Are you looking for a way to boost your savings goals? Thanks to technology, there are plenty of tools out there that can help you reach your goals – no matter what you are trying to accomplish.
Here are some tools that can help you meet your money savings goals:
- Mint: If you want to see where your money is going, as well as set up a budget and track your progress, Mint is the free way to do so. Millions of users have used Mint to begin getting back on track.
- LearnVest: If you want to add an investment dimension to your saving, LearnVest is a great way to do so. Learn about your habits and create a long-term plan. Bootcamps help you learn to save more effectively, and you can pay for planning services to help you create a five-year plan to put you on the right track.
- Personal Capital: What Mint lacks in investing chops, Personal Capital makes up for. You can set savings goals quickly and easily, and use the freemium tools offered by the site to create long-term plans for your money. Personal Capital will even evaluate your retirement accounts and recommend lower-cost options, saving you money over the course of time.
- Betterment: This is one of my favorite savings tools. Betterment requires you to make a commitment of at least $100 a month. You answer questions that help the site assess your risk tolerance and your goals, and then your money is automatically invested according to your profile each month. A great way to help you build toward your retirement savings goals.
- SmartyPig: Earn a reasonably high yield on your money with SmartyPig, plus get a bonus boost when you use your SmartyPig card for purchases. You can also get a cash back boost when you redeem your account for certain gift cards. Set a goal, and SmartyPig will help you save for it.
- ReadyForZero: Want to demolish debt and start saving more? ReadyForZero can help. You can create a personalized plan that will help you pay down your debt while paying as little as possible in interest. It’s a great way to get into savings mode while getting rid of debt.
- Barcode Scanner Apps: I am very fond of barcode scanner apps for smartphones. You can snap an image of an item’s barcode, and then see comparisons to prices in town and online. It’s a great way to make sure that you are getting the lowest price. You can then save the money, putting it toward your goals.
- Coupon Apps: Don’t forget the coupon apps. You can find mobile coupons, or scan and store hardcopy coupons to your smartphone. Organize your coupons on your phone, and then have them scanned at the register.
- YNAB: For the zero-based budgeter, YNAB is a great tool. You can give every dollar a job – including saving up for your goals. This isn’t an automated program, so you are forced to evaluate your spending before it happens. YNAB is a good way to make sure you plan ahead, and help put your savings goals first.
- SMART Goals: I like this app because it takes you through the process of setting goals using the S.M.A.R.T. method. You can track your progress, as well as adjust if you need to. Plus, this app can be used for more than just your money goals. Get on the right track with this helpful and informative app.
What are some other tools that can help you meet your money savings goals? Leave a comment!
High-end reward cards can make sense for regular people, not just high spending big shots. Despite their high annual fees, these cards can offer even more valuable rewards and benefits. The American Express Platinum card is one of the most popular luxury travel reward cards available, while Citi recently introduced its Prestige card to compete for this market.
Let’s look at how these cards match up head to head:
The American Express Platinum Card
The current champion, the American Express Platinum card, still has a lot of strengths. For each dollar spent, cardholders earn one point in the American Express Membership Rewards program. Points are worth one cent toward travel or gift card options, or they can be transferred to the mileage programs of over a dozen different airlines. New cardmembers earn a 25,000 point sign up bonus after spending $2,000 on their card within three months of opening the account.
There are still more benefits than can be listed here, but these are the highlights: Cardholders receive access to the airport lounges of American, Delta, and US Airways as well as over 600 lounges in the Priority Pass network. Cardholders also receive a $200 airline fee credit and a $100 credit toward the application fee of the Global Entry program. This membership is offered by the United States Customs and Border patrol and it allows expedited entry into the United States and access to the TSA’s Pre-Check program when traveling domestically.
Other benefits include access to the Fine Hotels and Resorts collection of properties including a room, upgrades, complimentary breakfast, and a $100 food and beverage credit during each stay. American Express also offers a concierge service to assist you with virtually any need, including restaurant reservations, travel arrangements, and event ticketing.
There is a $450 annual fee for this card, and additional cards are $175 per year. There are no foreign transaction fees for this card. And finally, this is a charge card and members are required to pay their balance in full each month.
Insider tip: The $200 airline fee credit is a great benefit, but only if you use it right. First, you have to choose a single airline for the fees to be credited from. Also, you need to know the rules. For example, seat selection fees are reimbursed, but not upgrades to first class. In addition, in-flight entertainment fees are eligible, but not fees for Wi-Fi. And finally, ticket purchases are never reimbursed.
