sara Rathner:
All right. Well, the idea that AI is getting in on the action is slightly terrifying. You mentioned our robot overlords at the top of the show, and I guess they’re coming for everybody’s bank account PINs.
Sean Pyles:
If only it were that simple, Sara. AI is being deployed in sophisticated ways to manipulate our emotions, find vulnerabilities in software that we rely on every day, and generally make our lives like something out of that show Black Mirror. So in this episode, we’re going to explore things like how is AI being used in scams, what’s the deal with these AI voice scams and what hellish development might we see next in the world of scams. To start, we hear from a woman named Jennifer DeStefano. She lives in Arizona and had an experience that no one should ever go through, but that provides a window into one of the ways that scammers can reach into your heart and try to pull money from your bank account.
Sara Rathner:
All right. We want to hear what you think too, listeners. So tell us your stories of identity theft or getting scammed or share how you’re working to fight it or recover from it. Leave us a voicemail or text the Nerd Hotline at 901-730-6373. That’s 901-730-NERD. Or email a voice memo to [email protected]. Here’s Sean with our first guest.
Sean Pyles:
Jennifer DeStefano. Welcome to Smart Money.
Jennifer DeStefano:
Thank you so much for having me.
Sean Pyles:
So Jennifer, you experienced an AI voice scam. Can you set the scene for us? What was that day like before you got this phone call?
Jennifer DeStefano:
It was just a normal day. I had two children that were up training for a ski race and I had my daughter, she was at dance, so I was going to go pick her up and then hopefully joining my other two kids later in the weekend. So I went to pull up to the studio and get out of my car to go get her, and I got a phone call and it came in from an unknown number. Originally I was going to ignore it, but knowing that I had two of them that were practicing for a ski race and unknown can be medical, you just never know, just in case I decided to answer it.
When I answered it, I said hello, and I was getting out of my vehicle, so I had all my stuff in my hands. I was walking through the parking lot, so I had the phone on speaker and it was my older daughter crying and sobbing saying, “Mom, Mom, I messed up.” And I said, didn’t think anything of it. She ski raced for a number of years. It was a very familiar phone call. And I said, “Okay. What happened?” And she goes, “Mom, I messed up.” And I said, “Okay. What’d you do?” And then all of a sudden a man came on and he said, “Put your head down, lay back.”
And at that point I thought she got really hurt just being toboggan. So then I started to get really concerned. I’m like, “Wait, wait, wait. What’s going on? What’s happening, Bri? What’s going on?” And then this man gets on the phone as she starts saying, “Mom, help me. These bad men have me. Help me, help me, help me.” The phone, her voice starts to fade off with her crying and sobbing and pleading for me. And this man gets on the phone. He goes, “Listen here, I have your daughter.”
“You call the police, you call anybody, I’m going to pop her stomach so full of drugs and have my way with her and then drop her for dead in Mexico.”And at that point was when I had my hand on the door handle of dance, and I walked inside the room and I just started screaming for help. So fortunately there happened to be three other moms there that know me well. I was asking my younger daughter to get her dad on the phone, call her brother, call anybody. So she actually jumped up and ran over to my younger daughter to say, “Let’s go find your dad. Let’s figure this out.”
Another mom said, “I’m going to go call 911.” She stepped outside to go call the police, and the third mom sat beside me so she could hear everything the man was saying as I was trying to figure out where my daughter was, what’s going on.
Sean Pyles:
And so it’s a perfectly normal day. You’re about to get your kids after a day of them doing their activities, you get a phone call and within 30 seconds your world is turned upside down.
Jennifer DeStefano:
Completely upside down. I had no idea what was going on. I had a full conversation with my daughter. It was interactive. There was no pause. There was no break. There was nothing that would lead me to believe that wasn’t her. So when the mom that stepped outside called 911, she came back in and she said, “Hey, 911 tipped me off that there’s a scam where they use AI and they can replicate anyone’s voice.” She’s like, “It could have been a voice recording.” I’m like, “It was definitely not a voice recording. It was interactive. I was asking her questions. She was responding to me. It was not a recording.” And she’s like, “Well, they can do anything.” I’m like, “But it was her crying. It was her sobbing. I know it’s my daughter. It wasn’t a recording.”
Sean Pyles:
And what thoughts are going through your head as you’re having this conversation with what sounds exactly like your daughter?
Jennifer DeStefano:
I didn’t for a second not believe it. It wasn’t until another mom actually got my daughter on the phone and I talked to her and she reassured me that she was who she really was, and I could finally wrap my head around it. And then I finally believed her and then I knew it was a scam.
Sean Pyles:
How much time elapsed from the time that you answered the phone to when your actual daughter was speaking to you and you were reassured the phone call that you got wasn’t legitimate?
Jennifer DeStefano:
So the whole phone call actually took four minutes, but that’s where time freezes in that panic and fear.
Sean Pyles:
Right. Oh God, that’s heartbreaking. So do you know how the scammers got your daughter’s voice and maybe why they targeted you specifically?
Jennifer DeStefano:
So I had a bunch of different thoughts on that. Okay. She’s done a few interviews related to school, sports, whatnot, but that still doesn’t explain the crying and sobbing. It doesn’t explain that conversation. Her voice recording for her phone is her prepubescent voice, so it’s not her current voice. So I honestly have no idea. That’s where a lot of this, what’s scary is at first it was are they following me? Is it targeted? Do they know something? But then hearing how it had happened to a number of other people in different capacities, and you realize it’s a lot more arm’s length.
They were demanding money to be hand delivered to them. So they were making arrangements to come pick me up in a white van with a bag over my head. I had to have all the cash. They were going to take me to my daughter, and if I didn’t have all the cash, then we were both dead.
Sean Pyles:
God, how much were they asking for?
Jennifer DeStefano:
It was originally a million dollars. And then he came up with a number of $50,000 when I pushed back that that wasn’t possible.
Sean Pyles:
And to this day, it’s unclear why you specifically got this call?
Jennifer DeStefano:
I have no idea.
Sean Pyles:
Okay. And so after the phone call ended, I assume you hung up on the scammer when you realized that your daughter was safe.
Jennifer DeStefano:
So once I realized my daughter was safe, I actually had them on mute and they were furious that I wasn’t making final arrangements for a pickup. And then I picked the phone back up and I called them out and said, you don’t have my daughter, this is a scam and I’m going to make sure that this is going to come to a stop and I’m going to do anything I can to stop you. And I hung up on him.
Sean Pyles:
God, what are you on an individual or maybe even a family level doing to safeguard yourselves? Have you guys established a safe phrase that you might use to confirm your identities?
Jennifer DeStefano:
So we did create a safe word, and then it’s a lot of communication. Where are you? Who are you with? Where are you going? So that way if I do get a phone call or anybody gets a phone call, you can easily put it through the test. Does this make sense? Is this where they’re supposed to be? Is this even possible? Do you know the code word? Do you have some identifiers? If I didn’t know where my daughter was supposed to be, I wouldn’t have been able to locate her as fast as I did. And I had her brother, I had all of her siblings coming together in response to help me as well. So everybody was in full communication. You have to communicate and you have to seek help.
Sean Pyles:
Well, Jennifer, is there anything that you would like to leave listeners with?
Jennifer DeStefano:
Just awareness, have these conversations, sometimes maybe tough conversations, especially with children. But you have to have the conversations, have safe words, know where your kids are at. You have to have these conversations and make sure you safeguard your family.
Sean Pyles:
Well, Jennifer DeStefano, thank you for sharing your story with us.
Jennifer DeStefano:
Thank you so much for having me. I really appreciate it.
Sean Pyles:
Sara. I found this story just heartbreaking. I mean, at least they found out it was a scam before handing over money or before Jennifer offered herself up to scammers. But not everyone is so fortunate. Imagine how hard it is to say no to something like this when a loved one seems to be in jeopardy.
Sara Rathner:
Yeah, there was a piece recently in The Cut written by a journalist who knew she would never, ever fall for something like this. Don’t we all think that? And ended up handing over $50,000 in a shoebox to a stranger in a large SUV. I don’t think anybody ever sees themselves doing that. I’m glad Jennifer DeStefano didn’t let it get that far with the help of friends.
Sean Pyles:
And there’s hope that help will come from more than friends. Earlier this year the Federal Trade Commission proposed new rules that would prohibit the impersonation of individuals. It recently enacted rules that prohibit impersonating government or businesses. This proposed rule would extend to, well, us. The proposal is currently in a comment period, so if you feel so moved, go to the FTC’s website, ftc.gov, and comment.
Well, next we’re going to talk with another journalist, Bob Sullivan, who’s been covering the scam world for years now. He hosts a podcast for the AARP called The Perfect Scam and is the author of Stop Getting Ripped Off, among other books. We’re going to talk about the future of the scam world and how to protect yourself as technology continues to make it easier for the bad guys. That’s coming up in a moment. Stay with us.
Bob Sullivan, I’m so glad you could join us on Smart Money.
Bob Sullivan:
Thanks so much for having me.
Sean Pyles:
So Bob, the first question I have for you is how do I know that you are the real Bob Sullivan and not an AI-generated Bob Sullivan?
Bob Sullivan:
This is an excellent question and I’m glad that you’ve started there. You can’t, really. In fact, I did an episode on my own podcast recently where I had someone clone my voice and rather persuasively introduce the podcast, although family members pointed out to me that there were just little things that didn’t quite sound right. So either I was AI or maybe I had a bad cold or something. But it’s hard to tell, a little nasally.
Sean Pyles:
So in this series we’ve talked about identity theft, identity fraud, and the scam world, and I’m hoping that today you can give us a warning about the future of all of this and the role that artificial intelligence or AI is going to play and in fact is playing. So to start, when did we first start seeing AI being put to use in this way? Do you remember a specific AI-generated fraud or scam where you said, oh wow, this is something new?
Bob Sullivan:
Well, I have to be honest with you and say that I sit here reading emails about scams and fraud all day long, and I have not seen evidence of these kinds of things that a lot of folks are talking about right now, which is voice cloning or deep fake videos being used to fool people. Here’s a couple of things that I am worried about, however. All the data collection that we have, the criminals now have access to it and it’s going to be very easy for criminals to use that data to just really carefully craft their phishing pitches so that they’ll know exactly when you are transactional, for example.
Then they’ll know precisely when you order something from Amazon or what your zip code says about your income, and they’ll know how to attack the right person at the right time with the right message. And that’s the kind of artificial intelligence that I’m worried about, criminals using big data to essentially perfectly hone their crimes. But there’s one other thing that I’d really like to mention that enough experts have told me about that I am quite concerned about it, and that’s this idea of generative AI, where a tool like ChatGPT can engage in conversations and learn.
We have told people forever that one of the ways that they might recognize that they’re talking to a criminal over email or in chat or in a game is bad grammar or sentences that don’t quite make sense, non sequiturs. Well ChatGPT is getting very good at holding intelligent sounding conversations. Let’s start by saying it’s going to probably eliminate the bad grammar problem, but even more than that, imagine a tool that learns along the way just the right things to say to romance someone using a formula that’s been tested in the real world or the right things to say to get someone to follow the instructions for an investment scam.
I think these tools are going to learn how to carry on these conversations in ways that we’ve never seen at large scale, and that’s the kind of artificial intelligence that I’m worried about being used in scams.
Sean Pyles:
Okay. And can you talk us through how these AI voice cloning scams do work, whether they’re pervasive or not?
Bob Sullivan:
Sure. Well, I mean there are services, the fellow who did it on me signed up for a website that lets you do this for $5 a month and the first month is 80% off. So for literally one US dollar, you can upload samples of my voice or anyone’s voice and then generate for a potential scam victim, something that sounds incredibly realistic. I think the one thing that’s important to understand about what’s different about voice cloning, I don’t know if you remember the movie Sneakers, it’s one of my favorite hacker movies.
