As mortgage companies turn to artificial intelligence for some tasks, they’re under pressure to comply both with fair lending laws and emerging guidance around AI itself, and that’s raised questions for the industry and its vendors about how to approach the two.
“There’s a lot of noise around AI and fair lending,” said Tori Shinohara, a partner at Mayer Brown. “If you look at the consensus of interagency pronouncements around the use of responsible AI or the White House blueprint for an AI Bill of Rights, those all have anti-discrimination components.”
However, while there’s guidance in this area, there hasn’t been formal regulation, she noted.
“Federal regulators, including the prudential regulators, whenever they put guidance on AI, it almost always has some sort of anti-bias component to it. But in terms of true regulation, there isn’t anything out there yet that is specifically regulating the use of AI in mortgage lending for anti-discrimination purposes,” Shinohara said.
Whether there is formal regulation in this area on the horizon remains to be seen.
“I think the thought is the existing regulatory framework for fair lending: the Fair Housing Act, Equal Credit Opportunity Act, and state laws are sufficient to prevent discrimination in connection with AI and in mortgage lending or servicing, because they’re so broad and cover discrimination as a result of a model in addition to discrimination as the result of an individual decision,” she added.
So these two federal laws are what mortgage companies may want to prioritize in compliance, but mortgage professionals should take note that public officials and agencies are looking at fair lending in new ways too.
“Both laws require any aspects of a credit transaction to be fair, and historically that was interpreted as being just underwriting and pricing,” said Kareem Saleh, founder and CEO of Fairplay AI, in a separate interview. “But if you pay attention to the statements coming out of the federal regulators, there also now seem to be concerns about digital marketing and fraud.”
This means more layers of potential scrutiny of fintech providers in areas where AI is being applied such as customer outreach, Saleh said.
“I think that is a big consequence of this move toward alternative data and advanced predictive models,” Saleh said. “As those systems are being used at more and more touchpoints in the customer journey, we’re seeing fair lending risks and obligations grow commensurately.”
It’s scrutiny that could apply to servicers as well as originators, as use cases for AI to determine settlements, modification offers or what customers to call, when, and how often emerge, according to Saleh.
What some new dimensions of risk look like To get a sense of where AI and fair lending rules veer into areas like marketing regulation and potential fraud allegations, consider the following examples. While these lie outside the traditional owner-occupied single-family mortgage market, the situations involved are applicable.
One cautionary tale to be aware of when it comes to compliance for generative AI, a type of machine learning that draws on existing data it’s fed and patterns within it to create new outputs, was an Air Canada chatbot. (Several other airlines have used chatbots as well.)
That chatbot produced a response to a consumer asking about a bereavement discount in 2022 that was a “hallucination,” which is to say the AI somehow interpreted the airline’s data in such a way that it made an offer that didn’t previously exist at the airline and that it didn’t intend. Earlier this year, the British Columbia Civil Resolution Tribunal forced the airline to make good on the offer.
In the United States, that kind of development might lead to violations of laws against unfair, deceptive or abusive acts or practices, Shinohara said.
“I think those would equate to UDAAP concerns if there was something that was provided and was inaccurate, raising questions about whether the company is still on the hook for those types of miscommunications,” Shinohara said.
The Consumer Financial Protection Bureau, Office of the Comptroller of the Currency and other prudential regulators enforce UDAAP, and the Federal Trade Commission enforces laws against unfair or deceptive acts and practices, which might also be relevant in such a circumstance.
Meanwhile, exemplifying the kind of new scrutiny of fair lending risks that might arise when AI gets used for marketing purposes is a recent missive the Department of Housing and Urban Development delivered to real estate agents and lenders.
HUD directed them to “to carefully consider the source, and analyze the composition, of audience datasets used for custom and mirror audience tools for housing-related ads” in conjunction with rules for AI-driven advertising rules and tenant screening.
Demetria McCain, principal deputy assistant secretary fair housing and equal opportunity, warns in a related press release that “the Fair Housing Act applies to tenant screening and the advertising of housing,” suggesting that officials are watching any customer outreach and approvals in this area for signs of redlining.
Marketing may currently be the bigger concern of the two for housing finance companies in the single-family owner-occupied market.
For now, qualifying borrowers or other core processes are determined primarily by major government-related secondary market players, so mortgage companies in that business are most likely to relegate AI and any related compliance efforts to customer outreach, according to Shinohara.
“I think there’s more focused interest on adopting AI or machine learning tools for things like marketing and how you make your marketing dollars go further. In action with marketing, you run into risks, like digital redlining,” she said. “If you’ve got tools that are being used to select who you’re going to market to, and you are marketing credit products, you should look at whether those tools inadvertently exclude or only give preference to certain communities.”
The path to compliant use of AI The aforementioned examples of new scrutiny applied to AI-driven tools do raise a key question about whether newer technologies like generative AI are helping to better address inequities that exist than their predecessors, or are further entrenching systemic biases.
“On the one hand, some of the disparate outcomes are likely the result of non-AI models, so you’ve kind of got a modernization issue,” Saleh said. “But also behind some of the disparities are AI issues which basically encode the disparities that were the result of the conventional techniques to begin with, and so it’s a very interesting time to be doing this work.”
AI could be viewed as a constructive force in a lot of the advanced data analysis the government-sponsored enterprises are doing with the aim of safely opening up the underwriting or marketing box in ways that could make lending more equitable.
“In theory, that should allow you to paint a kind of a finer portrait of a borrower, or the ability and willingness to repay a loan,” Saleh said.
But with AI currently relegated to limited use in conjunction with the customer experience and other challenges to qualifying for a loan existing in the market, applying AI to the point where it allows lenders to actually extend more loans to more people in an equitable manner is tricky.
“There are a lot of headwinds to write related to affordability in particular. So it’s a tough time to do fair lending, because on the one hand, you’ve got more resources than ever on the other hand, the macroeconomic environment is kind of working against you.”
How to address ‘the compliance officer’s lament’ When asked how a mortgage company can best address the aforementioned challenges, Saleh said, “This is the compliance officer’s lament, which is what do you want me to do? If I don’t do things exactly to the letter, am I going to get in trouble?”
Doing things to the letter may not even be possible, because the regulators themselves face a conundrum when it comes to giving companies guidance that’s too specific.
“There have been a lot of requests from the industry for more guidance and I think in some ways, the regulators have wanted to give more guidance. However, in other ways, they’ve been reluctant because they want to maintain their optionality,” he added. “They’re concerned that if they give guidance that’s too specific that people will game the system.”
So the industry is left to navigate what Saleh calls a “strategic ambiguity.”
“The thing about judgment is that you can always be second guessed, but if you can document that you take fairness seriously and why you feel the approach you’ve chosen doesn’t pose a threat to the consumers that you serve, I think that is your best option,” Saleh said.
Because legacy data that fuels generative AI may be biased and its outputs have to be watched for hallucinations, the answer to how to make it a constructive and compliant tool may be ongoing monitoring, a phrase common in consent orders.
The approach is in line with what mortgage companies that offer chatbots have said they’ve done to address the risks.. Instamortgage, for example, has said it limits possible interactions and constantly monitors the company’s personified chatbot, Rachel.
Saleh suggests applying analytics that may be AI-driven and can be examined on a regular basis such as monthly to the problem, perhaps even more frequently where unpredictable generative models are utilized.Although the aforementioned ambiguity from regulators and the opt-in nature of borrower information around race can make it be hurdles to interest in building the kind of robust fair-lending data sets that AI has the capacity to help ingest, Saleh advises doing so. He also advised keeping in mind that regulators generally want an understanding and explanation of any model used, no matter how complex it is, as HUD noted in its aforementioned directive.
“Have the benefit of evidence that’s informed by data so that you can comply and explain,” Saleh said.
Adjustments may not be necessary each time the statistics get examined as aberrations may occur in the short-term. But if counterproductive rather than productive patterns start to appear regularly in analyses, they need to be addressed, he said.
“I think a key part of what originators can do to navigate this environment gets back to saying, ‘Hey, we’re going to monitor frequently to make sure that these models and our decisions are performing reasonably and don’t pose a threat to consumers,” Saleh said.
Inside: Learn what 20 an hour is how much a year, month, and day. Plus tips to budget your money. Don’t miss the ways to increase your income.
You’re probably wondering if I made $20 a year, how much do I truly make? What will that add up to over the course of the year when working?
Is $20 an hour good?
Is this wage something that I can actually live on? Or do I need to find ways that I can increase my hourly wage? How much more is $20.50 an hour annually?
In this post, we’re going to detail exactly what $20 an hour is how much a year. Also, we are going to break it down to know how much is made per month, bi-weekly, per week, and daily.
That will help you immensely with how you spend your money. Because too many times the hard-earned cash is brought home, but there is no actual plan for how to spend that money.
