A family income rider in life insurance is an extra feature that provides a monthly income to your family if you die while the rider is active. This life insurance rider is an add-on to a life insurance policy.
Most life insurance death benefits are paid in a lump sum. But if you’re concerned that your survivors may have difficulty managing a large amount of money in the long term, you could opt for a family income rider so that benefits are disbursed in monthly installments.
How does a family income rider work?
You can often include a family income rider to your term life policy at very little cost — or even no extra cost. This is because if you die during the term, your insurance company will probably have to pay a death benefit. But if the insurer hangs onto part of the death benefit and makes the payout gradually, the company can still earn interest on some of the money for a while.
The term of a family income rider begins when you add the feature to your policy. For example, if you included a 15-year family income rider on your policy and died 10 years later, your beneficiaries would receive income for the remaining five years. Usually, your family would receive a specified portion of the death benefit each month. At the end of the term, any remaining death benefit is paid in a lump sum.
Some carriers only offer a family income rider as decreasing term life insurance, which means the total value of the death benefit gradually drops throughout the policy’s term.
Like other life insurance death benefits, money your survivors receive through a family income rider generally isn’t subject to income tax. However, any interest earned from the death benefit is considered taxable and needs to be reported to the IRS.
Thousands of homeowners face the risk of losing their homes due to “zombie mortgages” bought by companies — with some forcing foreclosures without their knowledge, according to a shocking report..
Many of the stunned homeowners took out second mortgages during the subprime lending housing bubble between 2004 and 2008 that they believed were written off — only to learn the mortgages have come back to haunt them.
An investigation by NPR found at least 10,000 old second mortgages that foreclosure activity had been initiated on in just the last two years.
Karen McDonough of Quincy, Mass. was shocked to learn that her home was being foreclosed on. Karen Mcdonough/Facebook
‘The numbers to me are very scary,’ Andrea Bopp Stark, an attorney at the National Consumer Law Center, told the outlet.
The problem is feared to be widespread across America.
‘If you’re looking at the number of these foreclosure filings, or at least the attempts to collect on this zombie debt, you’re starting to see the numbers tick up dramatically into the thousands, if not more, in individual jurisdictions,’ David Weber, a professor at the Creighton University School of Law told The New York Times.
‘That’s a lot of activity.’
McDonough told NPR.
When she approached one of the individuals who had driven up to her home, she was told: “We’re selling your house.”
“This is a foreclosure. You are going to lose this house.”
McDonough was stunned. She had owned the home for 17 years and was up on her mortgage payments.
McDonough was victimized by so-called “zombie mortgage” that she thought had been resolved. Karen Mcdonough/Facebook
But their was a “zombie” mortgage on her home that she was not aware of.
She purchased the home in 2005 for $365,000 with an “80/20” loan. One mortgage covered 80% of the home’s cost — $292,000 — while the other covered the remaining 20% — equal to $73,000.
“It was the easiest thing I’ve ever applied for,” McDonough told NPR. “I just filled out paperwork and submitted it and I was approved.”
McDonough was making her mortgage payments in the first two years, but the interest shot up after the second year — pushing her monthly bill $700 higher.
When she asked for the mortgage to be modified, she said she was informed by the company, which serviced both loans, that the second mortgage was forgiven.
McDonough took out loans to pay for her home in 2005. Karen Mcdonough/Facebook
“I was actually in my kitchen. I was cooking dinner, and I was talking to a representative … and he told me I would never have to make a payment again on the second mortgage,” she said.
“And I just didn’t question any of it ’cause I was so grateful that the loan was modified.”
McDonough said she no longer was receiving statements on the 20% loan. But recently she started getting phone calls asking for money.
Assuming those phone calls were scams, she ignored them.
She said she was told that one of the loans was forgiven. Karen Mcdonough/Facebook
The then received a letter was from First American National, a company that she had never heard of.
“It had an amount and they wanted a payment … like $77,000,” she said. “I was kind of in disbelief.”
First American National then kept calling and threatening her with foreclosure if she didn’t pay, McDonough told NPR.
When McDonough called the company that serviced the first mortgage, she said she was told it was likely a scam.
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“I was crying on the phone with them, like having a nervous breakdown,” McDonough said.
“And they kept saying like we’re gonna help you. You can’t lose your home through this.”
But her fears were well-founded.
Limited liability companies that are registered in Delaware and whose owners’ identities are shielded by law bought up bundles of mortgages for pennies on the dollar in the wake of the 2008 housing crash — when banks were selling them for dirt cheap as they were going under.
Since housing prices were low after the crash, the mortgages were worthless. But once home values soared in the ensuing years, the investors who bought up the loans were looking to cash in.
McDonough’s home, which she bought for $365,000, is now worth $600,000.
