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How to Use Priceline to Save on Travel

I don’t know about you, but one of my most exciting resolutions for this year is to travel more. In order to make this a reality, though, I need to be able to save money wherever I can on the trips that I plan for my family.

One of the biggest tools in my money-saving arsenal is to use an online travel agency site, like Priceline, anytime I’m ready to book. This can help me save tons whether I’m trying to find flights, hotels, rental cars, or even book a cruise or vacation package.

While Priceline is a pretty straightforward platform to use for travel booking, there are a few features that can save you even more money than you’d expect.

Express Deals show you star level and location, not the name of the hotel. Image source: Priceline.

Express Deals

Once upon a time, Priceline had a tool called Name Your Own Price. This allowed you to bid for flights, hotels, and rental cars, finding companies who would accept the offer(s) you were willing to make. It was a bit of a gamble and you were essentially “buying blind,” but the tool was a great opportunity to save.

Unfortunately, that tool was phased out a few years ago for flights and rental cars. It’s now only available for hotel stays and only accessible through the Priceline mobile app.

However, if you’re still itching to save money — and don’t mind buying blind — there’s another option. You can still save big using Priceline Express Deals … saving up to 60% off, in fact.

With Express Deals, you are able to pick up incredible prices on hotels, as long as you’re a little flexible (and trusting). All you need to do is choose your destination city and travel dates, and Priceline will help you find a great deal on a surprise booking.

While you won’t be able to choose the exact hotel you’ll get through Express Deals, you can choose the amenities you need and even the hotel quality you desire. You’ll see the price you’re paying as well as your overall savings. As soon as you book the room, you’ll be told where you’re staying (but, be careful because these are non-refundable purchases). And you can switch to the map view and see exactly where your hotel options are located.

A screen shot of the Priceline Trip Builder tool

Priceline lets you package airfare, hotel, and more. Image source: Priceline.

Trip Builder (new)

Sometimes, you just need a hotel room. If you’re planning a big trip or family vacation, though, you’ll need a lot more: hotel rooms, rental cars, and even flights.

Thanks to Priceline’s new Trip Builder feature, you can bundle all of those travel needs into one convenient package and save significant money.

With Trip Builder, you can combine any two or three needs from flights, hotels, and a car. If you’ll be bouncing around, you can add multiple hotel stays to the bundle and further boost your savings.

Your Trip Builder booking will all be listed under the same confirmation number, making it easier than ever to track all of your reservations in one place. You’ll also enjoy some of Priceline’s best deals in the process, leaving more jingle in your pocket for things like souvenirs and experiences.

Best Price Guarantee

Every once in a while, I’ll book a room or a flight for an upcoming trip, only to notice that the price goes even lower the very next day. Sometimes, that price continues to drop, reminding me of how much money I lost out on.

Luckily, you can learn from my mistakes. That’s because if you book a flight, hotel room, rental car, or cruise through Priceline, you’ll be covered by their Best Price Guarantee.

With this guarantee, you can receive a 100% price adjustment if the price of your reservation drops in the 24 hours after you book. If you booked an Express Deal, Priceline will not only give you double that — 200% of the difference! — but you’ll also have all the way until midnight the night before you travel to file your Best Price Guarantee claim.

There are some requirements, of course: the lower-price itinerary must be publicly accessible (no military discounts or special pricing platforms), the details must match exactly, and some airlines are excluded (Spirit, British Airways, and KLM, to name a few).

Even still, this guarantee means added peace of mind when you travel. And perhaps even extra savings in your pocket after you’ve already booked.

Double up on savings

Want to make your Priceline experience even more lucrative? Then double up on the savings.

There are a few ways to do this. You can:

  • Visit Priceline’s website through a shopping portal such as Rakuten (which is currently offering up to 5% back on your bookings)
  • Use a travel rewards credit card to earn extra miles or points on your reservations made through Priceline
  • Join Priceline’s membership program, giving you access to additional members-only discounts and easy trip management
  • Get the Priceline Rewards Visa credit card, which offers 5x bonus points back per $1 spent on priceline.com purchases

In fact, you can use more than one of these within the same booking, earning you maximum rewards, and saving as much as possible.

When booking a trip, sites like Priceline make it easy to shop around, compare prices, snag discounts, and manage reservations. You’ll have access to deals and promotions that you might not be able to find elsewhere, while also offering a best-price guarantee each time you book.

The more you save on your travel today, the more you can put toward additional trips in the future. And I don’t know about you, but I’m ready to start seeing more of the world in 2020.

–By Stephanie Colestock

Source: pennypinchinmom.com

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75 Personal Finance Rules of Thumb

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A “rule of thumb” is a mental shortcut. It’s a heuristic. It’s not always true, but it’s usually true. It saves you time and brainpower. Rather than re-inventing the wheel for every money problem you face, personal finance rules of thumb let you apply wisdom from the past to reach quick solutions.

Table of Contents show

I’m going to do my best Buzzfeed impression today and give you a list of 75 personal finance rules of thumb. Some are efficient packets of advice while others are mathematical shortcuts to save brain space. Either way, I bet you’ll learn a thing or two—quickly—from this list.

