No one wants to pay higher prices. But consumers wholly resistant to dynamic pricing could miss out on lower prices too.
More than a fifth (22%) of Americans say they would not spend money at a business that uses dynamic pricing, according to a recent NerdWallet survey conducted online by The Harris Poll. But as technology makes price changes increasingly easy, frequently fluctuating prices are bound to become more common.
Dynamic pricing refers to the practice of businesses adjusting prices up or down to account for supply and demand factors. It’s relatively common and growing in popularity. In fact, you’re likely patronizing businesses that use dynamic pricing — regardless of where prices stand.
Dynamic pricing in the public eye
Dynamic pricing first entered the popular imagination last decade with the rise of ridesharing services like Uber and Lyft. Those companies would raise their prices when demand was high, encouraging more of their drivers to get on the road. Drivers benefited from higher wages while riders benefited from prompt pickups, so the companies argued this form of dynamic pricing, referred to as “surge pricing” — which only goes up, not down — was a win-win. But not all riders have agreed.
Neither dynamic pricing nor its surge pricing variant is the same as price gouging — when businesses raise prices to take advantage of consumers without alternatives, such as artificially inflating gas or food prices during a natural disaster. Unlike the unethical practice of price gouging, consumers can actually benefit from prices that fluctuate in both directions.
Dynamic prices can go up. And down.
Dynamic pricing refers to the practice of setting prices based on the real-time supply of and demand for a product or service. Crucially, dynamic pricing can lead to higher or lower prices.
The travel industry provides a useful example. Take a hotel room in Chicago — a great city with much to offer, but frigid winters.
A Chicago hotel might see rooms going fast at $300 a night in July, but drop the price to $150 in December to minimize vacancies during the slow season. That’s dynamic pricing at work. And if you think celebrating New Year’s in Chicago sounds like fun, then you might consider yourself the beneficiary of dynamic pricing.
Dynamic pricing is fairly common
Few industries employ dynamic pricing as comprehensively as travel. As in the Chicago example above, airlines, hotels and car rental companies — and online travel agencies that sell their products — have long adjusted their prices based on seasonal demand. Most recently, JetBlue implemented peak and off-peak pricing for checked bags.
Online retailers such as Amazon use reams of real-time sales data to determine the price at which to offer products.
The happy hour — an attempt to lure customers at traditionally slow times using drink and food specials — has been a staple at bars for decades.
Electricity providers raise rates during periods of increased demand, such as heat waves.
Toll roads and subway systems will sometimes charge more during rush hour than on the weekends.
Dynamic pricing can be effective
A quarter (25%) of Americans say they would only spend money at a business that uses dynamic pricing when prices are down, according to the recent NerdWallet survey.
Consider some of the above examples:
Have you changed vacation dates to take advantage of lower airfares and hotel rates?
Have you waited a bit longer to turn on your air conditioner on a sweltering summer day?
Have you tried a new cocktail place offering a great happy hour deal?
If you answered “yes” to any of the above questions, then you’ve shopped at a business or used a service that employs dynamic pricing. What’s more, you altered your behavior as a consumer in response to the lower price, which is exactly how dynamic pricing is supposed to work.
It’s breakfast time, you’re hungry, and I’m offering you two options:
A healthy, adult hen
Two dozen eggs
Your first thought is probably: “Seriously? It’s just breakfast. I don’t want a live chicken running around my house.”
Forget that thought for now.
If you’re like me, your mind next asks, “If I do choose thechicken, how many eggs can I expect over time? What’s the risk the chicken doesn’t get to two dozen eggs? Am I willing to wait for two dozen – or hopefully more – eggs to arrive?”
When we know those answers, we can make a smart decision. It’s a time value of chicken question. It’s why Warren Buffett recites Aesop’s fables.
[embedded content]
A similar mathematical question lies at the heart of financial planning: how do we compare lump sum savings against a stream of income?
The question might sound simple. But people get it wrong all the time, and their financial lives are at stake.
Savings vs. Income: Would You Rather?
Would you rather have $140,000 today or $10,000 yearly for life? David Blanchett and Michael Finke posed that question in a study published by an annuity industry group.
Yes – we should exercise caution. It’s natural for an annuity industry group to publish pro-annuity media, and this study is certainly pro-annuity, as we’ll see. In general, I’m not a fan of annuities. Nevertheless, I think the study’s results are directionally accurate.
This is a hen vs. eggs question! $10,000 per year is like our hen: a steady income stream. The $140,000 is like our eggs: a big lump sum all at once., The study points out that person could use their $140,000 to buy an income annuity and guarantee themselves $10,000 per year for life. In other words, the two options are functionally identical.
However, study respondents don’t see the options as identical. Instead, most respondents prefer the $10,000 per year for life. It’s viewed as safer and more accessible to spend. The logic is:
If someone knows another $10,000 is coming next year, they’re willing to spend the $10,000 they receive this year.
But the lump sum doesn’t inspire that same confidence because it all depends on if or how you invest it. What if I spend down the $140,000 to nothing?! I’d much rather have the $10,000 per year at that point.
This is Loss Aversion 101. If you can guarantee a person won’t lose – just as the stream of income guarantees – that person is biologically biased to see that option as more appealing. Even if it isn’t!
The Big Problem
The problem with this “income vs. savings” logic becomes evident if we tweak our numbers.
What if I offer you a $200,000 lump sum vs. $10,000 yearly?
The pure math tells us it’s a no-brainer. Choose the lump sum! You could use that lump sum to produce an income stream greater than $10,000 annually.
But some would ask, “Can you guarantee that income? Or are you making a bet that you likely can produce more than $10K per year? What if you’re wrong?” And because of that risk of being wrong, they would still choose the $10K per year.
How does someone overcome this bias?
According to the study mentioned above, a simple income annuity would help by converting the $200,000 lump sum into a $14,000 per year guaranteed income stream, crushing the $10,000 per year option.
Note: the study’s ratio of $140,000 lump sum to $10,000 annual income stream suggests internal rates of return of: 0% over 14 years, 3.7% over 20 years, 5.8% over 30 years, and 6.6% over 40 years. This alignswell with Schwab’s guaranteed annuity payouts, as of this writing.
But as I’veexplained here before on The Best Interest: do you want to run the risk of a 0% return for 14 yearssimply to achieve the “nirvana” of 6.6% annually for 40 years?
That doesn’t work for me.
Quick Aside: Dividend Stocks!
The same faulty logic of “income >> lump sum” exists in the world of dividend stocks.
One of the greatest myths about dividend stocks is that they’re inherently superior to other stocks because they produce a dividend income stream. (Here’s a complete breakdown of all the faulty dividend stock logic.)
The income allure of dividend stocks convinces many retirees to stock their portfolios full of them. “You can get a 6% per year dividend AND still own your stock at the end of the day!”
A more diversified stock portfolio might “only” pay a 2% dividend while its price increases 8% a year (over the long run). If a retiree wanted to live off this second portfolio, they would have to sell some of their shares. That selling begs a scary question: What if we sell and sell again and again until we run out of stocks?!
The same question scares people looking at the $140,000 lump sum: what if we spend and spend again and again until we run out of money?! They opt for a steady income stream. They opt for dividend stocks.
Their normal, understandable monkey brains overvalue the income stream and undervalue the lump sum. Don’t be that monkey!
What To Do Instead?
One of my goals here at The Best Interest is to instill confidence. Specifically, the confidence that a diversified portfolio can achieve particular performance goals over sufficiently long periods.
Not without risk, mind you. That’s important. To achieve investment reward, we must assume investment risk. But I want to instill confidence that you can assume some risk (however much is appropriate for you) and good things will happen over long periods of time.
Such a portfolio can translate a lump sum into an income stream or an income stream into a lump sum. We need to fight the urge to overvalue one over the other.
Specifically, we need to have enough confidence in math to overcome our monkey loss aversion that overvalues income and undervalues a lump sum of money.
I’m not sure that confidence can be spoken into existence – at least not in the short-term. But with enough smart evidence and time, confidence builds.
Maybe even enough confidence to choose that chicken over the eggs.
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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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Discover career growth strategies to boost your income, including negotiating raises and navigating promotions and mentorship.
What are some of the best ways to increase your income?
What are strategies for negotiating a higher salary and excelling in your current role?
Hosts Sean Pyles and Alana Benson discuss career growth techniques and salary negotiation strategies to help you understand how to maximize your earnings and achieve financial stability. They begin with a discussion of the importance of increasing your income rather than solely focusing on cutting expenses, breaking down the long-term financial difference that seemingly small increases in your income can make over the course of your career.
Then, “The Job Doctor” Tessa White joins Alana to discuss how to excel in your current role and position yourself for promotions and raises within an organization. They discuss the necessity of understanding the true expectations of your role, measuring your contributions through tangible metrics and effectively communicating your value to your organization. Additionally, they explore the importance of informal mentorship and how to enhance your skills by observing and learning from those who excel in specific areas.
Check out this episode on your favorite podcast platform, including:
NerdWallet stories related to this episode:
Episode transcript
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
You’ve heard it one million times, “Just cut out the daily Starbucks run and you’ll be rich.” But more often than not, your financial situation is going to be better aided by fixing what’s coming into your budget versus what’s going out.
Tessa White:
If you’re, say, 35 years old and you negotiate an extra $5,000 for your job, it’s not just $5,000 because in lifetime earnings, that’s several hundred thousand dollars in lifetime earnings. And if you invested that difference, it’s even more.
Sean Pyles:
Welcome to NerdWallet’s Smart Money Podcast. I’m Sean Pyles.
Alana Benson:
And I’m Alana Benson.
Sean Pyles:
This episode kicks off our Nerdy deep dive into what we are calling investing in your income. Another way to say that is investing in yourself by seeking out more ways to make more money.
Alana Benson:
Yeah, Sean, you alluded to this at the beginning, but there’s just so much advice out there giving people flack for spending on straight-up normal stuff like going to Starbucks, or getting some tacos at a food truck instead of making them in your kitchen. And yes, technically all of these things can have a negative impact on your bottom line, but like, you have to live.
Sean Pyles:
Absolutely. And I mean, we’ve had a foot in this camp on the show advising people to take a hard look at their expenses and see what they can pare back in an effort to get themselves to a better financial situation. We haven’t told people to forego a morning latte, but there certainly is a time and place for examining your spending habits. That said, there is another way to affect that bottom line.
Alana Benson:
Exactly, and that is to just make more money.
Sean Pyles:
Yes. Okay. So Alana, you pitched this series to us. What prompted you to start thinking about this?
Alana Benson:
I’ve talked about this on here before, but before I started working at NerdWallet, I worked at a small company where I was making less than $30,000 a year with no benefits. So I actually tried to negotiate to $32,500 and I was told that I was “greedy and selfish.”
Sean Pyles:
Wow. The gall you must have had-
Alana Benson:
I know. How dare I?
Sean Pyles:
… to ask for that much more money, yeah.
Alana Benson:
But it messed me up for a long time. And to any listeners who have been told something similar, I want to tell you right now that you are not any of those things. I had to check my bank account every time before I went grocery shopping at that job, and I felt stressed about money all the time. And then when I finally started working at NerdWallet, overnight I went from that stressed out lifestyle to being able to save for retirement and a down payment on a house, which was just like a fever dream before then, and then it was a reality.
Sean Pyles:
Right. Well, we wish everyone could work for NerdWallet, but for those who are looking for other ways to have that kind of income jump, let’s talk about what they need to be considering.
Alana Benson:
Yeah, Sean. And this is not to say that this is easy. These are a little more difficult, they may not happen overnight, but there are some really critical factors that make increasing your income almost imperative if you want to meet particular financial goals. If that’s buying a house, if you’re making a college fund, investing for retirement, these are all the things that you usually do after you fill out your emergency fund, or you pay down high-interest debt and cover your day-to-day expenses. And by those metrics, it just makes it really hard for a lot of people to ever get to the point where they can afford to save and invest for those long-term goals. And for a lot of folks, increasing their income is literally the only way they’re going to be able to afford to invest for retirement.
Sean Pyles:
Right. And increasing your income can also be far more effective than reducing expenses, particularly for those who don’t have many expenses left to cut.
Alana Benson:
Yeah, exactly. So here’s an example. If you’re making $50,000 a year, the money you actually get on your paycheck after taxes, and generally this is without state taxes and everyone’s tax situation is different, but that would come to about $42,000 a year or $3,495 per month. The average monthly mortgage payment in the U.S. is $1,768. Now factor in groceries, bills, car payments, and other necessities, and the truth becomes something that we already know, which is just that life is really expensive and most of us are not making enough to cut it, let alone save for the future, or just make enough to enjoy life and take a vacation every now and then.
Sean Pyles:
Yeah. And the average millennial owes about $6,500 in credit card debt and those in Gen Z owe more than $3,000. Cutting your daily coffee habit and getting rid of streaming services simply cannot make up the differences here. And these numbers aren’t new, but they’re sometimes presented with little information about what we can do about them. Increasing your income is one of the biggest ways you can make a dent in those numbers.
Alana Benson:
Exactly. So over this three-part series, we’re going to talk about how you can get started increasing your income, some concrete steps you can take regardless of whether you want to change jobs or not, and what you can start to do once your income does increase. We’ll be talking about everything from sprucing up your LinkedIn profile to working with a career coach, negotiating, and whether that’s for a raise at your current job or a salary bump at a new one.
Sean Pyles:
All right, well we want to hear what you think too, listeners. To share your thoughts around ways to boost your income, leave us a voicemail or text the Nerd hotline at 901-730-6373. That’s 901-730-N-E-R-D, or email a voice memo to [email protected].
So Alana, who are we hearing from today?
Alana Benson:
We are going to the doctor for a checkup, Sean.
Sean Pyles:
Oh, no. What’s the copay going to be?
Alana Benson:
Well, hopefully nothing, because today we are talking with The Job Doctor, also known as Tessa White, who spent a good chunk of her career heading up HR departments, mostly for tech companies. She’s now founder and CEO of The Job Doctor and author of The Unspoken Truths for Career Success.
Sean Pyles:
That’s coming up in a moment. Stay with us.
Alana Benson:
Tessa White, welcome to Smart Money.
Tessa White:
Hello. Thank you for having me.
Alana Benson:
In this series, we are really focusing on ways to increase your income in kind of any form. So what would you say is the easiest way that people can increase their income?
Tessa White:
Well, I think they need to be very mindful that they are their best advocate for making money. The company’s not going to magically go in and decide that they need to pay them more money, because a company’s always going to err on the side of they’ll take as much as you’ll give. So making sure that you’re advocating for yourself is probably the greatest way that you make money.
