Tag: Mindful Money

 

What To Do With a Three Paycheck Month & How You Can Save Two Extra Checks Per Year

Are you paid on a bi-weekly pay schedule? If so, did you know that there are two months every year when you’ll receive three paychecks instead of two?

While it may be fun to go out and spend the third paycheck you receive during these two months, there are better ways to use this extra money. For starters: You can create a monthly budget based on two paychecks a month and then make smart money decisions with the extra funds. 

Learn more about bi-weekly and bi-monthly pay schedules, and see how you can maximize your money during your three paycheck months. 

Bi-weekly Pay vs. Bi-Monthly Pay  

Before we dive in, it’s important that you know the difference between bi-weekly and bi-monthly pay schedules.

A bi-weekly pay schedule is the most common type of pay period used by employers. If you are paid this way, you’ll generally get paid on a certain day, every other week (such as every  other Friday). This means you’ll receive 26 paychecks a year and 27 during a leap year. It also means you’ll get three paychecks a month twice a year. 

A bi-monthly pay schedule, also called semi-monthly pay, means you get paid twice a month. Pay dates are typically 15 days apart and occur perhaps on the first of the month and 15th or 16th. You may also get paid on another random set of dates that are 15 to 16 days apart. With this type of pay schedule, there are 24 pay periods in a year – with no three paycheck months. 

In this story, we get into the nitty-gritty of bi-weekly pay periods, as this is what gives you an extra two paychecks a year. Read on to learn seven ways you can use your extra paycheck money wisely by planning ahead and responsibly spending and saving your hard-earned cash. 

1. Pay Off or Reduce Your Debt

When you get a third paycheck in a month, instead of going out and spending that cash, try using it to pay off your debt. For example, you may be able to pay down credit card balances, chip away at your medical bills or even make extra payments toward your student loans or other debts.  

2. Start an Emergency Fund 

Do you have an emergency fund, or money set aside in a specific account to pay for unexpected expenses, like medical bills or car repairs?

If you don’t have an emergency fund, you’re not alone. According to Bankrate’s latest Financial Security Index, about 28% of Americans have no emergency savings

At a minimum, many financial experts recommend you have at least three months of living expenses saved up into an emergency account. But, don’t fret. Whether you’re starting from scratch or trying to build your emergency fund, your extra two paychecks can help you meet this goal. 

Pro tip: Pretend you never saw those paychecks and auto-transfer them immediately into your emergency fund as soon as you get paid. If you’re a Chime member, this is super easy with Chime’s Automatic Savings feature. 

3. Invest in Your Retirement Savings

You probably know about the importance of saving for retirement, right?

Whether you have an employer-sponsored 401(k) plan or an individual retirement account (IRA), you can always add extra money to your account – helping you build up your fund even faster. So, perhaps consider putting your two extra yearly paychecks right into your retirement account. 

4. Catch up on Home Maintenance & Car Repairs 

Have you been putting off home repairs or car maintenance because you’re low on cash?

Think of your three paycheck month as a great way to get these repairs taken care of, paying for them in one fell swoop. 

5. Start a Vacation Fund 

It’s summertime and we know you’d probably like to take a vacation. But, even if you travel on a budget, you know this means you’ll be spending money that you wouldn’t ordinarily spend.

With this in mind, wouldn’t it be nice if you had a vacation savings account, with money sitting there and ready for you to use on your next vacay? Why not open that savings account right now and deposit your extra third paycheck directly into the bank?

Without even thinking about it, you’ll be able to go on vacation without stressing about how you’ll pay for it. 

6. Save for Christmas Presents 

We know the holidays may seem way off in the distance. But, before you know it, Christmas will be here and you may be whipping out your credit card to pay for those presents. 

But, what if you used your extra third paychecks toward these gifts? All you have to do is deposit these paychecks into a holiday savings account or perhaps your regular savings account (just don’t spend it!) The money will be ready for you when Christmas rolls around and you can enjoy holiday shopping – without the stress! 

7. Treat Yourself (But Only a Little)

If you’ve been diligent in sticking to your budget, there’s nothing wrong with using a small percentage of your extra third paycheck to splurge on something you want. The operative word here is “percentage.” So, sock those two checks away and then maybe take 10-25% of this cash and treat yo’self to something you want, like dinner with friends, a manicure or a fitness workshop. You get the point. 

Use Your Third Paycheck as a Financial Clean Slate

As you can see by the seven options here, you’ve got many ways to use your three paycheck months to make financial improvements in your life: from paying down debt, to starting an emergency fund, to leveling up your savings account, and more. 

Instead of spending those checks recklessly, you can use these three paycheck months to get closer to your financial goals. Are you ready to give it a try?

 

Recommended Budget Category Percentages

We all know how beneficial a budget can be. 

For starters: A budget outlines your spending plan so you know exactly how much money goes toward each expense. Budgets are also extremely helpful when trying to decide how much you have available to save and how much money you can put toward paying off your debt. 

At the same time, there are many different ways to budget. One of the most common budgeting strategies I recommend is to set up budget category percentages. For example, a common rule of thumb is that housing costs shouldn’t exceed 30% of your income. What about the rest of your budget categories? Luckily, they can be broken down by percentages as well. 

Read on to learn more about creating percentage categories for your budget. 

Start with the Basics

If you’re new to budgeting, using the 50/30/20 approach is a great starting point. 

With the 50/30/20 budget, you allocate 50% of your income toward living expenses and necessities, 30% toward wants, and 20% toward debt and savings. 

Here’s how this would look. Say you bring home $3,000 each month. Under the 50/30/20 budgeting method, you’d put $1,500 toward living expenses and necessities, $900 to wants and variable expenses, and $600 toward debt and savings. 

While this method is super easy to use, it may not fit in with your particular goals. For example, you may want more wiggle room for your savings account

Get a Little More Specific

If you want to venture beyond the 50/30/20 budgeting method, you can get more specific and add additional percentages while breaking up your spending into more categories. 

