How to Copy Warren Buffet’s Biggest Investment of 2020

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Warren Buffett is notoriously a good investor. Sure, he’s made some mistakes along the way (who hasn’t?), but whatever move he makes, you can bet he’s thought it through, and it will pay off — big time.

Which is why when Mr. Buffett made his biggest stock purchase of the year into Apple, we thought, “Isn’t it too late to do that?” Apple is already trading at the highest price it ever has. It feels out of reach for us non-billionaires.

But it turns out, that’s not the case. While we don’t have the ability to own $111 billion (yes, billion with a B) in AAPL shares, we can still get our hands on some — and reap the rewards as the market goes up.

One of our favorite ways to get into the stock market and be a part of infamous big-tech returns, without risking billions is through a free app called Stash.

It lets you be a part of something that’s normally exclusive to the richest of the rich — on Stash you can buy pieces of other companies — including Buffett’s choices — for as little as $1.

That’s right — you can invest in pieces of well-known companies, such as Amazon, Google, Apple and more for as little as $1. The best part? If these companies profit, so can you. Some companies even send you a check every quarter for your share of the profits, called dividends.1

It takes two minutes to sign up, and it’s totally secure. With Stash, all your investments are protected by the Securities Investor Protection Corporation (SIPC) — that’s industry talk for, “Your money’s safe.”2

Plus, when you use the link above, Stash will give you a $5 sign-up bonus once you deposit $5 into your account.*

Kari Faber is a staff writer at The Penny Hoarder.

1Not all stocks pay out dividends, and there is no guarantee that dividends will be paid each year.

2To note, SIPC coverage does not insure against the potential loss of market value.

For Securities priced over $1,000, purchase of fractional shares starts at $0.05.

*Offer is subject to Promotion Terms and Conditions. To be eligible to participate in this Promotion and receive the bonus, you must successfully open an individual brokerage account in good standing, link a funding account to your Invest account AND deposit $5.00 into your Invest account.

The Penny Hoarder is a Paid Affiliate/partner of Stash. 

Investment advisory services offered by Stash Investments LLC, an SEC registered investment adviser. This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Investing involves risk. 

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

What is a Payday Loan?

A payday loan is a short-term loan with a high annual percentage rate. Also known as cash advance and check advance loans, payday loans are designed to cover you until payday and there are very few issues if you repay the loan in full before the payment date. Fail to do so, however, and you could be hit with severe penalties.

Lenders may ask the borrower to write a postdated check for the date of their next paycheck, only to hit them with rollover fees if that check bounces or they request an extension. It’s this rollover that causes so many issues for borrowers and it’s the reason there have been some huge changes in this industry over the last decade or so. 

How Do Payday Loans Work?

Payday lending seems like a simple, easy, and problem free process, but that’s what the payday lender relies on. 

The idea is quite simple. Imagine, for instance, that your car suddenly breaks down, payday is 10 days away, and you don’t have a single cent to your name. The mechanic quotes you $300 for the fix, and because you’re already drowning in debt and have already sold everything valuable, your only option is payday lending.

The payday lender offers you the $300 for a small fee. They remind you that if you repay this small short-term cash sum on payday, you won’t incur many fees or any real issues. But a lot can happen in 10 days. 

More bills can land in your mailbox, more expenses can arrive out of nowhere, and before you know it, all of your paycheck has been allocated for other expenses. The payday lender offers to rollover your loan for another month (another “payday”) and because you don’t have much choice, you agree.

But in doing so, you’ve just been hit with more high fees, more compounding interest, and a sum that just seems to keep on growing. By the time your next payday arrives, you’re only able to afford a small repayment, and from that moment on you’re locked into a debt that doesn’t seem to go anywhere.

Predatory Practices

Payday loans have been criticized for being predatory and it’s easy to see why. Banks and credit unions profit more from high-income individuals as they borrow and invest more money. A single high-income consumer can be worth more than a dozen consumers straddling the poverty line.

Payday lenders, however, target their services at low-income individuals. They offer small-dollar loans and seem to profit the most when payment dates are missed and interest rates compound, something that is infinitely more probable with low-income consumers.

Low-income consumers are also more likely to need a small cash boost every now and then and less likely to have the collateral needed for a low-interest title loan. According to official statistics, during the heyday of payday loans, most lenders were divorced renters struggling to make ends meet.

Nearly a tenth of consumers earning less than $15.000 have used payday loans, compared to fewer than 1% for those earning more than $100,000. Close to 70% of all payday loans are used for recurring expenses, such as utility bills and other debts, while 16% are used for emergency purchases.

Pros and Cons of Taking Out a Payday Loan

Regardless of what the lender or the commercial tells you, all forms of credit carry risk, and payday loans are no exception. In fact, it is one of the riskiest forms of credit available, dragging you into a cycle of debt that you may struggle to escape from. Issues aside, however, there are some benefits to these loans, and we need to look at the cons as well as the pros.

Pros: You Don’t Need Good Credit

Payday loans don’t require impeccable credit scores and many lenders won’t even check an applicant’s credit report. They can afford to do this because they charge high interest and fees, and this allows them to offset many of the costs associated with the increased liability and risk.

If you’re struggling to cover your bills and have just been hit with an unexpected expense, this can be a godsend—it’s a last resort option that could buy you some time until payday.

Pros: It’s Quick

Payday loans give you money when you need it, something that many other loans and credit offers simply can’t provide. If you need money right now, a payday lender can help; whereas another lender may require a few days to transfer that money or provide you with a suitable line of credit.

Some lenders provide 24/7 access to money, with online applications offering instant decisions and promising a money transfer within 24 hours.

Pro: They Require Very Little

A payday loan lender has a very short list of criteria for its applicants to meet. A traditional lender may request your Social Security Number, proof of ID, and a credit check, but the average payday lender will ask for none of these things.

Generally, you will be asked to prove that you are in employment, have a bank account, and are at least 18 years old—that’s it. You may also be required to submit proof that you are a US citizen.