The Citi Prestige Card
This new upstart card has a lot of things going for it. The Citi Prestige card is offered as part of the MasterCard network and cardholders earn one point in Citi’s ThankYou rewards program for each dollar spent. When it comes time to redeem rewards, ThankYou points are worth one cent each toward hotel and rental car reservations, and 1.33 cents toward airfare on nearly any airline. In addition, points can be transferred to the Hilton HHonors program at a ratio of 1:1.5. There are also a variety of statement credit, loan repayment, and gift card options, but they return just one cent per point in value – or less. New cardholders also receive 30,000 points as a sign up bonus after spending $2,000 within three months of opening an account.
Citi also appears to be trying to closely match the American Express Platinum card’s key benefits. For example, Citi also offers a $200 airline statement credit and a $100 fee credit for the Global Entry program application. Citi also includes a membership with an airport business lounge program called Airport Angel.
And while this program claims to grant members access to “over 470 lounges in 281″ cities, it has lounges in only five airports in the United States.
Other benefits include upgrades, free breakfast, and a fourth night free in their World Elite Luxury Hotel and Resort collection. This card also features an EMV smart chip that makes it compatible with the next generation of unmanned kiosks already used in Europe and around the world. And of course, cardholders receive access to a global concierge team available 24 hours a day to assist in purchasing tickets for travel and events.
There is $400 annual fee for this card, and additional cards are just $50. Thankfully, there are no foreign transaction fees for purchases outside the United States. The standard interest rate is 15.24%.
Insider tip: If you already have a Citi card that earns ThankYou points, you may still want to get this card. With most of their other cards, ThankYou points are worth one cent each towards airfare, but holders of this card can redeem them at a rate of 1.33 cents per point. And the best part is, the new rate applies to existing points earned on other cards, even if they were received before you got this card.
The new Citi product puts up a good fight, but it can’t overcome the champion from American Express for several reasons. First, the American Express Membership Rewards program is much more flexible than Citi’s ThankYou program as points transferred to airline miles that can be worth far more than 1.33 cents each. And with access to just a fraction of the lounges offered by American Express, the Citi Prestige card really can’t compete.
Nevertheless, the Citi card still holds the upper hand in a few areas. Its annual fee is less for both the first card and additional cards. Additionally, Citi’s airline fee credit policy is a lot more flexible. And finally, Citi beat American Express to the market when it comes to the EMV smart chip, which the Platinum card really should have by now.
The American Express Platinum card has some new imitators, but no card has been able to knock it from its throne.
Which card do you feel is right for you? Are you willing to pay these high annual fees for the benefits? Leave a comment!
There are lots of reward credit cards that allow cardholders to earn valuable points, miles, and cash back. Yet most of the products come with an annual fee that can start at around $50 and go up to several hundreds of dollars per year.
But what if you are trying to maximize your credit card rewards while refusing to pay an annual fee? American Express offers its Blue Sky card while Capital One features its VentureOne rewards card, each with no annual fee and competitive rewards.
Let’s compare these cards side by side and see which one is the better value, keeping in mind that those who use reward cards should always pay their balance in full each month. Otherwise, cardholders are best off using a non-rewards card with a lower interest rate.
VentureOne from Capital One
VentureOne cardholders earn 1.25 miles for each dollar spent on all purchases. Capital One miles are worth one cent each as statement credits toward any travel related expense. In addition, new cardholders start off with a 10,000 mile sign up bonus, worth $100, after spending just $1,000 within three months of opening an account.
This card also comes with an attractive promotional financing offer. New cardholders receive 12 months of 0% APR financing on new purchases. There is no annual fee for this card, and no foreign transaction fees.
The standard interest rate is 11.9% – 19.9%, depending on the applicant’s credit worthiness. That said, those who sign up for reward cards such as this should be paying their balance in full every month. Otherwise, cardholders are better off using a credit card that doesn’t earn rewards, but has a lower interest rate.
Insider tip: Capital One offers a similar card called the Venture Rewards card. That card offers two miles per dollar spent, but has a $59 annual fee. Therefore, those who would spend more than $8,000 a year on this card would earn more rewards by using the card with the annual fee.
American Express Blue Sky
American Express Blue Sky offers cardholders one reward point per dollar spent on all purchases. And for some reason, cardholders need to accumulate 7,500 points to redeem them for a statement credit of $100 toward travel expenses. Therefore reward points are worth a healthy 1.33 cents each. In addition, new cardholders earn 7,500 points, worth $100, when they make $1,000 worth of transactions within three months of opening a new account.