Think about your goals and lifestyle. What do you value spending money on? How much are your core necessities? Do you have debt? What are your savings goals? 

Start tracking your spending to see what your current budget categories are. It can be eye-opening to see the percentage of your income that you spend on things like dining out, transportation, and even bills and insurance. 

So, think about setting your own budget percentages based on your preferred spending patterns and goals. With that in mind, here are our recommended budget category percentages that can help you get ahead. 

Basic Recommended Budget Category Percentages

Housing (mortgage and rent costs): 25% 

Utilities: 5%

Food: 10%

Transportation: 5%

Insurance (includes medical, auto, renter’s etc.): 15%

Personal (+ household expenses): 5%

Entertainment/Recreation: 10%

Charitable Giving: 10%

Savings/Debt: 15%

Here’s how this budget would break down if you bring home $3,000 each month:

Housing (mortgage and rent costs): $750

Utilities: $150

Food: $300

Transportation: $150

Insurance (includes medical, auto, renter’s etc.): $450

Personal (+ household expenses): $150

Entertainment/Recreation: $300

Charitable Giving: $300

Savings/Debt: $450

Keep in mind that these are pretty standard budget percentages if you want to have enough money to afford your needs and wants. As you can see from the example above, you still can’t afford to splurge on housing costs, but you’ll have plenty of money for groceries, dining out, giving, savings, and debt payments. 

Once you have your ideal budget in place, you can start allocating money to different expenses when you get paid

Aggressive Recommended Budget Category Percentages

While the basic recommended budget category percentages may work well, you may want to take it up a notch if you have some aggressive savings goals and are willing to live frugally. 

If you are looking to pay off debt quickly or save to meet an important goal, here are some budget category percentages you can try.

Housing (mortgage and rent costs): 20% 

Utilities: 5%

Food: 7%

Transportation: 3%

Insurance (includes medical, auto, renter’s etc.): 10%

Personal (+ household expenses): 5%

Entertainment/Recreation: 5%

Charitable Giving: 5-10%

Savings/Debt: 40%

Here’s how this budget would break down if you bring home $3,000 each month:

Housing: $600

For this amount, you’d likely have a roommate or rent a smaller apartment to keep housing costs low. If you own a home, you may also rent out a few rooms to offset your mortgage costs. 

Utilities: $150

If you have roommates, you can split the cost of utilities to save money. Perhaps you can use Chime’s Pay Friends to send fee-free mobile payments if you’re splitting bills. You can also limit your use of electricity during the day by turning off lights as well as reducing heating and cooling costs by using a programmable thermostat.

Food: $210

Although the amount is quite low, this may be enough for one or two people. If you cook most meals at home, take advantage of sales, and buy ingredients and whole foods instead of packaged food, you can make this budget work. 

Transportation: $90

While this amount is also low, perhaps you work close to home and can keep your fuel costs down. Or, maybe you can use alternative transportation like walking or cycling. 

Insurance: $300

For this amount, you likely shop around for the best insurance rates and drive an older car that doesn’t cost much to insure. You also receive benefits from your job which helps keep this category low.

Personal (+ household expenses): $150

This amount is just enough to buy basic needs and supplies for the house as well as some affordable personal care once or twice a month. 

Entertainment/Recreation: $150

Your dollars can be stretched with free local activities and experiences along with using coupons and deal sites to dine out. 

Charitable Giving: $150-$300

Although you’re determined to save and/or pay off more debt, this budget still allows for you give back to others in need. 

Savings/Debt: $1,200

Accelerated debt payments and savings contributions will allow you to hit your financial goals faster, even if you don’t have a large income. 

The Power of Budgeting

It’s quite possible to save more than $14,000 annually on a $40,000 salary with the aggressive recommended budget percentages above. 

Yet, regardless of whether you prefer an aggressive, basic or other type of budget, breaking up your spending categories by percentages is powerful. It shows you exactly where your money is going and how much of your income is used for certain expenses.  

Feel free to use this new perspective and play around with your own budget category percentages. This will help you determine where you spend and how much you can save. Are you ready to give it a try?

 

How to Pay Off Debt in Collection: A Guide to Saying Goodbye to Credit Collectors

You’re in debt and you have no idea how you’re going to pay it off. 

The due date passes by. You want to pretend your debt doesn’t exist. As the days and months go on, you’re delinquent on your loans and they end up in collections. Your credit is shot. The menacing calls begin and all you want is for them to stop. 

Yet, while this is indeed a difficult situation, it’s one you can take control of and fix with the right actions. In this guide, we offer up ways you can pay off debt in collections. Take a look.

What is a Collection Agency and Why are Debt Collectors Calling?

First, let’s discuss the cast of characters involved with debt collections. 

There is the collection agency or credit collection service, which is a third-party company hired by a lender to collect an outstanding balance from a borrower. The collection agency then hires debt collectors, who are the actual people doing the dirty work and calling borrowers to get the money back

Credit card debt, student loans, medical bills, utility bills and more can all go to collections. Business debt isn’t eligible for debt collections. 

While debt collectors can take certain actions like call you at work, there are restrictions so that the hounding doesn’t become an abusive practice. For example, debt collectors can only call you during certain hours, in many cases between 8am-9pm.

How to Find out Which Debt Collection Agency You Owe Money to 

If you want to get out of debt collections, you need to pay money to the credit collection services agency. 

But how do you know exactly who to pay and who the debt collection agency is? In some cases it might be clear but if not, here are ways to find out which debt collection agency you owe money to: 

  • Contact the Original Creditor 

If you know what bill is in collections, contact the original creditor for more information about your collections account. You can then ask which debt collection agency they are using and get the contact information. Then, contact the debt collection agency and ask how to proceed to get your payment in good standing. 

  • Check Your Credit Report 

If you know you’re in debt collections but are unsure of which loans are not in good standing, you’ll want to get your credit report. Your credit report is a document that contains your full credit history, including outstanding loans that may be in debt collections. 

