October 2024 - Hanover Mortgages

Apache is functioning normally

October 30, 2024 by Brett Tams

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

It is better to leave a credit card with a zero balance open because removing the account could negatively impact several credit factors.

However, canceling a credit card can be a smart financial move in certain situations. For example, if you have a card with a high annual fee and rarely use it, canceling it might be a good idea to avoid unnecessary charges.

If you’ve successfully paid down a credit card, you may be wondering if it’s better to close it or leave it open with zero balance. While it’s recommended that you keep unused credit cards open instead of canceling, there are certain instances when canceling that credit card may be in your best interest financially.

Let’s examine the pros and cons of keeping and closing your zero-balance

Is it better to cancel zero-balance or keep them?

The general rule of thumb is that it’s best to keep your unused cards rather than cancel them. Open credit cards, even ones you aren’t actively using, help you build up your credit history and increase your available credit. That increase helps lower your credit utilization rate, which is the percentage of available credit you have used. These details are important because they relate to two factors that credit bureaus rely on when determining your credit score.

If you choose to keep a credit card open, try to use it occasionally to prevent the card issuer from decreasing your credit limit or closing your account due to inactivity.

On the flip side, sometimes the knowledge that you have a credit card available for purchases is too big of a temptation. If you’re having trouble controlling your credit card spending or if your credit card has a high annual fee, you may be better off canceling your card.

How does closing a credit card could impact your credit?

Canceling a credit card, particularly an older one, can lead to a credit score drop. The two primary potential causes of this drop are:

An increase in your credit utilization rate because you have less available credit
A decrease in the average age of your credit history

Let’s look more closely at how these two factors can directly impact your credit score. Understanding each one can help you determine whether or not you should close your zero-balance credit card account.

Your credit utilization rate could skyrocket

Even if you aren’t making purchases on a credit card, that available credit is helping to boost your credit utilization rate, which accounts for 30 percent of your credit score. The more available credit you’re using, the worse off your credit score will be.

To understand how your credit utilization ratio — and thus your credit score — could be affected by closing a credit card, here’s a helpful example. Let’s say you have two credit cards:

One has a $3,000 limit and a $3,000 balance (this is the money you owe).
The other has a $3,000 limit and $0 balance.
Your credit card utilization rate between both cards is 50 percent ($3,000 total balance divided by $6,000 total limit multiplied by 100 = 50 percent utilization).
However, if you close the credit card with the $0 balance, your credit utilization rate jumps to 100 percent ($3,000 total balance divided by $3,000 total limit multiplied by 100 = 100 percent utilization).

According to FICO®, the goal should be to keep your utilization ratio below 30 percent. There’s an easy formula you can use to calculate your credit utilization ratio:

Step 1. Divide the total amount of your overall credit debt by the total credit limit available across all of your credit cards.
Step 2. Multiply the result by 100 to produce your credit utilization ratio.

Pro tip: Before you close a credit card, take some time to determine what your credit utilization ratio would be. If that number will jump significantly, it may be a better idea to keep your zero-balance card open until you can pay down your total credit card balance.

The length of your credit history could decrease

The longer you’ve had a credit card open, the better. This helps to build your credit history, which accounts for 15 percent of your credit score. If you have a positive history associated with your credit card paired with years of having that card in your name, it’s a good idea to keep that card open and in use, as it improves the length of your credit history.

One easy way to keep a credit card in use without driving up your balance is to only use it for recurring payments for things like streaming services or other subscriptions. That way, you’ll know exactly how much is going on that card each month and can easily pay off the balance in full.

When should you close your zero-balance credit card?

Depending on your financial situation, there can be compelling reasons to cancel your unused credit card.

The card has a high annual fee

If you’re charged a high annual fee by your credit issuer, canceling may be a smart money move. However, it’s worth trying to have the fee waived before you decide to cancel, especially if you receive rewards through the card such as travel credits and perks. Call your credit card issuer to ask for the annual fee to be waived and mention that you’re considering closing your account. It never hurts to ask.

You’re a victim of fraud

If your credit card is lost or stolen, the issuer will usually close the account and send you a replacement. But, if a business continues to allow unauthorized charges even after you report the issue, closing the card might be the best financial move to protect yourself from further fraud.

You’re going through a divorce

If you’re separated or getting a divorce, it’s a good idea to close any accounts you share with your ex, as you could end up saddled with a credit card balance they’ve accrued on the account.

