Editor’s Note:Lending Club no longer offers peer-to-peer lending on it’s platform.
You’re probably already familiar with Lending Club, the largest peer-to-peer lending platform in the US. Since the site began operating in 2007, it has funded almost $16 billion worth of loans. It does this by bringing together borrowers and investors – who will be the ultimate lenders – on the same platform to make loan arrangements that will benefit both parties. This provides a form of direct borrowing/lending that effectively removes the “middle man”, which in traditional loan arrangements is the bank.
Borrowers benefit because many of them either pay lower interest rates on their loans, or are able to borrow money that would not be available from banks. But investors have perhaps an even bigger advantage – they are able to invest money in those loans and earn interest rates that are substantially higher than what they can ever get through the banks and other conventional fixed income investments.
The peer-to-peer universe, and especially Lending Club, are now drawing billions of dollars in investment capital from investors who are eager to take advantage of those higher returns.
Lending Club provides the perfect platform for the creation of new loans on a continuous basis. However one function that Lending Club doesn’t provide is the direct ability to buy or sell an existing loan note. For that, they are working with Folio Investing, an investment service that provides everything you need to buy and sell peer-to-peer loan notes on the secondary market.
And it all takes place through the Lending Club platform.
What Is Lending Club Folio?
Lending Club itself is solely responsible for the origination of new peer-to-peer loans. Investors can purchase entire loans, or they can purchase a small part of a loan, both of which are referred to as a “note”. You can purchase a loan note in denominations of as little as $25. This will enable you to diversify an investment of a few thousand dollars across a very large number of notes, limiting the amount of loss that you will suffer when a single loan defaults.
But if you want to sell a note before the end of the loan term, or if you want to purchase existing notes, Lending Club enables you to do that through its affiliation with Folio Investing.
McLean, Virginia based Folio Investing began operations in 2000, determined to bring about investing innovations that will help investors benefit from smarter investments. The company has developed new technology to help investors that have resulted in 19 patents. And the company is committed to developing even more.
You can actually open an account with Folio Investing for the purpose of investing through other platforms, in addition to Lending Club.
How Lending Club Folio Works
If you want to buy or sell existing notes, you first sign up for a Lending Club investor account and then move to the Note Trading Platform. There you can buy or sell notes from and to other Lending Club investors.
The Note Trading Platform is operated by Folio Investing through the Lending Club site. In order to participate on the platform you must have an account with Lending Club, and you must also open a Folio Investing trading account, which you can do through Lending Club. Folio is a member of both FINRA and SIPC.
If you want to buy or sell a note, you can offer it on the Note Trading Platform. There you will set the asking price. Potential buyers can browse through the list of notes available for sale, including your note, as well as get detailed information about each note. If a buyer is interested, he or she can choose the note, and place an order to buy it.
Pricing a note. The price of a note that is offered for sale is determined by the seller of the note. There is a marketplace rule however requiring a note not be priced at a markup greater than 70% of the total value of accrued interest and outstanding principal, or that would otherwise produce a negative yield to maturity.
Trades typically settle in one business day. Borrower payments made after the trade settlement go to the buyer, including principal and interest accrued before the sale of the note. The payments will be received from Lending Club, not Folio Investing.
In each sale, the transaction fee is paid by the seller, not by the buyer.
If you want to buy existing notes, rather than brand-new ones, you simply need to go to the Note Trading Platform and browse through the notes that are offered. There you can choose to buy any notes that meet your investment criteria.
We’ll discuss the reasons why you might want to invest in existing notes, rather than brand-new ones, below.
Features and Benefits
There are a number of benefits to selling existing notes, and selling them through Folio.
Liquidity – One of the limitations of peer-to-peer investing is the lack of options to sell a note once you buy it (it is one of the only real complaints about lending club). Not only are you unable to sell directly through Lending Club (other than through Folio), but you can’t sell them through a traditional investment broker either. At least at the current time, peer-to-peer loan notes exist only on peer-to-peer lending platforms. But through Folio, Lending Club provides you with an outlet to sell your current notes. That provides you with a solid measure of liquidity, that makes investing through Lending Club even more advantageous.
Portfolio management – With the ability to sell notes, you have an enhanced capability to manage your note portfolio. Let’s say that you invested in a note that met your criteria at the time you purchased it, but it no longer does; Folio provides you with the ability to sell it out of your portfolio and to move on to other notes. Perhaps this happens because the note does not perform as expected, or because you have changed your investment criteria since purchasing the particular note. As is the case with investing in any type of asset, it’s always best to have the option to sell the security after the fact.
Potential profit – Though it isn’t a common investment activity (yet), but it may be possible to earn extra income on a note if you can sell it at a price above par. For example, if you have a note with $75 remaining to be paid on it, but you can sell it for $77, you have an immediate additional profit of $2 on the investment. That may not seem like a lot of money, but if you can multiply the activity across many notes on a monthly basis, you could increase your investment returns considerably.
Fees – When you sell a note through Folio you are charged a fee of 1% of the purchase price. If you aren’t satisfied with the performance of a note, you may be happy to pay such a small fee in order to get out of it.
There are also a number of benefits to buying existing notes, and buying them through Folio.
Short-term investing – New notes purchased on Lending Club range from 36 months to 60 months. But let’s say that you don’t want to tie up your money for up to five years – you can buy existing notes through Folio that will have shorter terms due to the fact that they are already in progress. For example, you can purchase a 60 month term loan that has been in existence for three years; that means that the loan will have just 24 months remaining until it is fully paid. In this way, you can choose the maturities of the notes that you invest in.
Investment opportunities – You may be able to purchase existing notes that are priced below what you think they are actually worth. This could have something to do with the performance history on the note, or it can simply be that the current noteholder wants to dump it and move on. Whatever the reason, an underpriced note will offer you an opportunity to earn some extra principal on on it, in addition to the remaining interest due on it.
Loan “seasoning” – This is actually a term that is common in the lending industry. “Seasoning” refers to the fact that a loan is existing, and therefore it has an established payment history. This makes the integrity of the loan a known commodity. It is important to understand that there is no way to know with absolute certainty how a loan will perform when it is brand-new. Even borrowers with AAA credit profiles occasionally default on loans. But with existing loans, you have a better idea of the borrower’s willingness and ability to repay the loan. And since the loan has a shorter remaining term, that also serves to reduce the risk of the investment.
Access – There is simply no other source where you can buy existing Lending Club notes. They are not available through traditional investment brokers, despite the fact that they can represent profitable investment opportunities.
No Folio fees – Folio does not charge a buyer for purchasing existing notes. The only fee in the transaction is charged to the seller of the note.
Summary
If you are going to invest in peer-to-peer lending, as thousands of people now do, then it’s an excellent idea to sign up with Folio Investing through the Lending Club site. Folio will give you the ability to sell any notes that you are no longer comfortable owning. And if you decide that you would like to diversify your note holdings by adding existing notes to new ones, you will have that ability.
Liquidity – the ability to sell an investment – is a welcome feature in any investment portfolio. Not only does it reduce the risk of holding a note that you no longer consider to be investment-worthy, but it also gives you the ability to create the exact kind of portfolio that you want.
Once you become an investor set up a Note Trading Platform through Folio Investing, even if you don’t think you’ll use it. Chances are good that you will, sooner or later.
They lived in a modest 1,800 square foot home. They both drove Buick’s that were both completely paid off.
He retired from a manufacturing plant and she a grade school as an English teacher.
Despite their simple ways, they were both millionaires and were one of the first clients I landed as a financial advisor.
So what was the secret sauce? Did he buy Apple stock a few decades ago? Was it some crazy pension buy out? A salty family inheritance?
How about none of the above.
When I asked the husband what their secret was he shared the story about how every time he received his paycheck he would ALWAYS take a portion and purchase savings bonds (Remember: this was long before 401k plans).
That simple routine, which became a good flippin’ amazing financial habit, was the catalyst for them becoming millionaires.
It doesn’t matter if your goal is to become debt free, increase your savings, or become millionaires; all off them require you have good financial habits.
Everybody wants to be financially stable, but unless you have plan to get you there, it’s not going to happen.
Here are 27 that will enable you to set (and reach) your financial goals.
1. Live Within Your Means
This strategy is the foundation of all good financial habits. In fact, I’m not exaggerating when I say there will be no point in setting good financial goals until and unless you come to the point where you can live beneath your means.
Seriously.
There’s nothing complicated or strategic about this habit. If you take home $5,000 each month, you live on $4,500 – and bank the rest. As your savings and investments grow, your financial situation will improve dramatically.
2. Pay Yourself, You Deserve It
If you’re having trouble with the whole concept of living beneath your means, it’s time to pay yourself first. If you have a 401k (or some other employer retirement account) this is a simple way to automate the process of saving money. Allocate a certain percentage, or even a certain dollar amount, to come out of your pay each pay period, before you even see it.
Without you even noticing it, the money is transferred to savings and investment accounts, and turns into real money as the years pass. If you don’t have an employer sponsored plan like a 401k, see #17.
3. Give Yourself a Consistent Raise
Good financial goals are more easily achieved if you can build progress into your savings and investment funding. You can do this gradually by increasing your payroll savings once each year.
You can do this almost painlessly by increasing the savings payroll deduction – whether it is for retirement or some other savings or investment account – by increasing your deduction by one percentage point per year.
Let’s say you are participating in your company’s 401(k) plan with 6% of your pay in order to take advantage of the company‘s 50% matching contribution. In the coming year, increase your contribution to 7%. Plan on doing that each year, until you meet the maximum contribution you’re allowed to make.
While this is a great start, the reality is you need to save at least 20% of your income if you have any hope of retiring early (or at all). If you want to get super ambitious and retire at 30, you can take a page out this guy’s playbook and save over 50%.
When I encounter someone only saving around 5% I challenge to increase it by 1% each quarter until they reach at least 10%. From there adjust I have them adjust accordingly so they barely feel the extra amount deducted from their paycheck.
4. Buy Value
By “buy value,” I mean you neither by the cheapest goods, nor the most expensive. Instead, you look to buy the best value for the money. Sometimes it’s worth it to cough up a little extra dough for a product you know will last, rather than paying bottom-dollar for shoddy merchandise you’ll have to constantly replace.
On the flip side, keep in mind not all products are better simply because they’re more expensive – often they’re just more expensive because of perception. Read reviews and shop around.
5. If You Have to Borrow, You Can’t Afford It
Credit is an awesome thing when you’re buying something big, like a house or a car. Very few people have $150K sitting around in cash to buy a home, so for those things, borrowing makes sense. But adopting good financial habits means avoiding schemes to stretch your paycheck. Credit cards are probably the most common way to do this.
6. Pay Your Bills Ahead of Time
Paying bills late is another strategy to stretch the paycheck. But it’s also kind of like robbing Peter to pay Paul. All it does is give you a false sense of how much money you have, and then puts you under tremendous pressure to cover the difference later. By paying your bills ahead of time, you will gain more control over your finances, and that will make it easier to adopt good financial habits.
My wife is the queen at this! Instead of waiting until she receives our credit card bill, she logs into our accounts and pays it off in the middle of the month. There’s no way she’s allowing any interest to accrue!
7. Read One Financial Book Each Year
If you want to become financially stable, you’ll have to seek advice from the financial masters. Easy to do, since nearly every one of them has at least one book available.
Take advantage of that knowledge. If you only get three or four bankable ideas from reading a single book, think about how many you’ll get from reading a dozen or more.
Some of the personal finance books that I’ve enjoyed over the years include: Dave Ramsey’s Total Money Makeover, David Bach’s Smart The Automatic Millionaire, Ramit Sethi’s I Will Teach You to Be Rich. And…well there is of course the book on the left:
Shameless plug: My book, Soldier of Finance, can be purchased here.
8. Track Your Spending
If you don’t have a budget, then you probably don’t have even a remote idea where all of your money is going. This is one of those good financial habits you absolutely must adopt you if want to get control of your finances.
By tracking your spending, you will be able to identify the areas of excess. Eating out for 50% of your meals? Cut that back to even 25% and cook or brown bag the rest, and you’ll have a nice chunk of change to contribute to paying down debt or building up your savings.
Start tracking your spending now – you may be surprised to find where your money is actually going.
9. Spend Less Time Watching TV
Don’t think watching TV has anything to do with becoming financially stable? Guess what? TV is nothing but a giant advertising venue, and I’m not just talking about the commercials. Even TV shows advertise certain wares through a little thing called product placement.
It’s a place where “sponsors” come to peddle their wares, and often, to make you feel insecure because you’re not buying what they’re selling.
Much of our spending, especially impulse spending, is driven by time spent in front of the TV. The less time you spend watching it – and the ads it bombards you with – the less money you’ll feel compelled to spend on things you don’t need.
Plus, by watching less TV you can read more books!
10. Balance Your Checkbook Regularly
With online banking, it’s easy to ignore this step. After all, the balance is available to be checked every day. But the balance does not reflect upcoming charges or outstanding checks. If you aren’t fully aware of these, it could lead to an undersized balance, or even bounced check fees. No bueno.
Balancing your checkbook helps you to avoid these pitfalls, so you know exactly how much cash you have at all times.
11. Shop Without Your Credit Cards
Not only will this keep you from running up your credit card balances, but if you have to use cash or your debit card to make your purchases, there’s a very good chance you will spend less money than you would if you are shopping with a credit card, because you can’t just pay it off later.
It’s real money, being used right now, which helps you make a wiser decision in the checkout line.
12. Pay More Than the Minimum on Your Credit Cards
And speaking of credit cards, if you want to become financially stable, you will need to get rid of those balances. If you haven’t been successful in paying off your credit cards in the past, then you should commit to paying more than the minimum payment due.
On top of paying more than a minimum, you should consider consolidating your credit card debt under a single 0% balance transfer card. Once you do this all those high interest cards will be under a since zero interest card saving you money.
This will speed up the payoff of your credit cards without having to come up with huge sums of money to do it. You will simply be accelerating the payoff, and if you pay enough, it will happen more quickly than you think.
Pay attention to your credit card statements. They will often tell you how long it will take to pay off your balance if you only pay the minimum payment, and how long it will take if you pay a fixed amount slightly higher than the minimum payment. Most of the time, there’s a difference of several years.
Yes, I said years.