Cons: High Risk of Defaulting

A study by the Center for Responsible Lending found that nearly half of all payday loans go into default within just 2 years. That’s a staggering statistic when you consider that the average default rate for personal loans and credit cards is between 1% and 4%.

It proves the point that many payday lender critics have been making for years: Payday loans are predatory and high-risk. The average credit or loan account is only provided after the applicant has undergone a strict underwriting process. The lender takes its time to check that the applicant is suitable, looking at their credit history, credit score, and more, and only giving them the credit/loan when they are confident it will be repaid.

This may seem like an unnecessary and frustrating process, but as the above statistics prove, it’s not just for the benefit of the lender as it also protects the consumer from a disastrous default.

Con: High Fees

High interest rates aren’t the only reason payday lenders are considered predatory. Like all lenders, they charge fees for late payments. But unlike other lenders, these fees are astronomical and if you’re late by several weeks or months, those fees can be worth more than the initial balance.

A few years ago, a survey on payday lending discovered that the average borrower had accumulated $458 worth of fees, even though the median loan was nearly half that amount.

Cons: There are Better Options

If you have a respectable credit history or any kind of collateral, there are better options available. A bank or credit union can provide you with small short-term loans you can repay over many months without accumulating astronomical sums of interest. 

The interest rates are much lower, the fees are more manageable, and unless your credit score is really poor, you should be offered more favorable terms than what you can get from a payday lender.

Even a credit card can offer you better terms. Generally speaking, a credit card has some of the highest interest rates of any unsecured debt, but it can’t compare to a payday loan. It also has very little impact on your credit score and many credit card providers offer 0% on purchases for the first-few months.

What’s more, if things go wrong with a credit card, you have more options than you have with a payday loan, including a balance transfer credit card or a debt settlement program.

Why Do Payday Loans Charge So Much Interest?

If we were to take a cynical view, we could say that payday loans charge a lot simply because the lender can get away with charging a lot. After all, a payday loan lender targets the lowest-income individuals, the ones who need money the most and find themselves in desperate situations.

However, this doesn’t paint a complete picture. In actual fact, it all comes down to risk and reward. A lender increases its interest rate when an applicant is at a greater risk of default. 

The reason you can get low rates when you have a great credit score and high rates when you don’t, is because the former group is more likely to pay on time and in full, whereas the latter group is more likely to default.

Lending is all about balancing the probabilities, and because a short-term loan is at serious risk of defaulting, the costs are very high.

Payday Loans and Your Credit Score

Your credit will only be affected if the lender reports to the credit bureaus. This is something that many consumers overlook, incorrectly assuming that every payment will result in a positive report and every missed payment in a negative one. 

If the lender doesn’t report to the main credit bureaus, there will be no changes to your report and the account will not even show. This is how many payday lenders operate. They rarely run credit checks, so your report won’t be hit with an inquiry, and they tend not to report on-time payments.

However, it’s a different story if you miss those payments. A lender can report missed payments and defaults and may also sell your account to a debt collector, at which point your credit score will take a hit. 

If you’re concerned about how an application will impact your credit score, speak with the lender or read the terms and conditions before applying. And remember to always meet your payments on time to avoid any negative marks on your credit report and, more importantly, to ensure you’re not hit with additional fees.

Payday Loans vs Personal Loans

A personal loan is generally a much better option than a payday loan. These loans are designed to help you cover emergency expenses, pay for home improvements, launch businesses, and, in the case of debt consolidation loans, to clear your debt. 

The interest rates are around 6% to 10% for lenders with respectable credit scores, and while they often charge an origination fee and late fees, they are generally much cheaper options. You can repay the loan at a time that suits you and tailor the payments to fit your monthly expenses, ensuring that they don’t leave you short at the end of the month.

You can get a personal loan from a bank or a credit union; whenever you need the money, just compare, apply, and then wait for it to hit your account. The money paid by these loans is generally much higher than that offered by payday loans and you can stretch it out over a few years if needed.

What is an Unsecured Loan?

Personal and payday loans are both classed as unsecured loans, as the lender doesn’t secure them against money or assets. Secured loans are typically secured against your home (mortgage, home equity loan) or your car (auto loan, title loan). They can also be secured against a cash deposit, as is the case with secured credit cards.

Although this may seem like a negative, considering a lender can repossess your asset if you fail to meet the payment terms, it actually provides many positives. For instance, a secured loan gives the lender more recourse if anything goes wrong, which means the underwriters don’t need to account for a lot of risk. As a result, the lender is more likely to offer you a low interest rate. 

Where cash advance loans and other small loans are concerned, there is generally no option for securing the loan. The lender won’t be interested, and neither should you—what’s the point of securing a $30,000 car against a $1,000 loan!?

New Payday Loan Regulations

Payday lenders are subject to very strict rules and regulations and this industry has undergone some serious changes in recent years. In some states, limits are imposed to prevent high interest rates; in others, payday lenders are banned from operating altogether. 

The golden age of payday lending has passed, there’s no doubt about that. In fact, many lenders left the US markets and took their business to countries like the UK, only for the UK authorities to impose many of the same restrictions after a few years of pandemonium. In the US, the industry thrived during the end of the 2000s and the beginning of the 2010s, but it has since been losing ground and the practice is illegal or highly restricted in many states.

Are Payday Loans Still Legal?

Payday loans are legal in 27 states, but many states have imposed strict rules and regulations governing everything from loan amounts to fees. The states where payday lenders are not allowed to operate are:

  • Arizona
  • Arkansas
  • Connecticut
  • Georgia
  • Maine
  • Maryland
  • Massachusetts
  • New Jersey
  • New York
  • North Carolina
  • Pennsylvania
  • Vermont
  • West Virginia

It is still possible to apply for personal loans and title loans in these states, but high-interest, cash advance loans are out of the question, for the time being at least.

Debt Rollover Rules for Payday Lenders

One of the things that regulations cover is something known as Debt Rollover, whereby a consumer rolls their debt over into the next billing period, accruing fees and continuing to pay interest. The more rollovers there are, the greater the risk and the higher the detriment to the borrower.