Alana Benson:
Tessa White:
Yeah, salary negotiation, asking for money, which is uncomfortable for people to do sometimes. Understanding what the value of your role is or the position that you’re applying for versus just kind of going with the first thing that people ask. I mean a little bit of discomfort on the front end of negotiating on behalf of yourself really has a massive impact on the back end.
If you’re, say, 35 years old and you negotiate an extra $5,000 for your job, it’s not just $5,000 because in lifetime earnings, that’s several hundred thousand dollars in lifetime earnings. And if you invested that difference, it’s even more. So you need to look at it a little bit differently and say, “Every penny that I can negotiate on behalf of myself is the new basis for which other offers come in and other raises is based off of.” And it really does have a cumulative effect that’s significant.
Alana Benson:
I want to go back to something that you said about increasing the value where you’re at. Some people may have tried to negotiate or they’ve hit a financial ceiling for some ways, but how can you get extra experience at your existing job? For example, if you want a role in management in the future, maybe take on some mentoring to work towards that. For people who negotiating isn’t really on the table right now, how can people get some of that extra experience?
Tessa White:
First you have to know what to ask for. One of my recommendations is that you mimic a top-performer plan. Companies typically put people in this nine box, and they have these top performers and nobody knows who they are except the top performers. They get all these extra things. Some of those extra things are exposure to experiences which are very valuable to you. That might be sitting in on an executive meeting and just seeing how things operate.
And the thing about corporate America is your manager needs help. There’s always more to do than people to do it. And so if you ask for your own top-performer plan, you can actually ask for and be very direct with your manager to say, “Can I give part of a presentation in this executive team meeting? Can I run this little piece of a project that is holding us back that we need to get over the finish line? Can I sit in and listen to how a meeting operates? Can I help develop a dashboard for our departments so that we can show progression in some of the key objectives?”
So there’s lots of different ways you can do it, but the key is you have to ask because most managers are not really great at putting together growth plans for people. They’ve got a lot of people and it gets very murky what they need. But if you actually go to your manager, and direct it and say, “Can I do this one thing? Can you help make this one thing happen or these two things happen,” then your odds go way up and your credibility goes up in the organization, your visibility goes up. And therefore, your promotability goes up.
Alana Benson:
I love what you said about visibility because I think that is so, so important, especially a lot of people are now working in remote environments and so you don’t really get that face-to-face time. And so what are some ways that people can kind of increase their visibility? Kind of like you said, talking about a presentation, but just ways to get exposure and then how does that value come back to them?
Tessa White:
Well, let’s start with something that I think people might find interesting. I’ve sat in on hundreds of promotion meetings where they decide who gets the promotions that year. And almost without fail it’s like a broken record. The people that don’t get the promotions, people will say, “Well, they sound great, but I don’t know who they are. I haven’t worked with them.”
One of the big keys to getting the promotions is visibility across the organization and being able to collaborate well with other departments. And it’s really important that when people know you, you have a greater chance of getting the promotion, and when you intersect with them. So that’s the first thing is that having that exposure is really important.
One of the first practical things that I would do in a job is to go talk to the people that intersect with my role and say, “Tell me what do you expect out of this role? What are the problems that I am helping solve for you and where are your pain points?” And I would get very, very aligned with what those people and constituents need because the job on paper is not the real job. It never is. And this helps you determine what the real job is and how you win, more importantly, how you align yourself to win. So I would be having those conversations at least twice a year because that’s what’s going to point you towards how you actually work on the things that are going to get you promoted in a company, and how are you going to get visibility for you and what you do.
Alana Benson:
I think about that a lot where I work in terms of even just posting on Slack and making sure that I post regularly in the channels that my boss, and my boss’ boss, and even my boss’ boss’ boss are because that visibility is so important. So they say, “Oh, I know who this person is, I know what they’re working on. I know they’re doing X, Y, and Z.” So what are some other ways to make sure you’re getting that managerial attention that could potentially lead to a raise or a promotion?
Tessa White:
I’m a big believer in planting seeds in an organization with other managers and other places in the organization so that you know what’s coming. Managers are planning six months, eight months in advance, sometimes a year in advance of what they need and what’s coming. And you need to be talking with them about how are you going to be evolving, what are the big problems you’re trying to solve? What are big initiatives and things that are going to help you over the next couple of years move into the next level of efficiency? And when you understand those things, then you get a better idea of how you fit into the ecosystem and you also get a better idea of maybe where you want to go in the future. And then you can begin to craft the kind of experiences that you need so that you will be somebody that they can pay attention to.
I would absolutely treat your company like a big homework assignment. And I would be trying to listen to the quarterly reports, listen to the CEO. What are the big objectives that we’re trying to accomplish? And it helps you establish that narrative. Because I get mad when people come and say, “I interviewed but it didn’t work very good,” or, “I don’t think they understood my value.” And I say, “If you don’t understand your value proposition, I promise you the company won’t.” It really is your job to figure out what your value proposition is, and in order to do that you have to have information.
Alana Benson:
So when you go into those meetings, it’s so hard to kind of know what your value is or what people call your market value. So how do we figure that out? How do you essentially see if there’s space to grow in terms of pay in your existing role? How do you figure out what you should be getting paid?
Tessa White:
Well, that’s a lot of different questions. Let me start with value proposition, first of all. It’s kind of a big word, but how do you know what value you bring to an organization? This is a really hard thing for people. But if you think about leverage, that’s what you want to have as leverage to get what you want. Leverage at its core is “I have what you need.” And so if you can define what is it that I see the company needs, where are they going and what have I done so far that shows I have that skill, and you can then turn it into numbers.
“I was able to come into my department and move the needle on these particular criteria,” then you have more leverage. But what most people do is they say, “I’m really good at working with customers.” Well, that’s, in and of itself, doesn’t mean anything. But if you say, “My customer service scores are 20% higher than most of the other people in the department,” or, “I was able to decrease call time by X and increase customer satisfaction by X,” then you actually have something that the company understands and you’re speaking their language.
So part of your job in determining your value proposition is saying, “How am I solving problems for the company? And then how do I turn what I’ve done into metrics or numbers?” That’s why I tell people, “You should go to work every day and be measuring. If you don’t have a department metric that tells you am I doing good or am I not doing good, figure out what it is and start measuring things. Because those numbers become so critical to how you position yourself for a company.”
Alana Benson:
There’s two things, figuring out what the company kind of needs from you and what you can bring to it, and then obviously what can the company do for you?
Tessa White:
Well, your market value, it’s like a house. When we put a house up for sale, we don’t have some neat, perfect numbers to what its value is. What we know is that other houses sold at this amount that were similar, and the same is true with compensation. What other companies are willing to hire this role at is a pretty good indicator that you can bring that helps determine the value of a role.
But the other thing that you have quite a bit of control over is being able to tell the company, “Here’s how I solved the problems in my last company and here’s how I’ll solve them for you.” So for recruiting, for example, let’s just take a general example. If I said, “I’m a really good recruiter, and I was able to manage a recruiting team and fill 200 positions in a year,” that doesn’t, in and of itself, mean anything. But if I understand that a company has low resources and they don’t have a lot of money to put towards recruiters, I could say, “In the last company, I turned every employee into a recruiter in our company because we didn’t have a lot of funds. And we rolled out this employee referral program that made every employee a recruiter and it increased the number of applicants that we were bringing into the company month over month by 60%.”
Then all of a sudden the company goes, “Scrappy. I need scrappy. I’m a company that doesn’t have a lot of money. I need creativity. Look what that person was able to do.” And all of a sudden your leverage went up, which means your compensation probably goes up because you have what the company needs.
Alana Benson:
Yeah, I think it’s so important to think about what are the problems that need to get solved here? And sort of apply yourself to those, and be moldable, and be able to say, “Yeah, I can help you with that.” I feel like that goes so far and feeds into the visibility thing that we were talking about earlier because then you become known as someone who can fix problems.
Tessa White:
It’s everything because on resumes, again, one of my pet peeves is a resume will say, say you take an HR person and they say, “I’m a 25-year professional who has been able to manage talent management, training and employee relations.” Well, every single resume says that, but the minute that I can tap into how do I solve the problems and I say, “I’m the person that you’d hire if you need to go fast and put in place infrastructure so that you can go public or so that you can have a high merger acquisition strategy,” for example. If I say that, then I’ve just tapped into how to solve a problem that that particular small company needs.
Alana Benson:
So much of this is difficult to do and every company is different. And I think it’s so important to get help and support along the way as you’re trying to not only be better in your role but be making more money. So what can you tell me about how you can use mentorship to further your career and help you increase your income? What can mentorship look like and how do you find a mentor?
Tessa White:
I think every single person needs to have not just a mentor, they need to have a handful of mentors, and it’s available to everybody. What most people, the mistake they make is they think they need to go up to somebody and say, “Will you be my mentor?” When in fact, the best mentorships that I know of are where you identify people who have really good skill sets in an area.
For example, everybody should have a mentor that they can look to for how do you manage people, how do you get conflict over the finish line, and how do you do it in a way that’s productive rather than destructive? Everybody should have a mentor around data and data analytics or presentations and how to give a good presentation or run a meeting. You should identify people who do that well, watch them. You don’t even need to ask, “Will you be my mentor?” Watch them. Watch what they do in that area.
And then for example, before you go give a meeting, say, “I’ve been watching you. You give really good presentations and I’ve tried to use some of the principles I see that you utilize. Will you take a look at this presentation and tell me what you’d change? Can I just give it to you? Spend 10, 15 minutes to run over the high level?” That’s how you have mentors that make a difference for you is you find people that do good things, you watch them very closely, and then you ask them when the time is right to help you make sure you’ve done that thing right. And I think that’s available to everybody. You don’t have to have a company program to do it. You don’t have to have somebody necessarily saying they’ll be your mentor. Just pick people, watch them.
Alana Benson:
So it doesn’t need to be nearly as formal as what a lot of people think of when they think of entering a mentorship relationship? It can be as simple as, “I saw you do this. You’re great at it. Can you help me with this one presentation?”
Tessa White:
Exactly, or this one conflict. “I have a high conflict situation and this is how I was thinking of handling it. How would you do it?” Exactly. I think that’s far more productive.
Alana Benson:
To that point, obviously a mentorship and mentoring relationship is different than working with a career coach, but how can you find a career coach who can maybe help you and how do you navigate that search? There’s obviously a wide spread of what people charge for career coaching services. Are there any certifications that people should look for when it comes to working with a career coach to make sure they’re working with someone who knows their stuff?
Tessa White:
There are plenty of different certifications, but I don’t think that one is necessarily better than another. I think it’s a lot like finding a regular therapist. You need to find somebody that you vibe with. You need to find somebody who’s been around the block and has some experience.
Probably my biggest beef with career coaching as an industry is that a lot of people with five years of career experience are calling themselves a career coach. You need somebody who has seen lots of situations in lots of different circumstances and watched how those situations play out. And I think when you have somebody that has either been in your industry or has been around the block for a while, they’re going to be able to give you a much better idea of the different choices that you have, and more importantly, the likely different outcomes of those scenarios if you handle it different ways. But somebody with five years of experience simply doesn’t have enough experience or enough behind the scenes in really high-stakes situations to be able to give, I think, information that is really, really helpful or useful.
Alana Benson:
And so aside from a lack of experience, is there anything else to kind of look out for in this industry?
Tessa White:
I would find people that know my industry. For instance, tech is a different flavor than blue collar. If I took advice from a career coach that’s a high-tech career coach and I’m in a blue collar environment, that advice is not going to play as well because there’s just different flavors to different industries. So you try and find somebody that’s the best match to the environment that you are working in, I think, and then you make sure that that person has a lot of experience as well.
Alana Benson:
Is there anything that I didn’t ask you about that seems particularly important for people to think about if they’re trying to increase their income in a role that they’re already in?
Tessa White:
I will tell you that there is a trend that I’m seeing that I think is really valuable to understand. There’s a lot of change happening right now, a lot of layoffs and a lot of people leaving companies. But those people who stay through, I call it a red zone of a company, usually have tremendous opportunities that come their way because of the people that leave and the gaps that that creates. And even though it may be an uncomfortable period of time to try and do more with less, learning how to work through red zones of companies is really teaching you to innovate and is teaching resilience. And that skill set is extraordinarily valuable.
People who stay in companies often end up with the increases and the promotions that they want because of the vacancies that are left. And so I would tell people don’t think that the grass is greener just by leaving a company through a red zone. A red zone can be a tremendous gift to you, and particularly people who are okay with taking promotions that are lateral and they learn the ecosystem of a company, that has delayed value. While it may seem like you’re going backwards or standing still if you’re not getting big raises, if you understand the ecosystem of a company by working in different departments, over time that makes you incredibly valuable to a company. And I’m seeing people use that as a career strategy that ends up paying dividends. If you look at it in a long-term, like a four-year horizon, is huge. Even when they leave that company, the ability to understand the different departments and how they work together is something that’s very, very valuable.
So don’t discount the red zone of a company and think, your brain’s going to tell you this is the wrong company, the wrong time, it’s terrible, it feels uncomfortable. But discomfort doesn’t mean you’re in the wrong company, it simply means you have to learn to do things differently. And it really is the trigger for innovation. And if you can stay through that red zone, it can be incredibly valuable to you.
Alana Benson:
Well, Tessa White, aka The Job Doctor, thank you so much for talking with us today and we really appreciate your time.
Tessa White:
Yeah, thank you so much for having me.
Sean Pyles:
Alana, I so love how you and Tessa talked about what I sometimes think of as the theater of the workplace or narrative building around your job. And I don’t mean to be flip or diminish the real work that goes into building any career, but if you aren’t good at presenting the story of your work, building a compelling cast of characters through your colleagues and advocates who support your work, and getting people excited about what you are doing, it’s going to be a lot harder to get those big opportunities in your career. Tessa described it as “planting seeds,” and I kind of think about it as foreshadowing, set building, and fleshing out your narrative arc.
Alana Benson:
Totally. And there’s so much that goes into what we do at work, and how we can grow and eventually make more money. And if you’re looking for inspiration on where exactly to figure out what type of experience you should be getting, try looking at job listings for jobs you’ll eventually want but maybe aren’t qualified for now. That will clue you into where you should start looking. For example, if you’re in a job that doesn’t currently give you management experience but you’re looking to work as a manager in the future, you could give informal mentoring a try.
Sean Pyles:
So try thinking from your future resume’s perspective. Try to think from your future resume’s perspective. What experience do you need to have to check a box on a job openings list and how can you get it now?