By taking a step ahead and making a plan for the money, you are better able to decide how you want to live, make sure that you put your money goals first, and not just living paycheck to paycheck struggling to survive.
The ultimate goal with money success is to be wise with how you spend your money.
Knowing 20 dollars an hour is how much a year will help you with your budget and spending.
If that is something you want too, then keep reading. You are in the right place.
$20 an Hour is How Much a Year?
When we ran all of our numbers to figure out how much is $20 per hour as an annual salary, we used the average working day of 40 hours a week.
40 hours x 52 weeks x $20 = $41,600
$41,600 is the gross annual salary with a $20 per hour wage.
As of June 2023, the average hourly wage is $33.58 (source).
Let’s Breakdown How That Number Is Calculated
Typically, the average work week is 40 hours and you can work 52 weeks a year. Take 40 hours times 52 weeks and that equals 2,080 working hours. Then, multiply the hourly salary of $20 times 2,080 working hours, and the result is $41,600.
That number is the gross income before taxes, insurance, 401K or anything else is taken out. Net income is how much you deposit into your bank account.
So, $20 an hour is just above $40000 a year and just shy of $43000 a year.
Work Part Time?
But you may think, oh wait, I’m only working part time. So if you’re working part time, the assumption is working 20 hours a week at $20 an hour.
Only 20 hours per week. Then, take 20 hours times 52 weeks and that equals 1,040 working hours. Then, multiply the hourly salary of $20 times 1,040 working hours, and the result is $20,800.
How Much is $20 Per Month?
On average, the monthly amount would average $3,467.
Annual Amount of $41,600 ÷ 12 months = $3,467 per month
Since some months have more days and fewer days like February, you can expect months with more days to have a bigger paycheck. Also, this can be heavily influenced by how often you are paid and on which days you get paid.
Plus by increasing your wage from $17 an hour, you average an extra $520 per month. So, yes a few more dollars an hour add up!
Work Part Time?
Only 20 hours per week. Then, the monthly amount would average $1,733.
How Much is $20 per Hour Per Week
This is a great number to know! How much do I make each week? When I roll out of bed and do my job, what can I expect to make at the end of the week?
Once again, the assumption is 40 hours worked.
40 hours x $20 = $800 per week.
Work Part Time?
Only 20 hours per week. Then, the weekly amount would be $400.
How Much is $20 per Hour Bi-Weekly
For this calculation, take the average weekly pay of $800 and double it.
$800 per week x 2 = $1,600
Also, the other way to calculate this is:
40 hours x 2 weeks x $20 an hour = $1,600
Work Part Time?
Only 20 hours per week. Then, the bi-weekly amount would be $800.
Learn how to create a biweekly budget.
How Much is $20 Per Hour Per Day
This depends on how many hours you work in a day. For this example, we are going to use an eight hour work day.
8 hours x $20 per hour = $160 per day.
If you work 10 hours a day for four days, then you would make $200 per day. (10 hours x $20 per hour)
Work Part Time?
Only 4 hours per day. Then, the daily amount would be $80.
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$20 Per Hour is…
$20 per Hour – Full Time
Total Income
Yearly (52 weeks)
$41,600
Yearly (50 weeks)
$40,000
Monthly (173 hours)
$3,467
Weekly (40 Hours)
$800
Bi-Weekly (80 Hours)
$1,600
Daily Wage (8 Hours)
$160
Net Estimated Monthly Income
$2,647
**These are assumptions based off simple scenarios.
Paid Time Off Earning 20 Dollars an Hour
Does your employer offer paid time off?
As an hourly employee, you may or may not get paid time off.
So, here are the scenarios for both cases.
For general purposes, we are going to assume you work 40 hours per week over the course of the year.
Case # 1 – With Paid Time Off
Most hourly employees get two weeks of paid time off which is equivalent to 2 weeks of paid time off.
In this case, you would make $41,600 per year.
This is the same as the example above for an annual salary making $20 per hour.
Case #2 – No Paid Time Off
Unfortunately, not all employers offer paid time off to their hourly employees. While that is unfortunate, it is best to plan for less income.
Life happens. There will be times you need to take time off for numerous reasons – sick time, handling an emergency, or even vacation.
So, let’s assume you take 2 weeks off without paid time off.
That means you would only work 50 weeks of the year instead of all 52 weeks. Take 40 hours times 50 weeks and that equals 2,000 working hours. Then, multiply the hourly salary of $20 times 2,000 working hours, and the result is $40,000.
40 hours x 50 weeks x $20 = $40,000
You would average $160 per working day and nothing when you don’t work.
$20 an Hour is How Much a year After Taxes
Let’s be honest… Taxes can take up a big chunk of your paycheck. Thus, you need to know how taxes can affect your hourly wage.
Also, every single person’s tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and a 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
Gross Annual Salary: $41,600
Federal Taxes of 12%: $4,992
State Taxes of 4%: $1,664
Social Security and Medicare of 7.65%: $3,182
$20 an Hour per Year after Taxes: $31,762
This would be your net annual salary after taxes.
To turn that back into an hourly wage, the assumption is working 2,080 hours.
$31,762 ÷ 2,080 hours = $15.27 per hour
After estimated taxes and FICA, you are netting $15.27 an hour. That is $4.73 an hour less than what you thought you were paid.
This is a very highlighted example and can vary greatly depending on your personal situation. Therefore, here is a great tool to help you figure out how much your net paycheck would be.
Plus budgeting on a just over $15 an hour wage is much different.
Understand the difference between gross pay vs net pay.
$20 An Hour Salary
Now, you get to figure out how much you make based on your hours worked or if you make a wage between $20.01-20.99.
Learn how to budget on a low income.
This is super helpful if you make $20.19 or $20.25.
You are probably wondering can I live on my own making 20 dollars an hour? How much rent can you afford at 20 an hour?
We have figured out how much is $20 an hour annually is $41,600.
Using our Cents Plan Formula, this is the best case scenario on how to budget your $20 per hour paycheck.
When using these percentages, it is best to use net income because taxes must be paid.
In this example, we calculated $20 an hour was $15.27 after taxes. That would average $2,647 per month.
According to the Cents Plan Formula, here is the high level view of a $20 per hour budget:
Basic Expenses of 50% = $1323.40
Save Money of 20% = $529.36
Give Money of 10% = $264.68
Fun Spending of 20% = $529.36
Debt of 0% = $0
Obviously, that is not doable for everyone. Even though you would expect your money to go further when you are making double the minimum wage. So, you have to be strategic on ways to decrease your basic expenses and debt. Then, it will allow you more money to save and fun spending.
To further break down an example budget of $20 per hour, then using the ideal household percentages is extremely helpful.
recommended budget percentages based on $20 per hour wage:
Category
Ideal Percentages
Sample Monthly Budget
Giving
10%
$277
Savings
15-25%
$693
Housing
20-30%
$983
Utilities
4-7%
$139
Groceries
5-12%
$243
Clothing
1-4%
$26
Transportation
4-10%
$139
Medical
5-12%
$173
Life Insurance
1%
$17
Education
1-4%
$35
Personal
2-7%
$64
Recreation / Entertainment
3-8%
$113
Debts
0% – Goal
$0
Government Tax (including Income Taxes, Social Security & Medicare)
15-25%
$820
Total Gross Income
$3,467
**In this budget, prioritization was given to basic expenses. Thus, some categories like giving are less.
Deep Dive: What Is A Good Salary For A Single Person in Today’s Society?
Can I Live off $20 Per Hour?
At this $20 hourly wage, you are close to double the minimum wage. Things should be easy to live off this $20 hourly salary.
However, it is still below the median income of over $60,000 salary. That means it can still be a tough situation.
Is it doable? Absolutely.
Can you truly live off $20 an hour annually?
You just have to be wiser (or frugal) with your money and how you spend the hard-earned cash you have been blessed with.
If you are constantly struggling to keep up with bills and expenses, then you need to break that constant cycle. It is possible to be smart with money.
You need to do is change your money mindset.
This is what you say to yourself… Okay, this is my season of life right now. I have aspirations and goals to change how much I make, but for now, I am going to make sure that I am able to live on my 20 dollars per hour. No going into debt for me. I will start saving money.
In the next section, we will dig into ways to increase your income, but for now, is it possible to live on $20 an hour?
Yes, you can do it, and as you can see that it is possible with the sample budget of $20 per hour.
Living in a higher cost of living area would be more difficult. So, you may have to get a little creative. For example, you might have to have a roommate. Move to a lower cost of living area where rent is cheaper.
Also, you must evaluate your “fun spending” items. Many of those expenses are not mandatory and will break your budget. You can find plenty of free things to do without spending money.
5 Ways to Increase Your Hourly Wage
This right here is the most important section of this post.