Debt rollovers are at fault for many of the issues concerning payday loans. They create a cycle of persistent debt, as the borrower is forced to acquire additional debt to repay the payday loan debt. 

In the following states, payday loans are legal but restricted to between 0 and 1 rollovers:

  • Alabama
  • California
  • Colorado
  • Florida
  • Hawaii
  • Illinois
  • Indiana
  • Iowa
  • Kentucky
  • Louisiana
  • Michigan
  • Minnesota
  • Mississippi
  • Montana
  • Nebraska
  • New Hampshire
  • New Mexico
  • North Dakota
  • Ohio
  • Oklahoma
  • Rhode Island
  • South Carolina
  • Tennessee
  • Texas
  • Virginia
  • Washington
  • Washington D.C.
  • Wisconsin
  • Wyoming

Other states tend to limit debt rollovers to 2, but there are some notable exceptions. In South Dakota and Delaware, as many as 4 are allowed, while the state of Missouri allows for 6. However, the borrower must reduce the principal of the loan by at least 5% during each successive rollover.

Are These Changes for the Best?

If you’re a payday lender, the aforementioned rules and regulations are definitely not a good thing. Payday lenders rely on persistent debt. They make money from the poorest percentage of the population as they are the ones most likely to get trapped in that cycle.

For responsible borrowers, however, they turn something potentially disastrous into something that could serve a purpose. Payday loans still carry a huge risk, especially if there is any chance that you won’t repay the loan in time, but the limits imposed on interest rates and rollovers reduces the astronomical costs.

In that sense, they are definitely for the best, but there are still risks and potential pitfalls, so be sure to keep these in mind before you apply for any short-term loans.

What is a Payday Loan? is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

Should You Keep Investing At All-Time Highs?

A note from a dedicated reader inspired today’s article. It’s a question about the stock market and investing at all-time highs. It reads:

Hey Jesse. So, back in March you said that you were going to keep on investing despite the major crash. Fair enough, good call!

Note: here and here are the two articles that likely inspired this comment

But now that the market has recovered and is in an obvious bubble (right?), are you still dumping money into the market?

Thanks for the note, and great questions. You might have heard “buy low, sell high.” That’s how you make money when investing. So, if the prices are at all-time highs, you aren’t exactly “buying low,” right?

I’m going to address this question in three different ways.

  1. General ideas about investing
  2. Back-testing historical data
  3. Identifying and timing a bubble

Long story short: yes, I am still “dumping” money into the stock market despite all-time highs. But no, I’m not 100% that I’m right.

General Ideas About Investing

We all know that that investing markets ebb and flow. They goes up and down. But, importantly, the stock market has historically gone up more than it has gone down.

Why does this matter? I’m implementing an investing plan that is going to take decades to fulfill. Over those decades, I have faith that the average—the trend—will present itself. That average goes up. I’m not betting on individual days, weeks, or months. I’m betting on decades.

It feels bad to invest right before the market crashes. I wouldn’t enjoy that. But I’m not worried about the value of my investments one month from now. I’m worried about where they’ll be in 20+ years.

Stock Market Crash GIFs | Tenor

Allowing short-term emotions—e.g. fear of an impending crash—to cloud long-term, math-based thinking is the nadir of result-oriented thinking. Don’t do it.

Don’t believe me? Here’s a fun idea. Google the term “should I invest at all-time highs?”

When I do that, I see articles written in 2016, 2017, 2018…you get it. People have been asking this question for quite a while. All-time highs have happened before, and they beg the question of whether it’s smart to invest. Here’s the S&P 500 data from 2016 to today.

S&P 500 – Past five years. Punctuation my own addition.

So should you have invested in 2016? In 2017? In 2018? While those markets were at or near all-time highs, the resounding answer is YES! Investing in those all-time high markets was a smart thing to do.

Let’s go further back. Here’s the Dow Jones going back to the early 1980s. Was investing at all-time highs back then a good idea?

I’ve cherry-picked some data, but the results would be convincing no matter what historic window I chose. Investing at all-time highs is still a smart thing to do if you have a long-term plan.

Investing at all-time highs isn’t that hard when you have a long outlook.

But let’s look at some hard data and see how the numbers fall out.

Historical Backtest for Investing at All-Time Highs

There’s a well-written article at Of Dollars and Data that models what I’m about to do: Even God Couldn’t Beat Dollar-Cost Averaging.

But if you don’t have the time to crunch all that data, I’m going to describe the results of a simple investing back-test below.

First, I looked at a dollar-cost averager. This is someone who contributes a steady investment at a steady frequency, regardless of whether the market is at an all-time high or not. This is how I invest! And it might be how you invest via your 401(k). The example I’m going to use is someone who invests $100 every week.

Then I looked at an “all-time high avoider.” This is someone who refuses to buy stocks at all-time highs, saving their cash for a time when the stock market dips. They’ll take $100 each week and make a decision: if the market is at an all-time high, they’ll save the money for later. If the market isn’t at an all-time high, they’ll invest all their saved money.

The article from Of Dollars and Data goes one step further, if you’re interested. It presents an omniscient investor who has perfect timing, only investing at the lowest points between two market highs. This person, author Nick Maggiulli comments, invests like God would—they have perfect knowledge of prior and future market values. If they realize that the market will be lower in the future, they save their money for that point in time.

What are the results?

The dollar-cost averager outperformed the all-time high avoider in 82% of all possible 30-year investing periods between 1928 and today. And the dollar-cost averager outperformed “God” in ~70% of the scenarios that Maggiulli analyzed.

How can the dollar-cost averager beat God, since God knows if there will be a better buying opportunity in the future? Simple answer: dividends and compounding returns. Unless you have impeccable—perhaps supernatural—timing, leaving your money on the sidelines is a poor choice.

Investing at all-time highs is where the smart money plays.

