Over the past couple of weeks, more than a few GRS readers have complained about the site’s tone. These folks are afraid that Get Rich Slowly is turning into a column that’s only about frugality and self-denial, one that is neglecting the “rich” part of the blog’s title. These concerns came to the fore in last week’s article about remembering to appreciate what I already have.
In that discussion, ObjectiveGeek wrote:
I want the best possible life for myself and my family. Maybe that means a dream house, or maybe that means the freedom to travel any and everywhere, but maybe that means both. I’d be proud of my dream home if I had earned the means to own it. I don’t think contentment is much of a virtue — it’s more of a guise for mediocrity.
Alex offered a similar sentiment:
I sometimes cringe when I see these kinds of articles. What is so wrong with wanting 5 bedrooms you may never use? What is sooooo bad about wanting a bigger house? If you have diligently saved, and planned, and you can truly afford those nice-ities in life, why not reach for them? Why not buy them?
Here’s the thing: I agree with both ObjectiveGeek and Alex. If Get Rich Slowly has been frugality-minded lately, that’s simply an accident of scheduling. While I believe that frugality is an important part of personal finance, GRS remains dedicated to the Big Picture, to all aspects of getting rich slowly.
There’s nothing wrong with wanting more, and there’s nothing wrong with reaching for nicer things in life if you’ve diligently planned and saved. I certainly don’t mean to imply that it’s bad to choose to buy things that will make you happier. But it’s important to find the proper balance between what you want and what you can afford.
How I Spent My Money in the Past
It used to be that I bought a lot of little Stuff:
I spent hundreds of dollars a month on books and magazines.
I had a lot of recurring expenses, such as my monthly cable bill and magazine subscriptions.
I bought a lot of limited-use tech gadgets, like voice recorders and expensive digital cameras.
I bought too many clothes. When Kris and I went through my closet recently, I was saddened to see so many items still with their tags on!
There was plenty more, of course. Basically, I bought what I wanted without thinking. If a friend had a new gazingus pin or thneed, I’d be inclined to buy a new gazingus pin or thneed, too. And when my income went up, my spending always went up. This is how I succumbed to the tyranny of Stuff.
It’s this kind of spending that I encourage you to question. I’m not saying, “Stop! Don’t spend on the things that make you happy.” I’m saying, “Hold on a second. Take some time to think about the money you’re spending — make sure it aligns with your priorities and goals. Don’t just buy a bunch of Stuff.” Buy based on your goals and values, not out of habit.
How I Spend My Money Today
What do I mean by this? Let’s take a look at how I’ve spent my money over the past couple of years. Each of the things I list below were purchased consciously, with money I already had, because I knew they’d make me happy.
Here’s a gallery of my recent major purchases:
My Mini Cooper, which I coveted for years before I was able to save enough to buy it with cash. I bought a five-year-old used car, and have been very happy with it. Meanwhile, I’m slowly saving for an eventual replacement Mini.
My nice furniture, for which Kris and I saved until we could combine a coupon (yes, really) with a colossal sale. We got this stuff at 50% off regular pricing. That has to be the best coupon I’ve ever used.
My comic books. I have a monthly budget for purchasing comic books (and comic strips) in collected editions. Before I dug out of debt, my comic spending was part of the problem; now, it’s part of the solution — it’s part of what makes all these smart choices seem worth it.
My bicycle. It was a tough decision whether I could afford (and justify) $900 on a new bike last summer, but I’m glad I did. I’ve been riding this thing constantly since I returned from Alaska, and it’s helping me drop the weight. Also helping me drop weight is…
My gym. I spend a lot of money to be a part of the local Crossfit gym. But I also derive a lot of value. Since joining in April, I’ve lost fifteen pounds. By the end of the summer, I’ll be fitter (and stronger!) than I’ve been in my adult life. To me, that’s money well spent.
My travel. Most of all, I’ve been spending on travel. Kris and I hope to be able to make one big trip every two years. (Maybe every year, if we’re diligent.) This year is an exception. I used part of my book advance to go to Belize in February, and later in 2010 we’ll travel to France and Italy.
Make no mistake: I live a rich life, for which I am tremendously grateful. But this rich life is largely a result of the choices I’ve made. I worked hard to dig out of debt and get where I am today. I’m fortunate to have found work that I love and am good at, and I’m lucky to be a winner in the “lottery of birth” — and I make sacrifices on the things that don’t matter to me so that I can indulge in the things that do.
I write about thrift and frugality a lot, but it’s only because I recognize their value in helping me obtain my goals.
Important: I make certain to have a full emergency fund, and to set aside my target amounts for retirement and taxes before I spend on the fun stuff. Again, it’s about managing priorities.
Conscious Spending
“I should write a post for Get Rich Slowly,” my wife told me the other day. “I could tell your readers all about how you’re not frugal.” She meant that unlike what some of you think, I’m not into self-denial. I do buy nice things for myself.
But here’s the difference between my current spending and my former profligate ways: I can afford everything I’m buying, and when I do buy, it’s a conscious decision. I’m not financing my lifestyle on debt, and I’m not buying things just to “keep up with the Joneses” or out of habit. My spending now reflects my priorities, my goals, my values.
Because I’m spending consciously and living within my means, I’m much happier than I was before. I can’t have everything I want — no $2.3 million home for me, for example — but I can have a few of the things that seem most important.
In a follow-up comment to my post last week, objectiveGeek wrote:
Of course having money for money’s sake is nearly pointless, but having money for what it represents (value, effort, innovation, hard work, success) and for what it provides (freedom, time, safety, opportunity — essentially life!) is the noblest of goals.
I think that’s correct. We’re all striving to get rich — quickly or slowly — because of what we believe money can bring to our lives. I just think it’s important to maintain balance, to remember that money and happiness aren’t always connected, and to acknowledge that the best way to achieve your financial goals is to make active, conscious choices about where and when you spend your money.
Maybe it’s time to officially add a fifteenth tenet to the Get Rich Slowly philosophy. Namely, you can have anything you want, but you can’t have everything you want.
If you feel like you’re caught up in the hustle and bustle of everyday life, it’s natural to crave a quick escape to recharge your batteries. Whether you’re looking for a luxurious getaway or an adventurous retreat, the Middle East offers some of the world’s most captivating and awe-inspiring resorts. Here are ten of the best resorts that will make you feel like you’ve stepped into paradise.
1. Emirates Palace, Abu Dhabi
Emirates Palace is a magnificent resort in Abu Dhabi that is perfect for both business and leisure. The resort has hosted numerous international events, conferences, and exhibitions, attracting the world’s most influential figures. With its opulent decor, lavish suites, and world-class spas, Emirates Palace offers a luxurious and indulgent experience.
A Spa Getaway
If you’re looking for a getaway that combines luxury, comfort, and relaxation, this spectacular resort is the perfect destination to unwind, recharge and indulge in sheer indulgence.
2. Burj Al Arab, Dubai
Experience the awe-inspiring Burj Al Arab, a symbol of power, modernity, and beauty. Voted as one of the world’s most luxurious hotels, this palatial resort offers an opulent design and impeccable service that exudes extravagance and grandeur.
Relax Like Royalty
Indulge in the extraordinary and book your stay at the Burj Al Arab for the ultimate resort experience in the Middle East. Don’t settle for the ordinary when you can bask in the lap of luxury like never before!
3. Qasr Al Sharq Waldorf Astoria, Jeddah
Indulge in a luxurious destination in Jeddah that promises nothing but the best. Relax and rejuvenate at the stunning ladies-only spa by Clarins, and savor every bite of the exquisite menus at Aromi and Mataam Al Sharq.
Stay with Sophistication
Retreat into your own private bliss at the opulent Qasr Al Sharq, designed to create an ambiance of luxury and sophistication. Whether you’re a traveler seeking a lavish getaway or a local looking for a decadent escape, this destination in Jeddah is the perfect place to indulge in a world of luxury and extravagance.
4. Shangri-la Barr Al Jissah Resort & Spa, Muscat
Escape to a resort just 15 minutes away from Oman’s capital, Muscat, and prepare to be captivated by the beautiful Sea of Oman. With three hotels to choose from, each offering exceptional services, you can relax and unwind while taking in the marvelous view.
Vacation With a View
Whether you’re seeking a luxurious escape or a romantic getaway, this resort offers a serene ambiance, breathtaking views, and exceptional services that guarantee an unforgettable experience. Pack your bags and indulge in a world of luxury and relaxation like never before!
5. Al Areen Palace and Spa, Bahrain
Experience a luxurious getaway at Al Areen Palace and Spa, the only all-villa private pool resort in the Arabian Gulf. Just 35 minutes from Bahrain International Airport and five minutes from the world-famous Bahrain International Circuit, this resort offers unparalleled service, exceptional amenities, and a prime location.
Bask in the Romance
Whether you’re looking for a romantic escape or a family vacation, you can lounge by your private pool or indulge in a rejuvenating spa treatment. With opulent details and exquisite attention to every aspect of your stay, it’s no surprise that Al Areen Palace and Spa is considered one of the best resorts in the Middle East. Book your stay now and treat yourself to a world of luxury and relaxation!