Many debt collection agencies report to the three major credit bureaus — Experian, TransUnion and Equifax. You can access all three of your credit reports once a year at AnnualCreditReport.com

Make sure you check all three as some debt collection agencies only report to one credit bureau, not all of them. 

  • Answer the Phone When Bill Collectors Call You

In some cases, your debt collection fees won’t appear on your credit report. And sometimes, the debt can be passed onto other debt collection agencies, leaving you wondering who to contact.

In this case, you will likely have to wait until the debt collector calls you to get more information. It’s not fun and no one wants to deal with debt collectors on the phone. But if you’re unsure of who the debt collection agency is, answer the phone, get the information and ask how to get your loan in good standing. You’ll also want to get a debt verification letter and check your records to make sure you’re not overpaying as debt collectors can make mistakes too.

Three Ways to Pay Off Debt Collectors 

If you want to get out of collections and repay your debt, there are a number of routes you can take. Some of them may require negotiation and whatever you do, get everything in writing. Here are three ways to pay off debt collectors:

1. Negotiate a Settlement With Your Debt Collector

In some cases, you may be able to negotiate a settlement with your debt collector. A settlement is typically less than the amount owed and is used in exchange for deleting the account from your credit report. 

You’ll need to get a letter in writing about the settlement terms before making your first payment. Make sure you understand your rights and responsibilities, and that you know the terms of the settlement. 

2. Pay Off the Debt In Full 

If you have a small bill that is outstanding and in collections, you can choose to pay off the debt in full. Under this option, the good news is that your debt will be paid off. The bad news is that the collection account will remain on your credit report. 

3. Create a Debt Repayment Plan

If you can’t negotiate a settlement or pay the debt in full, you can talk to the debt collection agency about a debt repayment plan. 

In this case, it’s important to make all of your payments on time and in full to get your loan in good standing. 

What Happens if You Don’t Pay a Collections Agency?

If you have debt collectors hounding you, you might want to bury your head in the sand. Unfortunately, if you aren’t paying off collections, your problems will only get worse. Here’s why:

  • Your Credit Score Will Take a Hit 

The debt collection agencies report to the major credit bureaus. So, if you ignore them, your credit score may go down. This can make it more difficult to get approved for loans and may result in higher interest rates if you do get approved. 

In some cases, you may be able to negotiate the mark off your credit report. If not, the negative entry will remain on your credit report for seven years. And remember: This can have a sweeping impact on every area of your financial life. 

  • You May Have Late Fees, Making the Debt Harder to Pay Off

If your debt is in collections, it’s not just the outstanding balance you have to worry about. There could be additional late fees tacked onto your balance. All of the extra fees can add to the total cost of your loan, making it even harder to pay back. 

Deal with Your Debt

Debt collectors have one job — to collect your debt. In order to do that, they will call you many times until they reach you. This can be stressful and annoying.

So, answer the phone and face the issue head on. Talk to your debt collector about your options, whether that’s a settlement, payment plan or paying it off in full. Make sure you get everything in writing.

It’s not fun and can be tough to deal with, but getting out of collections will help you breathe easier and free up stress. Once you do this, you’ll be able to focus on other financial goals like saving money and investing. 

 

Overspending Because of Social Media? Here’s How to Stop.

#ad #sponsored #blessed

It’s hard to scroll through Instagram or any other social media platform and not be inundated with post after post showing you everything you’re missing. And it’s not just the ads that pop up in your feed, it’s the people you know — or the influencers you think you know — that may be causing you to spend. 

Charles Schwab’s 2019 Modern Wealth Survey found that more than a third of Americans admit that their spending has been influenced by what their friends are sharing on social media. And they also say that this FOMO is causing them to overspend. In fact, nearly half of millennials spend money they can’t afford on experiences with their friends. With stats like this, it’s not hard to see that social media can be a barrier between you and your savings account. 

So, what can you do to stop overspending due to social media FOMO? Here are four tips to help you curb the urge to spend. 

1. Curate your feed

It’s time to find balance with who you follow. While it’s fun to follow celebrities or friends who live it up, get in some other #goals. 

Find accounts that make you feel good, without necessarily making you feel the need to spend more. If you’re a runner, following running accounts can help inspire you to run, a low-cost activity. Love baking? There are plenty of social media accounts that will help you indulge in that hobby. I love hiking, so following accounts that show people getting outdoors inspires me to do the same.

If you want to balance some of the flashier accounts that grace your feed with others that will bring you back to reality, try finding money savvy accounts to follow. You’ll find some inspiration by searching hashtags like #debtfreecommunity and #moneymotivation. With these hashtags, you’ll find accounts of real people sharing the things they’re doing to reach their money goals

And remember, if you’re searching for new accounts to follow and Instagram keeps suggesting accounts that will only fuel the need to spend, you can request that they stop showing you those type of posts.

2. Remind yourself it’s a highlight reel

You know your friend who is always posting about a new trip, a new bag, or an epic brunch? That’s a small piece of her life. Of course she’s not going to post about her morning commute or the sad salad she had for lunch.

This an important thing to remind yourself as you start to feel envy over her life: It’s not her entire reality. 

And if you ever find yourself stopping mid-scroll and wondering how someone can afford everything you see, think about this: Maybe he can’t. He may have massive credit card bills, be dealing with debt, or have nothing saved at all. It’s very easy to see someone’s spending, but it’s very difficult to see his savings

3. Remember what you value

With social media, you’re constantly taking in images and information. Sometimes, without realizing it, you can get so caught up in what other people are doing and sharing that you forget what makes you happiest. 

Next time you start feeling pangs of jealousy seeing someone wearing a new outfit, driving an amazing car, or living the life on vacation, take a step back. Think of what you value and what makes you truly happy. Maybe it was the potluck dinner you hosted, or the night you spent on your couch with a friend eating popcorn and bingeing on Netflix. Or, perhaps it was a great walk in the park you took Saturday morning. Maybe none of those things would look so fabulous on social media, but they sure felt great. 

