Want to lower your mortgage rate without a traditional refinance? Look into a “mortgage rate modification,” which does just that.
Instead of having to contact lenders, fill out applications, and provide stacks of paperwork, you might be able to get payment relief by simply signing a modification agreement.
Aside from it being easier than a refinance, it could cut the processing time down from a month plus to just a week or so.
That means if you start the process early in the month, your very next mortgage payment could be lower.
While that all sounds great, there are some limitations you should be aware of, and like a refinance, fees are typically charged as well.
How a Mortgage Rate Modification Works
As the name suggests, a mortgage rate modification allows you to lower the interest rate on your existing home loan without going through the formal refinance process.
Instead, you are simply asked to fill out a modification agreement with your current loan information, including mortgage rate and loan product, along with desired loan program and current interest rate.
For example, if you currently hold a 30-year fixed-rate mortgage set at 7%, you’d enter that into the form and then select the type of loan you’d like going forward.
This could be another 30-year fixed, or perhaps a 15-year fixed or even an adjustable-rate mortgage if permitted.
Or it’s possible you hold an ARM loan and want to move into a fixed-rate product at the same time, removing future rate adjustment risk and snagging a lower rate in one move.
Typically, the lending institution would use the current advertised mortgage rate as the new interest loan on the loan.
So if credit union X is offering a rate of 5.875% on their rate sheet that day, you could obtain a rate more than a full percentage point lower using our example from above.
The loan would then be re-amortized using the new mortgage rate and remaining loan term to determine monthly payments.
While that would result in some nice monthly savings, and reduce your total interest expense, there is typically a fee.
How Much Does a Mortgage Rate Modification Cost?
As noted, this type of transaction isn’t free of charge. You will need to pay a fee, just as you would for a refinance.
The banks aren’t doing it out of the kindness of their hearts. So expect either a flat fee, such as $999, or a percentage fee based on the loan amount.
For example, you might be charged anywhere from 0.5% to 1% of the outstanding loan balance in exchange for the modification.
Doing the math, a $500,000 modification could cost anywhere from $2,500 to $5,000 to process.
That’s not a small number for many households and could in fact be cost-prohibitive, especially if you’re seeking payment relief.
However, there are sometimes caps on the fee that can be charged, so even if they charge a percentage, it might top out at say $2,000.
Conversely, there could have a minimum fee as well, so even if you have a small loan amount, you might be charged the minimum dollar amount.
Another consideration is closing costs typically can’t be rolled into the loan amount. So you’ll need to come up with the funds out-of-pocket to get the deal done.
Which Lenders Allow Mortgage Rate Modifications?
From what I’ve seen, mortgage rate modifications are most commonly offered by local credit unions and sometimes larger depository banks.
Both of these types of lending institutions hold mortgages in their own portfolios (as opposed to selling them off), which gives them more control over the process.
As such, these types of offers are less common with direct-to-consumer mortgage lenders and nonbank lenders, which often sell the loans they originate shortly after closing.
In other words, you might have better luck getting approved for this type of thing with a credit union or bank. But it doesn’t hurt to ask regardless.
Try reaching out to the loan servicer if the mortgage was sold, as the originator likely won’t be able to extend an offer.
Chances are they’ll try to guide you toward a mortgage refinance if they can’t or don’t offer a mortgage rate modification.
Mortgage Rate Modification vs. Mortgage Refinance
While both a rate modification and a mortgage refinance, namely a rate and term refinance, result in a lower interest rate, there are key differences.
Perhaps the biggest is that a traditional refinance tends to take a lot longer and is much more involved.
It includes a full-on loan application, verification of income, assets, and employment, a credit pull, and possibly a home appraisal as well.
Conversely, a rate modification might be as easy as filling out a form while skipping the document collection and appraisal.
In addition, you won’t have to worry about all the closing costs associated with a refinance, including title and escrow fees, lender fees (other than the modification fee), and so on.
However, a rate modification isn’t available on all types of loans, and may be limited to owner-occupied homes only.
There’s also a good chance you’ll only be able to qualify for one rate modification per year, and you might need to make a minimum number of payments before you’re eligible.
You’ll also need money to complete the modification, whereas it’s possible to apply for a no cost refinance where no money is required out-of-pocket.
Another limitation with rate modifications is you can’t pay discount points to get an even lower rate.
So you’ll just be able to get the market rate and nothing better, assuming you wanted to buy down your rate.
And lastly, a traditional refinance may allow you to skip a payment (or two), which can be beneficial to those who need some major payment relief.
Mortgage Rate Modification Pros and Cons
The Pros
You can lower your rate without refinancing
Obtain a cheaper monthly payment with the same loan term
Doesn’t reset the clock so you’ll stay on track paying down the loan
May be able to switch loan programs (ARM to fixed-rate loan)
Doesn’t require an appraisal or formal loan application
Process is typically very fast and relatively easy (2 weeks or less)
No closing costs other than the modification fee (which varies by bank/lender)
The Cons
You must pay a fee for the modification (either flat fee or % fee)
Can’t roll the fee into the loan amount (must pay out-of-pocket)
Rate improvement limited to market rate at time of application
May be limited to owner-occupied properties only
Might be limited to one modification annually
May require a minimum number of monthly payments before you’re eligible
No cash out allowed
Keep reading: How to lower your mortgage rate without refinancing.
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on Twitter for hot takes.
Businesses that need cash quickly but don’t have strong credit will sometimes turn to an alternative type of funding called a merchant cash advance (MCA). With an MCA, a financing company gives you an upfront sum of cash that you repay using a percentage of your debit and credit card sales, plus a fee.
An MCA can be helpful for covering cash flow shortages or short-term expenses, but if you end up taking out more than one merchant cash advance, you can end up paying different (and potentially high) interest rates and fees for each. Plus, you have to deal with different payment schedules for each MCA.
A merchant cash advance consolidation is an option that lets you roll up all of those advance payments into one. Ideally, an MCA consolidation has the potential to reduce what you’re paying in interest and fees. Here’s what you need to know about this type of consolidation loan.
What Is a Merchant Cash Advance?
Not every business qualifies for a traditional bank loan. Perhaps it hasn’t been in business long enough to be eligible, or maybe it doesn’t meet the credit requirements for a small business loan. That’s when a merchant cash advance may be useful.
An merchant cash advance is not a loan, but rather an advance on future sales. To determine eligibility, MCA providers may not rely heavily on criteria like time in business and/or credit scores, but instead focus on revenues. That can make it easier to get than other types of financing.
How MCAs Work
When you get an MCA, you receive a lump sum payment. Typically, MCAs express the interest they charge as a factor rate (often ranging from 1.1 to 1.5) rather than as a percentage. The factor rate does not include any additional fees the merchant cash advance company may charge you, such as administrative or underwriting fees.
How MCA Repayment Works
The repayment on an MCA works differently than other types of business loans. Typically, the MCA provider automatically deducts a daily (or weekly) percentage of your debit and credit card sales until the advance is repaid in full. Repayment periods can range anywhere from three to 18 months. Generally, the more you make in credit card sales, the faster you’ll repay the advance.
The downside is that MCAs tend to have much higher fees and interest rates than traditional small business loans, making them a costly financing option.
When you convert factor rates plus fees into an annual percentage rate (APR), the APRs on merchant cash advances can run as high as 350%, depending on the lender, size of the advance, fees, business revenue, and how long it takes to repay the advance.
What Is Merchant Cash Advance Consolidation?
A small business owner might take out a merchant cash advance to see their way through a slow period. Then, when they struggle with repayments, they may apply for another MCA to help repay the first. This is a process known as loan stacking. The company could then end up with multiple repayment schedules and paying different factor rates and different amounts for each advance.
A merchant cash advance consolidation rolls multiple MCAs into a single new loan. The consolidation loan typically pays off your existing MCAs and allows you to make one payment, often monthly, to the consolidation lender. Ideally, the consolidation loan will have a lower interest rate than the average of the multiple advances.
Recommended: Loans for Sole Proprietors
Signs You Need Consolidation
Signs you need a merchant cash consolidation include:
• Multiple MCA loans: If your business has taken out many MCAs, a consolidation loan can help you streamline your payments and possibly save money on interest.
• High interest rates: MCAs often come with steep fees, so consolidating into a lower-rate loan could reduce overall costs.
• Falling behind on payments: Missing or struggling with payments is a strong indicator consolidation is necessary.
However, there are a few things to consider before you jump into MCA consolidation. One is whether or not your existing MCA lenders will charge you a prepayment penalty fee if you pay off your advances early. You’ll also want to find out if there are any upfront fees you have to pay for the new consolidation loan, since this can eat into your savings.
If, after running all the numbers, it looks like you can save money and streamline repayment, it may be a good time to consider a merchant cash advance consolidation.
Recommended: How Does Debt Consolidation Work?
What to Consider Before Applying
Before applying for a consolidation loan, you’ll want to look at what you’re currently paying in interest and what you’d qualify for with a new loan. Also, consider any fees for the new loan and any payoff penalties you’ll owe your current lenders. If, once you crunch the numbers, your total debt hardly goes down, there’s probably no sense in taking on a new consolidation loan.
When deciding whether it makes sense to do an MCA consolidation, you also want to look at the repayment period and what your payments with the new loan will be. A shorter repayment period can mean larger payments that you might not be able to afford. And, while a longer repayment period can mean smaller payments, it will likely mean paying more in total interest.
Examining the options can help you find the best path forward for your business.
Potential Drawbacks and Risks
Merchant cash advance (MCA) consolidation loans can provide relief, but they come with potential drawbacks and risks, including:
• Extending the repayment period, which potentially increases the overall interest costs.
• Paying high fees, which could negate the benefits of combining advances.
Additionally, if you’re consolidating to manage cash flow, it could be a sign of deeper financial issues, and relying on more debt may worsen the situation.
Refinancing vs Consolidation
If you’ve heard of business loan refinancing, you may think it’s the same as merchant cash advance consolidation, but these aren’t exactly the same.
It’s true that both can potentially lower your interest rate and/or change your payment term. However, when you refinance, you’re replacing one MCA with a new one or with a small business term loan. When you opt for an MCA consolidation, you’re rolling multiple MCAs into a new MCA or other type of business loan.
Recommended: Refinancing Your Student Loans While Starting a Business
Types of Consolidation Loans
Lenders may have different approaches to help you with consolidating your loans. Some will buy out the loan and pay it off directly, while others will lend you the money, after which it’s your responsibility to pay off your existing MCAs.The following types of loans can be used to consolidate your MCAs:
Merchant Cash Advance
If you’ve taken out multiple MCAs, it’s likely because your business doesn’t have great credit and may not qualify for other types of loans. If that’s the case, you might consider a new, larger merchant cash advance to consolidate your existing MCAs, ideally with more favorable terms.
Be aware that you will likely have a short repayment period, perhaps between a few months and three years.
Online Lenders
Another consolidation option if you don’t have excellent credit is taking out a consolidation loan with an online lender. Interest rates may be lower than with a merchant cash advance and repayment terms may be longer. A longer repayment term typically means your monthly payment will be lower; however, you’ll pay more in interest overall than with a shorter repayment term.
SBA Loans
SBA loans like the 7(a) program can be used to consolidate business debt that is approved by your lender, if you qualify. Repayment terms can be up to 25 years, and rates on SBA loans are among the lowest of any financing option for businesses.
Traditional Bank Loans
If you’ve been able to build your business or personal credit since taking out the MCAs, you may qualify for a bank loan with lower rates and longer repayment terms. You can then use the proceeds of the loan to pay off your existing MCAs.