“Zombie mortgages” are loans that were sold for pennies on the dollar in the wake of the 2008 housing crisis. steheap – stock.adobe.com
First American National bought her house at auction for $178,500 and is the legal owner of the home. McDonough, however, is still living in her home after filing a lawsuit which alleges the company used unfair and deceptive practices to foreclose on her home.
She continues to make payments on her first mortgage.
“I feel like what happened was a terrible thing,” McDonough said.
“But I’m still, like, really hopeful that I’m going to stay in my home. I’m really hopeful I’m going to win this case.”
McDonough’s lawyers claim that the second mortgage she was told had been forgiven was instead sold in 2020 along with around 600 other mortgages to an LLC connected with First American National.
“We think that they have systemically and deliberately broken the law,” Todd Kaplan, an attorney with the nonprofit Greater Boston Legal Services, told NPR.
First American National, a small New Jersey-based business, is run by Ira Bailey, who told NPR that he had been buying up second mortgages for around 20 years.
The controversial Freddie Mac second lien purchase pilot has gained conditional approval by the Federal Housing Finance Agency.
This proposal, which Freddie Mac officials posited as an alternative to cash-out refinancings in a high interest rate environment, generated concern from opponents that it puts the government-sponsored enterprise in an area served by the private market.
During the comment period, which ended on May 22, the FHFA received 150 letters.
“The thoughtful engagement from public stakeholders confirmed the value of a transparent process for evaluating potential new Enterprise products and informed the parameters of the conditional approval,” said Sandra Thompson, the FHFA’s director, in a press release and accompanying statement.
“The limited pilot will allow FHFA to explore whether this closed-end second mortgage product effectively advances Freddie Mac’s statutory purposes and benefits borrowers, particularly in rural and underserved communities.”
Among the limits FHFA established are a $2.5 billion maximum in loan purchases, over an 18-month period. The individual loan limit is $78,277, which FHFA said corresponds to subordinate lien thresholds established in the qualified mortgage definition.
The first mortgage must have 24 months’ seasoning and it has to be for the borrower’s primary residence.
After the 18-month period ends, the FHFA will analyze the data to determine whether the objectives of the pilot were met. Any potential increase to the volume limit or extension of the duration, or conversion to programmatic activity would be treated as a new product that is subject to public notice and comment and FHFA approval.
The accompanying statement reaffirmed a belief that even many opponents held, that Freddie Mac is able to do this under its charter.
Furthermore, the limits ensure that private capital is not crowded out. It also extends the ability to obtain second mortgages to underserved markets.
The early reaction has been mixed. Christopher Whalen, whose Whalen Global Advisors, submitted a comment letter opposing the program, said most people in the industry expected the Biden Administration to go forward despite the substantial public opposition.
“Like the changes made by the FHFA to the [loan level pricing adjustments] grid, the impact of this change will be modest for the enterprises and negative for consumers,” Whalen said in an emailed comment. “Low-income borrowers are far better served in the FHA/VA/USDA market,” referring to the three government-guaranteed mortgage programs.
The U.S. Mortgage Insurers also opposed approval of the pilot, but took a conciliatory tone in its statement.
“While today’s announcement includes important limitations to the pilot, further clarifications should be provided including on how loan-to-value ratios will be calculated, information about applicable debt-to-income limitations, a specific exclusion for ‘piggyback loans,’ and additional details on capital and pricing treatment,” the statement from Seth Appleton, president, said. “USMI recommended that any future expansion of an approved product be subject to additional public notice and comment, and we are pleased that Director Thompson included this policy as part of FHFA’s conditional approval.”
On the other hand, the Community Home Lenders of America, welcomed the move.
“CHLA thinks this is an important product given that skyrocketing interest rates have made getting a refinance unaffordable,” Scott Olson, its executive director, said in a statement.
The Mortgage Bankers Association, which asked the FHFA to do more analysis before going ahead with the program, said it appreciated the regulator’s detailed responsiveness to its comment letter.
The process “produced a pilot rollout that is limited in size and duration, mitigates the impact on the private-label securitization market for second liens, focuses on borrowers with lower loan balances, and will encourage participation by smaller lenders that do not have easy access to liquidity for closed-end seconds,” MBA President and CEO Bob Broeksmit said in a statement.
“MBA and its members will remain engaged with FHFA and Freddie Mac to monitor the results of the pilot and ensure that it remains available to lenders of all sizes and business models and avoids disrupting the developing private-label securitization market for second liens,” Broeksmit continued.
ChexSystems is a nationwide credit reporting system that collects information about bank accounts that are now closed. It compiles data on red flags, such as whether a bank account was closed due to numerous overdrafts or suspicious financial transactions.
Many (but not all) financial institutions rely on ChexSystems data to decide whether or not to approve an application for a new checking or savings account. If you have a bank account or plan to open one, it’s helpful to understand what goes into a ChexSystems report and why it might matter to you.