Identifying and Timing a Bubble

One of my favorite pieces of finance jargon is the “permabear.” It’s a portmanteau of permanent and bear, as in “this person is always claiming that the market is overvalued and that a bubble is coming.”

Being a permabear has one huge benefit. When a bubble bursts—and they always do, eventually—the permabear feels righteous justification. See?! I called it! Best Interest reader Craig Gingerich jokingly knows bears who have “predicted 16 of the last 3 recessions.”

Source: advisorperspectives.com

Suffice to say, it’s common to look at the financial tea leaves and see portents of calamity. But it’s a lot harder to be correct, and be correct right now. Timing the market is hard.

Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.

Peter Lynch

Predicting market recessions falls somewhere between the Farmers’ Almanac weather forecast and foreseeing the end of the world. It takes neither skill nor accuracy but instead requires a general sense of pattern recognition.

Note: The Farmers’ Almanac thinks that next April will be rainy. Nice work, guys. And I, too, think the world will end—at least at some point in the next few billions of years.

I have neither the skill nor the inclination to identify a market bubble or to predict when it’ll burst. And if someone convinces you they do have that skill, you have two options. They might be skilled. Or they are interested in your bank account. Use Occam’s Razor.

Just remember: some permabears were screaming “SELL!” in late March 2020. I’ve always heard “buy low, sell high.” But maybe selling your portfolio at the absolute market bottom is the new secret technique?

“But…just look at the market”

I get it. I hear you. And I feel it, too. If feels like something funny is going on.

The stock market is 12% higher than it was a year ago. It’s higher than it was before the COVID crash. How is this possible? How can we be in a better place mid-pandemic than before the pandemic?

Crazy Pills GIFs | Tenor

One explanation: the U.S. Federal Reserve has dropped their interest rates to, essentially, zero. Lower interest rates make it easier to borrow money, and borrowing money is what keeps businesses alive. It’s economic life support.

Of course, a side effect of cheap interest rates is that some investors will dump their cheap money into the stock market. The increasing demand for stocks will push the price higher. So, despite no increase (and perhaps even a decrease) in the intrinsic value of the underlying publicly-traded companies, the stock market rises.

Is that a bubble? Quite possibly. But I’m not smart enough to be sure.

The CAPE ratio—also called the Shiller P/E ratio—is another sign of a possible bubble. CAPE stands for cyclically-adjusted price-to-earnings. It measures a stock’s price against that company’s earnings over the previous 10-years (i.e. it’s adjusted for multiple business cycles).

Earnings help measure a company’s true value. When the CAPE is high, it’s because a stock’s price is much greater than its earnings. In other words, the price is too high compared to the company’s true value.

Buying when the CAPE is high is like paying $60K for a Honda Civic. It doesn’t mean that a Civic is a bad car. It’s just that you shoudn’t pay $60,000 for it.

Similarly, nobody is saying that Apple is a bad company, but its current CAPE is 52. Try to find a CAPE of 52 on the chart above. You won’t find it.

So does it make sense to buy total market index funds when the total market is at a CAPE of 31? That’s pretty high, and comparable to historical pre-bubble periods. Is a high CAPE representative of solid fundamentals? Probably not, but I’m not sure.

My Shoeshine Story

There’s an apocryphal tale of New York City shoeshines giving stock-picking advice to their customers…who happened to be stockbrokers. Those stockbrokers took this as a sign of an oncoming financial apocalypse.

The thought process was: if the market was so popular that shoe shines were giving advice, then the market was overbought. The smart money, therefore, should sell.

I recently heard a co-worker talking about his 12-year old son. The kid uses Robin Hood—a smartphone app that boasts free trades to its users. Access to the stock market has never been easier.

According to his dad, the kid bought about $100 worth of Advanced Micro Devices (ticker = AMD). When asked what AMD produces, the kid said, “I don’t know. I just know they’re up 60%!”

This, an expert might opine, is not indicative of market fundamentals.

But then I thought some more. Is this how I invest? What does your index fund hold, Jesse? Well…a lot of companies I’ve never heard of. I just know it averages ~10% gains every year! My answer is eerily similar.

I’d like to believe that I buy index funds based on fundamentals that have been justified by historical precedent. But, what if the entire market’s fundamentals are out of whack? I’m buying a little bit of everything, sure. But what if everything is F’d up?

Closing Thoughts

Have you ever seen a index zealot transmogrify into a permabear?

Not yet. Not today.

I do understand why some warn of a bubble. I see the same omens. But I don’t have the certainty or the confidence to act on omens. It’s like John Bogle said in the face of market volatility:

Don’t do something. Just stand there.

John Bogle

Markets go up and down. The U.S. stock market might crash tomorrow, next week, or next year. Amidst it all, my plan is to keep on investing. Steady amounts, steady frequency. I’ve got 20+ years to wait.

History says investing at all-time highs is still a smart thing. Current events seem crazy, but crazy has happened before. Stay the course, friends.

And, as always, thanks for reading the Best Interest. If you enjoyed this article and want to read more, I’d suggest checking out my Archive or Subscribing to get future articles emailed to your inbox.

This article—just like every other—is supported by readers like you.

Source: bestinterest.blog

Things Break. How to Make Sure Your Emergency Fund Can Cover Them

Some of the links in this post are from our sponsors. We provide you with accurate, reliable information. Learn more about how we make money and select our advertising partners.

Your washing machine. Your car. Your front tooth.

If any of those broke right now, would you be able to get it fixed immediately? Or would you have to walk around with a gap in your smile for months until you could get the money together?

If you can’t afford to pay to fix it today, you’re not alone. Most people don’t have $400 saved in case of an emergency either. So before your car breaks down on the side of the road on your way to an interview, make sure you have a solid emergency fund of at least $500.

Don’t know how to get there? Having a budget (that you actually stick to) can help you get there. Here’s one budgeting strategy we recommend, and four other tips that can help you keep your expenses in line.