But in that movie, they basically needed a voice passport in order to enter a highly secure building, and they needed the authority figure to say things so that they could piece together cut and paste style a certain sentence, for example. So one way you might be imagining this works is someone tricks me into saying, my mother is in distress and I need you to send money to this wire account, but that’s not it. Instead, what’s powerful about AI voice cloning is with just a few sentences from me, they can extrapolate my intonation, my pausing and make me say anything.
So you don’t need a whole lot of vocabulary in order to make a really, really effective, almost fully independent voice clone.
Sean Pyles:
Well, I’d like to walk our listeners through some of the ways that fraudsters and scammers are putting this technology to work right now in ways that are shocking even to you. Can you share one or two examples that you know of that will give us a sense of just how bonkers this new era is?
Bob Sullivan:
Well, let me go back to the big data example. Foreign governments and large hacker organizations do have what would look to most people like a credit reporting agency on all of us. They have thousands of bits of data about all of us that they can use against us, and it’s data that they’ve been compiling for years. So they know what your tendencies are, they know where you shop, they know where you are. We never talk nearly enough about the theft of location data. All our cell phones are tracking devices.
And so a criminal could know when you’re walking past a store and send you a precisely timed invitation to either buy something at a discount or even worse to send you a note saying, I was just in Ireland. Bob, there’s a bank in Ireland that suddenly tried to charge a $2,000 charge to your account, say yes or no. And I would believe that message right now because I was just there. Those kinds of highly sophisticated, highly targeted crimes enabled by massive amounts of data that again can be searched now instantaneously, that’s the kind of thing that really scares me.
Sean Pyles:
And those examples are highly specific and individualized, which makes them all the more believable. So it makes it hard to trust anything that’s inbound to us.
Bob Sullivan:
Absolutely. And this is a tragedy because technology enables so many wonderful things. It is a terrible thing that we have all of these dark stories as this gray cloud around tech that’s going to prevent a lot of people from even trying to use it, and it’s going to make all of us feel just a little bit insecure because we know these sorts of bad and dangerous things can happen to us. The best example of this is in the health arena. We’re so far behind in what electronic health records could be in America right now.
When you go to the hospital, you’re laying on a gurney and there’s someone asking you over and over again, are you allergic to penicillin and you just were in a car accident. And that’s ridiculous. But because we are, I mean there’s many reasons, but a big one is we are so concerned about criminals misusing this data or companies misusing this data that we are decades behind where we could be with things like electronic health records.
Sean Pyles:
Earlier this episode, I spoke with a woman who received an AI voice scam call from what sounded like her daughter, and it of course wasn’t her daughter. But after everything settled down, she still doesn’t really understand how these people got her daughter’s voice. Her daughter isn’t really on social media, and this woman is also very unclear as to why she was targeted. So do you know how scammers are capturing people’s voices and why they might choose to target one person over another?
Bob Sullivan:
So I don’t know. I think for the vast majority of young people, it would be fairly trivial to examine a couple of TikTok videos and get enough voice sample in order to fake their voices. There are people who are not on social media and whose recorded voices aren’t in any, say, school websites or anything like that. I think they are few and far between. So I think most people should assume that a criminal could absolutely get enough audio samples of your voice to do this to you. So I can’t speak to that specific instance or why that person was targeted or why that child was targeted.
The only thing that concerns me is I don’t think we should give anyone the impression that this is happening on a widespread basis. It’s not. 99% of these kinds of calls are still being done by just human beings in boiler rooms. Nevertheless, this absolutely can be done. It can be done really inexpensively. And as I just mentioned, all of us are vulnerable to this. You’d be shocked at how much, even if you don’t have any social media, that pieces of your life have been posted by other people.
So it’s out there, and again, it takes very little, we’re talking probably less than a minute of audio in order to generate a fake you.
Sean Pyles:
What do you think we’re supposed to try to do to combat this? I mean, using me as an example, I host this podcast, you host one too. Our voices are out there just waiting for scammers to take a clip and make us say whatever they want, call our loved ones and use that voice to try to get their money. How do we fight that?
Bob Sullivan:
Yeah, you and I are screwed.
Sean Pyles:
Bob Sullivan:
Sorry. But the best, I talked to some other expert about this, so I can’t claim this advice myself, but I think it’s very good advice. At the beginning of the Photoshop era, people saw pictures of pyramids moved and weren’t skeptical of that. We just thought photographs couldn’t lie. I think nowadays for the most part, and certainly not everybody, for the most part, if you saw a crazy picture of Joe Biden riding on a camel or something, that there would be a piece of you at least that would say wait a minute, this might be fake.
There’s now an impulse that things you see might very well be faked. I’m hoping that our level of 21st century digital sophistication gets there quick enough with audio that your parents and my parents will have a predisposition to think if this is a weird phone call from Bob or Sean, it could be fake. And I think that’s the sort of learning curve we all have to go through kind of as a society.
Sean Pyles:
Well, let’s turn to some tactical ways that people can try to protect themselves. Can you tell us about the importance of things like pass keys, biometrics, other ways to authenticate that you are who you are when you get a call from someone or you allegedly call someone else?
Bob Sullivan:
I’m glad you brought that up. When it comes to voice printing in particular, there are these new technologies that are a little bit like image watermarking they’re discussing putting on voices. So you can imagine there being something even inaudible embedded in an audio phone call, which the technology company, the phone company, used seamlessly to verify that you were you, sort of like a Verisign email or whatnot. So there’s people who are working on technologies that would help with this verification. I’m not a fan of putting these really hard things onto individual consumers.
I think it’d be much better if the technology companies were forced to solve these problems because I can’t give my mom advice on how to verify how I might contact her at every platform that ever is going to exist. That advice is going to get outdated almost immediately.
Sean Pyles:
Given that we do live in this world that we are living in, I’m trying to think about ways that I can protect myself and my family. After I began doing research into 21st century scams, I established a safe phrase that if my family gets a call that alleges it’s from me and I’m in a panic, they’ll say, “Hey, what’s the safe phrase?” And I will tell them that phrase, if it’s actually me. And if it’s not, then the scammer’s going to try to divert them some other way, I’m sure.
Bob Sullivan:
I do think that’s great, and I don’t mean to trivialize any of that, but I would like to point out most people in security would say you’ve also created a vulnerability because someone armed with that phrase could easily disarm someone in your family, right?
Sean Pyles:
That’s true. Although the phrase has only been uttered in person when we agreed on what the phrase is. So we’ve tried to keep it as away from recording devices as possible to the extent that we can.
Bob Sullivan:
The only real point in my saying that was none of these things are foolproof. So it’s good to have that in mind. I think the one thing that helps all the time in the end, whatever we’re talking about here, almost inevitably, is a cover story for give me money. All of these, whatever technology we’re using, whatever the story is, in the end, there’s an ask of some kind. And stealing people against the ask is really, really important. And the best way to do that is interruption. The best way to do that is to train everybody in every circumstance, whatever is happening, to stop and talk to an independent third party, whether that be a family member or a financial professional or something.
Your son’s in jail in Europe, he needs bail money immediately, take the 15 seconds to talk to someone not involved in the situation and hear the words come out of your mouth. When you get a phone call you don’t expect, hang up and then go to the company’s website yourself and call the official published number, call the company back. That solves about 99% of these problems.
Sean Pyles:
Well, Bob, I’m asking this of all of the experts that we’re talking with for this series. So I’m going to ask you too, have you ever experienced a scam or identity theft or fraud?
Bob Sullivan:
No, but I’ve certainly been through a bunch of credit card-style identity thefts, but fortunately, knock on wood, nothing that we would consider deeply involved identity theft.
Sean Pyles:
Well, Bob, do you have any hopeful thoughts as we wrap up this series, which has been a bit of a bummer as we’ve talked about fraud and scams and people losing their life savings to technology assisted terrible people?
Bob Sullivan:
Yeah. So I spend all my week talking to people who’ve had their life savings stolen from them in all manner of speaking. It’s hard to stay optimistic. I think there’s a whole bunch of factors coming into play here. We have an aging population, many of whom thankfully have a lot of savings, they’re an easy target. And as I’ve mentioned, we have all of these tools that make it so much easier for someone halfway around the world to steal money instantly in untraceable ways. This has never happened in human history before, so this is the golden age of crime.
However, we are all talking about it now. So that’s really positive. Here’s the most optimistic thing I can tell you. Young people, software designers, engineers inside companies are now getting out of school having taken ethics classes and social impact classes and are starting to push back on their managers when they come up with tools like this. And that’s where the tide will turn is when enough people who have a grandparent who’s been a victim of a scam work at a software company and they say, we have to put this protection into this device before we release it to the world. And I do think those conversations are happening. So I am actually optimistic about that.
Sean Pyles:
That’s good to hear. And is there anything else that you wanted to mention that we didn’t touch on?
Bob Sullivan:
What we find is that a really, really big obstacle to fixing this problem is shame and embarrassment. Many, many people won’t come forward after they’ve been a victim of a crime like this because they feel stupid. I called myself stupid. All the language around scam crimes tends to focus on the individual instead of the system. Well, if you read a news story about a person who fell for a home improvement scam, that just doesn’t sound the same thing as someone who was robbed at gunpoint.
Sean Pyles:
Was the victim of a crime. That’s what happened at the end of the day.
Bob Sullivan:
They’re a victim of a crime, and we work hard on the language that we use to stress that there was a crime. There’s something about if we say, well, that person fell for this scam. Well, I would never fall for that scam. You can sort of put it at arm’s length, and that makes it a little easier to not do anything about the problem. And it takes the focus off the criminal. We kind of think the criminals are clever and sexy. But more than anything, we want to try to get away from the idea of shame because when someone is embarrassed because they are a victim of a crime, they don’t come forward.
The statistics don’t reveal the true nature and breadth of the crime. Everybody will tell you this, all this crime is wildly under reported. So however big the numbers seem to be, they’re at least double what we hear from the Federal Trade Commission and whatnot. And so anything that I can do to relieve the stigma from being a victim of crime like this, I’m all for it.
Sean Pyles:
Bob Sullivan, thank you so much for helping us out today.
Bob Sullivan:
Thanks a lot for having me.
Sean Pyles:
So Sara, after four episodes of hearing from experts and people who have experienced scams, I’m in a state of what I would call bleak optimism. The world right now is rife with scammers and their methods of duping innocent people are evolving at a rapid pace. But simultaneously, I can’t remember a time where scams and fraud were more present in the cultural conversation. Yes, it is fully a tragedy that our means of communication are so compromised that we cannot trust a call from a loved one in what seems like their most dire moment.
That really can’t be overstated. But hopefully the increased awareness of these scams will help people avoid sending money to bad actors and mitigate feelings of shame that people carry after enduring a scam. And hey, maybe one day our government will make some laws that help tamp down on the rampant scams that we’re all facing.
Sara Rathner:
And there’s this saying in journalism, if your mother tells you she loves you, fact check it. Well now you have to. So that’s the world we live in.
Sean Pyles:
If anyone contacts you at all, fact check it.
Sara Rathner:
Yeah. And text them on the side and be like, “Hey, are you calling me from jail right now?” And they’ll be like, “No.”
Sean Pyles:
I think the bottom line for everyone listening is to exercise extreme caution when you speak with anyone online and before you send money to anyone ever.
Sara Rathner:
If somebody is asking you for money and you don’t really know who they are, they are not who they tell you they are. How’s that? How’s that for general rule?
Sean Pyles:
All right. Well, for now, that’s all we have for this episode and this Nerdy deep dive about scams and ID theft and fraud. If you have a money question about any of this or anything else, turn to the Nerds and call or text us your questions at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected]. Visit nerdwallet.com/podcast for more info on this episode and remember to follow, rate and review us wherever you’re getting this podcast.
Sara Rathner:
This episode was produced by Tess Vigeland. Sean helped with editing. Kevin Berry helped with fact checking, Sara Brink mixed our audio.
Sean Pyles:
And here’s our brief disclaimer, we are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Sara Rathner:
And with that said, until next time, turn to the Nerds.
The following is a sponsored partnership with Kudos. Have you heard about Kudos – the free AI-powered wallet that helps you get more out of your credit cards? In this Kudos Review 2024, I’ll explain how this desktop browser extension and iPhone app helps you earn the maximum rewards and benefits when shopping online. With…
The following is a sponsored partnership with Kudos.
