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Understanding Long-Term Care Insurance

  • Health Insurance

A lot of us don’t like to think about this, but inevitably there will come a time where we will all need help taking care of ourselves. So how can we start preparing for this financially?

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Many people opt to purchase long-term care insurance in advance as a way to prepare for their golden years. Long-term care insurance includes services relating to day-to-day activities such as help with taking baths, getting dressed and getting around the house. Most long-term care insurance policies will front the fees for this type of care if you are suffering from a chronic illness, injury or disability, like Alzheimer’s disease, for example. 

If this is something you think you’ll need later on, it’s crucial that you don’t wait until you’re sick to apply. If you apply for long-term care insurance after becoming ill or disabled, you will not qualify. Most people apply around the ages of 50-60 years old. 

In this article, we will discuss long-term care insurance, how it works and why you might consider getting it.   

How long-term care insurance works

The process of applying for long-term care insurance is pretty straight forward. Generally, you will have to fill out an application and then you’ll have to answer a series of questions about your health. During this point in the process, you may or may not have to submit medical records or other documents proving the status of your health. 

With most long-term care policies, you will get to choose between different plans depending on the amount of coverage you want. 

Many long-term care policies will deem you eligible for benefits once you are unable to do certain activities on your own. These activities are called “activities of daily living” or ADLs:

  • Bathing
  • Incontinence assistance
  • Dressing
  • Eating
  • Getting off and/or on the toilet
  • Getting in and out of a bed or other furniture

In most cases, you must be incapable of performing at least two of these activities on your own in order to qualify for long-term care. When it’s time for you to start receiving care, you will need to file a claim. Your insurer will review your application, records and make contact with your doctor to find out more about your condition. In some cases, the insurer will send a nurse to evaluate you before your claim gets approved. 

It’s very common for insurers to require an “elimination period” before they start reimbursing you for your care. What this means is that after you have been approved for benefits and started receiving regular care, you will need to pay out of pocket for your treatments for a period of anywhere from 30-90 days. After this period, you will get reimbursed for your out-of-pocket expenses and from there.

Who should consider long-term care insurance

Unfortunately, the statistics are against our odds when it comes to whether or not we will eventually need some type of long-term care. Approximately half of people in the U.S. at the age of 65 will eventually acquire a disability where they will need to receive long-term care insurance.  Of course, the problem is, long-term care can be really expensive. Unless you have insurance, you’ll be paying for your long-term care completely out-of-pocket should you ever need it.

Your standard health insurance plan, including Medicare, will not cover your long-term care. The benefits of buying long-term care insurance are that:

  • You can hold on to your savings: Many uninsured seniors have to dip into their savings account in order to pay for their long-term care. Because it’s not cheap, many of them drain their life savings just to be able to pay for it.
  • You’ll be able to choose from a larger variety of options: Being insured gives you the benefit of being able to choose the quality of care that you prefer. Just like with anything else, you get what you pay for when it comes to healthcare. Medicaid offers some help with long-term care, but you’ll end up in a government-funded nursing home. 

How to buy long-term care insurance

If you’ve recently started thinking about shopping for long term-care insurance, you’ll want to keep a few things in mind:

  • Do you mind being insured on a policy with an elimination period?
  • Can you afford all of the costs including living adjustments?
  • Are you interested in a policy that covers both you and your spouse, otherwise known as “shared care”?

There are a few different ways to go about getting long-term care benefits. You can either buy a policy from an insurance broker, an individual insurance company, or in some cases, your employer. Obtaining long-term care insurance through your employer is probably going to be cheaper than getting it as an individual. Ask your employer if it’s included in your benefits. 

Many people also opt to shop for hybrid benefits insurance policies. This is when a long-term care policy is packaged in with a standard life insurance policy. This is becoming a lot more common in the world of insurance. Keep in mind that the approval process may be slightly different for a hybrid insurance policy than of that of a stand-alone long-term care insurance policy. Make sure to ask about the requirements before you apply. 

Best long-term care insurance packages

There are not very many long-term care insurance companies that exist as there once was. It’s hard to wrap our heads around purchasing something that we don’t yet need. However, here are a few examples of companies that offer competitive long-term care packages:

  • Mutual of Omaha: This company offers benefits of anywhere between $1,500 and $10,000. While the main disadvantage of this company’s packages is that they do not cover doctor’s charges, transportation, personal expense, lab charges, or prescriptions, you CAN choose to receive cash benefits instead of reimbursements. This company also offers discounts for things like good health and marital status. This company’s insurance policies offer a wide range of options and add-ons so you can make sure that all your bases are covered.
  • Transamerica: This company’s long-term policy, TransCare III, is good if you don’t want to hassle with an elimination period. If you live in California, this may not be the best choice for you because California’s rates are a lot higher than the rates in other states. Your maximum daily benefit can be up to $500 with this program, with a total of anywhere between $18,250-$1,095,000. 
  • MassMutual: Popular for their SignatureCare 500 policy which comes in both base and comprehensive packages, is a long-term care and life insurance hybrid. This is very appealing to many seniors wanting to kill two birds with one stone. This company also has a 6-year period as one of their term options, which is pretty high.
  • Nationwide: This program sets itself apart from many other programs available because it allows you to have informal caregivers like family, friends, or neighbors. You will receive your entire cash benefit every month and it is up to you to disperse the funds as you would like. Currently, this company does not have their pricing available online, so you will need to speak with an agent to discuss prices.

Source: pocketyourdollars.com

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8 Surprising Things No One Tells You About Retirement

Surprised retiree
cheapbooks / Shutterstock.com

Most of us spend decades working and dreaming of a day when we can retire. But when we finally arrive at our post-work destination, it’s not unusual to find ourselves in a world of surprises.

Knowing what to expect in advance can help you prepare for — and adjust to — life in your golden years. The following are some key things no one tells you about before you retire.

Housing will remain your biggest expense

Senior couple at home
Monkey Business Images / Shutterstock.com

Many retirees dream of paying off their mortgage so they will be free to spend money on travel and other activities. But the reality is that housing likely will remain the biggest expense in your budget for as long as you live.

U.S. households led by someone age 65 or older spent an average of $17,472 on housing in 2019, as we detail in “Here’s How Much Retiree Households Spend in a Year.” That is easily more than these households spent in any other expense category.

Work will not end — it will simply change

older worker
michaeljung / Shutterstock.com

You will probably work in retirement — and not just because you have to. More than 70% of people say they want to work during retirement, according to the findings of “Work in Retirement: Myths and Motivations,” a joint study by Merrill Lynch and Age Wave.

As you age, chances are good that the nature of work will change, though. The study found that 3 in 5 retirees plan to launch a new line of work that differs from what they have done in the past. Working retirees also are three times more likely than pre-retirees to own their own business.

If you’ve never volunteered before, you won’t start in retirement

Senior volunteer
Rawpixel.com / Shutterstock.com

About 90% of Americans say they would like to do volunteer service for someone or some cause that needs their help, but just 25% actually do so, according to the Stanford Center on Longevity.

When asked why they don’t follow through on the wish to help, Americans most commonly cite a lack of free time. Yet, retirees — with plenty of time on their hands — do not volunteer at rates that are any higher than those of workers.

And among people who did not volunteer during their working years, just one-third finally begin volunteering during retirement.

Retirement can be especially lonely for single men

Sad senior man
YAKOBCHUK VIACHESLAV / Shutterstock.com

In some ways, retirement is more challenging for women. Because they live longer than men, they will have to stretch the funds from their nest eggs over a longer period. To make matters worse, women generally start with less in retirement savings than men do.

But women who are single have one big advantage over their male counterparts: They are less likely to be lonely.

Just 48% of retired men who live alone say they are very satisfied with the number of friends they have, according to an analysis of Pew Research Center survey findings.