4. Take a break from your apps

How much time are you spending on social media apps? Maybe more than you think. People spend an average of two hours and 22 minutes per day on social media. How does your usage stack up? Your phone can easily tell you. On the iPhone, you’ll find your data by checking the Screen Time section of your settings. On the Google Pixel, you can find it under Digital Wellbeing. 

If you’re spending a lot of time on these apps and they’re hurting your wallet, it might be time to take a break or cut back on your use. 

Or, to avoid mindlessly opening them, try taking them off your home screen or using an app that blocks social media, like Offtime, or an app that helps you curb your usage, like Moment. If that doesn’t help, try scheduling your social media usage during one specific time of the day, like on your evening bus ride home. If you find yourself reaching for your phone mindlessly, download a good book and make a habit of reading a few pages.

If all else fails, delete your apps. You can always reinstall them, but you may find that a few days of space gives you the perspective that you need. 

Final word

Social media can be a great way to stay up to date with friends. But don’t let the lifestyle you see on social media influence you to spend more and save less. And remember: Your happiness is much more important than a social media feed.

 

How to Start Talking to Your Parents About Money

As you start your journey into personal finance, you’ll be looking at your numbers and trying to figure out your life ahead. One thing you may realize soon is that you’ll have to consider your parents as well as yourself.  

Your parents are aging too. How are they doing with their money? Is there an expectation that you’ll take care of them? 

Talking to your parents about money can be awkward but it’s necessary. Read on to learn how to discuss finances with your parents. 

My Story 

Over the years, I’ve had my own personal finance journey that included paying off $81,000 in debt, as well as starting to save and invest for the future. As I started to get my finances together, I wondered about my parents. 

I’m an only child, so if something were to happen to them, it would be up to me to take care of things. Obviously, this realization was tough and I wanted to be prepared. But how could I start a conversation with my parents without being rude or intrusive? So, I decided to open up the discussion with my own journey and then lead into questions about their financial situation. Here was my opening line:

Me to my parents: “Yeah, I just opened a SEP-IRA and am investing with index funds to help fund my retirement. I’m a bit behind because of my debt but plan on catching up. Do you have plans to retire soon?”

Asking that question opened up the conversation. They told me their timeline for retiring and gave me a clue about where they’re at financially. Once the conversation was open, I asked if they had any life insurance. I expressed that as an only child I wanted to be prepared if something happened to either of them. I also explained that life insurance would help cover burial costs and loss of income.

My parents confirmed they did have a life insurance policy. Phew! I breathed a sigh of relief. 

Starting this discussion with my parents opened up the opportunity to talk about how I can prepare now if something happens to them. 

It was a win as my parents created a folder for me that contained their financial documents like wills, insurance information and more. I now also have their passwords, a key to their house, and other relevant financial information.

The takeaway: When someone dies, your whole world turns upside down. You’re grieving and have to deal with so many other logistics. But on top of that, there are financial matters that need to be taken care of. If you never have a discussion with your parents about money, this can get messy. But taking steps now can ensure that you and your parents are financially prepared. 

How to Start the Discussion 

To get the conversation started with your parents, first talk about your life goals and finances when it comes to retirement. Then gauge the room and see if it seems appropriate to ask them about where they’re at with retirement funds. 

You can also broach the subject of life insurance and wills by saying something like “I’m looking into life insurance options and preparing a will. Just curious if you have life insurance and a will? I’m looking for recommendations.” 

If they say “yes”, you can ask if they have a sufficient life insurance policy to cover everything. You can also ask whether their will is updated and if you can access it in the event that something happens to them. 

If they say that they do not have a will or life insurance, the door is now open for you to say something like, “A will and life insurance could be helpful for you, too. I want to make sure you’re prepared if anything happens.” 

Ultimately, it would be great to review the following in detail with your parents:

  • Retirement savings
  • Wills. A will can help clearly state someone’s wishes so there is no confusion when they pass. It’ll help make the process less of a hassle. You can use a tool like Fabric to get life insurance online as well as create a free will. Tomorrow also offers wills at no cost. 
  • Health care proxy. A health care proxy is a document that appoints someone to make health-related decisions on your behalf if you’re unable to do so. 
  • Life insurance. Life insurance will provide a lump sum of money to the beneficiary upon the death of the account holder. That money can help pay for burial costs and cover any loss of income. On top of that, naming beneficiaries for retirement accounts and any other financial accounts is important as well. 
  • Disability insurance. This type of insurance helps provide income to a worker who is unable to work due to a disability or illness. 
  • Debt. In many cases, debt may be discharged in death or paid off by the estate. If there is a joint account holder or co-signer, it’s likely the debt will be the responsibility of the other party. 

This is a Discussion You Should Have

Talking about finances with your parents is tough but will put your mind at ease. 

Remember: Life happens fast and anything can happen – sometimes unexpectedly. It’s important to be prepared. 

 

4 Things You Could Afford If You Didn’t Have to Pay Bank Fees

As consumers, we accept pesky — and exorbitant — bank fees as a regular part of our everyday lives. To many of you, these fees are as commonplace as paying “service” fees when purchasing concert tickets.

So, why exactly do big banks charge fees? Besides trying to turn a major profit, banks charge fees to cover operating expenses — paying employees, developing technology, and covering other overhead costs. Yet, here’s a truth bomb: While bank fees are oftentimes considered the cost of doing business, big banks are profiting big-time off these fees. In fact, according to a 2017 analysis by CNNMoney, the three biggest banks — Wells Fargo, Bank of America and JP Morgan Chase — earned more than $6.4 billion in ATM and overdraft fees. Another sad truth: It turns out that eight percent of customers pay 75% of overdraft fees, per the Consumer Financial Protection Bureau

Just imagine what you could do with your hard-earned money if you didn’t have to pay bank fees. But first, let’s take a closer look at exactly how much the big banks are raking in. From there, we’ll look at all the awesome, amazing things you could do with that staggering sum instead.  