New cardmembers also receive a 0% APR introductory rate on new purchases that is valid for 12 months. After that, this card has a variable rate that is currently 17.24, 20.24 or 22.24%, based on your creditworthiness.
American Express cards are known for their perks and benefits and this card does not disappoint. There is a 24/7 global assist hotline to help with issues when traveling, as well as car rental and damage insurance, and travel accident insurance. In addition, cardholders receive a roadside assistance dispatch service, although they are responsible for payment. Finally, cardholders receive Entertainment Access emails that offer exclusive access to shows, concerts, and sporting events.
There is no annual fee for this card, but there is a 2.7% foreign transaction fee imposed on all charges processed outside of the United States.
Capital One has a great product here, but American Express edges it out primarily because the American Express Blue Sky offers 1.33 cents in value per each dollar spent versus only 1.25 from Capital One VentureOne. The American Express card’s benefits are also slightly better.
Otherwise the cards are pretty evenly matched with no annual fee and a $100 sign up bonus. Those who travel outside the United States would be best off using any Capital One card during their trip, just to avoid foreign transaction fees.
Both of these cards offer competitive rewards with no annual fee, and it is up to applicants to choose the one that will return the most rewards. And for most credit card users, American Express Blue Sky will come out ahead.
Which card is your favorite? Leave a comment!
If you are recently out of bankruptcy you’re going to face challenges, one of which will be to re-establish your credit. You might think that once you file for bankruptcy you’ll never borrow money again, but the reality of life in the 21st Century is that you will need credit at some point. And rest assured, even with a bankruptcy in your past, you will be able get credit again.
There will of course be some limitations, but you should be able overcome all of them in due time. Here some tips to help you along the way.
1. Lower your expectations – for a while.
If you’ve only been out of bankruptcy for a few months, you shouldn’t be thinking in terms of buying a house or a new car, or taking on any major purchases that will involve the use of credit. The worst time in a bankruptcy is right after it’s over. You’ll be able to borrow money soon enough, but you’ll have to lower your expectations until then.
As a rule, mortgage lenders will not work with you unless your bankruptcy was discharged at least four years ago in the case of a Chapter 7 bankruptcy. If however you did a Chapter 13 bankruptcy, mortgage lenders will work with you in as little as two years after filing.
In the meantime, practice living your life without some of the big ticket amenities you’ve had in the past. Rent a house or an apartment, drive a used car, and forego vacations for a couple of years. Practice living frugally – you’ll need to from now on.
2. Never be afraid to go forward.
Once your bankruptcy has been discharged, you may be afraid that you can’t do anything – even get an apartment, an insurance policy or apply for jobs and do some interviews. But that can be a bad strategy. You need to get moving in a positive direction as soon as your bankruptcy is over. A big part of the process of re-establishing your credit is a matter of getting out and getting involved in business transactions. Yes, there will be obstacles, but coming out of bankruptcy is a process – not an event. You’ll have to work at it gradually.
If you file for bankruptcy it’s likely that insufficient income had something to do with it. In order to rebuild your life and your credit, you’ll have to work to increase your income, and that will mean applying for better jobs (or starting a small business).
While it’s true that some employers won’t hire you with a recent bankruptcy, that isn’t true of all employers. Some employers may see your bankruptcy as a fresh start. You will be anxious to re-establish yourself, and you won’t be burdened down by all of the debt that you had before you declared bankruptcy.
Whether it’s applying for a job, an apartment, or an insurance policy, understand that there many people in the world today who have poor credit. A lot of companies will do business with you in spite of your bankruptcy, and see it as part of the risk of doing business. Your credit may be impaired, but that doesn’t mean you won’t be a good employee or customer.
3. From now on, no more late payments or collections.
You will have to be absolutely committed to making your payments on time going forward. No more late payments, no more collections. This will also mean that you will no longer take on obligations that you cannot reasonably afford to cover. You’ll have to keep your basic expenses to an absolute minimum, and work on becoming a saver rather than a borrower.
A bankruptcy is one big credit strike against you, but it isn’t terminal. However, if you continue making late payments and incurring collections after your bankruptcy, you will come to be viewed as a habitual credit problem. That’s an even bigger problem than having a bankruptcy.