Have you heard about Kudos – the free AI-powered wallet that helps you get more out of your credit cards? In this Kudos Review 2024, I’ll explain how this desktop browser extension and iPhone app helps you earn the maximum rewards and benefits when shopping online. With the average Kudos member earning $750 per year, you won’t want to miss out on this game-changing tool!
With Kudos, you can always choose the best card for maximum rewards at checkout, easily autofill your card information (including CCV) with just one click, find new cards that match your shopping preferences, and more.
Plus, Kudos has helped its members earn $150 million in rewards and counting!
The best part? Kudos is completely free. That’s right—no hidden fees. Just shop like you normally do, and Kudos automatically helps you during checkout to maximize your rewards.
If you don’t want to leave money on the table, there’s no reason not to use Kudos to take the guesswork out of deciding which credit card to use for each online purchase.
Personally, I find Kudos incredibly helpful. As someone with multiple rewards credit cards, each with their own unique benefits, Kudos saves me a ton of time by instantly identifying the best card to use for each transaction. This not only simplifies my life but also helps me earn more money!
This is great so that you are using the full potential of your credit cards.
And, even if you only have one credit card, Kudos is still helpful! This is because, at many online stores, you can still double your rewards for using the Kudos browser extension and earn points to put towards free gift cards.
You can download Kudos for free by clicking here.Plus, use code “CENTS” to earn $20 back after your first eligible Boost purchase.
Key Takeaways from this Kudos Review 2024
Kudos is a free AI-powered wallet that maximizes your credit card rewards when you shop online, whether you’re buying groceries, clothing, travel packages, furniture, or anything else—all with a single click.
With Kudos, you no longer have to guess which credit card to use for each purchase. Just shop like normal and Kudos will automatically recommend the best card to make sure you always earn the highest cashback, points, or miles on every transaction.
Kudos supports over 2 million stores, so you’re virtually guaranteed to find your favorite retailers and maximize your rewards with them.
Even if your credit card doesn’t typically offer rewards, you can still earn rewards by shopping through the Kudos browser extension at participating merchants.
Kudos is compatible with all major desktop browsers (Chrome, Safari, Edge) and is also available as an iPhone app, making it easy to boost your credit card rewards across every device.
Kudos Review 2024
Below is my Kudos review.
What is Kudos?
Kudos (also known as Kudos Technologies, Inc.) is a helpful AI-powered browser extension and app designed to help you make the most of your credit cards, particularly when shopping online. It was founded by Tikue Anazodo and Ahmad Ismail, and Kudos has been featured on Forbes, Yahoo Finance, Bloomberg, The Motley Fool, Nasdaq, and more.
Think of it as a smart wallet for your browser. Driven by the complex world of credit card rewards, the Kudos team created this tool to simplify the process.
Here’s how it shines: Select the cards you commonly use (without the need for any sensitive bank details) and Kudos tells you which one to use at checkout. You see, your cards might be packed with potential rewards for different spending categories—travel, groceries, or dining.
Different credit cards have so many different benefits (such as the rewards percentage, extended warranties, purchase protection, insurance, and more), which can be difficult to keep track of.
Kudos makes sure you’re using the best card possible to earn the most rewards, which is especially useful if you have more than one rewards credit card.
Members have collectively earned over $150 million in rewards with Kudos. On a personal level, you could boost your annual shopping rewards by an average of $750 just by using Kudos.
Plus, Kudos is super user-friendly. You can add it to your preferred desktop browser (Chrome, Safari, Edge) or use it on your iPhone, and it’s completely free. The service makes money by earning a small commission when you shop at participating stores or sign up for a card through their recommendations.
When you shop without Kudos, you could be missing out on opportunities to earn rewards with your purchases. Why miss out on potential earnings when Kudos provides a free and simple solution?
Kudos also has a really helpful Instagram account full of helpful credit card tips. I highly recommend checking that out here.
How Kudos works
Imagine you’re online shopping, ready to checkout, and you pause, thinking, which credit card do I use? That’s where Kudos steps in, always there to give you the best advice.
Kudos knows your cards and suggests which one to use at checkout. But how? First, you add your credit cards to the Kudos wallet. It’s safe and simple. When it’s time to buy something, Kudos pops up and says, “Hey, use this card!” Why? Because it’s the card that will give you the most rewards or savings for that purchase.
Here are the steps to get started:
Download the Kudos browser extension (takes less than a minute to do) on your desktop browser (Chrome, Safari, Edge) or iPhone. You’ll also answer basic questions like your name and the type of credit card you have (such as the Chase Freedom card).
Shop like you normally do.
Once you’re ready to checkout, Kudos will automatically appear to let you know which credit card you should use to get the most rewards and benefits.
Click the card you want to use and Kudos will then autofill the card info, making checkout a breeze.
What stores does Kudos work on?
Kudos works at over 2 million online stores and with over 3,000 credit cards – so there’s a very good chance that it’ll work for you.
Don’t see a store supported or can’t find your card? Their support team is super responsive and will help you out!
Kudos vs. other rewards tools: What sets Kudos apart?
When it comes to maximizing credit card rewards, Kudos stands out from other popular tools like Rakuten, Honey, and Capital One Shopping.
While these platforms primarily focus on providing cashback offers or coupon codes, Kudos takes a more comprehensive approach to optimize your entire credit card strategy.
What sets Kudos apart is its AI-powered technology that analyzes your specific credit cards and spending habits to recommend the best card for each purchase.
This makes sure that you’re not only earning cashback but also maximizing your points, miles, and other card-specific perks. By considering factors like bonus categories, statement credits, and exclusive benefits, Kudos helps you get the most value out of your credit cards.
Key Features of Kudos
When shopping online, you want to stretch your dollar as far as it can go. Kudos has features that make this easy by helping you get the most out of your credit cards such as:
Maximize your credit card rewards
When you’re shopping online, Kudos helps you pick the best card to use to maximize your rewards and benefits.
With Kudos, you no longer have to guess which credit card to use. This AI-powered wallet automatically recommends the best card for each purchase, making sure you always receive the highest cashback, points, or miles possible.
I personally didn’t even know that one of my credit cards had some of the benefits that Kudos listed, and I can’t believe I had been wasting so much money by skipping out on such a valuable benefit! Kudos makes it very easy for me to see my card’s benefits all in one easy place.
Plus, if you’d like, you can add your credit card information to Kudos, and Kudos will autofill your card info (including CCV) to make checking out fast.
Another way that Kudos helps you earn more rewards is because Kudos helps you build your Dream Wallet so you can get the most out of your everyday purchases. You’ll go through a quick quiz to help Kudos gather information about your needs.
Double your rewards with Kudos Boost
With Kudos, you can increase the amount you can get in credit card rewards with just one click.
If you usually earn 4% cash back when shopping at sites like Walmart or Sephora, you’ll now earn a total of 8% back with Kudos Boost. The best part? You can earn Boost at participating stores even if your card doesn’t offer its own rewards.
Kudos Boost are reward points you earn by shopping at Boost merchants.
It works like this:
Shop at one of Kudos’ 15,000 participating Boost merchants
Click “Activate Boost” on the bottom right corner of the screen
Use Kudos at checkout – At checkout, Kudos will find your best credit card to use, autofill the payment forms, and match your credit card rewards.
Redeem rewards for a gift card
You’ll receive an email from Kudos around 1-2 days after completing an eligible transaction. After the store confirms your purchase it usually takes between 60 to 120 days for your rewards to be available, and you can then find your rewards on your Activity page on Kudos.
When you’ve earned 1,000 Kudos Boost points (equal to $10.00 USD), you can exchange them for an Amazon gift card.
Receive personalized credit card recommendations
Stop wasting time opening up credit card application pages on incognito. You can receive access to elevated card offers on Kudos’ Explore Tool through their partnership with The Points Guy.
So, if you are looking for a new credit card, use Kudos to help filter the best one for you and your situation and compare different cards in one easy place.
For example, Kudos member Christina L. was able to get 150,000 Membership Rewards points after spending $6,000 on the Amex Platinum card within the first three months of account opening. That’s almost double the 80,000 points after spending $8,000 found on the American Express website!
Answer all your credit card questions with MariaGPT
Maria GPT is an AI-powered, personalized assistant designed to answer all your credit card questions, available on the Kudos mobile app.
She can help you understand the benefits of your current cards and offer personalized suggestions for new cards based on your spending habits, goals, and objectives.
Frequently Asked Questions about Kudos Review 2024
Below are common questions about Kudos, the free AI-powered wallet.
Is Kudos free to use?
Kudos is free to use.
How does Kudos make money?
Kudos earns a small affiliate commission when you make an online purchase at one of their participating merchants. Additionally, if you use the Kudos Explore Tool to apply for a new credit card, Kudos may receive a payment from the credit card issuer.
Is there a Kudos referral code?
Yes! Sign-up for Kudos for free and use the Kudos referral code “CENTS” to earn $20.00 back after your first eligible Boost purchase.
How much can you earn with Kudos?
On average, Kudos members earn $750 per year in rewards by using the app to maximize their earnings.
Do I need to provide my credit card numbers to use Kudos?
No, you don’t need to enter your credit card numbers to use Kudos. Simply select the cards you have in your wallet, and Kudos will help you maximize your benefits at checkout. Providing your credit card information is optional if you want to speed up the checkout process.
Can I use Kudos with other browser extensions?
If you use Kudos Boost and then activate another rewards program like Rakuten, Honey, Capital One Shopping, or others during the same shopping session, Kudos may not be able to earn an affiliate commission. To make sure you get maximum rewards, it’s best to use Kudos exclusively during your online shopping.
Is Kudos wallet legit?
Yes, Kudos is a legitimate browser extension and app used by over 200,000 shoppers who have earned over $150 million in rewards. You can find genuine user reviews on trusted platforms like Trustpilot, Chrome Web Store (4.8/5 stars from 667+ reviews), and the Apple App Store (4.7/5 stars from 3,500+ reviews).
Is Kudos safe and secure?
Yes, Kudos prioritizes user security and employs industry-leading protocols, including bank-grade 256-bit encryption, to safeguard your data. Kudos handles your personal and financial information with the utmost care and never sells or shares it with third parties. You can feel confident and secure when using the Kudos browser extension and app.
My Kudos Review 2024: Final Thoughts
I hope you found this Kudos review informative and helpful in understanding how this AI-powered wallet can help you maximize your credit card rewards.
Navigating the world of credit card rewards can be overwhelming, but Kudos simplifies the process with its intelligent recommendations. By analyzing a database of over 3,000 cards, Kudos ensures you always use the best card for each purchase, boosting your rewards effortlessly.
In addition to its AI-driven recommendations, Kudos streamlines your online shopping experience with a one-click autofill feature. This not only saves you time but also guarantees that you’re always using the card with the most advantageous benefits for each transaction.
Personally, I find Kudos to be a must-have shopping tool. As someone with multiple rewards credit cards, each with their own unique perks, trying to determine which card to use for every purchase can be time-consuming and confusing. Kudos eliminates this hassle by automatically identifying the best card for each transaction, allowing me to maximize my rewards efficiently.
Even if you only have a single credit card, Kudos can still help you earn more rewards. By shopping through the Kudos browser extension at thousands of participating online stores, you can accumulate points that can be redeemed for free gift cards. This means that regardless of how many credit cards you have, Kudos enables you to optimize your rewards earning potential.
Kudos also helps users find new credit cards through its partnership with The Points Guy, a well-known credit card rewards and travel website. By using the CardMatch service, Kudos helps users find the best credit card offers tailored to their specific needs and spending habits. This feature is particularly useful for those looking to expand their credit card portfolio and maximize their rewards earning potential across multiple cards.
You can sign up for Kudos for free by clicking here.
Do you use Kudos? What other questions do you have for this Kudos review?