However, a robust 71% of women who live alone are satisfied with the number of friends they have.

Health issues likely will catch you by surprise

Lisa F. Young / Shutterstock.com

Slightly more than one-third of retirees say health problems have put a damper on their retirement years, according to a survey from the Nationwide Retirement Institute. And 75% of those folks say their health problems emerged sooner in life than they expected.

To make matters worse, about one-quarter say health-related expenses keep them from living the retirement of their dreams. Such sobering numbers underscore why many people planning for retirement would benefit from opening a health savings account and stashing as much cash as possible into that HSA.

As you grow older, you will feel younger

Pressmaster / Shutterstock.com

Everyone has heard the cliche: “You’re only as old as you feel.”

If that is true, here is some good news for retirees: Paradoxically, the older people get, the younger they are likely to feel, according to “Growing Old in America: Expectations vs. Reality,” a paper from the Pew Research Center.

For example, among people ages 18-29, about half say they feel their age, one-quarter feel older than their age and another one-quarter feel younger.

However, among those 65 and older, 60% say they feel younger than their age and 32% say they feel exactly their age. Just a scant 3% say they feel older than their age.

Your early golden years might not gleam as you had hoped

Unhappy senior woman
Asier Romero / Shutterstock.com

Nearly one-third of recent retirees — 28% — say life is worse in retirement than it was during their working years, according to the Nationwide Retirement Institute survey.

What is the source of this gloom and doom? Money — or lack thereof.

Among those who lament post-work life, 78% cite a lack of income and 76% cite a high cost of living as the top factors in giving them the blues during their golden years.

The message to future retirees is obvious: Save early, save often and keep saving. For more tips, check out “9 Ways to Rescue Your Retirement in 2020.”

Initial disappointment will give way to later satisfaction

Happy senior couple
David Tadevosian / Shutterstock.com

If you are among those disappointed with retirement, take heart: As with so many things, retirement is what you make it. You can take steps to boost your overall satisfaction with life during your golden years.

For example, researchers at the University of Exeter in the United Kingdom found that people who volunteer are less likely to be depressed and more likely to be satisfied with life. There is even evidence that volunteers live longer.

So, if retirement has got you down, stop gazing at your navel and start looking outward at ways to help others.

A lot of other research has found that a happy marriage and spending time with close family and friends can greatly boost retirement satisfaction.

Even if you don’t take steps to make yourself happy, you might just end up feeling joyous anyway. The Pew Research Center found that 45% of adults 75 and older believe life has turned out better than they expected.

Just 5% say it has turned out worse.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

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Personal Financial Improvement With The Fruit Of The Spirit

It’s easy to judge others by their actions as we judge ourselves by our intentions.

Character development can prove to be a challenging and uphill climb. We want to do well but sometimes find it difficult to do so.

Some days we are living a life of victory and other days we’re too ashamed to look ourselves in the mirror!

There are days when we’re crushing our financial goals and other days when our budget is busted and we’re disgusted. Such is life.

Thankfully we’ve been given the fruit of the spirit.

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message that I delivered recently that explains it in greater detail.

Make friends of money but do not love it.

#2 – Joy

The Fruit Of The Spirit - Joy

The Fruit Of The Spirit - Joy

Joy is not based on our circumstances or situations – that would be happiness. James encouraged us to count it all joy when we fell into trying situations.

We can choose joy or misery.

It’s impossible to avoid difficult financial situations. Each of us will face a situation that tests our faith and at times our sanity. During those times, count it all joy. I know it’s easier said than done but it can be done.

Let them shout for joy and be glad, who favor my righteous cause; and let them say continually, “Let the Lord be magnified who has pleasure in the prosperity of His servant” (Psalm 35:27, NKJV).

It’s okay to win at wealth. According to Psalm 35:27 God takes pleasure in it! I am convinced that we could shout for joy a bit more.

#3 – Peace

The Fruit Of The Spirit - Peace

The Fruit Of The Spirit - Peace

Money fights are one of the leading causes of marital friction and ultimately divorce.

I know that things can get nasty when a couple fights about money. Egos are bruised, weaknesses are exposed, dreams are shattered, and hope is deferred.

Peace, as mentioned in the fruit of the spirit, is the absence of or the end of strife. It’s a state of untroubled and undisturbed well being. Doesn’t that sound cozy & comfy?

Let the peace of Christ rule in your hearts, since as members of one body you were called to peace. And be thankful (Colossians 3:15, NIV)

Sounds as though we have a part to play. It’s up to us to allow the peace to rule in our hearts.

Yes, it’s much easier to lash out in anger but that is not peaceful. Our fallen nature wants to cast blame, point fingers, and make sweeping accusations. Those behaviors do not produce peace.

Be thankful. The budget is challenging and sometimes there is more month than money. We all still have reasons to be thankful.

I’ve realized that I am often thinking about things I do not have rather than the countless blessings that I do have. There are billions of people who would gladly trade their problems for mine. When the budget is tough, take some time to truly be thankful for what God has already done.

Allow the peace of God to rule in your heart and family.

#4 – Patience

The Fruit Of The Spirit - Patience

The Fruit Of The Spirit - Patience

I totally expected you to skip this one. Few people like to talk about patience. Furthermore, many Christians are superstitious about it. They are convinced that if they mention it, all kinds of crazy things will happen to them. Not true. Yes, we must overcome but God is not a despotic dictator.

Before we go deeper, a definition of patience would be helpful. It’s not having a sunny disposition while waiting at the DMV for half a day. It’s much more than that.

Patience is the quality that does not surrender to circumstances or succumb under trial. A person operating in patience is consistently constant.

My brethren, count it all joy when you fall into various trials, knowing that the testing of your faith produces patience. But let patience have its perfect work, that you may be perfect and complete, lacking nothing (James 1:2-4, NKJV). 

Bad things, challenging things, and difficult circumstances will find you. You can run but you cannot hide. When these circumstances hit, it’s time to adjust our perspective.

Crying about how life is unfair won’t solve the problem. Actually, it might be prolonged.

When these tests happen count it or consider it joyfully. Why? God is still at work in us both to will and to do of His good pleasure. He has not give up on us. He’s still working on us! (That’s actually good news!)

I know that it’s difficult. I’m in a season of life where it seems that I have the anti-Midas touch. I feel like Andy in The Office when Michael gave him all of the largest accounts as a going away present. “I’m going to lose them all!”.

Yet, when I fall into these trials I know God is working in me. Patience is being developed and God will reward it.

#5 – Kindness

The Fruit Of The Spirit - Kindness

The Fruit Of The Spirit - Kindness

Kindness, regrettably, does not carry the same gravitas as some of the other fruit of the spirit. Perhaps it is misunderstood. Hopefully after today you will have a newfound appreciation of the persimmon of the fruit of the spirit known as kindness.

The fruit of kindness is having the harmlessness of a dove without the wisdom of the serpent. I chalk it up to that feeling you get when you want to be generous but before your brain kicks and talks you out of it. You simply want to be a blessing.

It’s also the mellowing of our character. As we get older we’re often less antagonistic and more apt to give a person the benefit of the doubt. We’re generally kinder after surviving this thing called life.

#6 – Goodness

The Fruit Of The Spirit - Goodness

The Fruit Of The Spirit - Goodness

Goodness is character energized and expressing itself in action. It’s the desire to DO something. Kindness supplies the idea to be a blessing and goodness puts the plan to action.

Earning money is awesome but we all eventually realize that there is more to life than collecting another dollar. Some desire to change their financial, family tree.

Others want to use resources to start a scholarship or feed children or to start a hospital.

Goodness energizes our kindness and makes things happen.

