While it’s not the easiest conversation to start, it will be vital to bring up the subject so that you and your parents know they are prepared.

There is a way to bring up this topic with your parents. All it takes is some preparation. Not only can this save you all a lot of worry, but it can get the practical ‘red tape’ out of the way so that your parents can focus on living their lives to the fullest, and you’ll have everything you need to provide ‘backup’ in case they need you.

What kind of safety net have you established for your healthcare needs?

It’s best to approach this question with compassion. Start with, “I worry about you, but it would help me quite a bit if we could go over your healthcare safety plans so that I know you’ll be prepared if you get sick or injured.” Then, once a dialogue is open, you’ll want to ask questions like these:

• What kind of health issues are you experiencing now? Of course, any health conditions need to be taken into account. This allows you to do research so that you’ll know a little more about related possibilities so that you can plan for them
• Is Medicare going to be enough to cover your needs? Some retirees are only using Medicare, and if this is the case with your parents, you may want to investigate strategies to create a financial emergency buffer plan
• Do you have additional long-term insurance in place? Policies should be noted so that you can take action if needed and ensure that health providers are aware of these insurance protections
• Are these expenses covered if one or both of you need additional care? For example, if in-home care is required or even a caregiver living arrangement is needed, you’ll need to know what is in place to help make that happen
• Have you designated a family member to help you if medical assistance is needed and you can’t make arrangements? It’s good to have one or more family members on call just in case your parents need a ride to the doctor and medical personnel needs to decide when your parents may not be able to do it for themselves

Do you have a plan for your financial security?

Asking about finances can be tricky. After all, they’re your parents, so they may resist this or not want to worry you.

But unfortunately, it’s something that you’ll need to press because without work revenue coming in anymore, it’s imperative to know that they’re secure.

The best way to word it will probably be, “What are your plans to stay financially flush while you’re enjoying your retirement?” Once you’ve got the subject broached, you’ll want to discuss several questions, so here are a few important ones to get you started:

• What are your current, reliable income sources? You’re looking to create a ‘financial profile’ based on reliable monthly or yearly income, such as Social Security, pensions, rental property revenue, etc
• How much have you put away in savings? This should include standard savings and 401(k), either static or dispersed in lump sums. This will be a safety net for emergencies, among other things, so it’s important to note this to create a complete profile
• Have you explored all the financial assistance options in case they are needed? Again, you can look into this even if your parents have a flush nest egg and recurring income. It never hurts to have a backup plan, after all, and this can make the difference between a smooth, sweet retirement and a sudden disruption in quality of life should pitfalls arise.
• Do you have any current active investments, and if so, which accounts are they tied to? Some retirees are still active investors, and if this is tied to a specific account, then that’s all well and good. But you’ll want to count this income and make sure that investments aren’t tied with the duplicate accounts as savings in case those investments take a dive and your parents find themselves in financial trouble
• Have you prepared a will? This is important, and you should remind your parents that their will is their business; you just want to know that this has been taken care of. Without it, there’s always a possibility of the government taking the fruits of their life’s labor, so don’t forget this critical step

https://www.agingcare.com/articles/talking-to-aging-parents-about-money-150098.htm

Do you have caregiver plans or preferences?

Caregiving is a sensitive subject. No one wants to live in a retirement home, so this deserves a section of its own.

But first, you’ll need to ask your parents what kind of caregiving options they prefer so that you’ll be able to help make this happen if it is needed.

For instance, there are ‘retirement condos’ that include in-house nursing staff, but these are costly, so if this sort of scenario is preferred, you’ll need to look into what hiring a full-time nurse will cost. It would be best if you priced it on a year-by-year projection so that you could realistically gauge the costs.

If a retirement home is required, you should choose one well in advance so that you know that if the time comes, your parents will be going to a place they have chosen and feel comfortable in for the foreseeable future.

Typically, this would be a comfortable location close enough for friends and family to visit. Still, ultimately, this is something that your parents will need to decide—they might already have a nice location in mind.

It might also be a good idea to look into the cost of accessibility upgrades for their current home. For instance, a sit-down shower conversion is suitable for bathing safety.

If there are stairs, a stair lift might be perfect if your parents have mobility issues. While these upgrades can be expensive, you need to look at the big picture compared to a caregiving home.

Home upgrades can give them more freedom and privacy to live their lives as they are used to, and it saves you a lot of money in the process, although a caregiver or at least some sort of emergency response solution will be vital.

You’re retired: what are your plans to enjoy all this free time?

Finally, entertainment will keep your parents happy, sharp of mind, and fully able to take advantage of the years ahead. Keeping occupied is one of the most critical aspects of retirement, so you should ask questions along these lines:

• Do you plan to volunteer somewhere to pass the time? Many workaholic retirees quickly get bored of all of that free time. This can lead to depression, and volunteer work is a great way to keep this at bay. As it’s voluntary, there is no pressure, and workaholics can still do what makes them happy
• Are you planning to do a little traveling? Many retirees like to travel, which you can help with, digging up brochures and finding deals now and again in your free time to help them realize this dream
• Do you have some hobbies that we should build a workshop for? Retirement is a fantastic time for hobbies, and it’s worth considering pricing what is needed to build a ‘dream workshop.’ You’ll be surprised how cheap it can be done, and this will give hobbyist parents something to do that they always had to MAKE time for before retiring

Some final words on retirement planning

While it’s a lot to digest and definitely a conversation that everyone dreads, asking these questions now is your best bet for protecting your parent’s future and preparing for the inevitability of every life.

Approach it positively. You and your parents will be more comfortable putting a positive spin on things.

Both you and your parents know that it needs to be done, so getting the hard questions answered now means that everyone can look ahead and hope for the richest, fullest retirement possible.

The post How to Talk to Your Parents About Their Retirement Plans appeared first on Personal Finance By The Book.

Women need to be prepared for the future, which means taking action with their finances today. This means to start saving, investing in diverse assets, and planning ahead for both the expected and unexpected.