You’re out of debt

Everyone is different, and for some, the temptation to keep a credit card and not use it is too high. For those struggling to get out of debt or for those who recently climbed out of credit card debt, it might be a good idea to cancel your unused credit card and stick to using cash or your debit cards to avoid sinking back into revolving credit card debt.

How to cancel your credit card in 6 steps

If you do decide to close your credit card, there are several steps you should take to ensure you’ve properly closed your account.

Redeem rewards points: Refer to your credit card’s redemption rules to learn how to redeem your points prior to closing your account.

Pay off your balance to zero (if it isn’t already): Pay off any remaining balance on your card before attempting to cancel it.

Confirm your zero balance: Contact your credit card issuer online or via phone to make sure that your balance is zero.

Make it official with certified mail: Send a certified letter to the company that issued your card requesting they send you a written letter verifying the zero balance and the closed status of your account. Keeping a paper trail is a great way to maintain a record of when the account was closed in case you need to contest any information on your credit report down the line.

Monitor your credit reports: Check your credit report 30-45 days after your card is closed to make sure the card is officially reported as “closed.”

Dispute any errors: Once you’ve reviewed your updated credit report, be sure to dispute any incorrect information you may find.

Bottom line: It depends on your financial situation

Deciding if it’s better to close a zero-balance credit card or leave it open is a personal decision — the answer will depend on your unique financial circumstances. No matter your situation, it’s important to cancel any unused cards in a way that keeps your financial health intact and minimally impacts your credit score.

For some, having unused credit cards may be no temptation whatsoever, but for others, the knowledge of having a card available to use could be difficult to ignore. Canceling a credit card won’t necessarily change your spending habits in the long run, so it’s important to develop a healthy approach to your personal finances by creating a realistic budget and sticking to it.

Tame your credit card debt with Lexington Law Firm

When you have a credit card with a zero balance, the decision whether to keep it open or not depends on your credit score goals. If inaccurate information on your credit reports is dragging your score down, credit repair services can help you challenge these errors and potentially boost your score.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

Apache is functioning normally

October 30, 2024 by Brett Tams

Some people got an email from Fidelity, myself included, about new benefits on the Fidelity 2% card. I assume everyone will get this email as it goes it in batches:

Receive up to 10,000 Reward Points every four years when you apply for either Global Entry® or TSA PreCheck®. That’s worth up to $100 when deposited into an eligible Fidelity® account, once every four years. Be sure to pay the application fee using your card to be eligible. Learn more about this benefit and review the terms at Fidelity.com/AirportBenefits
- My thoughts: Cool benefit on a solid no-fee card. TSA Pre costs $78 for five years and would end up fully covered with this benefit. Global Entry costs $120 and would be mostly covered with this benefit.
- There are many cards with this benefit, but not too many no-fee cards in that list. I did TSA PreCheck at the same time as my brother and I was able to cover the fee for him since I have multiple cards with the benefit.
Auto Rental Collision Damage Waiver at no extra cost. Be sure to review complete benefit terms at Fidelity.com/AutoRentalCoverage.
- My thoughts: I wasn’t aware that the card didn’t already have this benefit, but if it’s new that’s a nice addition. FYI – coverage is secondary behind your regular auto insurance (if you have that).
No foreign transaction fees for international purchases.

Source: doctorofcredit.com

Apache is functioning normally

October 30, 2024 by Brett Tams

Could logging in to your computer from a deluxe treehouse off the coast of Belize be the future of work? Maybe. For many, “freelance” means flexibility, meaningful tasks, and better work-life balance.

Who doesn’t want to create their own hours, love what they do, and work from wherever they want? Freelancing can provide all of that—but that freedom can quickly vanish if you don’t know how to manage finances as a freelancer.

“A lot of the time, you don’t know about these expenses until you are in the trenches,” says Alyssa Goulet, a freelance copywriter. “And that can wreak havoc on your financial situation.”

Some workers may choose to work in a freelance capacity hoping to increase their savings and their feelings of self-sufficiency. But for all its virtues, the cost of going freelance can carry some serious sticker shock.

Most people who freelance for the first time don’t realize that everything—from taxes to business software to retirement planning—is on them. Learning how to manage your finances as a freelancer early on will help set you up for success.

The key to budgeting as a freelancer is to plan for five expenses: taxes, business expenses such as your workspace and tools, health insurance, retirement savings, and general business costs.