The Takeaway
If you feel like you’re drowning because you’re paying too much, too often, for multiple merchant cash advances, consolidating with a new advance or small business loan may be a solution that could help you lower your costs and roll everything up into one monthly payment.
If you’re seeking financing for your business, SoFi can help. On SoFi’s marketplace, you can shop top providers today to access the capital you need. Find a personalized business financing option today in minutes.
Get personalized small business financing quotes with SoFi’s marketplace.
FAQ
What is a merchant cash advance consolidation?
A merchant cash advance (MCA) consolidation combines multiple merchant cash advances into a single MCA with more manageable repayment terms. Ideally, you’ll receive better rates and terms with your new merchant cash advance.
What happens if I don’t repay my merchant cash advance?
If you don’t repay your merchant cash advance (MCA), the lender may increase withdrawal amounts, freeze business accounts, or pursue legal action. Your personal and business assets could be at risk, and your credit score could be negatively impacted. This could affect financing options down the line.
Why consolidate your merchant cash advances?
The main reason to consolidate your merchant cash advance (MCA) is to simplify your payments. Rather than making multiple payments each week or month, you’ll only have to make one. Consolidating could also reduce your interest rate, saving you money over the life of the loan.
Photo credit: iStock/ipopba
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Whether you’re a dedicated DIYer or prefer to lean on professional guidance, the truth is clear: smart financial planning can save you a lot of money over time.
Below, I’ll share some recent examples of tactical planning moves I participated in, including how much money was saved.
COVID Panic
In March 2020, you could be forgiven for thinking: “the world is ending, and I want to sell everything.”
But with proper perspective and an investment policy statement – both hallmarks of sound financial planning – many investors stayed the course.
They rode the stock market down more than 30% from peak to trough. Ouch. Nevertheless, they rebalanced along the way, selling stable assets (like bonds and money market) to buy stocks. This is not natural behavior – in fact, it’s the opposite of natural (“run from the threat” not “run toward the threat”). It’s learned behavior through experience and education.
In the end, while others made portfolio mistakes that cost them 10%, 20%, or more – permanent impairment of capital that can never be recovered – the intelligent investor has a better portfolio than if the COVID crash hadn’t occurred.
What’s the value of a 10% mistake on $1M?
Bring Me a Higher Yield
A friend-of-the-blog recently sold his successful small business for ~$10M or so. Not your everyday event, to be certain. But it’s more common than I realized.
We sat down to spitball some ideas, and my honest advice to him was:
Put together a financial plan, which details future planned inflows and outflows of money. This would include some well-deserved near-term spending!
Pick an asset allocation that corresponds with that plan.
Then, dollar cost averages the money into that asset allocation (e.g. 4 large tranches of investment over 12 months, or something similar)
The problem: the idea of investing millions into the stock market concerned him. I believe good investing education can help this problem, but that education doesn’t occur overnight.
As we discussed next steps, I asked him, “Where is the money right now?”
The answer? In a large US bank savings account, earning 0.05% interest per year. That’s $5000 in annual interest on a $10M deposit.
So while we continued are long-term conversation about investing in the stock market, I gave him some vital near-term advice: seek out a higher yield via a brokerage money market fund.
In the ~18 months since I gave him that advice, his average yield has been ~4.5 – 5.0%. That’s ~$475,000 in interest on a $10M deposit.
Yes – a simple tip to be sure. But sometimes financial planning is all about identifying the simple fixed in your financial ecosystem that will provide $475,000 per year instead of $5,000.
He bought my coffee that day. Don’t tell Suze Orman.
The Car Loan
One of my clients bought a new car a few months ago and came to me with a simple question:
“Should I take advantage of the 0% financing they’re offering me?”
$40,000 cash out of pocket, or a $40,000 loan with zero interest?
The math is simple:
If she takes the loan, she can keep her $40,000 in a high-yield account (such as our previously mentioned money market account) and earn ~$1500 – $2000 per year in interest. There’s no downside. There’s no loan interest accruing against her.
$2000 a year isn’t life-changing money. But it’s easy money. Small, easy percentage points can move the needle over long periods of time.
Sneak Through the Backdoor
Another client of mine came to me as follows:
Early 30’s couple
High earners (total income ~$350,000 per year)
Using 401(k) accounts wisely, putting lots of extra money into a Joint Taxable brokerage account
I asked them if they’d looked into saving money in an IRA…
“Yep, we looked into it, but we earn too much money.”
They were partially correct. They do earn too much for “normal” IRA contributions, but they’re the perfect candidates for backdoor Roth IRA contributions.
I think we can conservatively calculate that backdoor Roth contributions will earn this couple an extra $100,000+ over the next 30 years.
Which House?
Another client lives in the greater Washington D.C. area and, with her growing family, faces an interesting question?
Where should we buy our forever home?
Their three options – Washington D.C. itself, Maryland, or Virginia – each come with their own financial pros and cons. We helped her weigh the following:
The cost of the homes themselves (e.g. how far a dollar goes)
The long-term cost of property and school taxes
The state tax benefits of home ownership
The impact of state income taxes on their earnings over the coming decades
The impact of state capital gains taxes on their long-term investing
Of course, this family must pick a home that’s right for their lifestyle. Finances come second.
But the maximum vs. minimum we calculated puts their range of possible at a net present value over $500,000. In other words, “House A” in the most expensive locality would cost them $500,000 more than that same house in the least costly locality, as measured in today’s dollars, over the next 30 years.
Then, as always, we should ask how our lifestyle and life plan might change with an extra $500,000?
The Value of a Basis Point
Portfolio reviews are vital.
If an expert looks at your investments and says, “You can accomplish the same asset allocation as you already are but could save 20, 30, or 50 basis points if you do it this way.” …what’s the value of that recommendation?
FYI: A basis point equals 0.01%. So, 50 basis points equals 0.50%
Smart, simple investing strategies don’t need to be overly expensive. While professional financial planners do need to charge for their time and expertise, they can and should also save their clients money by keeping investing costs low.
What’s a basis point worth?
Imagine a simple scenario. An average investor might invest for 35 years, socking away $10,000 per year and achieving a long-term average return of 8.00% per year. This investor’s final portfolio would be worth $1.86M. And in this case, each extra basis point of expenses along the way decreases the final portfolio value by $4500.
11 basis points adds up to $50,000.
The lesson is simple: keep fees low where you can, and make sure you’re getting value above and beyond the basis points you are paying.
What’s a “Cash Balance Plan?”
Finanical planning is a deep subject area, with many nooks and crannies I haven’t even heard of yet. One such example occurred this year, when my colleagues recommended a “cash balance plan” to one of my clients.
He’s a successful solopreneur who last year grossed about $700,000 in income. A lot of those dollars were taxed at the highest possible levels. His effective tax rate was north of 40%.
A cash balance plan is a defined benefit retirement account (whereas a 401(k) is a defined contribution account). In other words, it is like a self-funded pension.
Cash balance plans are especially beneficial when all of the following are true:
Solo business owners, or with a very small staff.
Business owners with high incomes who would benefit from putting away more tax-deferred dollars.
Business owners who are higher in age (as you’ll see below, the annual contribution limits are very high for older business owners).
This client can contribute about $200,000 into his cash balance plan this year, saving ~$80,000 on his 2024 tax bill. Those savings are likely to increase every year between now and his retirement.
Of course, he will eventually have to pay taxes on those dollars when he withdraws them in retirement. But in the meantime, he benefits from tax-free growth and, more importantly, from the flexible and planned nature of retirement withdrawals; we will help him plan those withdrawals at a much lower than ~40% tax rate.
Ugly Annuities
I dove deeply on annuities in episode 86 of The Best Interest podcast.
In short, the vast majority of annuities are:
Vastly over-costed.
Disappointing in terms of return on investment.
For that reason, 99% of us are best off never touching annuities in the first place. But what if you’ve already bought an annuity – what should you do then? As always, an essential part of financial planning is to “let the numbers be your guide.”
Annuities typically have “surrender fees,” which charge the owner an extra fee to exit the contract. These fees range up to 10% of the total annuity amount (e.g. $100,000 on a $1M annuity), and typically decay in size as the annuity matures. It’s common to see, for example, an 8% surrender charge in Year 1 of the annuity decay to zero surrender charge after Year 10.
Again, I have a client example. I’m working with an gentlemen who owned multiple annuities at various maturity level. We analyzed each one and showed him the potential upsides and downsides of dissolving those annuities, paying surrender fees, and then investing the proceeds into a moderate investment portfolio.
Together, we created a multi-year schedule to flip his portfolio to the light side of the force.
In the long run – say, over the next 20 years – I can confidently say he’ll save 1.5% per year on fees. And I can conservatively predict his new allocation will outperform the annuities by 3% per year (up to 5-6% per year if I’m being less conservative).
On his $750,000 portfolio over those 20 years, my conservative assumptions above lead to an extra $1.3M in compounding in his pocket.
The Power of Financial Planning
Smart financial planning is not about outperforming the stock market. Instead, it’s about identifying places in your personal financial ecosystem where you can and should be saving money, pay less taxes, earning better returns, reallocating assets, pay fewer fees, taking advantage of special accounts, etc. etc.
It’s about knowing all the rules of the game, and then playing it effectively. This article showed you just a few examples, including:
Avoiding 6- or 7-figure mistakes when the stock market panics
Earning simple higher yields on large sums of money. 3% on a million bucks is $30,000 per year!
Backdoor Roth contributions to earn someone an extra $100,000+ over 30 years
Optimizing a home purchase to the tune of $500,000 over 30 years
Keep investing fees low, or saving $4500 for every 0.01%
Utilizing complex tools, like a cash balance plan, to save 6- or 7-figures in lifetime taxes
Detangling ugly annuities, resulting in an extra $1M+ over 20 years
These are just a few of many examples, and none of them involved picking the winning stocks.
The real value of financial planning lies elsewhere.
Thank you for reading! If you enjoyed this article, join 8500+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week. You can read past newsletters before signing up.
-Jesse
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While Chicago has plenty of icons that draw travelers from near and far, true Chicagoans know exactly where to find unique adventures that will help you get to know the real Windy City. Maybe you are looking for a rental house in Chicago to test the waters, or you want to buy a home near the heart of the city, or maybe your goal is to find an apartment overlooking Lake Michigan. Regardless of what you are looking for, these 16 hidden gems in Chicago are bound to make you feel home.
1. Enjoy an iconic Chicago-dog at Jeff’s Red Hots
“When in Chicago, it is non-negotiable to eat a Chicago-Style Hot Dog.” Jeff’s Red Hots has been around since 1977, serving Chicago and its visitors one of the best hot dogs in the city. Whether you’re moving into the Portage Park neighborhood or just passing through town, grabbing a Chicago-Style dog from this local, family-owned business is an absolute must.
2. Raise a glass at Pops for Champagne
“As a wine expert in the Chicago area, my number one must-visit is Pops for Champagne,” says Sommelier Jane Norrington of See Jane Drink Wine. Pops is the oldest wine bar in the U.S. dedicated to champagne, offering over 150 champagnes and hundreds of other varieties of wines from across the world. “The staff is next to none, and their food menu offers perfect pairings for your glass. My favorite? A glass of Domaine de Bichery Blanc de Blanc paired with French fries and Dijonnaise.”
3. Meet new people and take in Lake Michigan by bike
“Bike the Drive turns Lake Shore Drive into a cyclists’ paradise,” says Mariya, owner and photographer at Mariya S Photography. She highly recommends the annual event that takes place at Butler Field in The Loop neighborhood. Thousands of people bike to and from a 15-mile stretch of Lake Shore drive that closes to traffic for cyclists of all ages. “It’s such a thrilling event – you’re surrounded by the coolest people biking along a gorgeous skyline and watching the sunrise over Lake Michigan,” says Mariya.