4. Start by opening one line of credit.
At some point after your bankruptcy you should borrow so that you can begin the process of re-establishing credit. You may think that you cannot get a loan as a result of your credit but that isn’t true. Many lenders – credit card companies in particular – will actually be anxious to lend to you after a bankruptcy. They will do this because (a) you have no other debt after bankruptcy, and, (b) you are legally prohibited from filing for bankruptcy for another eight years. In some ways this actually makes you a lower risk than customers who never filed for bankruptcy.
Start by applying for one credit card. Make it a small one – a $1,000 credit line should do. Over the first few months borrow small amounts on the card, maybe $100 or $200 each month, and pay the entire balance when the bill comes due. Do not keep a running balance!
5. Build your credit slowly.
If you build an excellent credit rating on a single credit card for a year or so, you’ll start attracting new offers. You might open a second credit card, but don’t go much beyond that. Sure, or credit lines with low balances and on-time payments will improve your credit profile quickly. But you don’t want to do anything that might get you back in the situation that caused you to file for bankruptcy in the first place.
Start with one credit line, then go to two, and by then you’ll be ready to take on a car loan. No matter what, on any new loans be sure that you borrow beneath your ability to pay and never above it. Time, and a good pay history will slowly minimize the effect of the bankruptcy on your credit.
6. Watch bankruptcy fade into the shadows.
As bad as a bankruptcy is, it will eventually go away. Chapter 13 bankruptcies fall off your credit report after seven years, while a Chapter 7 will disappear after 10 years. But as each year passes after your discharge, the impact of the bankruptcy on your credit will diminish even before it disappears from your credit report. And as you build up new credit with good ratings, the bankruptcy will matter even less.
If you have ever filed for bankruptcy, what did you do to re-establish your credit after? Leave a comment!
Personal finance blogs, financial media, and financial advisors are awash and plentiful in advice on how to build the biggest retirement portfolio possible. But despite the subject’s incredible popularity, real world application isn’t living up to the hype. The numbers on 401(k) plans – the cornerstone of self-directed retirement planning – are not encouraging.
A good news/bad news report came out a few weeks ago giving the latest numbers on 401(k) plans, 401(k) Balances Hit Record Highs. The headline contains the good news, 401(k) plans have hit record highs. But the bad news is that those record numbers aren’t nearly enough to allow the average person to retire comfortably.
According to the report, the average 401(k) balance at the end of 2012 is $77,300, and for those 55 and over it stands at $143,300. Record numbers maybe, but completely insufficient. The article even describes the numbers as “dismal.”
Let’s say that the number for the over-55 crowd doubles by age 65, and the overall quadruples by the same age. That will raise the average 401(k) balance to roughly $300,000 by retirement age. Using the “safe withdrawal rate” of 4%, that would yield an income of just $12,000 per year per retiree. Most people will need an amount several times higher than that to retire comfortably.
Sure there will be Social Security income, but there will also be inflation between now and then. If your 401(k) plan falls neatly into the average numbers, you’ll have to take action in order to have the retirement of your dreams. But if you have even a few years between now and retirement, there’s plenty you can do to improve your situation.
1. Increase your retirement contributions as soon as possible.
The first, best course of action is to increase your contributions. Find the maximum contribution you can make to your company plan, and work to hit that number as soon as possible.
Beyond your employer plan, make contributions to a traditional IRA or a Roth IRA, if you’re within the income limits to do so. Even if your traditional IRA contribution isn’t tax deductible, make the contribution anyway. The earnings will grow on a tax-deferred basis, and the non-taxable contributions you made won’t be taxable upon withdrawal.
2. Save money outside your retirement plans.
You don’t have to limit your retirement planning to tax-deferred retirement plans. Any money that you save and invest can be used for retirement. Best of all, non-retirement savings have no limits on contributions – you can save as much as you’re able.
There’s an advantage to having non-tax sheltered investments in retirement too. Since they aren’t tax sheltered, they won’t be taxable on withdrawal. That can represent a form of tax diversification on your income sources during retirement.
3. Get out of debt.
If you won’t have a large enough retirement portfolio to provide you with all of the income you will need, the next best strategy is to lower your living expenses. That starts with paying off any debt that you have.
This will provide a double advantage too. The money that you are no longer paying to service your debts can be redirected into savings and investments that will get you closer to your savings goal. And once you retire, the absence of debt will mean that you will need less money to live on.