Despite the obvious appeal of side hustles — more money! — they’re not for everyone. If your side hustle makes you stress out, neglect relationships, or miss opportunities at your day job, then consider it a bad idea. Side hustles are only beneficial when they help you accomplish goals without sacrificing what matters most.
Side hustles are often promoted as a simple way to generate extra cash or fulfill your passions. However, the often-ignored price tag is physical and mental strain. Not to mention the time requirement and potential financial commitment necessary to get a gig going.
Read on to find out how to evaluate your options and goals before taking on a side hustle.
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What Is a Side Hustle?
A side hustle refers to a second job or source of income that people pursue outside their primary employment. The purpose may be to earn extra money, pursue a pet project, or develop skills in a different area.
A side hustle can take various forms, from freelance work or consulting to selling handmade crafts or driving for a rideshare service. Renting out property and offering tutoring services also qualify. The point is leveraging your time and skills to pad your budget or explore a wider field than your day job allows. 💡 Quick Tip: We love a good spreadsheet, but not everyone feels the same. A free budget app can give you the same insight into your budgeting and spending at a glance, without the extra effort.
Pros and Cons of a Side Hustle
Browse the pros and cons below, and make a mental note of how many of each apply to your situation. If one side of the scales is considerably heavier, your decision may be obvious.
Pros of a Side Hustle
Here’s a breakdown of the benefits of a side hustle:
• Develop Your Career: Side hustles can provide a valuable opportunity to develop skills, gain experience, and broaden your professional horizons. By taking on projects or roles outside your main job, you may acquire new competencies to help advance your career or get a promotion. Additionally, side hustles can demonstrate initiative, entrepreneurial spirit, and versatility to potential employers, enhancing your marketability and opening up new opportunities.
• Switch Up the Norm: A side hustle allows you to break away from the routine of your primary job. This variety can be refreshing and stimulating, helping to prevent boredom and burnout. Whether you’re pursuing a different passion, exploring a new industry, or experimenting with creative projects, having a side hustle can inject excitement and fulfillment into your life outside work.
• Build Your Network: Side hustles often involve interacting with different people and communities, which can expand your professional network. Whether you’re collaborating with clients, partners, or fellow freelancers, each connection presents an opportunity to exchange ideas, learn from others, and potentially uncover new career prospects. Building a diverse network through your side hustle can provide valuable support, mentorship, and referrals in your professional journey.
• Channel Creativity: Side hustles offer a platform for expressing your creativity, passions, and interests outside your primary job. Whether it’s writing, photography, crafting, or any other form of expression, a side hustle can bring more meaning and fulfillment than your 9-to-5. This outlet can serve as a source of inspiration, relaxation, and personal growth, enriching your life beyond the confines of your main occupation.
• Increase Income: One of the most practical benefits of a side hustle is the extra money. Whether saving for a major purchase, paying off debt, or simply seeking financial security, the income from your side hustle can provide greater financial flexibility and stability. Likewise, having multiple streams of income can be a buffer against economic uncertainty and provide a safety net in case of job loss or another hardship.
Cons of a Side Hustle
On the other hand, these are the potential drawbacks of a side hustle:
• Less Time to Relax: Side hustles require time and effort, eroding your leisure time. Working 60+ hour weeks can lead to fatigue and even burnout. When juggling your day job, side hustle, and personal commitments causes you to lose sleep, your quality of life can become unsustainably low.
• Distraction from Work: A side hustle can encroach on your attention and focus during work hours. Constantly thinking about your other gig, responding to email, or taking calls while at your main job can detract from your performance. If colleagues or supervisors perceive your divided attention, this can also strain your professional relationships and undermine your credibility.
• Managing the Stress of Two Jobs: Managing the demands of a side hustle on top of your primary job and personal responsibilities can significantly increase stress. Deadlines, client expectations, financial pressures, and the need to constantly switch between different roles and tasks can elevate anxiety. Chronic stress associated with balancing multiple commitments can affect your mental and physical health over time.
• Sustainable Prices Can Be Elusive: Setting prices or negotiating rates for your side hustle services can be challenging, especially if you’re just getting started or dealing with imposter syndrome. Striking the right balance between competitiveness and fair compensation can be tricky, and you may encounter situations where clients or customers undervalue your work. Plus, breaking into a competitive market may require setting prices so low that you work at a loss for the first few months or even years. As a result, your side hustle may ding your budget instead of adding to it.
💡 Quick Tip: An online money tracker makes monitoring your spending a breeze: You can easily set up budgets, then get instant updates on your progress, spot upcoming bills, analyze your spending habits, and more.
When Does a Side Hustle Make Sense?
Several ingredients are key for a side hustle to make sense for your situation. First, it’s essential to have a clearly defined reason for pursuing a side hustle. For example, you may want to generate income, follow a creative impulse, or pave a path to a new career. This clarity of purpose will guide your efforts and motivate you throughout your side hustle journey.
Second thorough research is crucial to understanding the market, demand, competition, and potential challenges associated with your chosen side hustle. This is significant even if you don’t have financial aspirations for your other gig.
For example, if you’re interested in fitness, is your specific angle better suited for a blog or a YouTube channel? Will you create a social media presence to drive more traffic? What kind of value are you delivering to your audience?
In a different vein, if you want to become a rideshare driver, which company offers the best pay? Do you have a presentable vehicle that you’re willing to put miles on? Answering these kinds of questions will help you make informed decisions and set realistic expectations. Not doing your homework will likely bring a lack of results, monetary loss, and frustration.
Next, understand the time commitment your side hustle will require. For instance, a few hours of woodworking on the weekend is less demanding than taking a constant flow of orders on Etsy. If your schedule is already full to the brim from your primary job, family responsibilities, and personal pursuits, incorporating a side hustle can do more harm than good. Even if you work a side gig with your significant other, it’s not the same as spending quality time together.
Finally, your side hustle should fit into the larger picture of your goals and values. For instance, you might start a side hustle in order to build a $5,000 emergency fund. Or you could take a software engineering course in the evenings that will help you eventually switch careers. In any case, your side hustle should have specific benefits and point toward a defined objective. Otherwise, you’ll burn time without accomplishing much.
The Opportunity Cost of a Side Hustle
The “opportunity cost” of a side hustle depends upon the resources you invest. When you dedicate yourself to anything, you lose opportunities to engage in leisure activities, spend time with family and friends, and take vacations. In essence, the opportunity cost of a side hustle equals the value you place on other aspects of life that matter most.
Also ask yourself what is the financial cost of your side hustle? You might have to invest money to purchase materials or pay for marketing. You might also give up overtime at your primary job. That’s cash that could go into savings, investments, or paying off debt.
Likewise, your time could be going into skill development for your day job, leading to promotions or raises. Plus, your employer might sponsor specific types of professional development, resulting in free training that moves your career forward and increases your salary.
Ultimately, the opportunity cost of a side hustle varies depending on individual circumstances, goals, and priorities. It’s essential to carefully consider these factors and assess how the benefits of the side hustle compare to the time and money.
Examples of Side Hustles
While there are unusual ways to make money, side hustles are typically more accessible. Here are some side hustles that match with a range of backgrounds and skill sets:
• Freelancing: Offer services such as writing, graphic design, programming, bookkeeping, and more. You’ll take projects on a contract basis with multiple clients.
• Dog Walking: Providing exercise and companionship for dogs by taking them on walks on a regular or as-needed basis.
• Blogging: Creating and maintaining a consistent feed of valuable written content on a topic you love or have expertise in. Find out how much it costs to start and run a blog.
• Non-Medical Senior Care: Assisting elderly individuals with daily tasks (shopping, bathing, housework, etc.) and providing companionship to support their wellbeing.
• Babysitting: The tried-and-true income-generator for teenagers and adults alike. You’ll care for children in the evenings and on weekends when parents are busy or need a break.
• Personal Assistant: Providing administrative support and assistance to individuals or businesses. You’ll manage schedules, run errands, and handle correspondence. You can also be a virtual assistant and provide numerous essential services (bookkeeping, arranging travel, etc.), therefore creating a side hustle from home.
• Handyman: Offering services to repair, maintain, and improve residences. You can specialize in one or more areas: plumbing, electrical work, carpentry, or general home tasks.
• Crafting: Creating handmade goods and artwork, such as jewelry, clothing, and home décor, to sell online or at craft fairs.
• Cooking/Baking: Crafting you can eat! Get to work in the kitchen to make treats, desserts, or meal kits for sale.
• Private Tutor: Providing personalized academic instruction to students in a particular subject or skill, often on a one-on-one basis.
• Self-Publishing: Writing and publishing books or other written works independently, without the involvement of traditional publishing companies. Self-publishing is inexpensive because your work will be accessible as an ebook.
• Teaching Online Courses: Creating and delivering educational courses or tutorials on a specific topic via online platforms is another side hustle from home.
• Product Tester: Testing and reviewing products or services for companies or brands, often providing feedback and insights based on personal experience.
• E-Commerce: Selling products or services online through a website or online marketplace, which may involve sourcing or creating products, managing inventory, and handling customer inquiries and orders.
When Is a Side Hustle Not Worth It?
A side hustle may not be worthwhile because of the toll on your physical, mental, and financial wellbeing. Here are more specific ways that a side hustle can negatively impact your life:
• Burnout: Working an 8-hour job and dedicating 2 to 4 additional hours per day to your side hustle leaves little room for anything else. The demands of a side hustle can result in excessive stress, fatigue, and burnout.
• Missed Career Advancements: Devoting significant time and energy to a side hustle may detract from opportunities for advancement in your primary job. They can also keep you from visualizing a sustaining career. So if you’re in a job you don’t like, a side hustle can act as a bandage instead of a cure. It’s advisable to focus on switching vocations instead of supplementing your income through another unsatisfying side job.
• Unhealthy Lifestyle Habits: A demanding side hustle may lead to poor eating choices due to lack of time for meal prep, insufficient exercise, and disrupted sleep. Over time, these habits damage physical health and overall quality of life.
• Strained Relationships: Spending excessive time on a side hustle can strain relationships with family, friends, and romantic partners. Missing significant events or quality time with loved ones due to work commitments can lead to feelings of resentment and isolation.
• Financial Costs: Some side hustles require upfront investments of time and money, for purchasing inventory or equipment, marketing expenses, or training courses. If the return on investment does not justify these costs, the side hustle may not be financially sustainable in the long run.
• Not-So-Passive Income: Many side hustles require active participation and ongoing effort to generate income, which can limit scalability and long-term earning potential. Without the ability to create passive income streams, you’ll constantly trade time for money without achieving financial freedom.
• Neglecting Personal Growth: A side hustle that consumes all available time and energy may leave little room for hobbies or other interests. Over time, this can lead to stagnation and dissatisfaction with your lifestyle.
Side Hustle Tips
A side hustle can quickly get out of hand or detract from your life if you’re not careful. Here’s how to create a practical side hustle that serves your needs:
• Start Small: When beginning a side hustle, starting with manageable tasks or projects that don’t require a significant investment of time or resources is wise. Starting small allows you to test the waters, gain experience, and assess the viability of your chosen side hustle without taking on too much risk. As you gain confidence and experience, you can gradually expand and scale your side hustle over time.
• Play to Your Strengths: Identify your special skills, interests, and areas of expertise, and leverage them in your side hustle. By focusing on activities that align with your strengths, you’re more likely to enjoy the work, excel at it, and differentiate yourself from competitors. This approach also allows you to maximize your earning potential by offering high-value services or products that cater to a specific niche or market. Remember, this doesn’t mean you must stick to your current skill set. Your interests and abilities can also lead you to pick up new skills.
• Maintain Your Performance at Work: Balancing a side hustle with a full-time job means prioritizing high performance and professionalism in your primary job while pursuing your side hustle. To that end, it’s recommended to set boundaries for the time you dedicate to your side hustle and to manage your schedule efficiently. By maintaining your performance at work, you can preserve your job security and opportunities for advancement.
• Aim at a Goal Instead of a Job: Instead of treating your side hustle as just another job, set out to achieve specific goals or milestones that align with your long-term aspirations. Whether your goal is to generate additional income, pursue a passion project, or transition to full-time entrepreneurship, having a clear vision and purpose for your side hustle will keep you motivated and focused on what truly matters to you. By focusing on goals rather than simply exchanging time for money, you can create a more fulfilling and meaningful side hustle.