13. Dust Off That Business Idea You’ve Been Putting Off
Do you have a business idea you have been putting off for quite awhile? You may want to give it a serious try. The internet has made starting and running a business easier and less expensive than ever. Case in point example is my buddy, Steve Chou, who was able to replace his wife’s $100k income by launching an online store.
Another example closer to home is my wife’s blog. She was able to replace her full-time income from her corporate job after starting her blog in about a year.
Best of all, you can run a side business for as long as you like, and that can provide you with an extra source of income. It’s important to set good financial goals, but you also have to carry them through. Starting a business is one way to do that – even if you only do it on a part-time basis
14. Learn to Say “No” to Yourself
This is important when you are shopping, or just out and about. This is really about getting control of impulse buying. You’re out somewhere, and you see some item you like, and you buy it because it doesn’t cost that much. Even worse is the ability to purchase things online nowadays and have it delivered to your doorstep in just a few days. If you do that several times a week, the spending can really add up.
Making just 20 impulse purchases (or fancy coffees) per month at an average of “only” $5, adds up to $100 spent on stuff you really don’t need. That’s $100 which isn’t going into savings or investments, or to paying down debt.
One trick is to enforce a “72 Hour Rule” on any purchases, especially online items. If you really think you need to buy <fill in the blank>, after you add it to your cart make yourself wait 72 hours before you purchase it. After 3 days you should get a good feel whether you really need the item or if you just want it (and don’t need it at all).
15. Learn to Say “No” to Your Kids
If you have children, learning to say “no” to them is doubly important. First, kids being kids, they always want something. And that something tends to get more expensive as they get older. You can save a lot of money by learning to say “no” to the random things they see and decide they can’t live without.
Keep in mind, I’m not telling you not to give your kids birthday or Christmas gifts, or things they truly need. Rather, it’s about their own impulse buying – seeing something and wanting it – but instead, they’re using your money. Telling them “no” will keep more money in your pocket.
But the second issue is even more important.
How you spend money, and particularly how you spend it on your children, has important implications for the attitude they will have toward money when they grow up. Though saying “no” isn’t always easy, it’s a way of teaching an important financial lesson. It teaches your kids they can’t have all the candy in the store, and that’s something they need to grasp in preparation for adult life.
16. Buy Term and Invest the Difference
Everyone needs life insurance, but everyone complains about how expensive it is to buy it.
There is a better way.
Buy term life insurance. Because it costs only a fraction of what whole life costs, you not only save money on the premiums, but you can buy more coverage. And that money you save on the premiums can be invested to build a large investment for the future, which by itself is its own form of insurance.
17. Start a Retirement Savings Plan
Good financial habits can be elusive if you don’t have a retirement savings plan of any kind. But if you don’t have a plan through your employer, there are plenty of options. You can open up a self-directed traditional IRA or a Roth IRA through tons of different platforms. Either will provide the type of income tax deferral that is the essential to building a healthy nest egg for retirement.
If you don’t have a retirement savings plan, what are you waiting for? Set one up today, and start funding it with any money you have available.
Seriously. It’s better to start contributing a little bit now than to wait until you can contribute a lot. You can even fund it through payroll savings deductions through your employer. Our top choice is Ally Invest with the rest of best options for IRA’s here.
18. Refresh Your Emergency Fund on a Regular Basis
There’s a lot of talk on the web about building an emergency fund, but far less in regard to replenishing it once you’ve taken money out of it. And if your living expenses increase over the years, you can even find your emergency fund is no longer adequate.
Take a look at your emergency fund at least once each year, and determine if it is sufficient to cover at least 3 to 6 months of living expenses, based on your current expense level. If it isn’t, set up a plan to refresh it as needed. It’s hard to remain financially stable without a well-stocked emergency fund.
19. Save For Specific Goals
A lot of people understand the importance of saving money in an emergency fund, and for retirement. But less well understood is saving for specific goals. Those goals could include saving money for your children’s college education, saving money to replace your car without having to take a loan, or saving money to make major repairs on your .home.
This isn’t just about saving money – it’s also about becoming self-funding. That means you pay cash for the kinds of major things other people borrow money for.
I’m a huge believer in revisiting your goals every 90 days. I started this over 4 years ago and I’ve seen my revenue nearly triple while taking more days off than I ever have. So yes, I’m a HUGE advocate of goal setting. Here’s a quick peak on my last quarters goals as well as my goals for 2015.
20. Know What You’re Paying
A lot of people are not terribly concerned with investment fees, so long as their portfolios are growing in value. But there’s more going on with investment fees than people normally think. A difference of just 1% in investment fees can make a substantial difference over time.
For example, let’s say you have a $20,000 investment account earning 10% per year. If you pay 2% in investment fees, that will give you a net return of 8%. Over a ten year period, the investment will grow to $43,179.
But let’s say you have the same investment, but you pay only 1% in investment fees. That will give you a net annual return of 9%. After ten years, the investment will grow to $47,347.
That’s a difference of well over $4,000 over ten years. The difference is even more dramatic over 20, 30, or 40 years.
It’s also important to understand the type of investment you own and the fees associated with it. Recently, I had a new prospective client that owned a variable annuity. She didn’t understand how it worked or what she was paying per year to own it. She actually thought she was only paying $50 per year to own it when, in fact, she was paying over $3,500!
Moral of the story: investment fees matter!
21. Give to Others
This could donating your time to a charity or cause, tithing, or cooking a meal for a friend in need. The point is to put others needs before yours.
It’s easy to put our own worries and concerns at the forefront but when you start focusing on others, the payback is unmeasurable.
22. Become the Go To Guy/Girl at Work
Everybody wants a raise at work, but not everyone wants to do what it takes to get one – especially in a tight job market. The same is true for promotions.
But if you want to fast-track your career, work to become the go-to guy or gal in your office. That means taking on meatier work assignments and stepping up to help management and coworkers when needed. It’s not easy, and it’s not an immediate fix, but it can really payoff in the long run.
23. Get to Work 15 Minutes Early Each Day
By getting to work 15 minutes early each day, you can dramatically improve your work performance, and even reduce your stress levels. Just taking the extra time to organize your day, such as creating a to-do list that makes sure you get the most important tasks completed first, can give you a jump on the competition – your coworkers.
That can be an important part of improving both your productivity and your visibility at work. And that can eventually lead to a bigger paycheck.
24. Cut Down on Your Spending Allowance
Even people who budget can sometimes be lax when it comes to their personal spending allowance. That’s the money you use for entertainment, for casual spending, and for that latte at Starbucks.
Everyone needs a certain amount of free-spending built into their budget, but it’s equally important to make sure it doesn’t get out of control. Since it tends to be spent in small amounts over long periods of time, it’s easy to get carried away with spending on this front.
Start by giving yourself a fixed allowance for free-spending each month. Then gradually begin cutting it down to a more manageable number.
25. Cut Down on Restaurant Meals
Eating in restaurants has become so common these days we hardly notice it. But if you find yourself eating out three, four or more times per week, your restaurant habit has become a major expense without you even realizing it.
Track the number of times you eat out each week, and begin reducing it. This is an excellent way to save money painlessly. And it may force you to sharpen your cooking skills. The Food Network is there to help you with that, should you need it.
26. Drive Your Car a Few Years Longer
If you are accustomed to taking out five year loans on your cars, then replacing them as soon as the loan is paid off, you need to realize that’s a very expensive way to drive. The longer you drive it after the loan is paid off, the less expensive your auto expense will be. That’s another of those good financial habits that will point you in the right direction, and bring you to financial stability more quickly.
The average age of a car in the US is now 11.4 years. That isn’t to say you have to drive your car until it dies, but you should be able to drive it for as long as 10 years. And for the love of man, repeat after me:
Reliable transportation does NOT mean you have to buy a brand new car.
If you are paying $500 a month for a car payment, and you can keep the car an extra five years after, that will be an extra $30,000 in your bank account ($500 X 60 months). You’ll lose some of that to repair bills, but nothing close to $30,000.
27. Learn to Love the House You Live In
Some people make it a practice to trade up on their home every time they get a promotion or a new job. If you want to become financially stable, it’s critical you learn to live beneath your means – which was the first strategy on this list.
If you can keep your house payment stable while your income rises, you can redirect the additional income into savings, investments, and non-housing debt. That will improve your financial situation a lot more quickly and efficiently than buying a larger and more expensive home every few years.
So there you go – 27 good financial habits that you need to not go broke – and to become financially stable. Pick just a few of them, and watch your finances get better.
It didn’t take long after President Biden announced his student loan forgiveness program in August 2022 for the scammers to get up and running. The Better Business Bureau (BBB) and federal agencies have unearthed hundreds of ads, text messages, phone calls, and emails targeting student loan borrowers. Their purpose? To get consumers to divulge private financial information or to pay for unnecessary services. In response, the U.S. Department of Education issued warnings about the student loan forgiveness scams and advice on how to avoid them .
The ongoing student loan payment pause hasn’t slowed the scammers down. Keep reading to learn how student loan forgiveness program scams try to fool you, and how you can avoid getting duped.
Status of Biden’s Student Loan Forgiveness Plan
The student loan forgiveness plan would cancel up to $10,000 in federal student loan debt for single borrowers with an adjusted gross income of less than $125,000 a year, or less than $250,000 for married couples. Pell Grant recipients could have as much as $20,000 in student debt canceled. To refresh your memory, check out this story on the student debt relief plan.
The DOE officially began to accept applications for forgiveness on Oct. 17, 2022, but had to stop in November due to legal challenges to Biden’s program.
Meanwhile, the pause on federal student loan payments for all borrowers has been extended several times. Repayment could potentially resume as late as 60 days after June 30, 2023, when the U.S. Supreme Court is expected to release its decision on the challenges to President Biden’s student debt cancellation program.
While borrowers wait for updates, scammers are actively using phony government websites, false promises, and other criminal schemes to lure unsuspecting consumers. Here’s what you need to know to avoid student loan forgiveness scams.
Recommended: What Biden’s Student Loan Forgiveness Means for Your Taxes
Types of Student Loan Forgiveness Scams
Watchdogs have identified a variety of scams related to student loan forgiveness. Some are aimed at borrowers searching out information on the internet, and others directly target people who hold student loans. Fortunately, certain patterns are coming into focus. Here’s a rundown of what officials have seen so far.
Recommended: How Do Student Loans Work? Guide to Student Loans
False Deadline Warnings
These scams include texts, calls, and emails sent to borrowers conveying a false sense of urgency that they must take action before a certain date or miss out on forgiveness. In reality, the messages are designed to scare you into disclosing personal financial information, which criminals may then use for identity theft and other financial fraud. Be very wary of any “student loan forgiveness center” calls.
On Oct. 17, the DOE opened the official forgiveness application portal . The deadline for applications is the end of 2023, but you’ll want to apply a lot sooner if your payments will be resuming in January.
What’s more, for many borrowers who already have income information on file with the DOE, forgiveness will be automatic. No application — and no deadline — is necessary.
Fake Email Alerts
Especially while borrowers were waiting on an email from the DOE informing them that the forgiveness application was open, scammers are sending fraudulent emails that look as if they might be from the government in an effort to collect personal financial information. This and other fraudulent strategies are expected to continue.
To make sure you’re responding to a legitimate email, always check the address of the sender. The full address isn’t always obvious on a phone or other mobile device: That interface often shows only the name of the sender. Always click on the sender’s name to see the actual address.
The address is likely to be the real thing if it has a .gov ending, something not easy for fraudsters to imitate.
You can sign up for student loan forgiveness notifications and updates from this DOE webpage .
Help With the Student Loan Forgiveness Application
There are lots of offers on the internet and elsewhere to help borrowers claim their loan forgiveness — for a fee. While not all of the companies offering these services are illegitimate, the DOE has warned that it won’t be necessary to pay for help. They promise the application will be simple and quick to complete.
Predatory companies love to use webinars and videos explaining the details of the loan forgiveness program. The ending is always the same: a plea to sign up for their paid service, with the promise they’ll get you your debt relief. They may claim they can get you additional benefits, get your benefits faster, or get you to state tax breaks if you pay them upfront. In some cases, the outlaws charge hundreds of dollars for unnecessary service.
A real government agency will never ask for an advance processing fee. And legitimate student loan servicers will never charge a fee for providing information about your loans. You can check if a company works with the DOE at the Federal Student Aid site on avoiding scams .
Recommended: 9 Smart Ways to Pay Off Student Loans
What You Can Do to Avoid Scammers
To protect yourself from student loan forgiveness program scams, familiarize yourself with the following tips. They can help you avoid the threat of costly identity theft or financial fraud that can result from these schemes.
Never give out your FSA ID, student aid account information, or password. The DOE and the company that services your federal student loans will never call or email asking you for this information. Along the same lines, never give your personal or financial information — including your Social Security number and bank account information — over the phone or email. (That said, the beta version of the forgiveness application asks for your Social Security number but not your FSA ID.)
Avoid upfront fees. Think twice before paying anyone for help filling out the application. It is highly likely you won’t need help because the government is promising a free and easy-to-use application. Paying a fee before the application is even available is totally unnecessary.
Stay up-to-date. Having the most accurate and current student loan forgiveness information is the best defense against fraud. As mentioned above, sign up with the DOE for notifications and updates. And keep an eye on the Better Business Bureau and Federal Student Aid websites for the latest official information.
Update your contact information. To receive official notices related to student debt relief, make sure the government and your loan servicer have your most current contact information. If your income information is already on file at the DOE, qualifying borrowers will automatically receive loan forgiveness without having to apply. All borrowers, whether or not they have to apply, will be notified by the DOE when the application goes live.
To make sure you get these notices and other updates, sign up with StudentAid.gov to receive text alerts. If you don’t have a StudentAid.gov account, create one now .
You’ll also want to make sure your student loan servicer has your most recent contact information. You can find your federal student loan servicer’s contact information at Studentaid.gov/manage-loans/repayment/servicers
The Takeaway
Understanding how student loan forgiveness scammers work is an important step toward protecting yourself. Staying up to date on the latest official news and announcements can also help you bypass the onslaught of scams out there. Another important defense: Actively manage your student loan accounts and make sure all of your information is accurate and up to date.
SoFi can help. If you have more federal student debt than the new debt relief plan will forgive, or you don’t qualify for loan forgiveness, or you have private student loans, you may want to consider refinancing your debt before rates rise further.