#7 – Faithfulness

The Fruit Of The Spirit - Faithfulness

The Fruit Of The Spirit - Faithfulness

Sadly, faithfulness is not the word I would choose when discussing the money habits of most people.

Almost 80% of Americans are living paycheck to paycheck. Nearly 40% of Americans could not cover a $400 emergency with cash.

However, these same people have luxuries that people just twenty years ago did not enjoy.

The average car payment is now over $550 per month. Car loans are easy to get. I know many twenty + year olds who are driving cars that are new – and they have the payment to prove it. They have little discretionary income as much of it spent before it is earned.

Moreover it is required in stewards that one be found faithful (I Corinthians 4:2, NKJV).

Financial faithfulness is not a mere suggestion. The language Paul uses is quite strong. Faithfulness is required.

# 8 – Gentleness

The Fruit Of The Spirit - Gentleness

The Fruit Of The Spirit - Gentleness

Gentleness gets a bad rap just like kindness.

In some translations the word meekness is used instead of gentleness. Yep, not much better. However both words are powerful!

We’re told that Moses was meek. Moses marched into Pharaoh’s palace and bossed him around! We read in the Psalms and in the Sermon on the Mount that the meek shall inherit the earth. Not too shabby.

Jesus described Himself as gentle. Gentle doesn’t mean soft. A gentle person is not a pushover.

The one who has fully developed the fruit of gentleness is powerful and is fully aware of the power. Jesus entered Jerusalem on the colt of a donkey – lowly and gentle. He was fully aware of who He was and the power at His disposal. At His disposal, were legions of angels who could have wiped out humanity. He chose the route of gentleness.

There is no need to brag about money or wealth. No need to use wealth as weapon against others.

Exalting ourselves based on financial scorekeeping is bad form and quite tacky. Remain humble. We’re simply managing God’s resources. He is trusting you with it. Run it like He would run it – gently.

For who makes you differ from another? And what do you have that you did not receive? Now if you did indeed receive it, why do you boast as if you had not received it? – I Corinthians 4:7

#9 – Self Control

The Fruit Of The Spirit - Self Control

The Fruit Of The Spirit - Self Control

I’m a firm believer in living a life free from debt. The Bible never mentions debt in a positive manner. The borrower is slave to the lender.

Living a life free of debt can be challenging because debt is a ubiquitous method of financing a life style we cannot afford. Willingly going into debt (bondage) could be viewed as being discontent with God’s provision.

We feel as though we deserve a European vacation but the cash is not available. The siren song of Visa and MasterCard can be seductive. Before we know it we’re charging coffee and croissants at a bistro in the Latin Quarter of Paris.

Self-control is the fruit of the spirit that requires us to roll up our sleeves. This is the one that takes discipline. Jesus said if we wanted to be His disciple we would need to deny ourselves daily. Easy? Nope. Worth it? Yes.

Conclusion

Gifts of the Spirit are given but the fruit of the spirit must be developed.

If we dig deep we could witness dramatic financial results simply by developing the fruit of the spirit in our lives. These traits are inside each of us.

Let’s ensure they blossom.

Personal Financial Improvement With The Fruit Of The Spirit

Source: biblemoneymatters.com

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Homie’s Las Vegas, Nevada Housing Market Update October 2020

As the Las Vegas fall season comes around, the Las Vegas market keeps on going up. Read below for Homie’s update.

In October, the real estate market saw growth on most fronts including the number of listings, number of units sold, and in terms of median listing price and sales price. However, units available and availability went down year-over-year. With that said, we’re still seeing the market continue to grow month-over-month which might indicate that buyers and sellers are becoming more comfortable in the existing real estate market.

Here’s the full breakdown:

Monthly Sales

According to the data from the GLVAR® from October 2020, Las Vegas real estate realized a 6.8% increase in the number of single-family units sold compared to 2019. 

List Price

Average new list prices stay strong year over year as October records a 9% increase in new listing prices for single-family units and 8.8% increase for condo/townhouse units. 

*Data from the GLVAR® from October 2020 and October 2019

Sale Price

Property prices continued to grow as this seller market keeps on strong. We saw an 8.8% increase in year-over-year median price for single family units, and also a 14.3% increase in year-over-year median price for condos and townhouses.

*Data from the GLVAR® from October 2020 and October 2019

Days on Market (DOM)

We saw the Average Cumulative Days on Market continue to decrease in October 2020, as demand for this market continues to go strong. Now averaging an insanely brief 33 days on market versus 81 Average Cumulative Days on Market in 2019. This is a strong indicator that the real estate market will continue to remain strong. 

*Data from the GLVAR® from October 2020 and October 2019

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Mint Money Audit: Managing Money When You Make Enough

Anna’s email requesting help with her finances began with a unique confession.

“Farnoosh, my money problem garners little sympathy,” the 32-year-old wrote. “My issue is that I make too much of it.”

Now, THIS is interesting, I thought. I immediately followed up with many questions.

Here’s what I learned through our conversation:

The Denver-based Mint user earns $220,000 per year as an engineer. Anna’s also benefited from years of big bonuses and her net worth, not including her home equity, is close to a million dollars.

After paying taxes and health benefits and maxing out her 401(k), Anna takes home between $8,000 and $10,000 each month. Her expenses mainly consist of a $1,200 mortgage payment, car insurance, gas, food and utilities, amounting to maybe a few thousand dollars per month.

The rest either goes into savings where she stashes about $5,000 to $10,000 for unexpected expenses or into a brokerage account where she has roughly $800,000 invested. A wealth management firm manages that portfolio and charges, she says, an annual 1% fee.

Anna has no consumer debt, besides her mortgage, which amounts to about $338,000. It’s a 30-year fixed rate loan with a 2.85% interest rate. The home has appreciated in recent years with about $100,000 in equity (including Anna’s initial 20% down payment).

So, what is the problem, exactly?

“My big worry is that I don’t have the habits to manage money well,” Anna told me. Her sizeable bank balance has her feeling financially free, although she worries about getting carried away with spending sometimes.

“When I see money in my bank account I rationalize that ‘yea, that vacation is doable. I don’t hold back on the things that may seem frivolous,’” she says. But It seems she wants more financial grounding and to be able to evaluate expenditures and price tags more critically.

Anna’s situation may be unique, but I think relatable in the sense that we all would like to feel more thoughtful with how we spend, save and invest. And while some may do well with earning money, it should not be assumed that they can also manage that money well.

I applaud Anna for wanting to be sure that, even with an impressive net worth, she is actually making wise financial decisions.

Here’s my advice.

Take a Deep Breath

No need to panic when spending on things and experiences that you enjoy. From what I can tell Anna’s prioritizing the serious financial stuff first like contributing the max to her 401(k) and saving all of her annual bonuses in a brokerage account. She has no credit card debt and pays all her bills on time. That’s terrific.

Sometimes we just want to hear that we’re on the right track with our money and I have a very simple way to measure this:

If you manage each paycheck by saving, investing and paying all your bills first, then by all means, you’re entitled to have fun with whatever is left without any fear or regret. Am I right?

If you’ve done the good work of taking care of your future with your money, then don’t hesitate treating yourself and others with the remaining funds today. Splurge away and enjoy your hard-earned money. And remember to enjoy the moment.

Ditch Your Money Managers

I do think Anna could find a better home for her investments.

Paying one percent of her managed assets to this firm may not seem that high of an annual fee. But when you think about Anna’s balance of $800,000, that’s $8,000 this year. What about next year and the decades after that as she contributes more to the account? That fee, compounded over the next 30 years, will amount to – conservatively – over one million dollars. Ouch.

That doesn’t even factor in the expense ratios for each mutual fund that’s in her portfolio.

If all Anna seeks is investment assistance, she may be better suited stationing her money with an automated wealth platform or robo-advisor where her money is largely invested in low-fee index funds or exchange-traded funds (ETF) and the portfolio management fee is typically 0.50% or less.