Why is it important for women to start making financial plans?

One of the beautiful things about improvements to healthcare and living standards is that women in the US today are expected to live into their 90s, but, unfortunately, the cost of living is constantly on the rise.

Over an entire lifetime, women spend an average of over $300,000 on healthcare alone, while men typically only spend around $250,000. That money has to come from somewhere; for many people, living costs only get higher as you get into your senior years. Private rooms in retirement homes are surprisingly expensive, and you can expect all your other health and care costs to go up as well.

On top of that, the gender pay gap means that women can lose between $400,000 and $1.2 million over a 40-year career, which is one of the reasons women have fewer savings than men on average.

You don’t want to be working into your 80s, but that means having money set aside for some form of retirement. It’s not easy to achieve, but there are a few key things that you can do to make sure you are financially stable in the years ahead.

Work on saving money now

The most sensible and logical thing to start working on today is putting money aside so that you have a savings account prepared for when you eventually retire.

Of course, this is easier said than done, but it’s vital to future financial security.

Some essential tips that you can start working on today include:

• Pay off debts early
• Start with small savings, but be consistent
• Separate your savings from your spending money
• Utilize a savings account that has high interest
• Pay into your savings on payday
• Set achievable savings goals based on your income and outgoing expenses

To be realistic about how much you can save, you should review your budget. Figure out how much you spend on rent, bills, groceries, etc., over a month and compare that to how much is coming in.

Another critical part of establishing significant savings over time is preparing for the unexpected. Therefore, you should set aside a portion of your savings that can be used as an emergency fund in case you are temporarily without work or unforeseen circumstances require extra money.

You don’t want to lose everything you have been working towards because of a health issue, a gap in your work, or something as mundane as an engine malfunction in your car.

Balance your portfolio

Having one single pot full of your savings is helpful, but it is far from financially secure. Instead, it would help if you looked to diversify your assets so that your wealth is well-balanced between cash, stocks, and bonds.

Factors outside of your control, like inflation, can significantly reduce the value of the money you’ve saved up – so you want to invest in other liquid assets that can retain their value over time.

Valuable liquid assets can include:

• Treasury bills and treasury bonds. These are highly stable and highly liquid investments backed by the US government
• Bonds. You can hold your bonds until their maturity date, or you can trade them on the secondary market if you need the money quickly
• Stocks. You can sell equities on stock exchanges and purchase publicly traded stocks
• Exchange traded funds (ETFs). These investment funds trade like stocks and are less risky than individual stocks and bonds
• Mutual funds. These are easy to diversify but can only be sold at one time of day, so they are slightly less liquid

Remember, any investment you need to purchase (such as stocks or bonds) is a risk, and its value will change over time. As a result, you can sell for less than you originally paid.

Ideally, you want assets that will be relatively quick to sell and convert into usable cash. But some assets can make it harder to get your money out, even though they are still pretty safe.

Liquid assets include:

• Real estate. While a healthy investment in many markets, it can take a long time to get your money back through a sale
• Stock options. These are very valuable, but you must stay with a company for a long time before you own the stock itself
• Private equity. These investments, like venture capital, can offer large returns but are generally quite restrictive in terms of when you can sell your shares

If you don’t know much about the world of portfolios, it would be worth speaking to a financial advisor who can help you understand where your money could be best used and develop a robust retirement plan.

Invest in insurance

The future is full of unknowns, and insurance is a critical way to prevent yourself from falling into debt.

While working, take advantage of all the benefits your workplace provides – like life insurance, health insurance, and disability insurance. However, paying close attention to how your coverage works is essential, as many plans expire once your employment ends.

Consider investing in independent insurance policies that you can trust in the long term and planning for age-related circumstances with things like long-term care insurance. For example, Medicare is beneficial in many ways but doesn’t cover services like in-home care or nursing homes.

Wait to cash in

You shouldn’t have to work any longer than you need to, but the longer you work, the less time you have to rely on your retirement savings.

You can also choose to delay your Social Security benefits, which will increase the amount of money you receive when you do choose to start taking advantage of them.

If you wait to get Social Security until you are 70, you will get the most money from it.

Summary

So, how should women financially plan for retirement and potentially live longer than most men?

You must start putting money into savings as soon as possible and consistently increase those savings over time. You should also make sure to balance out your financial profile so that you have a variety of assets to draw from when the time comes.

It’s also important to be ready for the unexpected, so you should buy insurance and save money for emergencies.

It is almost always worth sitting down with a financial adviser. That way, you can be sure that you have a robust plan that will allow you to enjoy a long, comfortable retirement.

The post Women Live Longer Than Men: How To Plan for This Financially appeared first on Personal Finance By The Book.

You may think that conducting a year-end review is a waste of time, but it is not.

Instead, it will help you get organized for next year and keep your finances on track so that you are ready to go when it comes time for tax season.

Be Organized

Make an inventory of your assets and liabilities (you can use Excel or Google Sheets for this).

Be sure to include all of your investments, bank accounts, retirement accounts, credit card accounts, loans, and mortgages—and any other major assets or debts that might affect how much money you have available each month.

Separate Your Assets

Please review all of the transactions from this past year and categorize them according to expense type (rent/mortgage payments, groceries, utilities, etc.).

Then add up these categories individually, so you know exactly how much money went toward each expense type throughout the entire year (the total sum).

Look at the Positive

If conducting a financial review fills your heart with dread, you can get over this hurdle by starting your review by looking at the positive.

You may have grown your savings account, invested more money in stocks or bonds, taken on a new hobby like knitting or photography—or maybe even started a business.

Whatever has happened, it is essential to take stock of all these things and look at what worked for you financially this year.

Mark Your Accomplishments 

Have you made any big purchases? Did you do anything special with your money? If so, now is the time to celebrate!

If not, then it is time for a reality check and to be honest with yourself about what truly matters: How much did you spend on important things? How much did you save? How much did you give away?