6. Bab Al Shams Resort and Spa, Dubai
Nestled in the heart of the Arabian Desert, Bab Al Shams Desert Resort & Spa in Dubai is a luxurious retreat that offers a blend of traditional Arabic architecture and modern amenities. With a range of accommodations to choose from, including private villas and suites, guests can indulge in their own private pool or relax in the spacious spa.
Dine Under the Stars
The resort also offers a variety of dining options, from casual poolside meals to romantic rooftop dinners under the stars. For those seeking adventure, Bab Al Shams Desert Resort & Spa offers exciting activities such as dune bashing, camel riding, and falconry displays. Whether you’re seeking relaxation or adventure, this luxurious desert resort is the perfect destination for an unforgettable vacation.
7. The Chedi Muscat, Oman
The Chedi is a 5-star resort in Oman that offers an unforgettable experience. Guests can immerse themselves in the local culture and explore the souqs, forts, and desert dunes. The resort is also located near the newly opened Royal Opera House in Muscat, adding a touch of sophistication to your trip.
Be a Guest on the Gulf
With 158 elegant rooms and suites, each with private balconies or terraces overlooking the gardens or Gulf of Oman, you can indulge in luxury and relaxation. The resort’s restaurants offer a range of culinary delights and the spa is the perfect place to unwind. Come and experience the unique beauty of Oman at The Chedi—a destination that truly stands out as one of the best resorts in the Middle East.
8. Six Senses Zighy Bay, Oman
Six Senses Zighy Bay is an award-winning luxury resort nestled in the secluded Zighy Bay in Oman, surrounded by majestic mountains and a pristine beach. This stunning destination offers a range of activities, from adventure sports to relaxation on the beach. With 82 villas, each with its own private pool and modern amenities, you can enjoy the ultimate luxury experience.
Enjoy a Sensual Stay
The resort also offers a variety of dining options, including international and local cuisine, and a spa that offers treatments to rejuvenate your mind, body, and soul. Whether you’re seeking a romantic getaway or a family vacation, Six Senses Zighy Bay is the perfect destination for a serene and unforgettable experience.
9. Kempinksi Hotel Ishtar Dead Sea, Jordan
This hotel is an ideal destination for those who seek adventure and wish to explore the rich history of Jordan. Located less than three hours away from Petra, one of Jordan’s most prized possessions and top tourist attractions, this hotel is perfectly situated to give visitors a chance to discover the country’s treasures.
Explore with Opulence
Other must-see attractions within close proximity include the Ancient City of Jerash, Wadi Mujib Gorge, Mount Nebo, and Wadi Rum. With so much history and knowledge waiting to be uncovered, this hotel is the perfect starting point for a journey through Jordan’s fascinating past.
10. Movenpick Hotel and Resort Al Bida’a, Kuwait
Nestled near Kuwait Airport and the largest shopping malls in the city, Movenpick Resort offers a prime location for both business and leisure travelers. The resort boasts a stunning 200-meter white sandy beachfront and a plethora of activities to make your stay unforgettable.
Unwind in Unforgettable Ways
From exploring the exciting Aqua Park to immersing yourself in Kuwait’s rich culture at the National Museum, Museum of Islamic Art, and Scientific Centre, there’s something for everyone. For the adventurous, the Liberation Tower offers breathtaking views of the city skyline. With so much to explore and experience, it’s no wonder that Movenpick Resort is considered one of the best resorts in the Middle East.
Whether you’re seeking relaxation, adventure, or both, the Middle East has something for everyone. From the opulent Emirates Palace in Abu Dhabi to the secluded Six Senses Zighy Bay in Oman, these resorts offer a perfect blend of luxury, comfort, and unparalleled service. Pack your bags, get ready to indulge in sheer luxury, and start exploring the magnificent beauty of the Middle East!
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10 Actors and Actresses People Refuse to Watch Ever Again
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10 Terrible Fads People Are Glad Died Out
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According to the FTC, Americans have lost $610 million to “income illusions” since 2016 – and $150 million of that was in the first nine months of 2020 alone.
Predatory get-rich-quick schemes have become so audacious, so prevalent that the federal government has launched a full-scale operation targeting them: Operation Income Illusion.
So what are all the modern scams and schemes that young people should look out for? How can you spot the especially sneaky ones? What are the early warning signs of a bad online business course or a phony job listing?
And how can you convince that one relative of yours that they’re in an MLM?
Let’s cover this and more as we explore modern get-rich-quick schemes (and how to spot them).
What’s Ahead:
Common signs of a get-rich-quick scheme
Before we get into specifics, it’s worth pointing out some of the most common signs of any get-rich-quick scheme:
A promise or guarantee of income.
Payment requested upfront to cover supplies/training/application fees.
Sketchy websites or email addresses.
Zero online reviews or ratings.
Hyperbolic marketing language (achieve your dreams, become your own boss, etc.).
The perfect opportunity somehow found you (instead of the other way around).
A request for sensitive info: credit card info, SSN, or a photo of your passport/ID.
They give you a bad gut feeling. When you have a bad gut feeling about a person in real life, you walk away. Do the same online.
1. Cryptocurrency
Ah, crypto.
Perhaps no other investment in history has produced as much FOMO as Bitcoin. After all, everybody knows of somebody who got rich off of it, or alternatively, some rare altcoin (read: any crypto that isn’t Bitcoin) that exploded overnight.
It would be an overreach to call cryptocurrency a scam, but it’s certainly not the investor gravy train it’s made out to be.
Read more: The Top 10 Things You Need To Know About Bitcoin
What they promise
A $10,000 investment in Bitcoin in 2017 became $640,000 just four years later. Invest your money and buckle up, because you’re about to get rich.
Or, alternatively, keep your eyes on the crypto forums. If you get in on the ground floor of a new crypto before it explodes, that’s another easy way to 100x your investment overnight.
What really happens
A $10,000 investment in Bitcoin in November, 2021 would be worth $6,175.36 in February 2022.
Cryptocurrency values are 100% speculation, upheld by investor demand alone. There’s simply no guarantee (or even near-guarantee) that your investment will grow in value in the short- or long-term.
That’s especially true of new or obscure “altcoins” that trade for pennies a pop. Sure, a small percentage of them may blow up – but many more are simply scams or pump-and-dump schemes – and it’s extremely difficult to detect which is which.
Read more: From High Risk To High Cost: Why You Shouldn’t Buy Bitcoin
How to spot a crypto scam
Any crypto that promises to multiply in value is a scam. Again, the only thing propping up crypto values is investor interest, which is fickle, fleeting, and unpredictable.
Bitcoin, Ethereum, and other bonafide cryptos aren’t scams, but they’re ultra-risky investments nonetheless. For more on why, check out Crypto Crash Course – Everything You Need To Know About Bitcoin, Blockchain, And More.
2. Multi-level marketing schemes
MLMs are notorious for using psychology and manipulation to lure unsuspecting income-seekers into their midst. Then, they squeeze capital out of them on the dangling promise of eventually multiplying their returns.
Now that John Oliver and others have shone a light on the industry, the MLMs have had to get even sneakier.
What they promise
Join [Herbalife, Amway, Infinitus] and you’ll become your own boss, get free training, and earn six figures in your first year!
Who doesn’t want to become their own CEO for a small initial investment of just $150, especially when you can make 1000x within 10 months!
What really happens
99% of MLM participants lose money, according to the Consumer Awareness Institute. Anyone appearing like they’re making money from an MLM on social media is simply trying to dupe others into distributing for them.
How to spot an MLM scheme
If you’re wondering whether the sales opportunity you’re considering is part of an MLM, or you’re trying to convince someone that they’re in an MLM, here are a few steps that you can take:
See if it’s already a known MLM. TitleMax (of all places) published a helpful list of the top 25 MLMs by revenue. If your future “employer” is on the list, take a hard pass.
Search for complaints about the company. Reddit, The Better Business Bureau, and your state Attorney General’s office website are all helpful places to find consumer ratings, reviews, and official complaints.
Vet the products. MLMs tend to sell sketchy products with dubious or unsubstantiated research proving their efficacy. If you wouldn’t buy the product, you definitely shouldn’t sell it.
ID the “startup fee”. If a company has a flat fee for upfront training or especially your first round of inventory, it’s most likely an MLM.
Get a second opinion. Ask the company to provide all of its contracts and legal documents, and have a friend, mentor, or your attorney look over everything with a skeptical eye. Don’t try to convince them it’s legit; ask them to convince you that it’s an MLM.
3. The lottery
There’s no more open and honest get-rich-quick scheme than the lottery!
Playing the lotto in tiny doses can be fun when you expect to lose. My better half and I buy a ticket or two per year and fantasize about how we’ll fill our 20-car garage.
Then we lose and laugh.
But playing the lottery with even the faintest expectation that your investment will eventually pay off is a slippery slope – both financially and psychologically.
Read more: Why You Should Never Play The Lottery – And How To Better Spend Your Money
What they promise
Whether it’s $10,000 or $10,000,000, you’re just a scratch away from winning life-changing money.
What really happens
It’s better to gamble your money in Vegas than to play the lottery.
I say that because generally speaking, you have a 5% to 30% chance of beating the house in a Vegas casino (WSJ). Your chances of winning the lottery are 1 in 300 million (CNBC).
But what about a non-jackpot? Can you profit from buying scratch-offs?