Of course, breaking up with your financial advisor is not always so simple. It’s especially hard for Anna, as she equated her money managers to “father figures.”

If I were Anna, I would just explain to my advisors over email something like, “I want be more conservative with my money and that includes being extra mindful of the various fees that I’m paying. To that end, I’ve decided to manage my money more independently. I’m sure you can understand. I appreciate your help over the years. Please let me know next steps.”

Planners know the drill and are used to having clients end relationships.  Stay strong. Nobody can really argue with the fact that saving money is a good thing!

Establish Short and Long Term Goals

Anna wants to spend and save with more conviction. I think having some concrete, tangible goals can help.

For example, she shared that she’d like to get married, have a family and own two homes – one near her office downtown and another in the mountains as a getaway.

So, the next step is to understand what these goals cost. What are, say, the going prices on a vacation home in her state? How much might she want to stash in a separate account for the future down payment on this property? Knowing the underlying costs of her goals can better direct how much to spend elsewhere.

Next time she’s planning a vacation, she may be more inclined to price compare or hunt down better deals, as opposed to just judge whether the trip is financially “doable” by the amount of money in her bank account. Now she’ll have the image of that second home and its costs and will make a more informed choice.

Contribute to a Cause

Last but not least, when you feel you make more than enough, like Anna does, this is a great opportunity to be extra charitable. If she’s seeking a way to give her money more meaning and feel purposeful in her financial life, this is a truly wonderful way to go about it. Discover a cause that you’re passionate about and make an impact as a volunteer and donor.

Have a question for Farnoosh? You can submit your questions via Twitter @Farnoosh, Facebook or email at farnoosh@farnoosh.tv (please note “Mint Blog” in the subject line).

Farnoosh Torabi is America’s leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, she’s become our favorite go-to money expert and friend.

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Source: mint.intuit.com

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How To Become a Freelancer and Make a Full-Time Income

Today, I have a fun interview to share with you that will show you how to become a freelancer.

I recently had the chance to interview Ben Taylor. Ben has been freelancing since 2004, and he has worked for dozens of companies.

Yes, this is a career path that you can learn!

As Ben will tell you in the interview below, a freelancer can be anything. You can be a freelance designer, personal trainer, nutrition coach, online teacher, virtual assistant, writer, and more.

If you are looking for a new business or even just a side hustle so that you can learn how to make extra money, learning how to become a freelancer may be something that you want to look into.

In this interview, you will learn:

  • What a freelancer is, who they work for, what they do, etc.
  • How much a new freelancer should expect to earn
  • How a person can find their first freelancing job
  • The steps needed to take to make money as a freelancer

And much more!

He also has an informative course called Freelance Kickstarter. This course takes you through the step by step process of creating your own freelance business.

Check out the interview below for more information.

How to become a freelancer.

1. Please give us a background on yourself and how you started as a freelancer.

I’m Ben, and I live by the sea in England with my wife and two young sons.

I started a career in tech back in 1998, and by 2004 was Head of IT for a government department. It didn’t take long for me to tire of company politics, and the endless meetings that were more about displays of ego than really getting anything done.

I came from an entrepreneurial family and my parents both had businesses rather than jobs. The businesses weren’t always successful, and there were definitely periods of “feast and famine.” However, I was well used to that and I think that branching out on my own was something I was destined to do.

My move into freelancing splits into a couple of clear phases:

Initially, in 2004, I quit my IT job, walking away from business class travel and a gold-plated pension with nothing more than a vague plan to begin to work as a freelancer!

I started to provide IT support and consultancy to both businesses and individuals. I do actually still do some of that work for a select group of long-term clients, but by 2009 I had managed to burn myself out with it. The business was going well, but I was working ridiculously long days and every holiday I tried to take was interrupted by constant phone calls and emails.

So phase two began when I sold off most of my client-base and moved to Portugal! That’s when I really started to broaden my freelance horizons. I had to start from scratch, with an unclear intention to start writing for a living, and no real plan for how to do it.

I did lots of things, including wasting a LOT of time down fruitless blind alleys. I wrote for content mills, started blogs, found clients on freelance job boards, and – slowly and steadily – started to build my income back up. The difference was that I was doing it all completely on my terms with work I really enjoyed. 

I was also living in a dream destination whilst doing it.

2. Can you explain what exactly a freelancer is, who they work for, what they do, etc.?

This seems like a basic question, but it’s very worthwhile. There’s a considerable difference between freelancing and remote working that not everybody appreciates.

First off, a freelancer can be anything. For some reason many people immediately think of writing when they think about freelancing. But you can be a freelancer designer, personal trainer, nutrition coach, online teacher, virtual assistant, and dozens of other things.

It’s also worth noting you don’t only have to be one of those things. I AM a freelancer writer, but I also still dabble in IT consultancy, run my own blogs, provide coaching, and even build websites for people (if they ask nicely and the price is right!)

Regardless of what you do as a freelancer, the important thing to realise is that you are running your own business. The big plus of this is that you are in total charge. But the big negative is that you don’t have any of the safety nets you have if you are employed by a single company. This means you’re responsible for everything from your own insurance and healthcare to your own technical support!

Freelancers typically work for several different clients. There are myriad places to find those clients. It’s quite common for freelancers to find clients within their existing professional networks, and not at all unusual for ex-employers to be among them. Then there are freelance job boards like Upwork and PeoplePerHour, which provide an endless stream of new opportunities.

3. How much should a new/beginner freelancer expect to earn?

This is an incredibly difficult question to answer! I can think of one freelancer I coached who’s in a very specific writing niche. He went onto Upwork with an initial rate of $100 per hour and found lots of work. I started out in IT consultancy charging a similar rate and was quickly earning more than I did in my full-time job.   

However, at the other end of the scale there are people with limited experience or specialist skills who will need to pay their dues. This means building the foundations of a freelance career by proving yourself and taking low paying jobs to build up examples of work and positive feedback. My move into writing was much more like this!

I think “job replacement income” is a useful target for new freelancers to keep in mind. That can vary vastly from individual to individual. Obviously replacing and exceeding a corporate-level income takes much more than freelancing as an alternative to a part-time, entry-level job. That said, people with senior-level experience command much higher freelance rates.

Related content: 20 Of The Best Entry Level Work From Home Jobs

4. What do you like about being a freelancer?

Not having a boss!

The difference in lifestyle is massive when you work for yourself. This is always brought home to me when I’m making plans with friends and family, and people say “I’ll see if I can get the time off.”

This makes me shudder, because it’s SO alien to me now. The example I always use is that I never have to ask anybody before I can tell my children I’ll be at their sports day or nativity play.

When you have what I call a “traditional job,” you DO have the security of healthcare, and perhaps things like holiday and sick pay. But you give up a tremendous amount of freedom in return. Freelancing is profoundly different, and it’s rare to find people who’ve given it a go that would ever choose to go back to full-time employment.

So that’s a huge thing for me, but there are other huge benefits too. I love the fact I can pivot into different things, which always allows me to keep things fresh.

About four times a year I reassess my priorities and lay out new goals for the short, medium and long term. They might involve starting a new blog, writing another book, learning a new marketable skill. For somebody like me who relishes variety, I love having total control of this.

5. How can a person find their first freelancing job?

There are SO many ways to find freelance jobs. I have an article listing 50 different options!

However, they broadly split into two categories that I call “real world” and “online world.”

It’s always worth starting out by thinking of your real life networks. As I’ve said, many freelancers do their first self-employed work for people who already know them. I’d advise people to think about any contacts who’ve already seen the kind of work they’re capable of. These are “warm leads” that are well worth perusing.