4. Get into the fall spirit with Jack’s Pumpkin Pop Up
“If you’re looking for a fun fall outing, check out Jack’s Pumpkin Pop Up on Goose Island,” shares WeLovePopUps, your go-to resource for the best seasonal pop ups in Chicago. They have everything from a corn maze to cute photo spots, carnival games, and tasty fall drinks. “The whole place just screams cozy autumn vibes, and it is a perfect way to soak in the season with friends.”
5. Make the most of an evening with a food tour
Lauren, owner of Stunning & Brilliant Events, a multi-city wedding planning team, recommends getting to know the flavors of Chicago with a food tour fit for any evening out on the town. “I suggest going for the king crab roll at Maple & Ash located in the Gold Coast,” says Lauren. “Then, pop over to The Bellevue across the street to sip and sit on the patio with their Greek salad. End the night at Adalina for a night cap – and don’t pass up their chicken parmesan pizza if it’s a Sunday.”
6. Discover Wonderverse, an immersive entertainment venue
There are countless things to do indoors and outdoors in Chicago, but Wonderverse is like entering a whole new world. Here is a little bit about them in their own words: “If you’re getting to know the city, make sure to add Wonderverse to your bucket list. Whether you’re looking for fun entertainment or virtuality experiences, Wonderverse has something for everyone. Enjoy NFL game days with platters and drink specials, test your knowledge with weekly trivia, or immerse yourself in themed events like our Halloween-inspired Hotel Transylvania Character Brunch. Wonderverse is the ultimate destination for family fun, food, and entertainment.”
7. Take a breath of fresh air at a nearby lake
“Escape the city for a day out on beautiful Lake Geneva with us at Lake Geneva Cruise Lines.” Take a day-trip to find the perfect cruise to fit the vibe you’re looking for. Offering numerous sightseeing and meal cruises, there is a one-of-a-kind boat tour for everyone on board. “Our narrated boat tours cruising through October are the best way to see the fall foliage around the lake and make for a fun fall adventure.”
8. Find amazing views and variety at the Museum Campus
Nate, portrait and lifestyle photographer at Nathaniel Smith Photographs, recommends exploring the numerous parks and museums in this unique area of the city. “The view of the city at night from the Museum Campus is unmatched. The museums are all top notch, it’s a perfect place to bike, and there are concerts at night in the summer at Northerly Island.”
9. Toast to a great evening with cocktails fit for a king
Get a mystical perspective at King of Cups Cocktail Lounge with a wonderful cocktail program sure to please any pallet. Located in the Lincoln Park neighborhood, dive into your future with one of their nightly tarot readings paired with a royal cocktail, or stop by for one of their amazing happy hours.
10. Get to know the city equipped with coffee and books
If you’ve just moved to Chicago and are a coffee enthusiast, Metric Coffee is the place to be. Located in the Industrial Corridor of the West Town neighborhood, they offer free cuppings and coffee tastings every Friday morning. Metric also suggests checking out MYOPIC Books in nearby Wicker Park. “This amazing bookstore is a local hidden gem for new and used books, and even hosts a variety of author events.”
11. Bring a taste of Michigan to your Chicago experience
Lola’s Coney Island in Humboldt Park is a prime example of the cuisine that makes Chicago one of the top places in the country to go for food. Grab a true authentic Coney-dog straight from Detroit, a classic Chicago-dog, or try one of Lola’s specially made hybrid versions.
12. The Windy City is only the beginning
On the local side, Andrew and Catie of Lesser Known Adventures recommend Ricobene’s for their famous steak sandwiches, but they love Chicago most for its close proximity to so much more. “Within an hour’s drive, you could be riding a roller coaster at Six Flags Great America or, if you’re a car enthusiast, checking out the largest collection of vintage and Hollywood movie cars at the Volo Auto Museum. And, if you’re in the mood for an epic road trip, Chicago is the starting point of the historic Route 66 – one of the best road trips in the world.”
13. Discover Christmas in Chicago
“Braving the cold is a Herculean task, but there is always something fun to make it worth it,” shares Joshua, manager of Overflow Coffee in the heart of the city. The Christkindlmarket, a German-style Christmas market for winter holiday fun. “They have great food, music, gifts, knickknacks, ice skating, spiced wine or hot chocolate served in collectible mugs, and tons of Christmas spirit. It is something you’ll want to make into a tradition for sure.”
14. Classic Italian comfort is just around the corner
Buona Terra Ristorante has been a beloved staple in the Irving Park community for the past 23 years. Best known for its authentic Italian cuisine and fresh, locally sourced menu, Buona Terra is perfect for a cozy dinner or a special occasion. It has become a favorite among Chicago residents as a delightful escape right in the neighborhood.
15. Attend one of the many neighborhood summer festivals
“Chicago is a city of neighborhoods,” shares travel blogger Travel With Meena, “each with a distinct character that comes through during these summer celebrations of local art, music, and food. Contribute to an interactive art piece or catch a canine fashion show at the Logan Square Arts Festival. Watch fire dancers, listen to local bands and sip on local brews at Wicker Fest, or dive into the city’s Scandinavian heritage at Andersonville Midsommarfest. This is the real Chicago.”
16. Marvel at the annual Chicago Air and Water Show
At the end of the summer, the Chicago Air and Water Show roars across the shore, bringing the largest free show of its kind in the U.S. to Lake Michigan. Susan, owner of local wedding planning company Big City Bride, says “It’s a perfect beach day to enjoy the lake when it’s at its warmest of the season. You can feel the electricity in the air when the Blue Angels rip through the sky.”
Hidden gems in Chicago: final thoughts
Whether you like to keep close to the heart of the city or embrace your adventurous side, living in Chicago will always have something exciting to offer. These hidden gems in and around the Windy City are sure to make Chicago feel more like home – regardless of how long you stay.
Once your small business starts earning a profit, you have to decide if you should distribute those profits to yourself (and any other owners) or reinvest them back into the business.
While it can be tempting to pocket your company’s profits, funneling at least some of that money back into the business is worth considering.
For one, reinvesting can help improve the company or expand operations, leading to even higher profits down the line. For another, reinvested money is generally considered a business expense, which means you likely won’t have to pay income taxes on it.
Read on for a closer look at why you may want to reinvest a percentage of your profits back into your business, how this can impact your business taxes, and ways you might use profits to help expedite business growth.
What Constitutes a Business Profit?
Profit is the money a business pulls in after accounting for all expenses. Any profits earned funnel back to business owners, who can choose to either keep it as earnings, distribute it to shareholders as dividends, or reinvest it back into the business.
Whether you own a small dog grooming business or a multinational corporation, the main goal of any business is to earn money. Thus, a business’s performance is based on profitability. For accounting purposes, companies will often report gross profit, operating profit, and net profit (the “bottom line”).
Recommended: How to Read Financial Statements: The Basics
What Are Businesses Taxed On?
Any profits that aren’t reinvested in a business are typically taxed as income. How that tax is paid depends on the structure of the business.
Most small businesses are pass-through entities, which means that the gains or losses are passed through to the owners on their personal income tax returns. Corporations, on the other hand, pay a flat tax on business profits.
Recommended: 10 Steps to Starting a Small Business
Types of Business Taxes
When we refer to “taxes” for a business, we’re actually using an umbrella term for many different types of taxes a business may have to pay. Let’s take a closer look.
Income Taxes
Income taxes are based on the net income of your business for the tax year. Net income is the same thing as profit (income minus expenses). If you share a business with others, the net income is divided among the owners based on your business agreement. Most small businesses pay both federal and state income taxes.
Estimated Taxes
Employees have taxes withheld from their paychecks, but as the owner of your business, no one is withholding taxes from the money you take out of the business.
Instead, you need to file estimated taxes throughout the year based on the income you have earned up to that point in the year. Typically, federal and state estimated tax payments are due on April 15, June 15, September 15, and January 15 for the previous tax year.
Self-Employment Tax
Employees generally have Social Security and Medicare taxes withheld from their paychecks. If you are a self-employed business owner, however, you must calculate and pay your own Medicare and Social Security tax through self-employment taxes.
Excise and Sales Taxes
Depending on which state you operate in and what type of goods or service you sell, you may need to set up a system to collect sales tax from your customers and report and pay that tax to your state.
You may also need to pay federal and local excise taxes. An excise tax is a legislated tax on specific goods or services, such as fuel, tobacco, and alcohol.
Payroll Taxes
If you have employees, you must withhold payroll taxes from their paychecks and pay applicable federal, state, and local taxes. The taxes usually withheld from employee paychecks include FICA (Medicare and Social Security taxes) and federal, state, and local income taxes. Employers and employees each pay half of the FICA tax.
Recommended: 3-Year Business Plan Structure
How to Reduce Taxable Income
As a business owner, there are many strategies you can use to reduce the portion of your business income (or profits) that can be taxed. Here are some you may want to consider.
Reinvesting Business Profits Into the Business
Reinvesting means retaining net profits (the income left over after all operating costs and overhead are paid) and investing them in activities or expenses that can help increase the value of the business. As a business expense, reinvested income generally isn’t taxable.
You may, however, want to reinvest only a portion of your profits and look for other ways to infuse capital into the business, such as applying for a small business loan. Interest paid on business loans is typically tax deductible as a business expense.
Finding Deductions
There are numerous business tax deductions you may qualify for and, when you add them all up, they can amount to a significant reduction in your taxable business income. Here are some of the most common small business deductions:
• Inventory
• Business property rent
• Startup costs
• Utilities
• Company vehicle expenses
• Insurance
• Rent and depreciation on equipment and machinery
• Office supplies
• Furniture
• Advertising and marketing
• Business entertainment
• Travel expenses
• Interest paid on all types of small business loans
Tax Audits
As a small business owner, it makes financial sense to explore all your options for reducing your tax bill. However, when it comes to deductions, you need to be careful. It’s particularly important, for example, to keep your business and personal expenses separate. If your deductions look suspicious to the IRS, the agency could potentially audit your business.
Investing in Employees
One great way to reduce your company’s taxable income is to invest in your employees. Generally speaking, any wages, bonuses, or other compensation you pay your workers in a given year are tax deductible as a business expense. That includes any fringe benefits you offer — such as gifts, health plans, and employee discounts — as well.
Rewarding your workforce can do more than lower your tax liability, however. It can also help boost their morale, increase productivity, attract the top talent, and grow your business.
Choosing Purchases and Investments Wisely
While it’s clearly important to invest in your business, the question remains: Where should you focus your funds? Here are a few purchases and investments you may want to consider.
• Equipment: It can be smart to reinvest profits into new machinery and equipment as your current assets age and become expensive to maintain. Upgrading equipment can increase efficiency and help you stay on the cutting edge of your industry.
• Software: Investing in software, such as payroll and accounting software, can help streamline tedious tasks and free you up to focus on more important matters, such as growing your business.
• Inventory: In some cases, using business profits to buy more inventory can be a smart business move. If you often sell out of popular products, for example, beefing up inventory can help you capture sales you’ve been missing out on.
• More marketing: You might consider hiring a marketing professional or agency to help create buzz about your business, improve search rankings, and expand your customer base.
Recommended: Business Cash Management, Explained
Tax Planning Strategies
One of the best ways to make your business tax efficient is to pay attention to tax credits and not just deductions.
Tax credits are particularly valuable because, unlike deductions, which reduce your taxable income, credits reduce your tax bill on a dollar-for-dollar basis. For example, if your small business owes $25,000 in taxes, a $5,000 tax credit means you can subtract $5,000 from your tax bill and only owe $20,000.