1. Taxes for freelancers and the self-employed

First things first: Don’t try to be a hero. When determining how to budget and manage your taxes as a freelancer, you’ll want to consult a financial advisor or tax professional for guidance. A tax expert can help you determine what makes sense for your personal and professional situation and provide financial advice to help you build your freelance business.

For instance, just like regular employees, freelancers owe federal income taxes, as well as Social Security and Medicare taxes. When you’re employed by an organization, you and your employer each pay half of these taxes on your income, according to the IRS. But when you’re self-employed (earning more than $400 a year in net income), you’re expected to file and pay these taxes yourself, the IRS says. And if you think you’ll owe more than $1,000 in taxes for a given year, you may need to pay quarterly taxes.

That can feel like a heavy hit when you’re not used to planning for these costs. “If you’ve been on a salary, you don’t think about taxes really,” says Susan Lee, CFP^®, a tax preparer and founder of a website that provides tax information for freelancers. “You think about the take-home pay. With freelance, everything is take-home pay.”

Estimating what you’ll owe

Once you determine how often you’ll need to file taxes, Lee recommends doing a “dummy return,” which is an estimation of your annual self-employment income and expenses. You can come up with this number by looking at past assignments, industry standards, and future projections for your work—which Goulet also finds valuable.

Then, use that number to refine your estimate. “I determine the tax bracket I’m most likely to fall into by taking my projected monthly income and multiplying it by 12,” Goulet says. “If I experience a big income jump because of a new contract, I redo that calculation.”

Budgeting for what you’ll owe

After you estimate your income, you can determine how much money to set aside for your tax payments. Lee recommends saving around 25% of your income to pay your income tax and a self-employment tax (which funds your Medicare and Social Security). Once you subtract your business expenses from your freelance income, however, you may not need to pay that entire amount, according to Lee.

Adjust your estimates often—and always round up. “Let’s say, in one month, a freelancer determines she would owe $1,400 in tax. I’d put away $1,500,” Goulet says.

2. Business expenses for freelancers: Get a handle on two big deductions

For freelancers, tax deductions can yield big savings—if you know where to look for them. From the mileage you log between appointments to supplies for your home office to fees for coworking spaces, many freelance business expenses may be deductible, according to Lee.

The costs of freelancing vary from person to person. Some freelancers are happy to work from their kitchen tables, while others require a sophisticated (read: expensive) setup. Your freelance expenses will also change as you add new tools to your business arsenal.

Here are two budget categories you’ll need to account for as a freelancer:

Renting or furnishing your workspace

Joining a coworking space can help you establish the camaraderie you might miss when working at home alone. Yet these workspaces may charge membership dues, ranging from $20 for a day pass to hundreds of dollars per month for a dedicated desk or private office—something to consider when you’re calculating the cost of freelancing.

Coworking spaces may be all the rage, but you can still rent a traditional office space for several hundred dollars a month or more. However, this fee usually doesn’t include networking events or other membership perks like food and drink.

If you want to avoid office rent or dues but don’t want the kitchen table to pull double duty as your workspace, you might convert another room in your home into an office. When planning a home office on a budget, all it takes is a little creativity and know-how to create a functional, productive workspace.

Amy Hardison, a freelance copywriter and content strategist, retrofitted part of her house into a simple office. “I got a standing desk, a keyboard, one of those adjustable stands for my computer, and a squishy mat to stand on so my feet don’t hurt,” Hardison says.

Start with the absolute necessities. When Hardison launched her freelance career, she purchased a laptop for $299 and worked out of a coworking space—using its office supplies before creating her own workspace at home.

Going digital: freelancing business tools

There are a range of digital tools, including business and accounting software, that can assist with the majority of your business functions. These digital tools for freelancers can save you valuable time, which you can then invest back into growing and marketing your business.

The right business software can also help you avoid financial lapses as you grapple with how to manage finances as a freelancer. Hardison’s freelance business had ramped up to a point where a manual process was costing her money, so using invoicing software became a no-brainer.

“I was sending people attached document invoices for a while and keeping track of them in a spreadsheet,” Hardison says. “And then I lost a few of them, and I just thought, ‘Oh, my God, I can’t be losing things. This is my income!’”

You might use digital business and software tools to help manage scheduling, web hosting, accounting, audio/video conferences, and other business operations. When you’re determining how to budget as a freelancer, remember that the costs for these services depend largely on your needs.

For instance, several invoicing platforms offer options for as low as $9 per month, though the cost increases the more clients you add to your account. Accounting services also scale up based on the features you want and how many clients you’re tracking, though you can find reputable platforms that cost as little as $5 per month.