If you do qualify for forgiveness and you refinance your entire federal student debt, you will no longer qualify for the new program. If you still wish to refinance, leave up to $10,000 unrefinanced ($20,000 for Pell Grant recipients) to receive your federal benefit. Remember: Good information is your best weapon when it comes to managing all aspects of student debt.
Save thousands of dollars thanks to flexible terms and low fixed or variable rates.
FAQ
What are common types of student loan forgiveness scams?
Look out for false email alerts claiming to be from the government and phony government websites. These schemes attempt to get you to divulge personal financial information, which can then be used for identity theft and other financial fraud. Other scammers are offering unnecessary forgiveness application help for a costly upfront fee.
How can I avoid falling victim to a student loan forgiveness scam?
Information is your best defense. Sign up for government alerts and notifications, and keep an eye on advice from official outlets. Also, make sure your contact information is current with both the government and your loan servicer.
Does everyone eligible to receive student loan forgiveness need to fill out an application?
No. If your income information is already on file with the Department of Education, you will not need to apply for student loan forgiveness. You’ll receive it automatically.
Photo credit: iStock/Pekic
SoFi Student Loan Refinance If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended beyond December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since the amount or portion of your federal student debt that you refinance will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave unrefinanced the amount you expect to be forgiven to receive your federal benefit.
CLICK HERE for more information.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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. External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. SOSL1022002
As I type this, I’m jumping through the various hoops involved in buying a 2023 Tesla Model Y, a spectacularly expensive, large luxury “crossover” that is absolutely loaded to the gills with excess: all wheel drive, faster acceleration than a Lamborghini, enough space for seven people and enough computer gadgetry to function as a small Google data center.
The total net cost of this thing to me after all the taxes and tax credits* will be about $52,000, which is just a stunning amount higher than the Honda van it is replacing. That old classic cost me $4500 when I bought it off of Craigslist twelve years ago, and it had served me dutifully until just last month, crisscrossing the mountains and deserts of this country and also helping to rebuild a considerable swath of houses in my neighborhood.
I’m supposed to be a frugality-oriented financial blogger, and I’m also known for hating car culture – I think most people use cars about ten times more often than they need to, and most people drive cars they can’t afford. So why the hell am I buying a new one?
From those first three paragraphs, you can see I’m feeling plenty of self-mockery and ridicule over this new purchase. If you’re also a naturally frugal person, you can surely relate to the thoughts and you probably also agree with me that I’m off my rocker.
And indeed, I’m still on-board with frugality and healthy self mockery. After all, it was this overall life philosophy that earned me an early retirement 18 years ago, which provides all of the glorious freedom I enjoy now.
It was also the philosophy that allowed me to procrastinate on buying this expensive car for the last four years, even as countless people both close to me and out on the Internet egged me on and told me I should just loosen up and treat myself.
But there’s a classic slogan that applies to many areas of life, and it is something I like to dig up and ponder every now and then:
“What got you here,
Won’t get you where you’re going.”
How does that piece of wisdom apply to frugal living and enjoying a long life of early retirement?
A quick story from a recent run to the grocery store will explain:
I was standing there in the bakery aisle, hoping to restock with a loaf of Dave’s Killer Bread for the next day’s breakfast with some visiting friends. But since this was in a standard grocery store rather than the Costco where I usually shop, the damned stuff was priced at an eye-watering $6.99 per loaf (instead the $4.50 or so I’m accustomed to paying, and even at the bulk store this stuff is about double the price of normal bread).
“DAMN YOU KING SOOPER’S!”
Was my first response.
“WHO THE HELL DO YOU THINK YOU ARE, TRYING TO SELL BREAD FOR SEVEN BUCKS!!!”
Then I went through a whole mental battle of what I call Grocery Shopping With Your Middle Finger:
“Should I just boycott this bullshit?”
“Hmm I wonder if any of the other competing brands are any good?”
“What else is a good substitute for bread for this breakfast?”
And then thankfully, after exhausting all other mental options, I settled on the correct one:
“JUST BUY THE BREAD YOU DUMBASS!”
“Because you are never going to wake up in the future and look at your bank account and think, shit, if only I had an extra $2.49 in there I would be a happier person.”
That night, I came home from the store and shared this funny tale with one of my guests. He understood perfectly because he too had earned his own retirement through a lifetime of grinding in tough jobs and disciplined frugality. And despite the fact that he has a net worth several times higher than mine, he admitted that he faces exactly the same mental battles over splurging on himself.
This same friend gives freely to charitable causes, has supported a local school for decades, and is always the first one to pull out the checkbook if a friend has hit hard times or is looking for a trusted business investor.
But he still has trouble bringing himself to take an Uber to the airport instead of riding the bus which takes an hour longer.
We both realized that we were being too cheap with ourselves, and we needed to work on it. And we came up with a set of three ideas that should hopefully work together to help us have more fun with our life savings, while we are still alive:
the Minimum Spending Budget,
the Dedicated Money Wasting Account,
and the Splurge Accountability Buddy.
Principle #1: The Minimum Spending Budget:
Suppose you’ve done well over the years and amassed a pile of productive investments worth about two million dollars. Yes, this is a lot of money for most people, and that is the point: this hypothetical person truly has it made.
But as it turns out, most Mustachians I know with this level of wealth are still living very efficient lives, usually with a spending level of under $40,000 per year. On top of that, they typically live in a mortgage-free house and still have various forms of side income from a small business or two.
The 4% rule tells us that this person should be fairly safe spending up to about $80,000 per year from that cozy nest egg, even if they never earn any other money.
If this person wanted to be ridiculously conservative and set the spending rate at 3%, that still leaves about $60,000 of fun money every single year.. Plus, again, any side income, future inheritances, and social security income only add to the surplus.
Thus, a reasonable minimum spending level for this person might be $60,000 per year.
And in most cases, they know this, but still go right on living on $40k or less and claim they have everything they could ever want.
But if you watch carefully you’ll still catch them firing up the middle finger at things like $6.99 Dave’s bread or the $14.00 Cabernet at the restaurant or driving around in a gas guzzler even when they would prefer to have a proper, modern electric car.
And whenever these people do get extra money, their first instinct is to stash it away on top of the already-too-big pile. In diagram form, their money flow looks like this:
Note that while this person is great at accumulating money through that big red arrow firing money back into the ‘stash, their “fun stuff” arrow appears quite flaccid and withered.
Which is a perfect segue to ….
Principle #2 – the Dedicated Money Wasting Account
Lifelong habits are hard to break, and it’s sometimes hard to “waste” your own hard-earned money on things that seem frivolous, even when you know intellectually that you have way more money than you’ll ever spend.
But have you ever noticed that if you are spending somebody else’s money, preferably an anonymous corporation, it feels different?
For example, when you’re on a business trip and you just show up at the dining table to eat and drink and you never see the bill, you probably don’t fret about the prices, right?
The key is to make your own money feel like somebody else’s, and you can do it like this:
Re-brand your main bank account – henceforth it is the FREE FUN MONEY account.
Set up an auto-deposit of your minimum spending budget that drops in each month (if you suspect that you might currently be too frugal, make this at least $1000 per month higher than your current spending level)
The only way you are allowed to use the money in this new account is to spend it on anything and everything, or give it away. It can be used for both necessities like groceries and your utility bill, but also your luxuries like travel and dining and generosity.
But the key rule is this: You are not allowed to follow your old habit of sweeping out the surplus each month to buy more and more index funds as you’ve been doing your whole life.
If the free fun money starts building up, which it probably will because you are way out of spending practice, it will stare you in the face and tell you to do a better job.
And this can and should be FUN! Now you can get the best organic groceries even when the price seems exorbitant. Go out for dinner or order delivery whenever you like. Surprise your loved ones with concert tickets, join your friends on snowboarding or beach trips, or even pay for an entire group vacation, allowing people to go who couldn’t normally afford it so easily.
Technical Note: Some people have income or wealth levels are so high that it would be insane to spend at a 3% rate. For example, a $10M fortune would lead to a $25,000 monthly spending rate, which is obviously ridiculous.
In this situation, you can still leave your dividends reinvesting but still give yourself a bigger, no-saving-allowed budget to get some practice being more relaxed and generous. The real point here is to just stop sweating the details so you can have more fun.
Principle #3 – The Splurge Accountability Buddy
Many of us frugal people tend to stick together. And most of us have different versions of the same problem: we know logically that money is plentiful these days, but our emotions keep us stuck in our old ways of optimizing too much.
But I find that when I team up with local friends who are actually trying to battle these same habits, we can question each other’s decisions, call out cheapness when we see it, and cheer on splurges when we know the other guy would enjoy it.
My super wealthy friend from above has become much better about treating himself (and his family) to quality goods for the home, amazing trips together, and just a general reduction in his stress over being “efficient with money”
My friend and HQ co-owner Carl (Mr. 1500 Days) has finally replaced his beaten-down minivan with a spiffy new Chevrolet Bolt electric car, and is loving that leap into the future.
And of course Mr. Money Mustache, after squeezing one final mountain road trip out of his 23-year-old Honda van, is finally allowing himself to get the Tesla he has been talking about for half a decade.
A recent life change (becoming a co-owner of a fixer-upper vacation rental compound in beautiful Salida Colorado) has reignited the travel fire in my heart and made me realize how much I do love getting out to distant places for visiting, mountain biking, gathering with groups of friends and my favorite activity of all: Carpentourism.
Running the Numbers: how ridiculously expensive is this car?
This is the perfect start to my experiment in spending more. Realistically, a $50,000 car is going to cost me about $10,000 more per year than my old van was burning. With the biggest costs being these:
Foregoing roughly 8% annual investment returns on the 50 grand: $4000
Depreciation on the car: an average of $3000 per year over the first 10 years
Higher insurance premiums: $1000 more per year
Replacing those exorbitantly huge performance tires when they wear out, and probably things like repairing the all-glass roof someday when it meets Colorado’s pebble-strewn mountain roads: the remaining $2000 or so.
Since I personally had a spending deficit of several times more than $10k per year, I figure this is a solid first step. And, since the car’s primary purpose is things like epic camping trips, dream dates, and long adventures around the country, it will definitely help me spend more on experiences, hotels, and go out to dinner a bit more often as well.
“This Privileged Rich Folk Talk is Making Me Sick, why don’t you give your money away to charity, or to me?”
In general, I agree: the world has problems and the richer you are, the more you should consider giving generously.
But also, to be honest, the whiny people who constantly send complaints like this out to strangers on the Internet really need to get a life. It’s great to encourage philanthropy through positive examples, but completely unproductive to send negativity to shame people you don’t even know for not following your own personal value system. The world has seen more than enough of this.
On top of that, this one-sided thinking can be counterproductive. Both of my friends have given generously throughout their lifetimes. In my own case, I have donated over $500,000 to the best causes I could find during the years I’ve been writing this blog, but I was still refusing to let myself replace that 23-year-old van.
And that overthinking was leading to even more of a scarcity mentality, as I compared my own meager spending to these bigger numbers of my donations, and found myself thinking things like,
“Damn, I’m spending $100 on this dinner date which sounds like a lot, but I also spent ONE THOUSAND TIMES more on donations last year, which sounds like even more. Maybe I am spending too much and need to cut back on EVERYTHING!”
And then the fear side of my brain would illogically chime in: “Yeah and you’re going to make us run out of money and be poor forever! waaaah waaaah! Cut back and optimize and conserve!”
I think there is a happy medium here.
Yes – be a super, duper responsible steward of your life savings.
And yes, give generously with all your heart to charity.
But yes, it’s also okay to set aside a portion of the money you’ve earned, for frivolous spending on yourself and those closest to you. You’re not a bad person for having a few nice things.
It’s okay to pay that extra hundred bucks to sit in the front of the airplane instead of the back if it helps you enjoy your vacation and spend a joyful half hour walking FREE at your destination while the 49 rows of people behind you fuss infuriatingly with their shit in the overhead bins.
It’s okay to buy the frozen berries at Whole Foods even though they cost eight times more than Costco charges, if it spares you from making a second unpleasant trip through parking lot hell.
And as for me, I am calling it okay to, at last, double flip the Autopilot stalk in my new Tesla and lean back as it it shoots me gracefully through even the highest mountain passes, forever leaving the desperately underpowered wheezing and gear shifting and noise* of the gasoline era behind, forever.
Rest in Peace, Vanna – 1999-2023
* A useful tip for more effective splurging:
Try to find the truly negative aspects of your life and focus any additional spending on improving those things. But it’s a subtle art so you have to get it right if you want lasting results in happiness.
You don’t want to just reduce hardship or challenge like hiring someone to take care of every aspect of your house, because overcoming daily hardships and having significant accomplishments provides the very core of our life satisfaction.
You also don’t want to just upgrade the things that are already good in your life. For example, a friend of mine is a gourmet coffee expert, and he suggested that I upgrade my setup at home to include on-the-spot roasting, and fancy grinding and brewing equipment. But I already love the good quality coffee I buy off the shelf from Costco, so it would be counterproductive to invest time or money into changing this part of my life.
But when you have something that causes you regular angst and stress, whether it’s a leaky roof that makes you dread rain, or a long commute that makes you dread the daily traffic jam, or a body that is giving you trouble due to not being in the best of shape – those types of things are probably a good target for improvement.
In the case of my car situation, I had a Nissan Leaf which is wonderful to drive, but doesn’t have the range to travel anywhere outside of the Denver metro area. Then I had the van which is a clunky beast to drive, but is otherwise an amazing road tripper because I could bring along whatever and whoever I wanted. But the van was getting increasingly unreliable in several hard-to-fix ways which was making me nervous every time I thought about long distance travel. Which was causing me to avoid certain trips and miss positive lifetime experiences.
In other words, my lack of a reliable long-range car was a small but consistent source of negative stress.
Finally, Vanna gave me the gift of a final hot and smelly transmission failure on a mountain pass on the way home from my new project in Salida. It was just the nudge that I needed. And now I already feel excitement rather than dread at the prospect of all the road trips in the coming decades!
* Total cost of this Tesla:
Model Y plus options and Tesla fees: $53,630
Subtract $7500 federal EV tax credit
Subtract $2000 Colorado EV tax credit
(Note: this is equivalent to a $44,150 list price if you are cross shopping with other cars)
Add back in $4674 of sales tax
Add in first 3 years of Colorado new-car registration fees: $3000
Net cost: about $52,000
New Tracker Page!