There are a number of tax credits your business might qualify for, including:
• Credit for Small-Business Health Insurance Premiums
• Employer Credit for Paid Family and Medical Leave
• Work Opportunity Credit
• Credit for Increasing Research Activities
• Disabled Access Credit
• Credit for Employer-Provided Childcare Facilities and Services
• New markets credit
The Takeaway
It takes hard work to establish and grow your business. Once you’re able to cover all your expenses, pay yourself a salary, and still have money left on the table, it may be time to consider putting that extra money into your business.
Reinvestment means pouring a percentage of your company’s profits back into your business. It can be a great way to increase the value of your company and to help your company grow. What’s more, reinvesting can reduce your business tax liability at the end of the year, for the ultimate win-win.
If you’re seeking financing for your business, SoFi can help. On SoFi’s marketplace, you can shop top providers today to access the capital you need. Find a personalized business financing option today in minutes.
With SoFi’s marketplace, it’s fast and easy to search for your small business financing options.
FAQ
How much is a small business able to make before paying taxes?
A small business generally must pay taxes on any profit it earns, but the specific amount before paying taxes depends on deductions, credits, and the business structure. For self-employed individuals, income over $400 is subject to self-employment tax, while other tax obligations vary by income and state laws.
What does the 20% business tax deduction do?
The 20% business tax deduction, part of the Qualified Business Income (QBI) deduction, allows eligible small businesses to deduct up to 20% of their qualified business income from their taxable income. This reduces their overall tax liability, promoting business growth and investment.
What is a business write-off?
A business write-off is a tax deduction that allows businesses to subtract certain eligible expenses from their taxable income. Common write-offs include operating costs, rent, supplies, meals, startup expenses, employee salaries, and more. These deductions reduce the overall tax liability by lowering the business’s reported income.
Can you invest business profits to avoid taxes?
Yes, you can reinvest business profits into the company to reduce taxable income, but you cannot avoid taxes as a small business owner. While reinvesting can lower taxes, it doesn’t fully eliminate tax obligations, as profits are still subject to applicable tax laws and limits.
Photo credit: iStock/Andrii Yalanskyi
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Let’s dive into how interest rates are affecting the real estate market, particularly from an investor’s point of view. I’ll use an upcoming property purchase as an example to show how high versus low interest rates can make or break an investment.
Table of Contents
Video: Does it Still Make Sense to Invest in Rental Properties?
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The Property: A Rough Aplex with Opportunity
I’m about to close on an 8-plex (eight-unit building) that’s seen better days. It’s a rough property, but it has a lot of potential. In real estate, you make money by adding value, and that’s exactly what I plan to do. In today’s high-interest-rate environment, it’s nearly impossible to make rental properties cash flow without taking steps to improve them, either by increasing rents or enhancing the property.
This particular property was listed on the MLS, and it’s a rare find in Northern Colorado. Even at $600,000, which is very cheap for an 8-plex in our area, the numbers aren’t great under current conditions. However, that’s why it’s available at a lower price—because it needs work. Let’s look at how interest rates play into the decision to buy a rental property like this one.
InvestFourMore Cash-on-Cash Calculator
How Interest Rates Impact Cash Flow
The cost of borrowing is a huge factor for investors. With interest rates as high as they are today, the numbers on many rental properties simply don’t add up. For this example, I’ll assume a $600,000 purchase price with a 20% down payment, though in reality, I often use private money and refinance later.
Purchase price: $600,000
Down payment (20%): $120,000
Loan amount: $480,000
Monthly rent: $4,000
With a traditional 20% down payment, this deal would be tough to justify right now. The property brings in $4,000 per month in rent, but the mortgage and expenses eat up nearly all of that income, especially with current interest rates. If you were to pay all cash for the property, your return on investment (ROI) would be an abysmal 2.2%, which is well below inflation and far from ideal for any investor.
InvestFourMore Cash Flow Calculator
Additional Costs to Consider
Investors should also be aware of additional expenses beyond the down payment. You’ll need to factor in closing and loan costs, which can add up quickly. These might include:
Appraisal fees
Prepaid interest
Insurance
Taxes
Loan origination fees
Title costs
Improvement Location Certificate (ILC)
In total, you’re looking at an additional 3% of the loan amount, or about $15,000, bringing your initial cash outlay to around $134,000. If you’re financing through a bank, you’ll also need reserves on hand to cover unexpected costs like vacancies or maintenance.
InvestFourMore Cap Rate Calculator
Ongoing Monthly Expenses
Here’s a breakdown of some estimated monthly expenses for this property:
Insurance: $500
Property taxes: $500 (this is in a small town, so taxes are relatively low)
Property management: Even if you manage the property yourself, you need to account for your time.
Maintenance: Given the rough condition of this property, maintenance costs could be high, particularly if the property isn’t fully renovated.
Vacancies: Vacancies are always a factor. Lower-quality properties tend to have more tenant turnover, while renovated properties attract longer-term tenants.
Before financing, this property is already costing about $2,900 a month to operate. If it brings in $4,000 a month in rent, that leaves just $1,100 a month in profit, or $13,200 a year. For a $600,000 investment, this results in a 2.2% ROI—not nearly enough to make it worthwhile.
The Impact of Financing
Let’s assume you take out a $480,000 loan with an 8% interest rate on a 30-year term, which is typical for investors right now. Your monthly mortgage payment would be approximately $3,522. Combined with the operating expenses of $3,000 a month, your total expenses are $7,000. Since the property only brings in $4,000 in rent, you’d be losing $3,000 a month!
If you plan to hold the property and fix it up, you might be able to increase the rents to $7,000–$8,000 a month. In that case, your cash flow would improve, but you’d still only be earning around $1,000 a month, or a 5% ROI—still not great for the effort and risk involved.
How to Qualify for a Loan on an Investment Property
When Interest Rates Drop
The real opportunity comes when interest rates fall. If rates were to drop to 5%, your monthly mortgage payment would decrease to around $3,000. Now, with $8,000 a month in rental income, your expenses would total $6,000, leaving $2,000 a month in profit, or a 10% ROI. This scenario shows how significantly lower rates can change the profitability of a property.
Building Equity and Future Appreciation
Beyond cash flow, there’s another reason to invest in rental properties: appreciation and equity growth. If I fix up the property and raise rents, other investors may be willing to buy it at a higher price, accepting lower returns in exchange for the improved condition and potential for future appreciation.
For example, if the rents reach $96,000 annually, and the property sells at a gross rent multiplier of 9, the value could increase to around $860,000. After accounting for $100,000 in repairs and additional closing costs, that’s a potential $316,000 gain in equity—a strong outcome for a value-add property like this.
Conclusion
Buying rental properties in today’s high-interest-rate environment is challenging, but there are still opportunities for investors who know how to add value and improve properties. High rates may deter some, but if you can weather the storm and improve the property, you stand to benefit from future rate cuts and potential equity gains. The key is finding the right property, knowing your numbers, and being prepared for the risks and rewards that come with real estate investing.
Do you want to get paid to give advice? A few years ago, I never would have thought that giving advice could turn into a way to make extra money. But after starting my website and sharing what I knew about personal finance, I quickly realized that I could make extra income. It’s amazing how…
Do you want to get paid to give advice?
A few years ago, I never would have thought that giving advice could turn into a way to make extra money. But after starting my website and sharing what I knew about personal finance, I quickly realized that I could make extra income.
It’s amazing how your skills, whether they’re in medicine, cars, law, tech, relationships, or anything else, can become a profitable business. I love helping others and, at the same time, earning money from what I enjoy!
In this article, I’ll go over:
Ways to get paid to give advice
Type of professionals that get paid to give advice
How to get paid giving advice online
How To Get Paid To Give Advice
Here’s a list of 16 ways to get paid to give advice.
1. JustAnswer
JustAnswer is a site that pays people to give advice and answer questions in different fields such as legal, tech, medical, veterinary, antique appraisers, and more.
If you’re an expert in a field that people usually have questions in, you can monetize your expertise on JustAnswer by sharing your expert opinion.
You may be wondering what kind of questions are asked on JustAnswer. Here are a few examples:
How much is my antique worth?
How can I lower my business taxes this year?
What can I do if a sinus infection won’t go away?
How do I fix my car’s alternator?
To get started on JustAnswer, you need to go through an application process (with a background check) and get verified that you’re an expert by providing proof of qualifications like degrees, certifications, or other relevant experience.
Recommended reading: 21 Ways To Get Paid To Answer Questions
2. Start a blog
I run a personal finance blog and share advice all the time (and I get paid for it!). Starting a blog is one of the best ways to share your expertise while creating a reliable source of income.
Sharing your expertise and knowledge with a blog is a great way to diversify your income. You can make money blogging by:
Affiliate marketing (where you get a commission when people make purchases through your links)
Advertising revenue
Sponsored content
Selling services like coaching
Selling products like books or courses
One of the keys to successful blogging is choosing a niche or topic that you’re both passionate about and that has an audience who wants to learn more.
Here are some popular blog niches you can try, depending on your expertise:
Education and career – If you have experience in teaching or career coaching, this niche can focus on helping others with their career goals, job interviews, or study techniques.
Personal finance – Share tips on budgeting, saving, investing, and side hustles. Many people are looking for ways to improve their finances.
Health – Topics like fitness, nutrition, mental health, and self-care are helpful.
Travel – If you love traveling, you can start a travel blog, sharing tips on budget travel, destination guides, family travel, or even remote work opportunities.
Parenting – This niche covers a wide range of topics, from newborn care and toddler tips to advice for teenagers. You can also write about balancing parenting and work or homeschooling.
DIY and crafts – Whether it’s home improvement, crafting, or upcycling projects, this niche is popular among creative individuals looking for inspiration and guidance.
Lifestyle – A lifestyle blog covers several areas like home decor, fashion, personal growth, and productivity.
Tech – If you’re knowledgeable about tech, you can give advice on the latest gadgets, software, app reviews, and even tutorials for beginners.
Beauty – This is a highly popular niche where you can share makeup tips, skincare routines, and product reviews.
Relationships – Help readers improve their relationships or personal growth by sharing advice on communication, self-improvement, or career development.
You can learn how to start a blog in the free How To Start a Blog Course.
3. Create an online course
If you’re looking for a passive way to make money by giving advice, creating an online course is a great way to do so.
My sister runs a popular online course and has done very well with it. Over the years, she has helped thousands of people with her business advice for website owners.
You can create a course on topics such as:
Meal planning and prep – Teach people how to plan meals, prep ingredients, and create healthy, budget-friendly meals.
Parenting tips – Help with topics like raising toddlers, managing screen time, or improving sleep.
Home organization – Help people declutter, organize their homes, and create better living spaces.
Fitness and wellness – Share workouts, stretching routines, or mindfulness practices like meditation or yoga.
Photography basics – Teach people how to use their camera or phone to take better photos. I recently saw a course teaching parents how to take better family photos with their phone, and it looked so helpful!
Gardening for beginners – Guide people through starting a garden, caring for plants, and growing their own fruits and veggies.
DIY home projects – Sell lessons on simple home improvement or crafting projects, like building furniture or making home decor.
Travel planning – Share tips on planning budget-friendly vacations, packing efficiently, and finding fun destinations.
Pet care – Teach new pet owners how to care for their animals, including training, nutrition, and grooming tips.
You can sell your online course on your website or course websites like Udemy, Skillshare, or Teachable (Teachable is my favorite course platform).
4. Answer surveys
You won’t get rich by answering surveys, but it’s an easy way to make money by giving your opinion.
Market research companies pay survey sites to find users to complete surveys for them. These paid online surveys help companies make better products and services.