The Basics

These basic personal finance rules of thumb apply to everybody. They’re simple and universal.

1. The Order of Operations (since this is one of the bedrocks of personal finance, I wrote a PDF explaining all the details. Since you’re a reader here, it’s free.)

2. Insurance protects wealth. It doesn’t build wealth.

3. Cash is good for current expenses and emergencies, but nothing more. Holding too much cash means you’re losing long-term value.

4. Time is money. Wealth is a measure of how much time your money can buy.

5. Set specific financial goals. Specific numbers, specific dates. Don’t put off for tomorrow what you can do today.

6. Keep an eye on your credit score. Check-in at least once a year.

7. Converting wages to salary: $1/per hour = $2000 per year.

8. Don’t mess with City Hall. Don’t cheat on your taxes.

9. You can afford anything. You can’t afford everything.

10. Money saved is money earned. When you look at your bottom line, saving a dollar has the equivalent effect as earning a dollar. Saving and earning are equally important.

Budgeting

I love budgeting, but not everyone is as zealous as me. Still, if you’re looking to budget (or even if you’re not), I think these budgeting rules of thumb are worth following.

11. You need a budget. The key to getting your financial life under control is making a budget and sticking to it. That is the first step for every financial decision.

12. The 50-30-20 rule of budgeting. After taxes, 50% of your money should cover needs, 30% should cover wants, and 20% should repay debts or invest.

13. Use “sinking funds” to save for rainy days. You know it’ll rain eventually.

14. Don’t mix savings and checking. One saves, the other spends.

15. Children cost about $10,000 per kid, per year. Family planning = financial planning.

16. Spend less than you earn. You might say, “Duh!” But if you’re not measuring your spending (e.g. with a budget), are you sure you meet this rule?

Investing & Retirement

Basic investing, in my opinion, is a ‘must know’ for future financial success. The following rules of thumb will help you dip your toe in those waters.

17. Don’t handpick stocks. Choose index funds instead. Very simple, very effective.

18. People who invest full-time are smarter than you. You can’t beat them.

19. The Rule of 72 (it’s doctor-approved). An investment annual growth rate multiplied by its doubling time equals (roughly) 72. A 4% investment will double in 18 years (4*18 = 72). A 12% investment will double in 6 years (12*6 = 72).

20. “Don’t do something, just sit there.” -Jack Bogle, on how bad it is to worry about your investments and act on those emotions.

21. Get the employer match. If your employer has a retirement program (e.g. 401k, pension), make sure you get all the free money you can.

22. Balance pre-tax and post-tax investments. It’s hard to know what tax rates will be like when you retire, so balancing between pre-tax and post-tax investing now will also keep your tax bill balanced later.

23. Keep costs low. Investing fees and expense ratios can eat up your profits. So keep those fees as low as possible.

24. Don’t touch your retirement money. It can be tempting to dip into long-term savings for an important current need. But fight that urge. You’ll thank yourself later.

25. Rebalancing should be part of your investing plan. Portfolios that start diversified can become concentrated some one asset does well and others do poorly. Rebalancing helps you rest your diversification and low er your risk.

26. The 4% Rule for retirement. Save enough money for retirement so that your first year of expenses equals 4% (or less) of your total nest egg.

27. Save for your retirement first, your kids’ college second. Retirees don’t get scholarships.

28. $1 invested in stocks today = $10 in 30 years.

29. Inflation is about 3% per year. If you want to be conservative, use 3.5% in your money math.

30. Stocks earn 7% per year, after adjusting for inflation.

31. Own your age in bonds. Or, own 120 minus your age in bonds. The heuristic used to be that a 30-year old should have a portfolio that’s 30% bonds, 40-year old 40% bonds, etc. More recently, the “120 minus your age” rule has become more prevalent. 30-year old should own 10% bonds, 40-year old 20% bonds, etc.

32. Don’t invest in the unknown. Or as Warren Buffett suggests, “Invest in what you know.”

Home & Auto

For many of you, home and car ownership contribute to your everyday finances. The following personal finance rules of thumb will be especially helpful for you.

33. Your house’s sticker price should be less than 3x your family’s combined income. Being “house poor”—or having too expensive of a house compared to your income—is one of the most common financial pitfalls. Avoid it if you can.

34. Broken appliance? Replace it if 1) the appliance is 8+ years old or 2) the repair would cost more than half of a new appliance.

35. Used car or new car? The cost difference isn’t what it used to be. The choice is even.

36. A car’s total lifetime cost is about 3x its sticker price. Choose wisely!

37. 20-4-10 rule of buying a vehicle. Put 20% of the vehicle down in cash, with a loan of 4 years or less, with a monthly payment that is less than 10% of your monthly income.

38. Re-financing a mortgage makes sense once interest rates drop by 1% (or more) from your current rate.

39. Don’t pre-pay your mortgage (unless your other bases are fully covered). Mortgages interest is deductible, and current interest rates are low. While pre-paying your mortgage saves you that little bit of interest, there’s likely a better use for you extra cash.

40. Set aside 1% of your home’s value each year for future maintenance and repairs.

41. The average car costs about 50 cents per mile over the course of its life.

42. Paying interest on a depreciating asset (e.g. a car) is losing twice.

43. Your main home isn’t an investment. You shouldn’t plan on both living in your house forever and selling it for profit. The logic doesn’t work.