You need to figure out ways to increase your hourly income because I’m going to tell you…you deserve more. You do a good job and your value is higher than what your employers pay you.
Even an increase of 50 cents to $20.50 will add up over the year. Even better $21 an hour!
1. Ask for a Raise
The first thing to do is ask for a raise. Walk right in and ask for a raise because you never know what the answer will be until you ask.
If you want the best tips on how specifically to ask for a raise and what the average wage is for somebody doing your job, then check out this book. In this book, the author gives you the exact way to increase your income. The purchase is worth it or go down to the library and check that book out.
2. Look for A New Job
Another way to increase your hourly wage is to look for a new job. Maybe a completely new industry.
It might be a total change for you, but many times, if you want to change your financial situation, then that starts with a career change. Maybe you’re stressed out at work. Making $20 an hour is too much for you and you’re not able to enjoy life, maybe changing jobs and finding another job may increase your pay, but it will also increase your quality of life.
3. Find a New Career
Because of student loans, too many employees feel like they are stuck in the career field they chose. They feel sucked into the job that they don’t like or have the potential they thought it would.
For many years, I was in the same situation until I decided to do a complete career change. I am glad I did. I have the flexibility that I need in my life to do what I want when I need to do it. Plus I am able to enjoy my entrepreneurial spirit.
4. Find Alternative Ways to Make Money
In today’s society, you need to find ways to make more money. Period.
There is no way to get around it. You need to find additional income outside a traditional nine-to-five position or typical 40 hour a week job. You will reach a point where you are maxed on what you can make in your current position or title. There may be some advancement to move forward, but in many cases, there just is not much room for growth.
So, you need to find a side hustle – another way to make money.
Do something that you enjoy, turn your hobby into a way to make money, turn something that you naturally do, and help others into a service business. In today’s society, the sky is the limit on how you can earn a freelancing income.
There are so many legit ways to make 300 dollars fast today!
5. Earn Passive Income
The last way to increase your hourly wage is to start earning passive income.
This can be from a variety of ways including the stock market, real estate, online courses, book sales, etc. This is where the differentiation between struggling financially and becoming financially sounds happens.
By earning money passively, you are able to do the things that you enjoy doing and not be loaded down, with having a job that you need to work, and a place that you have to go to. And you still make money doing nothing.
Here is an example:
You can start a brokerage account and start trading stocks for $50. You need to learn and take the one and only investing class I recommend. Learn how the market works, watch videos, and practice in a simulator before you start using your own money.
One gentleman started with $5,000 in his trading account and now has well over $36,000 in about seven months. Just from practice and being consistent, he has learned that passive income is the way for him to increase his income and also not be a slave to his job.
Related Questions:
Tips to Live on $20 an Hour
In this last section, grasp these tips on how to live on $20 an hour. On our site, you can find lots of money saving tips to help stretch your income further.
Here are the most important tips to live on $20 an hour. Highlight these!
1. Spend Less Than you Make
First, you must learn to spend less than you make.
If not you will be caught in the debt cycle and that is not where you want to be. You will be consistently living paycheck to paycheck.
In order to break that dreadful cycle, it means your expenses must be less than your income.
And when I say income, it’s not the $20/hr salary. As we talked about earlier in the post, there are taxes. The amount of taxes taken out of your paycheck is called your net income which is $20 an hour minus all the taxes, FICA, social security, and Medicare are taken out. That is your net income.
So, your net income has to be less than your net income.
2. Living Below Your Means
You need to be happy. And living on less can actually make you happier. Studies prove that less is better.
Finding contentment in life is one thing that is a struggle for most.
We are driven to want the new shiny toy, the thing next door, the stuff your friend or family member got. Our society has trained you that you need these things as well.
Have you ever taken a step back and looked at what you really need?
Once you are able to find contentment with life, then you are going to be set for the long term with your finances.
Here is our story on owning less stuff. We have been happier since.
3. Make Saving Money Fun
You need to make saving money fun. If you’re good, since you must keep your expenses low, you have to find ways to make your savings fun!
It could be participating in a no spend challenge for the month.
It could be challenging friends not to go to Target for a week.
Maybe changing your habits and not picking up takeout and planning meals.
Whatever it is challenge yourself.
Find new ways of saving money and have fun with it.
Even better, get your family and kids involved in the challenge to save money. Tell them the reason why you are saving money with the 100 envelope challenge and this is why you are doing it.
Here are 101 things to do with no money. Free activities without costing you a dime. That is an amazing resource for you and you will never be bored.
And you will learn that a lot of things in life you can do for free. Personally, some of the best ones are getting outside and enjoying some fresh air.
4. Make More Money
If you want if you do not settle for less, then find ways to make more money. If you want more out of life, then increase your income.
You need to be an advocate for yourself.
Find ways to make more money.
It could be a side hustle, a second job, asking for a raise, going to school to change careers, or picking up extra hours.
Whatever path you take, that’s fine. Just find ways to make more money. Period.
Find ways to make $1000 in a day.
5. No State Taxes
Paying taxes is one option to increase what you take home in each paycheck.
These are the states that don’t pay state income taxes on wages:
Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Washington
Wyoming
It is very interesting if you take into account the amount of state taxes paid compared to a state with income taxes.
Also, if you live in one of the higher taxed states, then you may want to reconsider moving to a lower cost of living area. The higher taxes income tax states include California, Hawaii, New Jersey, Oregon, Minnesota, District of Columbia, New York, Vermont, Iowa, and Wisconsin. These states tax income somewhere between 7.65% – 13.3%.
6. Stick to a Budget
You need to learn how to start a budget. We have tons of budgeting resources for you.
While creating a budget is great, you need to learn how to use one.
You do not have to budget down to every last penny.
You need to make sure your expenses are less than your income and that you are creating sinking funds for those irregular expenses.
Budget Help:
7. Pay Off Debt Quickly
The amount that you pay interest on debt is absolutely absurd.
Unfortunately, that is how many of these companies make their money is from the interest you pay on debt.
If you are paying 5% to even 20-21% or higher, you need to find ways to lower that debt quickly.
Here’s a debt calculator to help you. Figure out your debt free date.
Make that paying off debt fast is your target and main focus. I can tell you from personal experience, that it was not until we paid off our debt that we finally rounded the corner financially. Once our debt was paid off, we could finally be able to save money. Set money aside in separate bank accounts and pay for cash for things.
It took us working hard to pay off debt. We needed persistence and patience while we had setbacks in our debt free journey.
Jobs that Pay $20 an Hour
You can find jobs that pay $20 per hour. Polish up that resume, cover letter, and interview skills.
Job Search Hint: Always send a written follow-up thank you note for your interview. That will help you get noticed and remembered.
First, look at the cities that require a minimum wage in their cities. That is the best place to start to find jobs that are going to pay higher than the federal minimum wage rate. Many of the cities are moving towards this model so, target and look for jobs in those areas.
Possible Ideas:
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Customer service representatives
Bank tellers
Freelance writers
Restaurant Kitchen staff
Truck driver
Uber /Lyft driver
Security guard
Movers
Warehouse workers
Companies that pay more than $20 per hour: Costco, Wayfair, Amazon, Best Buy, Target, In ‘N Out Burger, Wells Fargo, Disney World, Disney Land, Bank of America, JP Morgan, Cigna, Aetna
$20 Per Hour Annual Salary
In this post, we detailed 20 an hour is how much a year. Plus all of the variables that can impact your net income. This is something that you can live off.
How much is 20 dollars an hour annually…
$41,600
In this post, we highlighted ways to increase your income as well as tips for living off your wage.
Use the sample budget as a starting point with your expenses.
You will have to be savvy and wise with your hard-earned income. But, with a plan, anything is possible!
Still thinking I don’t want to work anymore, you aren’t alone and need to start to plan for your early retirement.
Learn exactly how much do I make per year…
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
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What Is a Series EE Bond?
A series EE bond is a U.S. Treasury bond. It’s considered to be a very safe investment, as it’s backed by the U.S. government. It is guaranteed to double in value in 20 years, even if the government has to add funds to it to meet that mark.
To provide some context, here’s a quick look at what bonds are and how bonds work. A bond is a debt instrument. Bonds are issued by corporations or governments in order to raise capital. The bond market is huge — much larger than the equity markets. (In 2023, the market cap of the global bond market was about $133 trillion, versus $111 trillion for the stock market.) Investors provide capital to companies and governments when they buy the bonds, effectively loaning their money to that institution.
Meanwhile, the bond issuer agrees to pay investors the capital back, along with interest, after a certain period.
There are different kinds of bonds investors can purchase, including municipal, corporate, high-yield bonds, and U.S. Treasuries. A savings bond is a type of U.S. Treasury bond, issued with the full faith and credit of the U.S. government, meaning there’s virtually no chance of losing money. Savings bonds allow the government to borrow money for various purposes while giving investors a reliable and predictable stream of interest income.