Here are some of the recommended survey companies to sign up for:
American Consumer Opinion
Swagbucks
Survey Junkie
InboxDollars
Branded Surveys
Recommended reading: 12 Best Online Surveys For Gift Cards
5. User Interviews
User Interviews stands out from most market research companies because, rather than paying for typical online surveys, it specializes in focus groups.
This means they seek more detailed feedback from participants on different products and companies. Their studies are usually conducted via phone or video interviews, with the average study paying over $65.
Large companies like Spotify, Pinterest, GoPro, and Amazon use User Interviews to collect market insights. The platform runs over 2,000 studies each month, and last year alone, more than 77,000 participants were paid.
Michelle (my sister as well as the owner of this blog) participated in a focus group through User Interviews and earned $400 for just one hour of work. She said it was simple, and the entire process was completed online through a video call.
You can click here to sign up for free with User Interviews.
6. Financial advisor
Financial advisors are trained professionals who give financial advice to clients. You can make money as a financial advisor by charging fees for your services, receiving commissions on financial products, or both.
A financial advisor may help with financial planning, retirement, wealth management, insurance, investments, savings, and more.
To become a financial advisor, you need a combination of education and certifications. To get started, you’ll need a bachelor’s degree in finance, economics, accounting, or related field. You’ll also need an internship or entry-level job in finance, banking, or financial planning to get hands-on experience. Most importantly, you’ll need to get certified as a Certified Financial Planner and pass the licensing exams.
As of this writing, the average Certified Financial Planner’s salary is between $66,000-$122,000 a year.
7. Business consultant
One way to make money by giving advice is to start a consulting business and become a freelance consultant.
A business consultant is someone who uses their expertise to help companies improve their business, income strategy, and profitability.
Consultants get paid either by hourly rate, project-based fees, or retainer agreements. Business consultants can also make money by conducting training sessions and workshops for more money.
Business consultants are in high demand as businesses are always looking for ways to improve and make more money.
8. Personal trainer
If you love fitness and working with people, you can try making money as a personal trainer.
Getting a NASM personal trainer certification, which is one of the top certifications in the field is helpful. This is where you’ll dial in form, workout routines, and many other important fitness-related skills.
As a personal trainer, you can make money with one-on-one sessions, group classes, and even online training programs. Trainers typically charge per session or have package deals for multiple sessions. You can also make money by creating workout programs that people can purchase online.
9. Online coach
You can make money working as an online coach through digital platforms.
Some areas that you could coach on include:
Life coaching
Relationship coaching
Business coaching
Fitness coaching
Career coaching
As an online coach, you can make money with one-on-one coaching sessions, group coaching, or self-paced courses that people can buy directly from you. You can charge people one-time fees, package deals, or ongoing membership subscriptions for continued access to your guidance.
To grow your income, you can use social media platforms to build your brand and get people to trust you, such as by sharing helpful free tips in graphics or captions.
10. HelpOwl
HelpOwl is a platform where you can get paid to give advice online to individuals seeking help with different topics.
To get started with HelpOwl, register on the website and set up your profile. Your profile should showcase your expertise, skills, qualifications, and areas of advice.
You can also determine your fee structure for providing advice whether it’s per session or question.
11. Quora
You’ve likely heard of Quora since it’s a goldmine for getting any kind of question answered, but did you know you can make money with Quora?
Yes, it is possible to make money on Quora through a few different strategies.
Quora has a partner program that lets you make money by asking questions that generate high traffic and engagement to their website. You can get paid based on the ad revenue generated from the questions you ask.
Quora’s partner program is great for anyone who wants to become an online advice giver as you can share your honest opinion or answer a question in a simple comment.
12. Start a podcast
You can make money selling advice through a podcast.
This method of selling advice takes a lot of work but can be worthwhile if successful.
If you want to start a podcast to give advice, there are many great topics to choose from. You could talk about personal finance, relationship advice, or career coaching. Health and wellness podcasts are popular too, where you can cover fitness, mental health, and self-care. Parenting tips for new parents, small business advice, or life coaching are also good ideas. You could even share tech help, home improvement tips, or legal advice.
Whatever you pick, your podcast can help people improve their lives.
Once you build up your following, you can make money with ads and different sponsorships on your podcast episodes, along with affiliate links.
13. Start a YouTube channel
Starting a YouTube channel is another great way to get paid for giving advice, especially if you enjoy talking on camera.
I turn to YouTube all the time when I’m looking for answers and advice. It’s a helpful resource where I can find detailed explanations on just about any topic. Whether I need tips on personal finance, blogging, or even tech solutions, there’s usually a video that walks me through the steps. I love how I can watch experts in action, and it’s a great way to learn something new quickly and visually.
With YouTube, you can create videos in your area of expertise and build an audience of subscribers who value your knowledge. Whether you’re skilled in personal finance, cooking, fitness, or any other niche, there’s probably an audience looking for advice in a YouTube video.
To make money on YouTube, you can monetize your channel through:
Ads: Once you reach YouTube’s eligibility requirements, you can earn money from ads that play during your videos.
Sponsorships: Brands may pay you to promote their products or services in your videos.
Affiliate marketing: Include affiliate links in your video descriptions, earning a commission when viewers make purchases through your links.
Selling products or services: You can also use YouTube to promote your own products, courses, or consulting services.
Consistency is key on YouTube, so creating valuable, engaging content that resonates with your audience will help grow your channel and income over time.
14. Share advice on Fiverr
Fiverr is a great spot to sell your advice if you’re looking for an online job.
I searched on Fiverr and found 2,200 listings where people were offering to give advice. The topics included things like relationship advice, tax advice, fantasy football advice, blog advice, business advice, and more.
You simply create a profile and a listing where you share the type of advice you specialize in.
15. Website testing (such as with UserTesting)
Website testing is a simple way to make money by sharing your advice and providing feedback on the website user experience.
There are several well-known website testing sites including UserTesting, TryMyUI, and Userlytics. These sites connect you with people looking for user feedback on their websites and apps.
By using website testing platforms, selling expert advice, and building a strong reputation, you can successfully make money through website testing and sharing your insights.
16. Mystery shopping
Mystery shopping is a fun way to give your advice and feedback on a customer service experience, product, or store operations.
As a mystery shopper, your feedback tells companies how well their employees are treating customers, if customers are happy, and if any operational problems need fixing.
There are three different ways to make money mystery shopping including:
Cash and reimbursement (you’ll get paid to do the mystery shop, plus get the service/product for free).
Cash payment (an example would be a phone call mystery shop when you don’t buy anything).
Reimbursement (an example would be a restaurant secret shop – these typically don’t pay any money except for receiving free food).
BestMark is one of the biggest mystery shopping companies with a great reputation, and they have many different kinds of mystery shopping jobs available. Ath Power Consulting is another well-known mystery shopping company that has over 500,000 secret shoppers. They complete over 10,000 mystery shops each month, and they work with many popular companies.
Recommended reading: Want To Make An Extra $100 A Month? Learn How To Become A Mystery Shopper
Frequently Asked Questions
Below are answers to common questions about how to get paid to give advice.
Can you get paid for giving advice?
Yes, you can get paid for advising in many ways such as consulting (people pay for advice on specific topics), coaching (people paying for expertise in a certain area, like business, relationships, career, and life), and content creation (monetize your advice through blogs, podcasts, social media).
What type of professionals make money by giving advice?
The kinds of professionals getting paid to give advice include:
Consultants
Coaches
Financial advisors
Legal advisors
Counselors
Health experts
Tutors
Real estate agents
Educators
Creative professionals
Entrepreneurs
Public speakers
As you can see, the list is endless. By using the skills and knowledge you have, you can likely get paid to provide practical and personalized advice to people.
Can I sell life advice?
You can sell life advice if you have valuable life experiences that other people find helpful to learn from. People tend to hire life coaches, mentors, and advisors to help them with life challenges, achieve goals, and find purpose in their lives.
You can make money selling life advice in several ways including:
One-on-one coaching sessions
Online courses
Books
Blogs
Podcasts
Social media accounts
It’s important to identify your niche and who you want to help. For example, your target audience may be women looking for a career change or people who need help with relationship advice. Focusing on a specific niche will help you stand out from others and market your services more efficiently.
How can you get paid to give advice online?
There are many ways to get paid to give advice from your laptop. JustAnswer is a great way to get started getting paid to give advice and connect you to people seeking help in your field.
If you’re looking for a passive way to make money giving advice, create an eBook, course, blog, or podcast. You can make money by selling your products, advertising, using affiliate links, or creating sponsored content.
Can you get paid to give relationship advice online?
You can get paid to give relationship advice and dating advice by working as a relationship coach through platforms like BetterHelp (as a therapist) or via your own website. You’ll need specific credentials to work on sites like BetterHelp and Talkspace, whereas having a relationship blog doesn’t require certifications, but may be harder to make money at the beginning of starting your business.
How To Get To Give Advice – Summary
I hope you enjoyed this article on how to get paid to give advice.
If you have knowledge in a specific area, you can turn that into a business by giving advice. Whether it’s in fields like medical, legal, tech, personal finance, or relationships, there are many ways to get paid for your skills.
Plus, you can do this either part-time or full-time, so you can choose what kind of hours you want to work.
Wilmington, North Carolina is a charming coastal city known for its Historic Downtown River District and its beautiful beaches that offer the perfect spots for swimming, tanning, and relaxing. While the sandy shores and historic charm of this city are well-known, Wilmington also offers an array of distinctive activities that go beyond the usual tourist attractions. Whether you’re looking to move into a new apartment in Wilmington, or buy a new house in Wrightsville Beach or you’re planning your next beach vacation, this guide will take you through some of Wilmington’s most unusual and intriguing activities.
In Wilmington, NC there’s no shortage of perks and culture to make people feel connected to one another in one of the most beautiful towns in the country. “Experiencing live music at the most surprisingly scenic swamp-based outdoor venue anywhere, Greenfield Lake Amphitheater, or finding carefully curated vinyl at the towns most beloved Gravity Records, Wilmington has music lovers covered. Wilmington’s food scene has long been established by the likes of local legendary Chef Keith Rhodes and talented team at Catch, and has also seen lots of exciting newcomers like Lauren Wright and Keala Yu from Pie Slayer on Princess Street.” – Dean Neff, Chef/Owner – Seabird Restaurant
One event that captures Wilmington’s essence is the North Carolina Azalea Festival. The Azalea Festival is an annual event that usually occurs in early April and it is always a great time. If you want a fun southern charm event that captures the culture and everything about Wilmington, this is the event for you!
“The events at the Azalea Festival include a garden party, multiple concerts, a big parade, a celebratory gala, a putt putt event with the Alex Highsmith Family Foundation, and so much more. I love so many things about the city of Wilmington but the Azalea Festival is definitely at the top of my list.” – Alex Highsmith with the Alex Highsmith Family Foundation
Photo by Sam Draper
Looking for a fun and unique way to spend your weekend in Wilmington, NC? Check out one of the local farmers markets! From fresh, locally grown produce to handmade crafts and artisanal goods, these markets are a perfect way to support local vendors while enjoying the vibrant community atmosphere. Plus, it’s a great spot to grab a coffee, stroll through the stands, and pick up something special for your apartment.
“Saturdays are for farmers markets in Wilmington. And from April to November you can go to downtown’s red bricked streets that border the wide Cape Fear River for the Riverfront Farmers Market, which is in its 21st year. There you’ll find local farmers selling what’s in season, fresh flowers, homemade jams, mushrooms and eggs, as well as soaps and loofah grown in the soapmaker’s backyard. Saturdays on Dock Street from 8 a.m. to 1 p.m.” – Eileen Duffy – Edible Port City
These open-air markets offer everything from seasonal produce to homemade goods, perfect for anyone wanting to embrace the community spirit. It’s not just about shopping—it’s about connecting with local farmers, artisans, and creators. Whether you’re picking up farm-fresh eggs, a new plant for your apartment, or just enjoying the laid-back vibe, these markets add a little local flavor to your weekend plans.