1. The 50/30/20 Budgeting Rule

The 50/30/20 rule is one of the simplest budgeting methods out there, which is why you’ve probably heard us talk about it before if you’re a regular TPH reader. There are no fancy spreadsheets or pricy apps to download (unless you want to), and it’s very straightforward.

Here’s how it shakes out: 50% of your monthly take home income goes to your essentials — your rent, your groceries, your minimum debt payments, and other necessities. 30% of your cash goes to the fun stuff, and 20% is dedicated to your financial goals. That could be paying more than the minimum on your debts or adding to your investments. And it definitely includes building up your emergency fund!

If you take a look at your budget and realized you don’t have enough leftover to contribute to your emergency fund, here are a few ways to help balance your budget:

2. Cut More Than $500 From One Of Your Must-Have Bills

You’re probably overpaying the bills you have to pay each month. But you can cut those expenses down, without sacrificing anything. Maybe even enough to cover that window your kid just smashed with a ball. Definitely enough to grow your emergency fund a meaningful amount.

So, when’s the last time you checked car insurance prices?

You should shop your options every six months or so — it could save you some serious money. Let’s be real, though. It’s probably not the first thing you think about when you wake up. But it doesn’t have to be.

A website called Insure.com makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and it’ll show you your options.

Using Insure.com, people have saved an average of $540 a year.

Yup. That could be $500 back in your pocket just for taking a few minutes to look at your options.

3. Earn Up to $225 in Easy, Extra Cash

If we told you you could get free money just for watching videos on your computer, you’d probably laugh. It’s too good to be true, right? But we’re serious. You can really add up to a few hundred bucks to your emergency savings with some mindless entertainment.

A website called InboxDollars will pay you to watch short video clips online. One minute you might watch someone bake brownies and the next you might get the latest updates on Kardashian drama.

All you have to do is choose which videos you want to watch and answer a few quick questions about them afterward. Brands pay InboxDollars to get these videos in front of viewers, and it passes a cut onto you.

InboxDollars won’t make you rich, but it’s possible to get up to $225 per month watching these videos. It’s already paid its users more than $56 million.

It takes about one minute to sign up, and you’ll immediately earn a $5 bonus to get you started.

4. Ask This Website to Pay Your Credit Card Bill This Month

Just by paying the minimum amount on your credit cards, you are extending the life of your debt exponentially — not to mention the hundreds (or thousands) of dollars you’re wasting on interest payments. You could be using that money to beef up your emergency savings, instead.

The truth is, your credit card company is happy to let you pay just the minimum every month. It’s getting rich by ripping you off with high interest rates — some up to nearly 30%. But a website called AmOne wants to help.

If you owe your credit card companies $50,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.

The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month.

AmOne keeps your information confidential and secure, which is probably why after 20 years in business, it still has an A+ rating with the Better Business Bureau.

It takes two minutes to see if you qualify for up to $50,000 online. You do need to give AmOne a real phone number in order to qualify, but don’t worry — they won’t spam you with phone calls.

5. Get a Side Gig And Make More Money

Let’s face it — if your monthly income is less than what your monthly expenses are (and you’ve run out of things to cut), you need more money.

Well, we all could use more money. And by earning a little bit extra each month, we could make sure we’re never taken by surprise when an ER visit tries to drain our savings.

Luckily, earning money has never been easier with the rise of the “Gig Economy”. Here are 31 simple ways to make money online. Which one could you do to pad your emergency savings?

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

Why You Need to Open a UGMA/UTMA Account for Your Kids

From the Mint team: As you know, Mint is a free product you can use to help stay on top of your finances. So, how do we make money? We get paid by the advertisers on our site. This compensation may affect how and where products appear on the site (and in what order). Mint.com does not include all products or all available offers. Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

 

Saving and investing for college expenses may seem overwhelming, but setting aside even small amounts can give your child a head start. While many people are aware of tax-efficient investing accounts like 529 plans, you may not know about UGMA/UTMA accounts – another way to save for educational and other expenses.

In this article, we’ll take a look at UGMA and UTMA custodial accounts, what they are, and how to determine the best way to save for your kids’ future, while getting tax advantages.

What are UGMA and UTMA accounts?

UGMA stands for the Uniform Gifts to Minors Act and UTMA stands for Uniform Transfers to Minors Act. Account-holders are “custodians,” and may transfer money into the account to benefit the minor, but the money is managed by the custodian. Typically the money is released to the minor at the age of majority (usually 21 but sometimes 18 or other ages).

How do UGMA and UTMA accounts differ from 529 plans?

529 plans differ from UGMA/UTMA account in a few key areas:

  • 529 plans can only be used for educational expenses, while UGMA/UTMA accounts can be used for anything that benefits the child. .
  • 529 plans are owned and controlled by the person who created the account – with UTMA/UGMA accounts, the funds are transferred to the beneficiary at the age of majority.
  • Unlike 529 plans, custodial accounts are considered the property of the child, which means that it counts for a higher percentage in financial aid calculations.

The two types of plans share some similarities:

  • Both types of accounts are considered custodial accounts that can be used for the benefit of a minor.
  • Anyone can contribute to either type of account — there are no restrictions based on one’s personal income

If you have a medium to long-term horizon, either a UGMA/UTMA account or a 529 account is usually better than just putting your money in a savings account at a low-interest rate. And don’t forget that it is possible to have both a 529 plan AND a UGMA/UTMA account for the same child.

Why You Need to Open a UGMA/UTMA Account for Your Kids

Unlike with a 529 plan, the funds in a custodial account do not have to be used solely for higher-education expenses. The custodian can withdraw money in a UGMA/UTMA custodial account for any expense that benefits the child, like technology, transportation, housing, or any other expense for the child.

The biggest advantage of UGMA/UTMA custodial accounts is their flexibility. Because they can be used for a wide array of expenses, you can use the money in the account even if your child chooses not to go to college. While earnings do not grow completely tax-free like in a 529 plan, earnings in a UGMA/UTMA account are tax-advantaged, but in a different way.