The Takeaway
Side hustles can be a bad idea when they damage your quality of life. While picking up a side gig can create more income, this result must be weighed against other priorities, including advancement in your day job, time dedicated to relationships, and alternatives that slowly but surely create passive income.
Asking yourself whether a side hustle is a good move might not be the most relevant question. Instead, you can ask yourself if a second job makes sense after developing a clear vision of the future.
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FAQ
Are side hustles risky?
Side hustles can be risky because of the opportunity cost of picking up extra work. Specifically, a side hustle can drain time and financial resources, add unmanageable stress to your life, and lead to worse quality of life because of the sacrifices required to work a second job. As a result, it’s essential to evaluate your circumstances and identify your goals before starting a side hustle.
Are side hustles a waste of time?
Side hustles can be an excellent way to generate more income, develop yourself professionally, or transition to a different career. However, they can also be a waste of time if you don’t set goals and create a realistic plan when starting. So a carefully planned side hustle that fits into the larger picture of your life can provide massive benefits, while picking up more work to simply stay busy can lead to missed opportunities in your professional and personal life.
Is starting a side hustle really worth it?
Starting a side hustle can be worth it for additional income, pursuing passions, or expanding your skill set. However, it requires careful consideration of the potential drawbacks, such as time constraints, increased stress, and the risk of hindering career advancement. Ultimately, the value of a side hustle depends on your aligning it with personal goals, managing resources effectively, and maintaining a healthy work-life balance.
Photo credit: iStock/JLco – Julia Amaral
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Inside: Learn how to save money quickly, even on a tight budget. Get practical tips for how to save money fast on a low income. Simple savings ideas to implement today.
Saving money on a tight budget can feel like a high mountain to conquer, especially when you’re trying to do it fast.
Many people earn just enough to cover their essential costs, leaving little room for savings. However, with the right strategies, saving money fast on a low income doesn’t have to be a pipe dream.
This is something I started when we decided to pay off debt. Then, we choose to continue saving that money and investing it.
By understanding the flow of your money – where it’s coming from and where it’s going – you can make informed decisions that maximize your savings potential.
By prioritizing your spending and forecasting future expenses, budgeting can reduce the stress of financial uncertainty and introduce a sense of control and confidence in your money management skills. Thus, leading to you starting to save.
What is the best way to save money on a low income?
On a low income, the best way to save money is to thoroughly understand your expenses and prioritize your needs over wants.
In addition, by planning and tracking your finances meticulously, you can identify where each penny is going. Thus, allowing you to analyze your expenses. Once you have a clear picture of these, start looking for areas to trim down.
Remember, saving money is about being proactive and consistent. These small but steady steps can build up over time to help you save money fast, even on a low income.
How to Save Money on A Fast Income
1. Start with Clear Priorities
Before you can decide where to cut costs or how to allocate your funds, you need to know what’s most important to you.
What is your why for doing what you need to do? Is it building an emergency fund, saving for a down payment on a home, or maybe preparing for retirement?
Whatever your goals, outline them clearly. This is how you will save money.
2. Budgeting effectively to manage finances
To budget effectively on a low income, it all starts with a cold, hard look at your numbers.
Begin by listing all sources of income – that’s your foundation.
From each paycheck or income stream, subtract your non-negotiable expenses such as rent, utilities, transportation, and debt payments. What you have left is your discretionary income.
Then, it’s time to categorize and prioritize. Group your expenses into necessities and nice-to-haves. If your essentials consume most of your income, you’ll need to scrutinize the nice-to-haves list.
Every dollar saved from unnecessary splurges is a dollar that can be put towards your savings.
Use budgeting apps or tools to keep a real-time record of your spending. These can help you stay disciplined and provide a visual reminder of your progress.
3. Track and Slash Unnecessary Expenses
Now, you must meticulously and ruthlessly cut out the non-essentials.
Identify patterns and spot the recurrent, unnecessary expenses that are draining your funds.
Do you subscribe to multiple streaming platforms?
Are you forking out cash for a gym membership you barely use?
Are those daily specialty coffee drinks adding up?
It’s time to slash these expenditures.
Cutting these expenses is like giving yourself a raise.
4. Lower Housing Expenses Without Compromising Comfort
Living in smaller, more affordable housing to decrease rent or mortgage might be exactly what you need.
Opting for a smaller, more affordable space is a practical approach to significantly lower your rent or mortgage payments. When you choose to live in a compact setting, not only do you reduce the square footage costs, but often, utility and maintenance expenses decrease as well due to the reduced size of the living area.
If you are renting, try to negotiate your rent or lease terms with your landlord – they might be willing to offer a discount to keep a reliable tenant, or you may be able to agree on lower rent for a longer lease commitment.
If you’re a homeowner, explore the possibility of refinancing your mortgage to take advantage of lower interest rates. Alternatively, consider renting out a room or a portion of your living space, as the additional income can offset your mortgage or maintenance costs.
5. Save Money on Utilities with Simple Home Adjustments
Saving money on utilities might sound challenging, but you can often achieve substantial savings with a few strategic home adjustments. Let’s explore some cost-effective strategies and modifications you can make to your living space that could help reduce your bills.
Energy Efficient Appliances: Swapping out older appliances for Energy Star-rated ones leads to significant reductions in electricity use and water consumption.
Smart Thermostats: Installing a smart thermostat allows you to programmatically control your heating and cooling based on your schedule and preferences, potentially saving you a bundle on your energy bills.
LED Lighting: Switch to LED bulbs, which are more energy-efficient than traditional incandescent ones and have a longer lifespan, saving you on replacement costs as well as your electric bill.
Insulation Upgrades: Proper insulation keeps your home warm in the winter and cool in the summer, reducing the need for excessive heating or air conditioning.
Water-Saving Fixtures: Low-flow showerheads and faucet aerators reduce water usage, preserving this precious resource and lowering your water bill.
Not only do these simple home adjustments lead to savings on your utility bills, but they also contribute to a more environmentally friendly lifestyle.
6. Cooking at home instead of eating out
Cooking at home instead of dining out is an excellent way to save money, especially on a low income. When you eat at a restaurant, you’re not just paying for the food; you’re also covering the cost of service, ambiance, and the establishment’s overhead.
Plan a balance between meal prepped home-cooked meals and the occasional dinner out to keep your budget in check while still enjoying life’s little pleasures. Here are some frugal meals to get you started.
Remember, you don’t have to eliminate eating out entirely.
7. Canceling unused subscriptions and memberships
Stop draining money on services you don’t actively use. It’s surprisingly easy to forget about these auto-renewing expenses, so taking the time to audit your subscriptions can reveal opportunities for savings.
Recently, we tracked over $100 a month in my mother-in-law’s unused subscriptions and membership!
As such, it’s important to periodically evaluate your subscriptions and memberships to ensure they are still serving your interests and goals. If not, give yourself permission to cancel and save that money for something that offers tangible benefits in return.
8. Buying quality items that last longer
Investing in quality items that last longer is a strategic way to save money over time. While the initial cost may be higher, durable products can prevent the cycle of frequent replacements, ultimately contributing to long-term savings and less waste.
Remember, not every purchase necessitates the highest quality option. Examine which items you frequently use and can benefit from in the long run. For instance, driving a Toyota or buying higher quality shoes.
Once you’ve identified these, invest in quality for those and enjoy the satisfaction of a purchase that lasts.
9. Optimize Grocery Shopping
To optimize grocery shopping and manage your food budget effectively, start by thoroughly checking your current pantry supplies and making a precise shopping list to deter impulse purchases.
Utilize coupons and enroll in local store loyalty programs for exclusive discounts.
Embrace meal planning to avoid unnecessary spending.
Consider incorporating meatless meals, as this can contribute to consistent savings over time due to the typically higher cost of meat compared to vegetables and other plant-based options.
Plan meals around these cheap foods when you are broke.
By shopping smartly, you have the power to drastically lower your monthly food bill. Just remember, the key is preparation and discipline.
10. Repairing items instead of replacing them
Repairing items instead of replacing them can be a significant money-saving tactic, especially when budgets are tight. It’s often more cost-effective to fix a piece of furniture, mend a garment, or troubleshoot an appliance than it is to buy new one.
Consider the condition and value of each item before deciding to repair it. If the cost of repair approaches the price of a new item, or if it’s beyond your skill set, researching community resources or seeking professional help may be a wise choice.
11. Practicing the 30-day rule for non-essential purchases
Putting the brakes on impulsive buying can significantly boost your savings, and practicing the 30-day rule is a tried-and-true method to control those urges.
Before you make any non-essential purchase, wait 30 days.
If after a month you still feel the purchase is necessary or meaningful, then consider buying it.
Remember that the goal isn’t to deny yourself enjoyment but to ensure that each purchase is considered and valued. This conscious approach can lead to more satisfaction with the items you do choose to buy and a healthier bank balance.
12. Skip the Car Loan
Opting out of a car loan and finding alternative modes of transportation, such as cycling, walking, or using public transportation, can lead to significant financial savings.
Without a car payment, individuals can redirect the funds that would have gone towards monthly installments, insurance, and maintenance into their savings account.
This strategy can be particularly impactful for those with a goal in mind or working with a low income, as every dollar saved moves them closer to financial stability. Furthermore, the elimination of auto loan interest charges and potential debt can provide a more secure financial footing and peace of mind.
13. Using public transportation or carpooling to reduce fuel costs
Utilizing public transportation or carpooling can be significant in reducing fuel costs, particularly when you’re committed to saving money on a low income. These alternatives to solo driving not only save on fuel but also on parking fees, and wear and tear on your vehicle.
Another option is embracing car-sharing services, especially if you find that you don’t require a car on a daily basis. Services like Turo and Getaround offer the flexibility of having a car when you need one without the constant financial responsibility associated with ownership.
Remember, it’s all about what suits your lifestyle and frequency of need. By assessing how often you need a vehicle and comparing it with the total costs of ownership, car-sharing could be an excellent way to save money.
14. Selling unused or unwanted items for extra cash
Selling unused or unwanted items is a fantastic way to declutter your space and earn extra cash. You might be surprised how much money you can make by letting go of things you no longer use or need. From clothes you’ve outgrown to homeware that’s gathering dust, each item sold can inch you closer to your savings goal.
Take advantage of this opportunity; a thorough home audit could reveal a treasure trove of sellable items right under your nose. Not only does this increase your income, but it also helps you consider future purchases more carefully.
15. Taking advantage of free entertainment and community events
Leveraging free entertainment and community events is a delightfully frugal way to enjoy yourself without breaking the bank. From concerts and exhibitions to workshops and meet-ups, there’s often a wealth of activities that won’t cost you a penny.
In fact, here at Money Bliss, I have the most popular list of things to do with no money.
With a little creativity and resourcefulness, you can uncover a variety of enjoyable and inexpensive things to do.
16. Automating savings to ensure consistent contributions
Automating your savings is a hassle-free way to ensure you consistently contribute to your financial goals.
By setting up an automatic transfer from your checking account to a savings account, you’re essentially paying your future self first.
This ‘set and forget’ approach helps grow your wealth with minimal effort.
17. Negotiating bills and asking for better rates
Many service providers are open to negotiating prices if it means retaining a customer. Whether it’s your cable package, insurance, or even a credit card interest rate, it’s worth having the conversation.
Remember, the worst they can say is no. But often, companies will offer helpful options when they realize you are considering alternatives due to cost concerns.
One phone call could save you $1000 a year – just like when I decreased my cable bill!
18. Evaluating insurance policies for potential savings
When evaluating insurance policies, it’s critical to regularly assess your coverage needs and shop around for the best rates. Comparing policies from different providers annually can reveal opportunities for lowering premiums or finding more suitable coverage.
Utilize online tools and independent insurance agents to ensure a comprehensive review of available options.
Remember to inquire about bundling policies, as this can often lead to significant savings while consolidating your insurance needs effectively.