Alana Benson:
Yeah. And once you identify what areas you want to get more experience in, there are thousands of online courses you can take for free or for just a small amount of money to exercise those skills. You can learn how to code, you can learn about AI, how to use spreadsheets, and pretty much anything else you can think of. So think about what courses could help you out in your current role or help make the case to give you a promotion.
Sean Pyles:
And this is a great time to look at other roles again and see what particular skills they’re looking for. If you’re looking for jobs in IT support, for example, you can take a Google certification course for that. Some companies even offer financial compensation for furthering your education. So be sure to ask your manager if there are any funds available to help you pay for the education costs.
Alana Benson:
That’s a great call.
Sean Pyles:
So Alana, tell us what’s coming up in episode two of the series.
Alana Benson:
Next up, we are going to hear from an expert from LinkedIn about how to best optimize your profile so you can make the most out of a job search.
Andrew McCaskill:
I think that the number one thing that I would say to folks if you’re trying to make your profile more visible and more searchable is over 40% of recruiters say that they are searching for talent based on skills. And so you really have to put your skills in your summary, and use skills and skills language.
Sean Pyles:
For now, that’s all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373. That’s 901-730-N-E-R-D. You can also email us at [email protected]. And remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes.
Alana Benson:
This episode was produced by Tess Vigeland. Sean helped with editing. Kevin Berry helped with fact checking. Sara Brink mixed our audio. And a big thank you to NerdWallet’s editors for all their help.
Sean Pyles:
Here’s our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Alana Benson:
And with that said, until next time, turn to the Nerd
Understand how much extra income you could get from a side hustle like DoorDash and get a budgeting and investing basics refresh.
This Week in Your Money: How much extra money can you really make from side hustles? What are budgeting and early investment strategies for young professionals? Hosts Sean Pyles and Sara Rathner discuss the realities of gig economy jobs with Tommy Tindall, a NerdWallet writer who tried working for DoorDash to see what kind of income it would give him. He shares tips and tricks on the ease of starting with DoorDash, the practical challenges involved, and how your location and lifestyle can impact your earnings.
Today’s Money Question: Host Elizabeth Ayoola joins Sean and Sara to help answer a listener question from a recent college graduate about early investment strategies. They discuss how young professionals can apply the 50/30/20 rule to their finances, the importance of setting clear savings goals, and how to start investing at a young age. They discuss the benefits of starting investments early, the differences between active and passive investing options, and the importance of automating investments to build wealth over time.
Check out this episode on your favorite podcast platform, including:
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Episode transcript
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
Have you ever gotten a food delivery or a ride in an Uber and wondered whether these gigs are really worth the effort as a side hustle? Well, this episode will deliver some answers.
Sara Rathner:
Cute. Welcome to NerdWallet’s Smart Money Podcast. I’m Sara Rathner.
Sean Pyles:
And I’m Sean Pyles. This episode, Sara and I are joined by our co-host, Elizabeth Ayoola, to answer a listener’s question about money goals, especially when you’re early on in your financial journey. How do you get a grip on your finances and set yourself up for long-term success?
Sara Rathner:
But first, we’re turning to side hustles. This month on Smart Money, we’re running a special series about how you can increase your income, whether you want more money to invest or you’re working on building up your savings, or you really just want some extra cash to spend on whatever junk appears in your social media feeds.
Sean Pyles:
And we are not here to judge you for whatever you spend your money on, but watch any social media influencer or read any article about ways to increase your income and inevitably someone mentions taking up a part-time job in the gig economy like Uber, DoorDash, Airbnb, take your pick. And I’ve always been pretty skeptical that these gigs will net you meaningful amounts of cash, especially considering all the time and effort involved.
Sara Rathner:
Absolutely. If you’re going to put miles on your car or let strangers sleep in your rental property, it needs to be worth it. And we don’t have access to a vacation house for the purposes of this podcast, but we do have a Nerd on staff at NerdWallet who actually did DoorDash for a couple of days to get a feel for whether these jobs live up to the hype. Tommy Tindall is here to share his insights with us. Tommy, welcome back to Smart Money.
Tommy Tindall:
Hey there. Thanks for having me.
Sean Pyles:
So Tommy, you recently made a really fun video for NerdWallet’s YouTube channel where you test drove DoorDash for a few days. What were your hopes and expectations going into this journalistic exercise?
Tommy Tindall:
Yeah, so I study and write quite a bit about side hustles and for this one, I really wanted to go the extra mile, get it, and test it out myself, try to make the advice a little more valuable, right? Give it a true test. And delivery driving is super popular and seemingly accessible, at least that’s what I thought, was my hypothesis, I should say, an easy way to make side money. So I really wanted to answer a couple questions that I think people have about a gig like this, and one is just how easy is it to get started? Can you really sign up on your phone, get a red bag in the mail and start driving? And spoiler alert, yes, that’s what I did. You can. And also can you make real money?
Sean Pyles:
Okay, so what were the main things that you were tracking as you weighed whether this side hustle was worth it?
Tommy Tindall:
I wanted to keep it easy, so I was just keeping a close eye on the time I spent driving while delivering, the miles I drove, and of course how much I earned and really wanted to get to what’s the real pay when you factor in the cost of driving.
Sara Rathner:
So talk with us a little bit about the experience of doing this. Was it fun? Was it boring? Did you get chased by any wild animals? Did you use this as an opportunity to catch up on episodes of Smart Money?
Tommy Tindall:
Well, I wanted it to be fun, but it was kind of hectic. I mean, I remember there were a couple moments of zen where I was just cruising, windows down, just looking outside thinking this is the life. But as soon as I started thinking that way, ding, ding, I’d get another delivery. And I think hustle is a real good term for this because it was kind of a grind. And what really got me, which I thought was interesting, was the constant interaction with my phone. It was draining. I was using maps to navigate, to take orders, and it was just a lot of interaction with the phone while driving.
At one point I, quick story had a 16-mile delivery, which was good pay. It was like $18 of base pay, which was really good. So I took it, but I was so distracted kind of trying to figure out where I was going, that I went the wrong way on 95 and was screaming, pounding the wheel, as you can imagine, and just like, efficiency. That’s what I was going for. Also, keep in mind, I was filming this experience for the video and that totally added to my stress. So maybe more practice without trying to film myself, I could be a little more efficient, get a little more time to enjoy solitude and catch up on my favorite podcasts like this one. But yeah, it was hectic.
Sean Pyles:
Yeah. But you can’t forget that this is a job, right? It’s going to have stressful, difficult moments like any job.
Tommy Tindall:
I was reminded of that quickly, that this is a job and I kind of felt the stress. When I would get a delivery, I wanted to make sure the food was hot and get there quickly, know where I was going. So I had that sense of, hey, you’re on the clock, you’re working.
Sara Rathner:
That distracted driving element is also pretty terrifying.
Sean Pyles:
Tommy Tindall:
Yeah. Now when I see people on the road, I’m wondering are they delivering right now? So before I yell “get off your phone,” I’m wondering that.
Sara Rathner:
Sean Pyles:
Sara Rathner:
They might be.
Sean Pyles:
Either way, get off your phone.
Tommy Tindall:
Sara Rathner:
Tommy Tindall:
Sara Rathner:
I know. So Tommy, you mentioned this in your video, you live in a smaller town, a more remote area. How does that affect your ability to make money from DoorDash or any other app-based job like this?
Tommy Tindall:
I mean, it matters a lot because it’s how busy it’s going to be around you. So location matters. It’s where you live, which towns you have access to with a short drive that may be more populated. So I live, it’s a smaller, more rural but kind of suburban town outside of Baltimore. And what I did before I started was I would watch the DoorDash app, the map section of the app and just kind of see where the hotspots were.
And of course areas closer to Baltimore where it’s more densely populated, more restaurants within close proximity of each other, they were regularly busy during the peak times and they were shaded in pink on the maps. That’s how you know you can go out. When the map is like pink or red, you can Dash on a whim. When it’s gray, which it was sometimes in my town, you have to wait or schedule a Dash for later. But luckily where I live during the busier lunch hour, the option to Dash now was available during the weekday when I tried this. So I was able to stay closer to home, which I think was more realistic, because if I did this, I don’t think I’d want to drive that far. I’d want to stay closer to home, so.
Sean Pyles:
You don’t want to have to commute for your side gig.
Tommy Tindall:
Exactly. You want to get out there and do it maybe on the lunch hour during work, which I was thinking, which we’ll talk about. Probably kind of hard to do because I did find myself going from one end of my town to another because it’s not that populated, so it cost me some time.
Sean Pyles:
Well, that also makes me think about wear and tear on your vehicle and other related expenses like gas. Was that a worry of yours as you were doing the side hustle?
Tommy Tindall:
Yeah, this was a big worry for me because I am somebody who loves cars and I can be a little obsessive about keeping our vehicles maintained. So just all the stop and go driving, it was just kind of giving me a nervous tick. That was on my mind the whole time. I think I kind of make that clear in the video a little bit, and I should also mention that I drive a full size Ram pickup truck, which I thought would be fun to test for this, but not the ideal gig economy vehicle. It’s inefficient, hard to maneuver.
Sean Pyles:
Yeah, lots of storage space, but maybe more than you need for a Starbucks run or something like that.
Tommy Tindall:
Oh, yeah. And the maneuverability. I think at one point I pulled off a busy road into the wrong driveway and I had to sort of Austin Powers my way out. You remember that 20 point turn he had to do in the first movie and all while the customer, the next house over was watching me. So when I finally got over there, we had a little laugh about it and I think she did tip me. I don’t know if she tipped me after the fact or not, which you can do in the app.
Sean Pyles:
You were providing some entertainment along with the delivery?
Tommy Tindall:
Oh, yeah. When I did get to interact with customers like that, I made it kind of fun. I’d be like, “Yeah, you don’t see people driving a truck very often, do you?” But yeah, I was a little anxious about my own vehicle and the wear and tear.
Sean Pyles:
Okay, so Tommy, after three days of Dashing, tell us how much time you spent driving, how far you drove, and how much you earned.
Tommy Tindall:
All right, well here are the stats. I went on three Dashes for this test and drove about six and a half hours on deliveries altogether. I put 90 miles on my personal vehicle, which was my big dump truck as I mentioned. Earned a total of $86, but factor in the 17 MPG that I was getting. And gas was I think around $3.60 a gallon when I was doing this. So less than $19 in fuel costs. True earnings are more like $67 or $10.31 cents an hour. So I mean, not a lot of money.
Sean Pyles:
So I’m going to wager that’s less than you’re making at NerdWallet on an hourly basis.
Tommy Tindall:
Yeah, yeah, yeah. Not giving up the main hustle.
Sean Pyles:
Yeah. Do you think this was worth it?
Tommy Tindall:
So yes and no, and I’ll start by saying I’m glad gigs like this exist because I was really blown away by the accessibility of this gig. I mean, I was signed up and through the background check in literal minutes, and if you, the listener, meets the basic qualifications, I mean you can probably start working and start earning, and I like that. It’s not like saying side hustle options, go be an influencer and wait a couple years to build a following before you make your first dollar. I mean, you sign up and you can make money, which I think is great. And flexibility of course is the selling point of a delivery driving job like this. But at the expense of what? I felt like I was really hustling. I didn’t make a lot of money and thinking back, I mean this would be a real grind for me to do on the side.
It’s really about where I’m in my life. I mean, I have a main job, I have a family, I have young kids in school and sports, a home that continues to break that I have to maintain, I serve in my church and I really covet kind of that little free time that I have left. So I guess all that to say, not quitting my day job. And I think doing this made me more grateful of my main hustle and reminded me that I think there’s merit in what’s become kind of an older way of thinking where you find a good company, work hard, build your skills, grow your confidence, gain expertise, and hopefully increase your salary over time. So whether it’s worth it I think depends on personal situation, because you do make money.
Sara Rathner:
So who do you think a side hustle like this is good for?
Tommy Tindall:
People who do have some extra time or need extra cash and can take advantage of the flexibility to work whenever, because again, that is the selling point of a job like this. Also people who can work the system to their advantage. And you see a lot of YouTube videos of people sort of gaming this and chasing something called peak pay, which is an incentive where you can add plus one, two, three, or more dollars to a delivery if it’s really busy. So the competitive types, which is not me, admittedly, but I do wonder if I would’ve tried this at a different time in my life, like back in college or in my first years working a job when I lived in Washington, DC, had it been available.
Sean Pyles:
Well, Tommy Tindall, thanks so much for talking with us.
Tommy Tindall:
Absolutely. Thanks for having me.
Sean Pyles:
So listener, you just heard Tommy describe an interesting way that he earned some money. Ahead of this month’s series about increasing your income, we have our new Nerdy question of the month for July, which is: what is the most creative thing that you’ve done to earn more money? Maybe you negotiated a significant raise or you’re one of those job hoppers that has a new gig every couple of years. Tell us what is the most interesting thing that you’ve done to increase your income?
Sara Rathner:
I mean, I’ve rented out my basement for a commercial shoot, so there’s that.
Sean Pyles:
Okay. Interesting.
Sara Rathner:
Made 1,400 bucks and bought new storm doors. What a day. Anyway, if you’ve done something like that or something else, call or text us on the Nerd Hotline at (901) 730-6373. That’s (901) 730-NERD, or email us at [email protected]. We might just share your story on a future episode. Maybe inspire some of our other listeners to take up an interesting side hustle.
Sean Pyles:
And while you’re at it, send us your money questions, too. It is our job as Nerds to answer whatever your money question is. So send it our way on the Nerd Hotline, (901) 730-6373 or email it to us at [email protected]. Well now let’s get into this episode’s money question segment after a quick break. Stay with us. We’re back and answering your money questions to help you make smarter financial decisions. This episode’s question comes from Adrian, who left us a voicemail. Here it is.
I’m a recent college graduate. I graduated college in June of 2023 and I am six months into my new corporate world job. I’m trying to save 25% of my income per month and I’m trying to start investing. I don’t really know what my savings goals should be. I’m down for some high risk investments, but I don’t know, I’m trying to just learn the basics of investing, how to plan for life. What would you do if you were in my shoes, if you could go back in time and be 23 and not have kids or a mortgage or anything?
Sara Rathner:
To help us answer Adrian’s question on this episode of the podcast, Sean and I are joined by our co-host, Elizabeth Ayoola. Hey Elizabeth.
Elizabethy Ayoola:
Hey, my favorite dynamic duo.
Sean Pyles:
I love getting a question from a listener who is so young because even though they’re only 10 years younger than me, it does feel like a lifetime ago that I was 23 and making these financial decisions for the very first time. One thing that I find really interesting about Adrian’s question is that while they are so early in their financial journey, their questions really can apply to anyone, because as I’m sure we all know well, plenty of people in their 30s and 40s and beyond are still trying to figure out their budgets and their financial goals. So with that in mind, I think that our listener and all listeners really could benefit from a little bit of budgeting 101. So Elizabeth, where do you think they should start?