It makes sense to think about personal contacts as well as business contacts, too. Plenty of freelancers find clients who are their “wife’s best friend’s brother” or something like that!

Remaining in the “real world,” there are also options like local business groups and networking events – although they are obviously far less accessible at the present time.

Moving to the online world, the freelance job boards are the place to be. They can be intimidating places initially, and it’s crucial to learn how to use them and how to avoid scammers and low paying clients. But there are plenty of great clients out there, including many household name companies who use those boards to hire freelancers.

Often, a quick one-off $50 job can evolve into a long and lucrative client relationship. My wife and I both have clients who we first met on the freelance boards years ago. We still work with them now.

There’s no one-size-fits-all answer to where to find the first client, but there are options for everybody.

setting rates when learning how to become a freelancer

setting rates when learning how to become a freelancer

6. How does a freelancer decide what to set their rates at?

This is a question I’m asked a LOT! The answer leads to lots more questions, and I think many of my readers are disappointed when I don’t just give them an answer of “$x per hour” or “$x per article!”

It’s a subject I cover in my Freelance Kickstarter course, and I’m happy to share a slide from that particular lesson here. The factors to consider include tangible things like the “market rates” for specific types of work, and how each client’s geographical location could impact how much they expect to pay.

But there’s much more to consider beyond that: How much does the gig align with your long-term goals? Will the job produce a great example of work that will help you win more clients in the future? Is this a job that could lead to on-going, long-term work?

I guess a simpler answer is that your rate needs to be fair and competitive, and sufficient to make it worth your while to do the job. However, the rate for each job really needs to be assessed on a case-by-case basis.

The reality is that there are millions of freelancers out there charging vastly different rates, often for very similar services. There’s a bit of an art to working out where you sit on the pricing spectrum, but it’s an art you can learn, and it gets easier with experience.

7. What steps does a person need to take to make money as a freelancer?

The first and most important is working out what it is you actually want to do. That may seem obvious, but my inbox is full of emails from people asking what they should do, without telling me what they’re capable of and what kind of work would make them happy.

I will attempt to lay it out in a fairly simple series of steps:

  1. Work out what skills you have and what market there is for them.
  2. Look at who else is providing those services, what they charge, and what you can provide that will make you stand out and appeal to clients.
  3. Identify any gaps in your knowledge and experience, and work to fill them. This could mean doing some training, or doing some voluntary jobs to bulk out your portfolio.
  4. Establish a personal brand. This isn’t as big a deal as it sounds, but does mean having a solid resumé and LinkedIn profile, and sometimes some other ways to demonstrate your expertise.
  5. Learn how the freelance job boards work. Even if you have a rich personal network to draw on, it’s wise to understand the wider world of freelancing.
  6. Put yourself out there, and start pitching and applying for things.
  7. Make sure you provide perfect work and delight your clients, so that they want to work with you again and recommend you to others.

Repeating and refining these steps is the essence of becoming a successful freelancer.

8. How much does it cost to start this type of business and how much on a monthly basis to maintain it?

Freelancing is generally a low-cost venture, but that’s not to say it’s free. Depending on what you do, you may need specialist equipment and / or software. And if you’re switching from an employed position, you may have to buy things like this yourself for the first time.

A good computer is a must, as it’s often the key tool of your trade. You may also need to budget for things like insurance, possibly including healthcare cover if you are somewhere like the US where this isn’t covered by tax payments.

When it comes to monthly costs, the main things I pay for include software subscriptions and insurance policies. Thankfully these tend to build over time and no individual thing is particularly expensive. You can start out as an online freelancer without even having a personal website, and add things like that once you gain some momentum.

I also recommend budgeting for ongoing training and learning. Thankfully there are all kinds of ways to learn online inexpensively. Companies have training budgets, but when you’re a freelancer, keeping your skills on point is on you.

9. What kind of training is needed to become a freelancer?

I’d say the training splits into two: learning about freelancing itself, and building skills around the specific work you want to do.

Courses like my own Freelance Kickstarter cover the first part. Freelancing is a skill in itself, and we’ve covered some of the important areas in this interview already. Stuff like setting rates isn’t immediately obvious, so learning from those who have been there and done it already is very valuable.

When it comes to skills-specific training it depends what work you’re doing. Let’s say somebody wanted to work as a freelance social media manager. Not that long ago it would have been all about Twitter and Facebook. Nowadays Pinterest is a much bigger deal for many people, and TikTok is emerging as the latest trend.

So as that freelancer, you need to decide what you’re going to focus on. Do you want to be the “go-to guru” for TikTok, or be more of a generalist with social media in general?

It’s wonderful to have the choice.

10. Are there any other tips that you have for someone who wants to become a freelancer?

I have many!

The one I repeat over and over is that you have to eventually go for it and make the jump. I see a lot of people who never get past the “thinking about it” phase. Meanwhile the go-getters have taken the leap of faith and started to build success.

Moving to freelancing is one of those things where there may never be a perfect time to do it. Those who keep waiting for that time to arrive can easily find themselves looking back ten years later with the same commute and the same job.

Another thing I’m like a broken record about is the importance of “paying your dues.” There are often plenty of less-than-ideal gigs to finish successfully before you arrive at the amazing ones.

I wrote about some really dull topics in my early days of freelance writing, for example. But I had to wade through that stuff to build my reputation. It all felt thoroughly worth it a few years later when I was being well paid for travel articles and restaurant reviews!

You learn something from every job along the way: How to handle clients, renegotiate rates, refine your skills, and get work done more efficiently so that you’re boosting the value of your time. Freelancing isn’t supposed to be easy but it’s almost always challenging, interesting and rewarding.

And let’s face it, many people don’t feel that way about their jobs.

11. What can a person learn from your course? Can you tell us about some of the people who have successfully taken your course?

OK, so Freelance Kickstarter expands on all of the topics I’ve touched on here, and many others. It’s intended to remove confusion, and that feeling of overwhelm that often descends when researching this stuff online. It helps new freelancers make a clear plan for getting started. As the strapline goes, the idea is that people “stop wasting time, and start making money!”

I never intended to create a course, but after running the HomeWorkingClub website for several years, it became clear there was a space for something like this. I make it very clear that it’s not some kind of “get rich quick” scheme.

To be brutally honest, I don’t want students who are looking for shortcuts. There is real hard work involved in being a successful freelancer, but it’s a more than viable option for those willing to do what’s required.

The course starts with the basics of working out what you can do and want to do, and presents LOTS of different options. It then moves on to auditing your skills and experience, building your brand, and working out your own personal goals. I particularly like that section because it helps people learn the exact process I use myself every few months to keep things moving forward.

The next lessons cover finding clients, and there’s a big module on learning how to use freelance job boards like Upwork. Once people have completed this, they will know how to uncover the good and genuine jobs, and how to side-step the time-drains and scams.

Students also learn about setting rates, and all the other practicalities of running a freelance business, from getting the tech right to taking undisturbed holidays! We also cover side gigs, and long-term slow-burn projects like blogs and self-published books.

I provide personal support on the course, and people can ask me all the questions they need as they go along. There are also regular exclusive podcasts with extra advice and news of industry developments and new opportunities.

In terms of people who have already taken the course, I recently published a case study from a lady called Lyn. She now has “more work than she can handle” as a freelance writer working via Upwork. Two things that have particularly pleased me about her situation is that she’s cherry-picking projects that interest her, and that she’s been able to do exactly what I suggest in increasing her rates as she builds experience and reputation.

I’ve also had great feedback from people at a much earlier stage. I’ve kept the course price low so that people can use it to help decide if freelancing is for them – just dipping their toes in for the first time.

As one student said, the course is “ideal if you are considering going freelance and don’t know where or when to start, or even if freelancing is for you.”