19. Meal Planning and Prep: Strategies to Reduce Food Waste
By allocating some time each week to plan your meals, you can ensure that you only buy what you need, thereby minimizing waste and cost.
Learning to meal plan starts with looking at a calendar and a local sales flyer to find the low cost deals.
By creating a weekly plan and incorporating budget-friendly recipes, you can not only eat healthier but also avoid the costlier option of dining out.
20. Forgo single use items
By choosing reusable items over single-use ones, you cut down on waste and habitual spending on disposables. This is also known as frugal green.
For instance, investing in a reusable water bottle, rather than buying single use water bottles.
By integrating sustainable products into your life, you also promote a culture of conservation and mindfulness, inspiring others to make eco-friendly choices.
21. Shopping for groceries with a list to avoid impulse buys
This is key! Especially when shopping with kids or a significant other!
Shopping for groceries with a list is a golden rule to avoid impulse buys, which can quickly derail your budget. By planning your purchases beforehand, you stick to the essentials and resist the temptation of sale items that aren’t on your list or don’t fit your meal plan.
Bonus Tip: Remember to always shop on a full stomach – hitting the grocery store hungry is a surefire way to end up with impulse purchases that aren’t on your list!
22. Buying generic brands instead of name brands
Opting for generic brands rather than name brands is a straightforward and effective way to save money on everything from groceries to over-the-counter medications. These products are often of similar quality and effectiveness but come at a significantly lower cost.
By making the switch to generics, especially for regularly used items, the aggregate savings can be substantial over time.
23. Making bulk purchases for commonly used items to save on cost-per-unit
When you buy in larger quantities, the cost per unit typically decreases, leading to savings that add up over time. Bulk buying works best for non-perishable goods or products you use consistently.
Make a point of buying non-perishable items or products with a long shelf life in bulk to avoid waste and ensure that you truly save money with each bulk purchase.
Just make sure you are going to use it!
24. Cutting costs on personal care by DIY methods
DIY methods for personal care are not just a trend – they’re a practical and often healthier alternative to store-bought products. By creating your own beauty and personal care items, you can significantly trim costs and take control of what goes on and into your body.
Even if you’re not the crafty type, consider starting small with something like a DIY sugar scrub or homemade toothpaste. This is something I did over ten years ago. You might discover a new hobby that enhances both your well-being and your budget.
25. Regular maintenance of vehicles and appliances to prevent costly repairs
Keeping on top of maintenance schedules helps prevent major breakdowns that can lead to expensive repairs down the line.
By making regular maintenance a non-negotiable part of your routine, you protect your investments and save yourself from future financial headaches.
I keep a list in my digital to do list, so I never lose track.
26. Shopping at thrift stores, garage sales, or second-hand websites
Shopping at thrift stores, garage sales, or second-hand websites is an excellent way to acquire items at a fraction of the retail cost. Not only are you being financially savvy, but you’re also participating in the circular economy, reducing waste, and often supporting charitable causes.
Shopping second-hand first is not just about saving money—it’s a lifestyle choice. With patience and persistence, it’s amazing what quality items you can find without impacting your wallet heavily.
27. Learning basic sewing to repair clothes
Mastering the basics of sewing to mend your clothes is a skill that pays off in multiple ways. You save money by extending the life of your garments, reducing waste, and developing a practical capability that can come in handy in various situations.
Honestly, sewing a piece of clothes is a very simple thing. Something that must be learned by the younger generations.
Consider setting aside some time to learn sewing basics via online tutorials, community classes, or even from a friend or family member—it’s a practical step toward financial savings and sustainable living.
28. Utilizing coupons and discounts for shopping
Using coupons and discounts strategically can lead to significant savings on your shopping bills. With a little planning and some savvy shopping techniques, you can ensure you never pay full price for essentials and other purchases.
Remember to only use coupons for items you were already planning to purchase; otherwise, you’re not saving money, you’re just spending less on something extra.
29. Consolidating debt to reduce interest rates
Debt consolidation can be a strategic financial move to lower your overall interest rates and simplify your monthly payments. By combining your debts into one loan with a lower interest rate, you can streamline your bills and potentially save significant amounts of money over time.
Make sure to shop around for the best debt consolidation options and read the fine print. The goal is to find a consolidation plan that truly puts you on a faster track to being debt-free without any hidden costs.
30. Tackle High-Interest Debts First to Free Up More Cash
Addressing high-interest debts is paramount in optimizing your financial strategy. Such debts, often from credit cards or payday loans, can spiral out of control if not managed promptly due to their compound interest rates, which can quickly exceed the original amounts borrowed.
This is known as the debt avalanche.
By zeroing in on high-cost debts, you ensure your income is spent more effectively and not wasted on steep interest fees, accelerating your path to financial freedom.
31. Choose the Right High-Yield Savings Account for Your Emergency Fund
Selecting the right high-yield savings account for your emergency fund is an essential move for growing your savings. High-yield accounts offer interest rates significantly higher than standard accounts, ensuring your emergency fund doesn’t stagnate and keeps pace with inflation as much as possible.
This is one of the bank accounts you need.
32. Implement The Envelope System
The Envelope System is a budgeting method that involves physically dividing your cash into envelopes for different spending categories.
Utilizing the cash envelope system promotes disciplined spending by providing a tangible limit on various expense categories, ensuring you stay within your pre-determined budget and facilitating more intentional money management.
This method also offers immediate visual feedback on spending patterns, which can lead to better financial habits and incremental savings as any leftover cash from each envelope can be added directly to a savings fund, making the act of saving more rewarding and motivating.
33. Using cash -back envelopes to track spending
The use of cash-back envelopes takes the traditional envelope budgeting system a step further by rewarding yourself with savings.
Whenever you spend less than the allocated amount in a budget category, you place the cash difference into a “cash-back” envelope, which can be used for saving or investing.
Adopting the cash-back envelope strategy can provide a rewarding twist to budgeting, making it a fun challenge to spend less and save more.
Boost Your Income: Creative Side Hustles and Opportunities
Boosting your income can provide substantial financial relief, particularly when you’ve maximized your ability to cut costs and still find your expenses stretching your budget thin.
Generating extra income, be it through a side hustle or achieving a raise enhances your ability to save and invest.
With additional streams of revenue, you gain more financial flexibility to achieve goals like paying off debt faster, saving for a significant purchase, or building an emergency fund.
Finding a side hustle or part-time job for additional income
Exploring a side hustle or part-time job is a proven way to supplement your income. In today’s gig economy, there are numerous opportunities for flexible work that can be customized to fit your skills and schedule.
A side hustle can not only pad your wallet but also provide an outlet for creativity and passion, possibly even offering a new career trajectory down the line.
Explore Gig Work and Passive Income Streams
Exploring gig work and passive income streams can accelerate your savings efforts, especially when your regular income isn’t enough to reach your financial goals. These alternative income ideas often provide the flexibility to work on your terms and build up earnings over time.
These revenue channels provide a proactive approach to increasing your disposable income. Researching and choosing the best options for your skills and financial situation can help you build a sound extra income strategy.
Take Advantage of Bank Bonuses and Credit Card Bonuses
Banks often offer attractive incentives to new customers, and high-interest savings accounts can grow your deposits at a faster rate than traditional accounts. The same is true for credit card issuers offering big bonuses.
Taking time to research the best offers and account terms can net you a nice bonus and put your money to work earning more money.
Learn How to Invest Your Money
Learning how to invest your money is paramount to building wealth over time. While it can seem intimidating at first, understanding the basics of investing can enable you to take advantage of compounding interest and market growth to increase your savings exponentially.
Start small, stay disciplined, and continually educate yourself as you grow your investment portfolio. Over time, your investments can become a significant source of wealth and financial security.
Learn how to invest in stocks for beginners.
FAQs: Navigating the Path to Low-Income Savings Success
Saving money when your income barely covers your fixed expenses requires a strategic approach. Begin by scrutinizing your budget to cut any non-essential costs.
Look for ways to reduce your fixed monthly expenses, like negotiating bills or refinancing loans.
Every small change can contribute to your savings, so focus on making incremental adjustments that together can enhance your financial situation.
Even when funds are tight, saving money is possible by making small but impactful changes.
Prioritize reviewing your expenses and identifying areas to cut back, such as non-essential subscriptions or eating out.
Round up loose change or small amounts from your daily transactions into savings.
Seek free entertainment options and consider generating additional income through side hustles or selling items you no longer need.
Each penny saved is a step towards your financial cushion.
Setting Realistic Savings Goals and Celebrating Milestones
Setting realistic savings goals is a key to financial success, particularly when managing a low income.
Determine what you can feasibly save without overstretching your budget. Whether it’s $5 or $50 per week, every bit helps.
Celebrating your achievements, no matter how small, can inspire continued discipline and dedication towards your financial objectives.
Being realistic and flexible with your budget will help you manage your finances more efficiently, ensuring that you set aside money for future growth, even when funds are tight.
This is a great step towards habits of financially stable people!
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Diversifying your assets is one of the best ways to create a sustainable, long-term investment strategy. And one of the ways you can do this is by buying gold.
Investing in gold and other precious metals is a great way to protect yourself against inflation. It also allows you to put your money in an asset that will likely continue to retain its value.
Despite the numerous benefits of investing in gold, many individuals remain uncertain about its viability as an investment and the process for getting started. In this article, we will outline a comprehensive guide on how to buy gold in 2024.
Why should I consider investing in gold?
With growing concerns of an impending recession, investing in gold has become increasingly relevant. This precious metal boasts a multitude of advantageous features that make it a valuable asset to any well-rounded investment portfolio. Here are four reasons why investing in gold is a wise choice:
Gold protects you from inflation: If you’re investing in the stock market, there’s a lot that’s outside your control. But gold is an asset you’ll always have some level of control over, regardless of what happens on Wall Street.
It retains its value: Because gold is much harder to obtain, it retains its value much longer. And you never have to worry about it decaying or losing its structure.
Gold is a high-demand product: There are many ways to use gold, and it tends to be a product that’s in high demand. This is especially true when economic conditions are tight.
Gold is an insurance policy: While some people purchase gold because they’re hoping to make a profit. Others like the security of owning gold and keep it as insurance in case of an economic downturn. Either strategy is an equally valid reason for gold investments.
How do I start investing in gold?
So now that you understand why gold is a good investment, it’s essential to know how to buy and sell gold, so you can get started. Listed below are five steps to make sure you get started on the right path.
Step 1: Decide What Type of Gold You Want to Buy
Start by deciding what kind of gold you would like to purchase. Each product will require a slightly different purchasing strategy, so you need to be clear on this right from the start.
Here are the main types of gold most people choose to invest in:
Gold bullion: When people think of owning physical gold, gold bullion is what usually comes to mind. It is a form of pure gold certified for weight and purity, typically in the form of bars.
Gold coins: A popular option for investors, gold bullion coins are easy to store due to their small size. They can be bought at a premium price and are readily available from reputable dealers.
Gold ETFs: For those not interested in directly owning gold, gold-based exchange-traded funds (ETFs) offer a convenient and cost-effective alternative. These shares can be bought and sold like stocks and are backed by a portfolio of gold-based securities.
Gold mutual funds: These mutual funds invest in companies involved in gold production, mining, and exploration. They may also invest in gold bullion, certificates, and derivatives.
Gold futures contracts: Gold futures are a type of futures contract allowing investors to buy or sell a specified amount of gold at a predetermined price and date in the future. They are best for experienced investors.
Gold jewelry: Accounting for 49% of global gold production, jewelry is a common form of gold ownership. However, it may not be the most profitable strategy, as retail jewelry prices come with substantial markups. Estate sales and auctions may offer better deals but require more time.
Gold mining stocks: With gold mining stocks, investors own a share in a gold mining company instead of the actual gold. These companies are large, global enterprises involved in the extraction and processing of gold ore. Investing in gold mining stocks is another way to profit from rising gold prices.