These are all important questions when it comes to making sure that money is being used wisely and effectively. 

Think about what is most important in your life and how much value those things bring—then compare that with how much money was spent on them.

The goal is not so much about cutting back as it is about spending more wisely—and knowing when something is worth the cost.

Do Not Avoid the Negative

The key to conducting a successful financial review is to remember that it’s not about being perfect but about making better decisions next year. So even if you are overspending or buying things you should not, try not to beat yourself up over it.

Instead, use these moments as an opportunity to learn from your mistakes and make better decisions in the future. Here are some questions you can ask yourself during your financial review:

Where could I have saved more money? What did I buy but rarely or never used? Can I sell them? Did I miss any important payments? Can I renegotiate any of my debt payments?

https://www.dummies.com/article/business-careers-money/business/accounting/general-accounting/10-tips-reading-financial-report-226420/

Reevaluate Your Payments

Next, look at any bills that have been piling up.

• Are there any late payments?
• Can those be renegotiated?
• Are there any subscriptions you can live without?
• Can they be automatic payments, so they don’t fall through again?

Finally, take stock of everything else:

• Did anything break or wear out this year?
• What did it cost to fix or replace it? Was it worth it?
• Will it still work on its own merits after another year or two alone (or do you need to do something about it now)?

This might seem overwhelming, but it is a healthy exercise to set up the right way for the next financial year.

This also does not have to be done in a day! Take your time with your review, and take a break if it gets too much.

Make a Realistic Financial Plan

To make a realistic financial plan, you must be honest about your goals.

It is tempting to think that being frugal is the way to go, but we have all seen people who have gone overboard and become so obsessed with saving money that they have no fun at all, and long-term planning ultimately fails.

That is not what financial planning is about! Instead, a realistic financial plan ensures that you have enough money for fun activities and can pay your bills on time. In other words, it means striking a balance between frugality and fun.

To do so, you need to know how much money you make each month and how much it costs to live where you live (including rent or mortgage payments). 

It is essential to be realistic when making a budget because if you try too hard without knowing the actual numbers, then it will be impossible for you to stick with it long-term.

Fun things to do that cost almost nothing

If there is no room in your budget for fun, then time to get creative and do fun things for cheap! Here are some ideas for having the most fun possible without spending a dime.

Host a movie night

Everyone loves going to the movies, but it can be hard on your wallet when you have kids. So instead of going out, why not invite friends over for a movie night? Make sure everyone brings a dish or two and order pizza for everyone else. This is a great way to make new friends and enjoy some quality time together without breaking the bank!

Invite friends over for game night

Board games are an excellent way to spend time with family or friends without spending any money on entertainment. So find some of your favorites and make it an evening of laughs, strategy, and fun.

Plan an outdoor adventure

The outdoors is full of adventure, so why not plan one yourself? Start with something small like hiking or biking—you will be surprised how quickly your finances can add up if you are used to doing things indoors all day long.

Final Thoughts

To summarize, here are the main takeaways for conducting your year-end financial review – and sticking to it.

1) List all income sources (wages, bonuses, interest earned from investments, etc.).

2) Write down all annual expenses (mortgage payments, utility bills, food costs, etc.).

3) Calculate your net worth by subtracting your overall expenses from all income sources (this will give you an idea of how much money is available for savings).

4) Adjust spending habits or increase savings contributions to avoid exceeding this amount each month/year.

5) Don’t forget to budget for fun!

The post A Guide for Conducting a Year-End Financial Review appeared first on Personal Finance By The Book.

Thankfully, we live in a modern age where money-saving apps can do a lot of the hard work for us, and it turns out that some are nothing short of amazing!

Rakuten

Rakuten is our first app to list, and it is one of the most popular money-saving apps for a good reason – it works! Most of us shop online, which is where Rakuten works its magic.

Rakuten consists of two parts: an app and a browser extension that you can install, and once you have done so, it can interface with over 3500 online stores to get cash back on your purchases.

This can include making hotel or travel reservations, buying clothes, or getting groceries.

It can even be linked to your debit or credit card for qualifying purchases in various stores or dining out. Once you have made a qualifying purchase, it is noted in your account, and once you reach a total of $5 or more, you can set it to send you the cash via check or a quarterly PayPal.

It is a great app when you need to do a little shopping.

Upside

Gas is at a premium these days, and filling your tank can be somewhat depressing – if only there were a way to save. Upside answers the call with the app, allowing you to earn a little cash back on your gas, restaurant, convenience store, and grocery purchases with each call.

All you need to do is download the app and register, and Upside will sync with your location, showing you a map of offers at supported locations that will give you cash back on your purchases.

As a bonus, if you refer a friend, there is an icon that looks like a gift box, and when your friends make purchases with the app, thank you gifts from Upside will be sent to your own app. Not a bad deal at all.

ShopSavvy

Do you like to comparison shop? Unfortunately, doing it online or around town can take up much of your time. The folks at ShopSavvy understand that and have offered a solution in the form of a handy app.

To use ShopSavvy, you must install the app and scan the barcode of an item you want when you are out shopping. Then, the app will instantly tell you where to find the item locally and in online stores. In addition, you will get pricing information and information about the product, ratings, and reviews.

If you spend a lot of time comparing prices, this is a money-saving app you will want to try. Once installed, see if you can find a better deal than the app, but we do not think you will.

PayPal Honey

Have you ever purchased an item, only to find out five minutes later that you could have saved money with an easy-to-find coupon?

PayPal Honey is designed to help you avoid that mistake and is a sight to see.

It comes in the form of an app and a browser extension, and when you purchase an item, PayPal Honey will look for promotion codes and coupons to get you a discount immediately.

They also give you points when you shop at participating retailers, which you can redeem for gift cards.

You save money immediately on your purchase, and you will get some freebies after enough purchases. It is a good deal, in our opinion. So, give PayPal Honey a whirl and see what happens. You will be happy that you did.

