Feeling unsure about whether or not you’re saving enough for retirement? Feeling unsure about whether or not the money that you have saved is being invested in the right way?
Saving for retirement can be a daunting process. Essentially, you need to invest enough money to support yourself for the rest of your life. Plus, if you feel like you don’t get the same kind of high-caliber advice that wealthy people get, retirement planning can be that much scarier.
Fortunately, there are things you can do to make it much less daunting. Jemstep.com just launched their new Portfolio Manager service to help people optimize for retirement and have more money for themselves and their family, all while taking the complexity, difficulty, and anxiety out of investing.
Jemstep gives you tailor-made guidance â€“ the same kind of personalized guidance youâ€™d get from a sophisticated advisor in a fancy office. Plus, it uses proven strategies and analytics used by top institutional investors. And they wrap it in an easy to use online service that guides you each step of the way.
How Jemstep Works
It works in four steps. First, you answer some questions about your situation and input your account info so that Portfolio Manager can show you, in real time, how much retirement income you are on track for with your current portfolio.
Jemstep then recommends what your target portfolio should look like in order to give you more money in retirement, while not taking on any unnecessary risk. Plus, it shows you how much more money you will have if you follow Jemstepâ€™s recommendation.
Then Jemstep will give you an action plan that contains specific recommendations for what you should buy and what you should sell. Just follow their step-by-step instructions, and your portfolio will be optimized to give you a richer and more secure retirement. For example, it will tell you to sell five shares of a particular mutual fund, because of its high costs or poor performance, and to buy eight shares of a much better fund.
Jemstep also gives you periodic reminders when itâ€™s time to rebalance. Itâ€™ll watch out for when you need to buy, sell or hold something.
Also, just to let you know: Jemstep is a registered investment advisor, which means that itâ€™s obligated to give you advice solely based on your best interest. It doesnâ€™t get fees or commissions from any of the funds that it recommends. In other words, itâ€™s here to serve you.
One thing to keep in mind is that Jemstep canâ€™t recommend funds that donâ€™t have publicly recognized ticker symbols. Some 401(k) retirement funds, 529 college savings plans, and other investment accounts offer specialized investments that lack traditional ticker symbols. Portfolio Manager canâ€™t get accurate fund profile and historical information about these types of funds. A company spokesperson says Jemstep is working on providing this in the future, but itâ€™s not ready yet.
Additionally, if you are the type of person that likes to be hands off with your portfolio (although I recommend against this), Jemstep may not be right for you. The product will give you an action plan, but you are the one responsible for executing the trades. You wonâ€™t see any improvements in your portfolio until you act on the information. However, if you want to take an active role in your retirement planning, Jemstep helps automate the process by giving you custom-tailored advice.
Jemstep offers a basic account which gives you a way to track all your investments in one place, an analysis of your portfolio and Jemstepâ€™s portfolio recommendation all for free. They also offer a premium account, which provides a full action plan and rebalancing alerts. So sign up and check it out . . . thereâ€™s no reason not to.
Have you tried Jemstep? What do you think of it? Leave a comment!
One of the ways that many consumers save money on their purchases is through buying on the Internet. Many items can be found for less online, and that can be good for a consumer’s wallet.
But you don’t have to rely solely on the lower online price for your savings. You can save evenÂ more when checking out online if you employ the following strategies:
1. Exhibit loyalty.
One of the best ways to save money at checkout is to join a loyalty program. You can earn points on your online purchases with retailers like Best Buy and CVS even you shop online. Just know your loyalty card number, and you can use it at checkout to earn rewards and points, get exclusive offers and coupons, and even receive discounts.
2. Change your payment method.
Some merchants offer discounts for paying with digital wallets like Dwolla. Additionally, you can receive cash back and other rewards when you check out using your rewards credit cards. Programs like Upromise can even boost what you save by applying a percentage of your purchase toward a goal (like saving for college) on top of giving you the rewards savings.
Don’t forget rewards debit cards, either. PerkStreet Financial offers you the ability to earn cash back rewards when using the debit card â€“ no credit needed.
3. Try promo and coupon codes.
There are many websites out there that aggregate coupon codes and promo codes. When you visit sites like Retail Me Not,Â Coupon Claim, Coupon Sherpa, Coupon Mom, and Coupon Cabin, you can access thousands of money-saving codes.
If you want to save on shipping costs, you can visit FreeShipping.org for codes to retailers that offer free shipping. You might not even need to make a minimum purchase in order to take advantage of these types of programs.
4. Visit daily deal sites.
From Groupon to Living Social to Moolala, it’s possible to have online deals sent directly to your inbox. One of my favorite (but rare) online deals is the offering of $20 on Amazon when you pay $10. You can also see steep discounts of up to 75% on online merchandise ranging from shoes to baby items. It’s even possible to get restaurant gift cards for a large discount off the face value. Sign up for daily deals, and save when you check out.