44. Pay cash for cars, if you can. Paying interest on a car is a losing move.

45. If you’re buying a fixer-upper, consider the 70% rule to sort out worthy properties.

46. If you’re buying a rental property, the 1% rule easily evaluates if you’ll get a positive cash flow.

Spending & Debt

Do you spend money? (“What kind of question is that?”) Then these personal finance rules of thumb will apply to you.

47. Pay off your credit card every month.

48. In debt? Use psychology to help yourself. Consider the debt snowball or debt avalanche.

49. When making a purchase, consider cost-per-use.

50. Make your spending tangible with a ‘cash diet.’

51. Never pay full price. Shop around and do your research to get the best deals. You can earn cash back when you shop online, score a discount with a coupon code, or a voucher for free shipping.

52. Buying experiences makes you happier than buying things.

53. Shop by yourself. Peer pressure increases spending.

54. Shop with a list, and stick to it. Stores are designed to pull you into purchases you weren’t expecting.

55. Spend on the person you are, not the person you want to be. I love cooking, but I can’t justify $1000 of professional-grade kitchenware.

56. The bigger the purchase, the more time it deserves. Organic vs. normal peanut butter? Don’t spend 10 minutes thinking about it. $100K on a timeshare? Don’t pull the trigger when you’re three margaritas deep.

57. Use less than 30% of your available credit. Credit usage plays a major role in your credit score. Consistently maxing out your credit hurts your credit score. Aim to keep your usage low (paying off every month, preferably).

58. Unexpected windfall? Use 5% or less to treat yourself, but use the rest wisely (e.g. invest for later).

59. Aim to keep your student loans less than one year’s salary in your field.

The Mental Side of Personal Finance

At the end of the day, you are what you do. Psychology and behavior play an essential role in personal finance. That’s why these behavioral rules of thumb are vital.

60. Consider peace of mind. Paying off your mortgage isn’t always the optimum use of extra money. But the peace of mind that comes with eliminating debt—it’s huge.

61. Small habits build up to big impacts. It feels like a baby step now, but give yourself time.

62. Give your brain some time. Humans might rule the animal kingdom, but it doesn’t mean we aren’t impulsive. Give your brain some time to think before making big financial decisions.

63. The 30 Day Rule. Wait 30 days before you make a purchase of a “want” above a certain dollar amount. If you still want it after waiting and you can afford it, then buy it.  

64. Pay yourself first. Put money away (into savings or investment accounts) before you ever have a chance to spend it.

65. As a family, don’t fall into the two-income trap. If you can, try to support your lifestyle off of only one income. Should one spouse lose their job, the family finances will still be stable.

66. Every dollar counts. Money is fungible. There are plenty of ways to supplement your income stream.

67. Savor what you have before buying new stuff. Consider the fulfillment curve.

68. Negotiating your salary can be one of the most important financial moves you make. Increasing your income might be more important than anything else on this list.

69. Direct deposit is the nudge you need. If you don’t see your paycheck, you’re less likely to spend it.

70. Don’t let comparison steal your joy. Instead, use comparisons to set goals. (net worth).

71. Learning is earning. Education is 5x more impactful to work-life earnings than other demographics.

72. If you wouldn’t pay in cash, then don’t pay in credit. Swiping a credit card feels so easy compared to handing over a stack of cash. Don’t let your brain fool itself.

73. Envision a leaky bucket. Water leaking from the bottom is just as consequential as water entering the top. We often ignore financial leaks (e.g. fees), since they’re not as glamorous—but we shouldn’t.

74. Forget the Joneses. Use comparisons to motivate healthier habits, not useless spending.

75. Talk about money! I know it’s sometimes frowned upon (like politics or religion), but you can learn a ton from talking to your peers about money. Unsure where to start? You can talk to me!

The Last Personal Finance Rule of Thumb

Last but not least, an investment in knowledge pays the best interest.

Boom! Got ’em again! Ben Franklin streaks in for another meta appearance. Thanks Ben!

If you enjoyed this article and want to read more, I’d suggest checking out my Archive or Subscribing to get future articles emailed to your inbox.

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

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Source: bestinterest.blog

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Pizza Delivery is for Millionaires

My son and I are having a beautiful Saturday night here at home. The sun is setting over the mountains outside my bedroom window and I’ve just finished baking a pizza which I am about to serve up for his dinner.

Although our day has been very simple, there has been an underlying magic within it that triggered an epiphany that I just had to write to you about. Because within this simple moment seems to be the secret to pretty much everything.

We woke up to a cloudless blue sky and were treated to summer-like warmth even though it’s November. I served up a French toast breakfast and then we ate together as we made plans for our day. We decided the first stage would be some computer work for him, while I went out to do some yard work and a bit of maintenance and cleanup on my construction van, to get it ready to lend to a friend.

Stage Two was our big walk downtown. Little MM wanted to get some shots of old buildings as part of an assignment for photography class, and I wanted to fix a minor leak in the roof of the MMM HQ Coworking building, so we decided to combine the errands. The walk was long and adventurous and we even stopped for some exorbitant ice cream cones on the way, courtesy of a gift card I received for helping someone last month.