GoodRx

Prescription drugs are EXPENSIVE and can make your wallet a lonely place, indeed. GoodRx earns its keep by helping you save on medications you need. It is also free to use and does not require registration. So, how does it work?

• Well, you download and install the GoodRx app on your smartphone and type in the name of a medication you are using.

• After that, GoodRx will search for that medication, providing you with a list of locations and the best deals available for what you need.

• Sometimes, it can even produce a coupon for you that you can print up or simply present on checkout from your app and discount medication!

The app is worthwhile considering that prescription drug prices can sometimes vary as much as $100, based on location.

If you have insurance, GoodRx coupons will not apply. However, it can still help you. This is because the app is good enough at its job that it often finds you medication that is even cheaper than your deductible and will also check for generics. So if you spend a lot on medication, this app can be a godsend.

Raise

Some of us have that friend who always likes to get us gift cards on special occasions, but they always seem to be for places we don’t like to use. This is where Raise shines by allowing you to use that card well.

What it does is that Raise acts as a broker for buying and selling gift cards, and you can list an unwanted card on the site and sell it.

Then, with your proceeds, you can purchase a gift card that you like at a discount. Fancy a $25 gift card from Amazon for only $20?

You can find them with discounts of 1% up to 30%.

They deduct a $1 fee to list your card and will take a 15% commission once it is sold, so you won’t get the total value of your card, but you can balance that out by exchanging the unwanted card and for one that you like.

Did we mention that you can also sell partially-used cards?

Raise allows you to sell cards with a remaining balance, just as you would with a brand-new card. Many of us have gift cards like these that we use once or twice, which tend to expire unused.

By utilizing Raise, you can sell new or used ones and save money by making purchases with gift cards that you like. Not a bad deal at all!

Some final words

There you have it – the cream of the crop. With Rakuten, you can get cash back online, Upside will save you money on gas, and ShopSavvy can save you both time and money by doing your comparison shopping for you.

PayPal Honey can help you get discounts at checkout, GoodRx helps put a dent in medical bills, and Raise will help you turn those unwanted gift cards into ones you will use. There is a wide assortment of money-saving apps, so try one or more and see what you think.

The post 2022’s Best Money-Saving Apps appeared first on Personal Finance By The Book.

Everyone needs a place they can afford due to an injury or a fixed social security income. The good news is that even if you are low-income, there are ways to find affordable housing in your area.

From government programs to local assistance, Section 8 public housing, private subsidized housing, and housing vouchers are here to help.

1. Subsidized housing

When most people talk about low-income housing, they are typically referring to subsidized housing. Subsidized housing occurs when the U.S. government pays the property owner to allow low-rent housing on a property. Low-rent housing is one of the top ways low-income people can afford housing.

If you think that subsidized housing is a good fit for you, there are a few requirements that you will need to meet.

For example, your income must fall within the federal income limit for your location and family unit size to qualify. Other eligibility requirements may vary based on the property owner’s regulations.

An easy way to locate subsidized housing options in your area is to use the search tool on resources.hud.gov. A search will bring up subsidized housing locations nearby. The federal database gives you a list of properties, the units on the land, and provider contact information.

The only downside is that the database does not keep track of vacancies, so you will need to contact every property owner directly to check which units are available.

With some research, you can narrow down exactly which low-rent subsidized housing units are open in your area and ready for you to move in once application paperwork and acceptance are complete.

2. Public housing

Things are a little different with public housing options. The main difference is that subsidized housing is subsidized by the federal government, while public housing options are run by a local Public Housing Authority (PHA).

If you are a low-income adult, a senior citizen, or an individual with disabilities, public housing rentals are set aside for people like you.

https://www.usa.gov/finding-home

Here is how to determine what public housing is available in your area. First, go to the U.S. Department of Housing and Urban Development (HUD) webpage.

Second, scroll down to select your state, or click on your state on the map and hit Go to this page. The results will include a page with a list of city and county redevelopment and housing authority offices and phone or email contact information.

Some states may have many field offices, while others only have one option. First, start with the HUD office closest to your current location. Then, you can expand your search to your entire state for rental assistance. Other options include talking to a housing counselor at your local office to get more specific information.

This helpful list lets you know if your local housing authority offers Section 8 housing, low-rent programs, or vouchers. Your local authority is the place to apply for a housing choice voucher or low-rent public housing. They are the only ones who can tell you if you qualify for help with housing in your area.

As a heads up, when you apply for public housing, the agency may send a PHA to visit your home to gather information, interview your family, and check how you are maintaining the house you already live in.

3. Housing Choice Vouchers

Searching for affordable, low-income housing can be stressful.

While some programs like Section 8 housing can have long wait lists, some people can skip through the process and get priority housing if they are homeless, their current house has dangerous living conditions, they are displaced through a disaster or domestic violence situation rather than their own choice, or if rent is eating up over 50% of their income.

That is why the Section 8 Housing Choice Voucher program is here to help with another kind of subsidized housing for people on low or fixed incomes. With Housing Choice Vouchers, the federal government does not deal directly with the landlord.

Once approved, you will get a voucher confirming the government’s promise to pay a portion of your rent. This is not a set amount since rent vouchers can vary based on how much money you make, your family size, and what rent costs in your local area.

After approval, your next step is locating a property owner who receives housing vouchers. Then, depending on what is available in the area and a landlord’s willingness to accept the voucher, you can rent an apartment, a single-family home, or a townhouse. You might even be lucky enough to live in an area where a Housing Choice Voucher can help you buy a home.

Contact your local PHA to apply for a Section 8 Housing Voucher. While waiting for the approval process, you can start searching on Trulia or Zumper to filter results for providers that accept Section 8 vouchers.

4. Rural housing options

Increase your affordable, low-income housing options by expanding your search beyond urban areas.

According to the United States Department of Agriculture (USDA), the USDA subsidizes more than 15,000 multi-family apartment complexes in rural areas across America. While some units are designed to house families, others are reserved only for older adults.