To go along with this article, I started a new page called “The Model Y Experiment” where I can share ongoing findings and Q&A about the ownership experience. I’ve driven and rented Teslas quite a bit in the past, so most of it will be pretty familiar. But as an owner I’ll get to verify the reliability and the quality of customer service, as well as any quirks and modifications and upgrades I do.
One of America’s crown jewels, Yosemite National Park has been leaving visitors awestruck since it became a national park in 1890.
The monoliths of Half Dome and El Capitan, the ancient sequoias of Mariposa Grove, and North America’s tallest waterfall, Yosemite Falls, are just a few of this vast California park’s emblematic attractions that make it one of the country’s best national parks. What makes Yosemite so appealing (and crowded) is that its signature features are easy to access and available pretty much year-round.
Not surprisingly, with close to 3.5 million visitors per year, lodging options within the park’s boundaries come at a premium. Within easy reach of the park, there are several amenity-rich wilderness lodges, quaint bed-and-breakfasts and lavish boutique hotels that cater to multigenerational families, couples looking to disconnect, and adventure-seeking solo travelers.
From budget-friendly in-park lodges to a flashy European-style retreat, here are some of TPG’s favorite places to stay in and around Yosemite National Park.
Ahwahnee Hotel
Yosemite National Park, California, USA
AL GOLUB/THE AHWAHNEE/FACEBOOK
Best for: Travelers looking for historic lodgings in an unrivalled location within Yosemite National Park.
Why stay here: A cherished national landmark, the Ahwahnee is a paradigm of “parkitecture” design. A wide selection of classically appointed rooms, suites and cottages can accommodate groups, couples and solo travelers — and paying up can even get you a view of Half Dome.
Best way to book: The Ahwahnee is operated by Xanterra Parks & Resorts. Book directly (and well in advance) for the best prices.
A cherished national landmark, The Ahwahnee has been the hotel of choice for celebrities, heads of state and royalty visiting Yosemite for generations.
Located on the southern fringes of Yosemite Valley, the location couldn’t be better, and even just a stroll across the grounds reveals the park’s hallowed attractions: Half Dome, Yosemite Falls and Glacier Point.
Constructed in 1929 of sugar pine logs and rough-cut granite, The Ahwahnee is a paradigm of National Park Service-rustic, or “parkitecture.” Magnificent public spaces with beamed ceilings and colossal stone fireplaces are filled with Native American artworks, Arts and Crafts furnishings and art deco influences.
While the 121 standard rooms don’t have quite the same wow factor, they are clean and spacious with classical detailing, rustic wood furnishings and spectacular views. Suites and junior suites on the upper floors have private fireplaces and/or balconies, and the presidential suite where President John F. Kennedy stayed has a king bedroom, living area and parlor with a sleeper sofa and a large balcony with views of Glacier Point.
What you are really spending up for here, though, is the stately ambiance, unbeatable location and time-honored rituals. The Ahwahnee Dining Room oozes history and charm, with emblematic stonework, iron chandeliers, Native American design motifs and floor-to-ceiling windows framing spectacular views of the valley. Dress the part (that’s required; no T-shirts or flip-flops) and dine on Yosemite’s finest cuisine. Menu favorites include Acadian spiced tiger prawns with smoked cheddar polenta, roasted tomatoes and seasonal herbs ($25), and New Zealand lamb chops with black garlic miso sauce, carrot-yuzu puree, arugula and pickled cucumber ribbons ($27).
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Rates at The Ahwahnee range from $521 per night for a standard room up to $1,242 for the presidential suite.
Rush Creek Lodge
Groveland, California, USA
KIM CARROLL/RUSH CREEK LODGE AND SPA AT YOSEMITE/FACEBOOK
Best for: Families with young kids and teens who will love the pools, zip line, nightly s’mores, hiking and biking trails, and day and nighttime programming led by the on-site recreation team.
Why stay here: This classic summer resort is close to Yosemite National Park’s southern entrance and has accommodations that can work for groups of all sizes, including two-bedroom hillside villas that sleep up to six guests.
Best way to book: Book directly with the lodge for the best rates, deals and packages.
Nestled amid 20 acres of woodlands, less than a mile from Yosemite’s west entrance, the 143-key Rush Creek Lodge combines rustic charm with modern conveniences and a fun-loving summer camp vibe.
Impressive amenities and round-the-clock programming are what really distinguish this property. There are zip lines for kids, a 60-foot embankment slide, bocce ball, nightly s’mores around the fire, live bands, themed parties and karaoke. By day, the fantastic pool area is the hub of the action, with a 2,400-square-foot saltwater pool and a large family-friendly hot tub. The guided recreation program includes full-day and half-day Yosemite hiking tours, horseback riding and mountain biking, among other wilderness adventures.
After a day on the trails, parents can indulge in a signature massage at the Wellness Center (80 minutes, $235) or just relax in the Aromatherapy Steam Room or Himalayan Salt Block Sauna.
Related: TPG’s favorite national parks: A month-by-month guide
Rush Creek’s rooms, suites and hillside villas all come with large decks, and most have sunset views. Standard rooms, which start at 400 square feet, are appointed with simple, natural wood furnishings and modern tiled bathrooms. Family-pleasing conveniences include air conditioning, a Keurig coffee maker, a refrigerator, hypoallergenic feather pillows, Alexa devices and Earth Therapy bath products.
Larger hillside villas are a great option for groups. Sleeping up to six people, they are configured with a separate bedroom with a king bed, a large sitting area with a queen sofa bed and a cast-iron gas fireplace.
The Restaurant at Rush Creek serves modern American fusion fare, such as king salmon with bok choy, soy glazed shiitake mushrooms and yuzu-ginger butter ($30) and bison chili mac with cavatappi, bison chili and smoked gouda ($28). Dinner and a late-night menu are also available in Rush Creek’s lively Tavern.
Rates at Rush Creek Lodge start at $340 per night.
AutoCamp Yosemite
Midpines, California, USA
AUTOCAMP/FACEBOOK
Best for: With Airstream suites that sleep up to six people and safari-style tents, AutoCamp is a unique option for groups and families craving an elevated glamping experience near Yosemite National Park.
Why stay here: Plenty of lifestyle amenities and creature comforts, including full bathrooms, air conditioning and heating, sleek gathering spaces and wholesome dining options.
Best way to book: Book directly with AutoCamp for the best prices, discounts and packages.
Located in the town of Midpines, about 40 minutes west of Yosemite National Park, AutoCamp is one of the more established glamping companies, with nine locations across the U.S.
Offering a mix of Airstream Suites and Luxury Tents, the setup is perfect for nature lovers who enjoy boutique amenities and creature comforts — as well as those partial to midcentury modern design icons.
Custom 31-foot Airstream Suites feature a queen bed, a kitchenette, a bathroom with walk-in shower, and a patio with a fire pit and shaded dining area. For families, Premium BaseCamp Suites combine the Airstream Suite with a deluxe canvas tent. There are also Luxury Tents and Classic Cabin Suites — compact pine cabins with a bedroom, galley-style kitchenette with a dining table, sitting area and a stylish bathroom with a walk-in shower and Ursa Major organic bath products.
The AutoCamp experience can be as social or secluded as you want it to be. There’s a clubhouse for happy hour gatherings, a seasonal, heated outdoor swimming pool, daily activities on-site (including yoga classes), live music, fireside s’mores, and wine tastings with local wineries.
Kids age 5 and up can attend the AutoCamp Yosemite Forest School, where scavenger hunts, nature art, science projects and visits from wildlife experts inspire curiosity in Yosemite’s history and landscapes.
The Kitchen serves healthy, local fare with plenty of vegetarian and vegan options. Campfire items and grill kits are available at the General Store for guests that prefer to light a fire and dine on their private patio beneath the stars.
Airstream Suites at AutoCamp Yosemite start at $292 per night. Classic Cabin Suites start at $519.
Evergreen Lodge at Yosemite
Groveland, California, USA
EVERGREEN LODGE YOSEMITE/FACEBOOK
Best for: Travelers of all ages looking for great value and a lively, summer camp-style ambience.
Why stay here: A variety of comfortable, well-equipped cabins, activities galore and resort-style amenities, just a mile from Yosemite National Park.
Best way to book: Book directly for the best rates, discounts and seasonal packages.
Just a mile from the western entrance of Yosemite National Park, surrounded by the towering pines of Stanislaus National Forest, Evergreen Lodge (a sister resort to Rush Creek Lodge, listed above) is a classic Yosemite resort built in the 1920s.
Significantly upgraded and expanded since the early 2000s, it’s one of Yosemite’s most popular family resorts with a surfeit of amenities, including zip lines, a large saltwater swimming pool and a hot tub.
Daily programming and wellness-focused activities range from yoga, fishing and hiking to arts and crafts, basket-weaving and nightly s’mores. There are plenty of cozy indoor and outdoor spaces to retreat to, or gather with new friends and trade stories.
Across the 88 accommodations, there’s something for every type of traveler and budget. Deluxe Cabins with vaulted ceilings start at 400 square feet and are appointed with simple wooden furnishings and a few decorative nods to the surrounding landscape (plaid throws and Western-themed artworks). It’s the thoughtful touches, though, that really sets them apart — a comfy king bed, a large sitting area with queen sofa bed, a cast-iron gas fireplace, air conditioning, a spacious bathroom with walk-in shower, Wi-Fi, Alexa devices, refrigerator, and a Keurig coffee maker. For families, there are more spacious one-bedroom Cottages and Family Cabins, as well as smaller (250-square-foot) Vintage Cabins, perfect for budget travelers.
At Evergreen’s lively main restaurant, the modern American menu showcases locally sourced meat, fish and produce, and satisfies gourmands as well as less adventurous palates. Perennial favorites include braised bison short ribs ($38), crispy pork belly ($30) and pan-seared salmon ($32), as well as salads, burgers, chicken tenders and grilled cheese sandwiches.
The historic, all-wood Tavern — a local institution for nearly a century — is an atmospheric setting for a pre- or post-dinner cocktail or beer, and it packs in the crowds for live music on the weekends.
Rates at Evergreen Lodge start at $335 per night.
Château du Sureau
Oakhurst, California, USA
CHATEAU DU SUREAU/FACEBOOK
Best for: Francophiles and gourmands looking for an elegant, luxurious hotel with impeccable service, haute cuisine and French flair.
Why stay here: A secluded, intimate boutique hotel with sumptous public spaces and richly appointed rooms featuring canopy beds, wood-burning fireplaces, antiques and Empire-style decor.
Best way to book: Book through our partner Skylark to enjoy elitelike benefits and on-property credits.
Located 16 miles from Yosemite National Park, this intimate, elegant retreat combines haute cuisine, impeccable service and sumptuous accommodations amid the majestic landscapes of the Sierra Nevada.
Part of the Relais & Chateaux hotel collection, a luxurious Old World aesthetic runs through individually styled rooms and public spaces, which are spread over 9 acres of delightful gardens. The 10 individually styled guest rooms feature four-poster beds dressed with plush pillows and luxe linens, fireside reading nooks with desks, walls hung with tapestries, Empire-era furnishings, a smattering of antiques, and modern, marble-clad bathrooms with soaking tubs.
Hidden behind a private, gated entryway, Francophiles will swoon for the palatial two-bedroom Villa du Sureau. At 2,000 square feet, it features a grand salon with a wood-burning fireplace and a Steinway & Sons piano, two king bedrooms, a library and office, a private Roman spa, a lavish tiled bathroom with a marble tub and a separate steam shower, and a private garden.
As you’d expect of a Relais & Chateaux property, the on-site restaurant is a destination unto itself. The Elderberry House has garnered a loyal following for over 30 years, serving three- and six-course menus ($95/$155) that incorporate seasonal produce from local farms — an amuse-bouche of sea urchin and sweet pea followed by ahi tuna with sorrel, for example, and then an entree of local steelhead trout with lemon thyme nage and snap peas.
The cozy, stone-walled Cellar bar is a great place to start the evening with a cocktail (perhaps an Elderflower Sour with gin, lemon juice, elderflower syrup and egg white, $17).
At the Spa du Sureau, you can book a range of European-inspired treatments, facials and massages or take a dip in the heated outdoor swimming pool.
A major draw of this property is the complimentary perks, including a copious daily breakfast and such welcome beverages and treats as a bottle of wine and a house-baked Gugelhupf cake. There’s also nightly turndown service and daily housekeeping (not always a given these days).
Rates at Chateau du Sureau start at $395 per night.
Blackberry Inn Yosemite
Groveland, California, USA
BLACKBERRY INN YOSEMITE/FACEBOOK
Best for: Couples looking for a peaceful (adults-only) retreat that invites relaxation as much as adventure.
Why stay here: Located 13 miles from Yosemite National Park, on 36 acres of forest, this charming, intimate lodge features just 10 classically appointed rooms with wraparound porches.
Best way to book: Book directly with Blackberry Inn for the best rates, seasonal discounts and packages.
A secluded, adults-only sanctuary, The Blackberry Inn Yosemite is set on 36 acres bordering Stanislaus National Forest, just 12 miles west of Yosemite’s Big Oak Flat park entrance.
With meticulous attention to detail, warm service and a peaceful ambience, it’s a great nesting place for discerning travelers looking to truly disconnect and immerse themselves in the area’s natural splendor.
Behind an egg yolk-yellow facade, wrapped with a white porch, the 10 elegant rooms and suites with vaulted ceilings start at 350 square feet and are individually designed with classical furnishings and decorative touches — solid wood furniture, refined wing armchairs, floral duvets, plush drapes and carpeting, and a smattering of antiques and landscape paintings. All rooms are appointed with luxury linens, a separate sitting area with recliners and fireplaces — suites also have deep soaking tubs. At every turn, there are beautiful views of Stanislaus National Forest and the innkeeper’s Arabian horses grazing on the property.
Beyond the refined rooms and personal service, the inn is known for its delicious homemade breakfast, served on fine china in the elegant dining room or on your private patio or porch (if you reserve a suite).
Rooms at Blackberry Inn Yosemite start at $290 per night, including breakfast. Children over 13 years are welcome and there’s a two-night minimum stay (although single nights are often available).