Elizabethy Ayoola:
Basically, I think they need to start with a budget. That’s going to tell you how to slice and dice your money. You should probably maybe start with the 50/30/20 budget, which we are advocates for at NerdWallet, or it might be the 60/30/10 budget depending on your cost of living and where you are. Now, for those who don’t know what the 50/30/20 budget is, 50% go to your needs, 30% to your wants and 20% to debt, paying down debt and also saving money. I do think it’s important to know, however, these numbers are not set in stone. It really just depends on your finances and you can adjust the numbers to fit where you are in your financial life right now. I myself currently save above that 20 bucket, but luckily I don’t have that much debt, so that’s why I’m able to save more money and save more than the 20.
Sean Pyles:
Yeah. And our listener wants to save 25% of their income, which is really ambitious, especially for someone who is so young. I think when I was 23, I was saving maybe 2% of my budget, and it wasn’t even intentionally, it was just by chance, because that’s what I had left over at the end of the month.
Elizabethy Ayoola:
You were doing great, Sean, because let me tell you, I was saving 0% of my budget at 20 something. So that is ambitious. I think it’s possible, but it just again depends on where your finances are.
Sara Rathner:
I like an ambitious savings goal, especially when you’re young. Some of the best advice I was given by a CFP that I used to work with was save as aggressively as you can for as long as you can because life only gets more complicated and more expensive. So if aggressive for you is 3%, that’s great. If aggressive for you is 25%, that’s great, and if you have to change it up from month to month, that’s fine too.
Elizabethy Ayoola:
So our listener is dedicated to being a hardcore saver, and I love that for you, listener. So Sean, I know you’re also big on saving and you have some tricks for effectively saving money. What do you think?
Sean Pyles:
So I would start by encouraging Adrian to have something to save for. Again, I’m thinking a lot about myself in my early 20s, I didn’t really have any sort of short, medium, or long-term goals or priorities of any sort because I was just focusing on paying my rent and having fun. So I understand how it can be hard to understand what your priorities might be, and this is where I think something that’s very woo woo but effective can come into play. And that is a visualization exercise. Now, if you’re rolling your eyes, just bear with me because I swear it can be super helpful. So when you are 23, 33, 43, think about where you see yourself in the future in five years, in one year, in 20 years. So maybe that means do you want to move to a new city in the next year? Do you want to buy a house in five years? Do you want to retire in 40 years? Imagine where you will be at these different points in your life and think about how you can save money to get there.
Elizabethy Ayoola:
I would not even say that’s woo woo, Sean. I mean, so I definitely started doing that in my late 20s and honestly, the life I have today was a lot of the woo woo stuff. So it worked for me.
Sean Pyles:
The manifesting is real.
Elizabethy Ayoola:
It’s a real thing.
Sara Rathner:
And if you’re not really into the whole idea of manifesting as a term, that’s fine too. You could also think about it in terms of just naming your goals. Instead of just being like, I’m going to save 25% of my salary. For what? So say what the “what” is. So maybe online savings accounts like high yield savings accounts, you could actually name the account. So you could have, this is the account because I need to replace my car, or this is the account because I need to buy a new computer. Or this is the account that I’m saving up for a down payment on a home for. And then beginning to say, okay, I’m going to put this amount of money in this month for this goal and this goal. Makes it so much easier to stay organized and there’s some science behind it, making it so that you actually are more successful in terms of reaching your savings goals by just naming the goal. So if you don’t want to do the woo woo thing, you could do the practical thing and just put some names on stuff.
Sean Pyles:
Yeah. And what you’re talking about there is really the marriage of the woo woo and the super practical and tactical, where you can start with knowing what you want and then getting the accounts that can help you save the money for that. So for a lot of people, that’s going to mean starting out with an emergency fund, building up over time three to six months of the needs budget that you have. That’s like rent and medicine and groceries, things like that. And then building out the other savings buckets for things like a vacation fund, a house fund, a wedding fund. I have 10 savings accounts across all of the banks that I partner with. And they are all specifically allocated for my different goals. I know 10 is kind of a ridiculous amount, but it works for me.
And what makes it easy is that I automate my deposits into these accounts. So I don’t even have to think about it. One of my accounts is only getting $40 a month, and that’s enough for me to save, to build on that goal over time. But I don’t have to be worried about, oh, okay, am I going to have enough for when I need a new rug for my house eventually. I just know it’s already going in the background.
Sara Rathner:
Yeah, I love this. It’s that concept of reverse budgeting where you automate transfers into your various accounts for different goals every month.
Sean Pyles:
And whenever we talk about savings accounts, it can be easy for we Nerds who are steep in this to maybe even take for granted the fact that high yield savings accounts are such an amazing thing for people to have. People can be getting even around 5% back for what they have sitting in their savings. And if you think about some average returns from the stock market some years are around 7%, and that can be much riskier than just having a savings account. I really do recommend people shop around, look at some of our roundups on NerdWallet and see what sort of high yield savings account might help you meet your goals, because you’ll be getting a much greater return on your money than you would get from a traditional brick and mortar bank.
Sara Rathner:
So our listener, Adrian, is a spring chicken in the world of finance and in the world of investing, which they also mention, having a long time horizon can be one of your best assets. And if you’re in your 30s and listening to this, you still have a long time horizon. So don’t think it’s all over if you didn’t invest in your 30s. Now let’s talk about investing at a younger age. Elizabeth, what are your thoughts there?
Elizabethy Ayoola:
Oh my gosh. I totally get the feeling of being overwhelmed and not understanding where to start. But it’s really important I think, not to let that paralyze you and to just start as soon as you can. And the first step in doing that is creating a strategy. And what the strategy is going to do is it’s going to tell you what your goals are and how much you need to save to achieve them and by what timeline. Now, it doesn’t have to be over complicated because I think that’s where people get tripped up, especially because there’s so many retirement and saving calculators online to help with this. And yes, I’m going to shamelessly plug NerdWallet. We have lots of those, go check them out. But yeah, knowing what age that you want to retire and how much you need will help guide your investing strategy. It’s also going to help you decide what to invest in, the best vehicles to use, and how much to put in each. What do you think, Sara, about time horizons in that sense?
Sara Rathner:
Oh, it’s probably one of the best things you have working for you because the way compound interest works mathematically is the longer of a time horizon you have, the less you can save per month or per year and still come out with a higher amount of money in the end versus waiting an extra 10 years, an extra 15 years, then you have to invest so much more per month just to catch up and still end up with less money overall.
Sean Pyles:
And I would recommend Adrian or anyone else who’s getting started in investing or just taking it seriously for the first time, is to get a lay of the land and understand all of the different investment accounts that are out there. Because there are all these different ones, like a 401k and a Roth and a Roth IRA that people have probably heard about, but really understanding what they are and when one is more beneficial than another for your circumstances can help you make the most of your investments. And something to think about too, since Adrian is so young, is that your younger years are often the best time to take advantage of an IRA because you are getting taxed at a lower rate when you’re earning less money than you will be taxed at later on in your career. So really use these early years to your advantage.
Elizabethy Ayoola:
Yeah, I’m with you Sean. You guys also should decide for those people listening whether you want to do active or passive investing. If you are like me and you ain’t got time for that, and when I say that, I mean checking the stock market every day, then you may want to consider passive investing and some passive investing options include ETFs or robo-advisors and kind of securities like that. But yeah, once you do all those things, the most fun part is automating your investments and knowing that you’re probably growing both while you’re sleeping.
Sean Pyles:
Yeah, I think for a lot of people, sometimes the best strategy to start can be the strategy of “I want my money to make me more money.” And that’s where I started out in my mid 20s when I first started taking investing seriously. I didn’t want to spend a lot of time actively managing investments. And guess what? Actively managed investments often perform worse than passively managed investments. So passive is probably going to be the easiest thing for most people to do. And I just set up an account with a robo-advisor that was trusted and well-reviewed on nerdwallet.com, and I just have automated deposits and it makes it super simple. I’ve been doing it for years and I’m already receiving literal and metaphorical dividends from that.
Elizabethy Ayoola:
Also, you want to think about fees when you’re looking at things like that and what has low fees and performance and other things, but don’t let that stop or overwhelm you as well. Just check out some resources on how to pick an ETF also.
Sara Rathner:
Yeah, I will also add that whenever I hear somebody in their early 20s say that they are, “Down for some high risk investments,” I think somebody’s been talking to their friends about crypto and I don’t know. I mean, for all I know Adrian just means, oh, I really want to dabble in a more stock forward portfolio. Sure. Honestly, you’re probably talking about crypto, aren’t you? Before you dabble in speculative investments, things like cryptocurrency, things like, I don’t know, precious metals and real estate and all sorts of stuff like that, you want to set aside a solid foundation. Just the things that we’ve been talking about, automating transfers of money into retirement accounts, either through your employer or on your own, diversifying those investments. And then, only then, if you have money left over, then you can dabble a little bit, sprinkle a little spice onto your investments, maybe 10% of your portfolio at the most into the higher risk, like crazy stuff. But set a good foundation first. Don’t put all of your money into speculative investments and then wonder why you don’t have any money left because you probably won’t.
Sean Pyles:
And I will just quickly add for the sake of our compliance department, that we are not financial or investment advisors. If you want specific individualized investment advice, speak with a financial advisor, hopefully a fiduciary financial advisor. Okay. Now, I know we’ve been kind of talking around this question for this conversation, but I would love to hear what you two would have done differently if you could go back to when you were 23 and maybe improve your finances, knowing all that you know now?
Elizabethy Ayoola:
That’s a deep, deep, deep sigh. So honestly speaking, the first thing I thought is like, oh my God, I would’ve stopped partying and buying alcohol and save more money. But then I remembered that I was living in Nigeria earning like $400 a month, which was seen as a good salary. So I barely had any money to live, quite frankly. And I think that’s a reminder that sometimes you just ain’t got really barely enough money to save and you just need to earn more. But I definitely would have educated myself more on personal finance and I would’ve at least stashed away something into an investing account. So that’s what I would’ve done. But then again, if I started investing too early, I might be in Turks and Caicos right now instead of chatting to you all. So I guess it worked out how it was supposed to.
Sean Pyles:
I’m glad you’re here with us, but also I would be happy for you if you were traveling the world instead of doing this. Sara, what about you?
Sara Rathner:
So I think a lot of people in their early 20s are, there’s just a lot of fear and uncertainty at that point in your life, and I definitely felt that at that time where there are all these big life milestones that are coming up for you eventually and you just don’t know when they’re going to happen. And so I was so worried about whether or not I’d be able to get to that point. But you’re 23.
Knowing how fast the next 10 to 20 years will go for you, just savor it because everything else is going to pile on really, really fast. And the way you spend your weekends is going to look really different. Do take a couple of steps to improve your position in life later on and use that gift of time. But then, yeah, you should have the wants budget, you should go travel with your friends, go out with your friends. Once you all get partnered up, you’re not going to see your friends as often, so enjoy it.
Sean Pyles:
Well, as someone who definitely enjoyed themselves a lot in their early 20s, I don’t regret any of it, really, shockingly, but it did come at the expense of my financial health in some senses. I really didn’t invest until my mid 20s. I barely had a budget until around the same time. So I would go back and encourage myself to be a little bit more balanced in the having fun and the forward planning aspect of life. But you’ve got to learn your lessons as you learn them. And that’s where I was at the time.
And one thing I think is important to realize and think about as you are trying to map out what having an adult financial life looks like is that the beginning of this financial journey is always going to be the hardest because you simply don’t know what you don’t know. There’s so much to learn. When you’re 23, you’re paying rent on your own for the first time. You’re figuring out how to make meals for yourself for the first time and building these good habits does take time. So don’t feel like you have to do everything all at once, but do make that concerted goodwill effort to try to better your relationship with money and use it to build the life that you want. Well, Elizabeth, thanks so much for coming on and talking with us.
Elizabethy Ayoola:
Thanks for having me.
Sara Rathner:
And that’s all we have for this episode. Remember, we’re here for you, whatever life phase you’re in, and we want to hear your real world questions because we’re here to make you smarter about your money decisions. So turn to the Nerds and call or text us your questions at (901) 730-6373. That’s (901) 730-NERD. You could also email us at [email protected]. Also visit nerdwallet.com/podcast for more info on this episode.
Sean Pyles:
And remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts and iHeartRadio, to automatically download new episodes. This episode was produced by me. Tess Vigeland helped with editing. Sara Brink mixed our audio. And a big thank you to NerdWallet’s editors for all their help. And here’s our brief disclaimer again. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Sara Rathner:
And with that said, until next time, turn to Nerds.
We’ve reached the midpoint of 2024. As you reflect on the first six months of the year, you may be wondering how you’re doing financially. Checking up on your credit health is a good starting point.
“People’s insurance rates, the fact that they can get approved for an apartment or even be employed by certain entities is being determined in part by credit scores and their credit reports,” says Michelle Smoley, an accredited financial counselor in Elma, Iowa. “It’s really, really important for people to keep on top of their credit report and their credit scores because they’re used for more than just consumer lending purposes.”
Here’s how to figure out where your credit stands and what you can do to protect it over the next six months.
Inspect your credit reports
Pull your credit reports from the three main credit bureaus: Equifax, Experian and TransUnion. You can use AnnualCreditReport.com to get free copies as often as once per week. Checking your reports yourself doesn’t directly affect your credit score, but it can help shed light on details that may be damaging your credit.
What should you look for? Make sure personal information, such as your name and address, is correct.
“Any errors or unusual information there might be a clue that somebody is trying to steal your identity,” says Bruce McClary, senior vice president of memberships and communications at the National Foundation for Credit Counseling. “It’s a tactic of identity thieves to apply for credit under P.O. boxes or addresses that are not really yours.”
Review the accounts and credit inquiries listed on your reports too. If negative items like bankruptcies or collections appear, make sure they aren’t outdated (most derogatory marks are supposed to fall off credit reports after seven years). Immediately file a dispute with the credit bureaus if you see anything inaccurate or unfamiliar. In many cases if the issue is corrected, “you’ll see a lift in your credit score,” McClary says.
Check your reports throughout the rest of the year — and beyond — for anything fishy. You can also protect yourself by freezing your credit, which blocks access to your reports.
Get score change notifications
See your free score anytime, get notified when it changes, and build it with personalized insights.
Check your credit score
If you’re planning a big purchase, such as a car or home, knowing your credit score and whether you could positively impact it beforehand can help you get approved for credit or for a more favorable interest rate, Smoley says.