Depending on how you file your tax return, a guardian can choose to include their child’s unearned income with their own tax return. Unearned income is money that doesn’t come from employment, like from interest or investments. In 2020, the first $1,100 of a child’s unearned income can be claimed on the guardians’ tax return tax-free, and the next $1,100 is taxed at the child’s tax rate, which is likely much lower than their parent’s.

Things to watch out for with UGMA or UTMA accounts

If you’re looking to save money or transfer assets to your kids for a variety of expenses beyond education, a UGMA/UTMA custodial account can make a lot of sense. One thing to watch out for is that a UGMA/UTMA account is tied specifically to one named beneficiary. Unlike a 529 plan, where you can transfer the money in an account to a sibling or other beneficiary, with a UGMA/UTMA account, any unused funds must be used or distributed by the time the child reaches their age of majority or their state’s maximum age for custodial accounts.

Apps like Acorns are making it easy to start a UTMA/UGMA account with their new product, Acorns Early. You can start in under a few minutes and set Recurring Investments starting at $5 a day, week, or month. Fun fact: If you invest $5 a day from birth, considering a 7% average annual market return, you could have more than $70,000 by the time the child turns 18. To learn more, visit Acorns.com/Early.


The post Why You Need to Open a UGMA/UTMA Account for Your Kids appeared first on MintLife Blog.

Source: mint.intuit.com

9 Things I Love and Have Learned After 9 Years Of Blogging

I still remember the month I started my blog. I don’t really remember the exact first day, but I remember the first month and how excited I was.

In August of 2011, I started Making Sense of Cents.

That was exactly 9 years ago!

Back then, I had no idea what I was doing, and I also had no goals for my blog.

I didn’t even really know what a blog was, or that they could make money.

I also didn’t even like to write at that time!

In the past 9 years, so much has changed for me.

It’s crazy to think that I started my blog nine years ago, especially when I consider all of the amazing things it has done for my life.

It was something I started and worked on in addition to my full-time day job as a financial analyst, and around two years after I started this blog, I quit my day job to blog full-time.

Some numbers on Making Sense of Cents:

  • My first blog post was published on August 10, 2011. You can read it here.
  • I have published 1,878 articles here on Making Sense of Cents. That number was higher about a month ago, but I recently deleted several hundred articles that I thought weren’t good enough.
  • I have 70,816 comments on my blog posts.
  • I’ve personally replied to 21,080 comments.
  • It took me 6 months to earn my first $100 from Making Sense of Cents.

First, a little backstory on how I began.

You may have heard this from me before, but the funny thing is that I created my blog on a whim after reading about a personal finance website in a magazine. It started as a hobby to track my own personal finance progress, and I honestly didn’t even know that people could make money blogging!

I knew NOTHING about running a website.

At that time, I was working as an analyst at an investment banking and valuation firm. I chugged along working the 8-5, Monday through Friday grind and didn’t see myself having an enjoyable future there. I had a stressful job filled with lots of deadlines and responsibilities that just didn’t interest me. Yes, I know this is the norm for some people, but I just couldn’t imagine myself living like that for 40+ years.

Blogging was an outlet for my stressful day job, and my interest quickly grew, even though it was just a hobby. It gave me space to write about my personal finance situation, have a support group, to keep track of how I was doing, and more. I did not create Making Sense of Cents with the intention of earning an income, but after only six months, I began to make money blogging.

A friend I met through the blogging community connected me with an advertiser, and I earned $100 from that advertisement deal.

That one deal sparked my interest in taking my blog more seriously and learning how to make even more money blogging.

I now earn a great living from my blog, and it all started on a whim, not even knowing that blogs could make money.

Blogging completely changed my life for the better, and I urge anyone who is interested to learn how to start a blog as well.

Blogging has allowed me to take control of my finances and earn more money. It means I can work from home, travel whenever I want, have a flexible schedule, and more!

Related content:

  • How I Successfully Built A $1,000,000+ Blog
  • Welcome To Paradise – We’re Living On A Sailboat!
  • How To Start a Blog Free Course
  • Should I Start A Blog? Here Are The Top Reasons You Will Love Blogging
  • What is a blog post?

And, all of this happened because I started some random blog nine years ago.

I made so many mistakes, and I still make mistakes today. But, I continue to learn and improve, which has shaped this blog into what it is today.

I was so afraid to quit my job when I did, especially for a blog.

So many people thought I was absolutely crazy and making the worst decision of my life. Especially since my husband quit his job at the same time!

Today, I want to talk about the the 9 things that I love and have learned about blogging over the years. I feel like what I enjoy about blogging as well as what I’ve learned go hand in hand.

Oh yeah, if you haven’t yet – please follow me on Instagram.

Here’s what I love and have learned about blogging.

 

1. I love being my own boss.

When I first started my blog and realized I could make an income from it, I quickly learned how much I love being my own boss.

I love being in complete control of what I do, and becoming self-employed may allow you to feel that way as well. I enjoy deciding what I will do each day, creating my own schedule, determining my business goals, handling everything behind the scenes, and more.

I actually have a rule in my life/business where I don’t do anything unless I want to. While I still say yes to many amazing opportunities, I’m not doing anything that feels like a total drag or is against my beliefs. This has really helped improve my work-life balance, which is great because being able to choose how you earn a living amounts to making sure you love everything you do.

I honestly love each and every service I provide – writing online, promoting, networking, interacting with readers, and more.

Running an online business (and being your own boss) may not be for everyone, but it’s something I enjoy.

 

2. A flexible schedule is one of my most favorite things.

One of the best things about working for yourself and being a blogger is that you can have a flexible schedule.

I can work as far ahead as I want to, I can create my own work schedule, and more.

I love being able to work for a few hours in the morning, do something fun during the day (such as a hike), and then work later at night when I have nothing planned. I can also schedule appointments during the day and it’s really no big deal.

I can work at night, in the morning, on the weekends – I can work whenever.

But, this can also be something to be careful with as well, as it can be difficult to have a good work-life balance.

 

3. Location independence is AMAZING.

Being location independent for so many years has been great.