The Top 10 Biggest Banks in the U.S.

While there are about 5,800 banks in America, just 0.2% hold more than two-thirds of the industry’s assets

Ready for another jaw-dropping statistic? The 15 largest banks collectively hold a total of 13.7 trillion in assets. Here’s the breakdown

  1. JPMorgan Chase & Co.: $2.53 – $2.62 trillion in assets 
  2. Bank of America Corp.: $2.28 – $2.34 trillion in assets 
  3. Wells Fargo & Co.: $1.87 – $1.95 trillion in assets 
  4. Citigroup Inc.: $1.84 – $1.93 trillion in assets 
  5. Goldman Sachs Group Inc.: $917 – $957.19 billion
  6. Morgan Stanley: $852.86 – $865.52 billion
  7. U.S. Bancorp: $462.04 – $464.61 billion
  8. TD Group US Holdings LLC: $380.65 – $380.91 billion
  9. PNC Financial Services Group Inc.: $380.08 – $380.77 billion
  10. Capital One Financial Corp.: $362.91 – $365.69 billion

What Kinds of Fees Do Big Banks Charge Consumers?

While you most likely are familiar with ATM and overdraft fees, you might find it surprising to know that you could get dinged with other kinds of bank fees. Lest you get blindsided, here are 10 ways banks make money off you: 

1. Overdraft fees

You’re charged an overdraft fee when the amount of your transaction is greater than your bank balance. When you have overdraft protection, the bank will cover the shortfall, and charge you a fee for doing so. The most common amount for an overdraft fee is $35. 

FYI: The US Bank overdraft fee is $36 if the amount of the overdraft is greater than five dollars. The Wells Fargo overdraft fee is $35 per transaction, and you can be charged up to three times a day. Yikes.

2. ATM fees

This is a fee that banks charge for using an ATM. For example, your bank might charge you a fee if you use an out-of-network ATM. This fee can be anywhere from two dollars on up to six dollars if you’re making a withdrawal from a non-network international ATM.

Here’s a closer look at what the big banks are charging: Bank of America’s ATM fees are $2.50 and five dollars for international transactions, while Chase ATM fees are also $2.50 and five dollars respectively. Wells Fargo ATM fees are $2.50 for non-network withdrawals in the U.S., and five dollars for international ATMs. 

3. Maintenance fees

A bank might charge you a monthly fee if you don’t meet certain criteria. For instance, some banks charge fees if your bank balance drops below an amount or you fail to make the minimum number of transactions on your debit card. Bank of America and Chase both have a monthly maintenance fee of $12. In 2017, Americans spent 3.5 billion in monthly maintenance fees alone. 

4. Returned deposit charge

If there’s not enough money in your account to cover a transaction, the bank might “return” the item — usually a check — and you’ll in turn be dinged with what’s known as a returned deposit charge. The average charge is $35 per item. 

5. Lost card fee

Misplace your debit card? You might need to pay a fee to get it replaced. For instance, Bank of America charges its customers five dollars to get a replacement card, and $15 if you’d like it rushed.  

6. Minimum balance charge

If your type of bank account requires a minimum balance and you don’t meet the threshold, you could end up paying a fee. Wells Fargo charges a $10 monthly fee if you don’t keep a minimum of $1,500 in your account. 

7. Foreign transaction charge

If you’re traveling out of the country and swipe your debit card, there might be a foreign transaction charge. 

8. Inactivity fee

If your account is idle for a set amount of time (i.e., you haven’t made any deposits, withdrawals or transactions), you might need to pony up a monthly inactivity fee.  

9. Paper statement fee

If you prefer to get paper statements, you may need to pay a monthly fee. US Bank charges two dollars a month to receive statements via snail mail. IMHO, this feels like a trap. Many people are cool with receiving digital statements. They just don’t know about the paper statement fee, or forget to opt out.

10. Account closing fee

If you’re over your bank and want to close out your account, you might be dinged a fee. 

4 Things You Could Buy With Fees Instead of Paying Big Banks  

Here’s the fun part: Imagine what you could buy with the crazy high amount big banks rake in from bank fees. 

To keep things simple, let’s play around with the $64 billion that big banks made in ATM fees alone. These fees could fund a number of extravagant purchases, solve national debt problems, and achieve the unachievable. 

Here are a few examples: 

1. Student Loan Debt

According to the Federal Reserve Bank of New York, as many as 44.7 million Americans are burdened with student debt. That’s one in five Americans. As of the end of 2018, the student loan debt had climbed to a staggering $1.47 trillion. 

That cool $64 billion that banks make in ATM fees could handle 43% of the student debt crisis. 

2. Household Incomes

Per the U.S. Census Bureau, the median yearly household income in 2017 was $61,372. With those $64 billion in ATM fees, you can cover the annual income of 104,282 households in America. 

3. Avocado Toast 

We wanted to point out that millennials can have their toast and, well, save on bank fees too. Avocado toast is the latest “whipping boy” as to why millennials don’t have as much in savings and retirement as they should.

Let’s throw it back to whoever came up with this ludicrous statement, shall we? If the average cost of avocado toast is $12, ATM bank fees can pay for $5.3 million plates of avocado toast. 

4. Lattes 

Who doesn’t like a sweet beverage from Starbucks? With the average cost of a Starbucks latte at $3.45, you can buy more than 18.5 billion lattes. With 7.7 billion humans on planet earth, you can pay for each person — man, woman, and child — to enjoy 2.4 lattes. 

How Much Can You Save When You Switch to a Bank With No Fees?  

Let’s say your bank charges a monthly maintenance fee of $15, and you get dinged with an overdraft fee three times a year at $35 each. This tallies up to $285 a year. 

Here’s the good news: There are banks that don’t charge fees. That’s right. No monthly bank fees. Zip. Zilch. Nada. 

With your saved $285, you could pay off credit card debt, stash it toward an emergency fund, or put it toward something you really want.