5. Find rebate programs.
Save money by signing up for rebate programs online. Sites like EbatesÂ and Big Crumbs provide you with the ability to earn cash back and other rewards â€“ including discounts and special promos â€“ just by doing your regular shopping. Whenever you make a purchase, a portion of the cost is deposited into a rebate account. You can withdraw for cash or redeem for rewards. Some of these sites automatically pay you via PayPal each month.
6. Be smart with your savings.
With the right strategy, you can save a lot of money when checking out online. When possible, stack discounts with free shipping promos, and use your rebates account to make your purchases. Add in payment by rewards card, and your savings really start to add up. Stacking these strategies can save you a lot of money on your regular purchases.
Just make sure that they are regular purchases, though. Don’t spend money just for the reward or the rebate. Instead, spend only what you had planned to originally. That way, you are truly saving money â€“ not spending more of it!
What are some other ways to save money at the checkout online? Leave a comment!
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 â€“ 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 â€“ including saving up for your goals. This isn’t an automated program, so you are forced to evaluate your spendingÂ 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:Â 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 â€“ 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:Â 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 SkyÂ 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 youâ€™re going to face challenges, one of which will be to re-establish your credit. You might think that once you file for bankruptcy youâ€™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 â€“ for a while.
If youâ€™ve only been out of bankruptcy for a few months, you shouldnâ€™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 itâ€™s over. Youâ€™ll be able to borrow money soon enough, but youâ€™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 youâ€™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 â€“ 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 canâ€™t do anything â€“ 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 â€“ not an event. Youâ€™ll have to work at it gradually.
If you file for bankruptcy itâ€™s likely that insufficient income had something to do with it. In order to rebuild your life and your credit, youâ€™ll have to work to increase your income, and that will mean applying for better jobs (or starting a small business).
While itâ€™s true that some employers wonâ€™t hire you with a recent bankruptcy, that isnâ€™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 wonâ€™t be burdened down by all of the debt that you had before you declared bankruptcy.
Whether itâ€™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. Youâ€™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 isnâ€™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. Thatâ€™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 isnâ€™t true. Many lenders â€“ credit card companies in particular â€“ 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 â€“ 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, youâ€™ll start attracting new offers. You might open a second credit card, but donâ€™t go much beyond that. Sure, or credit lines with low balances and on-time payments will improve your credit profile quickly. But you donâ€™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 youâ€™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 subjectâ€™s incredible popularity, real world application isnâ€™t living up to the hype. The numbers on 401(k) plans â€“ the cornerstone of self-directed retirement planning â€“ 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 arenâ€™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 â€œdismal.â€
Letâ€™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 â€œsafe withdrawal rateâ€ 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, youâ€™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, thereâ€™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 youâ€™re within the income limits to do so. Even if your traditional IRA contribution isnâ€™t tax deductible, make the contribution anyway. The earnings will grow on a tax-deferred basis, and the non-taxable contributions you made wonâ€™t be taxable upon withdrawal.
2. Save money outside your retirement plans.
You donâ€™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 â€“ you can save as much as youâ€™re able.
Thereâ€™s an advantage to having non-tax sheltered investments in retirement too. Since they arenâ€™t tax sheltered, they wonâ€™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 wonâ€™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 youâ€™re not â€“ which is apparently the case with the majority of people â€“ 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 donâ€™t have enough money to buy the type of car that you want, then youâ€™ll have to look for other ways to increase the amount of cash you have â€“ 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 â€“ you probably need a car more than you need investments.
- Get a gift from a family member â€“ they may prefer giving a gift to cosigning a loan since it wonâ€™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 donâ€™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 youâ€™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 donâ€™t have sufficient cash to buy a car and canâ€™t get a loan anywhere else, ask a family member or close friend if theyâ€™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 â€“ or other additional income source â€“ 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 youâ€™ll get â€“ and the terms that will involve â€“ 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 â€œgotcha provisionsâ€ 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 â€œbeaterâ€ and trade your way up.
If you cannot get a loan at all, thereâ€™s always the option to buy a beater. These cars tend to be older and in poor condition â€“ 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, youâ€™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 canâ€™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 Citi ThankYouÂ® Preferred Rewards card while Chase features its Sapphire card.
Lets see how these two products match up:
Citi ThankYouÂ® Preferred Rewards Card
To start off, new cardholders of the Citi ThankYouÂ® Preferred Rewards card earn 20,000 bonus ThankYou points after spending $1500 within three months of opening a new account. One ThankYou point is earned from each dollar spent (2x Points on dining & entertainment), 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. The statement credit returns a higher value of cents per point than cashback. Some â€“ but not all â€“ 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:Â 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:Â 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.