You won’t see credit scores on your credit reports, but you can get them elsewhere for free.
“So many people have access to either their FICO score or their VantageScore through their financial institution or their credit card,” Smoley says.
Generally, a score of 690 or higher puts you in a good position. But even if your credit score is strong, it isn’t guaranteed to stay that way. Always be thinking about how to keep your score at that level or grow it so you can qualify for the best possible deal when it comes time to apply for a loan or a line of credit, McClary says.
Knowing the factors that influence credit scores may guide you. Actions like paying your bills on time or becoming an authorized user on a relative’s credit card to expand your credit history can bump up your score.
Make a plan for your debt
Carrying debt can wreak havoc on your credit score because more than half of your score is based on two factors: whether you make payments on time and how much of your credit limit you use.
If you’ve lost track of your debt — maybe it’s been a while since you’ve made a payment on an account or it’s been passed around several debt collection agencies — your credit report can tell you who is managing that account and how much you owe, McClary says.
Once you know what you’re dealing with, set due date reminders and try to make at least the minimum monthly payment on each account. Note that while medical debt may disappear from credit reports early next year, your obligation to pay it won’t.
Making extra payments on credit cards with high balances can help your score too. Keeping your credit utilization ratio below 30% is ideal.
Do your best to save up for purchases you’ll make in the often expensive second half of the year, and pay them off as soon as possible. Summer vacations, back-to-school spending and holiday shopping can put a strain on credit utilization.
If you shop for a mortgage or auto loan, limit applications to a 14-day period to avoid multiple hard pulls from lenders on your credit report, which hurt scores, Smoley says. Credit scoring models generally count all inquiries made within this time frame as a single hard pull.
Keep monitoring your credit health to avoid surprises at the end of the year. “If you don’t know where to start, you can talk to a nonprofit credit counseling agency,” McClary says. “A nonprofit credit counseling agency can work with you, first of all, to understand what you’re seeing on your credit report, and then understand your options for dealing with some of these things. So you don’t have to go through it alone.”
Get more financial clarity with NerdWallet
Monitor your credit, track your spending and see all of your finances together in a single place.
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Learn why estate planning is important even if you don’t own a lot of assets, along with when to ask for professional help.
Why is estate planning important? What happens to your assets when you die without an estate plan? Hosts Sean Pyles and Dalia Ramirez discuss the essential aspects of estate planning and the common misconceptions that often deter people from creating an estate plan. They begin with a discussion of the critical importance of having a will, with tips and tricks on keeping updated records, managing assets, and understanding the role of a will in preventing lengthy probate processes.
Then, RK Law PC Managing Attorney Regina Kiperman joins Dalia to discuss various tools and strategies available for effective estate planning. They discuss the importance of clearly identifying witnesses in a will, the scenarios where hiring an attorney is essential, and the necessity of advance directives, power of attorney and healthcare proxies. The conversation features actionable advice on managing your will and advance directives, highlights the emotional and financial relief that estate planning can offer surviving family members, and encourages proactive steps to ensure peace of mind for loved ones.
Check out this episode on your favorite podcast platform, including:
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Episode transcript
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
Nobody wants to think about the worst case scenario. To put it more bluntly, nobody wants to think about dying, but if you don’t think about it at all and don’t plan for it, your entire financial life could end up in someone else’s hands, from a distant family member to your state’s court making decisions about your money. Today, what to do to keep that from happening.
Welcome to NerdWallet’s Smart Money Podcast. I’m Sean Pyles.
Dalia Ramirez:
And I’m Dalia Ramirez.
Sean Pyles:
Dalia Ramirez:
Doesn’t get more exciting than this, Sean.
Sean Pyles:
Well, Dalia, welcome to the host chair here at Smart Money.
Dalia Ramirez:
Thanks. I’m really glad we’re tackling this topic.
Sean Pyles:
Yeah, it’s something we talk about every so often on the show, sometimes in response to listener questions, but in this episode we’re going to go through why it’s so important to have an estate plan, who needs one and what happens if you don’t have one.
Dalia Ramirez:
Yeah, that’s really the key here. I think a lot of people don’t realize what happens to their money and belongings, their estate, if they don’t have a plan. And there are a lot of misconceptions about estate planning, that it only matters if you’re rich, that you don’t need one if you don’t have kids, that it’s expensive and takes a lot of time to do this kind of planning, and that’s not all true.
Sean Pyles:
And when we take a look at the numbers we definitely see some concerning trends. Caring.com does an annual wills and estate planning survey, and in 2024 they found that only 32% of Americans even have a will, and that’s down 6% from 2023.
Dalia Ramirez:
Yeah, for the first time since 2020, the number of Americans with a will declined. And this is despite the fact that 64% say having a will is important. So we kind of know that this is something we should do, but then we don’t do it.
Sean Pyles:
And I think some of what we’ve already cited makes sense. People are worried about cost, they think it’s just for rich people, and I would imagine that in some cases folks just don’t want to think about their own death.
Dalia Ramirez:
But here’s the thing, the consequences of not doing any planning will fall on your surviving family members. If you don’t have a plan, your family can end up having to deal with a long, expensive probate and all kinds of other legal issues all while they’re mourning your death, which is hard enough on its own.
Sean Pyles:
Yeah. Dalia, this is not fun to talk about.
Dalia Ramirez:
No, it’s not. But we’re going to forge through anyway.
Sean Pyles:
Okay, so is there a specific reason that you wanted to come on and do an episode with us about this?
Dalia Ramirez:
I think in a weird way it’s comforting to make peace with things like death. It’s a part of life, it happens to everyone, and there are some surprisingly simple ways to make it easier on your loved ones when it does happen. A document or two, which you can make inexpensively or even for free, can really spare your family from having to make painful decisions during an already difficult time.
Sean Pyles:
Well, I’m glad to know that I’m not the only person with somewhat morbid proclivities at NerdWallet. While thinking about death can be scary and grim, there is something about planning for the inevitable that makes this part of our lives a little easier to grapple with. Well, we want to hear what you think too, listeners. Do you have an estate plan in place? If not, why not? If so, what prompted you to do it? Share your stories with us by leaving us a voicemail or texting the Nerd hotline at 901-730-6373. That’s 901-730-NERD. Or email a voice memo to [email protected]. So Dalia, who are we hearing from today?
Dalia Ramirez:
Today we’re talking with Regina Kiperman. Regina is a managing attorney with the estate planning firm RK Law PC in New York.
Sean Pyles:
All right, we’ll hear from Dalia and Regina in just a moment. Stay with us.
Dalia Ramirez:
Regina Kiperman, nice to have you on Smart Money. Let’s start with what might seem like an obvious question, but we’re going to ask it anyway. Why is it important to have a will?
Regina Kiperman:
It’s important to have a will because a will acts as an instruction manual to set forth your wishes in the event that you pass away. All states have typically provisions for what happens to your assets if you pass away. For example, New Jersey says if you pass away married, everything goes to your spouse, and if there’s no spouse, then to your kids. New York, on the other hand, says if you pass away and you have a spouse and kids, $50,000 plus the first one half goes to your spouse and the rest goes to your kids. Some people want to deviate from the basic rules that are put forth by these different states and they might want to create a will so that they can have their proposed and desired way of distributing the estate assets. Sometimes you need to do it for tax planning, sometimes you want to do it because you want to give to a friend or a charity or a different person than you would have to give if you just followed the strict laws of the state.
Dalia Ramirez:
So what are some of the things that can happen if you don’t have an estate plan? Where could your estate end up?
Regina Kiperman:
If your next of kin are your parents and they are on government benefits, not having a will could lead to those parents inheriting the estate assets and being kicked off their benefits. Actually, I have a case in point. One of my clients, his dad, is his next of kin, and his dad is a Russian immigrant, and his dad is on all sorts of government benefits, but because the person who passed away didn’t have a will, now all the assets passed to dad and now dad is in danger of losing all of his benefits because he’s now going to inherit this amount of money. And had the person who passed away actually had a will, then the dad could have had the benefits and been able to use the money to supplement his care, which could have benefited him more.
I have another client whose aunt passed away, and at the time she passed away, she had nine siblings, and some of the siblings had died before her. And because it took so long to administer the estate, some have now died after her. And when someone dies after and they have children or even the ones that died before, they also had children, so now the court will require jurisdiction over all these different people, making the administration process a complete nightmare. And in that case, the person has a house, that house has tax liens and other problems associated with it. And so if there was a will, even though there’s all this different family over whom we have to get jurisdiction, it’s easier to get something called preliminary letters to at least temporarily administer the estate, and it’s easier to get that than temporary letters.
Dalia Ramirez:
What are the other tools that might be needed for these circumstances?
Regina Kiperman:
Okay, so a will is fine. You can have trusts inside of wills. Trusts by themselves, they’re just contracts. And a revocable trust is often perceived of as a will substitute. And for basic estate planning purposes, a will is perfectly fine, and even sometimes for tax planning a will is perfectly fine. The creation of the sub trust could be done under the will, which is just another trust that’s formed under the will with the spouse who had no will. Even if he had just said “everything to my spouse,” that is not the best tax planning, but that’s something, because that then defers all of the tax until the death of the second spouse and creates more flexibility and does not cause difficulty for the family, who now has to raise money to pay the estate tax.
Dalia Ramirez:
Is it fair to say that in most circumstances or even all that something is better than nothing? Or are there any types of people who really need something specific or nothing is better? How do you know which tools are necessary?
Regina Kiperman:
So typically when a family calls and they say, oh, we’re newlyweds, we want to make sure everything goes to each other. If that’s their only thinking, I’ll say, well, you don’t really need a will, because if you die, everything will go to the survivor anyway. So that’s an example where you don’t necessarily need one. Although if they think three steps ahead and they say, well, what happens if we both die and we want to give everything to, again, a charity or our cousin or our friend, then you would need a will. So anytime you want to override the default state law, you need a will. Anytime you’re just thinking, I just want it to go to my spouse, you don’t necessarily need a will. Anytime you have two children or one child and that’s your only child and you don’t have a spouse, you don’t need a will because everything’s going to go to that person anyway.
If you want to build in more foresight and more planning… So for example, I have only one child, but they’re not super trustworthy. I have only one child, but they have creditors. I have only one child, but I don’t trust their spouse. Then you want to do planning. But if it’s like, I have one child, they get everything and I don’t care what happens when I pass away, you don’t really need a will in that situation.
Dalia Ramirez:
Okay. That helps. I mean, people have a lot of different circumstances, so there would be different tools that fit. Could you, again for us, name the most common estate planning tools? We don’t have to go into far detail, but maybe the top five.
Regina Kiperman:
Okay, so estate planning, there’s only a finite number of permutations, right? There’s a will, which basically overrides state law of what happens upon your death. And then there’s a trust. And then a trust is a contract between “parties” and sometimes if it’s a revocable trust, it could be a contract between yourself and yourself because in a revocable trust typically you’re the one that creates the trust and you’re the manager of the trust, also known as the trustee. There’s various types of irrevocable trusts which are trusts that you set up with a different type of purpose. Like for a revocable trust, you usually set it up for privacy or because your heirs are unknown or because you want to treat people differently or because your assets are volatile, it’s a different type of planning. It’s like probate avoidance planning. That’s a revocable trust.
An irrevocable trust, which is another estate planning tool, is where you’re starting to think more about not just probate avoidance but specific purpose. So there’s a qualified personal residence trust where you’re gifting your property away, but being able to take advantage of the present value of it. There is a Medicaid trust where you are giving away your assets in order to qualify for Medicaid. There’s a credit shelter trust where you’re essentially trying to figure out what goes into the trust to reduce your taxable estate. So the irrevocable trusts get broken down into a number of different trusts that depend on what your purposes are and what your facts and circumstances are.
And then another estate planning tool is advanced directives, which is power of attorney, healthcare proxy, living will, HIPAA, appointment of agent to control remains, and that is, in my opinion, everybody needs those documents. Those are the most basic documents you can get and everybody needs them because everybody is going to go through a process where they become sick and where they need help and where they need someone to make decisions for them. And in the absence of these types of documents, which are very simple and easy to get, people find themselves in guardianship or more complex processes that then require a lot of time to have someone appointed to make the right decision for you on a medical or a financial level.
Dalia Ramirez:
So these medical estate planning tools are fairly straightforward, right?
Regina Kiperman:
They’re extremely straightforward. For the most part, you can get them online. Like a healthcare proxy, you can just download it online, every state has its own form. A HIPAA, download it online, every state, it has its own form and also federal has its own form. A power of attorney can be more complex, but the most basic version is typically available online. An appointment of agent to control remains, also available online. A living will, and most people think a living will is a will, it’s actually not. A living will is the document that says we authorize our agent to pull the plug and it’s not a will. And that living will is not really available online, it’s not just a statutory formula. But you could have somebody create for you or if you go to I think CaringKind or one of these kind of organizations, they usually have some version of a living will.
Dalia Ramirez:
So most people can pretty easily get the medical estate planning together. The financial stuff could be a little more complicated, right? Do you have to change the name on your accounts? Your bank accounts become accounts under the trust? Do you need new checks? What are the steps after you create something like a trust on the financial side?
Regina Kiperman:
Okay, so for a will, obviously you don’t have to retitle anything. For a trust, after you create the trust, you have to fund the trust. I have countless examples of people who created the trust, not me, not me, we fund all of our trusts. But they’ve come to me because they’ve created a trust and I say, “Okay, what’s in it?” And they blank stare at me, like “What do you mean what’s in it? I have a trust.” And I’m like, “That’s great. What’d you put inside?” And then there’s silence, just absolute silence.
For a trust to have any… I don’t want to use the word legitimacy, that’s not right. For a trust to have value and make any sense, you should fund it. Here’s how you fund the trust. The statute requires you to fund the trust by re-registering assets into the trust. If you have a deed, you need to do a new deed to transfer ownership of the property into the trust. If you have retirement accounts, you can either transfer ownership, just get the forms to either transfer ownership or transfer the beneficiary designation. For a retirement account, you don’t have to necessarily say, oh, the trust is the owner. In fact, because it’s a retirement account, you may not even be able to do that. But you can designate the trust potentially as a beneficiary. If you have stocks, you might want to re-register those stocks. If you have life insurance, you might, depending on the type of trust, either transfer ownership of the life insurance or change beneficiaries on the life insurance to be the trust. And there’s always forms that every financial institution has to help you re-register the asset into the trust.
And I always tell people, you should have the spreadsheet and then you should continue to update it as you get new assets because everything you put into the trust you should have a record of. I actually have stories where people have put almost everything into the trust and then they left out an account. Otherwise, if you have everything in the trust and you’ve left an asset out, when you pass away, now you have to probate your will, which might not have been your goal in the first place. If you were trying to avoid probate, you just failed.