If you sign up for a business or accounting software platform, start with the “freemium” version, where the first tier of service is always free, Hardison says. Once you have enough clients to warrant the expense, upgrade to the paid level with the lowest cost. Gradually adding services will keep your expenses proportionate to your income.

3. Health insurance for freelancers: Harness an inevitable cost

Saving for healthcare costs can be one of the biggest hurdles to self-employment and successfully learning how to manage finances as a freelancer. In 2024, the average monthly premium under the Affordable Care Act (ACA)—for those who do not receive discounts due to qualifying income—was $469 for a 40-year-old individual and $1,491 for families of four, according to Forbes.

“Buying insurance is really protecting against that catastrophic event that is not likely to happen. But if it does, it could throw everything else in your plan into a complete tailspin,” says Stephen Gunter, CFP^®, a financial advisor at a wealth management firm.

Speak with an insurance advisor who can help you determine which plans are best for your health needs—and your budget. An advisor may be willing to offer a free consultation so you can gather important information before making a financial commitment.

4. Retirement savings for the self-employed: Learn to “set it and forget it”

Part of learning how to budget as a freelancer is thinking long-term, which includes estimating retirement expenses. That may seem daunting when you’re navigating new business expenses, but saving for retirement is a big part of budgeting when you’re self-employed, Gunter says.

“It’s kind of the miracle of compound interest,” Gunter says. “The sooner we can get it invested, the sooner we can get it saving.”

His freelance money management tip? Set aside whatever you would have contributed to an employer’s 401(k) plan and put it on autopilot. One way to do this might be to set up an automatic transfer from your primary checking account to your savings or retirement account.

“So, if you would have put in 3% [of your income] each month, commit to saving that 3% on your own,” Gunter says. The Discover® IRA Certificate of Deposit (IRA CD) could be a good fit for helping you enjoy guaranteed returns in retirement by contributing after-tax (Roth IRA CD) or pre-tax (Traditional IRA CD) dollars from your income now.

Prioritize retirement savings every month, not just when you feel flush. “Saying, ‘I’ll save whatever is left over’ isn’t a savings plan because whatever is left over at the end of the month is usually zero,” Gunter says.

5. General business expenses: Update your rates to cover them

With time, you’ll likely find that one of the best financial tips for freelancers is to build your costs into what you charge. “As I’ve discovered more business expenses, I definitely take those into account as I’m determining what my rates are,” Goulet says.

She notes that freelancers sometimes feel guilty for building business costs into their rates, especially when they’re worried about the fees they charge to begin with. But working these costs into your rates is essential to sustainable money management—and building a thriving freelance career.

Your expenses will change over time, so reevaluate the rates you charge annually. It’s also wise to do quarterly and yearly check-ins to assess your income and costs and see if there are any processes you can automate to save time and money.

Knowing how to manage finances as a freelancer is the key to a successful career

When you understand how to manage finances as a freelancer—effectively accounting for the costs of being self-employed—you can build the foundation of a long (and, with luck, lucrative) freelance career. From planning for taxes to saving for retirement, smart money management can provide you with much-needed financial stability and peace of mind if and when you decide to strike out on your own.

“There are many hats you have to wear and expenses you have to take on,” Goulet says. “But for that, you’re gaining a lot of opportunity and flexibility in your life.”

Working as a freelancer has its benefits, but it also means your pay can fluctuate from month to month. If you want to be even more prepared for freelance money management, then find out how to make a budget when you have an irregular income.

Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third party or information.

The article and information provided herein are for informational purposes only and are not intended as a substitute for professional advice. Please consult your tax advisor with respect to information contained in this article and how it relates to you.

Source: discover.com

Apache is functioning normally

October 30, 2024 by Brett Tams

SBA loans are government-guaranteed small-business loans issued by designated lenders to help small businesses access capital at low rates and long terms. It is possible to get multiple SBA loans as long as your SBA lender allows it, and you don’t exceed the borrowing limits set by the SBA.

Having more than one SBA loan can work in certain situations and help you access low-cost financing for your business; however, it can be difficult to qualify for multiple SBA loans, and it’s not right for every situation.

How much do you need?

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

How many SBA loans can you have?

The SBA itself does not limit the number of SBA loans you can take out, but it does place a cap on the maximum amount you can borrow. That means you can technically have as many SBA loans as you can qualify for with any given SBA lender, up to these limits:

SBA 7(a) loans: $5 million.
SBA 504 loans: $5 million (select projects may qualify for up to $5.5 million).
SBA microloans: $50,000.