These housing options can range from studio apartments up to four-bedroom dwellings. Also, like HUD and PHAs, the USDA helps people who qualify by giving them rental assistance programs and vouchers.

https://www.ruralhealthinfo.org/toolkits/sdoh/2/economic-stability/housing-affordability

If you need low-income housing relief, head to the USDA’s website. Remember that the USDA’s available housing reflects the critical housing shortages plaguing the U.S. today. According to the National Low Income Housing Coalition, there’s a shortage of 6.8 million affordable rental properties in the U.S.

At any given time, for every 100 families with very low incomes, there are only about 37 affordable rental homes available. So if you are desperate for affordable housing on a fixed or low income and there aren’t any government or local agency options, you might need to get creative.

Talk to local government agencies like the Community Action Council, Department of Social Services, Area Agency on Aging, and other nonprofits who may know about different resources.

5. The VASH Program

Finally, if you are a low-income or homeless veteran who qualifies for V.A. healthcare, you may be eligible for the HUD-VASH program.

Veterans with physical problems, substance abuse disorders, mental health issues, or who do not have a safe and regular place to sleep at night may receive priority.

If you are interested in the HUD-VASH program, reach out at 1-877-4AID-VET, an online chat at va.gov, or contact your area’s V.A. Medical Center to speak to your local V.A. Homeless Program or get in touch with a Homeless Coordinator.

It is important to know that government and local programs and resources are available to help you search for safe, affordable, and low-income housing for you and your family.

The post Here are 5 Low-Income Housing Assistance Options for Those in Need appeared first on Personal Finance By The Book.

There are multiple strategies for repaying debts, and which one is the best for you will depend on what you view as most important.

The most important things to consider are:

• Keeping morale up,

• Saving money, and

• Ensuring the plans will work.

We will examine why you may need a debt repayment strategy, learn about four of them, and explore why you should or should not use them.

Why do you need a debt repayment strategy?

If you are used to simply paying your bills at the end of the month and only paying the minimum payment, you might find your debts dragging on for much longer than needed.

The solution is to voluntarily overpay to reduce the amount you are paying on interest every month. But you will need a way to decide where these over payments go.

If you cannot do overpayments, you may still need a debt repayment strategy for managing your required monthly payments, either because they are too many to keep track of or too expensive.

Debt snowball

The debt snowball strategy of repaying multiple debts starts by looking at all of the debts you owe and sorting them from the smallest balance to the largest. Once you have this sorted list, all money you plan to put toward paying off your debts will go to the one with the smallest balance.

This smallest debt will be the fastest to pay off, and once you have paid it off, you will put all your repayment money into the new smallest one.

Because you are always paying off whichever debt is the fastest one to do so, this strategy will reduce the total number of debts most quickly.

Reasons For

The debt snowball method will get you fast victories. This strategy is designed to be unbeatable in stacking up many achievements early.

If you are feeling overwhelmed by your debts or demotivated at how they never seem to end, these early wins can be an absolute game-changer at putting you back on your feet and in the fight.

Reasons Against

The debt snowball strategy is not the best to use from a mathematical perspective.

Because you are not factoring in the varying APRs, unless you are lucky, you will almost certainly end up paying more interest and therefore losing more money in the long run.

The debt snowball strategy’s psychological benefits may not work for everyone. For example, if you focus more on efficiency than symbolism, you may even be demoralized when you see high-interest levels lasting longer than needed.

Debt avalanche

Like the debt snowball strategy, you will also focus all your repayments on one debt at a time, but with debt avalanches, this focus is always on the debt with the highest interest rate.

Reasons For

The debt avalanche strategy is the right choice if your finances are unstable or you want to save as much money as possible.

Because you will eliminate the highest interest rates first, the amount you will be paying on interest every month will go down the fastest way possible. Therefore, the total amount of money you will have spent on interest once all your debts have been paid off will be lower.

In practice, the debt avalanche strategy is the fastest way to reduce your total debt, including interest, even if it does not necessarily reduce the number of individual debts as quickly.

Reasons Against

If you are prone to distress, lack of motivation, or struggle to cope, the debt avalanche strategy can be highly demoralizing, especially if your highest-interest debts are among your largest.

For this reason, the debt avalanche method should not be used if you are not very disciplined.

If you lose morale, which can hurt your income, you could get deeper into debt, which would cancel out any mathematical advantage this strategy might have.

Debt consolidation

If you have multiple debts, a straightforward solution is to take out a loan that covers the balance of all of them and use it to pay them off.

By doing so, you effectively combine several debts into a single debt. Because there is no guarantee of what loans you could have access to, everyone’s mileage will vary with this strategy.

Reasons For

Debt consolidation makes repaying your debts a lot more simply because you only have to keep track of one payment instead of many.

If you have a good credit score and can get a big enough loan with a low enough APR, this strategy can also lower your monthly interest payments, possibly by a lot, saving you money in the short and long term.

Reasons Against

If you have a low credit score, you might not have access to a loan that would benefit from this strategy. The APR will be too high or the amount available will not be enough to consolidate all your existing debt.

This can make the search time-consuming and frustrating and may not even give you a positive result.

Debt management plan

The most extreme strategy for repaying your debts is to enter a debt management plan with a consumer credit counseling agency.

The agencies set up and run these plans. They will take your one monthly payment and give it to your creditors themselves.

Reasons For

The agencies will often be able to negotiate your payments so that you are paying less every month. If you struggle to make ends meet, this can be critical to keeping your household afloat. It will also be easier to keep up with your debt repayments because there will only be one to make each month.

Reasons Against

You will not be able to pay for anything using your credit cards while on a debt management plan. This can be a deal-breaker if you rely on them for many essential payments.

Final thoughts

We have learned about four debt repayment strategies and the positive and negative aspects of using each, so you are now ready to choose the best one for your personal needs.