Dalia Ramirez:
Right. And some of this sounds like it’s for people with a lot of money, a lot of assets, and I think a lot of people assume that you need to be really wealthy to need an estate plan. Is that true?
Regina Kiperman:
It’s more about tax planning if you have a lot of assets. Estate planning is just an orderly way to distribute what you do have. So some people just have maybe a house and maybe some cash in the bank and maybe some retirement accounts. You just want to make sure that when something happens to you, those assets are distributed in the way that you want them to be.
Here, I have a great example. A woman recently came to my office with her niece and she actually does not have a lot of assets. She has a co-op in New York City and one bank account. And really she was older and needed care and she was struggling with how to finance that care. And she has a son. When I asked about the son, she said, “I don’t have a relationship with my son.”
So in her case, she wanted to make sure that she gave everything that’s left to her niece, and also they wanted to make sure that there was a way to finance her cost of care. So we talked about setting up maybe a reverse mortgage, which by the way is also an estate planning technique. We talked about transferring the co-op into a Medicaid trust. And then we talked about just doing a will, leaving her whole asset to her niece, because that was the one person who took care of her during her lifetime and that’s the one person she wanted to make sure everything went to. So she doesn’t have a lot of assets, but she just wants to make sure it doesn’t go to her son, who she hadn’t seen in like 20 years.
Dalia Ramirez:
I have a sort of separate question now on a different note. What kind of life events should trigger people to think about their estate plan? Anything that could happen in someone’s life where you would say, now is the time?
Regina Kiperman:
People call us for the following. We just had a baby, and if they just had a baby, they want to make sure that there’s a guardian who could be charged with taking care of the baby in the event something happens to them. People call us because they want to potentially shift their assets because they are afraid of creditors. People call us because they want to pass their businesses down to their children and they’re ready to retire. People call for retirement planning. People call because they’ve bought property in multiple states and they want to avoid probate in multiple states. And then people call because a family member has fallen or the spouse has fallen and they’re in rehab and they need to figure out what to do to shift assets for government benefits.
Dalia Ramirez:
Gotcha. Once you get married, would you want to create estate planning documents together? A joint will, a trust together?
Regina Kiperman:
That one’s a little different because if you’re just married, you don’t necessarily need the type of basic estate planning because everything goes to that spouse anyway. But if you are married and have a lot of assets or if you’re married and have disparate assets and you want tax planning or you want to deviate, again, you don’t want everything to go to the spouse, then you would want estate planning. So it really depends on the facts and circumstances. But just being married by itself isn’t necessarily enough reason.
Dalia Ramirez:
I was wondering how people can make sure their wills, trusts, any estate planning document is valid. Because having a will is one thing, but having a will that actually passes through probate court successfully and quickly is another thing. And I know this might vary by state, but what can we tell people to make sure they know what they need to do to get their will certified?
Regina Kiperman:
In most places, to have a will, you need a person, two witnesses and a document, and the person can say, this is my will, this is what I wanted. Will you guys be my witnesses? Yes. Yes. Okay. Everyone sign. And for the most part, most wills are not contested. There are nuances and some specific requirements that people need to meet in order for their will to be admitted to probate. So the names of the witnesses should be really clearly spelled out. I have now a case where I cannot for the life of me figure out the name of the second witness and the law firm where the person had the will done is now closed. It’s literally a squiggle. The signature is a squiggle. It could be like John Doe and I don’t know what to write. And so I actually called the court and I’m trying to figure it out. But that’s a really very small thing that could turn into a big thing. Just legibly write very neatly the names of the witnesses.
Dalia Ramirez:
I’m wondering on that note when is it necessary to hire an attorney for estate planning? Who is in a position to DIY it and who really needs the professional help?
Regina Kiperman:
Again, this is personal. Because the law is some part art, part science. And so I think that if you have a house, a couple of bucks, a retirement account and you’ve got a wife and a couple of kids and there’s nothing, you’re not setting up any trust, it’s just a will that says to my spouse, and if not, to my children, you can DIY it. You don’t need a fancy lawyer. You don’t even need a lawyer at all. You can go on LegalZoom, Rocket Lawyer, Trust.com, whatever site you want. And if that’s your specific situation, you do not need a lawyer.
If your situation is more substantive and it’s not necessarily that you have more assets, it’s more substantive. So for example, your wife is sick, you don’t trust one of your children, you’re going to treat your children unequally. You need to create a sub-trust. You want to do Medicaid planning. You want to do tax planning. You want to do business succession planning. If you want something more substantive, you want to give to a charity because there’s different rules on charity, then you might want to speak with an attorney because they can help guide you on the nuances.
If you believe your will will be contested, you should go see an attorney. Not only that, you should do 10 versions of your will. Not 10 of the same, you might strategically want to execute multiple wills saying the same thing, because if you set aside one, you haven’t set aside the other. Those are probably some times where you DIY versus not.
Some more examples. You should staple your will. And once you’ve stapled your will, if you want probate to go simple, don’t unstaple the will. You should not keep your will in a safe deposit box because if you do, then someone’s got to go search the box, because the bank will seal the box. So don’t keep your will in the box, don’t unstaple your will. And even by the way, staple it. Don’t leave it unbound because then the court wants to know why is it unbound? Make your witnesses really clear. Have a self-proving affidavit. A lot of wills from these other like online DIY, the thing is they don’t always have a proper self-proving affidavit. And if they don’t have a proper self-proving affidavit, you have to hunt down the witnesses, which sometimes is a problem.
Dalia Ramirez:
I’m sure for some people cost is a factor here, they’re going the DIY route because it might be cheaper. Could you ballpark estimate how much an estate plan would cost people with an attorney?
Regina Kiperman:
People ask me all the time when right before they hire me, how much I’m going to charge them. And it’s hard to quantify. It really depends on your facts and circumstances. It could be anywhere from $2,500 to $25,000, depending on the complexity. If it’s a basic will with some trusts for the minors and some powers of attorney, all that stuff, it might be $2,500. If you’re getting into trusts, trust funding, deeds, transfers of assets, re-registration of assets or transferring your co-op into a trust, that becomes a pricier venture.
Dalia Ramirez:
So cost can be a factor depending on your circumstances. I also read a survey by Caring.com that found that only 32% of Americans have an estate plan. So what do you think are the other factors that keep people from doing estate planning?
Regina Kiperman:
The fact that people think, “Okay, well I don’t have a lot of money, therefore I don’t need it.” That people say, “Okay, I’ll do it, I’ll do it.” And then they don’t get around to doing it because it’s just not a priority. Some people are superstitious about doing it. They think that if they’re going to do it, that means they’re going to die. For some people, they can’t even talk about it, again because it’s superstition. And some people start the process and don’t finish it. And then there’s the people who don’t have anyone to leave it to and they say, “Well, whatever, the state will figure it out.”
Dalia Ramirez:
Are there any warnings that you would say to encourage someone who you think really could benefit from estate planning but is hesitant for any number of reasons?
Regina Kiperman:
So again, in my opinion, the most important thing that you absolutely 100% need to do is advance directives. Everyone hears me say this, power of attorney, healthcare proxy, the most, most, most important thing, because I am telling you, these documents are extremely cheap to do, and if you don’t do them and if something happens to you, there’s going to be 100 times more dollars spent on reacting to the consequences of not having a simple power of attorney.
As for a will, I personally think that it’s important to do it to set forth your wishes, but the will is just one piece. The thing that I think is the most important is to have a conversation about what do I want to happen if I’m sick or if I pass away. Where do I want my stuff to go? That conversation is the most important one to have. Even if you’re superstitious, you have to face it. You have to face that conversation. And if you don’t, unfortunately you’ll wind up with a mess, and it’ll be a bigger mess if it happens while you’re alive. Because if you’ve passed away, the mess is on your kids. But if you haven’t taken care of estate planning while you’re alive, then the mess is on you.
And I’ve got countless examples of that where the person’s alive, got sick, is incapacitated, can’t sign a power of attorney, and their kids are both grieving, dealing with the mental difficulties and anxiety of their sick parent and scrambling to try to figure out where everything is and properly structure a plan where their parents can be taken care of. I have those and I have countless examples of the same set of facts, but the parent has now passed away and the kids have property, but no way to pay the estate tax. That’s a big problem as well, and that leads to fighting. And the thing that most parents don’t want is they don’t want their kids to fight. Or, here’s a great one, a person passes away, they have three kids, they have a house, they didn’t do a plan. One kid lives in the house. What’s going to happen now? The parent should have been more proactive to think about, what will I really do with my house? Who do I really want it to go to so that my children don’t fight? Which by the way, as a parent, I hate when my children fight. I will do anything for them not to fight.
Dalia Ramirez:
And that should be motivation enough to call up a lawyer. Those are such great examples. Thank you and thank you for helping us out today with all of these questions. I really appreciate it.
Regina Kiperman:
No problem.
Sean Pyles:
Anyone who knows me knows that estate planning is my favorite morbid hobbyhorse. People really don’t want to think about or engage with this stuff, and I get it, it can be scary. But I think about it a little bit differently. I see estate planning as an act of love and generosity. Spending a few hours sorting out how you want to be cared for when you get sick or injured, and what you want done with your stuff after you die, can bring tremendous peace of mind and solace to your family in the middle of a very stressful time. So please give this gift to your loved ones.
Dalia Ramirez:
Absolutely, Sean. And I think it’s important to remember that no one can read your mind about what you want the end of your life to look like. Taking the time in advance to reflect on what matters to you and get it into writing makes it a lot more likely that your wishes will be respected and that your family might even have the pleasure of fulfilling them instead of the burden of guessing.
Sean Pyles:
Well, I hope our listeners have a better feel now for why it’s important to do this even if you don’t think you want to or you don’t want to think about your own demise. If you’re having trouble with that, just remember the aftermath is hardest on the people that you leave behind. So if nothing else, think about them.
Dalia Ramirez:
And I really hope listeners come away with the knowledge that this doesn’t have to be complicated or complex and it doesn’t have to cost much money. In fact, you can DIY it if you want to. But if you don’t want people who aren’t you to decide where all of your money and belongings end up, it’s really important to get this done. Do you have one, Sean?
Sean Pyles:
I do. My partner and I both have our estate plans and advance directive sorted. We did this a few years back after we got engaged because we knew it would be a number of years until we got married, but we wanted to ensure that we were taking care of each other now before we were legally bound together. What about you, Dalia?
Dalia Ramirez:
Well, it feels silly because I don’t have a spouse or kids or much in the way of property, but I spend a lot of time reviewing estate planning software, so I’ve helped my whole family draft wills and I did mine for good measure. Hopefully at some point I’ll have some more things to put on there.
Sean Pyles:
I like that. You are practicing what you preach. Well, Dalia, thanks for coming on Smart Money and doing this episode with us.
Dalia Ramirez:
Thank you, Sean.
Sean Pyles:
For now, that’s all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected]. Visit Nerdwallet.com for more info on this episode. And remember to follow, rate and review us wherever you’re getting this podcast.
Dalia Ramirez:
This episode was produced by Tess Vigeland. Sean helped with editing. Claire Tsosie helped with fact checking. Sara Brink mixed our audio. And a big thank you to NerdWallet’s editors for all their help.
Sean Pyles:
Here’s our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Dalia Ramirez:
And with that said, until next time, turn to the Nerds.
Amazon Prime Day is July 16-17. It’s like Black Friday, but in July and with less burden to buy for others.
Some people may already have holiday gift-buying in mind, but most are likely shopping for themselves, says Jane Boyd Thomas, a professor of marketing at Winthrop University.
More emphasis from retailers on summer deals has shifted trends on Google. “In recent years, searches for ‘deals’ have spiked in mid-July, even surpassing search interest in ‘vacation,’” said Sean Scott, vice president and general manager of consumer shopping at Google, in a blog announcing Google’s enhanced shopping tools. Its updated “deals destination” is intended to make it easier to shop for deals across retailers in one place.
Whether you start on Amazon or Google, the key is to nab deals on planned purchases over impulse buys. Keep this list in mind as you decide what to buy (or skip) on Prime Day.
Buy: Electronics
Thomas says electronics will be the best category for Prime Day deals, which will likely include Apple products. She chuckled when mentioning an Apple Pencil she recently paid full price for ($129.99), only to hear later that it’ll likely be cheaper on Prime Day. In fact, it is $79 on Amazon at the time of this writing, before Prime Day. AirPods Pro (2nd Generation) ear buds were down to $189.99 in late June (Apple’s price is $249, but Amazon regularly sells them for $199), and could go lower during the sale.
Select models of TVs, soundbars, speakers and other headphones should see deep discounts too. Amazon is already touting an invite-only deal of up to 40% off Sony wireless headphones. But be mindful that limited quantities on the hottest products could mean you have to act quickly.
My experience: I dropped the “bar” last Prime Day. I had coveted a particular model of Sony soundbar that normally sells for about $300 all year long. I saved it and waited for the price to drop. On Prime Day, it went down $100. But instead of getting it, I hesitated for a few hours, and when I decided to buy it, it was not only out of stock on Amazon but also at other retailers. I settled for a similarly priced but inferior model.
This year’s sale starts promptly at 12:01 a.m. PDT on July 16 and ends at 11:59 p.m. PDT on July 17. The specific start and end times motivate people to buy on whim for fear of missing out, says Thomas.
But you can prep for Prime Day now, by making a list and checking your budget, to avoid overspending at crunch time.
Before you build a budget
NerdWallet breaks down your spending and shows you ways to save.
Buy: Car seats and strollers
Prime Day is likely to bring good deals on baby gear. NerdWallet monitored prices on a handful of popular products during every major sale of 2023. The Graco Extend2Fit Convertible Car Seat we tracked went on sale often, but hit its lowest observed price during last year’s July Prime Day, coming in at $139.99. It’s $199.99 on Amazon at the time of this writing.
Thomas, a new grandmother, needs to get equipped to drive her granddaughter around.
The car seat base she needs typically goes for around $160, she says. “I’m going to put it in my wish list and set alerts, which you can do with Amazon, to let me know when it goes on sale,” she adds.
Strollers, cribs, pack-and-plays and other typically pricey baby products could hit lows during Prime Day. Last year, for example, the Baby Jogger City Mini GT2 All-Terrain Stroller was 40% off during Amazon’s sale.
Buy or skip: Amazon devices
Buying an Amazon device during Amazon’s biggest sale of the year is a no-brainer, but only if you’re in the market for one. Fire tablets and TV sticks, Kindles and Echo devices are all likely to be discounted. And many of the gadgets Amazon makes are pretty well-reviewed.