“Scratchies” typically list their odds of winning on the back of a card, usually between 5% and 20%. Your chances of winning something are better – but your chances of profiting are still extremely low.
Lotteries are also inherently problematic and controversial. Supporters say they benefit society by generating tax revenue – but it’s worth considering where that revenue is originating.
A mass study on the lottery’s net impact on society found that “the percentage of income spent on the lottery is significantly higher for players with low family incomes and low education,” hence the lottery’s ignominious nickname: “a tax on the poor.”
While it may be more transparent, make no mistake – the lottery is just as bad of a get-rich-quick scheme as an MLM (just with much worse odds).
4. Phony job listings
This one’s more of a straight-up scam than a scheme – and even as far as scams go, it’s pretty nefarious. FBI Special Agent, Jeanette Harper writes:
“Fake Job Scams have existed for a long time but technology has made this scam easier and more lucrative.”
What they promise
A supposed rep from a legit-looking company – or even one pretending to be from a company you’ve heard of – will reach out and say they’re hiring for a high-salary role.
They either say “no experience necessary” or that you’d be perfect for it, and since they want to fill the role right away, they’ll just do the interview via a chat window.
Before your start date for your high-salary role, they’ll need to add you to payroll and benefits – so you’ll need to pass along your W-9, 1099, and/or a scan of your ID.
What really happens
The scammer uses this sensitive information to steal your money and/or identity.
How to spot a phony job listing
Fake job opportunities are pretty insidious, but at least they’re pretty easy to spot. Here are some of the telltale signs:
The job listing appeared on social media (nearly all legit companies recruit via job boards, LinkedIn, or by referral only).
The rep’s email address doesn’t match the company name.
The company has no website/social media/LinkedIn presence (or a sketchy one).
The rep won’t reveal themselves – they won’t share their own personal data nor will they get on a video call with you – they insist on communicating via chat.
Everything they’re telling you seems oddly vague.
The interview process is moving oddly quickly – you’re accepted in minutes or hours, when the real-world process takes days or weeks.
The rep wants money – such as a $25 fee to submit your application.
5. COVID-era robocall scams
At the risk of sounding indelicate, the COVID-19 pandemic has created a target-rich environment for robocallers who peddle MLMs, phony jobs, or shady website building services.
To give an example, the FTC is going after scam company National Web Design for sending out millions of illegal robocalls specifically targeting people who’d just lost their jobs, guaranteeing them passive income if they just paid a little upfront.
I try not to use the term evil lightly…
What they promise
Here’s what National Web Design told its victims: you could earn up to $400 a day as an Amazon affiliate. Just let us build your site for $2,000 and your passive income awaits.
What really happens
The scammers may actually deliver a product, but it never works as advertised. You’re out $2,000 and they never pick up the phone.
How to spot a robocall scam
If someone calls you offering a job or passive income opportunity, it’s a scam. But don’t just hang up – report their call as spam on your phone and report the company to the FTC using this form.
BONUS: how to prevent robocalls in the first place
You can help stem the flow of robocalls to your own phone by adding your number to the official Do Not Call Registry. Don’t worry, it’s free and 100% legit.
The second thing you can do is to never, ever, ever give your phone to a business unless it’s essential to your wellbeing. Even companies that claim to “protect your privacy” will still sell your data to their partners (since it’s not a violation of their own privacy policy).
6. Bad online business courses
Here’s one that I fell for.
To my credit, it wasn’t named so blatantly – and I can tell that the instructor was being sincere in his advice – but it was still bad advice that I paid an embarrassing amount of money for.
Bad online courses always seem like good investments upfront. They’re taught by people who’ve “made it” in the industry and who promise to tell you all of their “best money-making secrets.”
They’re also sold to you at a weirdly high discount (e.g. 97% off) and sometimes, you even have to apply to be in the course.
But crappy online courses aren’t just dangerous due to high cost and missed expectations – they can teach you the wrong things that actually hinder your progress and take months to unlearn.
What they promise
Sellers of “How To Get Rich In XYZ Industry” courses promise exactly that – that you can make millions in a certain industry by simply following in the instructor’s footsteps.
What really happens
The advice you learn in an unaccredited online course can range from good to bad to downright toxic. And if you’re new to an industry, it can be hard to distinguish which is which.
You could be paying for advice that could win new clients – or immediately turn them off.
That’s why you’ll want to be extremely careful who you learn from. Some instructors truly are at the top of their industry and their tips are worth their weight in gold.
But others are on their way out – their way of doing things in their industry no longer works, so they’re packaging and selling bad and outdated advice to make up for lost income.
How to spot a bad online course
Part of the challenge to spotting bad online business courses is that they’re often marketed exceedingly well – so well, in fact, that if it’s a course in How To Make Millions Selling Bad Online Courses, maybe it’s worth it!
Facetiousness aside, here are some of the signs that the course you’re considering isn’t worth it:
The instructor has limited, outdated, or vague experience – e.g. they’ve “worked with dozens of Fortune 500 companies” but won’t say who, in what capacity, or how much they actually earned.
The course promises or downright guarantees income. No course can guarantee income, so that’s a huge red flag.
High-pressure sales tactics. If the vendor of an online business course gives you a short time window to decide, or says the price will increase in 13 hours, just shrug and hang up the phone.
No reviews or ratings. If the instructor can’t point to a single successful past student, that’s probably a sign that one doesn’t exist – and you won’t be the first.
A high price tag. Finally, if a 3-day “Mastermind” costs thousands of dollars, that could be a sign that the instructor values his or her advice. It could also mean that they need the money because their clients dried up.
7. Mystery shopper scams
Mystery shopping is when a restaurant, retailer, or third-party data company will hire you to go into a store or restaurant and report back on your experience. Mystery shoppers are often paid a flat fee per assignment, and sometimes even get the product/meal reimbursed, too.
From what I’ve heard, it’s a fun gig if you can get it. But since lots of folks are interested, the scammers are taking advantage.
What they promise
Mystery shopping scams often start with a text stating that you can earn $200 to $500 per assignment by becoming a secret/mystery shopper or “filling out a survey.”
All you have to do is visit a retail store, purchase a product or a gift card, send it to a specific address, and report on your experience. You’ll be compensated upon completion. Easy $500.
This may sound like an obvious scam, but in the victims’ defense, this isn’t too far removed from how legit mystery shopping works.
What really happens
In the case of the scam, you send the product or gift card and are never compensated. To rub salt on the wound, the scammer may sell or abuse the personal data you gave them.
How to spot a mystery shopping scam
Luckily, the Mystery Shopping Professional Association (MSPA) publishes a running list of all the mystery shopping scams they’ve seen.
If you don’t see the potential scam listed there, cross-reference it with their free online directory of legitimate mystery shopping companies.
Summary
To a pandemic-stricken society, get-rich-quick schemes are becoming harder to spot and more seductive all at once.
But by helping yourself and your loved ones avoid them, you can protect your money and ride out the storm.
My wife and I have been homeowners for nearly twenty years. In that time, we’ve done a lot of home improvement ourselves. But we’ve also learned when it’s best to hand projects to the pros. (To be honest, this is most of the time.) It’s great to be able to do small jobs yourself, but it’s also important to recognize when something’s beyond your ability.
During the past 18+ years, we’ve learned that working with contractors always seems to follow a similar pattern. I’m not sure it has to be like this, but it generally seems to be so. To illustrate our typical experience, I took notes on our most recent repair job. Today I’ll share our tale.
Note: At the recent Financial Blogger Conference, a lot of folks expressed fondness for the Personal Finance Hour, the podcast that I used to do with Jim from Bargaineering. I’ll admit I’d forgotten about it. That was a fun gig. Here’s an episode we did about home improvement.
A Leak in the Roof
In 2004, we bought a hundred-year-old farmhouse on more than half an acre. It’s a lovely place in a park-like setting, but it’s also a bit of a money pit. There’s often something going wrong.
We’ve had trouble with the roof, for instance, since the first summer we moved in. Initially, we blamed the insulation contractors, who had cut holes in the roof for added ventilation but then failed to adequately seal around their work. As a result, the vents eventually developed large leaks.
It turns out, however, that the shoddy vents were only part of the problem. One section of the roof is essentially flat, which means it needs a different kind of roofing material than most of us are used to. When the previous owner last installed a new roof, he cut corners. (He was always cutting corners. Many of our woes are because the previous owner did his own work and cut corners.)
As a result, the flat section of the roof developed a leak. Or several. While I was traveling in July, Kris called me in a panic to tell me that Portland was having a severe rainstorm and that water was pouring into an upstairs bedroom — right next to my precious comic books. My comics were safe, thank goodness, but this certainly spurred me to action.
The roofing problem was one reason I canceled my planned trip to England. I stayed home, called contractors, and shepherded the project toward its slow completion.
Choosing a Contractor
Whenever we’re faced with hiring a contractor, we get multiple bids for the job. This time was no different. We like to take recommendations from friends, though this doesn’t work in every instance. This time, for instance, nobody we knew had worked with a roofer recently. Instead, I contacted five or six local roofers via the web. On August 2nd, three of them came out to look at the roof.