“Being a local in Wilmington, NC, means getting to know your local farmers! Visit the Wilmington Farmers Market at Tidal Creek every Saturday, year-round from 8am-1pm to purchase local food and get to know the farmers that grow it. Learn about their farming practices and bring home the freshest, most nutrient-dense food you can get your hands on. Be sure to go inside Tidal Creek Co-op for coffees, smoothies, or hot breakfast before shopping at the market; your new Saturday morning ritual.” – Julie Svenson – Market Manager
“Seaglass is a once-a-month destination, featuring over 50 local artists & artisans selling handmade, homemade, resale, and retail items. It is a unique way to shop local and meet the talented vendors each month. Visit our website for dates, hours, and directions. We are completely indoors & open, when scheduled, rain or shine!” – Kelli Benton
Located at 5601 Castle Hayne Road in Castle Hayne, NC this market is just minutes from Wilmington!
“The Really Cool Stuff Holiday Market is held on Nov. 30, 2024 (Small Business Day) and is a great way to celebrate and support small, local businesses. Held on Dock St. between Water and 2nd streets, this annual holiday themed festival brings together 60 plus artists and creators from Wilmington and nearby communities. Street musicians, live DJ spinning, and day of surprises add to the fun, social atmosphere while kicking off the holiday season. From whimsy to traditional, there’s something local and creative to discover. 11am – 4pm.” – Andrella Christopher
If you’re passionate about the environment and looking to support organizations that feel the same way, check out this fun and eco-friendly event! Whether you’re a seasoned eco-enthusiast or just curious to explore, the Veg-Out festival is a perfect way to spend a Saturday outdoors, connecting with the community.
“Wilmington’s own 4th annual Veg-Out Festival brings together local healthy eating and green living vendors at Greenfield Lake in the Rotary Wheel Garden Oct. 12. A great place to try local vegan and vegetarian food, find reusable home goods, natural bath and body products, get a massage, and learn about climate change. A free event in a beautiful, intimate setting from 11am-4pm. Also includes speakers on various environmental and well-being topics.” – Cool Wilmington
“Be sure to check out The ArtSea Shop & Studio when you’re in Historic Downtown Wilmington. This cute little shop features the artwork of over 25 different local artists and offers many different beginner’s level art/craft classes every week! Support local and get your creative juices flowing while here in Wilmington! Located at 3 S 2nd Street, Units 150 and 160, just off Market St.” – Jenn Maksymiak
The Cameron Art Museum in Wilmington, NC, showcases contemporary and historical art with a focus on regional artists. Its diverse exhibitions and beautiful garden offer a unique cultural experience.
“Join us Thursday evening September 19 at 7 PM outside CAM in the PNC USCT Park as we welcome vocalist Leme Nolan to our Sunset Performance Series. This is a FREE event that takes place in front of the Boundless sculpture created by artist Stephen Hayes to honor the USCT that fought on the museum grounds for their freedom. CAM Café is open late serving drinks and more to enjoy outside. Visit CameronArtMuseum.org to learn more.” – Matt Budd, Director of Marketing
Spending an afternoon visiting Airlie Gardens is always at the top of our list of expert recommendations for friends and family visiting Wilmington for the first time. Especially in the springtime, but truly any time of the year, Airlie Gardens is a delight for the senses.
“With its centuries-old majestic oak trees, dripping with Spanish moss; vibrant and ever- changing flower beds that line and surround enormous grass lawns; a view of the intracoastal waterway along Bradley Creek and an abundance of nature and wildlife to take in, there’s always something new to see, hear, smell and feel at Airlie Gardens.” – Shauna Gartz – Shauna Loves Planning
10. Local coffee shops
“Whether you are in Wilmington for the weekend, or you have recently relocated, local coffee shops like BeSpoke Coffee and Dry Goods or Hidden Grounds are an absolute must. Both of these local coffee shops offer unique and creative coffee and/or tea beverages with non-dairy milk alternatives. As a nutrition professional and someone with a couple of food restrictions, I rarely find myself without options in Wilmington.” – Crystal McLean, MS, RDN, LDN, Owner – Thrive Performance and Nutrition
“Wilmington has an abundance of great restaurants to try but make sure to visit Blue Surf Café (near UNCW) and Blue Surf Arboretum West (north of Mayfaire) where you will find great food with a laid back vibe that fits this coastal town. Locals and tourists alike enjoy the patios and comfortable feel while enjoying the inventive twists on modern American cuisine. Make sure to try the gourmet hot chocolate in the fall and winter!” – Colleen Kochanek
Wilmington is a beautiful coastal town that attracts those who appreciate the ocean and are dedicated to preserving it. Local businesses, like The Green House Restaurant, prioritize sustainability to protect what makes this place so special.
“By sourcing from local farms, using clean energy through Arcadia Power, avoiding disposable plastics, and composting, we minimize environmental impact while offering you a mindful, delicious dining experience.” – Anastasia Worrell – The Green House Restaurant
“If you ever find yourself in Wilmington, make sure to drop by… drumroll… The Kitchen Sink. We took an old nook downtown and made it into a place that serves creative dishes-masterfully melding the comfort of Southern food with international flair. From the Sweet & Savory sandwich to our Soup Flight, each plate embodies the heart of Wilmington’s laid-back eclectic food scene. Pull up a chair, get comfortable, and find out why Wilmington feels like home.” – Najee Kenion
“My new spot for food and beverage is Ponysaurus Brewing Co. They renovated an old lawyers’ office and created a beer hall environment complete with a massive upstairs space and an outdoor beer garden. My addictions aren’t limited to the fennel sausage pizza, caesar salad, and a frozen daiquiri. Their beer is top shelf, too.” – William Mellon – Manna Avenue
Nestled in the heart of the Soda Pop District in downtown Wilmington, you’ll find the quirky arthouse theater, Jengo’s Playhouse.
“A staple to the neighborhood for over two decades, Jengo’s Playhouse features a rotating schedule of independent, regional and international films throughout the year. Come early and grab a refreshing cocktail or mocktail at the backyard bar at Jengo’s and then stick around for a special Q&A with a local filmmaker after the screening.” – Anna Bennett – Communications Manager
If you’re passionate about the theater and have time to sit down and watch a remarkable local show, visit the Thalian Association Community Theatre in the historic downtown area.
“Providing performances and education since 1788, Thalian Association Community Theatre is the official community theater of North Carolina. “Enjoy the 2024-2025 productions on the Main Stage of Historic Thalian Hall, Young Frankenstein, Irving Berlin’s White Christmas, A Few Good Men, Disney’s Mary Poppins, and Legally Blonde. The great entertainment continues with Youth Theatre shows at the Hannah Block Historic USO/Community Arts Center, Anastasia, Willy Wonka Jr., Alice In Wonderland, and Fame Jr. See you at the theatre!” – Susan H. Habas, Thalian Association Community Theater
Located as the gateway to downtown Wilmington and just a few blocks from the scenic riverfront, the Wilson Center at Cape Fear Community College is a hub of music, theater, and more.
“If you’re looking for a wide range of live entertainment — from Broadway shows, concerts, and headliner comedians — the Wilson Center has something for everyone.” – Abby Logue, Communications Coordinator
Wilmington Outdoor Adventures invites you to explore the stunning waterways of Wilmington and beyond!
“Our guided kayak tours are perfect for residents seeking outdoor fun and a unique way to experience the natural beauty of local estuaries, creeks, lakes, and rivers. Whether you’re new to kayaking or a seasoned paddler, we have something for everyone. In addition to our regular tours, we offer special events such as full moon paddles, empowering women’s retreats, and hands-on kayaking workshops. It’s the perfect way to unwind, connect with nature, and meet fellow adventurers!” – Kay Lynn Hernandez
Experience the thrill of summer with the Wilmington Sharks Baseball team, the 2024 Coastal Plain League champions!
“Watch top collegiate prospects from across the nation showcase their skills in a family-friendly setting. Enjoy all the classic ballpark fare, including hot dogs and peanuts, while cheering on the reigning champs in Wilmington, NC. It’s the perfect blend of excitement and tradition at the heart of America’s pastime under the coastal summer sky.”
Tickets and merchandise can be purchased at our website: www.wilmingtonsharks.com – Brett Bloomquist – Wilmington Sharks
Looking to spend an entire day in Wilmington? One local offers her comprehensive list of unique things to do all day long.
“Part of the immersive experience of living in Wilmington, even part time like my husband and I do, is the small-town feel of a beach town. Each morning is spent with a spin class at Recess near Wrightsville Beach (say hi to Bevin if you’re a One Tree Hill fan!), followed by a smoothie or coffee at Bitty and Beau’s, which employs people with disabilities.
In the afternoon, I love the cocktails and appetizers on the rooftop at Johnny Luke’s, before driving over to dinner at Bluewater, which is right on the intercoastal waterway and has a beautiful view. After dinner, we drive to the riverfront and stroll the shops and maybe grab an ice cream at Kilwin’s. We love the nightlife on the riverfront. Low key atmosphere at places like Front Street Brewery for a beer and a late night snack, fine dining at Circa or Elijah’s, or oysters at Shuck’n Shack (they also have a location on Carolina Beach!) for oysters! You really can’t go wrong when you spend time at the beach!” – Kristy – Neatly Balanced
Wilmington, NC, is a treasure trove of unique experiences that offer a fresh perspective on this charming coastal city. Beyond its beautiful beaches and historic sites, Wilmington’s eclectic mix of activities ensures that there’s always something new and exciting to explore.
By stepping off the beaten path and embracing the city’s quirky and distinctive offerings, you’ll uncover a side of Wilmington that many overlook. So next time you find yourself in this vibrant locale, take a detour from the ordinary and dive into the unexpected. Your adventure in Wilmington is bound to be as memorable as it is unique.
Anyone who works in the industry probably saw this coming. But those who don’t might be left scratching their head.
Yesterday, the Fed finally pivoted and cut its own fed funds rate, yet mortgage rates went up. Why does this always seem to happen?
Shouldn’t good news on the interest rate front push rates lower across the board? Seems perfectly logical until you dig into the details.
There are two main reasons why mortgage rates often defy the Fed’s own move.
One is that the Fed’s policy is often fairly telegraphed and not a surprise, and the other is that the data is typically baked in already.
The Fed Simply Follows the Economic Data
First things first, the Federal Reserve is simply making monetary policy decisions (hike, cut, nothing) based on the economic data in front of them.
So their FOMC statement and accompanying interest rate decision generally don’t come as much of a surprise.
Yesterday, there was a little more uncertainty than normal, with both a 25-basis point and 50-basis point cut a possibility.
The Fed opted to go with a 50-bps cut, which had been the favorite with a ~60%+ likelihood per CME FedWatch.
In other words, the Fed did what the market expected, as they often do. The reason the Fed does what the market expects is because they base their decisions on publicly available data.
And the data is somewhat old by the time the Fed makes its announcement. That removes much of the element of surprise.
However, what can move the bond market after the FOMC interest rate decision is the press conference with the Federal Reserve chairman Jerome Powell.
He explained that they took the step of making a 50-bps cut because they had patiently waited for inflation to come down, and were now comfortable to make a “strong move.”
The bigger cut allows them to (hopefully) avoid a big increase in unemployment while also preventing a return to high inflation.
But he added that there shouldn’t be an expectation that 50-bps cuts are the new normal. The decisions will still be made meeting-by-meeting.
So no real surprises here and not enough new information for mortgage rates to continue falling.