No-Fee Banking When You Switch to Chime 

Here’s a side-by-side glance at how much fees can cost at some of the big banks:

Chime  JP Morgan Chase Wells Fargo  Bank of America 
Minimum balance requirement (to waive the monthly maintenance fee)  $0.00 $1,500  $1,500  $1,500 
Monthly maintenance fee $0.00 $12  $10 $12
Overdraft fee  $0.00 $34 $35 $35 
ATM fee (non-network, within the U.S.)  $0.00 $2.50  $2.50  $2.50 

When you bank with Chime, you’ll be a member of a bank with no fees. What’s more, we offer a handful of nifty features to help you save money. No, we’re not a unicorn bank. We’re just doing what we think should be the status quo, not the exception. 

 

Wealthy Habits I Learned From Being Low-Income

I grew up relatively poor. While I never felt deprived — there was always food on the table and we took the occasional summer trip to a local water park — the fact remains: For several years, we lived in subsidized housing in a Los Angeles suburb.

I received free lunches at school, my family collected cans for change, and we shopped at day-old bakeries. I wore hand-me-downs from older, well-to-do cousins and spent summers in the stacks at the local library. We eventually moved to a middle-class neighborhood when I was 12, but much of the “poor person” mentality stayed with me well into adulthood.

While it’s still a work in progress, I had to make some mindset changes to work toward a wealth-building mentality. Here are some “poor” habits and beliefs I learned to break:

Wealth is a look

When we learn that someone makes six-figures or that he drives a fancy car, we automatically think he’s rich.

But being wealthy isn’t about dining in the finest restaurants or appearing like you have money. For example, when a relative of mine started wearing luxury brands and bought a new set of wheels, it was easy to assume that this person had fallen into money. Yet, when you pull back the hood, you might discover that appearances can be deceiving. In fact, that person may be living well above his means, and have mounting credit card and student loan debt. I’ve even heard stories about folks who buy new cars but can’t afford to keep the lights on at home.

It’s important to understand that wealth is much more than appearances. It boils down to your net worth. It’s how much money you have sitting in the bank and invested. So even if you’re shopping at thrift stores, you might be discreetly wealthy.

To get started building wealth: See where you’re at money-wise. Track your spending, and determine how much cash is coming in. From there, figure out how much is going out each month. You’ll also want to see how much debt you owe, and how much you have sitting in the bank and invested in your retirement accounts. You can use a money-saving app or money management platform to see your entire financial picture.

Having money means you’re a bad person

I grew up believing that only greedy people had money. And if you had wealth, you were inherently shrewd, extremely calculating, or a downright cheat.

It took me a long time to understand that having money didn’t automatically make you a member of the “Bad Persons Club.” At the end of the day, moola is a tool, a resource. Nothing more, nothing less. It can help you live a comfortable life and do positive things.

To start building wealth: Understand that money doesn’t change who you are. It merely amplifies your current self. If you grew up with a “poor is the noble, honest” way mentality, it may take some time for you to become a more money-minded person.

You win at the money game by cutting coupons

My mom was the type to drive to three different supermarkets to save a buck on produce. She would also carefully scour her receipts and if she found even a 10 cent discrepancy, we would drive across town so she could contest the transaction.

I adopted a lot of these frugal habits until this hit me: You can only save so much, but your earning potential is unlimited. For instance: I didn’t really start to save until I job-hopped and was earning $10,000 more a year. Because I didn’t change my lifestyle or boost any expenses, I was able to ramp up my savings faster.

These days I still enjoy hunting around for a deal, but will only do so if it’s easy (like not spending on stupid bank fees) and worthwhile. Otherwise, I’m fine spending an extra buck if it saves me time or mental energy.

To start building wealth: Focus on your earning potential. Whether it’s continuing education, expanding your client base, or working toward getting a raise at work, learn how to grow your money.

You get rich overnight

We oftentimes hear stories of that athlete or singer who got discovered and amassed wealth in a short amount of time. It’s an alluring myth, and one that continues to pervade our culture.

That belief certainly extended to my family. I grew up thinking that to be rich, you had to earn a six-figure salary, get a huge promotion, or win the lottery. But growing your money requires know-how.

To start building wealth: Start small, and start today. The earlier you begin saving and investing, the more time you have for your money to grow. For starters, you can automate your savings. Challenge yourself to saving five dollars a week, or $25 a month. The important thing is to get into the habit.

Exchanging time for money

I was also taught that you need to exchange time for money. If you’re not working 40-plus hours a week, you’re lazy. Along the same lines, to be busy means you’re making money. What’s more, I grew up thinking you should stick to your day job, where you’ll get small, incremental raises each year.

I now know that you can grow your money by finding ways to pull in passive income. This can mean creating a digital product, or earning royalties from content you create.

To start building wealth: Put on your creativity cap and think of ways you can make money in your sleep. See how you can earn more for the same amount of work.

Income is a stat, wealth is a habit

When you change your beliefs, mindset and habits, your money situation will begin to change as well.

This may be corny but it’s true: A basic understanding of what true wealth is, combined with a shift in your money mindset, will help you tap into your true financial potential. Are you ready to shed some false money beliefs and adopt positive financial habits?

 

What I Learned After Getting Hit with Fraud

About a month ago, I was going through my credit card statement and saw a purchase from Amazon that I didn’t make. I also got a suspicious email that included some of my personal information.

I immediately contacted my credit card company to report fraud. My card was frozen and I was reissued a new one. While this process was annoying, what happened after that was eye-opening.

Here’s what I learned after getting hit with a fraudulent charge.

We give everyone our information

I have one credit card – Chase Sapphire Preferred – which I use for everything. This card scores me rewards for dining out and travel, my top two discretionary expenses. When my card was canceled and I received the new one, I had to update my payment information on all of my accounts.

I use auto-pay for almost everything as this way I never forget to pay a bill or get hit with a late fee. So, I had to comb through all my credit card expenses and take an inventory of all the accounts associated with that card.