I love being able to work from wherever I am, and it’s allowed me some of the best experiences I’ve had, like living in an RV and now on a sailboat. All I need is an internet connection and my laptop.

The only problem with being location independent is that it can be hard to separate work from the rest of your life. You may find yourself working all the time, no matter where you are, and while that may seem great, being able to take a true vacation can be a hard task.

However, I’m not going to complain because the work-life balance I’m rocking right now is great.

 

4. Remember, success takes time!

Many bloggers quit just a few months in.

In fact, the statistic that I’ve always heard is that the average blogger quits just 6 months in.

I completely understand – starting a blog can be super overwhelming!

But, good things don’t come easy. If blogging was easy, then everyone would be doing it.

It took me 6 months for me to earn my first $100 from Making Sense of Cents. If I would have quit at that time, I would have missed out on so many great things!

Remember, success takes time!

 

5. Don’t write when you feel forced.

One thing I have definitely learned about myself over the years is that I write best when I’m not forced – i.e. when I’m on a deadline.

Instead, I always try to write content ahead of time.

I used to write content for Monday on the night before (Sunday!), and I found that to be super stressful. Even a week in advance was too stressful for me.

I like to be at least a month ahead, as then I can truly write when I feel inspired and happy to write.

 

6. Get ready to learn.

Pretty much everything about having a blog is a learning process.

Blogging is not a get rich quick scheme, and anyone who tells you that it is (or acts like it is) is lying.

Blogging is not easy.

And, you won’t make $100,000 your first month blogging.

Blogging can be a lot of work, and there is always something to learn. Something is always changing in the blogging world, which means you will need to continue to learn and adapt to the technology around you. This includes learning about social media platforms, running a website, growing your platform, writing high-quality content, and more.

This is something that I love about blogging – it’s never stale and there’s always a new challenge.

 

7. Stop seeing other bloggers as competition.

Okay, so this isn’t exactly something that I’ve learned, but I want everyone else to learn!

I have always had this mindset – that there is plenty of room for everyone in the blogging world. However, not everyone feels the same.

So many bloggers see other bloggers as enemies or competition, and this is a huge mistake.

I mostly see this in newer bloggers, and this can really hold them back.

Networking is very important if you want to create a successful blog. Bloggers should be open to making blogging friends, attending blog conferences, sharing other blogs’ content with their readers, and more.

Networking can help you enjoy blogging more, learn new things about blogging, learn how to make money blogging, make great connections, and more. If you want to make money blogging, then you will want to network with others! After all, networking is the reason why I learned how to make money blogging in the first place!

The key is to be genuine and to give more than you take, which are the two main things I always tell people when it comes to networking. I receive so many emails every day from people who clearly aren’t genuine, and it’s very easy to see.

I’ve made great friends who are bloggers and influencers, and it’s truly a great community to be in.

 

8. You don’t need previous experience to be successful.

To become a blogger, you don’t need any previous experience. You don’t need to be a computer wizard, understand social media, or anything else.

These are all things that you can learn as you go.

Nearly every single blogger was brand new at some point, and they had no idea what they were doing.

I’m proof of that because I didn’t even know that blogs existed when I started Making Sense of Cents, and I definitely didn’t know that bloggers could make money. I learned how to create a blog from the bottom up and have worked my way to where I am today. It’s not always easy, but it’s been rewarding!

With blogging, you’ll have a lot to learn, but that doesn’t mean it’s impossible. It’s challenging, but in a good way.

 

9. You can make a living blogging.

This is probably one of the best things that I’ve learned since I first started my blog.

You can actually make a living blogging!

No, not every single person will become a successful blogger (it’s NOT a get-rich-quick scheme), but I know many successful bloggers who started in a similar way as I did – blogging as a hobby and it just grew from there.

For me, I have earned a high income with my blog, and I have enough saved to retire whenever I would like. I am still working on my blog, though, as I enjoy what I do.

 

What’s next?

I’ve never really been much of a planner, so I don’t want to commit to anything HUGE haha.

But, for Making Sense of Cents, I do have some plans. I am working towards improving traffic and readership, and coming up with more and more high-quality content.

I am so grateful to all of you readers, and I want to continue to help you all out by writing high-quality content.

That is really my only goal for now!

If there’s anything you’d like me to write about on Making Sense of Cents, please send me an email at michelle@makingsenseofcents.com or leave a comment below.

Thank you for being a reader!

 

There’s a ton of valuable free resources.

I know I’ll be asked this, so I am going to include this here.

One of the great things about starting a blog is that there are a ton of FREE blogging resources out there that can help you get started.

In fact, I didn’t spend any money in the beginning in order to learn how to blog – instead, I signed up for a ton of free webinars, free email courses, and more.

  1. First, if you don’t have a blog, then I recommend starting off with my free blogging course How To Start A Blog FREE Course.
  2. Affiliate Marketing Cheat Sheet – With this time-saving cheat sheet, you’ll learn how to make affiliate income from your blog. These tips will help you to rapidly improve your results and increase your blogging income in no time.
  3. The SEO Starter Pack (FREE Video Training)– Improve your SEO knowledge in just 60 minutes with this FREE 6-day video training.
  4. The Free Blogging Planner – The Blogging Planner is a free workbook that I created just for you! In this free workbook, you’ll receive printables for starting your blog, creating a blog post, a daily/weekly blog planner, goals, and more.

Do you have any questions for me? Are you interested in starting your own business?

The post 9 Things I Love and Have Learned After 9 Years Of Blogging appeared first on Making Sense Of Cents.

Source: makingsenseofcents.com

The Top Financial Resolutions for 2021

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Have you made your resolutions yet? It can feel a little daunting trying to figure out what you need to focus on, so we made it easy: These are the resolutions everyone else is taking on in 2021, according to a survey by Wallethub, and you should, too. Plus — how to accomplish them.

1. Make A Realistic Budget And Stick To It

This one sounds familiar, right? Oft-regarded as Old Faithful when it comes to New Years’ resolutions, it holds that title for good reason. Having a budget you can actually stick to will set you up for financial success, no matter what your goals are.