The first guy had been with his company for 37 of its 42 years. I liked him. He pulled up a section of the roofing to reveal that “the guy who did this didn’t know what the hell he was doing”. It was just one layer (instead of three) over some felt paper. “No wonder it’s leaking,” he said. “It doesn’t surprise me at all.” There were already soft spots in the plywood too that need to be dealt with. He said the job would be expensive, but the work would be designed to last a lifetime. The job would take him two or three days, and he was two or three weeks out. (I can’t find his bid or I’d share it here; it was highest of the three.)
The next guy was young, but I thought he was sharp and observant. He noted that the leak wasn’t under the actual roof we were standing on, and tried to figure out where it might be coming from. He tracked the crease between the flat roof and the angled roof, and he found a soft spot with an “eyehole”. “That’s the leak,” he said. He tracked down other spots where water might got in, and also a spot where the water was likely flowing out. He downplayed the expense, saying it was no more expensive than any other roofing material. The job would take about a day, and he was about one week out. He gave us a bid of $2800.
Like the first two contractors, the final fellow didn’t think much of our roof. But he didn’t really get down and look at it. When I told him our previous leak had been through a vent, he yanked on the current vent and said, “I think it’s here again.” He too thought our current roofing was a poor option for Oregon. He recommended tearing it off (and tearing off the shingles on the ridges around the flat roof), laying down a three-ply roofing system, and then installing new shingles back over the top. He said the job would take two days, but they were at least a month out, and probably more. He quoted $3500.
After meeting with all three men and getting their bids, we decided to go with the second company. They seemed to have the clearest idea of what needed to be done, they had the lowest price, and they could start almost immediately. It almost seemed too good to be true.
It was.
Repairs
The first sign of trouble was the constant delay. We’re used to contractors putting us off, but this company did it again. And again. And again. When I met with the representative on August 2nd, he told me they could start within a week. HA! They didn’t actually begin work until September 8th. Fortunately — or perhaps not — the job only took a day.
Mid-way through the repair, the company called me with bad news. “A lot of the plywood is rotten,” they told me. “That’s why it was so soft. It’ll take an extra four or five hours. And we’ll have to charge your for material.” So, as usual, the cost on our planned repair ballooned. I should have been wary when the crew was still able to finish the job in a day despite the “extra four or five hours” replacing the plywood was going to take.
As I’ve mentioned before, we’ve been paying our neighbor Chris to do some handyman stuff around the place. He’s been under-employed for a while, and I have more writing work than I do time, so this seems like a good exchange. (It’s one way in which I value my time.) So, we paid Chris to climb up and paint the patches that had been uncovered by the roofing project. When he did, he found problems.
A gallery of photos of the botched roof repair. Click on an image to see a larger version.
Chris actually has experience with construction management, and is well-versed in the ways of roofing. He was flabbergasted at the quality of workmanship (or the lack thereof). “This looks like it was just rushed through,” he said. He borrowed a digital camera to take photos of all the things that were wrong with the repair. “If I were you,” he said, “I’d get them back out here to fix this. Otherwise you’re still going to have leaks.”
I called the roofing company and asked them to send somebody out. To their credit, they were very contrite. They responded quickly and efficiently. They took copies of our digital photos back to the office, promising to send a crew out by the end of the week to make things right. And they did. They installed new flashing and caulked the spots where they’d nailed through the shingles. They spent several hours fixing their foul-up — at no additional charge to us, of course.
When they were through, Chris and I climbed back up on the roof. “Well, it’s not perfect,” he told me. “But I’ll admit that any further complaints would probably just be seen as nit-picking. They could have done better work, but this should be fine. Just keep an eye on things.”
So, we think things are fine, but I still a harbor a few worries. Every time it rains, I go upstairs and check to make sure there’s no leak over my comic books. I don’t do this just once, either. I’m sort of compulsive about it. Meanwhile, I dream of the day when we hire a contractor who is punctual, thorough, and reasonably priced. There are times I think this will never happen.
From NAR Research: In April, the median existing-home price for all housing types was $391,200, up 14.8% from April 2021 ($340,700), as prices increased in each region. This marks 122 consecutive months of year-over-year increases, the longest-running streak.
Wait, what? How are home prices up 14.8% year over year? We were told that population growth is slowing, we were told that Americans would panic sell and that massive inventory would hit the marketplace once rates got to 4%. Spoiler: If you haven’t realized that the housing market since 2012 has been trolled out by professional grifters who don’t ever forecast sales, that is on you. Economics done right should be boring, and you always want to be the detective, not the troll. It’s May 19, mortgage rates are over 5.5%, and the mass exodus of 7-8 million Americans selling their homes to cash out at any price has never happened.
Inventory is always seasonal. It rises in the spring and summer and fades in the fall and winter. My rule to get the housing market out of the unhealthy stage is that we need total inventory back between 1.52 million and 1.93 million. Today inventory levels are at 1.03 million.
I use the 1.52-1.93 million range because it brings us back to 2018-2019 levels, the last time we had a balanced housing market. The last time we had total inventory growth was back in 2014 when we tried to get back to 2.5 million units and six months of supply; we couldn’t do that then, even though purchase application data was down on trend 20% year over year.
Because we had a housing credit bubble from 2002 to 2005, the credit demand push on exotic loan debt structures was a setup for future forced credit selling. What I mean by forced credit selling is that the homeowner’s credit financials didn’t allow them to have the capacity to own the home any longer, so they were forced to sell their home. This created an abnormal amount of foreclosures and short sales, which exploded the supply levels for the existing home sales market. As we can see below clearly, the market worsened before the job-loss recession happened.
This was a big reason why we saw the monthly supply data pick up in 2006, 2007 and 2008 — all before the job-loss recession happened late in 2008. The job-loss recession added more forced credit selling into the mix.
We have been through a lot of drama since 2012, especially the drama in 2020, 2021 and 2022. We are sitting with just 2.2 months of supply. Now supply should pick up with higher rates — we had our first weekly positive print. We are not taking the unhealthy housing market theme off this marketplace.
NAR Research: At the end of April, the total housing inventory amounted to 1,030,000 units, up 10.8% from March and 10.4% from one year ago (1.15 million). Unsold inventory sits at a 2.2-month supply at the current sales pace.
In February of 2021, when I was saying that we need higher rates to cool housing, my mindset was that there were two things higher rates could do: They could cool down price growth and create more days on the market. More days on the market is the number on the short-term data line that I want to rise to above 30 days. Currently, it’s at 17 days; anything that is a teenager with this data line is exceptionally unhealthy.
NAR Research: First-time buyers were responsible for 28% of sales in April; Individual investors purchased 17% of homes; All-cash sales accounted for 26% of transactions; Distressed sales represented less than 1% of sales; Properties typically remained on the market for 17 days.
Currently, the housing market is reacting just like you would expect when we have higher rates. When have seen higher rates cool down sales before, and right now, it seems the same to me. I kept that target level of 1.94% going on during 2020-2022 as an inflection point for housing. This is sticking with my theme in the past that when rates rise, it cools down housing. Even though mortgage rates are historically low, they still always matter because mortgage buyers are the biggest homebuyers in America. We still have some legs to move lower in sales. Hopefully, this chart gives you some context to previous times when rates have risen post-2010.
The one aspect of higher rates that I have gotten wrong so far is that I was anticipating a bigger hit to mortgage demand by now. Because the home-price growth level broke my model, higher rates at this stage mean a bit more to me than most. So, I was anticipating purchase application data to be down 18%-22% year over year by now. That level would be a traditional decline with a noticeable hit from demand working from a higher base than in the previous expansion. I like to use a four-week moving average on this data line on a year-over-year basis only, and as of today, this hasn’t happened. By October of this year, we will have more challenging comps to with worth, and that might be when the four-week moving average gets to 18%-22% declines year over year.
The purchase application data is down 12% week to week, ending the two-week positive streak, and it’s down 15% year over year. The four-week moving average is negative at 12.75% year over year, which is about 5.25%-9.25% better than I thought with rates this high.
Obviously, from my housing work, you can tell I haven’t been a fan of this housing market once it became apparent the housing shortage was getting worse in 2021. I talked about needing higher rates to cool things down and the cool-down is happening, but not fast enough. I am more concerned that the economic data, which is getting softer, will send bond yields lower and take rates down with it before we have a real shot to get real inventory growth.
Again, I know this is a first-world problem to have. However, I am just staying consistent with my economic work model for the years 2020-2024: the only thing that can make total home sales fall below 6.2 million is if home-price growth is over 23% and then rates rise. We have that happening currently, so the need to create more inventory and days on the market has to benefit here. A balanced market is the best housing market and we don’t have one today; it’s still a savagely unhealthy housing market.
Ah, relationships. Without other people, money management would be easy! Easy-er, anyhow. But love, family, and business relationships tend to make people do things they know they really oughtn’t.
Take Patrick, for example. He fell in love, and it led him to commit a financial faux pas. Here’s Patrick’s l-o-n-g story and his questions:
A couple years back, I met a girl, fell in love, and we moved in together. A few months into our cohabitation, her car died. Since we needed to separate cars for work, we went to a dealer to see what she could find in the way of a used vehicle.
After a long time sitting in an office, test driving a car, and running her credit (which was not very good), the dealer came back with an offer sheet for a high-interest, short-term loan with a payment of $750 a month, an impossible figure to work into her budget. She asked for a different deal, and they said, “This is the best we can do without a cosigner.” Hearing my cue to play the role of the “hero,” I stepped in, which cut the interest dramatically and the payment by half.