What I realized was astonishing. I had thought that maybe the credit card was associated with a few subscriptions. But to my surprise, I paid for tons of things automatically with this card. Think Lyft, Amazon, Starbucks, Chewy, Postmates, Quickbooks, my electric bill, my gym, Internet service, health insurance, and more.

As a millennial, I enjoy the convenience of apps, and I don’t think twice about handing out my credit card information. But when you think about it, when companies have your credit card information, you’re more vulnerable to theft and fraud. It’s no wonder data breaches are at an all-time high.

I’m spending more than I thought

One thing this case of fraud taught me is that I’m spending more than I thought on Lyft, Starbucks and other services. As I was forced to manually add my new credit card information to all of these subscriptions and services, I saw exactly how much I was spending.

It gave me a reason to pause. These apps make it so convenient to spend money without thinking about it. Yet, when you use apps to pay, you don’t even swipe! You press a few buttons and are totally removed from the payment process. That psychological disconnect can easily lead to overspending.

There’s more to manage

It took me more than an hour to manually log into all of my accounts and update my payment information. Even then I was paranoid I missed something and would be hit with a returned payment fee if one of the auto-pay subscriptions didn’t go through.

Let’s just say it took up a good half a day to manage everything. It was a pain and it made me realize that as much as I practice minimalism, maybe I wasn’t a financial minimalist. Had I sacrificed minimalism for convenience? In some ways my life is easier with all of these apps and subscriptions. In other ways, my spending has gone up and my information is out there.

I realize now that every time I give my credit card to a new app, subscription or service, it’s one more thing to manage. Even if I don’t get hit with fraud again, my current card will expire eventually. Then I’ll get a new card and have to go through the same process I just did.

What I’m doing going forward

The fraudulent charge on my credit card was annoying and a hassle. But that was actually the easiest part to deal with. Updating all of my payment information was the big eye-opener that made me realize just how vulnerable we are. It made me realize how simple it is to spend when you’re not attached to the money or the card.

As I was going through the list of items I needed to update, I assessed whether I really needed them or not. Postmates? Delete.

In the future, I am going to be more mindful of giving out my financial information. I know that data breaches are rampant and we can’t control everything, but being cautious is a good thing.

I’m also going to be more mindful of how these apps and services add to my spending and eat away at my potential savings. I’m all for convenience but I also don’t want to fall into a trap where I’m spending mindlessly when I could be saving more.

So, while this instance of fraud was a hassle, it taught me where my money is going. I also learned about how to better manage and track my finances, as well as just how vulnerable we are when it comes to using credit cards to automate your financial life.

The moral here: Stay cautious and mindful folks.

 

What is a 401(k) Plan?

When planning for your future, it’s important to determine when you think you’ll retire. More importantly, how will you be able to afford retirement?

In order to retire, you need to save enough money to fund your lifestyle without needing to work. Experts say your retirement income should be 80% of your pre-retirement income. This means that if you’re earning $50,000 per year, you’ll likely need to live on around $40,000 per year during your retirement.

One of the best ways to save for retirement and build wealth over time is with a 401(k) plan. Read on to learn more about this type of retirement account.

What is a 401(k) Plan?

You might have heard the term 401(k) before, especially if you landed a job and your new employer offers this as part of the benefits package.

Backing up a bit, a 401(k) is basically a retirement savings plan sponsored by an employer. It allows you to save and invest a portion of your income before taxes are deducted from your paycheck.

This option can only be offered by your employer and it’s not a savings account. The money you put into your 401(k) is not easily accessible as it’s set up to grow over time.

Since 401(k) contributions are tax-deferred, you can deduct the amount you contribute from your income each year, thus lowering your taxable income. However, you will have to pay taxes on the money once you retire and start withdrawing it.

How Does a 401(k) Plan Work?

Contributing to a 401(k) plan is easy. You simply opt-in if your employer offers a 401(k) option. This may involve filling out some initial paperwork.

From there, you can choose how much of your paycheck you want to contribute. Some employers even offer to match your contributions and this is great because it’s just like getting free money.

For example, your employer may offer to match every dollar you contribute to your 401(k) up to five percent of your gross pay for the year. If your salary is $60,000, this means your employer can contribute up to $3,000 to your 401(k).

How Much Can You Contribute To a 401(k)?

This year, the maximum 401(k) contribution limit for anyone under 50 is $19,000. This is subject to change in any given year.

Be sure to research each year’s contribution limits at the beginning of the calendar year to see if there are any changes. This will help you plan your contributions.

What Are Roth 401(k)s and IRAs?

A 401(k) plan isn’t the only type of retirement plan available to you. A Roth 401(k) is similar to a 401(k) – except that your account is funded with after-tax dollars.

This means that you pay taxes on your income before you contribute to your retirement plan, yet you make tax-free withdrawals during your retirement years.

An IRA, on the other hand, is an individual retirement account. There are two main types: traditional IRA and Roth IRA. A traditional IRA is funded with pre-tax dollars while a Roth IRA is funded with taxed dollars. The main difference is whether you’ll pay taxes when you contribute (Roth IRA) or when you retire (traditional IRA).

Regardless of which option you choose, an IRA can be used as a separate, alternative retirement savings tool or it can be used in addition to your 401(k) plan.

The annual contribution limit for an IRA is $6,000 if you’re under 50 and $7,000 if you’re over 50. There are also income limits to be eligible to contribute to an IRA.

How Much Should You Contribute To Your 401(k)?

After recognizing the importance of 401(k) plan, your next question may be: How much should I contribute year after year.

The amount you put into your account depends on your retirement goals. So, think about when you want to retire and how much you’ll need to live on each year.

Fidelity recommends saving ten times your income by the time you hit 67. To do this, you’ll need to save around 25% of your income each year starting in your mid-20s. This 25% savings rate may sound high, but it includes 401(k) contributions, an employer match, cash savings, and debt repayment. Remember: You can always adjust your 401(k) contributions depending on your age and current situation.