Series E bonds, which were created in 1941 to help fund the WWII effort, were replaced in 1980 with Series EE bonds, or Patriot Bonds.
💡 Quick Tip: An online bank account with SoFi can help your money earn more — up to 4.60% APY, with no minimum balance required.
How Do Series EE Bonds Work?
If you’re interested in buying bonds, here are details on how a Series EE bond works:
• Series EE bonds are electronic and can only be purchased and managed online with a TreasuryDirect account. They are available in any denomination starting at $25, up to $10,000 per person named on the bond, per calendar year.
• These bonds are guaranteed to double in value in 20 years, even if the government needs to kick in extra cash. You can hold the bond for up to 10 additional years to continue to earn interest.
• When you purchase a Series EE bond, the interest rate will be stated. Through October 31, 2024, the interest rate is 2.70%.
• Interest is earned monthly, compounding semi-annually, for up to 30 years, unless you cash it sooner.
• Series EE bonds can be cashed in (or redeemed) after 12 months, but early withdrawal can trigger a penalty of partial interest loss.
• Electronic Series EE bonds can be cashed in via the TreasuryDirect site.
• Interest earned on Series EE bonds is taxable at the federal level. Federal estate, gift, and excise taxes, as well as state estate or inheritance taxes, may also apply. If the money is used for qualified education expenses, however, you may not be subject to taxes.
• The TreasuryDirect site also makes 1099-INT statements of interest earnings available annually.
Recommended: Understanding the Yield to Maturity (YTM) Formula
Understanding Series E Bonds
The popularity of Series E bonds may have hinged largely on the patriotic call to purchase them as part of the war effort. Buying bonds served two purposes: It helped the government to raise money for the war and it also helped to keep inflation at bay as shortages threatened to push consumer prices up. Apart from that, there were other qualities that might have made a Series E saving bond attractive.
These bonds were issued at 75% of their face value and returned 2.9% interest, compounded semiannually if held to 10-year maturity. So investors were able to earn a decent rate of return on their investment.
Series E bonds were also affordable, with initial denominations ranging from $25 to $1,000. Larger denominations of $5,000 and $10,000 were added later, along with two smaller memorial denominations of $75 and $200 to commemorate the deaths of President Kennedy and President Roosevelt, respectively.
Series E bonds were redeemable at any time after two months following the date of issue. Bond purchasers could redeem them for the full face value, along with any interest earned.
Interest from Series E bonds was taxable at the federal level but exempt from state and local taxes, adding to their appeal. And because they were issued by the federal government, they were considered a safe investment.
Recommended: Understanding the Yield to Maturity (YTM) Formula
Series EE Bond Maturity Rate
The maturity rate for EE bonds depends on when they were first issued.
Here’s a table showing the maturity dates for Series EE bonds over time:
Issuing Date
Maturity Period
January – October 1980
11 years
November 1980 – April 1981
9 years
May 1981 – October 1982
8 years
November 1982 – October 1986
10 years
November 1986 – February 1993
12 years
March 1993 – April 1995
18 years
May 1995 – May 2003
17 years
After June 2003
20 years
Recommended: 13 Tips for Aggressively Saving Money
Are Series EE Bonds Right for Me?
Series EE bonds can be a convenient, low-risk way to help your money grow over time. Plus, many people like the idea of investing in America and having their investment backed by the U.S. government. However, the rate of return may not be optimal, and the bonds are typically held for quite a long time versus a short-term investment.
Here are two popular alternatives you might consider to grow your money:
Savings Accounts
A savings account is a deposit account that’s designed to hold the money you don’t plan to spend right away. You can find various types of savings accounts at traditional banks, credit unions, and online banks. Savings accounts can pay interest, though not all at the same rate.
High-yield savings accounts at online banks, for example, tend to pay much higher rates than basic savings accounts at brick-and-mortar banks. Currently, they may offer around 4.60% APY (annual percentage yield) versus 0.58% for savings accounts.
Stocks
If you’re unclear about how stocks work, they effectively represent an ownership share in a company. When you buy shares of stock, you’re buying an ownership stake in a publicly traded company. The way you make money with stock investing is by buying low and selling high. In other words, you want to purchase stocks at one price then sell them for a higher price.
Stock trading can be a more powerful way to build wealth over time versus keeping money in a savings account or buying bonds. But there’s a tradeoff since stocks tend to be much riskier than bonds or savings accounts. Buying shares of mutual funds or exchange-traded funds (ETFs), which hold a collection of different stocks as well as bonds, is one strategy for managing that risk.
Recommended: Bonds vs. CDs: What’s Smart for Your Money?
Banking With SoFi
Series EE savings bonds can be a safe way to earn a steady rate of return. However, they aren’t the only way to grow your money.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.
FAQ
When should I cash in EE savings bonds?
Series EE savings bonds are optimally held for 20 years, at which point the money invested will have doubled. If you’d like to keep earning interest, you may hold the bonds for up to an additional 10 years.
How long does it take for a Series EE savings bond to mature?
Series EE savings bonds mature in 20 years. At the end of that period, the initial investment’s value will have doubled. You may hold them an additional 10 years and continue to earn interest, if you like.
Do Series EE savings bonds double after 20 years? 30 years?
Series EE savings bonds double after 20 years. If you don’t redeem them, you may continue to earn interest on them for another 10 years, for a total of 30 years.
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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
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The Consumer Price Index (CPI) has done more than any other report to shape trends in the bond market in the past year. At times (such as the middle and end of 2023), CPI provided hope that inflation was moving back down to target levels. At other times, such as Q1 2024, it’s suggested a troubling resurgence of elevated inflation. This week’s installment isn’t exactly in a position to put any debates to bed. If it’s higher than expected, it would suggest the market continues waiting for better evidence of a shift. But if it’s lower than expected, traders will increasingly view Q1 as the last unexpected push before a better chance at a turning point. With the Fed out with a new dot plot that same afternoon, there’s a lot at stake this week, but you wouldn’t necessarily know it based on the slow, sideways trading in place at the start.
Today’s only potentially relevant calendar item is the 3yr Treasury auction at 1pm. Shorter term auctions are less likely to cause a reaction, but it’s not out of the question.
Mortgage rates aren’t budging, and neither is the Federal Reserve… yet.
The Fed’s governing body, the Federal Open Market Committee, is meeting today and tomorrow (June 11-12) to decide whether to make any adjustments to its benchmark interest rate. But experts say the FOMC isn’t likely to break from its holding pattern.
Until inflation cools enough for the Fed to start cutting rates, homebuyers shouldn’t expect mortgage affordability to improve much. However, if inflation continues to decelerate and the Fed is able to make even one rate cut down the road, we may see some modest improvements in mortgage rates by the end of the year, according to Odeta Kushi, deputy chief economist at First American Financial Corporation.
That’s a big “if.”
On Wednesday, we’ll receive an updated Summary of Economic Projections, which could offer clues as to the direction of mortgage rates over the next several months.
“In the SEP, we’ll learn if Fed members still expect to be cutting rates this year or not, and get a sense of where they believe economic growth, unemployment and inflation will be headed for the remainder of 2024 and beyond,” said Keith Gumbinger, vice president of mortgage site HSH.com.
High mortgage rates have made buying a house prohibitively expensive. I spoke with several housing market experts about their expectations for Fed rate cuts and when we might see lower mortgage rates in 2024.
Why is the Fed holding off on rate cuts?
Since progress on inflation has been slow and the labor market remains strong, the Fed has reason to hold off on lowering rates for another month, if not more.
It’s a delicate balancing act. The Fed wants to see unemployment levels increase just enough to bring inflation down, but not so much that we fall into a recession. The Fed also wants to avoid cutting interest rates too soon, only to have inflation rear its head again. By holding interest rates steady, the Fed can continue to assess the overall economy.
“The Fed won’t cut rates until they have good reason to do so,” said Alex Thomas, senior research analyst at John Burns Research and Consulting.
The Fed doesn’t directly set mortgage rates. However, its policy changes, as well as investors’ expectations for future policy changes, influence whether rates on home loans move up or down.
What do inflation and labor market data have to do with interest rates?
The FOMC will be closely monitoring the Consumer Price Index for May, released Wednesday before its meeting concludes. The central bank wants to see inflation move closer to its target annual rate of 2%. The Personal Consumer Expenditures Price Index (the Fed’s preferred measure of inflation) showed prices growing at an annual rate of 2.7% in April.
The other big metric the Fed cares about is employment. Last week’s labor report showed the unemployment rate reaching 4% for the first time since January 2022, with the US adding 272,000 jobs in May, well above investors’ expectations. Another large increase in jobs indicates a still-growing economy, giving the Fed a reason to wait longer before cutting rates.