Tenaya at Yosemite
Fish Camp, California, USA
TENAYA AT YOSEMITE/FACEBOOK
Best for: A great option for families with four-legged friends in tow, Tenaya has a variety of accommodations, indoor and outdoor pools, and diverse dining options that cater well to picky eaters.
Why stay here: Tenaya’s peaceful location, just a mile from Yosemite’s southern entrance, is hard to beat. A daily calendar of on-site activities and experiences keeps the whole family entertained.
Best way to book: Book directly with Tenaya for the best rates, discounts and seasonal packages.
This attractive lodge, just 2 miles from Yosemite National Park, is an appealing option for multigenerational families looking for a streamlined and activity-rich national park experience.
One of the largest lodges in the area, Tenaya comprises 223 guest rooms, 26 suites, 53 cottages and 50 creekside cabins extending across 75 wooded acres bordering Sierra National Forest at an elevation of over 5,000 feet. Drawing many repeat visitors, the AAA Four Diamond-rated property boasts exceptional amenities, a prime location and outstanding tours and activities for all ages.
Inviting public spaces set a homespun tone with earth-hued walls, large windows framing forest views, beamed ceilings, hardwood floors bedecked with Western-style rugs and walls decorated with landscape paintings and Native American motifs.
Premium rooms are kitted out with simple furnishings and give off cozy, mountain vibes. Extended queen and king rooms have an additional 100 square feet, a small living area with plush chairs and a sleeper sofa that’s perfect for smaller families.
Larger families or those looking for a little more luxury might want to consider spending up for a suite, which offers major upgrades in style, size, character and amenities — high ceilings, a soothing neutral color palette, hardwood floors, contemporary design-forward furnishings, a fireplace, and a swanky bathroom with soaking tub. There are also accessible rooms and adults-only suites with private patios and gardens.
For adventure seekers, biking and hiking trails lead directly from the property into Sierra National Forest. Guests can sign up for on-site and off-site activities and daily tours (additional fees apply), including gold panning, guided hikes, mountain biking, archery lessons and horseback riding. Telescopes are also available for stargazers.
There are five dining venues, including a pizzeria and Jackalope’s Bar & Grill (the main restaurant), which offers chef-driven cuisine as well as bar-food staples. The Ascent Spa has 12 treatment rooms and offers reasonably priced facials, body wraps and massages (90 minutes for $180).
Rates at Tenaya at Yosemite start at $269 per night.
Yosemite Valley Lodge
Yosemite National Park, California, USA
SAM ISAAC/YOSEMITE VALLEY LODGE/FACEBOOK
Best for: A short walk from Yosemite Falls, this cozy lodge is a comfortable base for families that value location, convenience and a budget-friendly price tag.
Why stay here: This property offers a variety of accommodations, several dining options and a seasonal outdoor pool — not to mention spectacular surrounding natural beauty.
Best way to book: Yosemite Valley Lodge is operated by Xanterra Parks & Resorts, Inc. Book direct (and well in advance) for the best prices.
This popular, no-frills NPS lodge frequently books up 12 months in advance, largely due to its prime location — it’s the closest property to Yosemite Falls and many of the park’s most popular hiking trails start near the lodge. It’s also considerably cheaper than nearby Ahwahnee, making it a good budget option at a time when lodging prices in and around U.S. national parks have soared.
For nature-loving families and couples that value location over luxurious amenities, it ticks a lot of boxes. There are 245 simple hotel rooms (many recently updated) across three room categories — Traditional Rooms, Bunk Rooms and Family King Rooms. All share a homely aesthetic and provide a clean and functional place to bed down at the center of the action. There is no air conditioning, Wi-Fi or TVs in any room categories.
The Mountain Room restaurant serves sustainably sourced modern American cuisine — steak and seafood, as well as vegetarian and vegan options — along with iconic views of Yosemite Falls. At the canteen-style Base Camp Eatery, you can get your caffeine fix, fuel up for the day on casual fare and head out with some packable grab-and-go items.
There is also a seasonal swimming pool on the grounds, and bike rentals to explore the area — the lodge is located just a 5-minute bike ride, or 10-to-15-minute walk, from Yosemite Village’s shopping, dining and visitors center.
Rates at Yosemite Valley Lodge start at $329 per night.
Wawona Hotel
Yosemite National Park, California, USA
TONY SECKER/WAWONA HOTEL/FACEBOOK
Best for: Budget-conscious travelers looking to disconnect and explore in and around Yosemite National Park, a 40-minute drive away.
Why stay here: Victorian-era charm, a tranquil location, an outdoor pool and comfortable rooms that are far from generic.
Best way to book: Wawona Hotel is operated by Xanterra Parks & Resorts. Book directly for the best prices as well as special offers and packages.
Dating to 1856, the Victorian-style Wawona Hotel is located within Yosemite National Park’s more secluded recesses, some 45 minutes from the valley floor. Open during the winter season (December through March), it’s popular with snow-sports enthusiasts visiting nearby Badger Pass, as well as nature lovers keen to view the famed sequoias of Mariposa Grove — namely the 1,800-year-old Grizzly Giant and the California Tunnel Tree.
There are 50 standard rooms with en suite bathrooms and 54 budget-friendly rooms with shared bathrooms. While they are spare and compact and, some may say, fusty in design (floral bedding, heavy carpeting and simple furniture), with rates from $157 per night, you won’t find anywhere cheaper (apart from camping) within the park. It’s certainly a hot ticket, with rooms selling out 6 to 12 months in advance.
For active types, there’s an array of adventures close by: hiking trails, mountain biking, golf and horseback riding, as well as a seasonal outdoor pool on the property. Public spaces are a joy to return home to, with a light-filled sunroom, cozy dining room filled with period detailing, wide verandas and patios overlooking lovely gardens, and daily rituals such as live classical music and cocktails in the cozy lounge, fireside gatherings and summertime barbecues.
Rates at the Wawona Hotel start at $157 per night.
The GI Bill offers veterans, military members, and their loved ones many benefits. But one thing it doesn’t cover? That’d be buying a house.
Fortunately, if you’re looking to purchase a new home as a veteran or active-duty service member, you still have options. While there may not be a specific GI Bill home loan out there, there is a mortgage program designed just for military home buyers — and it’s one of the best home loan programs on the market.
Are you interested in using the VA loan program to buy a house? Let this VA home loan info guide the way.
Check your eligibility for a VA home loan here (Apr 30th, 2023)
Mortgage program for military home buyers
Dubbed the VA loan program, these military-only mortgages are some of the best financing options available. They’re backed by the Department of Veterans Affairs and offer low interest rates, come with no loan limits, and require zero down payment at all.
So while there is no official “GI home loan,” military borrowers have access to a VA home loan benefit, a great mortgage program intended to put homeownership into reach for veterans, active-duty service members and their families.
Benefits of a VA loan
VA loans come with countless benefits, but the biggest perk is that they require no down payment.
Unlike other mortgage programs, which ask for anywhere from 3% to 20% down, VA loans require no down payment at all. This can offer significant savings right off the bat. (A low-cost FHA loan requires at least $7,000 down on a $200,000 house, for example, while a VA loan requires $0 down).
Some other benefits of VA loans include:
Competitively low interest rates
No credit score requirements
Limits on closing costs
Loans are assumable, meaning future buyers can take over the loan (and the favorable rate and term it comes with)
No private mortgage insurance (PMI)
No loan limits
Can be used multiple times
VA loan mortgage rates 2023
When compared to other loan types — conventional loans and FHA loans, for example — VA home loans offer consistently lower rates than for the average consumer.
VA
Conventional
FHA
March 2023
6.18%
6.54%
6.44%
February 2023
6.04%
6.26%
6.30%
January 2023
5.96%
6.27%
6.22%
December 2022
6.17%
6.36%
6.36%
November 2022
6.56%
6.81%
6.66%
October 2022
6.62%
6.90%
6.73%
Source: Economic Research Federal Reserve Bank of St. Louis
A lower interest rate translates to a lower monthly mortgage payment and substantial savings over the life of your loan.
Qualify with GI Monthly Housing Allowance (MHA)
One last advantage? If you qualify for GI Bill benefits, you can actually use your GI Monthly Housing Allowance (MHA) to qualify for a VA loan. If you’re considering this option, talk to a VA lender. They can give you an idea of what your MHA qualifies you for.
VA loan eligibility & guidelines
For eligible borrowers, VA loans are usually the best mortgage option available. To qualify, borrowers must meet eligibility requirements set by the U.S. Department of Veterans Affairs and by the individual lender.
VA loan service eligibility requirements
VA loans are only for active-duty military members, veterans, and their families (including surviving spouses), so there are strict service requirements you’ll need to meet to qualify.
The exact standards depend on when you served, but generally speaking, you’ll need to have one of the following:
90 consecutive days of active service during wartime
181 days of active service during peacetime
6 years of service in the National Guard or Reserves
A veteran/service member spouse who died in the line of duty or due to a service-related disability or injury
Qualifying for a VA loan
The VA doesn’t set specific financial standards for its loans, though private mortgage lenders — the companies who actually issue the loans — do. These vary from one lender to the next, but in most cases, borrowers need at least a 620 credit score and a debt-to-income ratio of 41% or less.
If you fall short of these requirements, you still might qualify. Just make sure to shop around for your lender, work on improving your credit, and consider making a down payment. These steps can all help you better qualify for a mortgage loan (VA or not).
VA loan property requirements
The VA home loan program is intended to help veterans and active-duty service members become homeowners. That means, with some rare exceptions, these homes are reserved for single-family homes that the borrower plans to use as a primary residence.
A VA appraisal will ensure the property meets the VA’s Minimum Property Requirements, to ensure the home is livable and worth the value of the loan.
See if you’re eligible for a VA home loan (Apr 30th, 2023)
Types of VA loans
You can use a VA loan to either purchase a property or refinance an existing one. In both cases, there are a few options.
These include:
VA Purchase Loans: These can be used to buy a home (up to four units), an approved condo, or a manufactured home. You can also use VA purchase loans to build a new construction property or purchase a home and renovate it
VA Streamline Refinance: Also known as a VA Interest Rate Reduction Refinance Loan (IRRRL), these streamlined refinance loans allow existing VA loan borrowers to lower their interest rates or get more favorable terms quickly and affordably.
Native American Direct Loans: These are VA loans reserved just for veterans of Native American descent. They can be used to buy, build, or renovate properties on federal trust lands or to refinance.
VA Cash-out Refinance Loans: These are VA loans that let you tap your home equity. They replace your existing VA loan with a larger-balance one and give you a lump-sum payment in return. Cash-out refinancing can be a good choice if you need to make repairs on your property or if you have unexpected or looming expenses to cover.
VA funding fee
The VA funding fee is a one-time fee you’ll pay at closing. It helps subsidize the VA loan program and keeps costs low for future VA borrowers. The exact fee depends on your loan type, the number of times you’ve used your VA loan benefits, and your down payment size.
VA home loan FAQ
How much is a typical GI home loan?
There is no GI Bill home loan, but VA loans have no loan limits. As long as you have your full entitlement, you can borrow as much as you need to purchase a property. Keep in mind, though, lenders have their own criteria for evaluating borrowers. These tend to be stricter on higher loan amounts.
What are the benefits of a VA home loan?
The VA housing loan is one of the most beneficial financing products out there. The VA guarantee means private lenders can afford to pass along valuable benefits to eligible veterans, active-duty service members and their families. These loans come with no mortgage insurance or down payment, they have low interest rates, and there are no credit score requirements or loan limits either.
How much house can I afford as a veteran?
That depends on your budget, the interest rate you qualify for, and the down payment you’re willing to make. You can use this VA home loan calculator to point you in the right direction.
What is a Certificate of Eligibility (COE)?
A Certificate of Eligibility is an official document from the VA that details your military service. Lenders use it to determine whether you meet the VA loan program’s service requirements, which are detailed above. You can retrieve your COE yourself through your eBenefits portal, or you can ask your chosen VA lender to request the document on your behalf.
Can I get a COE as the spouse of a Veteran?
You can get a Certificate of Eligibility as the spouse of a veteran in some cases, but not all. To qualify for a COE, your spouse will either need to be missing in action, a prisoner of war or have died while in service from a service-connected disability. There are some other nuances, too — especially if you’ve remarried, so be sure to check out the VA’s detailed rules here.
Can I get a Certificate of Eligibility (COE) for a VA direct or VA-backed home loan?
Certificates of Eligibility are required for all VA mortgages, including Native American Direct and VA-backed purchase and refinance loans.
How much is the VA funding fee?
Your VA funding fee will depend on a few factors, including the type of loan you’re using, whether you’re a first-time home buyer, and whether you’re making a down payment. Fees range anywhere from 0.5% to 3.6% of the total loan amount and is typically well-worth the VA loan savings it allows you to access. This money allows the U.S. Department of Veterans Affairs to continue to offer this valuable VA home loan benefit to qualified veterans, active-duty service members and their families.
GI home loans: The bottom line
While there is technically no such thing as a GI home loan, veterans and active-duty service members do have access to excellent VA mortgage program, which offers significant benefits including:
Zero down payment
Competitively low interest rates
No credit score requirements
Limits on closing costs
Loans are assumable, meaning future buyers can take over the loan (and the favorable rate and term it comes with)
No private mortgage insurance (PMI)
No loan limits
Can be used multiple times
If you’re ready to buy a home (or refinance one), a VA loan might be your best option.
Ready to buy a home with a VA loan? Start here (Apr 30th, 2023)
Stone walls, crocodile-filled moats, Rottweilers — our ancestors found some pretty creative home security solutions!
Today’s home security systems feature a more tech-savvy approach, but the goal remains the same: to keep your family, your property, and your stuff safe from outsiders.
Recent innovations have fueled a new surge in home security sales.
As you shop around and compare systems, consider your home’s security challenges, your lifestyle, and your budget.
Chances are good you’ll find the system you need, whether you’re a new homeowner or just new to the home security market.
How Security Systems Have Changed Over Time and Recently
Believe it or not, tech-driven security systems have been around nearly two centuries. Augustus Russell Pope of Boston combined electricity, magnets, and a bell to create a burglar alarm in the 1850s.