Now for the moment you’ve been waiting for: My girlfriend decided to move away, and she ended up in a different time zone. We stayed together for a bit, but realized it wasn’t going to work long distance and broke things off.
Following the break up, the situation with the car deteriorated. After never missing a payment before, she’s now only made one payment in full and on time — and she’s been gone over a year. Several times, she’s been over thirty days late on payments, and my credit has already taken a hit (though it’s still listed in the good/fair range).
But there have been other issues with the car. She lapsed on insurance once and neglected to tell them about a change in insurance another time. Both times, they took out insurance on the car at an astronomical rate for the times it looked like the car was uninsured and that money’s been added to the principle. She also neglected to register the car after she changed states and the registration on the car in my state expired more than ten months ago. For that time, she’s been driving around in an unregistered vehicle in both of our names.
I’ve contacted her to try and see when we’re going to get back to smooth financial sailing, but I get only false promises. She tells me she’ll make a payment on time, and then I’ll get a call ten days later from the bank saying it’s past due.
It does seem like she’s trying at least, and even though the payments come late, they do eventually come. I’ve suggested she sell the car, even if it is at a loss, but she’s not taken any action. The latest plan is to have another friend refinance it with her and get my name off the car, but that friend (who is financially solvent enough to pay off the whole car if necessary) has not yet stepped up to do so. Nothing I say to her has compelled her to do anything but give more promises.
So, fellow readers, what do I do? How do I untangle myself from this financial web to which I’m legally tied? Can I do anything at all? Or am I just a cautionary tale? Feel free to call me names. You can’t think me stupider than I’ve thought myself over the past year, so I am unafraid. The frustration and stress seems to be at a point where I need to find a solution, and not just label myself as “bad with money.”
Ah, Patrick. I feel for you. I really do. While I’ve never been in this situation, I know people who have. (One member of my family loaned another $20,000 and has never been repaid.) Plus, I’ve done some stupid things myself. I once shared an apartment with my cousin for a few months, and I’m fairly certain I never paid my share of the rent for part of that time. (It was almost 20 years ago, so I’ve forgotten the details.)
It’s important to note that not every financial transaction between family and friends ends in disaster. In fact, although there aren’t any stats on the subject, it’s likely that most transactions go smoothly. But the potential for trouble is so great that you should think twice — or thrice — before lending (or borrowing) money. Or co-signing on a loan. Ask yourself what would happen if the borrower never repaid. Or, as in Patrick’s case, the co-signer left town. How would it affect your finances — and your relationship?
You’re usually better off saying “no” rather than putting yourself in a position where you have to hound a friend for money. Which would make you feel worse: the momentary pain of telling a friend “no”, or the ongoing anguish of having a languishing loan destroy a friendship?
Despite these warnings, there are times we’re tempted to lend money to people we know. When this happens, be smart about it.
First, discuss other options. Is there some other way you can help other than giving money or co-signing on a loan?
This is important: Only lend money you can afford to lose! You may never see the money again, so don’t put your own financial well-being on the loan just because your girlfriend can’t afford a new car. (Sorry, Patrick.)
Be clear about expectations. Draw up a payment schedule and discuss what happens if something goes wrong.
Get it in writing. Don’t just hand over money without some sort of record. You can find all sorts of legal templates online. Use them.
Deal with problems immediately. You may feel like a nice guy by not reminding your borrower that they’re 30 days past due, but you’re just setting yourself up for trouble. Communicate.
Having said all that, these guidelines don’t help Patrick solve his problem. These are things he should have done to avoid trouble in the first place. To be honest, now that he’s in trouble, I don’t know what his options are. Do you?
Have you ever loaned money to a friend? Co-signed on a loan? How’d that work for you? What sorts of legal protections did you take? If you’ve ever been in a situation similar to Patrick’s, how did you resolve things? Does Patrick have any legal recourse to repossess and then sell the car? How can he go about getting his ex-girlfriend to prioritize this debt?
Mortgage Q&A: “How to pay the mortgage with a credit card.”
First things first; banks and mortgage lenders don’t accept credit cards as a form of payment when attempting to repay your home loan. Options for paying are typically limited to ACH or check.
However, back during the housing boom aka meltdown there were various third-party services that allowed homeowners to make their mortgage payments with a credit card.
Paying the mortgage with a credit card topics:
– Why pay the mortgage with a credit card? – Using Plastiq to pay the mortgage – Using Tio to pay the mortgage (no longer an option) – Using American Express Serve to pay the mortgage – Warnings and drawbacks to paying the mortgage with a credit card
These services charged fees for the convenience, and looking back, they were probably only offered because people couldn’t keep up with their mortgage payments, and eventually their credit card payments either.
Chances are these same people had to execute a balance transfer shortly after…
Unsurprisingly, these services seemed to disappear as quickly as they surfaced, but there are still options to pay the mortgage with a credit card each month free of charge, even if mortgage lenders won’t let you do it directly.
Reasons to Pay the Mortgage with a Credit Card
To meet a minimum spending requirement and earn bonus credit card points
To increase everyday spending and earn cash back, points, etc.
To defer payments for a period of time to give yourself some breathing room
This last one isn’t a good idea!
The difference today is that this method/idea is more about earning credit card points (or cash back) for paying your mortgage, and not so much about simply paying it.
Let me preface this by saying it makes no sense to pay your mortgage with a credit card if you can’t afford to pay it otherwise.
The only purpose of this method is to earn bonus points and/or cash back as you would on other purchases made with a rewards credit card.
Using Plastiq to Pay the Mortgage with a Credit Card
Plastiq allows mortgage payments via credit card
But only with a MasterCard or Discover card
They no longer accept Visa or American Express cards
You must also pay a transaction fee of 2.5% or less
There are some companies that allow you to pay rent or the mortgage with a credit card in exchange for a small transaction fee.
By small fee, I mean something in the range of 2-3%. Recently, a company called Plastiq had a special where they charged just 1.75% ($17.50 per $1,000 in payment). They normally charge 2.5%.
Unfortunately, most credit cards don’t earn cash back or points at levels this high unless it’s in a bonus category. And these companies often aren’t in any bonus category whatsoever.
The one exception is the old AT&T Access More credit card, which earns 3X per dollar on all online purchases. That seems to include services like Plastiq. This allows you to come out ahead.
Even if you can’t come out ahead dollar for dollar, it might be worth it for some people looking to meet a minimum spending requirement to earn an opening bonus, or just to buy some time on that monthly payment (not recommended).
For example, if you need to spend $5,000 in the first three months to earn a signup bonus, paying the mortgage can probably put a big dent in that requirement. And it’s only $125 in fees if you use Plastiq for the entire amount. If the reward points eclipse the cost, you win.
Some other cash back credit cards do earn 2%+ on all spending, either initially as a bonus or all the time, so it’s possible to come out slightly ahead or just slightly behind. Aside from making money doing this, some folks are happy just to earn lots of credit card points and miles by charging the pricey mortgage.
Important note: Plastiq currently only accepts MasterCard and Discover. They recently stopped allowing mortgage payments to be paid with a Visa card and American Express cards. That means you’re limited to the other two major issuers, which still isn’t bad.
Apparently Visa told Plastiq they had to comply with a new directive that banned mortgage payments via Visa credit cards. They’re basically closing a loophole because otherwise Visa would just allow it themselves and you wouldn’t need to use a third-party payment service.
It’s unclear if the others will follow, but it’s always a risk. For some reason, the ability to pay the mortgage with a credit card never seems to stick long-term, and perhaps for good reason.
If you do use Plastiq to pay the mortgage, you’ll need to enter the business name as it appears on your mortgage statement, along with the mailing address they list for mailed payments.
Assuming they have an electronic option (ACH) available in their system, payment will be sent electronically. If not, they’ll send a paper check on your behalf. If that’s the case, be sure to give it a week or two to arrive.
In terms of limits, the only payment limits are those associated with the credit card you use for payment. So if your card has a $5,000 credit limit, you won’t be able to send a mortgage payment for any more than that. This means even those with a jumbo mortgage will likely be able to use this service, assuming they have decent credit limits.
I’ve yet to use Plastiq, but I may in the future if I need to meet a spending requirement quickly to earn a signup bonus. I’ve heard of people successfully paying a Wells Fargo mortgage and a Chase mortgage with this service.
Use Tio to Pay the Mortgage with Discover, MasterCard, or Visa
Tio used to allow homeowners to make mortgage payments with any credit card
Other than American Express
With virtually every bank, lender, or loan servicer for a variable fee
But then they got bought out by PayPal and were promptly shut down
There’s a similar service called Tio (formerly ChargeSmart) now owned by PayPal that lets you pay a mortgage with a credit card in a matter of seconds. You don’t even need to sign up.
All you have to do is select a mortgage company from the handy list on their website (pictured above), then enter your loan number and payment amount.
From there, simply click on the credit card icons and enter your credit card information. It will then display the fee, which tends to range between 2.5% and 3%.
Interestingly, they seem to charge varying fees based on payment amount and based on the mortgage company you select. It appears to be more expensive for smaller payments, such as 3% for $1,000 payments, and a bit cheaper as your payments rise.