We got it all done – Little MM got his 24 required shots, I fixed the roof and also ran into my co-owners Mr. and Mrs. 1500 who were setting up the building for a group breakfast tomorrow. So my boy and I strolled the 1.5 miles home through the sunny leafy autumn streets of Longmont and settled in for the night.

I popped one of my homemade pizzas into the oven. Because it was a big one, it was going to take at least 25 minutes to cook so I figured I’d use that time to shower off the day’s dust and sunscreen. But then I noticed my hair was starting to get a bit out of control so I gave myself a quick haircut before the shower.

And as I stepped out of my room, dressed in clean clothes and feeling sharp and healthy and arriving in the fancy kitchen I built last month just as the oven beeped to indicate the pizza was finished, I realized that this is the secret to wealth. Days like today. Monetary wealth for sure, but also every other kind of wealth.

We had just enjoyed an almost perfect day almost effortlessly, just by having the right habits in place.

We had a shitload of fun, socialized and exercised and advanced the projects that are important to us. But simultaneously, we spent very close to zero dollars, and left the world mostly unscathed as we finished our day.

The beeping of that oven full of homemade pizza was what really set off the epiphany in my head.

“Damn”, I realized, “even with all this excess money building up over the years, it didn’t even occur to me to order a pizza. It’s just automatic, and thus faster and cheaper and healthier, to make my own.”

Plus by avoiding the delivery I am saving my neighbors from one gas-powered car bringing an unnecessary extra serving of danger and pollution onto our street. It’s a three-way win with no losing involved.

Ordering a decent extra-large pizza including tax, tip and delivery: $20
Dad’s Homemade pizza: about $4
Difference: 500%

Sure, the difference here is only sixteen bucks, but I wanted to highlight the percentage difference instead. Because if you apply this philosophy of efficient, automatic habits all through your life, it really does tend to cut your costs so that your life becomes 2, 3, 4, or even 5 times less expensive.

So I thought to myself “WHY does anyone who is not even a millionaire yet, or even worse who has a mortgage or credit card debt, still do something as frivolous and easily avoided as ordering a pizza?*”

With that example drawn out in detail, let’s look at some of the other details of this day:

New kitchen in my latest frugal fixer-upper house in progress. Even the toaster is fancy!

My new kitchen which made that pizza cooking so enjoyable was built on a total budget of about $6000 including changing the floorplan, electrical, plumbing, cabinets, countertops and all the appliances.

This is less than half of what custom-ordered cabinets alone would have cost, and a full kitchen remodel of this type usually tops $25,000. But by getting assemble-it-myself cabinets from Ikea and my appliances from Craigslist and doing all of the work myself, I cut the cost by about 75%, while earning plenty of great physical exertion and satisfaction at the same time. Savings: about $20,000 or 80%

My son is in the public middle school rather than in the private school across town, which is where some of the other multimillionaire parents send their kids. If the private school were better for his needs, of course we could afford to send him there too. But we gave the local option a chance and it has turned out to be an incredible place for him. Savings: about $20,000 per year or roughly 100%

We chose walking as our means of transportation, and if we were in a rush we would have ridden our bikes. This habit of not driving doesn’t just save me gas and maintenance money, it also allows me to keep an older vehicle. I have a 1999 Honda van that is still in sparkling new condition.

She just reached drinking age, all cleaned up for her first can of Coors Light!

It stays new because I barely use it, because I have designed my life to be within an entirely muscle-powered radius. But this brand-new van is worth less than two grand and insurance is about twenty bucks a month. Maintenance is less than $10, registration is $5. Savings versus owning an “average” $35,000 American car and driving an average amount: about $600 per month or 90%.

We didn’t go “shopping” (100% savings), watched a movie at home instead of the theatre (100%), I cut my own hair for the something-hundredth time (100%), we advanced our health rather than chipping away at it (100%), and built this warm caring relationship with each other as well as with our friends (priceless).

And there were all sorts of other less tangible things working in the background too. I bought a commercial building and started this coworking space as a way to pass the time and spend time with old and new friends – the same reasons that someone might buy a vacation home in the mountains or at the beach.

But instead of costing me a few thousand dollars per month and requiring 100 miles of driving every time I visit, this building is just a pleasant walk from home and it generates thousands per month in cashflow and appreciation. It is great for the mental and physical health of all of our 75 members and growing, and we all save money by being a part of this community.

Mr. 1500 and I hosting a party at MMM-HQ for the first screening of the Playing with FIRE documentary, April 2019

The funny part of all this is that today was a completely normal day for us – most of my days are very similar to this one. The only unusual part was that I happened to take a step back and actually notice it. And that is really the point of this whole article:

We get used to our daily routine, and think of it as “normal”, even if it is completely ridiculous.

In recent months, I have just had my eyes re-opened as I have had more contact with people who are living more typical American lives than me. Their normal is different than mine, so when I visit I happen to notice the differences – more car trips and impulse purchases and pizza deliveries.

These people are not living lifestyles that appear exorbitant at all, and their houses aren’t packed with expensive things. But these little 5-to-1 differences just silently happen, quietly and consistently and add up to perhaps $100 per day, when compared with a more streamlined lifestyle.