Gold IRAs: Similar to traditional retirement accounts, gold IRAs are backed by gold and other precious metals like silver, platinum, and palladium. They offer a unique investment opportunity for those looking to diversify their retirement portfolio. Here’s a list of the best gold IRA companies of 2024.
Step 2: Learn How Gold Prices Work
Before investing in gold, it’s essential to understand how gold prices work. The gold spot price, which reflects the cost of one ounce of gold, can fluctuate considerably based on market demand.
To ensure that you make wise investment decisions, research the market and stay up to date with its trends. In doing so, you’ll be poised to make the most of the opportunities presented by decreases in gold prices.
Step 3: Find a Trusted Seller
When investing in gold, you need to choose a trustworthy dealer. While purchasing gold online is convenient, be sure to exercise caution to avoid falling victim to scams.
To ensure that you purchase gold bullion or coins from a reputable source, consider consulting the U.S. Mint for a list of gold dealers in your area.
Once you have identified a potential dealer, make sure you evaluate their credibility. Gather information about their reputation through customer reviews and the Better Business Bureau.
It’s also a good idea to research the dealer’s buyback policies. Obtain a written copy of these policies and keep them in a safe place for future reference.
Step 4: Buy Physical Gold that You Can Sell
If you buy gold that is in demand, it will be easier when selling it at a later time. Stick to the most familiar gold coins and gold bars.
Gold Coins
The following are the most popular gold coins:
American Gold Eagle
Austrian Philharmonic
British Britannia
Canadian Maple Leaf
South African Krugerrand
Gold Bars
The most popular gold bullion bars include:
Credit Suisse
Perth Mint
Valcambi
Englehard
Johnson Matthey
PAMP Suisse
Step 5: Decide How You’ll Store the Gold
Finally, make sure you have a plan in place for storing your physical gold. Sticking several gold bars under your bed probably isn’t the wisest strategy. This puts you at greater risk of having your investment stolen.
Your best bet to store physical gold bars and coins is likely to purchase a safe for your home. You can also use a safe deposit box at a bank or rent a secure storage facility.
Conclusion
Investing in gold can be a rewarding journey, but only if you approach it with caution and foresight. First, decide the type of gold that aligns with your investment objectives, whether it be coins or bars, and make sure to source from a reputable dealer.
Additionally, consider the practical aspects of your investment strategy. For instance, if you opt for gold bars, consider the storage and security of your precious metal, and how you plan to sell it in the future. Gold bars can’t be easily divided, so take that into account.
Furthermore, you’ll need to factor in the rate of return on your gold investment. Ensure that the gold you purchase will not only keep pace with, but also surpass inflation, or you may end up with a loss in the long run.
And finally, avoid the common mistake of putting all your eggs in one basket, especially when it comes to gold investment. While gold and precious metals can be a lucrative component of your investment portfolio, they should never make up your entire investment strategy.
Frequently Asked Questions
Is gold a good investment?
Gold is a unique asset that doesn’t provide regular income in the form of cash flow, unlike other investments. However, owning gold can still have many advantages for your overall investment portfolio.
By including gold in your asset mix, you can diversify your investments and reduce your overall risk exposure. This is particularly important during times of economic uncertainty, such as a recession.
When other investments may perform poorly, gold has historically held its value, helping to protect and stabilize your wealth. This characteristic of gold makes it a useful tool for managing risk and preserving your wealth over the long term.
What is the best way to buy gold?
Acquiring gold can be a smart investment choice, but it’s essential to choose the right seller. Reputable sources include banks, investment firms, and online gold retailers.
To ensure you make a wise decision, do your due diligence and find a dealer with a good reputation, competitive pricing, and dependable customer support.
Furthermore, being aware of the current spot price of gold and market trends is crucial to making an informed purchase. Ultimately, the best form of gold to buy is the one that aligns with your investment objectives and needs.
How much gold should I buy?
Experts generally suggest investing 5% to 10% of your portfolio in gold. During economic downturns and periods of high inflation, some recommend allocating a larger portion.
The ultimate decision on how much to invest in gold should be based on personal financial objectives, comfort with risk, and available funds. As a diversification tool and a hedge against market instability, gold is a consideration worth making.
How much does gold cost per ounce?
Gold can experience significant price swings due to a multitude of factors. These include the ebb and flow of supply and demand, the fluctuation of currency exchange rates, and the instability of political climates.
The value of gold is expressed in U.S. Dollars and is most commonly reported in troy ounces, a unit equivalent to 31.1 grams. As of this writing, gold is priced at around $1875.00 per ounce.
What is the safest way to store gold?
For the ultimate protection of your gold investments, consider utilizing a secure depository, a bank safe deposit box, or an at-home safe.
Depositories provide comprehensive security and insurance coverage. They are an excellent option for safeguarding valuable assets.
Safe deposit boxes, located within banks, offer added protection with key-controlled access. An at-home safe, properly installed and maintained, can also provide a secure storage solution.
Buying your first home can be tedious and overwhelming.
While it’s exciting to visit properties and daydream about your dream home, getting over the financing hurdles is another story. But don’t fret.
This comprehensive guide for first-time homebuyers will walk you through the entire process from start to finish.
Benefits of Being a First-Time Homebuyer
As a first-time homebuyer, you may feel a mix of excitement and apprehension. While the home buying process can seem overwhelming, it’s important to recognize the numerous benefits that come with this milestone.
Financial Assistance
First-time homebuyers have access to several financial assistance programs that can make homeownership more affordable. These include down payment assistance programs, low-interest mortgage loans, and grants specifically designed for first-time buyers. Some of these programs are offered by state and local governments, while others are provided by non-profit organizations or private lenders.
Lower Down Payments
Several loan programs offer lower down payment requirements for first-time homebuyers. The FHA loan, for example, requires as little as 3.5% down if your credit score is 580 or higher. The USDA and VA loans even offer zero down payment options in some cases.
Access to Educational Resources
There’s a lot to learn when you’re buying a home for the first time, but fortunately, there are plenty of resources available. Many organizations offer homebuyer education courses that can help you understand the process and make informed decisions. Some lenders and assistance programs require you to take one of these courses, but even if it’s not mandatory, it can still be a valuable resource.
Before Starting Your Home Search
Check Your Credit
Not only will your credit score play a considerable factor in whether you’re approved for a mortgage, but it will also determine your interest rate.
A small increase or decrease in interest rates may not seem like a big deal. However, mortgage loans are for a hefty sum and for an extended period of time. So, a slight increase or decrease equates to thousands of dollars more spent or saved over the life of the loan.
To have the best chance of being approved for a home loan, you should aim for a credit score of at least 620. It’s possible to get approved for select home loan programs with a score as low as 580, but you may have fewer lenders to choose from.
Run the Numbers
It’s tempting for first-time homebuyers to start searching for homes when they know their credit score is up to par. But that’s probably not a good move until you determine how much home you can afford. Yes, the loan officer will give you a figure when you obtain a preapproval, but that amount isn’t always indicative of what you can afford.
Why so? Well, they focus on the debt-to-income (DTI) ratio to get an idea of a loan amount you qualify for. According to the Consumer Financial Protection Bureau, lenders prefer a DTI ratio of 43% or lower with your new mortgage payment. To illustrate:
CURRENT MONTHLY DEBT
GROSS INCOME
DEBT-TO-INCOME RATIO
MAXIMUM MORTGAGE PAYMENT (USING 43% RECOMMENDATION)
$1,000
$4,000
25%
$720
$2,000
$6,000
33%
$580
$3,000
$10,000
30%
$1,300
Note: Debt-to-Income Ratio = Aggregate Amount of Monthly Debt / Gross Income
The problem is that it fails to consider any expenses unrelated to debt. And if you have hefty insurance, childcare, or even grocery bills, that could be a major concern.
So, your best bet is to look at your current budget and come up with a realistic figure for your new mortgage payment. But don’t forget to keep the recommended DTI ratio in mind.
Explore Mortgage Options
There are several mortgage options on the market for first-time homebuyers, but the most prevalent are:
Conventional Loans
A conventional mortgage is a type of home loan that is not insured or guaranteed by the government. It’s typically offered by a private lender, such as a bank or credit union, and is the most common type of mortgage used to purchase a home.
Conventional mortgages typically require a down payment of at least 3% of the purchase price of the home. Borrowers typically must have a credit score of 620 or higher and a DTI ratio of 36% or lower to qualify. If you have bad credit or are unable to make a large down payment may have a harder time qualifying for a conventional mortgage.
If the loan amount is over $726,200, it becomes a jumbo loan and requires a higher down payment.
FHA Loans
An FHA loan is a type of home loan insured by the Federal Housing Administration (FHA), a government agency within the U.S. Department of Housing and Urban Development (HUD).
FHA loans are designed to make it easier for people to buy homes, especially for first-time homebuyers. They offer lower down payment requirements and more flexible credit guidelines than conventional mortgages.
The minimum credit score required for an FHA loan is 500. If your credit score is between 500 -579, the down payment is 10%. However, if you have a credit score of 580 or above, the down payment is 3.5% of the purchase price.
VA Loans
VA Loans are insured by the Department of Veterans Affairs. They don’t require a down payment and are easier to qualify for than conventional loan products. However, you must be an active-duty member of the armed forces. Surviving spouses also qualify.
USDA Loans
A USDA loan is a type of mortgage offered by the U.S. Department of Agriculture (USDA) to low- and moderate-income borrowers who are looking to buy a home in a rural or suburban area.
See also: 14 First-Time Home Buyer Grants and Programs
Check Out Our Top Picks for 2024:
Best Mortgage Lenders
Most mortgages have a 30 or 15-year term. The latter will cost you more per month, but you’ll save a load of cash on interest.
You can also choose from a fixed or adjustable-rate mortgage (ARM). Fixed-rate mortgages have the same interest rate for the duration of the loan. But ARMs typically start with a lower interest rate for a set amount of time. In fact, they usually span from five to ten years and then adjust depending on the housing market.
Some first-time homebuyers choose ARMs over fixed-rate mortgages because it gives them the option to make a smaller monthly payment in the first few years. It could also mean that you can qualify for a more expensive home. But, be careful not to get too overextended, as erratic market behavior could cause the rate to skyrocket.
Get Preapproved
This is one of the more time-consuming parts of the entire mortgage process for a first-time home buyer. The good news is you don’t have to settle for the first offer that comes your way out of fear that your credit score will take a hit.
“FICO Scores ignore [mortgage] inquiries made in the 30 days prior to scoring,” according to myFICO. So, you won’t be penalized for multiple inquiries.
So, start by researching mortgage lenders that you may be interested in working with. You could also solicit the help of a mortgage broker if you’re strapped for time or want someone to do the legwork for you.
Once you’ve settled on a few lenders, be prepared to provide the following to get preapproved:
Financial statements to confirm your assets, including retirement accounts and real estate
Recent bank statements
Last two pay stubs
W-2s from the last two years
They will also pull your credit report and credit scores. If you qualify, the mortgage lender will then provide you with a preapproval letter, valid for a certain time period, that specifies how much you’re eligible for.
Save Up for a Down Payment and Closing Costs
During the preapproval process, the lender should have discussed loan options that could be a good fit for you. They should also have communicated how much you will need for a down payment and closing costs.
While some sellers may be willing to cover closing costs, be prepared to provide earnest money to secure your offer. And you may need a large down payment if you’re taking out a jumbo loan, or don’t qualify for the FHA or VA loan program. If that’s the case, now’s the time to figure out a plan for it.
If the seller is not paying closing costs, expect to pay between 2% and 5% of the sales price. And if a hefty down payment isn’t required, it’s not a bad idea to bring money to the table. Doing so allows you to reduce the Loan-to-Value, which positions you as less risky to the lender.
You may also be able to avoid private mortgage insurance (PMI), which is required until you reach 20% in equity, and possibly qualify for a reduced interest rate.
How to Find the Perfect Home
Go Home Shopping
All squared away with a preapproval and planned to save up the cash you need? Now, it’s time to go home shopping. But before you go, you have to decide if you want to enlist the assistance of a real estate agent.