The post How To Choose the Debt Repayment Strategy That Is Right for You appeared first on Personal Finance By The Book.

According to a recent study by USA Today, the average couple can expect to spend over $300,000 on healthcare in retirement. While many think their cost of living will decrease in retirement, prices often increase. Having an HSA or FSA can help with significant medical expenses. A health savings account can also benefit your loved one’s medical bills.

The big difference between an FSA (Flexible Spending Account) and an HSA (Health Savings Account) is that you control an HSA and rollover contributions into the following year.

At the same time, FSAs are handled by your employer and don’t offer the same flexibility. So, if you like being in control of your medical savings for the future, you may want to consider the pros and cons of an HSA.

The benefit of having an FSA or HSA

A health savings account allows you to save pretax funds to cover qualifying medical costs. To be eligible, you need a high-deductible health plan or HDHP that qualifies for an HSA.

This money is held by the HSA trustee, which can be a bank, credit union, or another type of financial institution) until you withdraw it to pay for some types of medical expenses.

According to IRS policies for 2022, a health insurance plan is an HDHP if it offers:

• Individual minimum deductible of at least $1,400 and $2,800 for a family plan
• Individual coverage includes a maximum of $7,050 for out-of-pocket payments and family coverage with max personal payments of $14,000

HSA eligibility requirements also include not being listed as a dependent on another person’s tax return and not being enrolled in Medicare.

Remember that an HSA is more flexible than an FSA, since your employer doesn’t own it. With an HSA, you can better regulate your contributions and access your benefits.

However, an FSA is a valuable option for people who do not want to set up a healthcare account or would prefer to let their employer handle the contribution details.

So, how do these plans work?

Here’s how a health saving accounts work

It is a good idea to check with your insurance company or employer if you are unsure whether your health plan qualifies as an HDHP.

Get all the details: interest rates, investment options, fees, and any extra services can vary from trustee to trustee. For example, some institutions offer fund transfers between your bank accounts and HSA accounts to help make bill-paying easier. Some also let you store your medical receipts electronically for better tracking.

• In 2022, you can contribute up to $3,650 to your HSA account per individual and $7,300 to cover your family.

• In addition, if you turn 55 by the end of the tax year, you can contribute an extra $1,000 with a catchup policy.

If you choose to deduct your HSA contributions from each paycheck, the amount you contribute will decrease your taxable income.

The good news is that any interest you accrue in your HSA account is not subject to taxation. This means you can allow your money for future medical expenses to grow tax-free. In addition, your employer will not withhold taxes on HSA contributions, which can help lower your tax bill.

You will not get taxed on any money withdrawn from an HSA if you use it for qualified medical costs. This includes a long list of vision care, prescription drugs, psychiatric care, dental care, copays, and any other type of eligible medical care that isn’t covered by your health insurance plan.

One big bonus is that your HSA funds will never expire. You can leave it in the account forever. In addition, you do not need to spend it in any given year since HAS funds roll over at the end of the year. This contrasts with FSAs, which require you to use or lose your funds that year.

Once you reach a high enough account balance, most trustee institutions will let you invest HSA money in stocks, bonds, or mutual funds. The next covers all the cons of having an HSA.

The cons of using a Health Savings Account

Here are some not so great benefits for an HSA:

Early Withdrawals

If you withdraw funds from an HSA before age 65 to cover non-medical costs, the IRS considers this taxable income and will charge a 20% penalty. 

Keep receipts for any HSA payments in case the IRS chooses to audit your HSA account.

Contribution Timing

Specific tax penalties can apply to your account if you apply for Social Security and do not stop contributions at least six months before applying.

Not 100% Eligibility

One downside to using an HSA is that if you are on Medicare or claimed as dependent on someone else’s tax return, you will not qualify for an HSA.

High-Deductible Health Plans Only (HDHP)

If you do not have an HDHP, you will not be able to use an HSA.

HSA Card Rejection

It’s good to know that not all stores will take HSA debit cards, so be aware that you might sometimes need to pay out of pocket and get reimbursed by your HSA institution.

End of Contributions

Once you reach age 56, which is the age when people can apply for Medicare, you cannot add any contributions, including catchups, to an HSA even if you are still employed.

Now it is time to look at the benefits of getting an HSA for you and your family.

The top 10 benefits of having a Health Savings Account

Here are the pros for this account type:

1.    Tax Advantages

Compared to 401(k) accounts, HSAs offer more tax benefits such as pre-tax funds, employer or relative contributions, untaxed withdrawals for eligible medical expenses, and tax-deductible benefits, even if you’re unemployed, non-taxed interest averaging about 0.01%, and investment opportunities.

2.    No Deposit to Open

Most HSAs do not require a minimum deposit to open an account.

3.    Balances Can Roll Over

Unlike an FSA, where there’s a “use it or lose it” policy each year, HSA balances roll forward yearly.

You will not need to worry about spending your funds at a specific time.

4.    HSAs are Portable

An HSA is portable. This means that you, not your employer, own the account. If you leave your job, your HSA travels with you. Since an HSA is a bank account with your name, you can control when and how you use the money even if you change your health insurance plan.

5.    HSAs Are Eligible to Be Insured

For people concerned about losing money put into an HSA, the good news is that HSAs are held by FDIC-insured banks or credit unions, insured for up to $250,000 per person per account.

6.    Other People Can Contribute

Worried you cannot contribute as much as you’d like to your future health savings? With an HSA, you aren’t the only one who can put money in the account. Friends, family, or even your employer can fund your account.

However, the IRS does limit how much people can add to the account.

7.    HSAs Carry Family Benefits

If you have a family, you already know that healthcare for everyone can add up. That is why an HSA can offer a good option for your spouse and dependent children if they’re not covered under your high-deductible health plan.

8.    They Can Pay for Medicare Premiums

Once you retire, you can use HSA funds to cover premiums for Medicare or Medicare Advantage plans. At the same time, an HSA can’t pay for Medigap policies.