And $100 every day becomes $36,500 every year, and if you invest that conservatively it will compound into about $520,000 every decade.

$520,000 per decade.
Just from the tiny mindset switch between
“hey lets order a pizza”
versus
“Hey, let’s throw a pizza into the oven.”

I really think this is important, and as this whole “FIRE Movement” thing grows, some people are getting soft and complaining that Mr. Money Mustache is “too extreme”, and so we should take a gentler and easy path and let our spending get sloppy if that is what’s right for us.

The thing is, this is usually just wrong. It’s laziness rather than practicality. Because Mr. Money Mustache is already plenty spendy, and plenty sloppy – well beyond the level required to live a happy life.

I can afford to live this way, because I’m old and wealthy now. If you are still young and poor, you should be spending less than me, not more.

So, pizza delivery is for millionaires, and it’s also time to put away those car-clown keys and get back on your bike. We’ve still got work to do.

* Of course, this is a perfect-world generalization. Real life has room for joyful exceptions and imperfections. But you have to know the reality of what you should be doing, before you can safely start making exceptions like ordering your pampered ass a pizza.

Source: mrmoneymustache.com

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30% of Americans Say COVID-19 Has Changed the Age at Which They Plan to Retire

New Northwestern Mutual Research Finds 20% of People Plan to Retire Later than Expected, and 10% Plan to Retire Earlier

MILWAUKEE, Dec. 3, 2020 /PRNewswire/ — The economic impact of the COVID-19 pandemic has changed the retirement timeline for 30% of Americans, according to research from Northwestern Mutual’s 2020 Planning & Progress Study. The study finds that 20% of U.S. adults age 18+ plan to delay retirement beyond what they expected, while 10% plan to accelerate their timelines and retire earlier than anticipated.

Millennials are the most likely generation to move up their planned retirement date, with nearly one in six (15%) saying they would accelerate their plans. This compares to less than one in 10 among Gen Z (8%), Gen X (6%) and Boomers (4%). Meanwhile, Gen X (25%) is the most likely generation to say the pandemic has caused them to push back their planned retirement date, followed by Gen Z (22%), Millennials (19%), and Boomers (14%).

When asked what age people expect to retire, Millennials indicated the earliest target date, nearly seven and a half years younger than Baby Boomers:

  • Gen Z – 62.5
  • Millennials – 61.3
  • Gen X – 63.2
  • Boomers – 68.8

“These numbers illustrate what may be a distinct difference in the way generations view retirement,” says Christian Mitchell, executive vice president & chief customer officer at Northwestern Mutual. “Millennials appear to prioritize retirement earlier on, whereas other generations may be quicker to extend their retirement timelines outward. Much of this depends on individual circumstances, of course, but it also underscores that a long-term financial plan has to factor in the unexpected and be nimble enough to adjust course.”

Retirement Obstacles
The study finds that the greatest obstacles to financial security in retirement have flip-flopped during the pandemic. Before COVID-19 began to spread widely, lack of savings (42%) was the top obstacle followed by healthcare costs (38%) and the economy (34%). Now it is the economy (49%) followed by lack of savings (33%) and healthcare costs (32%).

Findings also reveal that people are relying heavily on Social Security as a funding source during retirement but don’t have great faith it will actually be there when they need it. Social Security ranked as the top source of retirement funding, accounting for an average of 27% of Americans’ overall retirement funding. But one-fifth (20%) of people believe it is not at all likely Social Security will be there when they’re ready to use it.

“This is a good reminder that there are always factors to consider that are outside of people’s control such as the economy, healthcare costs and Social Security,” says Mitchell. “That only underscores how important it is to focus on the things you can control such as saving, investing and protecting your assets. A solid financial plan and a trusted advisor can help.”

Working Longer
One in five (21%) U.S. adults expect to work past the traditional retirement age of 65. Among those who do, nearly half (45%) say it’s because of necessity and 55% say it’s because of choice.

Taking a closer look at those who plan to work out of necessity, the top reason cited was not having enough saved to retire comfortably at 60%. Other top reasons include:

  • I do not feel like Social Security will take care of my needs – 58%
  • I am concerned about rising costs like healthcare – 49%
  • I had an unexpected situation arise that has cut into my retirement savings – 20%

For those who plan to work past the age of 65 by choice, the top reason cited by nearly half (49%) is that they enjoy their job/career and would like to continue. Other reasons include:

  • I want additional disposable income – 43%
  • It is a social outlet that will help me stay active/prevent boredom – 34%
  • I want to do something that will let me give back to the community – 21%

“While the nature of retirement continues to change, it’s encouraging to see more people working past the age of 65 out of choice and not necessity,” says Mitchell. “Although that may not always be an option for all, having a tailored, diversified strategy with both insurance and investments can allow people to make informed choices regarding a retirement that suits their unique circumstances.”

About The 2020 Northwestern Mutual Planning & Progress Study
The 2020 Planning & Progress Study is a research series conducted by The Harris Poll on behalf of Northwestern Mutual. This wave included 2,702 American adults aged 18 or older who participated in an online survey between June 26 – July 10, 2020. Results have been weighted to Census targets for education, age/gender, race/ethnicity, region and household income. Propensity score weighting was also used to adjust for respondents’ propensity to be online. No estimates of theoretical sampling error can be calculated; a full methodology is available.