4. Start developing additional income streams.
Finally, it will help if you also develop additional income sources. Like paying off debt, there is also a twin advantage here. Additional income streams will lower your dependence on your investment portfolio in retirement, and also provide more money for savings and investing between now and then.
You may also be able to set up a dedicated retirement plan for your new income ventures, such as a SEP-IRA.
You can choose passive income sources, such as rental real estate or some sort of royalty arrangement, or an active source, such as a secondary career or side business that you can continue to work as a part-time venture after retirement.
You may be one of the people on the high end of the 401(k) balances, but if you’re not – which is apparently the case with the majority of people – there are other options. Try putting some of them to work now.
Do you feel that your 401(k) will be sufficient to provide you with the retirement you hope to have? If not, what other arrangements are you making?
Can you buy a car with bad credit and not have to use a cosigner? The answer is yes, however it is not nearly as clean and neat as buying a car with a conventional loan. You have to use your imagination, and prepare for a less comfortable situation. Here are some options:
1. The old standby: pay cash.
When all else fails, you can always pay cash for a car. That will limit your car options to the size of your bank account, but it will enable you to buy a car without either a loan or a cosigner for the loan.
The more car that you want to buy, the more cash you will need to make it happen. If you don’t have enough money to buy the type of car that you want, then you’ll have to look for other ways to increase the amount of cash you have – or you will have to buy less car than you had hoped.
Here are some ways to raise the cash that you will need:
- Sell the car you have now; you generally will get more money by selling it yourself than by trading it in to the dealer.
- Sell any other possessions you have to help raise more cash; have a garage sale and sell what you can either on Craiglist or eBay.
- Sell stocks or other investments you have – you probably need a car more than you need investments.
- Get a gift from a family member – they may prefer giving a gift to cosigning a loan since it won’t affect their credit standing.
- When all else fails, consider taking a cash advance on a credit card. Just make sure you set up a payment schedule and pay it back in no more than one or two years.
If you have bad credit you probably don’t have credit cards either, at least not ones with credit lines large enough to pay for a car. But there are different degrees of bad credit, and if you’re on the higher end (not so bad credit) you may be able to combine a credit card advance with one or more of the other methods listed here.
2. Get a loan from a family member or close friend.
If you don’t have sufficient cash to buy a car and can’t get a loan anywhere else, ask a family member or close friend if they’ll make you a loan. Just keep a few very important caveats in mind if you do:
- Draw up a note spelling out all the terms of the agreement, to be signed by both parties.
- Set up regular monthly payments that will pay off the loan in the shortest time frame possible.
- Be sure to make your payments on time every month.
- Give strong consideration to getting a part-time job – or other additional income source – so you can earmark income specifically to pay off the loan.
Of course, getting a loan from a family member or close friend is not without complications. If for any reason you are unable to repay the loan, or to pay according to the agreed-upon schedule, you could end up ruining an important relationship in your life. Think hard before you do something like this; it should only be done if your situation is truly desperate.
3. Try car dealer financing.
The car dealer may be able to arrange financing for you. Just keep in mind that the type of loan you’ll get – and the terms that will involve – will depend entirely upon how bad your credit is.
If your credit is on the not-so-bad end of the spectrum, the dealer will probably be able to arrange financing that will look very much like a bank loan, except that it will carry much higher interest rate.
If your credit is on the really bad end of the scale, you could end up with a direct dealer loan that will come with a very high interest rate, as well as a requirement to make your payment each month in person, and even to pay them in cash (ie, “we don’t trust your check to not bounce”). These loans contain all kinds of “gotcha provisions” that will have you owing more on the car than it is worth, financing it for longer than is reasonable, and being subject to repossession for the slightest offense.
You might be better off buying a bicycle or planning to rely on public transportation than taking that last kind of loan.
4. Buy a “beater” and trade your way up.
If you cannot get a loan at all, there’s always the option to buy a beater. These cars tend to be older and in poor condition – you can think of it as a starter car. You can buy the best car you can afford with the cash you have, and plan on putting money aside in a savings account each month as if you are making a car payment. The idea is to drive the beater while you are saving up money to purchase a better car, one or two years into the future.
To go this route, you’ll have to make sure that you are putting away a reasonable amount of money each month. Not only will you be saving money to buy a better car later, but at least some of what you save will go into paying for repairs on your beater. It could be a long slow road to your next car, but if you can’t get a loan and you can’t get a cosigner, this can be the difference between having a car and needing to invest in a better pair of sneakers.