9.    It’s Easy to Transfer Funds

Since an HSA is a particular bank account, the format makes it easy to transfer funds between your accounts to cover expenses.

10.   Many Eligible Types of Expenses

An HSA can offer real benefits for people since they pay for a broad range of coverage, including medical care, dental treatment, and mental health services. You can check out specific expenses under the IRS Publication 502 section on Medical and Dental Expenses.

Eligible expenses include various medical, dental, and mental health services. They are explained in detail in IRS Publication 502, Medical and Dental Expenses.

The post The Top 10 Benefits of Having an FSA or HSA appeared first on Personal Finance By The Book.

This could include refunds, old bank accounts, forgotten deposit boxes, lost wages, settlements, or insurance policies. Whether you’re living paycheck to paycheck or maximizing ways to boost your savings, locating missing money is a great way to put cash back in your wallet.

Nowadays, you do not have to search your couch for missing coins. The National Association of Unclaimed Property Administrators reports that $3 billion in unclaimed funds is returned to owners each year.

That means that one in every ten people has money waiting for them to claim it.

So, do not wait for the state to invest your missing money. Instead, track down any missing money with your name on it today.

1. Search for unclaimed funds

When you are hunting for unclaimed money, the best place to start is by searching free databases that help people track down missing funds.

• Type your name into MissingMoney.com to search multiple states. If your last name is unusual, it is even easier to see if your name pops up. Keep in mind that not all states are searchable on MissingMoney.com.

• That is why it’s a good idea to head to Unclaimed.org next. According to the National Association of Unclaimed Property Administrators (NAUPA) clearinghouse, this site can give you more information.

• You can also investigate FindMyFunds.com to check if missing money is turned over to state custody in more than 25 states.

• The U. S. Department of Housing and Urban Development (HUD) often has refunds from FHA home loans. If you have had this type of loan in the past, check out HUD.gov to see if you qualify for a refund. In addition, for foreign property owners or those with an overseas bank account, the Bureau of Fiscal Service is a good source. 

2. Hunt down previous pension plans

Did you know millions of dollars in pension funds are floating around unclaimed? When companies fold or shut down their benefit plans, the connection between account owners and old accounts is often lost.

If you moved, changed contact information, or the company can’t locate you, your pension money is transferred to the Pension Benefit Guaranty Corporation (PBGC).

A government agency holds retirement income until the rightful owners claim it. The best way to check if you are owed money from a former pension plan is to look for your name on the organization’s unclaimed pension database.

3. Review your old 401(k)s

When many people move from one job to the next, they often do not transfer their retirement plans to the new company. As a result, some people might have opted-in automatically to their company’s retirement plan without knowing it.

It is a common way to lose track of old retirement accounts.

The good news is that you can find old 401(k) accounts and request a benefit pay-out through the PBCG’s Missing Participants Program.

4. Check Your Old Bank Accounts

It is crazy to think that people can forget about the money in the bank, but it’s easier than you think.

For example, if you had an old college account, one that your parents set up for you as a minor, or had funds in a credit union or another type of financial institution that later shut down, you could have missed money due.

According to the Federal Deposit Insurance Corp. (FDIC), there is a list of unclaimed deposits insured at banks that closed.

Use the FDIC’s BankFind tool to track down your old bank accounts or discover if a new institution has opened with information about your unclaimed money.

5. Contact the IRS

The Internal Revenue Service doesn’t just collect taxes. So, if you were supposed to get a refund but didn’t file in a previous year, your refund could be one of the $1.5 billion in unclaimed refunds that the IRS will report in 2022.

The good news is that you have a 3-year grace period to claim the money. Afterward, head to the IRS website to review current or prior-year tax forms if you haven’t yet filed for the year in which you should have a refund.

 Do not worry; there aren’t any penalties for submitting a late tax filing if the IRS owes you. Since it is your money, all you need to do is go after it.

6. Dig out forgotten savings bonds

Remember getting savings bonds as a kid? You probably wanted a bike, a skateboard, Barbie, or the latest video game for Christmas or birthdays instead.

Now you might be in for a happy surprise if you hung onto any old savings bonds.

It is a fact that there are billions of dollars in mature government savings bonds that no one has ever cashed. Many people do not know they have them squirreled away in boxes, attics, or storage units.

Once you dig out forgotten savings bonds, submit a Fiscal Service Form 1048 and Claim for Lost, Stolen, or Destroyed United States Savings Bonds if you think you are owed some money.

These practical tips will help track lost money and put cash back in your pocket when you least expect it.

The post 6 Ways to Find Missing Money in Your Life appeared first on Personal Finance By The Book.

As a result, it may seem like you must choose either school or work. But believe it or not, some companies will assist you in furthering your education while simultaneously allowing you to earn an income. 

If there is a particular industry you have your sights set on, it’s worth looking into whether you can work with a company that will allow you to gain more training to move up within the company.

Additionally, an industry you might already work in could have opportunities to help you advance your career with more specialized training. We have provided a list of companies that will pay for college.

How exactly does this payment work?

Each company may have its own way of implementing this strategy to help employees gain more education.

Tuition reimbursement is a common approach; the company will give you money towards tuition costs when you are enrolled in school. Other companies may give you the payments upfront, and if you don’t complete the program, you have to pay the money back. 

How much tuition and education costs are covered will vary by company, so it’s important to ask as many questions as possible to know what you can contribute versus what they can contribute. 

McDonald’s

McDonald’s has been touted as one of the best fast food restaurants to work for, and their Archways To Opportunities program is one of the reasons why.

This program offers employees the ability to earn a college degree while continuing to work, and McDonald’s will help the employee financially. 

They can also help those who need to complete high school or learn English as a second language more proficiently. 

Walmart 

Walmart has a Live Better U program that allows employees to earn college credits or degrees in a few areas, such as business, cybersecurity, and supply chain management.