Economic data, like last week’s labor report and this week’s CPI numbers, may change expectations about the future of rate cuts this year, causing mortgage rates to dip down even before the rate cuts actually happen.
“If the labor data gets weaker, it doesn’t matter what the Fed does; mortgage rates will go lower,” said Logan Mohtashami, lead analyst at HousingWire.
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When will the Fed start lowering interest rates?
The central bank may make its first cut in July, but that will only happen “if the labor market report is weak and inflation comes down significantly,” said Lisa Sturtevant, chief economist at Bright MLS.
A more likely scenario is for the Fed to cut rates in the fall or early winter.
“If the cuts happen, they will happen toward the end of the year,” said Mohtashami. He believes we’ll see only one or two cuts, as opposed to the three cuts previously penciled into the Fed’s outlook.
Another factor to consider is the general election in November.
“Typically, the Fed refrains from making monetary policy decisions too close to a presidential election, to avoid the prescription of influencing the outcome,” said Sturtevant. “If the Fed does not cut rates in July, it is possible there will not be any rate cuts until 2025.”
Where are mortgage rates going this year?
In December of last year, after the Fed indicated it was prepared to lower interest rates in 2024, mortgage rates moved down into the mid-6% range. Some early-year forecasts optimistically called for rates to fall below 6% by the end of 2024.
But then mortgage rates started to climb back up. Since mid-February, the average rate for a 30-year fixed mortgage has held above 7%.
Experts still anticipate that mortgage rates will moderate in the coming months, landing between 6% and 6.5% by the end of the year. But if new economic data shows higher inflation, investors may adjust their forecast for rate cuts, causing Treasury yields and mortgage rates to surge, said Orphe Divounguy, senior macroeconomist at Zillow Home Loans. His baseline forecast calls for rates to fluctuate between 6% and 7% throughout the rest of 2024.
It’s also important to note that the Fed won’t cut rates all at once. Instead, it will be a gradual process over the next few years, meaning it may take a while before we see mortgage rates drop below 6%.
The bottom line? “Rates are going to remain higher than we had been predicting last year,” said Sturtevant.
When will affordability improve for homebuyers?
Today’s unaffordable housing market isn’t due to just high mortgage rates. Homebuyers are also being pinched by elevated home prices, limited housing supply and the pain of high inflation. Unfortunately, there’s no quick fix to all of these problems. But baby steps are better than no steps at all.
“Frustrating for some as it may be, it’s better that conditions continue to align slowly,” said Gumbinger.
For example, a rapid decline in mortgage rates would only spur more homebuying demand. Without the supply to support that demand, lofty home prices could press even higher, according to Gumbinger.
As mortgage rates gradually fall in the coming years, we should see more homeowners come off the sidelines and sell their houses. But most sellers are also buyers, so that won’t repair today’s housing shortage entirely.
Divounguy said the key to long-term affordability lies in boosting residential construction via land-use and zoning reforms. We’ve already witnessed how new construction is proving to be a bright spot in today’s difficult housing market: To lower the barrier-to-entry for homebuyers, many builders are offering sales incentives like discounted prices, closing-cost assistance and mortgage-rate buydowns.
If you don’t live in an area where there’s a lot of new construction (or you’d prefer to purchase an existing home), there are things you can do to make buying a house more accessible:
Build your credit score: Mortgage lenders reward borrowers with excellent credit scores with lower mortgage rates, which can affect your monthly payments. Paying your credit card bill on time and in full, and lowering your credit utilization ratio can help improve your score over time.
Save for a bigger down payment: With a larger down payment, you can take out a smaller mortgage, which will save you interest over the life of your loan. Depending on your timeline for buying a home, consider stowing your money in a high-yield savings account or certificate of deposit to take advantage of higher returns.
Explore first-time homebuyer programs: First-time homebuyer programs can offer assistance with your down payment, closing costs and more. Also consider government-backed loans, such as FHA loans, USDA loans and VA loans, which often have lower credit score and down payment requirements than most conventional loans.
The U.S. Department of Housing and Urban Development (HUD) has terminated the Federal Housing Administration (FHA) direct endorsement approval for Open Mortgage in Iowa.
“HUD placed Open Mortgage on credit watch for the Des Moines HOC [homeownership center], which only impacts our loans in Iowa,” Christopher D’Auria, president and CEO of Open Mortgage, told HousingWire.
“Our direct endorsement authority remains unchanged outside of that HOC. We have worked with HUD to address the issues associated with this situation and are working to resolve so that we can reapply for authority in Iowa later this year.”
Texas-based multichannel lender Open Mortgage has originated about $400 million in mortgages over the past 12 months, per mortgage tech platform Modex.
Most of its loans during the past year were in Kansas (12.5%), Mississippi (11.4%) and Florida (9.7%). Iowa was responsible for 3.4% of the total, Modex data shows.
In practice, the direct endorsement authority allows lenders to underwrite single-family mortgages and submit them to FHA for insurance endorsement. Open Mortgage’s termination is based on the “poor performance” of these loans, HUD stated.
HUD’s decision on Open Mortgage will be published in the Federal Register on Wednesday. The effective termination date is May 20. Inside Mortgage Finance first reported on the topic.
According to its current rule, HUD can terminate the direct endorsement approval of any lender whose default and claim rate in the past 24 months exceeds 200% of the geographic area served by a HUD field office, or the national default and claim rate for insured mortgages.
Following the decision, FHA loans already underwritten and approved by a Direct Endorsement underwriter, as well as cases with a firm commitment issued by HUD, may be submitted for insurance endorsement. Cases in the early stages may be transferred to other lenders with an FHA approval.
Open Mortgage had 67 sponsored loan officers and 23 active branches as of Tuesday, per the Nationwide Multistate Licensing System (NMLS).
In November 2023, the company closed its reverse mortgage origination division after lower origination volumes combined with lower pull-through rates to make its cost to close reverse mortgages too high. Open Mortgage has continued to operate in the forward lending space.
Have you always dreamed of owning your own home? It’s not an uncommon goal. But one of the greatest challenges is saving up enough for a down payment.
Does this mean you’ll have to wait several years to buy a home? Not quite. Read on to discover the best ways to save up for a down payment.
How to Save for Down Payment on a House
Before you begin saving for a down payment on a house, you need to know how much house you can afford. There are several things you will need to plan for. Your monthly mortgage payment will include the following:
Mortgage principal and interest
Real estate taxes
Private mortgage insurance (PMI)
Homeowners insurance
Homeowners’ Association (HOA) fees, if any.
You will also have closing costs and possibly moving expenses.
Furthermore, remember that for a conventional mortgage, you’ll typically need to save up to 20% of a home’s purchase price for a down payment. That means you’ll likely need to come up with tens of thousands of dollars.
1. Make a Plan
Making a plan can be helpful in saving money, even if you are unsure of where the funds will come from. It allows you to set a timeline for reaching your savings goals and helps to keep you motivated. Additionally, having a plan can help you track your progress and make measurable progress towards your financial goals.
To illustrate, if you need to save $6,000 in 12 months for a down payment, you must find a way to come up with $500 each month.
Some may be able to do this by cutting a few expenses. Others may have to get creative and find other ways to earn money. Either way, breaking it down into small chunks makes meeting the goal a lot more workable.
So, start by figuring out how much you need, come up with a plan, and execute. And remember that discipline is a must. If you have the right mindset and commit to the plan, you’ll be closing on your new home in no time.
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2. Prepare for the Unexpected
Life happens, and sometimes those unexpected occurrences can wreak havoc on your finances. This makes it near impossible to achieve your savings goals. But you can cut the chances of this happening by creating a safety net before you start saving for a down payment. That way, your dreams of buying a home won’t crash and burn if a financial emergency comes up.
3. Pay Yourself First
Have you ever tried saving money at the end of the month only to have your plans go up in smoke? It usually goes a little something like this: you make a budget for the month and vow to follow it line by line. And whatever is remains at the end of the month gets deposited into your savings, CD, or money market account.
Sounds good, but that’s not typically how it goes. A more realistic chain of events: you create a budget and all is well until life happens. By the end of the month, your wallet is empty and you’re awaiting the next paycheck.
We’re talking about saving up thousands of dollars for a down payment fund. For this reason, you want to save money at the beginning of the month or pay yourself first. This ensures a busted budget doesn’t get in the way of saving up for a down-payment on a home.
4. Start a Side Hustle
Starting a side hustle can be a great way to earn extra money and save for a down payment on a house. If you have a particular skill or talent, you may be able to offer your services as a freelancer or independent contractor. This could include writing, design, photography, or any other service that you have experience in and can offer to others.