Several of the testimonials so far have aligned perfectly with the original objective, which was – essentially – to help people see the wood for the trees in an environment than can seem very daunting to begin with.

I set out to create the course I wish I’d had! I’ve made more than my fair share of mistakes in over 16 years of freelancing. The people taking Freelance Kickstarter should hopefully be able to avoid the same ones!

Click here to learn more about Freelance Kickstarter.

 Are you interested in learning how to become a freelancer?

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Source: makingsenseofcents.com

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An Overview of Filial Responsibility Laws

An Overview of Filial Responsibility Laws – SmartAsset

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Taking care of aging parents is something you may need to plan for, especially if you think one or both of them might need long-term care. One thing you may not know is that some states have filial responsibility laws that require adult children to help financially with the cost of nursing home care. Whether these laws affect you or not depends largely on where you live and what financial resources your parents have to cover long-term care. But it’s important to understand how these laws work to avoid any financial surprises as your parents age.

Filial Responsibility Laws, Definition

Filial responsibility laws are legal rules that hold adult children financially responsible for their parents’ medical care when parents are unable to pay. More than half of U.S. states have some type of filial support or responsibility law, including:

  • Alaska
  • Arkansas
  • California
  • Connecticut
  • Delaware
  • Georgia
  • Indiana
  • Iowa
  • Kentucky
  • Louisiana
  • Massachusetts
  • Mississippi
  • Montana
  • Nevada
  • New Jersey
  • North Carolina
  • North Dakota
  • Ohio
  • Oregon
  • Pennsylvania
  • Rhode Island
  • South Dakota
  • Tennessee
  • Utah
  • Vermont
  • Virginia
  • West Virginia

Puerto Rico also has laws regarding filial responsibility. Broadly speaking, these laws require adult children to help pay for things like medical care and basic needs when a parent is impoverished. But the way the laws are applied can vary from state to state. For example, some states may include mental health treatment as a situation requiring children to pay while others don’t. States can also place time limitations on how long adult children are required to pay.

When Do Filial Responsibility Laws Apply?

If you live in a state that has filial responsibility guidelines on the books, it’s important to understand when those laws can be applied.

Generally, you may have an obligation to pay for your parents’ medical care if all of the following apply:

  • One or both parents are receiving some type of state government-sponsored financial support to help pay for food, housing, utilities or other expenses
  • One or both parents has nursing home bills they can’t pay
  • One or both parents qualifies for indigent status, which means their Social Security benefits don’t cover their expenses
  • One or both parents are ineligible for Medicaid help to pay for long-term care
  • It’s established that you have the ability to pay outstanding nursing home bills

If you live in a state with filial responsibility laws, it’s possible that the nursing home providing care to one or both of your parents could come after you personally to collect on any outstanding bills owed. This means the nursing home would have to sue you in small claims court.

If the lawsuit is successful, the nursing home would then be able to take additional collection actions against you. That might include garnishing your wages or levying your bank account, depending on what your state allows.

Whether you’re actually subject to any of those actions or a lawsuit depends on whether the nursing home or care provider believes that you have the ability to pay. If you’re sued by a nursing home, you may be able to avoid further collection actions if you can show that because of your income, liabilities or other circumstances, you’re not able to pay any medical bills owed by your parents.

Filial Responsibility Laws and Medicaid

While Medicare does not pay for long-term care expenses, Medicaid can. Medicaid eligibility guidelines vary from state to state but generally, aging seniors need to be income- and asset-eligible to qualify. If your aging parents are able to get Medicaid to help pay for long-term care, then filial responsibility laws don’t apply. Instead, Medicaid can paid for long-term care costs.

There is, however, a potential wrinkle to be aware of. Medicaid estate recovery laws allow nursing homes and long-term care providers to seek reimbursement for long-term care costs from the deceased person’s estate. Specifically, if your parents transferred assets to a trust then your state’s Medicaid program may be able to recover funds from the trust.

You wouldn’t have to worry about being sued personally in that case. But if your parents used a trust as part of their estate plan, any Medicaid recovery efforts could shrink the pool of assets you stand to inherit.

Talk to Your Parents About Estate Planning and Long-Term Care

If you live in a state with filial responsibility laws (or even if you don’t), it’s important to have an ongoing conversation with your parents about estate planning, end-of-life care and where that fits into your financial plans.

You can start with the basics and discuss what kind of care your parents expect to need and who they want to provide it. For example, they may want or expect you to care for them in your home or be allowed to stay in their own home with the help of a nursing aide. If that’s the case, it’s important to discuss whether that’s feasible financially.

If you believe that a nursing home stay is likely then you may want to talk to them about purchasing long-term care insurance or a hybrid life insurance policy that includes long-term care coverage. A hybrid policy can help pay for long-term care if needed and leave a death benefit for you (and your siblings if you have them) if your parents don’t require nursing home care.

Speaking of siblings, you may also want to discuss shared responsibility for caregiving, financial or otherwise, if you have brothers and sisters. This can help prevent resentment from arising later if one of you is taking on more of the financial or emotional burdens associated with caring for aging parents.

If your parents took out a reverse mortgage to provide income in retirement, it’s also important to discuss the implications of moving to a nursing home. Reverse mortgages generally must be repaid in full if long-term care means moving out of the home. In that instance, you may have to sell the home to repay a reverse mortgage.

The Bottom Line

Filial responsibility laws could hold you responsible for your parents’ medical bills if they’re unable to pay what’s owed. If you live in a state that has these laws, it’s important to know when you may be subject to them. Helping your parents to plan ahead financially for long-term needs can help reduce the possibility of you being on the hook for nursing care costs unexpectedly.

Tips for Estate Planning

  • Consider talking to a financial advisor about what filial responsibility laws could mean for you if you live in a state that enforces them. If you don’t have a financial advisor yet, finding one doesn’t have to be a complicated process. SmartAsset’s financial advisor matching tool can help you connect, in just minutes, with professional advisors in your local area. If you’re ready, get started now.
  • When discussing financial planning with your parents, there are other things you may want to cover in addition to long-term care. For example, you might ask whether they’ve drafted a will yet or if they think they may need a trust for Medicaid planning. Helping them to draft an advance healthcare directive and a power of attorney can ensure that you or another family member has the authority to make medical and financial decisions on your parents’ behalf if they’re unable to do so.

Photo credit: ©iStock.com/Halfpoint, ©iStock.com/byryo, ©iStock.com/Halfpoint

Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
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Tips for Families Going From Two Household Incomes to One

The decision to move from two household incomes to one can be a challenging one. Many people face it when they’re having their first child, or when they’re contemplating a career change that will require going back to school.

Sometimes, it’s not a decision at all, as a life change can force you into this type of situation. Perhaps one partner becomes disabled, or they face job loss in the coronavirus economy. (Sometimes, this can happen abruptly, with the unexpected passing of your partner.)

For Sarah and I, the moment that triggered our choice to move to a single income household was the moment we discovered that our third child was on the way. With two other preschool-aged children at home already, child care was becoming so financially demanding that we were questioning whether it was worth it anyway, and the desire to simply have a tighter knit family for a time while the kids were so young cinched our decision.

Here are seven strategies that worked very well for us in planning for a transition from two incomes to one.

In this article

How to transition from two household incomes to one income

1. Create a budget for life after the change

If you’re considering the possibility of moving to a single income household, your first step is to figure out the financial feasibility of it. Is it even possible to pull this off?

The easiest way to do that is to assemble a budget that incorporates both your reduced income level after the shift as well as the changes in your expenses. You’ll have to make some estimates as to how many of your expenses will change. For example, you’ll likely see a drop in commuting costs, professional clothing, and meals eaten outside the home, and you’ll probably see a natural drop in overall food costs. However, you’ll likely have to supplement that with additional belt-tightening.