About Northwestern Mutual
Northwestern Mutual has been helping people and businesses achieve financial security for more than 160 years. Through a holistic planning approach, Northwestern Mutual combines the expertise of its financial professionals with a personalized digital experience and industry-leading products to help its clients plan for what’s most important. With $290.3 billion in total assets, $29.9 billion in revenues, and $1.9 trillion worth of life insurance protection in force, Northwestern Mutual delivers financial security to more than 4.6 million people with life, disability income and long-term care insurance, annuities, and brokerage and advisory services. The company manages more than $161 billion of investments owned by its clients and held or managed through its wealth management and investment services businesses. Northwestern Mutual ranks 102 on the 2020 FORTUNE 500 and is recognized by FORTUNE® as one of the “World’s Most Admired” life insurance companies in 2020.

Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM)(life and disability insurance, annuities, and life insurance with long-term care benefits) and its subsidiaries in Milwaukee, WI. Subsidiaries include Northwestern Mutual Investment Services, LLC (investment brokerage services), broker-dealer, registered investment adviser, member FINRA and SIPC; the Northwestern Mutual Wealth Management Company® (investment advisory and trust services), a federal savings bank; and Northwestern Long Term Care Insurance Company.

SOURCE Northwestern Mutual

For further information: JEAN TOWELL, 1-800-323-7033, mediarelations@northwesternmutual.com

Source: news.northwesternmutual.com

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How to Make Homemade Healthy Gatorade

August 10, 2015 | Crystal Paine

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Charged Off as Bad Debt: An Explainer

July 21, 2020 &• 5 min read by Lacey Langford Comments 73 Comments

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Disclaimer

Making payments late or missing payments completely spells bad news for your credit rating. When you miss too many payments, your creditor may charge off the debt. When your debt is charged off as a bad debt, don’t fool yourself into thinking it goes away.

A charged off debt can lead to harassing phone calls, garnished wages, and a major drop in your credit score. According to the Federal Reserve, consumer loans had a charge-off rate of around 2.3% in the final quarter of 2019. Credit card debt was more likely to be charged off than other forms of debt. But what is a charge-off, and how much does it impact your credit if your balance is charged off as bad debt? Find out more below, including what you can do about charge-offs on your credit report.

What Is a Charge-Off?

A charge-off occurs when you don’t pay the full minimum payment on a debt for several months and your creditor writes it off as a bad debt. Basically, it means the company has given up hope that you’ll pay back the money you borrowed and considers the debt a loss on their profit-and-loss statement. The creditor closes your account, which could be a personal loan, credit card, revolving charge account or another debt you’ve failed to pay as promised, and it’s charged off as a bad debt.

If you make payments that are less than the monthly minimum amount due, your account can still be charged off as bad debt. You must bring your account current to avoid it being charged off. Once your debt is charged off, your creditor will send a negative report to one or more of the credit reporting agencies. It may also attempt to collect on the debt through its own collection department, by sending your account to a third-party debt collector, or by selling the debt to a debt buyer.

When Will a Charge-Off Happen?

Charge-offs typically don’t happen until your payments are severely late. When you start missing payments, creditors will first send letters reminding you of your past-due bill. If that fails, they move on to the collections process. The standard time for creditors to perform a charge-off is after 120 to 180 days of nonpayment.

Does Charged Off Mean Your Debt Is Paid Off?

Charged off doesn’t mean your debt is forgiven. Don’t be misled into believing that because the creditor wrote off your balance that you no longer need to pay the debt.

Even when a company writes off your debt as a loss for its own accounting purposes, it still has the right to pursue collection. This could include suing you in court for what you owe and requesting a garnishment of your wages. Unless you settle or file for certain types of bankruptcy—or the statute of limitations in your state has been reached—you’re still responsible for paying back the debt.

How Does Charged Off Debt Affect Your Credit Score

Charge-offs affect your credit report because they’re caused by missed payments. FICO research indicates that a single late payment negatively impacts your credit score. Missing a payment by 90 days can drop your score over 100 points—but missing it by just 30 days can also have a significant negative affect on your score.

Because a charge-off results from missing payments, you have both the late payments and a charge-off listed on your credit report. Even with good credit, a single charge-off lowers your credit score substantially. Late and delinquent payments have the largest impact on your credit score because up to 35% of your score is determined by your payment history. A lower credit score can cause higher insurance rates, larger housing and utility deposits, increased interest rates and denials for new loans and credit cards.

How Long Does Charged-Off Debt Stay on Your Credit Report?

Just like late payments, a charged-off debt stays on your credit report for seven years. The seven-year clock starts on the date of the last scheduled payment you didn’t make and doesn’t restart if the debt is sold to a collection agency or debt buyer. Paying the charged-off amount won’t remove it from your credit report. The account’s status is simply changed to “charged-off paid” or “charged-off settled,” which remains on your credit report until the end of the seven-year period, when it automatically falls off your report.