Of course, you can also wait. The next big Prime sale, which should come in October, is all but certain to bring similar prices on Amazon’s own tech.
My experience. I skipped both the July Prime Day and October Prime Big Deal Days last year and still got a great deal on the latest Echo Show 8 (3rd gen) smart display device, which wasn’t released until late in the year. I ordered mine on Dec. 28, 2023, for $60 off the normal price. It’s a good reminder that products are often refreshed and prices are constantly in flux.
Buy: Toys
If you are prepared enough to put a gift list together in July and have kids to buy for, sensory-type creative toys can be a good way to go. One of the best Prime Day deals NerdWallet spotted last year was on the Magna-Tiles Classic 100-Piece Set. Kids love them, and the set went down to $82.99 on Prime Day. The same set is $119.50 on Amazon at the time of this writing.
Thomas says Amazon is inclined to mark down already hot sellers to draw people in.
“I would look at things like gifts for children, scooters, Lego sets because those are things that are pretty steady sellers year-round for them,” she says.
Buy or skip: Small appliances
Kitchen gadgets are fair game for deals on Prime Day, but NerdWallet’s research shows Cyber Monday is better for deals on small appliances like air fryers, mixers and coffee makers. And for these items especially, don’t let Amazon be your only stop. Target, Walmart, Best Buy and other retailers will compete.
You could also wait and stumble upon a deal later, if you’re not quite ready to buy.
My experience: While at a friend’s house for dinner late last year, I couldn’t help but notice the side-by-side Instant Vortex Plus 6-quart XL Air Fryers they were using to cook the meal. The food was good, and the stainless look was slick. I got home, opened Amazon and saw the same model going for $74.15, about $55 off the normal price. I nabbed it on Nov. 5, 2023, a random Sunday. Moral of the story: good sales happen throughout the year if you’re not ready to buy now.
Nerdy reminders about online shopping
Doing the necessary product and price research should be second nature by now, but here’s a refresher on how to e-shop smartly.
Know the going rate: If you’re shopping on Amazon, it’s quick and easy to use a price-tracking site like camelcamelcamel to check the price history over time. Paste the Amazon URL in the camelcamelcamel search bar to view lowest-ever, highest-ever, current and average price.
Set your pounce price: Once you know the lowest price and how often the item is discounted, you can use your budget to set a price threshold. Once the price drops below that line, you’ve given yourself permission to buy.
Save it for later and set alerts: Set alerts to take the effort out of tracking prices. In the Amazon app, you can set deal alerts for items of interest by going to the account section, scrolling down to “message center” and tapping deal alerts.
Google it before you get it, or search “shop deals”: Amazon may be the loudest, but other retailers will quietly compete with Prime Day. A quick Google search of the specific product you’re after will let you compare prices, but you can go deeper with Google’s new “deals destination.” Type the words “shop deals” into the search bar to view a carousel of products with recent price drops from across the web. Click on the product to view its typical price range based on averages over the past 90 days.
Shopping online is easier than ever, and there are tricks and tools that can definitely help you save. But there’s also a time-consuming and inescapable nature of online shopping. As we hit the peak of summer, don’t let chasing the best deal keep you from things that matter most. Those things are probably free anyway.
Get more financial clarity with NerdWallet
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Who knew a lack of proper estate planning would throw the entire realm into war? That’s the lesson I garner from HBO’s House of the Dragon. If you’re unfamiliar (as I was) with the series, here’s an uber-quick primer to catch you up.
[SPOILER ALERT!]
It takes place in the same universe as Game of Thrones. Semi-medieval, very political, heavy on violence and sex. House of the Dragon is set roughly ~200 years before the Game of Thrones timeline
The show chronicles the early history of House Targaryen, focusing on the events leading up to and during the Targaryen Civil War (a.k.a. “the Dance of the Dragons”). The series delves into the Targaryen dynasty’s political intrigue, family dynamics, and power struggles.
Turns out, the entire civil war results from poor estate planning. I doubt my or your estate plans would ever be so consequential, but it’s worth learning our lessons (even if they come from a dragon-y fantasy world).
Where the Problem Starts…
Throughout most of Season 1 of the show, a clear precedent is set:
The King, Viserys, is generally liked and respected. He’s sick, though, and growing sicker as he ages. He has no male heirs – a big deal in hereditary monarchy. His wife dies in childbirth.
So, before all the important lords and ladies of the realm, Viserys names his one and only daughter – Rhaenyra – as his heir. An unusual choice, but clearly made.
Time marches on. Viserys remarries. He has more children – two boys and a girl. In most monarchies, the eldest son is heir to the throne. But Viserys maintains his previous decree: despite having a son, his eldest daughter, Rhaenyra, will remain heir to the throne.
More time – 15+ years – goes by. King Viserys…very, very sick…is finally on his deathbed. And thus, the stage is set for drama…
The Drama
As King Viserys lies dying and drinking “milk of the poppy” (a creative naming of what we’re to believe is an opiate pain reliever), he speaks with his wife, the Queen. Remember, this is his second wife; she is stepmother to Rhaenyra and mother to the King’s sons (who some would argue are the “rightful” heirs to the throne).
Only the Queen is present. The King is high on drugs and in terrible pain.
He manages to speak a few sentences about “the prince that was promised” and “Aegon” and a cryptic suggestion, “…to unite the realm against the cold and the dark. It is you. You are the one. You must do this. You must do this.”
And then he dies. What the heck did that all mean? “Aegon” is a boy’s name. And you guessed it: the King’s eldest son (the Prince who is not the named heir) is named Aegon.
Whoa. Those are some scary special effects…
Was the King speaking of his son, Aegon? Is young Aegon “the Prince that was promised…to unite the realm?” The Queen certainly thinks so. After all, she’s biased toward wanting her son (not her stepdaughter) to gain the throne.
As viewers, though, we know the King—high as a kite—was, in fact, referencing a centuries-old tale of “Aegon the Conquerer,” a long-dead Targaryen king who prophesied a future cataclysmic war pitting the living (and their dragons) against some undead ice zombies.
Ice Zombies. Cool.
The Queen doesn’t know this backstory, though. You can’t blame her for thinking, “Prince? Aegon? Unite the realm? Oh – he’s telling me he’s changed his mind! He wants our son, Aegon, to take the throne.” Classic mixup! Could happen to any of us.
The Queen returns to all the courtly leaders with this news: the King, on his deathbed, made clear to me that he wants our son, Aegon, to ascend the throne. Rhaenyra, despite the past ~15-20 years of clearly communicated precedent, is out.
What’s Rhaenyra to think?! She has lived most of her life as the heir to the throne. And then, at the 11th hour, with only one biased witness present, as the King lay high and dying, supposedly he changed his mind? It seems suspicious, no? One could even say it’s a clear foul play.
Thus starts the Targaryen Civil War. Rhaenyra (and her followers) vs. her half-siblings (and theirs).
Lessons for Us
Financial planning is more than investing and taxes. Estate planning is another major component. In short, estate planning answers, “What happens to your assets after you die?”
I doubt any of us have a kingdom to bequeath. Nevertheless, what did the Targaryens get wrong that we should strive to get right?
Put it in writing. A clear, legally valid will is essential. It outlines your wishes regarding the distribution of your assets. It can prevent misunderstandings or disputes among your heirs.
Designate beneficiaries. Ensure that you have designated beneficiaries for all applicable accounts (like retirement accounts and insurance policies) and that these designations are up-to-date.
Use Clear Language. Be explicit and precise in all estate planning documents to avoid ambiguity. Clearly state who gets what and under what conditions, and consider using legal terms correctly to ensure your wishes are interpreted as you mean them. Work with an attorney to get it right.
This article outlines a further 11-step process to begin your estate plan.
One more vital tip: create a Life File. Your loved ones will thank you.
How Estate Planning Can Go Wrong
“House of the Dragon” shows us how estate planning can go wrong.
The King’s transition plan was never written down. It was only spoken. If the King can speak it into existence, why can’t he simply speak it away?
When creating estate documents (like a will), a person must be “of sound mind.” This is a legal term, and like many legal terms, it exists on a spectrum. But surely most U.S. jurisdictions would maintain that being high on opiates is not “of sound mind.”
You should discuss your estate plan (and any changes) with the included (and excluded) parties. Some people might push back on me here, but I think it’s important. When people are included or excluded from your estate, they should know about it while you are still living. Otherwise, it creates a problem after your death, when, by definition, you’re no longer around to solve it. Ideally, the King would have gotten all interested parties – Rhaenyra, the Queen, his second batch of children, etc. – on the same page from Day 1. His drug-addled ramblings would have been more easily dismissed as just that.
Forget the Seven Kingdoms. Our world is riddled with famous stories of contested estates. You don’t want to add your family to that list.
We’ll see how “The Dance of the Dragons” concludes. What a nice euphemism for a firestorm slaughter!
In the meantime, though, let’s get our own kingdoms in order.
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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For many Americans, one of the best ways to get closer to their ideal annual income is to learn how to make money online.
According to a 2024 study from Smart Asset, individual Americans need an annual salary of $96,500 to live comfortably in a major city, and families with two children need to make about $235,000.
However, the Bureau of Labor Statistics (BLS) recently reported that the weekly median earnings for Americans was $1,139. This makes the median annual salary a little less than $60,000—far below the annual cost of living in many cities.
Some leverage the thriving “gig economy,” where you find contracted gigs in a virtual marketplace, and others generate passive income. Regardless of your skill set and interests, you’re sure to find something that works for you.
We put together a list of 27 different ways you can make money from home to supplement your income. You’ll also learn what it takes to get started and whether or not it’s right for you.
1. Find miscellaneous freelance jobs
A great place to start when learning how to make money online is by looking at platforms that offer a wide range of work. Before diving into the rest of the list, it’s helpful to know about popular platforms like Upwork and Fiverr. Every day, people and companies post jobs you may be perfect for.
At these sites, you can type in some of your various skills to see if any jobs are available. You can also create a detailed profile marketing your skills so people can find you more easily and offer you work.
Best for: People with a wide range of skills.
What you need to get started: Skills will vary depending on the specific job.
2. Take online surveys
Many companies out there want to get opinions from specific demographics and will pay you to take these surveys. While these don’t pay as much as many of the other options on the list, they also don’t take that long to do, so they are a simple way to make extra money. You can sign up to take these surveys at websites like Survey Junkie or Swagbucks.
Best for: Anyone with access to the internet.
What you need to get started: Access to a web browser.
3. Perform data entry
Data entry is a skill that many people can learn if they don’t already have experience. Doing data entry typically involves inputting data from different sources into a spreadsheet. Sometimes, you can find businesses looking for long-term workers, which can offer a little more stability than finding “gig work.” In addition to sites like Upwork and Fiverr, you can find data entry work at TechSpeed and Oworkers.
Best for: Well-organized individuals.
What you need to get started: Some proficiency with spreadsheet programs like Excel and Google Sheets.
4. Become an online tutor
For teachers looking for online side hustles, becoming an online tutor is a great option. Even if you’re not a teacher, you may be able to find some subjects that you can help students with. The platforms that link tutors with students usually cover school subjects like math, English, foreign languages, writing, and more. You can sign up to tutor on websites like TutorMe, Skooli, and Preply.
Best for: Those who love to teach.
What you need to get started: Experience teaching and expertise in the subject matter.
5. Be a virtual assistant
Many businesses of all sizes need additional help, so they hire virtual assistants. Virtual assistant tasks can vary depending on the gig. Some of these opportunities may be for one day of work, but others may need help for longer stretches of time.
These may pay you per job or per hour, and you can find these gigs on any freelance website. As of 2024, the average hourly rate for virtual assistants is $24 per hour and can be upward of almost $34 per hour.
Best for: People with a wide range of skills.
What you need to get started: Skills will vary depending on the specific job, but some skills can be helpful for many gigs like project management, organization skills, and data entry.
6. Get paid for your perspective
Focus groups are a key aspect of marketing, but it’s no longer just for new products hitting store shelves. In the digital age, companies are looking for people to review the user experience for their websites.
Sites like UserTesting pay you to share your opinions about different products from a variety of different brands. There are also sites like Userbrain that allow you to test different websites, applications, and software.
Best for: Individuals who like sharing their opinions.
What you need to get started: Access to a web browser.
7. Rent out your stuff
Do you have things that you don’t mind renting out? Well, websites like FriendWithA connect you with people who are looking to rent various items. Some of the main items people rent include cameras and film equipment, tools, generators, bikes, and other items people may only need for a day or two.
Best for: People with items they aren’t regularly using.
What you need to get started: Items in good condition to rent.
8. Rent out a room
In addition to apps like Uber, Airbnb is one of the most popular platforms in the new “sharing economy.” Many people use Airbnb as an alternative to hotels while traveling, but some people need a room to rent for longer periods.
Joining a platform like Airbnb allows you to make use of the extra room in your home for both travelers and long-term renters.
Best for: People with an extra room or home.
What you need to get started: A well-maintained room or home.
9. Sell used items
Selling used items is one of the best ways to make money because we all have things we no longer use. You no longer need to have a garage sale to sell your old items because there are platforms that can help you find buyers. There’s a long list of platforms that allow you to sell your used items like:
One of the primary advantages is that you’re no longer limited to your neighborhood and can reach a larger pool of potential buyers. If you have unique novelty items you’re willing to sell, you may want to consider a platform like eBay, where people are regularly looking for hard-to-find items. This is also a great way for kids to make extra money by selling old toys.
Some of these sites are also a great way to make money fast online because they have quick payouts once an item is sold. If the buyer is local, you can get paid the same day.
Best for: Those with old items they no longer need.
What you need to get started: Supplies to ship orders or transportation to deliver locally.
10. Sell graphic design services
There’s no shortage of graphic design jobs, and you can find these jobs through freelance websites or directly with businesses. Many businesses of all sizes need people who can design advertisements, logos, and more. If you’re a graphic designer, it may be a good idea to create a website that hosts a portfolio of your work where people can contact you directly as well.
Although it’s helpful if you have a background in graphic design, you can learn many graphic design skills on your own. There are many helpful tutorials for popular programs like Photoshop on YouTube and other social media sites.
Best for: Graphic designers.
What you need to get started: Graphic design software.
11. Create online courses
Is there something you know quite a bit about that you can teach to others? If so, you can create and sell online courses. From work-related topics to yoga to parenting strategies, offering classes for something you are a subject matter expert in can help you make money while doing something you love! Some of the best websites to sell your courses include Udemy, Skillshare, and Teachable.