How does one even start assembling a budget?  Begin by figuring out where all of your money is actually going, tracking it down with bank and credit card statements.  Organize all of those expenses into categories that make sense for you, and total up how much you spent in those categories.  Then, figure out sensible cuts within each of those categories.

When Sarah and I assembled our one-income budget we realized we would have to drastically cut our entertainment and food expenses to make things work. We decided that strictly adhering to eating at home and cutting back heavily on spending for entertainment and travel would have to happen, but it was still possible and realistic to make it work.

2. Consider your health insurance options

In an ideal situation, the person who is remaining in the workforce already has the best health insurance package, which the whole household is already using. However, sometimes you may find that the person leaving the workforce is the one with the better option, meaning that you either need to switch to the other health care plan or, if one isn’t available, shop for one on the open market.

3. Consider long-term FMLA leave or a sabbatical

Some workplaces offer unpaid leave through Family Medical Leave Act (FMLA) that can last for up to a year in some situations, and other workplaces offer sabbaticals in the form of periods of unpaid leave. These options can help you retain access to some workplace benefits while you are away from the workplace.

4. Do a trial run on one income first

Now that you have a clear picture of the expenses that you’ll face after moving to one income, do a “trial run” on that income. Commit to living as though you had just one income as closely as possible, sticking to your reduced expenses in areas like food, entertainment and hobbies to see what problems expose themselves.

If you find that you cannot sustain your household on one income, try revisiting your budget to find other areas where you can cut back on expenses. In the case that you find you can’t cut back any more expenses, consider some work-from-home jobs to pick up a side gig or increase your income while staying home.

5. Build a healthy emergency fund

An emergency fund is a pool of cash that is set aside for unexpected events, typically in a savings account. One of your major goals during the time leading up to transition to a one-income household should be to build up that emergency fund, so that you’re able to handle unexpected events easily once you go from two incomes to one. If you’re executing the trial run strategy, then the extra income from the second income earner during that trial run period provides the funds you need to build that emergency fund.

Ideally, all families should have a healthy emergency fund, but it’s even more important when you’re transitioning to a single income, as there’s more financial risk involved. The truth is that life contains a lot of risk and emergencies will happen, and while there are many things you can do to avoid debt in an emergency, the best one is to simply be prepared for it. Aim to have at least a couple of months of living expenses set aside, so that things don’t fall apart if the single income earner loses their job as well.

6. Pay off high-interest debts

If you have a healthy emergency fund in place, the next step is to get rid of as much of your high-interest debt as possible. As with the emergency fund, this is much easier to do if you’re doing a trial run of transitioning from two incomes to one income.

Start by assembling your own debt repayment plan, which will help you organize your debts in a sensible way and will naturally prioritize high-interest ones.

The advantage of paying off debts during your trial run period is that it reduces your expenses when you’re living with a single income. That’s one fewer bill that you have to deal with, meaning it’s easier to make ends meet.

7. Develop home economics skills

As you’re preparing to switch to a single income household, one very useful tool to have in your repertoire is basic frugal household skills, like food preparation, household management and basic repair skills. Use this trial run as an opportunity to really hone your skills in those areas when you have a financial safety net of a second income to help clean up any mistakes along the way.

For example, you might completely burn dinner as you’re learning to cook at home, but this is much less of a crisis if you can afford to order pizza, an option that might not work as well later when you’re on a much tighter budget.

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

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How to Stop Spending Money You Don’t Have

So, you want to stop spending money.  That might be easier said than done.  When it comes to managing your money, there are things you need to do.  You know you need to budget, try to get out of debt and control your spending.

stop spending money

stop spending money

The issue is not necessarily that you are spending money on things you don’t have; you just aren’t spending it in the right way.  The issue is not that you don’t make enough money, it is just not having a plan on how to use it once you get it.

That’s what happened to me.  Unfortunately, I didn’t have a plan for my money.  That lead me down a path I did not like.

After years of working without a plan, I found myself on the steps of a courthouse declaring bankruptcy. And, because I did not learn how to make the right changes in managing my money, my husband and I found ourselves in debt a few years later.

The difference with the second time I had debt was that I took responsibility for it.  I owned what happened, and he and I worked together to make changes to not only pay off our debt but never go down that same road again.

If you find yourself in the same situation, you need to make big changes.  To start, you have to stop spending money you don’t have.  Plain and simple.

HOW DO YOU KNOW IF YOU ARE OVERSPENDING?

You’ve maxed out your credit cards

When there is no room to charge anything on your cards, you might have a problem.  In most cases, maxed credit cards signals you are living beyond your means.  If you have to continue to charge because you don’t have money, then you are spending too much.

You can’t find a home for your latest purchase

Your temptation might be electronics or handbags. No matter what you love to buy, you might notice you are running out of room to store things.  When the stuff takes over your home and is causing clutter, it is time to take a long hard look at how you spend money.

Your budget never works

There may be months when you don’t have enough money in your budget to cover your mortgage or food.  When you continually spend money on the wrong things, your budget will not work.

That means if you have just $50 for entertainment, do not spend $75.  That other $25 has to come from another budget line.

You spend more than you earn

Take a look at your credit card balances. You might be paying only the minimum balance because you can’t pay it in full. When you spend more than you make and continue to add more debt, take a look at what you are buying.  It might be time to pull back and stay out of the stores.

HOW TO STOP SPENDING SO MUCH MONEY

Use a budget 

When many people hear the word budget, what they hear is “you don’t get to spend any money.”  That is the opposite of what a budget does.  Your budget is a roadmap.  It shows you where your money should go – including the fun money you want to spend!

Your budget helps you know what you need to do with your money when you get paid.  Look at every penny as an employee of yours.  You get to tell it where it needs to go.  Some of them will go to rent, others to your car payment and still others will go to the into your savings account.

The best part of a budget is that you can allow for fun.  Learn how to budget to have fun and even how to budget if your paychecks are never the same amount.

Related: How to Figure Out How Much to Budget for Groceries

Write down your financial goals

Successful people start planning by having the end in mind.  It may mean taking a backward approach to your finances.

Think about what you want.  Do you want to get that credit card paid off or maybe take that dream vacation?  No matter your goal, figure out what it will take to get there, and that will help you set your goal.

It may mean fewer dinners out or putting in some overtime at work.  Whatever your goal, make sure it is clearly defined and you keep it front and center.  Put it on your refrigerator.  Keep a photo of it in your wallet.  Make sure you see that budget staring you back in the face every time you even think about spending money.  That will usually stop you right in your tracks.

Related:  The Secret Trick I Use to Stick to My Budget

Cash is a Must so that you never overspend

If you are someone who is always saying “I can’t stop spending money,” then you need to use cash.  I’m sure you’ve heard it time and time again. Using cash is one of the simplest tricks to help you stop spending money you don’t have.

It works because it gives you defined money.  If you have $100 to spend at the grocery store, there is no way you can even spend $101.  You don’t have it.  You are forced to spend wisely and think more about every purchase you make.

I know some of you are reading this saying “but if I have cash I just spend it so fast.”  That is because you are not tracking it and taking responsibility for your spending.

You need to use the cash envelope method.

If you have an envelope for groceries with $50 left in it, sure, you can dip into that and grab $20 to spend on lunch.  But, what happens when you need food for your family?  That means you’ve just $30 to buy food – which may not get you much.

Cash forces you to think about every purchase you make.

Related:  How You Can Become Accountable With Your Money

Stop paying for convenience

There is a quick fix for nearly everything.  You can find dinners in boxes, small pre-packaged snacks, etc.  Rather than purchase convenience items, buy the larger size snacks and then re-package yourself into smaller baggies.  You will not only get more out of a box, but you can even control how much you put into each baggie.