You might also consider starting a small business on the side, such as selling handmade crafts or offering a service like pet sitting or tutoring. This allows you to diversify your income streams and potentially increase your overall earning potential.
5. Make It Fun
Did you discover a brand-new savings challenge at the beginning of the year? You don’t have to wait until the new year to partake in the fun. Put a savings challenge in place now to help accomplish your goal. A few ideas:
Gather a group of friends to join in as you embark on the challenge. You can come up with some sort of small incentive to award the person who reaches their target goal the fastest. Even if you don’t win, having that sort of accountability will help reach your goals faster.
Keep the change. You won’t get very far saving coins from transactions. But committing to saving every $1 or $5 bill could be effective. (This approach is most effective when you only use cash for everyday transactions).
Commit to no-spend days. Pick one day of the week to not spend a single dollar (unless it’s an emergency).
Rotating spending category months.
Use financial windfalls wisely. If you receive an unexpected financial gift or a lump sum of cash, put it in your down payment savings account.
Participate in a 52-week challenge with weekly increases. You don’t have to wait until the first of the year to get started. Start on your next payday and stretch it out for an entire year.
6. Look at Your Budget
When was the last time you took a close look at your budget? If it’s been a while, you may be wasting money on items or services that are no longer needed or beneficial to you. Or you can stand to reduce some expenses and reach your savings goal faster. Some tips to cut costs:
Bundle cable, internet, and phone services or cut them altogether.
Request a free energy-audit to identify problem areas in your home.
Increase the deductible on your insurance policies to decrease premiums.
Create weekly meal plans to decrease grocery expenditures.
Ditch eating out for home cooked meals.
Use coupons and shop for bargains.
Avoid impulse spending.
Downgrade your cell phone or opt-in for a low-cost prepaid plan.
7. Get a Roommate
Having a roommate can be a great way to reduce your living expenses and free up more money to put towards a down payment on a house. By sharing the cost of rent and other expenses, you can significantly reduce your monthly expenses and save more money each month.
Additionally, if you are able to find a roommate who is willing to pay more than their share of the expenses, you may be able to increase your overall income and save even more.
8. Boost Your Income
Worried about stretching yourself too thin from your savings plan? Explore other ways to boost your income, so your efforts won’t interfere with your budget. Some ways to pull this off:
Work overtime to earn some extra cash.
Ask for a raise if it’s been awhile and your latest evaluation was stellar.
Get a part-time job and work when you have spare time.
Find odd jobs on Craigslist.
9. Sell Your Unwanted Stuff
Selling items that you no longer use or need can be a good way to raise extra money to put towards a down payment on a house. Here are a few ideas for items that you might consider selling:
Clothing and accessories: Do you have clothes, shoes, or accessories that you no longer wear or that no longer fit?
Home decor and furniture: Do you have furniture or home decor items that you no longer need or that no longer fit your style?
Electronics: Are there any electronic devices that you no longer use or need, such as an outdated phone or laptop?
Books, CDs, and DVDs: Do you have a collection of books, CDs, or DVDs that you no longer want or need?
Collectibles and antiques: Do you have collectibles or antiques that you no longer want or that you think may be worth a lot of money?
Consider selling these items through an online consignment shop or online marketplace like eBay or Craigslist.
10. Refinance Existing Loans
Are you paying too much in interest for your current debt obligations? The only way to find out is by reaching out to your lenders to determine if you’re eligible for lower interest rates.
If not, consider refinancing your loans, especially student loans, to lower the monthly payment and free up funds to go towards your down payment. (Keep in mind that extending the loan term could mean more interest paid over the life of the mortgage loan unless the new interest rate is lower).
11. Consolidate Your Debt
What about credit card debt with exorbitant APRs that are costing you a fortune? Explore debt consolidation options to determine if you qualify for a loan with a competitive rate. By going this route, you could shave hundreds off your monthly expenses, and pay off the credit cards much faster while saving for a down payment on a house.
12. Automate Savings
One simple way to boost your savings is by setting up an automatic deposit from your paycheck. By transferring a predetermined amount from your checking account into a high-yield savings account on a regular basis, you can watch your savings grow over time. This way, you don’t have to actively remember to transfer the funds yourself.
13. Explore First-Time Home Buyer Programs
If you are a first-time home buyer working towards the goal of homeownership, it can be helpful to research first-time home buyer programs that may be available to you. These programs may offer assistance with a down payment or low down payment options.
Some examples include Fannie Mae and Freddie Mac’s down payment assistance programs, VA loans, USDA loans, and FHA loans.
By considering these options, you may be able to significantly reduce the amount of money you need for a down payment on a home. It’s worth taking the time to research and see what kind of help may be available to you based on your personal financial situation.
14. Save on Transportation
Consider switching to cheaper forms of transportation, such as biking or public transit, if you live within a reasonable distance from your workplace. This will this save you money on gas and parking fees. It can also improve your physical fitness if you choose to ride a bike.
If you live in an urban area, using the subway or bus as an alternative to driving can also help reduce air pollution and traffic congestion, benefiting both your personal well-being and the environment.
15. Save Money on Your Purchases
There are several ways to save money while shopping, both online and in-store. Here are some suggestions:
Use online browser extensions like Honey or Rakuten to find and apply coupon codes automatically at checkout. These extensions can also alert you to price drops and help you find the best deals.
Look for sales and clearance items, and consider buying in bulk when it makes sense.
Compare prices across different retailers before making a purchase. Websites like PriceGrabber and CamelCamelCamel can help you find the best prices online.
Use cashback credit cards or apps like Ibotta and Dosh to earn money back on your purchases.
When shopping for groceries, try to plan your meals in advance and make a list of the items you need to purchase. This can help you avoid buying unnecessary items and sticking to a budget.
Consider buying generic or store-brand products, which can often be just as good as name-brand items but at a lower price.
Look for deals and discounts, such as buy-one-get-one-free offers or discounts for purchasing a certain number of items.
Use coupons and take advantage of loyalty programs if the store offers them.
Consider purchasing items that are in-season, as they are often cheaper than out-of-season items.
Shop at discount stores or warehouse clubs such as Costco or Sam’s. They often offer lower prices on a wide range of products.
Bottom Line
While it may be intimidating to save for a down payment, you can pull it off if you have a solid plan. It may take a bit longer than you’d like, but the benefits of homeownership will make your efforts worthwhile.
I’m now 30 months into my new career, and I’m loving every single day.
As a lifelong learner, I find the nuanced topics of financial planning and investment management to be a limitless sandbox, or perhaps more like an underground cave system. Where’s the bottom?! Nobody knows!
Despite that complexity, my colleagues and I help clients with many common issues that are not the strict domain of experts. These are topics you don’t need CFPs, CPAs, or attorneys to help you with. And that fact – that even experts focus on getting the basics correct – is an important lesson.
Let’s dive into some examples.
Cash Flow Management
Cash flow management is the single biggest financial fundamental that most people overlook. I see examples of this daily, both good and bad.
I’ve seen people earning $600,000 and spending $625,000 yearly. They’re drowning (though usually unaware of it).
I’ve seen people earn $300,000 and spend $200,000, or earn $120,000 and spend $80,000. They are thriving. If you’re saving 20%+, you’re killing it. Great work.
Yes, it is so simple: Spend less than you earn and, ideally, measure it. Despite its simplicity, this idea is the foundation upon which the rest of our finances are built. Cash flow management is a vital part of every financial planning conversation.
Portfolio Complexity
Prospective clients or new clients typically prioritize portfolio reconstruction. I get to see the peculiar, the zany, the intriguing…somebody call P.T. Barnum!
The most common theme, though, is that many outside portfolios have come to me far more complex than they needed to be.
The most frequent complexity is to see 4 or 8 or 15 mutual funds in a single portfolio that are performing the same exact role. Who needs 15 mutual funds that are all 60% stocks, 40% bonds, and actively managed? The answer, of course, is nobody. But why, then? Why do investors get in this situation in the first place?
The reason is what I call “flavor of the month.”
With about 97% accuracy, I can tell these portfolios were built by a financial advisor who was financially incentivized to buy specific funds for their clients. The “mothership” will tell such advisors, “Our NBNHX mutual fund is undercapitalized. If you put your clients in NBNHX this quarter, we’ll double your commission on it.”
That’s a flavor of the month. Not for the client, mind you. But for the advisor. It’s a conflict of interest, for sure, but not all advisors are required to act as fiduciaries. We call on Uncle Charlie to remind us, “Show me the incentives, I’ll show you the outcomes.” Next thing you know, NBBHX has entered the portfolio.