Walmart employees can also make money while receiving training to advance their careers at Walmart Academies. 

Chevron 

Chevron helps its employees further their education, even if their field of choice isn’t related to Chevron’s business practices.

Their SESP Educational Assistance Program helps employees by reimbursing them for up to 75% of the costs associated with attending school.

The company also assists employees who want to participate in training to help them move up in the company. 

Target 

Through their Target Forward Program, Target helps their employees who want to earn a degree in programs such as design or data analytics, among a couple of other programs.

In addition, they will assist with the costs associated with earning either an undergrad or graduate degree in one of their covered programs. 

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Chipotle 

Whether full-time or part-time, Chipotle employees can participate in the company’s education assistance program after working a certain number of accumulated hours.

There are a variety of courses that can be taken online, and Chipotle can reimburse tuition. The amount refunded depends on the program you choose. 

Publix 

Publix helps employees who have been working with them for at least six months continuously at 10 hours minimum a week to further their education with financial assistance.

The amount that Publix will contribute to your education depends on the program and certification you are obtaining. 

UPS 

UPS has been committed to supporting its employees who wish to advance their careers or education for a long time.

They offer help with tuition for employees that can vary depending on the program of choice. Additionally, UPS supports its employees who want to get more training to advance within the company. 

Papa John’s 

This popular pizza joint can help employees with up to 100% of their tuition when they enroll in and complete an online program. The assistance is offered to corporate members who work at least 20 hours a week and have been with the company for three months. 

Google

The tech giant helps employees who are also students reduce the amount of student debt they accumulate through school by matching student loan payments up to $2500 a year. Furthermore, they also have a tuition reimbursement benefit those students can earn when they maintain high grades. 

Gap 

The Gap, which also owns stores like Old Navy and the Banana Republic, has a tuition reimbursement program for employees working for at least one year. This reimbursement program can cover costs of up to $5000 a year. 

Final thoughts 

More and more companies see the value in supporting their employees more than just letting them earn a paycheck. Companies that assist in educational pursuits see better employee retention, boosted morale, and continued success. So, it’s a good idea to take that step toward continuing to learn, especially if the company you work for will help you.

The post Best Companies and Jobs That Will Pay For College Degrees appeared first on Personal Finance By The Book.

However, many do not realize that learning to separate the two can seriously improve finances, allowing you to cut back on unnecessary spending and begin to save some money for when you need it.

This article discusses the difference between financial wants and needs and offers our five top tips for separating the two.

What is the difference between wants and needs?

A ‘want’ is something you would like but is not essential, whereas a ‘need’ is something you rely on to survive.

A financial need allows you to live your life, such as medical expenses, housing, and food. Financial wants are things you might buy to improve your lifestyle, like a holiday.

1. Be firm in what constitutes a need

The line between want and need can easily be blurred, and it can be difficult to distinguish which category something falls into.

For example, some purchases, like travel or monthly subscriptions, may feel necessary. However, in reality, you could live without them, so they do not constitute a need.

One thing you can do is sit down and create a list of the things you need to be able to survive. This list will differ from person to person, but most people will include basic living costs like housing, food, medical expenses, and bills. Other people might add extra necessities like therapy bills or the internet if they work from home.

2. Create separate budgets

One of the difficulties that come with not distinguishing wants from needs is the possibility of overspending. Of course, it’s effortless to spend money on things we want if we consider them necessary to our happiness or lifestyle.

But, often, these things are not entirely necessary, and we are, in fact, simply spending money unnecessarily.

To limit overspending, consider setting budgets. An excellent way to do this is to use the 50/30/20 system. This system allocates a specific percentage of your monthly income to different expenses.

For example, with this system, each month, you would set aside 50% of your income on your needs, 30% on wants, and 20% on savings and debts.

The good thing about a budget system like the one above is that you can still spend money on things you want, but you are prioritizing your needs and ensuring that you have enough money set aside to cover them. It also visualizes how much you are spending in certain areas and cuts back if you need to.

https://www.fettermaninvestments.com/blog/understanding-needs-vs-wants-in-a-financial-plan

3. Be prepared to cut back on spending

Once you have budgeted and decided how much you want to spend on each area, it may be a good idea to work out how much you are currently spending. If you are spending more than you would like, think about which areas you can afford to spend less on.

You are more likely to discover that you can cut back on your wants rather than your needs; perhaps you could eat out less or reduce your subscriptions.

However, you may also be able to lessen the amount you spend on your needs. With a little bit of haggling and shopping around, you can often find cheaper deals that better fit your budget. 

A great way to stay on top of your spending and ensure you stay within your budget is to track your expenses.

Keeping an eye on what you spend can help you make sure you do not overspend and stay on top of your finances.

4. Consider your priorities

Breaking your spending into priorities is a great way to separate wants from needs and minimize overspending. Within your needs and wants categories, you will likely have some things you need or want more than others. Therefore, it makes sense that you might be willing to spend more on these things.

Visualizing your priorities is an excellent way of focusing on yourself. For example, a chart could help you focus on what is a high-priority need versus a low-priority one, and the same for your wants. If you find this kind of picture helpful, it can be a great way to make sure you can put money where it needs to go.

5. Use separate bank accounts

Tracking spending can be difficult for many people, even if they have budgeted their expenses and are aware of their priorities.

Something that makes this even harder is using one bank account, which is used for both wants and needs. Unfortunately, it can be easy to get overwhelmed and lose track of spending in each category this way.

For this reason, the sensible idea is to create separate bank accounts, one to store your budgeted amount for your wants, another for your needs, and another for your savings. This can make it much easier to track how much you are spending and cut back if necessary.

Summary

Separating wants from needs can be very difficult, but it is an important task that can help you cut back on spending, begin to save, and take charge of your finances. Here, we have looked at five of the top things you can do to separate your wants from your needs and hopefully save some money.

The post 5 Tips to Separate Financial Wants and Needs appeared first on Personal Finance By The Book.