There are other ways we pay for convenience.  We pay for someone to iron our shirts, wash our cars and even mow our lawns.  By doing these things ourselves, we can keep much more money and easily stop overspending.

Read more:  How You are Killing Your Grocery Budget

Put away the credit cards to halt spending money

One of the simplest ways to stop spending money is to get out the scissors and cut up those credit cards!!  Or, if you aren’t ready to cut them up, put them on ice.  Literally.  Freeze your credit card in a block of ice.

If you keep spending, you have to cut off the source at its knees.  While I don’t think credit cards are a good fit for everyone, I know they work for some.

If you must use credit cards, never charge more than you have in the bank to pay it off.  That means you can’t charge the amount you believe you will get on your paycheck.  There is never a guarantee that your check will arrive.  Spend only the amount you have, not what you will receive.

Related:  How to Pay off Your Credit Card Debt

Pay your bills on time

We all have bills.  We know when they are due.  When you miss the payment due date, you get assessed a late charge.   Pay them on time, so you don’t pay more than you need to.

In addition to late fees, not paying your bills on time can have an adverse effect on your credit score. Learn how to organize your bills, so you never pay them late again.

Do not live above your means

Few of us would not love new clothes or a new car. We all would like to make more money or get the hottest new device.  The thing is, can you afford it?  Is it a want or is it a need?

If you are using credit or loans to get items that you can not afford, then you are living beyond your means and spending money you don’t have.  Scale back and make sure that you can honestly afford the house or the car and that it doesn’t ruin your budget and cost you too much.

Read more: Defining Your Wants vs. Your Needs

Don’t fall for impulse buys

Stores are sneaky about making us spend money.  They use signs, layout and even scents to lure you into wanting to buy more.  The thing is, if you purchase something you did not intend to, then you are already blowing your budget and probably overspending.

Another way that you are spending too much is when you plan dinner but then decide at the last minute to go out to dinner instead.  Why do that when you have food waiting for you at home (which you’ve already paid for)?

The final reason you may impulse buy is that of emotion.  If you feel a rush because of that new item, you may purchase out of impulse and emotion instead of need.

Read more:  Stopping Impulse Shopping

Plan your meals

One of the most significant changes we made was to menu plan.  It took me some time to put it all together, but now, I can plan our meals in no time at all.  I use the simple menu planning system that I’ve taken time to build over the years.

While this works for me, I remember when I was learning how to menu plan.  It was quite a process, and I relied upon the help of some experts in the field.   One of them I have used is Erin Chases’s $5 Meal Plan.  I loved how simple it was to create our meals each week.

Even the best menu plan won’t work if you aren’t eating what you buy.  Make sure you are not making mistakes with your grocery budget and eat what you buy.  After all, throwing food away is just money in the trash.

Related:  Money Saving Secrets Stores Won’t Tell You

Challenge yourself to spend less 

There is something fun about trying to beat yourself at your own game.  By this I mean, if you have $150 to spend on groceries for the week, try to spend only $130.  That gives you $20 more to spend on something else — or put towards your goal.

Related:  The Yearly Savings Challenge for Kids and Adults

Stay out of the stores so you don’t shop

If you can’t control your spending and continue spending money you don’t have, you have to remove the temptation.  Even something that seems harmless can result in spending money.

Related:  Fun and Frugal Date Night Ideas

Track the money you are spending

Keep track of your spending by adding up the amounts on your phone.  That way, you’ll have no surprises when you get to the checkout lane. You can try Shopping Calculator for Android or Total-Plus Shopping Calculator on iTunes.

When you start to see that total creep up, you realize how much you are spending. That may help you think twice about that extra box of treats you are tempted to toss into the shopping cart.

Use the three-day rule before you spend a dime

The three-day rule is pretty simple.  If you see something you want, wait for three days before you buy it.  Once the third day is up, ask yourself if you still feel it is something you need.

If it is, look at your budget to ensure it works with this month’s spending.  Then, double check the cash to make sure you have enough to pay for it.  If both of these work, you can consider buying it.

The funny thing is that most purchases are impulse buys and the three day waiting period helps you realize you don’t need it.  And had you purchased it, you may even have buyer’s remorse at the three-day mark.

Related:  The Trick To Make Sure You Never Overspend

Don’t use coupons and skip the sales

Sales are very tempting.  They lure you in and often result in making purchases you would not do otherwise.  That is why you nee your list. Stick to it and don’t fall for the sales.

You also need to put away the coupons.  Well, you can use them, but responsibly.  If you would not purchase an item at full price, you should never buy it only because there is a coupon.  A coupon is not a golden ticket to shop.

In addition to this, avoid the clearance aisles and end caps.  These are money spending traps!  You walk by, and your eye is drawn the end cap with the big SALE sign in front of it.  If you don’t need that item, don’t grab it.  Also, don’t walk by the clearance section.  It is very easy to pick up items you don’t really need.  That makes you again spend money you had not planned on.

Instead, shop the sections you need.  If you need detergent, go to that section and grab your item and then go to the next on your list.  Don’t wander through the store as you will be more likely to do “cart tossing.”   This is when you put items in your cart without noticing what you are spending.

I’m not saying not to buy anything on sale.  Just get the things you need that are on sale this week, or that you will need in the next weeks.  You probably need spaghetti noodles, but you don’t need a new pair of shoes.

Related: The Money Traps You Will Fall For

Never shop without a list

Never shop without a grocery list. Ever. Then, force yourself to stick to it.

Some simple ideas include using a timer to limit how long you can be in the store.  If you have only 20 minutes to shop, you will be less likely to grab the items you don’t need and stick with those that are on your list.

Another is to challenge yourself to see how fast you can finish your shopping.  If you have the list and stick to it, you’ll find you spend less time shopping and more time enjoying the things you love.

The best reason to use a list is that you don’t have to worry about forgetting that “one item” you know you need.  When you force yourself to make a shopping list and stick to it, you’ll always have everything you need on hand for dinner.

Keep emotion out of shopping

One tip is never to shop hungry.  When you do, your stomach controls what you buy.  The added benefit is buying the healthy foods you need.

If I am feeling bad about myself, buying something I have been wanting may end up making its way home with me. Spending money to make myself feel better never works.

There are many emotions attached to spending.  You have to identify which one(s) apply to you and find a way to fulfill that need through another method – other than spending money.

Define Needs vs. Wants

There are items we need.  You need food, but do you need the extra box of cookies?  Yes, the sweater is really cute but is it something you need or just something you want.  Ask yourself  “is this a need or a want” with each item you buy.  You’ll soon be on your way to less overspending.

Clean and declutter

When you declutter, you find all of those items you’ve spent money on and no longer need.  It makes you realize where you are spending.  You will also recall how clean your closet now is. Do you really want to fill it back up with more stuff?

The added benefit of decluttering is that it keeps your house clean and organized!  You can find what you need more easily and don’t have so much “stuff” cluttering the house.

Save first, spend later

It is important always to pay yourself first.  Remember that the amount you have to spend is what is left over after you pay your bills and pay yourself.

You should always tell your money where to go instead of it deciding for you.  So many do that the opposite and save after they spend.  If you still save a little, you will quickly build a nice emergency fund and can have less guilt about your spending.

Learn from your mistakes

The most important thing you must do is figure out where you’ve gone wrong in the past.  Your mistakes will be different from everyone else’s.  You may shop out of emotion while someone else does out of boredom.

You also need to keep in mind that you will make mistakes.  There will be months when you fall off the wagon.  Don’t beat yourself up over it.  Use it is a chance to learn from them and do what you can to not repeat them again.

Related:  The Mistakes You Will Make When Getting Out of Debt

Gaining control of your spending is possible.  You just need to have the desire – and the tools – to make it happen.

stop spending

stop spending

Source: pennypinchinmom.com

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