If you’re okay with everything, you simply hit “pay this bill” and Tio will deliver your payment within 2-3 business days they say.
The upside is that Tio is super fast, the downside is it can be more expensive than Plastiq, and they don’t accept American Express for mortgage payments. However, they seem to still accept Visa cards.
At first glance, I like Tio more than Plastiq, at least when it comes to paying the mortgage, because they have tons of mortgage companies already listed and ready to go. I don’t like the idea of manually entering the wrong company or address when sending a very important payment.
Plus, they list tons of major mortgage companies like Chase, Citi, Ditech, Nationstar, Ocwen, PNC, Quicken, Wells Fargo, and many more.
Update: Tio has also suspended service while its parent company PayPal investigates some so-called security vulnerabilities. So this method may or may not be available in the future once they sort it out.
You Might Be Able to Pay Your Mortgage with American Express Serve
American Express Serve used to work like a charm
Homeowners could load the prepaid card account with a rewards credit card
Then use the bill pay service to make monthly mortgage payments
But most customers’ accounts were shut down
Perhaps the easiest method that used to work involved American Express Serve, which is referred to as a reloadable prepaid account.
In reality, it basically works like an online bank account in that you can transfer/load money to it and then pay everyday bills or make purchases with the associated prepaid card.
Let’s focus on that paying bills part. Your mortgage is a bill and it must be paid each month until maturity, just like other recurring bills.
But loan servicers don’t give homeowners the option to pay with a credit card (for good reason!) unlike most other bills.
The Serve method entails loading the account with a credit card or gift cards (like pin-enabled gift cards), and then using the funds to pay your mortgage via their bill pay service. I suppose you can use a debit card as well if it earns rewards.
The purpose of this is to get credit card rewards on that large amount of money spent, so if the credit/debit card doesn’t earn rewards, there’s no point in doing this.
Of course, most folks would buy Visa gift cards using a different travel rewards card, hotel credit card, or airline credit cards to hit the minimum spending requirement and earn lots of miles.
Then they would turn around pay off their credit card in full each month to avoid any interest or fees to offset the benefit of doing it to begin with.
A couple warnings/issues with this method:
– You need to make sure your credit card issuer doesn’t charge fees to load Serve (American Express warns of this possibility on the website – They can be treated as cash advances – The max you can load with a credit or debit card each month is $1,000 ($200 per day) – The limit increases to $1,500 a month ($500 daily) if you get Serve with Softcard – You actually need to pay off the credit card charges to avoid interest/fees – Your credit score can go down if you keep racking up large balances, even if they’re paid off – You could get on the bad side of credit card companies and miss out on future rewards – If you have bad credit none of these methods will probably work very well
As noted above, you can load your Serve account with a credit card, but even American Express warns that you could be charged fees by your card issuer for doing so.
I’ve used a Chase credit card and there was no fee or issue. It just showed up as a standard purchase.
But to avoid any mishaps, testing with a small amount or asking your credit card issuer to lower your cash advance limit to zero (or as low as possible) might be a good idea before giving it a whirl.
Once the necessary funds are in the Serve account, you’ll be able to see your available balance. Assuming it’s sufficient to cover your full mortgage payment, you simply select “Pay Bills” from the dropdown menu then add a payee.
While certain payees are already in Serve’s system, you’ll likely need to add your loan servicer manually, including their address and your loan number.
It should be the address where you would send a paper check because Serve is basically cutting a physical check on your behalf. It’s essentially a bill pay service. This is exactly why it works.
You’re not actually paying your mortgage with a credit card – rather, you’re funding an account with a credit card then sending those funds to your servicer via check, a much more accepted form of payment.
Once you save the payee information, you can make your mortgage payment via Serve each month. There’s even a memo section where you can write your loan number and any other details to ensure the payment is processed properly.
Note that payments can take several business days to process, so it’s not as quick as making a payment online. Fortunately, mortgage due dates are fairly flexible. But you’ll want to give yourself a cushion to avoid paying late if anything goes wrong.
Update: Serve doesn’t work for many people anymore, so take note that the above method properly won’t be an option going forward. In fact, they went as far as to just close a lot of people’s accounts.
The Downside to These (or Any) Methods
The first thing you have to look at it is the associated fee for using a credit card
You also have to make sure you aren’t charged cash advance fees for doing it
Also consider the work involved if employing a creative method
And the potential to accidentally miss a mortgage payment along the way
It may also complicate a future refinance if payment history is shown via credit card
In the end it might not be worth it
While it’s kind of cool to pay your mortgage with a credit card, it does require some work, as noted above. And if you have a jumbo mortgage payment, these methods may not work very well if your credit limits are low.
You certainly won’t want to send partial payments and find out that your loan servicer paid down your principal or simply returned your check.
It can also get murky if you use different methods to pay the mortgage, and then decide to apply for a refinance because mortgage rates went down. If the new lender asks for mortgage payment history and sees some of the payments made via credit card, they may question your solvency. Even if you do explain yourself, they probably won’t be thrilled about it.
At the end of the day, you’ll have to ask yourself how much you’ll really “earn” by using a credit card once factoring in your time (opportunity cost) going to the store to buy gift cards, not to mention the transaction fees and credit card annual fees.
If your monthly mortgage payment is $1,000 a month, it equates to just 12,000 points or miles annually, which is worth maybe $120 or slightly more if redeemed for travel or something more lucrative.
Those earnings could be used to pay down your mortgage a little bit faster if you put it toward the principal balance. In that sense, it could be worth it as the points would go a lot further via saved interest and faster home equity accrual over time.
Just be careful not to miss a payment or make life harder in the process. Plenty can go wrong here, and at the end of the day, you might be better off just using your bank account to pay the mortgage. Or simply keeping an eye on mortgage rates and refinancing to a lower rate to save potentially hundreds a month.
Mortgage Q&A: “How to pay the mortgage with a credit card.”
First things first; banks and mortgage lenders don’t accept credit cards as a form of payment when attempting to repay your home loan. Options for paying are typically limited to ACH or check.
However, back during the housing boom aka meltdown there were various third-party services that allowed homeowners to make their mortgage payments with a credit card.
Paying the mortgage with a credit card topics:
– Why pay the mortgage with a credit card? – Using Plastiq to pay the mortgage – Using Tio to pay the mortgage (no longer an option) – Using American Express Serve to pay the mortgage – Warnings and drawbacks to paying the mortgage with a credit card
These services charged fees for the convenience, and looking back, they were probably only offered because people couldn’t keep up with their mortgage payments, and eventually their credit card payments either.
Chances are these same people had to execute a balance transfer shortly after…
Unsurprisingly, these services seemed to disappear as quickly as they surfaced, but there are still options to pay the mortgage with a credit card each month free of charge, even if mortgage lenders won’t let you do it directly.
Reasons to Pay the Mortgage with a Credit Card
To meet a minimum spending requirement and earn bonus credit card points
To increase everyday spending and earn cash back, points, etc.
To defer payments for a period of time to give yourself some breathing room
This last one isn’t a good idea!
The difference today is that this method/idea is more about earning credit card points (or cash back) for paying your mortgage, and not so much about simply paying it.
Let me preface this by saying it makes no sense to pay your mortgage with a credit card if you can’t afford to pay it otherwise.
The only purpose of this method is to earn bonus points and/or cash back as you would on other purchases made with a rewards credit card.
Using Plastiq to Pay the Mortgage with a Credit Card
Plastiq allows mortgage payments via credit card
But only with a MasterCard or Discover card
They no longer accept Visa or American Express cards
You must also pay a transaction fee of 2.5% or less
There are some companies that allow you to pay rent or the mortgage with a credit card in exchange for a small transaction fee.
By small fee, I mean something in the range of 2-3%. Recently, a company called Plastiq had a special where they charged just 1.75% ($17.50 per $1,000 in payment). They normally charge 2.5%.
Unfortunately, most credit cards don’t earn cash back or points at levels this high unless it’s in a bonus category. And these companies often aren’t in any bonus category whatsoever.
The one exception is the old AT&T Access More credit card, which earns 3X per dollar on all online purchases. That seems to include services like Plastiq. This allows you to come out ahead.
Even if you can’t come out ahead dollar for dollar, it might be worth it for some people looking to meet a minimum spending requirement to earn an opening bonus, or just to buy some time on that monthly payment (not recommended).
For example, if you need to spend $5,000 in the first three months to earn a signup bonus, paying the mortgage can probably put a big dent in that requirement. And it’s only $125 in fees if you use Plastiq for the entire amount. If the reward points eclipse the cost, you win.
Some other cash back credit cards do earn 2%+ on all spending, either initially as a bonus or all the time, so it’s possible to come out slightly ahead or just slightly behind. Aside from making money doing this, some folks are happy just to earn lots of credit card points and miles by charging the pricey mortgage.
Important note: Plastiq currently only accepts MasterCard and Discover. They recently stopped allowing mortgage payments to be paid with a Visa card and American Express cards. That means you’re limited to the other two major issuers, which still isn’t bad.
Apparently Visa told Plastiq they had to comply with a new directive that banned mortgage payments via Visa credit cards. They’re basically closing a loophole because otherwise Visa would just allow it themselves and you wouldn’t need to use a third-party payment service.