Marketing the invention proved difficult, though, because people feared electricity as much as they feared intruders. As the decades passed, the world caught up with Pope’s idea.
By the early 20th century, electricity had grown safer and more common. The burglar alarm started to catch on.
By the 1970s, home security systems featured motion sensors. Off-site monitoring caught on in the 1980s.
Prices started to fall in the 1990s, making systems accessible for more homeowners. Now the internet has changed the industry again.
For a few hundred dollars in hardware and installation fees — or perhaps less if you install the system yourself — you can monitor your own home from your smartphone from work, school, your commute, or even while on vacation.
These new systems have drawbacks, too, so before you jump in, make sure you’re getting the security your family needs.
Monitored Vs Unmonitored Security Systems
This has become the first question to ask when shopping for home security: Should you pay more for a system with professional monitoring included?
For decades, monitoring fees prevented a lot of homeowners from getting a home security system.
Even the lowest fees can become cost-prohibitive when you pay them month after month and year after year for the indefinite future.
For those homeowners, unmonitored systems may offer the only way into the home security market. If you have a choice, though, give this question some thought.
Monitored systems come with some advantages you may like.
Advantages of Professionally Monitored Systems
Just like with cars, computers, and houses, you get what you pay for with a home security system.
A monitored system costs more, but consider these advantages:
More seamless responses: With an unmonitored system, it would be up to you to contact fire or law enforcement officials when you get an alert about an intruder. When you’re out of town, calling 911 probably won’t work as quickly since you’d have to be transferred between areas of jurisdiction. Someone monitoring your home should be able to contact officials more quickly.
Someone else deals with false alarms: When you’re at work or out shopping and you get a security alert from your unmonitored security system, it’s up to you to assess the risk. If the FedEx guy triggered the alarm by delivering this month’s dog food, you’d feel relieved. But when something like this happens several times a day, it starts to get distracting. A monitored system can take care of these distractions, saving your attention for when it really matters.
Equipment may be included: Customers who buy an unmonitored system tend to be responsible for maintaining and upgrading their own security equipment. A monitored system would more likely include the equipment and, naturally, its maintenance and upgrades. In a fast-changing industry, your gear can get outdated pretty quickly.
Protection isn’t dependent on cell service: Most of us always know where our phones are. But what happens when you’re in an area with poor service or when you lose your phone on the Slinky Dog ride at Disney’s Hollywood Studios? (I’m not judging!) You may not have access to your at-home security system alerts when most needed. A monitored service can contact authorities to protect your home even when you aren’t in the loop.
Advantages of Unmonitored Systems
Unmonitored, also known as self-monitored, home security systems have become the fastest growing segment of the market for a reason. Advantages include:
The cost, of course: Since you could use a self-monitored home security system without paying monthly fees, you can save a lot month to month and year to year. Even if you pay a professional to install the system’s panel or cameras, you can still avoid that monthly bill.
A perfect fit if you’re renting: The home security market has traditionally ignored renters since they don’t have the authority to install hardware or enter a long-term contract. An unmonitored system offers exactly what a renter needs: flexible service with no long-term commitment.
Having more control: When you’re making all the decisions about whether to call for help or whether it’s a false alarm, you’re automatically controlling the response level. Since you know better than anyone what’s normal at your home, this can prevent some confusion. For example, the monitoring service may not know your brother has a spare key but does not know the alarm code. Since you know this, you can automatically filter out the police response as a viable option (unless you really have it in for your brother).
Integrating additional home systems: Some of the best self-monitored systems are an extension of WiFi-enabled home automation. Along with feeling more secure, you can also lock or unlock doors, change your thermostat, turn certain lights on or off, and even control the garden sprinklers (and lawn mowers!), all from an app. (Traditional monitored services have started adding these features, too.)
Can You Get the Best of Both Worlds?
Wouldn’t it be nice if you could combine the best aspects of professionally monitored and self-monitored systems?
Well, the industry has been moving in that direction.
Here’s why: The rapid growth of self-monitored home security systems has grabbed the attention of the traditional home security companies.
The leading monitored services are compensating by adding modern conveniences such as app-based customer control and, in some cases, acquiring smaller, self-monitored home security companies.
And it’s not a one-way street: Some self-monitored services have added the option to have your home professionally monitored, but with a twist. You can get add-on monitoring for a fee only when you need it. That way you could still avoid the contracts and flat monthly fees.
As the market continues to evolve, I’d expect to see less separation between these two categories.
But full-time monitoring will continue to be a separator. It simply costs more money to have someone monitoring your home and responding to problems all day every day.
And in many cases, professional monitoring equals a more secure home.
Should You Buy a Monitored or Unmonitored Security System?
This gradual merging of monitored and unmonitored home security features could, ironically, make it harder to decide what kind of service to buy.
If you like the control an unmonitored system offers, you don’t necessarily have to opt for an unmonitored system anymore. You can find a monitored system with similar capabilities.
Or, if you want a monitored system because you’re out of town a lot, you no longer have to choose from only traditional security service providers. You may be able to find an unmonitored service with added-on monitoring periods without a contract.
If you can’t decide for sure, take a look at your home, your lifestyle, and your personal preferences. They can tell you a lot about your needs.
What Type of Home Do You Have?
The kind of home you’re protecting should help drive the kind of protection you buy.
Makes sense, right?
Well, it’s easy to forget such obvious things once you start comparing features, prices, contracts, apps, and customer reviews.
Take a look around your home. If you have two full floors full of windows and doors, along with a garage door and windows to consider, you’ll need a lot of equipment installed and maintained.
You’ll also have a lot more sensors to trigger false alarms. A monitored system could be worth the cost.
On the flip side, if you live in a 2-room apartment with just a few windows and only two doors, your up-front equipment investment will be less, and you’ll have fewer trigger points to keep an eye on as you monitor things while away. A self-monitored system could do the job.
How Connected Are You?
If a home security system sends an alert to your smartphone but no one is around to hear it, does it make a sound? We could debate that question for hours, and if your phone happens to be off, someone could be stealing your stuff as we contemplate.
With an unmonitored system, you’re on call around the clock via your smartphone. If you’re the kind of person who likes to unplug after work or while on vacation, you may want to lean toward a monitored security system.
If, however, you and your phone are inseparable — if you sleep with the phone beside you on the pillow — you’re likely set up well to monitor security alerts.
That said, I’d suggest using a different ringtone for home security alerts. You wouldn’t want to ignore a serious problem thinking it was just a reminder to pick up your sister’s cat from the vet tomorrow.
How Connected Is Your Home?
Most of us have WiFi at home now. Most does not mean all, though.
People without WiFi at home will have a hard time using all the features of a self-monitored home security system.
In that case, a landline-based, traditional system would be a better option.
If you have WiFi, the quality of your surveillance will depend a lot on the quality of your Internet connection.
As more devices and appliances get online — thermostats, washing machines, tablets, phones, TVs, refrigerators, lawn mowers — there’s more demand on your network. For many of us, a DSL connection just doesn’t cut it anymore.
If you have a gigabit-per-second coming across fiber into your home, your unmonitored security features should work just fine.
How Busy Are You?
A lot of us can add tasks to our regular schedules without a lot of stress. People in the gig economy or with a couple side hustles may have just the kind of schedule flexibility they need to assess threats from their smartphones.
Sure, you may have to re-arrange a few things or tell a client to hold on a second while you check the alert on your phone, but it’s still possible. People who teach school, run meetings, perform surgery, or preside over class-action lawsuits may not have time to check their phones every couple of hours.
Just like any other commitment you take on, consider the time demands of an unmonitored security system.
I’ve been in more than one meeting where someone had to check on a security alert. (Usually, something like leaves blowing onto the porch or a delivery from Amazon triggered the alert.)
Do You Own Your Home?
I referred to this earlier, but it bears repeating. Traditional home security firms more or less ignored renters for years since they didn’t have permission to install a system anyway.
With no wires to run behind walls, a tenant can usually install an unmonitored system without changing the property.
Mounting a camera in the corner is hardly different from hanging a picture, and it’s a whole lot simpler than installing a wall-mounted TV.
Plus, when you move on to a new home in a new city, you could take a lot of the system’s components with you to use at the new rental house. Of course, check your lease agreement to make sure you have permission to make the changes an unmonitored system would require.
And, by the way, if you’re a renter who would like a traditional monitored system, ask your landlord about it. He or she may be fine with the idea, especially since a system could reduce your landlord’s homeowners insurance rates.
Best Security System Providers For 2023
We’ve chewed on a lot of theoretical stuff, so let’s get into what really matters. How do systems compare to each other, and which one should you get?
A year or so ago I would have made two best security system lists: One for monitored security systems and one for self-monitored systems.
The features of these systems have blended so much I think one list will better serve shoppers. I’ll be sure to indicate whether you would need a contract to use each service.
While convenient features are important and worth weighing into the equation, the quality of the system itself still matters most.
So I’ll be giving the quality of your home security system first priority in these comparisons while giving conveniences and customer flexibility a little less importance.
Frontpoint
Contract required: Yes Professional monitoring: Yes Length of contract: At least one year
Remember earlier when I suggested the future of home security will likely blend the features of monitored and unmonitored systems?
I had Frontpoint in mind when I said that.
This company has led this confluence of features, offering professional monitoring plus the conveniences do-it-yourself systems introduced.
Yes, Frontpoint requires a contract and you’ll be paying for 24/7 professional monitoring. But you’ll also have a user-friendly app that can control your locks, lights, and thermostat.
With Frontpoint, you install the equipment yourself since it’s wireless, lightweight, and easy to position with included adhesive strips.
Essentially, Frontpoint offers the best features of monitored and unmonitored services in one package: professional monitoring, quality equipment, convenient features, and a do-it-yourself approach.
That’s why I’ve listed Frontpoint first.
I also like the 30-day, risk-free guarantee. If you’re unhappy with the service, Frontpoint won’t bill you and you can return all the hardware. You won’t be on the hook for the rest of the contract.
I also like the one-year contract. Most companies require a three-year commitment.
Frontpoint offers three price points. If you’d like to access recorded video surveillance from your property, you’ll need to go with the most expensive plan.
Best for: A homeowner who wants mobile control, full-time professional monitoring, and more contract flexibility than usual. Avoid if: You don’t want to enter at least a one-year contract.
ADT Pulse
Contract required: Yes Professional monitoring: Yes Length of contract: At least three years
ADT, a leader in home security for almost 150 years, has also started offering the conveniences of unmonitored security in its ADT Pulse system.
Like Frontpoint, ADT Pulse still bases its services on contracts, but it has bulked up its app to give customers more control over their security equipment. In fact, you can probably incorporate your own cameras and sensors into ADT’s system since it supports many third-party hardware brands.
Unlike Frontpoint, ADT Pulse includes professional installation (and a corresponding $99 set-up fee). The result is another best-of-both-worlds approach for the customer who is willing to enter into a contract.
In ADT’s case, the contract will last at least three years, and you’d be billed a hefty termination fee to get out of it.
ADT will let you out of the contract if you’re not happy with the service, but it’s not a no-questions-asked policy. ADT will try to resolve your issues, which is a good thing if home security is your priority.
Best for: A homeowner who wants a time-tested, trustworthy home security partner with professional installation plus modern mobile-based control. Avoid if: You’re not sure about entering a long-term contract.
ProtectAmerica
Contract required: Yes Professional monitoring: Yes Length of contract: At least three years
By now you’re sensing a trend: Traditional, contract-based home security companies that have adopted modern conveniences are dominating the top of this list.
And for good reason: Ultimately, a home security system should provide the best home security for you and your family, and professional monitoring tends to offer more security.
ProtectAmerica makes this list for those reasons and because of its flexible pricing options. The company has five price points.
I’d stay away from the company’s less expensive, landline-based options. They do not offer the control and integration you’d get from Frontpoint or ADT Pulse (unless you want a traditional, landline-based system).
ProtectAmerica’s broadband and cellular-based options deliver a lot. You can even integrate the system with your Amazon Alexa or Google Home smart device for voice control.
And when an alarm goes off, you can also get a voice prompt from the system telling you which sensor or camera triggered the alarm. When you’re half asleep, this simplicity can pay off! There’s also a panic button which will automatically call for help.
Best for: A homeowner or renter who wants the conveniences of tech-based security with fewer potential complications. Avoid if: You’re shy about a three-year contract.
Vivint Home Security
Contract required: No, unless you’re financing equipment Professional monitoring: Yes Length of contract: At least 42 months (but only when financing equipment)
If you’ve been looking for a no-contract home security solution that still delivers professional results, consider Vivint Home Security. Vivint offers monitoring for a monthly fee, but it doesn’t require its customers to commit to more than one month at a time.
However, if you cancel your account while you still owe money on your equipment, Vivint will bill you for the balance. So even though you wouldn’t have an official contract, you’d still be compelled to keep the service or pay a lump sum to end your connection to the company.
It’s not exactly a no-strings-attached situation, but customers do have more control month to month, especially if they pay up front for the equipment.
Vivint makes this list because of this potential flexibility and because of the flexibility of the company’s equipment.
You can essentially build your own home security and home automation package the way you want. Rather than choosing from a package, you can combine different kinds of surveillance equipment including outdoor monitoring, and different safety features such as smart lighting and thermostat control.
You can manage your system through a Google or Amazon smart speaker or you can use a more customized control panel.
Best for: A homeowner who wants to customize a security solution. Avoid if: You don’t want to pay up front for equipment. If you don’t pay up front, you’ll have a de facto contract.
Link Interactive
Contract required: No, unless you’re financing equipment Professional monitoring: Yes (by a third party monitoring center) Length of contract: N/A unless financing equipment
Link Interactive rounds out my top 5 because, once again, it blends traditional and unmonitored features to give customers the best of both worlds. Link Interactive stands out because it has embraced broadband and cellular networks more thorough than most other providers.
As a result, you can talk with a professional monitor through your control panel at home during an emergency. Sometimes just knowing what’s going on and finding out easily when help will arrive can alleviate stress.
But you should know that Link Interactive uses a third party, which doesn’t always equal a loss in quality, but it does mean the company has less control over the monitoring process.
Still, lots of Link Interactive customers have been satisfied with their service according to TrustPilot and Better Business Bureau reports, which tend to lean toward the negative for security systems.