If you can’t afford to max out your retirement account each year, you can still aim to contribute enough to get your employer match if it’s offered. This is (practically) free money that you don’t want to leave on the table. So, assess your situation every six to 12 months to see if you can increase your contributions over time.

The great thing about a 401(k) plan is that you don’t see the money you contribute so you won’t miss it much.

What Does It Mean to Be Vested in Your 401(k) Retirement Plan?

The term ‘vesting’ means ownership.

Being 100% vested means that you own your entire 401(k) balance and it can’t be forfeited or taken back by your employer for any reason.

Some employers, however, don’t give you full ownership of your 401(k) match dollars right away. For example, your employer may require you to be on the job for at least three years before you can be 100% vested in your 401(k) balance.

This means that if you leave your employer before that three year mark, you could lose some of the match contributions.

When Can You Get Your Retirement Money?

Generally, you’ll want to wait until you’re 59 ½ to start withdrawing money from your 401(k). Why? Because if you withdraw money before that age, you may face a 10% early withdrawal penalty from the IRS. This means you may have to pay taxes on any amounts you cash out (since you contributed pre-tax dollars).

However, there are some cases where you can avoid the penalty fee. Here are some of these situations:

  • Withdrawing funds as a down payment on your first home purchase
  • Unreimbursed medical expenses that exceed 7.5% of your adjusted gross income
  • Education expenses that fall under a ‘hardship withdrawal

If possible, it’s best to avoid early withdrawals to avoid any chance of receiving a penalty.

The Wrap-Up

A 401(k) plan is a great retirement tool that can help you save money to retire comfortably.

When it comes to deciding how much to contribute, look at your budget and determine how much money you can save. If you can get an employer match, try to contribute enough to get the full match and be mindful of vesting rules.

And remember: It’s important to start somewhere and set goals to contribute more over time.

 

What are Balance Transfer Cards?

In credit card debt? Having a hard time paying off your high-interest balance?

If this rings true, you may want to transfer your balance to another card for a much lower interest rate. Depending on your situation, you may be able to pay off your debt faster, allowing you to put your hard-earned cash into your savings account.

But before you make any decisions, read on to learn more about balance transfer credit cards.

What is a Balance Transfer Credit Card?

A balance transfer card is a credit card with a low interest rate. While it may seem counterintuitive to transfer your debt from one credit card to another, it’s a convenient way to obtain a lower interest rate and hopefully pay off your balance faster.

Yet, while a balance transfer can allow some people to pay off their debt, it may not work for everyone. Most of the time, when you initiate a balance transfer, you’ll get an introductory low interest rate. After a set amount of time, however, that interest rate goes back to the usual  rate (which is on average 19.24% according to WalletHub). So, if you’re the type who can’t pay off your debt within a timeframe, then a balance transfer card may not be for you.

It’s also important to note that a balance transfer is not debt forgiveness or a debt repayment. It is simply a way to temporarily lower the interest rate on your debt.

When Should You Apply For a Balance Transfer Credit Card?

Before you run out and apply for a balance transfer card, be sure to take the following into consideration:

  • Your Credit Score

In order to receive approval for a balance transfer credit card, you typically must have a good to excellent credit score. According to Magnify Money, you should have at least a “good” credit score, which is a score between 670 and 739. Check out these ways to improve your credit score.

  • Your Credit Card Payments

Have a balance on more than one credit card? A balance transfer is an excellent way to consolidate multiple lines of credit. This way, you only have one low interest payment to worry about, making it easier to stay on track when repaying your credit card debt.

  • Your Spending Habits

Be honest with yourself: Can you really open another credit card without being tempted to overspend? If not, then a balance transfer card may not be the best option for you. Evaluate your spending habits and savings goals before applying for another credit card.

Choosing the Right Balance Transfer Card

If you decide that a balance transfer is the right choice for you, it’s important to evaluate your options. Here are some key questions to ask when looking for the best balance transfer card:

  • How Long is the Introductory Period?

Many credit card companies will offer a 0% interest rate during the introductory period. To boot, the longer the introductory period, the more time you have to pay no interest or a super low rate. For this reason, look for a card with the longest introductory period possible. Not sure where to start? Check out some of these 0% interest credit cards.

  • What’s the Balance Transfer Fee?

Typically, credit card companies charge a balance transfer fee of between three and five percent. Depending on how high your balance is, this can quickly become costly. Before you dive head first into a balance transfer, assess your situation to make sure you can afford the fee.

  • Can You Transfer the Whole Balance?

While you may be approved for a balance transfer credit card, this doesn’t mean you can automatically transfer your entire balance to your new card. In fact, your new approved line of credit may be less than what your previous credit card allowed.

If this is the case for you, you can still proceed by transferring some amount of money to your new balance transfer card. You can then pay the minimum balance on the transfer card during your introductory period, while aggressively paying down the debt on your high-interest credit card.

Don’t Max Out the Credit Card Balance You Just Transferred

When getting a new balance transfer card, make sure you don’t bite off more than you can chew.

For example, it’s not wise to clear up the balance on your old card just to max out that new credit card. Keep you end-goal in mind: You want to get out of debt. With this on the forefront, you’ll be more apt to accomplish what you set out to do – improve your financial well-being.

Banking Services provided by The Bancorp Bank or Stride Bank, N.A., Members FDIC. The Chime Visa® Debit Card is issued by The Bancorp Bank or Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted. The Chime Visa® Credit Builder Card is issued by Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted. Please see back of your Card for its issuing bank.

The Bancorp Bank and Stride Bank, neither endorse nor guarantee any of the information, recommendations, optional programs, products, or services advertised, offered by, or made available through the external website ("Products and Services") and disclaim any liability for any failure of the Products and Services.

Please note: By clicking on some of the links above, you will leave the Chime website and be directed to an external website. The privacy policies of the external website may differ from our privacy policies. Please review the privacy policies and security indicators displayed on the external website before providing any personal information.

© 2013-2019 Chime. All Rights Reserved.