The portfolio fills up with these various flavors of the month until – voila! – you have a Baskin Robbins. But despite the “flavors” having different ticker symbols, they all taste the same. Imagine if Baskin Robbins sold 31 flavors of vanilla! That’s what these portfolios look like. “Could I get a scoop of vanilla, a scoop of French Vanilla, and one of Vanilla Bean? Sprinkles? Never…”
Instead, we should make specific investment choices to answer specific portfolio problems—in layman’s terms, put the “right tools for the jobs” into your portfolio.
Each “job” might require its own specialty “tool.” We each have many tools in our garages and toolboxes. There’s nothing wrong with having multiple funds in a portfolio. But you don’t want or need redundant assets, just like a homeowner doesn’t need nine shovels.
You should be able to point to each fund or asset in your portfolio and describe the unique reason it’s there or the specific portfolio problem the asset is solving.
It’s hard to find a picture that combines “ice cream” and “tools,” so I asked A.I. to help me out. I’ve seen plenty of weird A.I. images at this point, but it’s still disorienting to see such real-looking objects (that ice cream isn’t real?!) juxtaposed with a computer’s misguided interpretations (what kind of dental torture device is that in the lower right? and why do the screwdrivers all have wooden popsicle sticks?).
Too Much Cash
Nobody should complain about 5% risk-free rates. However, cash is not a long-term investing strategy. Risk-free rates cannot, and should not, outperform inflation over the long run. You need to take some risk.
While cash is an important buffer to ensure short-term liquidity and an emergency fund safety net, your long-term assets should be in a risk-bearing, higher-growth asset class.
Stocks and bonds are wonderful.
Further reading: How Much Time Does It Take for Stocks to Outperform Bonds?
Goal Setting
Whether you realize it or not, your financial plan has specific branches and pitstops and end-points. My financial plan does too. But mine are much different than yours.
The reason is because each of those branches and pitstops and end-points are related to specific goals. My goals for my plan, your goals for your plan.
You don’t need a professional’s intervention to ask yourself, “What are our financial goals? What do we want life to look like, and by when, and how much might that particular life cost us?”
Consolidation
A common financial stress I hear rhymes with, “We have money all over the place. Too many accounts, too many statements, we need help!”
There’s not always a financial impact from consolidation (though sometimes it will save you annual or monthly account charges). But a significant mental burden lifts when you go from 24 disparate accounts down to 5.
Scary Stuff
People out there have scary stuff in their financial lives. The more stones I overturn, the more interesting scenarios I find. Some examples include:
Keeping large amounts of credit card debt to “improve our credit scores.” Credit scores don’t work that way.
Saving large sums ($25,000+ per year) while carrying huge credit card debt ($50,000+). Bad priorities. No investment is going to outperform paying down a 25% debt.
Tapping into a 401(k) prematurely (though quite intentionally) without awareness of the extremely stiff penalty. There’s a 10% early withdrawal penalty plus your marginal Federal tax rate (22% to 37% for most of you) plus your marginal state tax rate (6-8% here in NY). For hire earners, it sums to north of 50%. That $50,000 withdrawal? You keep $24,000 of it. The rest goes to the IRS.
Unrealistic spending plans. Both irrationally optimistic and irrationally pessimistic. Two families each want to spend $100,000 a year throughout their retirement. The first family has a $500,000 nest egg, which works out to a 20% withdrawal rate. The 4% rule is squealing. The second family has $15 million, or a 0.67% withdrawal rate. They are crippled with anxiety over running out of money. Neither family is living in reality.
No communication. Family finances are a deeply personal topic. There are many ways to skin the cat. But there aren’t infinite ways to skin a cat. Some methods are plain stupid. It shouldn’t take a meeting with a CFP for one spouse to tell the other spouse they still have $120,000 of student loans. Communication, communication, communication.
Ok, you spelunkers. It’s fun to dive deep into the financial planning cave, where the Social Security salamanders and the Roth conversion crayfish lurk. But the professionals care deeply about the “surface-level” stuff too, and it’s perhaps more important to get those simple ideas right.
Thank you for reading! If you enjoyed this article, join 8000+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.
-Jesse
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Beauty may be subjective, but modern beauty standards heavily influence what many of us find aesthetically pleasing. Three-quarters of Americans (75%) agree that “pretty privilege,” or personal and professional advantages for those perceived as beautiful, is real, according to a new NerdWallet survey. And many are spending on beauty, possibly to reap those benefits.
The survey of over 2,000 U.S. adults, commissioned by NerdWallet and conducted online April 15-17, 2024, by The Harris Poll, finds that three-quarters of Americans (75%) have made beauty-related purchases for themselves, spending that includes products, services and procedures. The survey also asked Americans how they pay for beauty and how they think social media has impacted beauty spending.
Key findings
Some Americans have gone into debt for beauty spending. Of Americans who say they’ve made beauty-related purchases for themselves, 15% paid with a credit card that they didn’t pay off by the due date and 9% used “buy now, pay later” services, according to the survey.
Cosmetic procedures are a career investment for some. The survey found that 11% of Americans think cosmetic procedures are a good financial investment — they think looking better will be an asset to their career.
Many agree social media has exacerbated beauty spending. Three-quarters of Americans (75%) say social media has made beauty spending much worse, according to the survey.
Beauty spending is sometimes seen as a necessity. Nearly a third of Americans (31%) consider at least some of the beauty products and services they buy as essential in their budget, the survey found.
“Spending on beauty products and services can be fun and enjoyable, even helping shoppers feel a boost of confidence and joy. But it may also have a dark side,” says Kimberly Palmer, personal finance expert at NerdWallet. “Spending more than you can comfortably fit into your budget can lead to financial stress and, in some cases, long-term debt.”
Some beauty spenders are taking on debt
Three-quarters of Americans (75%) have made beauty-related purchases for themselves, the survey found, including products, treatments and procedures. The most popular expenses are skin care products (54%), hair products (41%) and cosmetic products (39%).
Many of these purchases were made with cash. According to the survey, 72% of Americans who purchased beauty products, treatments or services for themselves say they paid with cash or a debit card. And nearly 1 in 5 (19%) paid with savings.
Credit cards are another popular payment method for beauty-related spending. Paying with a credit card can provide more payment protection than a debit card, as well as potential rewards on spending. However, due to interest charges, this is generally only a good idea for those who pay off their balance in full by the due date, and not all beauty spenders did that. While 44% of Americans who have made beauty-related purchases for themselves say they used a credit card that they fully paid off, 15% say they used a credit card that they didn’t pay off by the due date, the survey found.
Credit card debt isn’t the only debt Americans have taken on for beauty spending. Nearly 1 in 10 Americans who have made beauty-related purchases for themselves (9%) used buy now, pay later services and 5% used a loan product from the provider of the beauty product or service.
Some beauty products and procedures are medically necessary and may allow people to use insurance and/or an HSA/FSA. (An HSA is a health savings account, and an FSA is a flexible spending account; both can be used for eligible health care costs.) For example, sunscreen may be a HSA/FSA-eligible medical expense and Botox as a treatment for chronic migraines may be covered by insurance. The survey found that 8% of Americans who have made beauty-related purchases for themselves used insurance and 5% used their HSA/FSA.
26% of Americans have paid for cosmetic procedures
More than a quarter of Americans (26%) say they’ve purchased cosmetic procedures for themselves, with the most popular (19%) being cosmetic dental procedures, like teeth straightening or whitening, according to the survey. In addition to dental work, 7% of Americans say they’ve purchased nonsurgical procedures, like Botox or dermal fillers, and 7% say they’ve purchased cosmetic surgeries, like rhinoplasty or liposuction.
Cosmetic procedures are common for some: The survey found that 11% of Americans say cosmetic procedures are normal in their social circle. Those with a household income of $100,000+ are more likely to say this — 15% say cosmetic procedures are normal in their social circle compared with 8% of those with a household income less than $100,000.
Like with beauty spending in general, the most popular way to pay for cosmetic procedures is cash or debit card (59%), followed by a credit card paid in full by the due date (39%). But some have gone into debt to pay for beauty procedures, with 14% using a credit card that they didn’t pay off in full by the due date, 10% using a loan product from the service provider and 9% using buy now, pay later services.
Taking on debt for nonessential purchases isn’t generally recommended, but more than one-tenth of Americans (11%) say cosmetic procedures are good financial investments, believing that looking better will help them get ahead in their career. This sentiment is most popular among young Americans — 17% of Gen Z (ages 18-27) and 20% of millennials (ages 28-43) see procedures as a good investment compared with 6% of Gen X (ages 44-59) and 4% of baby boomers (ages 60-78).
Some cite beauty spending as a necessity
Investment or not, going into debt for beauty spending isn’t looked at favorably by the general population. According to the survey, 4 in 5 Americans (80%) think it’s unacceptable to go into debt for beauty products or services. But this line may be blurry for some. Debt may be considered more acceptable when used to pay for necessities rather than extras and nearly a third of Americans (31%) — including 42% of women — consider at least some of the beauty products and services they buy as essential in their budget.