Link Interactive lets you pay month to month instead of committing to one to three years. However, as with Vivint, if you owe money on your home security equipment, you’d have to pay the balance if you canceled service.
So unless you pay up front for the equipment or pay the balance down enough to make more affordable, you’d likely be sticking with the service for a while.
Essentially, it’s a contract by another name. Link Interactive does stand by its 30-day grace period. If you change your mind or don’t like the service, you can cancel without obligations.
Security matters most, and even though I’ve listed a couple concerns, Link Interactive has the experience (about 70 years’ worth) and the equipment to serve its customers well.
Best for: A homeowner who wants a reliable partner with the best modern conveniences. Avoid if: You don’t plan to stick with the company for at least until you’ve paid off the equipment.
Best Self-Monitored Home Security Services For 2023
I know — I listed my five top choices for home security, and not a single one offers a completely self-monitored system.
I alluded to the reason earlier but here it is again: Professionally monitored systems simply provide better security across the board, and we’re looking for the best home security systems.
In most cases, security tends to be better because you have a staff of monitors at the ready to respond to a crisis at your home.
Most, of course, doesn’t mean all. You may have just the right work-life balance to handle a self-monitored system. Or you might just prefer to self-monitor your home security, either to save money or because you like the control.
If so, you have a lot of choices.
Let’s take a look at a few of my favorites.
Ring Alarm
You’ve probably seen this one on TV. It looks simple, efficient, and affordable.
Overall, it lives up. For only $200 or so up front, you can get a pretty solid set-up and install it yourself. Pricier packages offer more components for larger homes.
You can opt for professional monitoring (for $10 a month or $100 a year) or for self-monitoring, which is free. Ring connects to Z-wave, which means you can incorporate a wide variety of home management and security equipment.
Amazon owns and sells Ring systems, so if you’re a frequent Amazon shopper you’ll know pretty much what to expect.
Best for: A low-cost but useful alternative with professional monitoring available.
Honeywell Smart Home Security
Honeywell, whose name you may have seen on thermostats somewhere along the line, has expanded its business into smart home connectivity, including home security.
You’ll pay more, over $1,000 most likely, to get your system going, but after that, you can do a lot, including arming and disarming the system with a key fob and even integrating facial recognition.
Honeywell’s system works seamlessly with Amazon Alexa, and the system should soon also offer Google Assistant and Apple HomeKit integration.
Honeywell also syncs with Z-wave, which means you can use all sorts of wireless equipment to manage and monitor your home.
Best for: A do-it-yourself alternative that still has top-notch gear and accessibility specializing in self-monitoring.
SimpliSafe
SimpliSafe has grown in name recognition and market share. The company offers a lot of options. About 16 to be precise. They all vary slightly in the number of components and price.
Set-up fees range from about $290 to about $550 depending on how much equipment your home needs. The equipment is easy to install and use. You can go without professional monitoring and keep using the security equipment.
It tends to be harder to incorporate third-party equipment, though. So if you get SimpliSafe don’t assume you can use existing gear from previous systems.
Best for: An all-in-one system for homeowners new to security systems.
Nest Secure
If you use Google products — Google Assistant and the Android operating system, for example — Nest Secure could offer a sensible extension for your home automation and security needs.
Naturally, the service integrates nicely with Google Assistant and your Android phone or tablet. You can spend up to $500 or so getting the equipment set-up.
You can add professional monitoring on a contract or month-to-month basis.
Best for: Customers who already use Nest home automation products. Nest is part of Alphabet, Google’s parent company.
Going Cheap? Create Your Own System And Go Full DIY!
Even though the home security market has changed a lot with the success of self-monitoring systems, customers still have two basic choices:
Enter a contract of some sort to get professional monitoring and pay less up front.
Buy a do-it-yourself system, spending $300 to $1,500 up front, and have the freedom to self-monitor and avoid the contract.
Some customers wonder why they can’t just buy some cameras and door sensors and connect the gear to their smartphone. That may be possible, and if that’s your thing, you could save compared to buying a pre-packaged deal.
But, for the majority of consumers, I do not recommend this approach for a few reasons:
It depends upon your ability to connect and maintain the equipment.
You couldn’t add professional monitoring if you wanted to.
It’s more difficult to self-monitor without an app to centralize the camera feeds and sensor data.
Regional Security Firms May Offer a Lot
I tried to limit this post to companies offering nationwide service. Some regional companies offer great equipment and great service, too.
If you’re considering a regional firm in your area, make sure to check on the following issues:
Who monitors the company’s security systems? Is it local or third party? If third party, try to find out response times for the monitoring service.
Are you as the customer responsible for maintaining the equipment or will the company keep it up to date? If you’re responsible, work that into what you’ll be paying.
Does the system’s control panel have a battery backup during loss of electricity? What about backup for the WiFi connection? If not, the system could leave you vulnerable.
If you have the ability to self-monitor, can you integrate components you already own via Z-wave or another similar service?
What do local law enforcement officials think about the firm? Cops know a lot about home security. They may know the value of a local or regional home security outfit.
Need Proof of Results? Ask Your Insurance Agent
Our homes are personal. Having a stranger violate, steal, or destroy our homes, our property feels like a personal attack even if we’re not home and deal only with the aftermath.
People who have experienced that feeling know it can change the way you look at the world for a while.
It makes sense for homeowners (and renters) to seek some kind of protection against this danger. No system can guarantee your safety and the safety of your family.
But home security systems do get results. For proof, just ask your homeowners insurance company.
Many insurers will give you a discount on your home insurance premiums if you have a professionally monitored home security system. Insurers give this discount because they know a quality home security service will likely reduce the likelihood of a personal property insurance claim.
As you compare systems, consider what kind of security you need and whether what you’re buying fits your home.
Security is personal. It’s up to you to make sure you’re getting a system to match your life.
isolate a pinhole leak in the fuel filler neck and hose assembly
maintain and/or replace an evaporator canister
recognize the term “evaporator canister”.
“Evaporator canister” does return only 457 Google hits, leading one to question whether such a component even exists. (cf. “skyhook”, “snipe hunt”, and “key to the batter’s box.”)
The vehicle in question, a 2008 Ford Explorer, has 52,340 miles on it. The check engine light came on, a crisis that created an opportunity to do two things:
save a little money
spend a lot of money.
You can read about what to do regarding vehicle maintenance in the book (available now at Amazon, Barnes & Noble and other fine bookstores). Rule 1 is Don’t Go To The Dealer. More specifically, don’t begin at the dealer. You might have no choice if you need a specific original-equipment part for body work, but for repairs not restricted to a certain make and model of vehicle, start elsewhere.
There is a caveat, the exception that reinforces the rule. It’s OK to begin at the dealer if you’re willing to stay a few minutes with your vehicle and confirm that you don’t want this to turn into a full-on service appointment. If your vehicle’s clearly in the warranty period, it shouldn’t be a problem. If it’s on the fence, stand your ground and ensure that the dealer’s service department won’t charge you.
“On the fence” means you aren’t sure whether a certain component is still in the coverage period or not, which is definitely possible. Here are some examples from the warranty for said Explorer:
catalytic converter (8 years or 80,000 miles, whichever comes first)
idle air bypass valve (5 years or 50,000 miles, unless you’re driving something other than a heavy duty vehicle, which is a truck from 8,500–19,500 pounds)
intake manifold (7 years/70,000 miles, if you have the long-term defects warranty, but only if your engine is at least 4 liters)
any other emissions-related part (15 years/150,000 miles, but only if you’re in California, the special state that might as well be an independent country for its refusal to accept the laws the rest of us seem to have little trouble crafting.)
So yeah, you might not know what’s covered until the dealer’s already in your pocket. Beware, especially since check engine lights are similar to dental cavities: ignoring them is never an effective way of getting the underlying problem to disappear.
It’s astonishing how many people will take steps to reduce their water bills by .35¢ a month, or shop around to save $5 on groceries, but won’t expend a little effort to save hundreds on automotive repair.
The dealership will tell you that only it can diagnose the check engine light and identify the code that arises. They’ll also charge you $90 for the privilege of determining what’s wrong with something they sold you in the first place. (Read that sentence again.) This is the same dealership that likely told you the $1100 desert protection package option is a vital add-on that all the smart drivers are getting this year, even though you live on Kaua’i.
In other words, a lie. If you don’t have a scanner of your own, find a lube shop that does and an employee who knows how to use it. Depending on what state you live in, you need to do this surreptitiously. The bureaucrats in some state governments, peons of the automotive-industrial cabal, prohibit everyone but dealers from using scanners legally. Which is not only counterproductive and immoral, it’s expensive.
Nor are state transportation department employees above going to a lube shop, asking for a diagnosis, then levying a fine. (The 1930s are alive and well in some industries.) So be careful. If you’re already comfortable at a particular lube shop, and they know you, or you can prove that you’ve taken your vehicle there before, ask if you can get someone to check the code on your vehicle. Obviously, you shouldn’t do this in front of anyone but a single technician. At the very least, they might be able to recommend someone who can help you. Be explicit about how you’re not there to jeopardize anyone’s livelihood.
With a diagnosis from a lube shop, which takes less than a minute, you’ve already saved the $90 service fee a dealer would charge. (At this point you’re welcome to tip the technician.) Yes, the dealer will refund the $90 if the work is covered under warranty, but why wager $90 to take that chance? Better to walk in armed with at least the results from the code reader.
The Explorer had an evaporation leak, which the tech classified as a small one. Small, by definition, means .004-.006”. (Anything smaller is hard to detect.) The initial course of treatment was a “smoke test”, in which a tech literally blows smoke up your vehicle to determine the genesis of the leak.
Lube shops don’t do this, so the next stop was a non-affiliated service center, which quoted close to $90 for a smoke test. However, the dealer charges about the same, but also tells you if the work is under warranty. Thus in this case it is time to head to the dealer, for a rare justifiable visit. A few hours later, the verdict: repair the leak in the fuel filler neck and hose assembly, and replace that mysterious evaporator canister. $1531.
Fortunately, a small evaporation leak isn’t enough to render the vehicle un-drivable, at least not for a few days. So off we go to comparison shop, after a tactical lie to the dealership’s service writer (“I’m broke until my next paycheck. I’ll take it home and hopefully have enough to come back and let you fix it next week.”)
Then to the service center. Their quote?
$818, at least ¾ of which is parts. Same guaranteed work, none of which voids the warranty. That’s more than a $600 savings, and no one had to turn off the faucet while brushing to accomplish it.
Only go to the dealer if you absolutely have to. In a situation like this one, doing so gets you the best of both worlds: as inexpensive a diagnosis as possible, plus a quote, which you can then use to shop around with and get a better price. Thus selling a liability, and leaving you more funds to buy assets with.
Greg McFarlane is an advertising copywriter who lives in Las Vegas and Lahaina – testament to the power of entrepreneurship. He recently wrote Control Your Cash: Making Money Make Sense, a financial primer for people in their 20s and 30s who know nothing about money. Buy the book here (physical) or here (Kindle) and reach Greg at [email protected].
Typically, most people automatically assume they should roll over their old 401(k) into a traditional IRA. However, a lot of people have been asking about another option lately – and that’s whether you can roll your 401(k) over into a Roth IRA instead.
Fortunately, the definitive answer is “yes.” You can roll your existing 401(k) into a Roth IRA instead of a traditional IRA. Choosing to do so just adds a few additional steps to the process.
Whenever you leave your job, you have a decision to make with your 401k plan. Most people don’t want to let an old 401(k) sit idle with an old employer, and could benefit immensely by moving those funds somewhere that could benefit them more in the long run. Let’s see if I can help you make “cents” of the situation.
But first, let’s look at the rules behind the strategy of rolling over your 401k into a Roth IRA.
Table of Contents
Need to open a Roth IRA?
My favorite online broker is Ally Invest but you can check out our recap on the best places to open a Roth IRA and the best online stock broker sign-up bonuses. There are many good options out there, but I have had the best overall experience with Ally Invest. No matter which option you choose the most important thing with any investment is to get started.
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Roth IRA Rollover Rules From 401k
As a reminder, you must generally be separated from your employer to roll your 401k into a Roth IRA. However, some employers do permit an in-service rollover, where you can do the rollover while still employed. It’s permitted by the IRS, but not all employers participate.
Before January 1, 2008, you weren’t able to roll your 401(k) into a Roth IRA directly at all. If you wanted to do so you had to complete a two-step process. (Keep in mind that this would also apply to old Simple IRA’s, SEP IRA’s and 403b’s, 457, and qualified pensions, too)
Open a Traditional IRA.
Convert the Traditional IRA to a Roth IRA.
However, the law changed shortly after and this option became available. Still, just because the law has made this option available doesn’t mean you can definitely roll your old 401(k) into a Roth IRA no matter what. Unfortunately, it all depends on your plan administrator.
For example, recently I had two clients who intended to roll their old retirement plans into a Roth IRA.
One client had an old military retirement plan- Thrift Savings Plan (TSP) – and the other had an old state retirement plan. After helping each of them complete the required paperwork, I came across an interesting discovery.
The TSP rollover paperwork had a box you could mark if you wanted to roll over the plan into a Roth IRA (the instructions had been added to make sure you had a Roth IRA already established). However, the state retirement plan did not give that option.
The only option was to open a traditional IRA to accept the rollover and then immediately convert it to a Roth IRA. That certainly seemed like a hassle at the time, and it definitely was.
However, this man’s state retirement plan is not the only one I’ve encountered with these extra “rules.” Many 401(k)’s and 403(b)’s come with the same “No-Roth IRA Rollover” option. This option was supposed to be mandatory in 2010, but some still do it on a voluntary basis.
At the end of the day, this means you should explore this option thoroughly before automatically assuming it would work in your case. Ask questions, consult your financial advisor, and read through all of your rollover paperwork carefully before you begin moving in this direction.
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Recap on Roth IRA Conversion Rule
These days, nearly anyone can take all of their traditional IRAs and old retirement plans and convert them to a Roth IRA. The amount you convert will be taxed, but it still can be an attractive move for those that feel that taxes are going nowhere but up.
How Do I Rollover if I Receive the Check?
If you receive a distribution check from your 401(k) rollover to a Roth IRA, then chances are good they will hold around 20% for taxes. If you want a direct 401(k) rollover to a Roth IRA, you may want to send that check back to your employer 401(k) provider and ask to be sent all of your eligible retirement distribution directly to your new Rollover IRA account (not as a check, or they will just give you 80% again).