How to Remove a Legitimate Charge-Off from Your Credit Report

The only way to have a legitimate charge-off removed from your credit report before the seven-year period expires is to convince the original reporting entity to do so. That’s typically the creditor that wrote the debt off.

While this tactic is hit or miss, success can mean a major positive for your credit report. And even if you’re not successful, you can still get a bit of a bump in your credit history by paying off charged-off debt. Here’s how it works.

  • You need to have enough money to negotiate with. Before you start negotiating, determine how much you can realistically pay and how soon you can pay it. If you can pay in full right away, you have more leverage to have the charge-off removed you’re your credit report, but you can also ask if they’re willing to make payment arrangements Consider saving up money or taking out a debt consolidation loan.
  • Once you have enough money to negotiate, contact the original creditor. Make sure you’re speaking to someone who has the authority to negotiate with you and make agreements about actions on your credit report.
  • Let the creditor know how much you can pay and that you’re able to make the payment today in exchange for calling the debt paid off and removing the charge-off from your credit report.
  • Get any agreement in writing from the creditor before you make a payment.

If the creditor won’t delete the charge-off from your credit report but does agree to settle your debt for less than you owe, consider the offer. Make sure they agree to mark the charge-off as paid-in-full on your credit report. That shows future creditors that you did make an effort to pay your debts and can be a critical requirement if you ever apply for a mortgage.

How to Dispute a Charge-Off on Your Credit Report

Sometimes, the charge-off on your credit report isn’t accurate. Perhaps you never owed the debt to begin with or you did pay it, and the profit-and-loss write off is a clerical error. You can work to get such items removed from your credit report by disputing them and asking the creditor to verify what they reported. Write a dispute letter yourself or work with a credit repair company to help clear up your report.

When you sign up for ExtraCredit, you get exclusive discounts to reputable credit repair services—plus access to 28 of your FICO scores from all three credit reports and additional features.

How to Avoid Balances Being Charged Off as Bad Debt

Even better than working to settle a debt and potentially get a charge-off removed is avoiding the issue in the first place. The ideal time to act is as soon as you see you’re struggling to make regular payments. Waiting until items are charged off as bad debt means your credit score will take numerous hits as you miss payments.

But if you can’t pay your debts, what choice do you have? Turns out you have many options, including some of the ones summarized below.

  • Consolidate your debt. Apply for a debt consolidation loan that lets you bring several debt items under a single account. You may be able to qualify for more favorable terms that reduce the amount you pay each month to make it easier to manage your debt. But this is more likely before your credit score drops due to missed payments and charge-offs.
  • Get a balance transfer card. If the debt you’re struggling with is credit card related, apply for a balance transfer card. If you can get approved for a card with a 0% APR offer, you may reduce how much you have to pay each month and make it easier to pay down your debts.

TD Cash Credit Card

Card Details
Intro Apr:
0% Introductory APR for 6 months on purchases

Ongoing Apr:
12.99%, 17.99% or 22.99% (Variable)

Balance Transfer:
0% Introductory APR for 15 months on balance transfers

Annual Fee:

Credit Needed:
Excellent-Good

Snapshot of Card Features
  • Earn $150 Cash Back when you spend $500 within 90 days after account opening
  • Earn 3% Cash Back on dining
  • Earn 2% Cash Back at grocery stores
  • Earn 1% Cash Back on all other eligible purchases
  • $0 Annual Fee
  • Visa Zero Liability
  • Instant credit card replacement
  • Digital Wallet
  • Contactless Payments

Card Details +

  • Reach out to the creditor for help. Most creditors have programs designed to help account holders who are experiencing emergency financial situations. As soon as you know you can’t pay your bills, call the customer service line for your account and ask if there are programs you can apply for to modify your loans or seek other assistance. Just make sure the new agreement you make is possible with your budget.

Take Charge of Your Debt

The worst thing you can do is ignore debt you owe. It won’t go away, and things get progressively worse for your credit history and score when you let them fester. So, check out your free Credit Report Card today to see where your credit is falling short and start looking for ways you can realistically handle debts that you owe to improve your credit in the future.

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How to Buy a Reliable Used Car

money saving strategy, and for good reason. According to Q1 2019 Experian data, the average used car loan amount was about $12,000 less than a loan for a new car. 

Avoiding expensive monthly car payments is especially important when faced with financial uncertainties. That’s probably why research firm IHS Markit found that the average car age on the road today is nearly 12 years old. Buying a used car is more popular now than ever — but it does take some extra consideration.

How to Buy a Reliable Used Car

There are always risks to buying a used car. If you buy a lemon, you might end up spending far more on it than if you’d just bought a new car. Here’s how to find the best reliable used car at a good price. 

1. Check Your Own Car Loan

If you’re still paying off a car and you’d like to trade down to save some money, the first thing to do is check your existing car loan. If you sell your car for less than you owe on the loan, you could end up having to pay the outstanding balance out-of-pocket. 

You can request a “payoff estimate” from your lender to see how much it’ll cost to pay off the remainder of your loan in full. Then, look up your car’s value on Kelley Blue Book or a similar site. Keep in mind that you’ll likely get a lot more money for selling it yourself versus trading it into a dealership.