The SBA also allows business owners to get both an Economic Injury Disaster Loan (EIDL) and a business physical disaster loan for a single declared disaster, as long as the combined amount of the loans doesn’t exceed $2 million

. However, the SBA prohibits business owners from having more than one EIDL for a single disaster.

How to qualify for multiple SBA loans

In general, the qualifications for multiple SBA loans are the same as they are for one SBA loan. SBA loan requirements can vary depending on your lender and the specific SBA program, but broadly, you’ll need to meet the following to qualify for a 7(a), 504 or microloan:

A for-profit business, operating in the United States.
Can’t get the desired loan on reasonable terms from other lenders. (For microloans, this only applies for loans over $20,000.)
Demonstrate creditworthiness to be able to repay the loan according to the lender’s requirements.

To qualify for an SBA disaster loan, you have to be physically located in a declared disaster zone, directly impacted by the disaster or unable to cover expenses or obligations because of a declared disaster. Business physical disaster loans cover physical damage caused by a declared disaster that is not fully covered by insurance.

While there are no set guidelines for qualifying for multiple SBA loans, in addition to the standard requirements, there are some other factors you should consider:

Standing with your current SBA loan. If you’re not in good standing with the SBA loan you currently have, it’s highly unlikely you’ll be approved for another one.
Available collateral. For loan totals above $50,000, you’ll need enough collateral to cover the total combined loan amounts. This is something to consider if your current loan didn’t require collateral, but your new SBA loan will push your total borrowing amount over $50,000.
Cash flow and DSCR. Make sure you calculate how an additional monthly payment will affect your business’s positive cash flow. Similarly, understand how a new loan affects your business’s debt service coverage ratio (DSCR), or the measure of cash flow against outstanding debt obligations. There’s no minimum DSCR set by the SBA, but lenders commonly look for a range of 1.25 to 1.50.

Combining different types of SBA loans

There are certain instances where it’s possible — and even advisable — to combine different types of SBA loans. For example, SBA 504 loans are an excellent option for purchasing, building or expanding commercial real estate and equipment, but they are fairly limited to those purposes. If there are other costs associated with your project that 504 funding cannot be used for — such as additional inventory or working capital — you might pair your 504 loan with an SBA 7(a) loan if you can qualify.

You can also combine EIDL and business physical damage loans (as long as the total doesn’t exceed $2 million). EIDLs are specifically for small businesses that have suffered economic losses due to a declared disaster, whereas business physical disaster loans cover physical damage caused by a declared disaster that is not fully covered by insurance.

Pros and cons of multiple SBA loans

Pros

Access to multiple low-cost financing options.

Added flexibility for uses.

Low interest loans for unforeseen disasters.

Cons

Can take a long time to fund.

Needs may exceed borrowing limits.

Can be difficult to qualify for.

Frequently asked questions

Can you have multiple SBA loans from different lenders?

Yes, it is possible to have multiple SBA loans from different lenders. Keep in mind that each SBA lender may have different qualification requirements.

Can I apply for an SBA loan again?

Yes. If you have previously applied for or had an SBA loan, or if you have a current SBA loan, you can apply for another one as long as your current loan amount won’t exceed the SBA’s borrowing limits. You cannot apply for two EIDLs for the same declared disaster.

Source: nerdwallet.com

Apache is functioning normally

October 30, 2024 by Brett Tams

Nearly 60 percent of future retirees think they will need a paycheck in retirement that’s as big or bigger than what they receive today to live comfortably As retirement looms, the majority of Gen X Americans say their retirement nest egg is just three times their annual salary or less While nearly two-thirds of Gen … [Read more…]

Apache is functioning normally

October 30, 2024 by Brett Tams

If you’re looking to refresh your “dream home” material, we have just the thing: A newly listed home in Los Angeles’ family-friendly Encino neighborhood has recently landed on the market with an $8,995,000 price tag and some seriously gorgeous interiors.

Set behind custom gates, the 6-bedroom home was meticulously designed by the designer/builder duo Shelly and Jeffrey Greenfield of Red Door Homes to incorporate organic materials and sophisticated finishes — with just the right touch of farmhouse appeal.

It’s now being offered for sale at $8,995,000 with Marco Rufo, Craig Knizek, and Andrea Korchek of The Agency in charge of finding a buyer. And we think they won’t have to do much looking — if these property photos are any indication. See for yourself!

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