It’s easy to slip away from our good financial habits as the year goes on, so it’s particularly important to find a budgeting system that works for your lifestyle and won’t be hard to maintain.

We recommend the 50/30/20 method. It’s simple, yet effective, and has a bit of a cult following, too! Here’s how it shakes out:

50% of your take-home income every month covers your fixed expenses — rent, utilities, groceries, minimum debt payments, etc. 30% goes towards the things you can live without, but don’t want to (like food delivery, a Netflix subscription and travel). Finally, the last 20% of your monthly income is dedicated to your financial goals.

2. Look For A Better Job: Make up to $69/Hour

The most surefire way to achieve your financial resolutions and stay within that budget you made is to earn more money.

2020 made that really hard for most people. Which is why finding a better job, that you actually enjoy — and will pay you more — is a top resolution for 2021.

But what if you could create that higher-paying and more rewarding job? There’s an idea…

Can you open an excel spreadsheet? Does earning $69 an hour sound appealing? How about the freedom to work remotely while helping others succeed?

Those are the perks of working as a bookkeeper, says Ben Robinson, a CPA and business owner who teaches others to become virtual bookkeepers through online courses called Bookkeepers.com.

You don’t have to be an accountant or even really good at math to be successful in this business. In fact, all you need are decent computer skills and a passion for helping business owners tackle real-world problems. The ability to stay moderately organized is helpful, too.

You can make up to $69 an hour, according to data from Intuit, the creator of QuickBooks, and you have no commute. It’s a great opportunity for parents who want a part-time job, recent college grads or anyone who wants to bring in real money working from home.

Robinson shares what it takes to be a virtual bookkeeper, plus tips for making this career work for you in his free class at Bookkeepers.com. If you stick with the classes, you could be running your own business in just a few months.

3. Pay Off Credit Card Debt: Wipe Out All Your Debt by Tomorrow

2020 was actually a good year for paying down credit card debt — Americans did more of it this year than they ever have.

But there’s still work to be done, which is why paying off credit card debt is one of the top financial resolutions this year.  Because if you still have credit card debt, you know. The anxiety, the interest rates, the fear you’re never going to escape…

And the truth is, your credit card company doesn’t really care. It’s just getting rich by ripping you off with high interest rates. But a website called AmOne wants to help.

If you owe your credit card companies $50,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.

The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month.

AmOne won’t make you stand in line or call your bank, either. And if you’re worried you won’t qualify, it’s free to check online. It takes just two minutes, and it could help you pay off your debt years faster.

4. Monitor Your Credit Report

Did your credit score take a dive this year? Or is still stuck at a “fair” grade? Then monitoring any changes on your credit reporting and working to improve your score should be one of your financial resolutions for this year, too.

When it comes to your credit score, it’s important to stay organized and keep tabs on it. After all, it’ll play an essential role in any big purchase you want to make — whether that’s a home or a car.

So if you’re looking to get your credit score back on track — or even if it is on track and you want to bump it up — try using a free website called Credit Sesame.

Within two minutes, you’ll get access to your credit score, any debt-carrying accounts and a handful of personalized tips to improve your score. You’ll even be able to spot any errors holding you back (one in five reports have one).

James Cooper, of Atlanta, used Credit Sesame to raise his credit score nearly 300 points in six months.*** “They showed me the ins and outs — how to dot the I’s and cross the T’s,” he said.

Want to check for yourself? It’s free and only takes about 90 seconds to sign up.

5. Get Insured In Case Of A Catastrophe. You Could Give Your Family up to $1 Million

Talk about a scary year. If a global pandemic didn’t have you thinking about your own mortality, what else could? With that thought in mind, people are adding “buy life insurance” to their list of 2021 to-dos.

Have you thought about how your family would manage without your income if something happened to you? How they’ll pay the bills? Send the kids through school? Now’s a good time to start planning for the future by looking into a term life insurance policy.

You’re probably thinking: I don’t have the time or money for that. But your application can take minutes — and you could leave your family up to $1 million with a company called Bestow.

Rates start at just $16 a month. The peace of mind knowing your family is taken care of is priceless.

If you’re under the age of 54 and want to get a fast life insurance quote without a medical exam or even getting up from the couch, get a free quote from Bestow.

6. Add A Month To Your Emergency Fund

Having an emergency fund is important; you know that. But it’s easy to deprioritize it when things are going fine. And as 2020 showed us, you can lose your job at the drop of a hat, meaning a full emergency fund can be what keeps your lights on.

So prioritize your emergency fund this year. If you don’t have one yet, start by opening an account that will help you grow your money.

One way to do that is with a company called Aspiration. It lets you earn up to 16 times the average interest on the money in your account.

Not too shabby!

Enter your email address here to get a free Aspiration Spend and Save account. After you confirm your email, securely link your bank account so they can start helping you get extra cash. Your money is FDIC insured and they use a military-grade encryption which is nerd talk for “this is totally safe.”

7. Pay Bills Right After Payday

It’s easy to get swept up in the joy that is payday and immediately start buying things you don’t need. But as the final financial resolution on this list, paying your bills right away can help keep the rest of your goals on track.

It means you can avoid late fees on your utilities, which can really add up and destroy your budget. You can pay off your credit card debt without mounting interest charges. And you can prevent any hiccups that would dock your credit score a few points.

Whatever your financial goals are this year, we know you can achieve them! Here’s to making 2021 your best financial year yet.

Kari Faber is a staff writer at The Penny Hoarder.

***Like Cooper, 60% of Credit Sesame members see an increase in their credit score; 50% see at least a 10-point increase, and 20% see at least a 50-point increase after 180 days.

Credit Sesame does not guarantee any of these results, and some may even see a decrease in their credit score. Any score improvement is the result of many factors, including paying bills on time, keeping credit balances low, avoiding unnecessary inquiries, appropriate financial planning and developing better credit habits.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com