You have 60 days upon receiving the check to get the money into the Roth IRA- no exceptions! So don’t procrastinate on this one.
What About the Roth 401k?
If your employer offers a Roth 401k and you were savvy enough to take part, the path to a rollover will be much easier. When you’re converting one Roth product to another, there is simply no need for conversion. You would simply roll the Roth 401(k) directly into the Roth IRA with the help of your plan provider.
Roll Your 401(k) by Following These Steps
You have to have a Roth IRA open/established before you can do any of this.
Ask your plan provider about the paperwork required to roll your plan over, then complete the paperwork in a timely manner.
Enjoy the tax-free growth of your Roth IRA!
4 Signs It Makes Sense to Roll Your 401(k) into a Roth IRA
If you’re thinking of rolling your 401(k) into a Roth IRA instead of a traditional IRA, you have plenty of reasons to do so. Not only do Roth IRAs let you invest your dollars in the same investments as traditional IRAs, but they offer additional perks that can help you save money down the line. Here are four signs that a Roth IRA might actually be your best bet.
1. You expect to pay higher taxes in the future.
Since Roth IRAs use after-tax dollars, you’ll have to pay taxes upfront on any funds you roll over. However, you won’t have to pay taxes on your distributions, which could be extremely beneficial if you’re taxed at a higher rate when you reach retirement. You’ll pay taxes either way – now or later. But with a Roth IRA, you can rest assured your withdrawals will be tax-free.
2. You want to take withdrawals when you’re ready, and not a minute before.
While traditional IRAs force you to begin taking withdrawals at age 70 ½, Roth IRAs do not have this stipulation. Because of this, you can squirrel your Roth IRA funds away until you’re ready to use them.
3. You expect to earn more money in the future.
If you plan to earn lots of money in the future – or earn a high income now – you should consider rolling your funds into a Roth IRA instead of a traditional IRA. For single filers in 2023, the maximum income allowable for contributions to a Roth IRA starts at $138,000 and ends at $153,000. Learn more about Roth IRA rules and contribution limits here.
For married filers, on the other hand, the ability to contribute to a Roth IRA begins phasing out at $218,000 and halts completely at $228,000 for 2023. The more you earn in the future, the harder it will become to contribute to a Roth IRA and secure the benefits that come with it.
4. You want to increase your tax diversification.
Contributions to traditional IRAs are tax-advantaged, meaning you won’t pay taxes on your invested funds until you begin taking withdrawals at retirement. Roth IRAs, on the other hand, are taxed up front but offer tax-free withdrawals after age 59 ½.
If you’re unsure how your tax and income situation might pan out in the future, having both types of accounts – a traditional IRA and a Roth IRA – is a smart move in terms of diversifying your future tax exposure.
401k to Roth IRA Rollover Rules
Details
Eligibility
You can roll over a 401k to a Roth IRA if you have left the employer sponsoring the 401k and are no longer contributing to the plan. Some plans also allow in-service rollovers, but it’s best to check with your plan administrator for details.
Taxes
When you roll over a 401k to a Roth IRA, you will owe income taxes on the amount you convert. This is because contributions to a 401k are made with pre-tax dollars, while contributions to a Roth IRA are made with after-tax dollars.
Conversion Limitations
There is no limit on the amount you can convert from a 401k to a Roth IRA. However, the amount you convert will be added to your taxable income for the year in which you make the conversion, which could have tax implications.
Timing
You can convert a 401k to a Roth IRA at any time, but it’s important to consider the timing of the conversion carefully. If you convert when your income is higher, you will owe more in taxes.
Penalty-Free
If you are 59 ½ or older, you can convert a 401k to a Roth IRA penalty-free. If you are younger than 59 ½, you may be subject to a 10% early withdrawal penalty on the amount you convert.
The Bottom Line – Rolling Over 401k into a Roth IRA
Rolling your 401(k) into a Roth IRA is a smart decision for many investors, but it may not be right for everyone.
Some financial advisors may suggest rolling over your 401k into a Roth IRA to take advantage of the tax-free growth the account offers. While this can be a great option for some, it’s important to consider if you’ll be able to afford to pay the taxes on your contributions and earnings when you eventually withdraw them.
Before you pull the trigger, make sure to investigate all of your options and consider speaking with a tax professional. When it comes to complex investment vehicles and taxes, what you don’t know can hurt you
FAQs on Rollover 401k to Roth IRA
Can you roll over 401k to Roth IRA without penalty?
Yes, you can roll over funds from a 401(k) to a Roth IRA without incurring any penalties, but there are some important rules and restrictions to be aware of.
First, you’ll need to meet the eligibility requirements for a Roth IRA, which include having earned income and not exceeding certain income limits. If you’re eligible, you can roll over funds from your 401(k) to a Roth IRA by asking your 401(k) plan administrator to transfer the funds directly to your Roth IRA account. This is known as a “direct rollover” and it allows you to avoid paying any taxes or penalties on the funds.
However, there are limits on how much you can contribute to a Roth IRA each year, and there may be tax consequences if you exceed those limits. It’s important to consult with a financial advisor or tax professional before making any decisions about rolling over funds from a 401(k) to a Roth IRA. They can help you understand the rules and restrictions and determine if a rollover is the right move for your financial situation.
What are the disadvantages of rolling over a 401k to a Roth IRA?
There are a few potential disadvantages to rolling over funds from a 401(k) to a Roth IRA. These include:
1. Tax implications: When you roll over funds from a 401(k) to a Roth IRA, you’ll have to pay taxes on the amount you roll over. This can be a disadvantage if you’re in a high tax bracket and don’t have other funds available to pay the taxes.
2. Loss of employer matching: If your employer offers matching contributions to your 401(k), you’ll lose out on those contributions if you roll over your funds to a Roth IRA.
3. Loss of certain benefits: 401(k) plans may offer certain benefits, such as loan provisions and hardship withdrawals, that are not available with a Roth IRA. If you roll over your funds to a Roth IRA, you’ll lose access to these benefits.
Overall, rolling over funds from a 401(k) to a Roth IRA can be a good move for some people, but it’s important to carefully consider the potential disadvantages and consult with a financial advisor before making any decisions.
What is the tax penalty for rolling 401k to Roth IRA?
If you roll over funds from a 401(k) to a Roth IRA, you’ll have to pay taxes on the amount you roll over. This is because funds in a 401(k) are pre-tax, meaning you don’t have to pay taxes on them until you withdraw the funds. When you roll over the funds to a Roth IRA, you’re essentially withdrawing the funds and then depositing them into the Roth IRA, so you’ll have to claim that amount of reportable income.
Since you’re “rolling over” and not taking a distribution you won’t have to pay the 10% early withdrawal penalty if you’re under the age 59 1/2. If you do choose to this be prepared to pay the taxes on the rollover out of pocket. Otherwise if you use your 401k money to pay the taxes you will be penalized on that amount.
What is the Roth five year rule?
The Roth 5 year rule is a requirement for certain tax-free withdrawals from a Roth IRA. In order for a withdrawal from a Roth IRA to be tax-free, the account must have been open for at least 5 years and the withdrawal must be made after the age of 59 1/2. If these conditions are not met, the withdrawal may be subject to taxes and penalties.
The Roth 5 year rule applies to both contributions and earnings in a Roth IRA. For example, if you make a contribution to a Roth IRA and then withdraw it within 5 years, the withdrawal will be subject to taxes and penalties unless it meets one of the exceptions to the rule. The same is true for earnings on your contributions – if you withdraw earnings from a Roth IRA within 5 years, they will be subject to taxes and penalties unless an exception applies.
There are a few exceptions to the Roth 5 year rule, including:
-Withdrawals made to pay for qualified higher education expenses -Withdrawals made to pay for qualified first-time homebuyer expenses -Withdrawals made due to the account holder’s disability -Withdrawals made by a beneficiary of the account after the account holder’s death
It’s important to understand the Roth 5 year rule and the exceptions to it before making any withdrawals from a Roth IRA. If you’re not sure whether a withdrawal will be subject to taxes and penalties, it’s a good idea to consult with a tax professional.
How Often Should You Rebalance Your Portfolio? – SmartAsset
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Choosing the right asset allocation matters for achieving your investment goals. But it isn’t just set-it-and-forget-it. Rebalancing your portfolio from time to time is necessary to ensure that you have the right mix of investments, based on your goals and risk tolerance. The question is, when do you need to rebalance? Knowing how often to rebalance portfolio allocation is a basic – yet important – investing lesson to learn. A financial advisor can offer valuable insights as you rebalance your portfolio.
What Is Portfolio Rebalancing and Why Is It Important?
Portfolio rebalancing simply means adjusting the weightings of different assets in your portfolio. This is achieved by buying and/or selling securities to bring your asset allocation back in line with your goals.
For example, say you prefer to hold 80% of your investments in stocks and 20% in bonds. But higher-than-expected returns have pushed the stock portion of your portfolio to 90%. To get back to your ideal 80/20 mix, you’d have to sell off some of your stocks or purchase more bonds to act as a counterweight.
Portfolio rebalancing matters for maintaining the appropriate level of risk in your portfolio. Say you’re more risk-averse and prefer to hold a higher proportion of bonds. If you don’t rebalance, you could expose yourself to more risk than you’re comfortable with if the stock portion of your portfolio grows.
On the other hand, failing to rebalance could mean you’re not taking enough risk to achieve your investment goals. You could end up with too much of your money in bonds or fixed-income investments, which could limit your portfolio’s growth potential.
Rebalancing regularly can help with maintaining a diversified portfolio. It’s also an opportunity to take a closer look at what you own to decide if those investments still match up with your needs and objectives.
How Often to Rebalance Portfolio?
Deciding how often to rebalance your portfolio is entirely a personal decision. You could do it monthly, quarterly, biannually or once a year. The advantage of using a time-based approach is that it’s easier to get into a habit of rebalancing, so you don’t forget to do it. And while you’re rebalancing, you may tackle other tasks as well, such as reviewing expense ratios for the mutual funds or exchange-traded funds you hold or commissions you’re paying to your brokerage.
You can also choose to rebalance once your asset allocation reaches a specific tipping point. So again, say you’re focused on investing 80% of your portfolio in stocks and 20% in bonds. You may set a rule for yourself to rebalance any time the stock portion of your portfolio grows to 85%. This is a fairly standard rule of thumb to follow, though you may choose a different percentage instead. For example, you may decide to rebalance if your asset allocation changes by 10% or 15%.
The advantage of rebalancing this way is that it allows you to avoid having your portfolio allocation be off-kilter for extended periods of time. If you were to only rebalance once a year, for example, it’s possible that you could go most or all of the year with an asset allocation that doesn’t match up to your goals or risk tolerance.
The key with either approach is to avoid overdoing it. Say you follow a set calendar for rebalancing quarterly. Rebalancing just because it’s time to rebalance may be counterproductive if your asset allocation hasn’t shifted course in a major way. Likewise, rebalancing once your asset allocation moves beyond a set percentage range could be problematic if it means paying more fees to your brokerage.
While many brokerages have adopted $0 commission trades for U.S. stocks and ETFs, fees may still apply to trade mutual funds or bonds. So even though rebalancing could help you to keep your portfolio in line, it may mean paying higher fees.
How to Rebalance Your Portfolio
If you want to rebalance your portfolio, the first step is to take an inventory of your current holdings. Specifically, you’ll want to break down what percentage of your portfolio is dedicated to different asset classes, i.e. stocks, bonds, cash and cash equivalents, real estate, etc. You can also drill down even further by looking at your allocation to domestic versus international investments and by market sector.
So if 80% of your portfolio is made up of stocks, for example, consider:
How much of that is U.S. stocks
How much is international stocks
Which stock sectors you own (i.e. healthcare, financials, utilities, etc.)
Whether you own more large-caps, mid-caps or small-caps
How much of your investments are in growth vs. value stocks
Digging deeper into your holdings can help you quantify which type of investments you need and want to have in your portfolio, based on your preferred investing strategy. If you set your asset allocation by age, for example, then your ideal allocation should reflect the level of risk that a person in your age range would typically be comfortable with.
Once you know what you own and what your ideal asset allocation should be, you can rebalance by buying or selling securities as needed. You may also want to consider asset location along with allocation. Asset location means where you keep your investments.
So you might have money invested in a taxable brokerage account, a 401(k) plan at work and an individual retirement account (IRA). All three have different tax profiles and all three may offer a different range of investments or charge different fees. When rebalancing, it’s important to consider the entirety of your portfolio across all investment accounts to decide where to keep which assets.
For example, your 401(k) may include target-date funds. These funds base their asset allocation on your target retirement date, then rebalance themselves automatically as you get nearer to that date. If the majority of your 401(k) is invested in a target-date fund then you may not need to do much to rebalance. But you’d still want to look at the fund’s underlying holdings and compare them to the funds you hold in your IRA or brokerage account. This way, you can avoid becoming accidentally overweighted.
Also, consider whether it makes sense to let an algorithm rebalance for you if you’re investing with a robo-advisor. Some, though not all, robo-advisory platforms include automatic rebalancing as an account feature. The pro is that you don’t have to do any heavy lifting to rebalance. The con, of course, is that rebalancing decisions are guided by an algorithm rather than a human perspective. So that’s one reason you may still want to talk to a financial advisor about the right way to rebalance.
The Bottom Line
There’s no single answer for how often to rebalance a portfolio. At a minimum, it can be helpful to review your portfolio and rebalance as needed at least once a year. The important thing when deciding how often to rebalance is to choose a frequency that fits your overall investing style.
Tips for Investing
If you’re considering a robo-advisor for automatic rebalancing, remember to weigh the costs as well as the other features that may be included. Robo-advisors typically charge an annual management fee which may or may not be tiered based on your account balance. So you might pay a management fee of 0.25% or 0.30%, which is lower than the 1% typically charged by human advisors. But think about what you’re getting in return, aside from automatic rebalancing. Is tax-loss harvesting included? Do you have the opportunity to speak to a human advisor if needed? Asking those kinds of questions can help you decide if a robo-advisor is right for you.
Consider talking to a financial advisor about the ins and outs of portfolio rebalancing and why it’s important. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Rebecca Lake, CEPF®
Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.