2. Ask for Maintenance Records

Whether you buy a used car from a dealership or through a private seller, it’s important to review the car’s history. If regular maintenance wasn’t done, repair issues and costs can compound down the road — when you own the car. Scrutinize its maintenance and repair records to get an idea of how well it was taken care of and what’s recently been worked on. 

Not everyone keeps meticulous records, unfortunately. But if they’re available, records are a good source of information about the reliability of the car. 

3. Take the Car for a Test Drive

It’s possible to buy a car over the internet and have it delivered right to your home. Although it sounds convenient, buying a car without a first-hand test drive is very risky. 

Get behind the wheel yourself to test it out on road conditions you plan on experiencing. For example, if you often drive on the highway versus surface streets. A test drive helps you feel whether the car is comfortable for your personal anatomy, and offers a real-life sense of obvious repair issues that weren’t apparent in the maintenance records. 

4. Do a Background Check on the Car

Regardless of whether a car’s previous owner kept good maintenance records, the car’s VIN and a CARFAX report can surface valuable information, like recalls, ownership history, service records, and more. 

Also, ask to see the title of the car, and look for “salvage,” “rebuilt,” or “flood” written on it. The exact terminology and the color of these special titles varies by state, but they all indicate one important thing for you: be cautious — the vehicle has a checkered past that might pose a safety or financial risk. 

5. Get an Inspection

Always remember to get an inspection done from an independent mechanic. If you buy your car from a dealership it might be “certified pre-owned” or already have an inspection report (from the dealer’s mechanic which might be biased). 

Even in these cases, get the car inspected by a third party. Ask the seller if they’re willing to join you as you take the car to your mechanic, or have the seller take it to your chosen mechanic. 

If that’s not an option, ask your preferred mechanic if they do on-site inspections. If that’s not even a possibility, there are mobile mechanic companies that specialize in doing on-site inspections, like Lemon Squad or CARCHEX. These companies are also handy, if you’re buying a car from out-of-state. 

Pros and Cons of Buying a New Car vs. a Used Car

Buying a used car is the best option in many cases, but it’s not the only choice. Here are the benefits and disadvantages that you can expect when buying a new car versus a reliable used car.

New Car

Pros

  • Most reliable and safe: Things can still go wrong with new cars, but in general, they feature the newest safety features and have zero wear and tear on them.
  • May come with a warranty: New car warranties aren’t all-encompassing and generally only protect certain features, such as the drivetrain. Still, it’s something you’re less likely to find with a used car. 
  • May last longer: Since you’re buying a car that no one’s driven around, there’s a good chance it’ll last you longer than a used car.

Cons

  • Expensive: Not only are new cars wildly more expensive than used cars, but as soon as you drive them off the lot, new cars depreciate immediately. According to Edmunds, your new car’s value drops by 9% as soon as you drive it off the lot, and depreciates by 19% during the first full year.
  • Might be in debt longer: According to the same Experian study, on average, new-car loan terms were about four months longer than a used car. That’s not a huge difference, but taking out a bigger loan for a longer time period, means even more money spent on a car that’s already lost much of its value.

Used Car

Pros

  • More affordable: Used cars are definitely the way to go if you’re looking for a car that won’t break the bank. They’re also cheaper to insure and register. 
  • Previous owner absorbed the depreciation: The car’s original owner took the biggest hit on depreciation so that you don’t have to. Even a used car that’s just a few months old gives you a nearly brand-new car without losing a chunk of its value right away. 
  • Less debt: If you’re buying a cheaper car, you won’t need to take out as big of a loan for it. You might not even need a loan at all if you’ve saved up enough money — a target that’s a lot easier to reach for used cars. 
  • Higher-end car for less money: Another perk of buying a used car is that you can often get a nicer used vehicle at a higher trim level, for example, than if you’d paid full price for a basic model. 
  • Might still be under warranty: If you buy a newer used car or a car from a dealership, it might have a short warranty associated with it. 

Cons

  • Reliability and safety: You’ll need to do your due diligence when buying a used car. It’s especially important to have any potential used cars looked over with the experienced eye of a mechanic before you put your money on the line.
  • More research and time: You’ll need to put in more time and legwork than with a new car. This includes doing extensive research about the build-quality and reliability of the car, checking maintenance records, professional assessments, and more.
  • Might not last as long: There’s a reason used cars are cheaper — they’ve already gone through some of their expected lifespan. 
  • Harder to get a loan: Many lenders have limits on how old or how many miles a used car can have, because the car is collateral for the loan. If you’re buying a really old car or it has high mileage, you might have some trouble finding financing for it. 

Saving Money by Buying a Used Car

Buying a used car — the right way — is about more than just saving money up front. That savings will resonate throughout the rest of your financial life. 

For example, if you buy a $20,000 used car instead of a $32,000 new car but keep all of the other loan details the same ($5,000 down payment, 4.5% APR, five-year loan term), your monthly payment will be almost $230 less. 

Now, if you take that savings and put it in a high-yield savings account, you’ll have almost $14,000 saved up by the time your car is paid off. That’s almost enough to buy another car outright in cash, or a hefty emergency savings fund. By being thoughtful about your next used car purchase, you can find a dependable car while also hitting your other financial goals. 

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