Mortgage Lenders Have Already Dropped Rates a Ton Leading Up to the Fed Rate Decision
The other relevant piece here is that mortgage lenders were already aggressively lowering mortgage rates heading into the Fed meeting.
If you look at the 30-year fixed, it had already fallen nearly 150 basis points (1.50%) since the end of April.
In other words, bonds and mortgage-backed securities (MBS) were making big moves based on the data and the expected Fed pivot for months now.
A lot of the price improvement, if not nearly all, was priced in before Fed day. It’s kind of a “sell the news” situation.
You know something is coming so you buy bonds or MBS and once the news actually hits, it could be time to sell off a bit.
In this case, it’s just an expected bounce in the opposite direction as everyone digests the widely-anticipated Fed decision.
To put it another way, mortgage lenders tend to price their rates defensively ahead of an FOMC interest rate decision, so often times there’s a bit of a relief rally after a hike.
Just keep in mind this is but one day, and mortgage rates may develop a longer-term trajectory based on what’s going on with the Fed and underlying economic data.
But the best way to track mortgage rates is by watching the 10-year bond yield and/or MBS prices.
Since yesterday, the 10-year yield has already ticked up about 10 basis points and MBS prices have fallen a bit.
No major movement, but perhaps a disappointment for those who thought mortgage rates would fall further after the Fed cut rates.
Mortgage Rates Tend to Defy the Fed
September 18th, 2024: Rate cut, mortgage rates up July 26th, 2023: Rate hike, mortgage rates down May 3rd, 2023: Rate hike, mortgage rates down March 22nd, 2023: Rate hike, mortgage rates down February 1st, 2023: Rate hike, mortgage rates down December 14th, 2022: Rate hike, mortgage rates down November 2nd, 2022: Rate hike, mortgage rates UP September 21st, 2022: Rate hike, mortgage rates down July 27th, 2022: Rate hike, mortgage rates down June 15th, 2022: Rate hike, mortgage rates down May 4th, 2022: Rate hike, mortgage rates down March 16th, 2022: Rate hike, mortgage rates UP
I was curious what tends to happen with mortgage rates on Fed decision day so I looked at the past 12 decisions and used MND data for mortgage rate movement on the days in question.
I included the 11 rate hikes since March 2022 and the pivot to a cut yesterday. Unsurprisingly, as far as I’m concerned, mortgage rates tend to defy the Fed more often than not.
In other words, when the Fed raises rates, mortgage rates often fall. And when the Fed cuts, mortgage rates tend go up.
I’ll need more data on the latter piece as they continue to make expected cuts. But it wouldn’t surprise me to see this trend continue.
Just note that the mortgage rate movement post-Fed rate decision often isn’t significant. And over time, things can change a lot more.
For example, even though lenders often cut rates on Fed hike day, the longer-term direction of mortgage rates was decidedly higher.
Now we might see the opposite. As the Fed is expected to make additional cuts, lenders may gradually lower rates over time.
But again, it’s not because of the Fed! It’s the underlying data and direction of the economy.
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on Twitter for hot takes.
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Get expert tips on how to pack for travel efficiently and effectively, including clever ways to save on baggage fees.
How can you keep luggage costs down during holiday travel? What are the best strategies for managing carry-on luggage, especially for international trips? Hosts Sean Pyles and Meghan Coyle discuss efficient luggage management to help you understand how to save money on baggage fees. They begin with a discussion of minimizing luggage costs, with tips and tricks on rolling clothes, borrowing essentials from family members, and sticking to a carry-on bag. Then, travel writer Jessie Beck joins Meghan to discuss effective packing techniques, including the benefits of using smaller bags to prevent overpacking, creating a versatile travel capsule wardrobe, and dealing with potential issues like gate-checked bags and delayed luggage. They also cover the importance of miniaturizing items such as wallets, using airline apps and AirTags to track luggage, and understanding airline compensation policies for delayed bags.
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:
Are you really bringing all that? Do you need everything in that bag? Are you sure? Couldn’t you do with just one pair of shoes instead of, oh, six? Well, if not, you’re probably going to pay a pretty penny for luggage when you’re traveling over the holidays. We’ve got some timely advice for keeping those costs down.
Jessie Beck:
Once you add on the cost of paying to have a carry-on bag on that basic economy ticket, you might as well just get an economy ticket and be able to be a little bit more flexible. I think that’s the most important thing for me. If I did have to make a last minute change, I can do that penalty-free.
Sean Pyles:
Welcome to NerdWallet’s Smart Money podcast. I’m Sean Pyles.
Meghan Coyle:
I’m Meghan Coyle.
Sean Pyles:
This is episode three of our nerdy deep dive into holiday travel and the costs therein. Meghan, I know there are plenty of folks out there who are strict carry-on only travelers, and I am one of them. I’ve not checked a bag in over a decade.
Meghan Coyle:
Wow! You’re one of them. Okay. There’s a lot to be said for that strategy, as long as you can live with fewer choices. There’s a whole cottage industry around figuring out the best ways to stuff small suitcases and even wear multiple articles and layers of clothing on the plane, so they’re not even in a bag.
Sean Pyles:
I have not gone that far yet. I mostly try to roll my clothes as tightly as possible, so I can still have options while fitting everything in my carry-on. There are multiple reasons to restrict yourself like this, though. One is that your luggage will never be lost.
Meghan Coyle:
Oh, man. Remember that period a couple years back, when people were losing their luggage all over European airports?
Sean Pyles:
Yeah. What a nightmare. When you go carry-on, there’s no losing your bag, no worrying about stuff getting stolen out of it. Another benefit to carry-on only is that you don’t have to pay luxurious fees to check your bags. You could put a kid or two through college for what it costs to have your bag fly in the cargo hold. I exaggerate a little bit, of course. But honestly, the fees are pretty bad when you add them on top of airfare.
Meghan Coyle:
And choosing your seat, and your airplane snacks.
Sean Pyles:
Yeah. I’m carry-on only for two main reasons. The first is that I am impatient. I do not want to wait at baggage claim to collect my suitcase after I’ve spent however many hours traveling. And two, I try to be in control of my own destiny as much as possible. Handing off my bag to some airline and hoping it gets to my final destination is just not how I roll. And yes, that’s a suitcase pun.
Meghan Coyle:
I’m also a carry-on type of person most of the time. I hate waiting at the luggage carousel after a flight. I want to be at my destination already. Sean, not everyone can smoosh everything into a bag that fits in the overhead bin or under their seat. Especially in the winter, and that includes holiday travel. If you’re going anywhere with a possibility of snow, ice, frigid temperatures, you’ve got to have the boots, you’ve got to have the sweaters, you’ve got to have the puffer coats. Or if you’re escaping to the tropics, I don’t know, maybe you need 40 sets of swimsuits. Whatever the reason, if you’re a bag checker, we’ve got some tips for you to try to bring the cost down.
Sean Pyles:
All right. Well, we want to hear what you think too, listeners. To share your ideas and experiences around holiday travel with us, the good, the bad, and the insanity, leave us a voicemail or text the Nerd hotline at 901-730-6373. That’s 901-730-NERD. Or email a voice memo to [email protected]. Meghan, who’s talking luggage with us today?
Meghan Coyle:
Our guest today is Jessie Beck. She’s a San Francisco-based travel writer for Afar, a travel magazine, and she’s done plenty of packing and unpacking in her career. She’ll share her knowledge of all things baggage.
Sean Pyles:
That’s coming up in a moment. Stay with us.
Meghan Coyle:
Jessie Beck, welcome to Smart Money.
Jessie Beck:
Hi, Meghan. Thank you for having me.
Meghan Coyle:
Tell us, what are your travel plans this year for the holidays?
Jessie Beck:
Oh, that’s a good question. For Thanksgiving, my husband and I are going back to the East Coast to visit family. But for Christmas, we’re taking advantage of the fact that we both have a lot of time PTO around that time, so we’re going to go to Japan. See the family another time, when it’s warmer.
Meghan Coyle:
Oh my goodness, that sounds incredible. Have you been to Japan before?
Jessie Beck:
Actually, we’re going back to a hotel that we stayed in in February 2020, right when the pandemic was starting in Japan. Really excited to go back and say hello again.
Meghan Coyle:
Well, let’s get right into it. How much luggage are you taking with you for each of those trips?
Jessie Beck:
I am a pretty avid carry-on only packer. Actually, that last trip I took to Japan in the winter to ski season, I only did with a 40-liter backpack and a small purse as my personal items.
Meghan Coyle:
Okay. How many coats were you wearing on the airplane?
Jessie Beck:
One very large coat, and I was very hot.
Meghan Coyle:
Are you going to do the carry-on only for both your domestic trip and your international trip?
Jessie Beck:
Yes, definitely. I think it’s almost a little easier when you’re traveling to visit family, because I’ve got a sister-in-law I can borrow clothes from. They’ll have extra hats and mittens, and all those kinds of things. If you forget your toothpaste, family will step in. Sports or ski trips can be a little bit trickier to stick to the carry-on luggage.
Meghan Coyle:
Tell us exactly what kind of bag you’re using for these carry-on only trips.
Jessie Beck:
I’ve always wondered how big the backpack cohort is, in terms of luggage enthusiasts. I’ve always used a travel backpack. I really love how much easier it is to move around the world with a backpack. I know some people will disagree with me because they’re heavy, and all that stuff.
Meghan Coyle:
For people who don’t normally travel with backpacks, can you tell us what is the difference between a travel-specific backpack and just the backpack you use to carry your laptop, or to go to school or work?
Jessie Beck:
Oh my gosh. This is so embarrassing, but when I first started traveling a lot in college and right after, I was using this massive hiking backpack that I just found in my parents’ garage. It was way too big. But it was also really difficult to get access to anything within the bag, because a traditional hiking backpack is top-loading, so you’ll usually see the opening of the backpack at the top of it. Maybe you’ll have a zipper at the bottom, to be able to access things at the bottom of the backpack.
But a lot of travel-specific backpacks will have a clamshell opening. They’re opening a little bit more similarly to a suitcase, and that makes it a lot easier to open your bag and see everything that’s inside it without having to take all the stuff that’s on the top out. A lot of them will also have some additional pockets and organizational features. Some of them will also design with carry-on restrictions in mind, so they’re really trying to keep it under that 40-liter limit.
Meghan Coyle:
Yeah. One of the features I really like about my travel backpack, I have one from Dagne Dover, is that it has the sleeve on the back of it so that it can very snugly fit over your carry-on rolling suitcase, if you decide to do both backpack and suitcase. I really love that feature.<br>Let’s get back to your travels. How much is that going to cost you to travel backpack-only?
Jessie Beck:
For just the luggage, I will not be spending anything to bring a bag with me on either flight. I’ve noticed, and this is purely anecdotal, I almost never have my bag gate-checked when I’m wearing a backpack. If there’s any other backpackers out there who have had a different experience, I would love to know. But I am operating under this theory that backpack people don’t get gate-checked as often as suitcase people. Not only am I not spending any money, but I generally keep my luggage with me.
Meghan Coyle:
For people who are going to take a carry-on bag or checked baggage, how much would you say they need to budget for bags if they’re traveling for the holidays this year?
Jessie Beck:
In terms of price for checking a bag?
Meghan Coyle:
Yeah. Or even bringing a carry-on, in some cases.
Jessie Beck:
That’s true. Some airlines are now charging for carry-on bags. I always do that calculation as I’m booking the ticket. For example, I’ve tried basic economy a total of one time.