What would you do if you needed to buy a car and had bad credit and no cosigner? Leave a comment!
There has been an airline mileage backlash brewing for some time as carriers have made it near impossible to redeem their miles for awards seats at the lowest levels. This backlash extends from the skies right down to our wallets as credit card holders no longer see nearly as much value in airline mileage cards as they once did.
In response, banks have begun issuing their own “miles” to credit card holders. And unlike the airline’s miles, these bank-operated programs allow customers to use their miles to book any travel at any time. And since these award flights are booked just like any other, travelers can earn miles from their trip and be eligible for upgrades.
Capital One has been offering its Venture Rewards card for several years. In fact, you may have noticed their ubiquitous marketing efforts featuring celebrities such as Alec Baldwin and Jerry Stiller. Less well known is Barclaycard, which recently introduced their Arrival MasterCard with a similar rewards program.
Let’s put these two products head to head and see which one comes out on top.
Capital One Venture Rewards
The Capital One Venture Rewards card has lots of good things going for it. Cardholders earn a one-time bonus of 10,000 miles after they spend $1,000 in the first three months of card membership. And for each dollar spent, cardholders earn two miles in Capital One’s program. Miles are unlimited and never expire.
When it is time to redeem miles, cardholders could choose from a variety of cash back and merchandise options, but at only .5 cents in value per mile redeemed. The best use of miles is for statement credits towards any travel expense. When used this way, miles are worth one cent each. In effect, cardholders consistently receive 2% back in value for each dollar spent.
How do you redeem miles? First, make any travel purchase the way that you normally would. This can include airfare, hotels, rental cars, cruises, or a reservation booked through a travel agent. Next, log into your account and select the travel expenses. Capital One will then reimburse you one cent for each mile for as many miles as you have. It is that easy!
There is a $59 annual fee that is waived the first year, and like all Capital One cards, there are no foreign transaction fees.
In theory, you really need to spend about 2% of your income on travel expenditures in order to redeem all of your miles for statement credits at one cent each.
Not to be left out of the market for reward cards with bank issued “miles,” Barclaycard introduced its Arrival card in December of 2012. And its terms look surprisingly similar to the Capital One Venture Rewards card. As with Capital One, cardholders earn two miles per dollar spent on all purchases. These miles are then worth one cent each as statement credits towards any travel-related expense. And like Capital One, Barclaycard has no foreign transaction fees either.
But here is where it gets interesting. The Barclaycard product offers 20,000 bonus miles, worth $222, after your first transaction. And when redeeming points for travel expenses, it offers a 10% mileage refund that they call Carry-on Miles. So while one dollar spent with the Capital One Venture Rewards card earns two miles worth two cents, a dollar spent on the Barclaycard Arrival earns two miles worth 2.22 cents.
There is an $89 annual fee for this card, but it is waived the first year.
Insider tip: There are several versions of this card being offered. One version has no annual fee and only earns one mile per dollar on most purchases and two miles per dollar on travel and dining. That version only has a sign up bonus of 10,000 miles. And while this other version might work better for some cardholders with modest spending requirements, it is not the version I am reviewing here.
This is a tough call, but I am going to have to go with the Barclaycard by a nose. Sure, the annual fee is a tad higher, but the sign up bonus is worth an extra $222, good enough to offset the difference for your first eight years of card membership. And while I thought that Alec Baldwin was brilliant in The Hunt for Red October, his influence is not enough to make up for the 11% better returns on the miles redeemed with the Barclaycard.
By beating Capital One ever so slightly at its own game, the new Barclaycard Arrival card becomes the winner by split decision.
Which card is your favorite? Leave a comment!
There are two ways for a credit card issuer to construct a rewards program. One is to offer customers points or miles with a partner such as an airline or hotel chain. The other is to develop a proprietary program. Banks run these programs, issue points, and choose the options cardholders have to redeem their points.
To this end, Citi has its ThankYou Points program while Chase offers several cards that allow customers to earn points in their Ultimate Rewards program. When looking for one of these cards with no annual fee, Citi offers its ThankYou® Preferred Rewards card while Chase features its Sapphire card.
Lets see how these two products match up:
Citi ThankYou® Preferred Rewards Card
To start off, new cardholders of the Citi ThankYou® Preferred Rewards card earn 15,000 bonus ThankYou points after spending $1000 within three months of opening a new account. One ThankYou point is earned from each dollar spent, there are no limits, and points never expire. Furthermore, cardholders receive a small anniversary bonus each year, up to 3% after they have been a card member for at least two years.