Social media is very good at influencing purchases, and beauty products and procedures are no exception. The survey found that three-quarters of Americans (75%) agree that social media has made beauty spending much worse. This could be due to ads and influencer marketing, or pressure to look a certain way.
The survey found that 12% of Americans feel pressured by society to spend more on beauty products and services than they would like to, and nearly a third of women (31%) wouldn’t feel comfortable going into work without wearing makeup.
How to keep beauty spending in check
If spending on beauty products and procedures is something you can afford without jeopardizing your finances, then it could fit into the 30% “wants” category in a 50/30/20 budget plan, for instance. But if you’re looking for ways to minimize such spending, here are a few tips to get started.
Save where you can on beauty products to put money away for your future. If spending on beauty is keeping you from saving enough — or saving at all —one place to start is to look at your spending and see if there are ways to cut back. Maybe you believe the serum you love is worth the money, but you’re fine getting fewer pedicures, for example. Think about what’s most important to you and adjust your spending accordingly.
“Taking time to look back at your beauty spending over the last year could lead to some surprising insight into how much you’ve been spending on products and services, perhaps without even realizing it. You might decide to make some changes going forward based on your priorities,” Palmer says.
Set boundaries with kids when it comes to beauty spending. The survey found that 57% of parents have made beauty-related purchases for their children, including skin care products (29%), hair products (27%) and nail salon treatments (21%). For younger children, you can start by setting budgets for nonessential beauty purchases and talking about your limits. For those old enough to take on part-time work, it may make sense to have them contribute or pay for beauty products that aren’t necessities, like cosmetics or manicures.
“Spending on beauty products also offers a great chance for kids to practice budgeting themselves. Giving them an allowance and encouraging them to make their own purchasing decisions gives them experience with those kinds of trade-offs,” Palmer says.
Avoid debt for nonessential procedures. Of Americans who purchased cosmetic procedures for themselves, 14% used a credit card they didn’t pay in full by the due date. Evaluating your options before swiping could save a lot of money in interest.
Some procedures are medically necessary, and if that’s the case, check out your insurance options or whether the procedure is HSA/FSA-eligible.
For procedures that aren’t medically necessary, saving up first is a good idea. Taking on high interest debt for any purchase could lead to future resentment.
“It’s easy to get swept up in trends and overspend. Just as with any big purchase, pausing to think through whether or not the treatment or procedure is actually worth the cost can help you make the best decision for you and your money,” Palmer says.
Consider your motivations for spending. More than a third of Americans who have made beauty-related purchases for themselves (36%) say the products they buy are status signifiers, and as mentioned, many Americans (75%) think pretty privilege exists, giving beautiful people real-world advantages. But it’s a good idea to think critically about why and how much you spend on beauty products.
Consider what beauty products and services you enjoy spending on and what you’re buying because it feels compulsory. Pausing to consider your motivations for your spending may help avoid buyer’s remorse.
Methodology
This survey was conducted online within the U.S. by The Harris Poll on behalf of NerdWallet from April 15-17, 2024, among 2,082 U.S. adults ages 18 and older. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 2.5 percentage points using a 95% confidence level. For complete survey methodology, including weighting variables and subgroup sample sizes, contact [email protected].
Disclaimer
NerdWallet disclaims, expressly and impliedly, all warranties of any kind, including those of merchantability and fitness for a particular purpose or whether the article’s information is accurate, reliable or free of errors. Use or reliance on this information is at your own risk, and its completeness and accuracy are not guaranteed. The contents in this article should not be relied upon or associated with the future performance of NerdWallet or any of its affiliates or subsidiaries. Statements that are not historical facts are forward-looking statements that involve risks and uncertainties as indicated by words such as “believes,” “expects,” “estimates,” “may,” “will,” “should” or “anticipates” or similar expressions. These forward-looking statements may materially differ from NerdWallet’s presentation of information to analysts and its actual operational and financial results.
Get ready to be blown away by this brand-new, jaw-dropping California Modernism-inspired compound in the heart of Pacific Palisades.
Freshly landed on the market for a cool $34 million, this 2024 stunner offers the ultimate blend of luxury, style, and convenience — with a distinct architecture that makes it fit right in with area’s many notable properties, which include four Case Study House Program residences and National Register of Historic Places-designated houses.
Listed by Jacqueline Chernov at Compass and David Berg, Kristin Alexander, and F. Ron Smith of Smith & Berg Partners, the newly built marvel offers 15,681 square feet of luxury living space and some standout amenities, not to mention a killer location in the Palisades.
Here’s a peek inside this posh pad.
Specs & features
Price: $34,000,000 Location: Between Riviera Country Club, Palisades Village, and Will Rogers State Beach Size: 15,681 sq ft Bedrooms: 6 Bathrooms: 12 Lot size: 0.52 acres Notable features: elevator, subterranean 6-car garage, home automation system Select amenities: Ocean views, home theater, wine-tasting room, full spa with a gym, massage room, sauna, resort-like backyard with zero-edge infinity pool & cabana
Set in an enclave of architecture
The estate sits on the architecturally significant Chautauqua Boulevard, best known for its four iconic midcentury houses built under the auspices of Arts & Architecture magazine’s Case Study House program.
Bearing the signatures of lauded architects like Charles Eames, Eero Saarinen, Rodney Walker, and Richard Neutra, several of them have been listed in the National Register of Historic Places. That includes the Eames House, the famous mid-century modern home of well-known designers Charles and Ray Eames, now open to visitors.
Paying tribute to the area’s architectural past
While 538 Chautauqua Boulevard might not align itself with its neighbors’s midcentury modern aesthetics, its architecture does adopt (or rather, adapt) their California Modernism elements.
Drawing heavily on the principles of California Modernism, it features clean lines, open spaces, and a seamless connection with the outdoors. It also heavy showcases certain hallmarks of this style like the extensive use of glass.
Inside the main level
Walking through the front door, you’re greeted by soaring 12-foot ceilings and steel-framed doors that flood the space with natural light.
The gourmet kitchen, complete with a butler’s pantry, is a chef’s dream come true, and the multiple living areas make this home perfect for hosting grand events or cozy family gatherings.
Luxury amenities galore
Head downstairs to find a bar, lounge, wine-tasting room, home theater, and a full spa with every other wellness amenity imaginable. Think gym, massage room, sauna, and steam room. Talk about living the high life!
Sophisticated interior finishes
The interior of this home is a masterclass in sophisticated design. From the warm, monochromatic palette to the high-end finishes, every detail has been carefully selected.
Highlights include Taj Mahal slab stone, which adds a touch of elegance and durability, and Apparatus lighting that provides both function and a modern aesthetic. These elements come together to create a cohesive and luxurious living environment.
Standout design elements
Some of the most striking features of this home are the soaring 12-foot ceilings and the walls of steel-framed doors that flood the space with natural light.
These architectural choices enhance the feeling of openness but also highlight the brilliant millwork of the artisan-crafted walnut staircase and custom built-ins. The design elements are both visually stunning and add practical elegance to the spaces.
The primary suite
The primary suite is nothing short of a personal oasis. With its high vaulted ceilings, you’re enveloped in an atmosphere of tranquility and spaciousness. Imagine waking up to panoramic ocean views and enjoying your morning coffee from your private sitting room.
The suite also boasts dual custom closets, offering ample space for even the most extensive wardrobes, and a stone-clad bath that creates a spa-like experience right at home.
Bathrooms are equally luxurious
Every bathroom has been crafted with attention to detail, featuring high-end fixtures and finishes, and a luxurious design that seems taken straight out of the most expensive hotels in the world.
Heading outside to the zero edge pool
Step outside, and you’re greeted by a resort-like backyard that rivals any high-end vacation destination. The zero-edge infinity pool seems to blend seamlessly with the ocean views, providing a perfect spot to unwind.
More outdoor amenities
The outdoor kitchen and private cabana make entertaining a breeze, whether it’s for hosting a summer barbecue or a sophisticated evening gathering. The outdoor space is designed for both relaxation and recreation, making it an ideal extension of the luxurious indoor living areas.
Our favorite part? The sunken outdoor living area with plenty of seating, which I’m sure makes for one hell of a party spot.
A great location in the Palisades
The newly built home is located in the affluent neighborhood of Pacific Palisades, known for its tranquil ambiance, breathtaking ocean views, and large, private homes — that sport a hefty median listing price of $5 million, per Realtor.com.
Conveniently nestled between the Riviera Country Club, Palisades Village, and Will Rogers State Beach, 538 Chautauqua Boulevard offers easy access to some of the area’s top attractions. Whether future owners will be into golfing, shopping, or beach lounging, everything is just a stone’s throw away.
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