It’s unclear if the others will follow, but it’s always a risk. For some reason, the ability to pay the mortgage with a credit card never seems to stick long-term, and perhaps for good reason.
If you do use Plastiq to pay the mortgage, you’ll need to enter the business name as it appears on your mortgage statement, along with the mailing address they list for mailed payments.
Assuming they have an electronic option (ACH) available in their system, payment will be sent electronically. If not, they’ll send a paper check on your behalf. If that’s the case, be sure to give it a week or two to arrive.
In terms of limits, the only payment limits are those associated with the credit card you use for payment. So if your card has a $5,000 credit limit, you won’t be able to send a mortgage payment for any more than that. This means even those with a jumbo mortgage will likely be able to use this service, assuming they have decent credit limits.
I’ve yet to use Plastiq, but I may in the future if I need to meet a spending requirement quickly to earn a signup bonus. I’ve heard of people successfully paying a Wells Fargo mortgage and a Chase mortgage with this service.
Use Tio to Pay the Mortgage with Discover, MasterCard, or Visa
Tio used to allow homeowners to make mortgage payments with any credit card
Other than American Express
With virtually every bank, lender, or loan servicer for a variable fee
But then they got bought out by PayPal and were promptly shut down
There’s a similar service called Tio (formerly ChargeSmart) now owned by PayPal that lets you pay a mortgage with a credit card in a matter of seconds. You don’t even need to sign up.
All you have to do is select a mortgage company from the handy list on their website (pictured above), then enter your loan number and payment amount.
From there, simply click on the credit card icons and enter your credit card information. It will then display the fee, which tends to range between 2.5% and 3%.
Interestingly, they seem to charge varying fees based on payment amount and based on the mortgage company you select. It appears to be more expensive for smaller payments, such as 3% for $1,000 payments, and a bit cheaper as your payments rise.
If you’re okay with everything, you simply hit “pay this bill” and Tio will deliver your payment within 2-3 business days they say.
The upside is that Tio is super fast, the downside is it can be more expensive than Plastiq, and they don’t accept American Express for mortgage payments. However, they seem to still accept Visa cards.
At first glance, I like Tio more than Plastiq, at least when it comes to paying the mortgage, because they have tons of mortgage companies already listed and ready to go. I don’t like the idea of manually entering the wrong company or address when sending a very important payment.
Plus, they list tons of major mortgage companies like Chase, Citi, Ditech, Nationstar, Ocwen, PNC, Quicken, Wells Fargo, and many more.
Update: Tio has also suspended service while its parent company PayPal investigates some so-called security vulnerabilities. So this method may or may not be available in the future once they sort it out.
You Might Be Able to Pay Your Mortgage with American Express Serve
American Express Serve used to work like a charm
Homeowners could load the prepaid card account with a rewards credit card
Then use the bill pay service to make monthly mortgage payments
But most customers’ accounts were shut down
Perhaps the easiest method that used to work involved American Express Serve, which is referred to as a reloadable prepaid account.
In reality, it basically works like an online bank account in that you can transfer/load money to it and then pay everyday bills or make purchases with the associated prepaid card.
Let’s focus on that paying bills part. Your mortgage is a bill and it must be paid each month until maturity, just like other recurring bills.
But loan servicers don’t give homeowners the option to pay with a credit card (for good reason!) unlike most other bills.
The Serve method entails loading the account with a credit card or gift cards (like pin-enabled gift cards), and then using the funds to pay your mortgage via their bill pay service. I suppose you can use a debit card as well if it earns rewards.
The purpose of this is to get credit card rewards on that large amount of money spent, so if the credit/debit card doesn’t earn rewards, there’s no point in doing this.
Of course, most folks would buy Visa gift cards using a different travel rewards card, hotel credit card, or airline credit cards to hit the minimum spending requirement and earn lots of miles.
Then they would turn around pay off their credit card in full each month to avoid any interest or fees to offset the benefit of doing it to begin with.
A couple warnings/issues with this method:
– You need to make sure your credit card issuer doesn’t charge fees to load Serve (American Express warns of this possibility on the website – They can be treated as cash advances – The max you can load with a credit or debit card each month is $1,000 ($200 per day) – The limit increases to $1,500 a month ($500 daily) if you get Serve with Softcard – You actually need to pay off the credit card charges to avoid interest/fees – Your credit score can go down if you keep racking up large balances, even if they’re paid off – You could get on the bad side of credit card companies and miss out on future rewards – If you have bad credit none of these methods will probably work very well
As noted above, you can load your Serve account with a credit card, but even American Express warns that you could be charged fees by your card issuer for doing so.
I’ve used a Chase credit card and there was no fee or issue. It just showed up as a standard purchase.
But to avoid any mishaps, testing with a small amount or asking your credit card issuer to lower your cash advance limit to zero (or as low as possible) might be a good idea before giving it a whirl.
Once the necessary funds are in the Serve account, you’ll be able to see your available balance. Assuming it’s sufficient to cover your full mortgage payment, you simply select “Pay Bills” from the dropdown menu then add a payee.
While certain payees are already in Serve’s system, you’ll likely need to add your loan servicer manually, including their address and your loan number.
It should be the address where you would send a paper check because Serve is basically cutting a physical check on your behalf. It’s essentially a bill pay service. This is exactly why it works.
You’re not actually paying your mortgage with a credit card – rather, you’re funding an account with a credit card then sending those funds to your servicer via check, a much more accepted form of payment.
Once you save the payee information, you can make your mortgage payment via Serve each month. There’s even a memo section where you can write your loan number and any other details to ensure the payment is processed properly.
Note that payments can take several business days to process, so it’s not as quick as making a payment online. Fortunately, mortgage due dates are fairly flexible. But you’ll want to give yourself a cushion to avoid paying late if anything goes wrong.
Update: Serve doesn’t work for many people anymore, so take note that the above method properly won’t be an option going forward. In fact, they went as far as to just close a lot of people’s accounts.
The Downside to These (or Any) Methods
The first thing you have to look at it is the associated fee for using a credit card
You also have to make sure you aren’t charged cash advance fees for doing it
Also consider the work involved if employing a creative method
And the potential to accidentally miss a mortgage payment along the way
It may also complicate a future refinance if payment history is shown via credit card
In the end it might not be worth it
While it’s kind of cool to pay your mortgage with a credit card, it does require some work, as noted above. And if you have a jumbo mortgage payment, these methods may not work very well if your credit limits are low.
You certainly won’t want to send partial payments and find out that your loan servicer paid down your principal or simply returned your check.
It can also get murky if you use different methods to pay the mortgage, and then decide to apply for a refinance because mortgage rates went down. If the new lender asks for mortgage payment history and sees some of the payments made via credit card, they may question your solvency. Even if you do explain yourself, they probably won’t be thrilled about it.
At the end of the day, you’ll have to ask yourself how much you’ll really “earn” by using a credit card once factoring in your time (opportunity cost) going to the store to buy gift cards, not to mention the transaction fees and credit card annual fees.
If your monthly mortgage payment is $1,000 a month, it equates to just 12,000 points or miles annually, which is worth maybe $120 or slightly more if redeemed for travel or something more lucrative.
Those earnings could be used to pay down your mortgage a little bit faster if you put it toward the principal balance. In that sense, it could be worth it as the points would go a lot further via saved interest and faster home equity accrual over time.
Just be careful not to miss a payment or make life harder in the process. Plenty can go wrong here, and at the end of the day, you might be better off just using your bank account to pay the mortgage. Or simply keeping an eye on mortgage rates and refinancing to a lower rate to save potentially hundreds a month.
One thing I’ve always been happy with is how me and Wes have always been very open about money.
No, we haven’t always done things the “normal way” (we combined finances YEARS ago and often receive flack for that), but in the end things worked out well for us. I think that’s because we make sure to be open about money.
I have witnessed many people around me make several money mistakes. I know people who have never once discussed a budget (even budgets that suck!) with their significant other, even though they are married. I also know others who have broken marriages/relationships because of secret debt, financial infidelity, and more.
No, life isn’t all about money, but money does play a big factor in a relationship.
I’m all for people doing their own thing in life, but, in general, the money behaviors below can lead to big mistakes when in a relationship. Money mistakes can lead to debt, delayed retirement, stress, heartache, and more.
Who wants all of that? Not me!
Below are financial mistakes that couples should try to avoid:
Assuming that merging finances is right for everyone.
Even though Wes and I have merged finances, I know plenty of others who have completely separate finances and wouldn’t have it any other way. As I always say “Everyone is different.”
There is no right or wrong way for anyone, and there are positives and negatives to combining or keeping everything separate. You should research the differences and see what is right for you and your relationship.
Just because you are in a relationship does not mean that everything needs to become one.
Not talking about money with your significant other.
If you are in a relationship, you should talk about money at least somewhat. And if you are married, in a serious relationship and/or have combined finances, then you DEFINITELY need to be talking about money.
You should discuss your credit scores, past money problems, any debt that the other person may have, how the monthly budget is going, and more. You should be able to openly talk about money with your significant other without it turning into stress or a money fight.
We talk about money all the time. Honestly, at first I think Wes hated it. Now he is used to it and we understand how to talk about money to each other without us starting to bicker at each other. We talk about what we can improve on, what changes need to be made, how our spending is doing, retirement, and more and these are talks that we actually enjoy having with each other.