It’s possible to find a slew of listings within your price range on the web with minimal effort. However, real estate agents have access to a system that could expand your reach. Even better, they could be integral in helping you choose a home that’s a good buy and negotiating the final purchase price.
And the seller’s agent pays their commission, so no need to worry about forking over extra cash. Just be sure to hire a real estate professional that is seasoned and reputable.
Now for the fun part: home shopping. Be careful not to judge a home solely by its appearance. Some other important factors to keep in mind:
Taxes: are the property taxes affordable or beyond what you can comfortably afford? (You can roll property taxes and homeowners insurance into an escrow account, but they can easily make or break your budget if the figures are steep).
Location: is the home in an area that has historically held its value? Is the location optimal for your commute to and from work?
Crime: is it a high crime area or is it relatively safe?
Condition: how old is the property? Does it need tons of repairs, or is it close to being move in ready?
Floor plan: is the floor plan feasible or ideal for your situation? Would it be appealing to other buyers if you had to sell?
School district: how are the schools? Have they received a good rating, or do they struggle to stay afloat?
All of these factors can have an effect on the value of the property over time.
Submit an Offer
You’ve found the perfect home, and you’re ready to sign on the dotted. Before you can finalize the paperwork and move in, there’s one more important step. And that’s making the offer. Even if the sales price seems fair, you may need to make an offer that’s higher or lower to snag the home.
Why so? Well, there could be a slight or drastic bidding war going on, and the only way for you to win is to beat out the competition. Or maybe your real estate agent did some research and determined the asking price was a bit high based on similar properties in the area or the home’s current condition.
Either way, you want to submit an offer that stands out and gets accepted. Your real estate agent will be able to do so on your behalf. But if you don’t have a real estate agent, check out these letters from Trulia to get you started.
The Mortgage Process
Even after your offer is accepted, there’s still more work to do. You’re not done just yet! It’s time to move on to the mortgage process.
Remember that preapproval letter? The lender will make sure all the information you initially provided is accurate through a process called underwriting.
Depending on how long it’s been since you were preapproved, you may be asked to provide updated bank statements or pay stubs.
The faster you submit the requested information, the quicker you’ll get a response. So, don’t drag your feet if you want a closing date that’s sooner than later.
Home Inspections and Appraisals
Before you close on the home, you will need to have a home inspection and appraisal complete.
The home inspection shouldn’t cost you more than $500. It will give you an overall assessment of the property and identify any potential issues.
The appraisal also plays an integral role as it will give you a solid idea of the home’s fair market value. The lender will mandate it, but it’s not a bad idea to get an independent appraisal done to serve as a second opinion.
An inspection and appraisal may help you decide if you should lower your offer or walk away from the property.
Purchase Homeowners Insurance
Your mortgage lender will require that you take out homeowners insurance. So, you want to start shopping around for quotes and select a policy prior to closing.
Close on Your Loan
At last! You’ve reached the finish line, and it’s time to close on your loan. During the closing, expect to:
Sign a load of paperwork.
Provide any amounts owed for the down payment.
Pay closing costs, which could include property tax obligations, premiums for homeowner’s insurance and association dues, title insurance, and any other costs associated with finalizing the loan.
Pay discount points or prepaid interest that can reduce the interest rate.
But before you show up at closing, it’s a good idea to speak with the lender, so you’ll know what to expect. You can also request a copy of the final closing document, or Closing Disclosure, to see a detailed breakdown of expenses.
A Few More Tips
Here are a few more suggestions for first time home buyers to help you get approved for your first loan:
Refrain from applying for new credit before you close. This could throw off your DTI ratio, lower your credit score, and ultimately prevent you from closing on the loan.
State and local programs may be available to assist with down payments. If you’re low on funds, be sure to explore options that may be available to you.
Several builders offer buyer incentives, like allowances for upgrades and closing costs. So if you haven’t considered new construction, it may not be such a bad idea to take a look if the price points are within your budget.
Should You Rent, Instead?
Perhaps you’ve done a little legwork, ran the numbers, and are on the fence about home buying. You will typically find that it’s cheaper to make monthly mortgage payments than to pay rent.
You can also take advantage of tax deductions and build up equity as you’re making monthly payments. The equity can be borrowed against for a loan or put some extra money in your pocket should you decide to sell before the repayment period ends.
However, renting a home gives you the flexibility to move to a new location if the home isn’t quite what you expected, don’t like the neighborhood, or want something more affordable.
Furthermore, renting allows you to pass the costs of maintaining the home on to the owner. But as a homeowner, you’ll be responsible for costs associated with maintenance and repairs.
Another reason why some choose to rent over buying is the upfront costs. Most landlords require a security deposit. However, it could be substantially lower than the money you may have to bring to the table for the down payment and closing costs.
Ultimately, you have to decide which is the better fit: investing in an asset that could build wealth or continuing to pay rent until you feel the time is right. There is no right or wrong answer; it just depends on your personal preference and financial situation.
Bottom Line
By taking the time to learn about the home buying process, you’ll be well-prepared and save yourself time and headaches. Best of all, you’ll increase your chances of landing your dream home with the most competitive mortgage product on the market.
Frequently Asked Questions
What is the process for buying a home?
The process for buying a home typically involves the following steps:
Determine your budget and get preapproved for a mortgage.
Find a real estate agent and start looking for homes.
Make an offer on a home and negotiate the terms.
Get a home inspection and address any issues that are found.
Get a mortgage and close on the home.
How much house can I afford?
When determining how much house you can afford, there are several factors to take into account. You should consider your income, expenses, down payment, credit score, and mortgage type before making a decision.
A larger down payment can help you get a lower mortgage rate, and a higher credit score can qualify you for better rates and loan terms. Shopping around for mortgage rates and considering different types of mortgages, such as fixed-rate or adjustable-rate, can also help you find the best deal.
Keep in mind that owning a home involves more than just the monthly payments. You will also need to factor in property taxes, insurance, and maintenance costs. You should create a budget that includes all of these costs and leaves room for unexpected expenses.
How much money do I need for a down payment?
The amount of money you need for a down payment will depend on the type of mortgage you get and the price of the home you are buying.
Some mortgage programs, such as FHA loans, allow for down payments as low as 3.5%, while others may require a higher down payment. It’s a good idea to speak with a mortgage lender to determine how much you will need.
Can I buy a house if I have a low credit score?
It’s possible to buy a house with a low credit score. However, it may be more difficult to get approved for a mortgage, and you may have to pay a higher interest rate. Before applying for a mortgage, work on improving your credit scores, as this will help you qualify for a better loan and save you money over time.
How much will closing costs be?
Closing costs are fees that are paid at the closing of a real estate transaction. These costs can vary widely and may include things like mortgage origination fees, title insurance, and appraisal fees. On average, closing costs can range from 2% to 5% of the purchase price of the home.
What is a mortgage preapproval?
A mortgage preapproval is a letter from a lender that indicates how much you are qualified to borrow for a mortgage. The preapproval letter is based on a review of your financial information, including your credit score, monthly income, and debts. A mortgage preapproval can help you understand how much you can afford to borrow and can make you a more competitive buyer in the real estate market.
What is a mortgage rate?
A mortgage rate is the interest rate that you will pay on your mortgage. The mortgage rate will determine the amount of your monthly payments and the overall cost of your loan. Interest rates can vary depending on the type of mortgage you get and your credit scores.
What is PMI?
PMI, or private mortgage insurance, is insurance that is required by lenders for certain types of mortgages when the borrower has less than a 20% down payment. PMI protects the lender in the event that the borrower defaults on the mortgage. The cost of PMI is typically added to the borrower’s monthly mortgage payment.
Today’s average mortgage rates on Apr. 22, 2024, compared with one week ago. We use rate data collected by Bankrate as reported by lenders across the US.
Mortgage refinance rates change every day. Experts recommend shopping around to make sure you’re getting the lowest rate. By entering your information below, you can get a custom quote from one of CNET’s partner lenders.
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Refinance rate news
A vast majority of US homeowners already have mortgages with a rate below 6%. Because mortgage refinance rates have been averaging above 6.5% over the past several months, households are choosing to hold on to their existing mortgages instead of swapping them out with a new home loan.
If rates fell to 6%, at least a third of borrowers who took out mortgages in 2023 could reduce their rate by a full percentage point through a refinance, according to BlackKnight.
Refinancing in today’s market could make sense if you have a rate above 8%, said Logan Mohtashami, lead analyst at HousingWire. “However, with all refinancing options, it’s a personal financial choice because of the cost that goes with the loan process,” he said.
What to expect from refinance rates this year
Mortgage rates have been sky-high over the last two years, largely as a result of the Federal Reserve’s aggressive attempt to tame inflation by spiking interest rates. Experts say that decelerating inflation and the Fed’s projected interest rate cuts should help stabilize mortgage interest rates by the end of 2024. But the timing of Fed cuts will depend on incoming economic data and the response of the market.
For homeowners looking to refinance, remember that you can’t time the economy: Interest rates fluctuate on an hourly, daily and weekly basis, and are influenced by an array of factors. Your best move is to keep an eye on day-to-day rate changes and have a game plan on how to capitalize on a big enough percentage drop, said Matt Graham of Mortgage News Daily.
What to know about refinancing
When you refinance your mortgage, you take out another home loan that pays off your initial mortgage. With a traditional refinance, your new home loan will have a different term and/or interest rate. With a cash-out refinance, you’ll tap into your equity with a new loan that’s bigger than your existing mortgage balance, allowing you to pocket the difference in cash.
Refinancing can be a great financial move if you score a low rate or can pay off your home loan in less time, but consider whether it’s the right choice for you. Reducing your interest rate by 1% or more is an incentive to refinance, allowing you to cut your monthly payment significantly.
How to find the best refinance rates
The rates advertised online often require specific conditions for eligibility. Your personal interest rate will be influenced by market conditions as well as your specific credit history, financial profile and application. Having a high credit score, a low credit utilization ratio and a history of consistent and on-time payments will generally help you get the best interest rates.
30-year fixed-rate refinance
For 30-year fixed refinances, the average rate is currently at 7.25%, an increase of 19 basis points compared to one week ago. (A basis point is equivalent to 0.01%.) A 30-year fixed refinance will typically have lower monthly payments than a 15-year or 10-year refinance, but it will take you longer to pay off and typically cost you more in interest over the long term.
15-year fixed-rate refinance
The current average interest rate for 15-year refinances is 6.76%, an increase of 15 basis points over last week. Though a 15-year fixed refinance will most likely raise your monthly payment compared to a 30-year loan, you’ll save more money over time because you’re paying off your loan quicker. Also, 15-year refinance rates are typically lower than 30-year refinance rates, which will help you save more in the long run.
10-year fixed-rate refinance
The current average interest rate for a 10-year refinance is 6.62%, an increase of 25 basis points compared to one week ago. A 10-year refinance typically has the lowest interest rate but the highest monthly payment of all refinance terms. A 10-year refinance can help you pay off your house much quicker and save on interest, but make sure you can afford the steeper monthly payment.
To get the best refinance rates, make your application as strong as possible by getting your finances in order, using credit responsibly and monitoring your credit regularly. And don’t forget to speak with multiple lenders and shop around.
Reasons to refinance
Homeowners usually refinance to save money, but there are other reasons to do so. Here are the most common reasons homeowners refinance:
To get a lower interest rate: If you can secure a rate that’s at least 1% lower than the one on your current mortgage, it could make sense to refinance.
To switch the type of mortgage: If you have an adjustable-rate mortgage and want greater security, you could refinance to a fixed-rate mortgage.
To eliminate mortgage insurance: If you have an FHA loan that requires mortgage insurance, you can refinance to a conventional loan once you have 20% equity.
To change the length of a loan term: Refinancing to a longer loan term could lower your monthly payment. Refinancing to a shorter term will save you interest in the long run.
To tap into your equity through a cash-out refinance: If you replace your mortgage with a larger loan, you can receive the difference in cash to cover a large expense.
To take someone off the mortgage: In case of divorce, you can apply for a new home loan in just your name and use the funds to pay off your existing mortgage.