When it comes time to redeem points, the value of these points varies depending on which option you choose. $50 cash back requires 8,000 points, returning a value of .62 cents per point. A $250 statement credit requires 35,000 points, or a value of .71 cents per point. Some – but not all – gift cards can be purchased at a value of one cent per point. In addition, flights can be booked through Citi at the rate of one cent per point using just points or a mixture of cash and points. And finally, those who have a mortgage or student loan with Citi can make a payment at one cent per point redeemed.
There is no annual fee for this card, but there is a 3% foreign transaction fee on all charges processed outside of the United States.
Insider tip: This card comes equipped with an EMV smart chip that makes it compatible with unattended kiosks in Europe and other parts of the world. On my last trip to Europe, I can’t tell you how many Americans I met in train stations who couldn’t buy a ticket because their credit card did not have one of these chips.
Chase’s no fee offering in this segment is a lot like Citi’s. As with the Citi card, new applicants can earn 10,000 points after spending $500 within three months of opening an account. Cardholders then earn one point per dollar spent on most purchases, and two points per dollar spent at restaurants.
Once earned, points can be redeemed for one cent each in value as cash back, statement credits, travel, merchandise, and many other options.
There is no annual fee for this card, but there is the same 3% foreign transaction fee on all charges processed outside of the United States, just like the Citi card.
Insider tip: You can transfer the Ultimate Rewards points that you earn to other Chase cards. Why would you want to do that? The Sapphire Preferred, Ink Bold, and Ink Plus cards all offer a 25% points bonus when booking travel with points. And more importantly, these cards allow you to transfer points to the programs of nine different airlines, hotels, and Amtrak. So you can earn points now on your standard, no-fee Sapphire, and later transfer them to another card with better reward options.
While the tally is reasonably close, Chase’s Sapphire comes out on top. Double points at restaurants is a good start, but the fact that all Ultimate Rewards points are worth one cent each toward any redemption option seals the deal.
There is fierce competition among banks that offer their own reward points, and the one that offers the most valuable points will always win. For now, that is Chase’s Sapphire.
What investments are tax free? Probably at least a few more than you think. Especially when you consider that where you have your money easily has the biggest impact on what is free of taxes and what is not.
Let’s look at tax-free investments in the usual – and not so usual – places.
1. Municipal bonds and municipal bond fund interest.
Talk about tax-free anything, and municipal bonds are the default conversation. They are tax free for federal income tax purposes, and also from state income taxes if you live in the state that issues them. Note: They are not tax free for state income tax purposes if you do not live in the state where the bonds are issued.
Municipal bonds are debt securities issued by states, counties, municipalities, and the various agencies of each. They can be issued for all kinds of purposes, including building roads and schools, developing or improving utility projects, or even the issuance of very low interest mortgage loans by the states to their residents.
It’s important to understand that while the interest earned from municipal bonds is tax free, any capital gains from the sale of the securities will be subject to taxation. However, they’ll be subject to more favorable capital gains tax rates if they are held for more than one year prior to sale.
Municipal bonds are also held in mutual funds and exchange traded funds (ETF’s). Any interest paid to you through the fund will be tax free, however the capital gains will be reported to you as taxable gains in the year of sale.
2. Treasury securities are tax-exempt for state income tax purposes.
Interest earned on United States government treasury securities is fully taxable for federal income tax purposes, however they are exempt from income tax at the state and local level.
This might not mean much if you live in a state with very low marginal income tax rates, but in those states with rates in the 10% (or higher) level, the tax savings can be substantial.
3. Anything in a retirement plan – well, tax-deferred anyway.
Virtually any investment held in a tax-sheltered retirement plan – an IRA, SEP, 401(k), 403(b) or 457 plan – will accumulate income on a tax-deferred basis. This isn’t quite the same as tax free, but it will allow you to grow your investments until you reach retirement and you begin withdrawing funds.
The advantage here is that, at least in theory, by the time you retire you’ll be in a lower income tax bracket, and the tax bite on your withdrawals will be substantially lower than the amount of tax you saved on the contributions and income accumulations.
Again, strictly speaking it’s not quite tax free, but it’s the next best thing!
4. Investments held in a Roth IRA.
Income earned from investments held in a Roth IRA will be tax-free, if you’re at least 59 ½ at the time you begin taking withdrawals, and you have been in the plan for a minimum of five years.