You may want to familiarize yourself with online course platforms because they are a great resource to broaden your skills. If you’re willing to invest some time and a little money, there are many courses to teach you new skills that you can turn into more ways to make money online.
Best for: Those who love to teach.
What you need to get started: Expertise in the subject matter you want to teach.
12.Self-publish books
There are many ways for writers to make money online, and writing books is easier than ever. You no longer need to go through a publisher to make money selling books. Today, there are many different websites that allow you to self-publish and sell your books.
The most popular site is Amazon’s Kindle Direct Publishing (KDP), but you can also sell your books on websites like Apple, Google Play books, Kobo, and more. If you have a microphone, you can turn your books into audiobooks as a way to make even more money from your writing.
Best for: Writers.
What you need to get started: Writing software.
13. Start a blog
Blogging became big as a way to make extra money online in the early days of the internet, and it’s still very viable. The great thing about blogging is that you can write about anything you’re interested in and just need to find others who are interested in the same topic.
There are different ways to make money from a blog. You can create your own website and sell Google Ad space or find sponsors. You can also use platforms like Medium, which has a built-in audience, and you can earn revenue as more people read your posts.
Best for: Those who like to write.
What you need to get started: Writing skills and knowledge about a topic.
14. Do freelance writing
Although many news outlets and websites have dedicated journalists, there is also a lot of work out there for freelance writing. Some of the biggest websites out there, from the Washington Post to the New York Times, take submissions from freelance writers.
One of the best ways to find freelance writing work is by following editors on X (formerly known as Twitter). They’ll often post asking for people who can write on a specific topic. Sometimes, these gigs will pay hundreds of dollars for a single article. If you’re a fast writer and can write articles within a couple of hours, you could earn an hourly rate of $100 an hour or more.
If there’s a specific website you’d like to write for, just check and see if they have a page that tells you how to submit pitches for articles. Keep in mind that each publication pays different rates, and sometimes, the work can be inconsistent.
Best for: Writers. What you need to get started: Writing software.
15. Find voice-over work
There are many people looking for voice-over work in advertisements, presentations, or audiobooks. If you can read a script, there may be people out there who will hire you for your voice work. Freelance platforms like Upwork often have miscellaneous voiceover job postings, but you can make more with longer-form content.
ACX is the platform Amazon’s Audible uses for authors to find people to read their audiobooks. The prices vary, but you can sometimes make significantly more there than on the freelance websites.
Best for: Anyone with a great voice.
What you need to get started: A microphone with good quality.
16. Sell arts and crafts
There are many different marketplaces online for those who love making arts and crafts. One of the most popular marketplaces is Etsy, and there’s a market for just about anything you enjoy making. You can make your own prices, and the platform takes a small percentage of the sale.
Best for: Creatives and artists.
What you need to get started: Materials to create items.
17. Sell stock photography and videos
Have you ever wondered where websites get their high-quality photos or videos? Many of them don’t have in-house photographers or videographers. They buy stock photos and stock video footage for a variety of projects.
For those who love photography and videography, there are a variety of websites that will buy your photos and videos. Websites like SmugMug Pro, 500px, Getty Images, and many others will pay you for the rights to your photos and videos.
Best for: Photographers and videographers.
What you need to get started: A camera.
18. Sell royalty-free music
Similar to photography and videography, many websites will pay you for your music. This type of music goes in the background of YouTube videos, advertisements, and anywhere else people may need some background music. Websites like Epidemic Sound and Pond5 are good places to start when it comes to selling your tunes.
Best for: Musicians.
What you need to get started: Instruments and recording equipment. Royalty and licensing information is available on the websites.
19. Create an e-commerce website
There are many websites that allow you to sell your product, but each one takes a percentage of the profits for using their platform. You can keep a larger portion of your profits by creating an e-commerce website.
When you create your own website, you’ll hold onto most of the profits. One of the most popular ways to sell is with Shopify, which easily plugs into your website. Shopify and similar services have fees as well, but it’s less than using a platform like Etsy.
The primary downside is that marketplaces like Etsy have a built-in user base, so you would have to do your own marketing to get the word out about your website.
Best for: People with something to sell who want a larger portion of the profits.
What you need to get started: The ability to create a website.
20. Utilize affiliate links
Affiliate links are a way to make additional money that work in conjunction with many of the other jobs on this list. An affiliate link is a special link that you use for a product or service from a company, and each time someone uses your link, you get a commission. This is how many stay-at-home parents popularized blogging in the 2000s. You can easily make passive income by using affiliate links with any of the following:
Personal blogs and websites
Social media profiles and content
Podcasts
In an interview with Business Insider, creative entrepreneur and YouTuber Roberto Blake explained how he started making $5,000 a month from affiliate marketing. “I fell into affiliate marketing from the Amazon affiliate program, but then I realized a lot of subscriptions and software I was using had programs, too,” said Blake while discussing additional ways to do affiliate marketing.
Best for: Those who also make money from creating a platform like a blog, YouTube channel, or podcast.
What you need to get started: Discussing other products and services that you can link to.
21. Edit audio or video
There are many different job postings on freelance websites for audio and video editing. Many companies find freelancers through sites like Upwork and Fiverr to help them with their marketing content.
In addition to companies hiring audio and video editors, many social media influencers on platforms like YouTube and TikTok outsource their editing. Podcasters often hire audio editors as well.
This is another one of the skills that you can potentially learn if you don’t have experience yet.
Best for: People who enjoy editing audio and video.
What you need to get started: Software to edit audio and video.
22. Edit copy
People are always looking for editors. Whether it’s an author looking for someone to edit their next book or a company that needs an editor for something they’re publishing for the public, people need their words to look excellent. Previously mentioned websites like Upwork and Fiverr regularly have jobs for editors, but you can also find work at Reedsy and Wordvice.
Best for: Those who love language.
What you need to get started: Familiarity with the English language and various types of grammar rules, such as Chicago or AP style.
23. Become a social media influencer
Currently, it’s easier than ever to make money online through social media platforms. Platforms like YouTube and TikTok pay creators directly through their creator programs. Typically, you have to meet certain criteria to be eligible for these programs, but some people make hundreds or even thousands of dollars each month through them.
If you’re an online business owner, a writer, or anyone who sells products or services, social media is a great way to find new buyers. On these platforms, you can provide links to your products, and you can also include affiliate links as a way to earn even more.
Best for: People who don’t mind being on camera.
What you need to get started: Some or all of the following: a camera, smartphone, and editing software.
24. Start a podcast
Podcasting is an easy way to start making content that could potentially make you money. You have a lot of creative freedom with podcasts as well. You can talk about topics that you’re interested in, tell stories, or interview people. Then, you can broadcast it to thousands or even millions of potential listeners on apps like Apple Podcasts and Spotify.
It can take some time to make money from podcasting. Unlike social media platforms like YouTube or TikTok, podcasting platforms don’t have a program to pay creators. Podcasters primarily make their money from advertisements and affiliate links. Once you have a dedicated audience, you can reach out to companies to sell ad space on your podcast.
Best for: People who enjoy talking.
What you need to get started: A microphone and audio-editing software.
25. Create a newsletter
Newsletters were some of the first ways for people to make money online. Services like Mailchimp and others allow you to create an email list and send a newsletter out to your subscribers.
The newsletter can be as frequent as you’d like, you can discuss different topics that interest you, and you can put it behind a paywall on your website. Substack is a newer platform that combines blogging with newsletters, and you can charge readers a monthly or annual subscription. This is a helpful tool for those who don’t want to build their own website.
You can also use a newsletter as a way to promote your online business and alert your customers of new products or discounts.
Anne Janzer is a self-published author and discusses how she uses her newsletter to sell more books. “When I have something new going on, I can go and ask those folks, ‘Hey, can you share the word about this?’ and they’re the first ones to go out and post about my new book,” Janzer said in an interview about how her newsletter leads to more sales.
Best for: Writers and people with an online business. What you need to get started: The ability to write.
26. Walk or board dogs
If you’re a dog lover, this may be the right option for you. There are apps like Wag and Rover that connect dog walkers with people, but you can board dogs as well. For those who rent, you may need your landlord’s approval before boarding dogs, but this is a great option for those who want to make money from home.
Both Wag and Rover offer additional dog services for those with other dog specialties. These include:
Drop-in visits to check on dogs while the owner is away
Dog training
Dog sitting
Best for: People who love dogs.
What you need to get started: Possibly transportation to get to clients and a home that allows pets if you choose to board them.
27. Trade stocks
This path of making money from home is on the riskier side, but it can also come with higher rewards. The difference between investing and day trading stocks is that investments are long term, whereas trading involves buying and selling stocks on a daily basis.
To make money trading stocks, you’ll need to stay updated on all of the latest stock news and learn when to buy and sell properly. There’s a learning curve to trading stocks, but some people make full-time income trading stocks through brokerages like Charles Schwab, Vanguard, or Robinhood.
Best for: People with a high risk tolerance.
What you need to get started: Before trading, you’ll want to learn as much as you can about various stocks and how to read the market to minimize losses. Then, you need a computer to trade, or you can trade on apps like Robinhood.
Making money online can help you pay off your debts
If you have a lot of debt, allocating funds from your paycheck can be difficult. Making money online is a great way to earn extra income that you can put toward your debts and potentially improve your credit. Some people are even able to make more money online than they would in an office job.
Having a good credit score is also a way to get access to credit cards and loans. You can use these to fund your online business or better equipment. This all starts with knowing your credit health and having the right tools.
At Credit.com, you can get your free credit report card to check your credit. Sign up for ExtraCredit for additional tools like credit monitoring and ways to report additional payments to the major credit bureaus.
The total household debt in 2023 was $17.1 trillion, according to Experian®.
The Fair Debt Collection Practices Act prohibits collection agencies from threatening you or calling your family members.
The avalanche method helps you pay off debt from the highest to lowest interest rates. The snowball method targets your smallest balances first.
The lower your account balance is, the less your interest rate will affect you.
Experian reported $17.1 trillion as the total American household debt by the end of 2023. Unfortunately, debt doesn’t just hamper your current spending power—it can also detract from your nest egg and savings accounts.
The best way to tackle debt is to be proactive. Here, we’ll discuss several methods to help you get out of debt in 2024. We’ll cover everything from DIY plans to working with debt relief agencies, and we’ll share powerful tools like Credit.com’s debt-to-income (DTI) calculator.
1. Gather Your Debt-Related Paperwork
Gathering all your debt-related documents in one place helps you see how much you owe and who you need to repay. Some of the information you’ll want to collect includes:
Monthly statements: Check the downloadable monthly statements attached to your checking and savings accounts.
Recurring bills and utilities: Cell phone bills, utility bills, and rent payments all fall under this umbrella. Income information: Look at paycheck stubs or your bank accounts so you know what, on average, you can expect in income each month.
Credit reports: You can request your credit report from the three bureaus and a free credit report card from Credit.com.
You can log your outstanding debt information in a spreadsheet, then sort the page from least to greatest to see which items are top priorities.
2. Build a Monthly Budget
Next, you can build a monthly budget based on the information you’ve just gathered. Ideally, you’ll account for major budget categories like rent, groceries, and recurring medical bills. You can then allocate any remaining funds toward your debts, and then your savings goals after your DTI reduces. To start, you can use Credit.com’s free monthly budget template to better visualize your finances. This template is fully customizable, so you can remove or add categories based on your needs.
Regularly update your monthly budget doc to reflect increases or decreases in your income.
3. Address Any Debts in Collections
When debt goes to collections, that means a bill you’ve yet to repay has been sold to a debt collection agency. Collections agencies can be very aggressive, so it helps to know your debt collection rights.
Sometimes, agencies might mistakenly try to collect debts that have already been repaid. If this error occurs, you’ll be able to rectify the situation with a phone call. If you’re determined to be responsible for the debt in question, it’s best to address it quickly to preserve your credit health.
If a collections agency violates FDCPA guidelines, you can potentially sue them for breaking the law.
4. Explore Debt Repayment Methods
The avalanche method and the snowball method are two popular debt repayment strategies. Effectively using these strategies is a great way to get out of debt quickly.
The avalanche method takes a top-down approach to debt repayment. Here, you’ll focus on repaying your debts with the highest interest rates first, and then you’ll move to paying off your less expensive debts as time goes on. It can be slow going at first, but if you stick to it, you can save more money using this method than if you were to use the snowball method.
With the snowball method, you focus on repaying your smallest debts first as you gradually work toward your largest bills. Taking this “least to greatest” approach to repayment will help build momentum and keep you motivated as you pay off your debts.
Use spare change to help pay your debts down faster. If you use $10 to by an $8 drink, count the leftover $2 toward your debt.
5. Lower Your Interest Rates
Interest rates are essentially fees that lenders charge you for borrowing money. If you have a high interest rate, you’ll have to pay a significant amount of interest in addition to the funds you need to repay. Here are some potential ways to lower your interest rate:
Request a lower rate: Once they’ve built rapport, cardholders can ask their banks for lower interest rates. Having strong credit scores and a solid credit history increases the likelihood of success.
Consider debt consolidation or refinancing: Debt consolidation loans help you pay off accounts with higher interest rates and gather all of your debt under one bill.
Use balance transfer credit cards: Balance transfer credit cards help you move your credit card debt over to accounts with low or even no interest rates during promotional periods.
Interest payments are based on the amount you currently owe. Try to pay down your balances as much as possible.
What to Do If I Can’t Repay My Debt
If you don’t currently have the capital to pay off your debts, you have several options to reduce your financial burden:
Write a hardship letter: You can write a hardship letter that details your current financial situation and send it to your creditors. These letters might pave the way for credit card debt forgiveness.
Meet your minimum balance: Try to pay at least your minimum balances due to keep your payment history intact.
Gain additional income: If possible, pick up a second job or a financially secure side hustle to help you pay off your debts faster.
File for bankruptcy: Chapter 7 and Chapter 13 bankruptcy can greatly reduce the debt you’re responsible for, but there can be consequences, such as a significant hit to your credit.
Options for Debt Relief
There are alternative strategies for debt relief to consider alongside more tried and true methods. Here are some examples:
Increase your financial knowledge: Tap into online financial education courses and workshops to boost your literacy and learn more ways to get out of credit card debt.
Start a debt management plan: A trustee or credit counseling agency will help you create a plan to whittle down your debts.
Debt settlement: You might be able to negotiate with creditors to pay a lower amount of debt than originally owed. However, debt settlement can adversely affect your credit.
Learn More Debt Management Tips With Credit.com
The more financial knowledge you have, the easier it will be to get out of debt. Check out Credit.com’s personal finance guide to gain more insights on debt management and debt relief solutions. And when you’re ready, get your free credit score with Credit.com to see how your debts are impacting your credit.