Having only only person understand the financial situation that you two are in TOGETHER.
This is something that me and Wes are guilty of. I’ve always been in charge of our finances just because I have always been better with managing them. Also, training another person just seemed like added stress because we would probably often over check what we’ve done.
However, this is a huge problem that I am working on changing. We have many bills, retirement, cars, etc., and if something were to happen to me then Wes would be completely out of the loop and it would be very hard to manage on his own. Just clueing your loved one in can be helpful.
Before you laugh and think we are crazy for making this relationship money mistake, MOST couples are actually this exact same way – usually just one person handles all of the finances.
Also, it helps everyone stay on the same page. If one person is doing all the work then all of the financial burden can fall on them as well.
Keeping something money-related a secret from your significant other.
This is a tough one, but it’s something that I’ve seen pop up several times recently. Keeping something money-related a secret from your loved one can be a huge problem.
They can feel like they were left out, that you didn’t trust them, and/or that you are financially cheating.
Money secrets may include:
Secret debt.
Secret money saved.
Lying about how good or bad the family is financially doing.
And more, of course!
Completely throwing out the idea of getting a prenup.
Okay, so me and Wes don’t have a prenup, but we also combined our finances when we were young and had nothing. However, there are many instances where having a prenup may be a great idea for a couple. No, it doesn’t mean that you don’t trust the person you are in a relationship with.
The fact is that you never know what will happen later. What if YOU are the problem later on? It happens!
What financial mistakes have you seen or experienced?
If you are not in a relationship, what mistakes will you make sure to avoid?
Real estate can be a great investment if you take the time to educate yourself about the process and the best ways to get great returns. However, most people who are interested in buying rental properties or real estate as an investment never do so. People who don’t take the time to learn about investing in rental properties are missing out on a great opportunity. I own 11 rental properties that bring in approximately $5,000 a month in cash flow after all my expenses, including mortgage payments.
One thing I would have done differently is investing in real estate much sooner. I bought my first rental property when I was 31 and I am now 35. The great thing about rentals is the longer you own them, the better investment they become. Plus, when you are young you have more flexibility in life, fewer commitments, and can take more risk. If you wait too long to start investing, family, work, and life make it hard to learn about and buy rental properties.
What’s Ahead:
Why rental properties are a great investment
I love comparing rental properties to the stock market, because the stock market is the investment vehicle we are all taught to use. Whether it is individual stocks, mutual funds, index funds, or REITs, we are told the best way to save and invest is to put our money in the market. The problem with investing in the stock market is we are depending solely on stocks to increase in value. Retirement calculators are based on the stock market. They make us guess when we will die to determine how much we should save. We run out of money if we live too long or save too much money if we die to soon.
Some people invest in real estate for appreciation, but smart investors invest for cash flow.
Cash flow and real estate investing
Cash flow is the money you make from rental properties every month after all expenses are paid. The great thing about cash flow is it increases over time without ever eating away at your principal investment. It is like a stock where the dividend is so high that you never have to worry about the stock increasing in value to make great returns.
Cash flow will also increase over time because rents will go up with inflation while your mortgage payments stay the same. Eventually, you will pay off your loan and your cash flow will increase significantly.
On my rentals, I am seeing 20% cash on cash returns, which is not always easy to do, but possible depending on your location and amount of money you have to invest. Those returns do not include the tax advantages of rentals, equity pay down and possible appreciation which all increase your ROI. Here is a great article on how to calculate cash flow properly.
One way to make money on rental properties is to invest using sites like Roofstock. Roofstock is an online marketplace for real estate investing that charges half of the fees of traditional agents. The site makes it ridiculously easy to filter and search for properties in your price range.
Buying rental properties with little money down is easier when you are younger
Most banks will require an investor to put at least 20% down on a rental property.
That is a lot of money to most people, especially when you consider a property may need repairs, you have to pay closing costs and you want to have money in reserve in case something goes wrong. It can easily take 30% or more of the purchase price in cash to comfortably purchase a rental property.
If you buy a home as an owner occupant you can put no money down with certain loans (USDA, VA) and almost certainly buy a home with 5% down. You can’t rent out a home that you buy as an owner occupant right away, but you can rent it out after you have lived in the home a certain amount of time (usually one year).
There are some things to know about buying a multi-family property that you plan to live in. Most lenders require an owner occupant to live in a house for 12 months to satisfy the owner-occupancy requirement. That means you can buy a rental property as an owner-occupant, live there for 12 months and then rent the home out. If you are ambitious you can keep repeating this process every year although you will most likely only be able to use the no money down option once.
You can also buy a multifamily property that is between one and four units and live in one of the units to qualify as an owner occupant. After you have lived in the unit for 12 months, you can rent out the entire building and repeat the process.
When you are younger, it is much easier to move into a house that you want to make a rental property. When you have a family it is tough convincing your spouse and kids that you need to move every year and into a house that may not be up to their standards.
You can invest in real estate without buying property
One of the easiest ways to enter the real estate market is to do so as an investor. Today, there are many platforms that crowdsource the investment process. These platforms choose a group of expertly-vetted properties and have investors contribute to a collective pool, with each investor sharing in the reward.
You don’t have to be an accredited investor with Fundrise, and you can get started on real estate investing with only $10. Fundrise loans money to commercial real estate buyers, then bundles those loans, offering them as investments through its platform.
DiversyFund is yet another investing platform that allows you to invest in real estate without purchasing a property. The company offers investment funds of private market assets including real estate, and investors can start with as little as $500. They also feature zero management fees and a commitment to helping investors of all income levels grow their wealth, making it a great option for investors in their twenties.
CrowdStreet has two major options for real estate investors: choose and manage your own portfolio or let their team of real estate investment experts do the work for you. Either way, you join other investors in funding commercial real estate projects, each of which is carefully vetted by market experts. Minimum investment requirements vary from one project to the next, but you can choose the opportunities that best fit your finances.
Streitwise is another excellent starter real estate investment opportunity. There’s only a $5,000 minimum for private real estate investments, and its most recent dividend was 8.4%. Note that Streitwise isn’t a crowdsourcing platform. Instead, you’re individually investing in a real estate investment trust (REIT), which operates similarly to a mutual fund by grouping investments together and having investors buy-in. What sets Streitwise apart is that it allows you to fund your investment using cryptocurrencies like Bitcoin and Ethereum. Once you’ve signed up on the website, you can download the app to use on your iOS devices
This is a testimonial in partnership with Fundrise. We earn a commission from partner links on MoneyUnder30. All opinions are our own.
It takes time to get a great deal on rental properties that cash flow
It is not easy to find rental properties that will generate the returns I get, but I am not an aberration either. Many investors get higher returns than I do, but they have put in a lot of time and effort learning their market, learning about real estate, and learning about rental properties. The older you get, the less time you have with more job commitments, more family commitments, and more hobbies you discover. There is less time to learn about real estate, your market, and how to make money in this business the older you get (unless you get to retirement age).
I also fix and flip about 10-15 homes every year so I specialize in getting great deals on real estate. I buy most of my deals off the MLS even with rising prices and a lot of competition.
Here are a few tips on getting great deals:
I am a real estate agent, which helps me get great deals and lets me act very fast. I am not saying all investors should be agents, but it sure helps!
If you aren’t an agent spend a lot of time finding a great agent that will act fast for you and find you deals.
Spend time researching prices in your market and rental rates so you know what a good deal is.
Do not depend solely on a real estate agent to find you good deals. Many agents are not investors and won’t know what you are looking for.
Join a real estate investing club in your area to meet other investors and learn what they are buying and how.
The risks involved with buying rental property
There are definitely some risks and work involved with owning rental properties. The biggest mistake I see investors make is buying for appreciation with negative cash flow. It is great if my houses appreciates, but I love the cash flow. With cash flow, I have money in my pocket that I can use to buy more properties, invest somewhere else, or spend on something fun. If you have negative cash flow, there is a great chance things will end badly for the investor.
The problem with negative cash flow is most investors underestimate the money they will have to spend on their rental properties. There is also no guarantee prices will rise or when they will rise. Given enough time real estate will probably appreciate, but it could also go down in value before that happens. How long can you continue to pay money into a property every month? Eventually, people run out of money and are forced to sell, sometimes for less than they bought a property for. If you have positive cash flow, you won’t have to sell and you won’t want to sell, because it is putting money in your pocket.
Another issue that people forget about is maintenance. You have to budget for maintenance items every month. I figure 10% to 20% of my monthly rents will go to maintenance, depending on the age and condition of a property. If you don’t account for maintenance you may not make any money on your rentals.
On my rentals my average mortgage payments range from $400 to $600 including taxes and insurance and my rents range from $1,100 to $1,500 a month. After accounting for possible maintenance and vacancies my cash flow is about $500 a month.
It takes time to manage a rental property as well. You will have to find tenants, create a lease, account for expenses and income properly and make sure everyone pays on time. You could also hire a property manager to do all this for you for about 8% to 10% of the monthly rents, but you have to budget for that expense as well.
Conclusion
Rental properties can be an awesome investment that allows you to retire early. It is not a get rich quick scheme and it is not easy to do. Real estate investing takes time, flexibility, and ambition to make it work well. The sooner you get started, the easier it will be and the better off you will be later in life.