You won’t get a tax reduction as a result of contributing to a Roth IRA, but any income you earn on the investments held in the account can later be withdrawn completely tax free if you meet the above criteria. This makes a strong case for putting at least some of your retirement money into a Roth IRA. You can think of it as a form of income tax diversification for retirement planning.
5. The sale of your principal residence – mostly.
Most people don’t typically think of their principal residence as a tax-free investment, but if the value has risen substantially since you purchased it, the profit on the sale of the home could be largely shielded from income taxes when you sell.
The IRS allows the first $250,000 in gains from the sale of a principal residence to be exempt from taxation for singles, and $500,000 for married couples. Since states generally figure your tax based on taxable income for federal income tax purposes, the gain will also be exempt at the state level.
You won’t get an income from your principal residence in the way that you will from traditional investments, however you will get a big fat tax break when you finally sell the home. A big gain on the sale of your principal residence will result in a very large tax-free windfall.
Are there other tax-free investments that you know of that are available to the average person? Leave a comment!
We’ve all heard it said that student loans cannot be discharged in bankruptcy, so what do you do if your financial situation is a wreck – or if you’re unemployed – and simply don’t have the money to repay? There actually are a couple of ways to manage the situation even if the bankruptcy option doesn’t exist.
One comes in the form of a government program, and the other is a matter of financial guerrilla warfare.
Income-Based Repayment Plans (IBRs)
If you’re having trouble paying your student loans the government can be your best friend. There is a program available that will reduce the monthly payments on your loan if you have low income or are unemployed. The program is called the Income-Based Repayment plan, or IBR. The program was established specifically to help address the problems of people who are unable to manage their student loan debt payments.
The plan comes with certain limitations. It is based on your income and your family size, and that information will be reviewed each year you participate in the plan to account for changes in either your income or your family size. The loans can carry a term of up to 25 years, and will have a payment that can be substantially lower than what you’re currently paying. Also, since there are different student loan types, it’s important understand that not all student loans will qualify for an IBR.
The monthly payments are based on your discretionary income. The payments can be limited to 15% of that income, and this is the primary benefit of the program. There’s also a provision in the plan that will allow for the forgiveness of your debt in exchange for 10 years employment in certain public service organizations.
Don’t Qualify? Attack Your Debt!
If you can’t qualify for an IBR, there is one other option and though it’s difficult, it may be the only way out. That is to dig in and do whatever it is you need to do in order to pay off your student loan debt completely.
One of the fundamental problems with student loan debts is that they can go on for years. And since they are completely unsecured, you have no underlying collateral asset to sell in order to liquidate the debt. The only way to pay it off then is to dedicate yourself to spending a period of several years making the pay off your student loans your personal financial priority. If your loans are in the range of $50,000-$100,000 or more, you’ll need to attack the debt on several fronts:
Keep living expenses to a minimum.
As much as you may want to spread your wings and get on with your life, you’ll need to adopt a life on a shoestring. That may mean living at home with your parents, taking a residence with one or more roommates, or even living in a rented room. It will also mean driving the least expensive car possible, and cutting out any expenses that are not absolutely necessary.
Put all extra money into the debt.
The basic idea of living at a minimal expense level is so that you can throw any extra money at the student loan debt. You want to treat the payoff of the student loans as equivalent of a Chapter 13 bankruptcy. If the balance that you owe is very large, there will be no other way to pay off the loans without a significant degree of struggle.
Increase your income.
As an alternative to an extremely frugal lifestyle – or perhaps in addition to it – you can create a second income. This can be either a part-time job or a side business. You can either use the extra money to increase your payments, or as an alternative, you can dedicate the entire second income toward paying off the loan early.
Ignore other debt.
Unless you have a mortgage, it’s likely that your student loan is the largest single debt that you have. The sooner it’s gone, the sooner you’ll get some control over your finances. The best way to make that happen is to ignore your other debts and concentrate on your student loans instead. This will mean making the minimum payments on any other debts you have until your student loans are fully paid. It’s a matter of concentrating your efforts on the single most threatening financial problem you have, and letting the rest go until later date.
Don’t quit until the student loans are gone.
Paying off a large amount of student loan debt is a huge hurdle. If you’re going to make it happen you’re going have to fully commit to doing what you need to do. You’ll have to approach the payoff with an intensity bordering on obsession. How great that obsession is should depend upon how large your student loans are.
Are you aware of any other ways that you can get out of your student loan debts if you’re having financial troubles? Leave a comment!