Meghan Coyle:
Jessie Beck:
I was like, “Okay, I’m a light packer. I can do this. Personal item only, visiting a friend in Chicago in the summer, easy. No problem. Got it.” But I think for most scenarios beyond that, the things you’re losing by going from an economy ticket to a basic economy ticket don’t make that savings worth it, especially if you want to bring a carry-on bag. Once you add on the cost of paying to have a carry-on bag on that basic economy ticket, you might as well just get an economy ticket and be able to be a little bit more flexible. I think that’s the most important thing for me. If I did have to make a last-minute change, I can do that penalty-free, whereas you can’t do that with a basic economy ticket.
It definitely varies by airline. You’re probably going to end up spending somewhere between 30 and 50 each way. Definitely do that calculation and that math before you book your ticket, because if you’re traveling with a bunch of luggage, basic economy is not the way to go.
Meghan Coyle:
I totally agree. It makes it hard to compare prices when you’re looking at basic economy, versus economy, versus budget airlines. There’s so much you have to add up before you make your choice, based on price.
Jessie Beck:
I wish Google Flights had an easy feature where you could add all of that up to the total price of your ticket so you could see the actual cost of what your ticket’s going to be. But in short of that, a simple spreadsheet works. I’m super nerdy, I love a spreadsheet.
Meghan Coyle:
Same, same.
Jessie Beck:
Meghan Coyle:
Tell us what has happened to bag prices this year. If people haven’t traveled since the last holiday season, they might be a little surprised when they do go to check out and see the bag fees.
Jessie Beck:
I’m going to be totally honest, I haven’t been keeping tabs too much on this specific story because I am such a carry-on only packer. Though, one change that I was really excited to see is some airlines are now considering sporting equipment, like bikes, as just a regular bag, whereas previously they were not. That’s something I encountered recently this summer, when I was traveling with a bike. I had traveled with a bike previously on United Airlines, and they were charging me $200 each way to fly with this bike. I was like, “That is ridiculous.”
Meghan Coyle:
Yeah. That could be more than the ticket in some cases, I would imagine.
Jessie Beck:
For domestic, at least, I switched to Alaska Airlines when I was traveling with a bike because they always treated bikes as regular luggage, so as long as it stayed under 50 pounds. But recently, United changed their rules as well, so they, too, are now qualifying a bike as regular luggage. That’s probably the one change I’ve been paying attention to the most because that’s pretty much the only time I ever check a bag, is with a bike.
Meghan Coyle:
One story I’ve been following this year was bag fees not only went up across several airlines, and it’s a pretty nominal amount. Delta, United, American, Alaska, all of those airlines raised their bag fees by $5, in some cases $10. There’s a difference between if you check your bag before you get to the airport, when you’re booking your ticket, or if you wait until you’re literally at that kiosk checking in and you add a bag there. But the one that interested me the most was that JetBlue even added peak and off-peak pricing to their bags. Get this. They basically published a set of dates for peak pricing for your bags, where your bags will cost $5 to $10 more than their normal pricing. Of course, the peak pricing is during the holidays.
Jessie Beck:
Meghan Coyle:
If there is a way to, like you said, visit your family and borrow some toothpaste, I would say if you’re flying JetBlue, this might be a good time to try it out. What are some other ways to save on bag prices?
Jessie Beck:
You brought up one good point, which is that some airlines will charge you more if you’re paying at the airport versus paying for your checked bag in advance. Again, not a ton of money. No one’s going to hate on saving $5 or $10. Credit cards are another good way to save on checked baggage fees. If you have airline-branded credit cards, then you can check that bag for free. That’s a good option if you travel often. If you’re only traveling once or twice a year, I don’t know if an airline-branded credit card is really the best option. But if you are traveling frequently and you have that, that’s something to look into. Or if you’re traveling with other people, try to consolidate so you’re only checking one bag between the two of you, or something. There’s a bunch of ways to get creative and just minimize how much you’re bringing or checking with the airlines.
Meghan Coyle:
It has so many benefits beyond just saving money. If you have just one bag to worry about, it brings you so much peace of mind in other ways of traveling as well. Tell us a little bit about your travel history and when this idea of being team carry-on only really started to resonate with you.
Jessie Beck:
It’s been a process. I started by reducing from that 65-liter, to buying a 45-liter backpack. I traveled with that for quite a while. Including when I was in the Peace Corps, that’s the main luggage that I brought with me, along with a day bag. Then in my two years in the Peace Corps, I actually tried to minimize even further. Mostly because, in the country where I was at, Madagascar, you’re mostly traveling by bus. If your luggage cannot fit in your lap or under the seat in front of you on those buses, it goes above the bus. Which normally, wouldn’t sound like such a bad idea, except it’s not covered. If it rains, your luggage gets wet. I ended up with a soggy bag full of clothes and was like, “I’m never doing this again. I’m just going to bring two outfits next time I travel, because they’re going to stay dry.”
Meghan Coyle:
Oh my goodness.
Jessie Beck:
I’m never putting anything on the roof.
Meghan Coyle:
Yeah. Oh, what a bummer to have soggy luggage.
Jessie Beck:
Meghan Coyle:
What is your packing strategy, then? To be able to fit everything in such a small bag?
Jessie Beck:
It can be intimidating to try and go from a lot of luggage to a very small amount. Just start small, try to reduce what you’re carrying by maybe 10 liters, five liters. Some of the strategies that I’ve found really effective. The first one is get a smaller bag. We all have this case where, if our bag is bigger and we have extra space, we’re going to fill it. I was traveling with a friend to Portland over the weekend, and she had exactly that scenario. She packed everything she needed for the weekend. Then she said she had half of her bag empty, so she decided to just start throwing in some extra sneakers and some extra towels and all these things that she didn’t really need, just because she had the space. I think that’s a really good forcing function, is get a smaller bag. Don’t give yourself the opportunity to pack those things you don’t really need in the first place. That can be a really helpful place to start.
Meghan Coyle:
It’s like when you have a smaller dinner plate and you don’t fill your plate as much.
Jessie Beck:
Meghan Coyle:
Because there’s just less space for it.
Jessie Beck:
Yes, so true. I think there’s probably some psychological reasoning for all of this. But yeah, definitely noticed it works.
Meghan Coyle:
What else are you doing? What is a must pack for you, in terms of your carry-on?
Jessie Beck:
The other two things I do. One, I miniaturize or bring a travel-sized version of everything. I’ve even taken my giant wallet and gotten a super small travel-friendly wallet. It seems like a small thing to just go to a smaller wallet. But when you do that across a bunch of different items, you can get from a medium-sized bag to a small bag worth of things. The other thing I do is I do a travel capsule wardrobe. This is taking that capsule wardrobe approach, but travelizing it. So instead of 30 items of clothing for your full season, which is what a lot of capsule wardrobe enthusiasts will recommend, I’m focusing more on 10 to 12 items of clothing. Plus your PJs, underwear, and no more than two pairs of shoes. I think that’s a big one, too.
Meghan Coyle:
Oh, the shoes take up so much space.
Jessie Beck:
Meghan Coyle:
It’s so hard to choose just two shoes.
Jessie Beck:
I know. It really is.
Meghan Coyle:
Let’s get to what happens if your bag does get gate-checked, you get separated from your bag somehow. Are there any things you do to give yourself some peace of mind so you know you’ll get your bag back or be able to locate it?
Jessie Beck:
The number one thing, always download the airline app. Even if it’s an airline that you don’t fly very frequently, always, always, always download that app before you go. They can provide a lot of information and services just through that app on your phone. A lot of airlines will allow you to track the status of your bag through their app. Whenever the barcode on that tag is being scanned on your luggage, it’s going to update in that app. It’s going to tell you where it is. If you have a connection, it’ll tell you if your bag made the flight with you.
Another thing that other people like to do is putting an AirTag or something similar in their luggage, just to be able to see that location. I do that with my bikes, just because those are really expensive and I want to make sure that they’re not getting lost somewhere. That’s definitely a nice way to keep peace of mind with your luggage.
Meghan Coyle:
What are some airline policies around compensation for delayed or lost bags? Just in case something does happen to it, what should customers know about getting some sort of reimbursement for that?
Jessie Beck:
I know there’s more than one, but definitely Alaska Airlines. Then I think it’s Delta. Both of them will compensate you if your bag is late. I think a lot of people don’t know this, which is a super nice tip to keep in mind. If it takes more than 20 minutes to get to the carousel, you can write in and get some miles as compensation for that bag being late. I forget what Delta’s policy is.
Meghan Coyle:
I think it’s 2,500 miles if your bag doesn’t show up in 20 minutes. So yeah, very similar.
Jessie Beck:
Exactly. That’s a decent amount of miles just for being like, “My bag was 10 minutes late.” And it takes you a couple minutes to write in and say, “Hey, my bag was late. Can you compensate me?” I think a lot of people don’t take advantage of that.
Meghan Coyle:
I agree. It just takes that one extra step of looking up the online form. But then, it’s an easy way to get miles. At least you got a little something for waiting at baggage claim for so long. One other tip I always like to remind people is that your travel credit card might always have some lost luggage or delayed luggage reimbursement. This doesn’t really help in the moment when it’s happening and you’re like, “Where’s my bag?” But it could help you get reimbursement for anything new you had to buy. If they actually did lose your luggage, you might be able to get reimbursed for any valuables in your bag. Something to keep in mind is that you should try to book your travel with a travel credit card that has those kinds of protections if you have one.
Jessie Beck:
Yeah. That’s a really good one to keep in mind.
Meghan Coyle:
Jessie Beck, thank you so much for helping us out today.
Jessie Beck:
Yeah, of course. Thank you for having me. It was great speaking with you.
Sean Pyles:
Jessie’s experience of downsizing her packing is something that I can really relate to. I will admit that I am a recovering over-packer. Historically, I’ve tried to cram as much as possible into my suitcase. But over the past year or two, I’ve gotten much better at selecting just a couple of staples that I can mix-and-match. I may have fewer options on the whole, but it helps me get creative. I’m basically doing a less intentional version of that whole capsule wardrobe thing that you and Jessie talked about. I found that my suitcase is lighter, which makes traveling easier. And I also just have more room for souvenirs from my travels.
Meghan Coyle:
I think the real lesson here is that you do have options. You can take little baby steps to become someone who travels light. Sometimes, you just have to make those decisions based on who you are. Some people are fine wearing the same clothes day in and day out for a week-long holiday stay. Others want a new outfit every day plus room for shopping. We say you do you. But definitely look into some of the ways to cut down on those baggage fees through credit card benefits or other means.
Sean Pyles:
Agreed. As long as you’re prepared for the possibility that your luggage could end up hanging out somewhere in an airport, or even in another country without you, well, then it’s up to you to take that risk. Me? No giant suitcases, no problems. And then I have more money to spend on margaritas.
Meghan Coyle:
Luggage fees versus margaritas, is that what this has come to? I’ll join you.
Sean Pyles:
Meghan, tell us what’s coming up in episode four of the series.
Meghan Coyle:
Next time, we’re going to focus on people traveling internationally, either for holidays or any upcoming trip abroad, and what you should know about traveling with your debit and credit cards. Plus, how to save on getting local currency.
Craig Joseph:
As long as there’s a mobile signal, you can now use a card in a lot of situations where you previously couldn’t. That means you don’t have to carry as much cash, which is obviously safer, and credit card purchase protections cover you from fraud, in case you swipe the card in the wrong place.
Meghan Coyle:
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 at 901-730-6373. That’s 901-730-NERD. 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 iHeart Radio, to automatically download new episodes.
Sean Pyles:
This episode was produced by Tess Vigeland. I helped with editing. Claire Tsosie helped with fact checking. And a big thank you to NerdWallet’s editors for all their help.
Meghan Coyle:
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.
Sean Pyles:
With that said, until next time, turn to the Nerds.