What Is ChexSystems?
Authorized by provisions in the Fair Credit Reporting Act (FCRA), ChexSystems is a risk-management tool for financial entities that are checking an individual’s banking history.
ChexSystems compiles information that can help financial institutions gauge whether a customer is creditworthy before granting them an account. The information that ChexSystems compiles is based only on closed accounts, not current ones, and can reveal whether past accounts were closed voluntarily or due to negative behavior, such as repeated overdrafts or suspected fraud.
Negative marks typically stay on a ChexSystems report for up to five years. If a financial institution sees any kind of negative activity on a ChexSystems report, the applicant may be denied a bank account.
The information in your ChexSystems report can also be used to generate a ChexSystems consumer credit score. This is separate from consumer credit scores generated using information from the three major credit reporting bureaus to help lenders decide who may qualify for a loan.
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What Is In a ChexSystems Report?
Not everyone will have a file with ChexSystems. Those who have a clean banking record may not be listed. However, those who have had bank accounts closed in the past for negative reasons will likely have a report with ChexSystems.
A report will usually include basic identifying information, such as name, address, phone number, and date of birth. It will also include details about your banking history, such as:
• Suspected fraudulent activity
• Non-sufficient funds (NSF) or overdraft activity
• Inquiries (when someone has viewed your ChexSystems report)
• Check cashing inquiries
• Returned checks reported by retailers
• History of checks ordered
• Checking account closures
ChexSystems only collects information for closed accounts, and negative behaviors typically stay on file for five years, as noted above. Current checking accounts do not show up on a ChexSystems report.
Worth noting: If you’ve ever had a security freeze in place, that will usually show up on your ChexSystems report, as will identity theft alerts.
Recommended: Why Is Having a Good Credit Score Important?
How to Get a Copy of Your ChexSystems Report
You can get a copy of your ChexSystems report for free once every 12 months under the Fair and Accurate Credit Transaction Act (FACTA), similar to the way you can request a free copy of your credit reports once a year from the three main credit bureaus.
You can request your ChexSystems report online, by phone, or by mail:
• You can complete and submit the Consumer Request for Disclosure Form online.
• You can call 1-800-428-9623 Monday through Friday, 8:00 am to 7:00 pm CST.
• You can mail a Consumer Request for Disclosure Form to ChexSystems, Inc., Attn: Consumer Relations, PO Box 583399, Minneapolis, MN 55458.
ChexSystems also offers options for people with visual or hearing impairments. In addition, the ChexSystems website details ways to obtain a report for those under age 18 or for an adult for whom you have power of attorney.
There is an exception to this “once a year” free report rule: If you’ve been denied a bank account, you can request a copy of your ChexSystems report to understand the factors behind the bank’s decision, even if less than a year has passed since the last time you pulled a report. The bank is required to specify the reason for the denial, too.
How to Clean Up Your ChexSystems Report
To clean up your ChexSystems report, you’ll first need to get a copy of it, if you haven’t done so already. You can then dispute any negative information you may find. This can help improve your ChexSystems profile if you can get the information removed.
You can reach out to the bank that shared any negative information about your past account and offer to make good on any outstanding obligations. The bank could agree to remove the negative information.
Going forward, you can prevent any further negative information from being reported by practicing good banking habits, such as:
• Maintaining positive balances across accounts so you don’t land in overdraft
• Keeping of checks and deposits to avoid bounced checks
• Protecting your banking information to prevent fraud
• Reporting any suspected fraud to your bank right away
Those actions won’t erase a negative ChexSystems file. But they can help you to stay on your bank’s good side.
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Does a ChexSystems Report Affect Your Credit Score?
Your ChexSystems report doesn’t affect your consumer credit scores directly. FICO® credit scores, for example, are based on how responsibly you manage credit and debt. For example, it can reveal how often you pay bills late, how much of your available credit you’re using, and how often a hard credit inquiry shows up on your report.
Those are some of the main factors that affect credit scores.
But there could be a ripple effect. If your ChexSystems report makes it difficult or impossible to open a bank account, you might have a hard time paying bills when they are due. If, as a result, you send payments late, that could lower your credit score.
Options if You’ve Been Denied a Bank Account Due to ChexSystems
If you’ve been denied a checking account because of a negative ChexSystems report, it helps to know what to do next. You have a few options:
• Clean up your ChexSystems file. Request a copy of your ChexSystems report to understand why you were denied. Review your report for any errors or inaccuracies, and dispute any errors you find. Or, if you owe a debt to your previous bank, you could pay it off and request that the bank remove the mark against you.
If successful in cleaning up your report, you can ask the financial institution you recently applied to if they would reconsider the denial. You might also try opening a savings account with the new bank first, see if you can build a relationship, and then add a checking account.
• Try another bank. Find a bank that doesn’t rely on ChexSystems reports to evaluate potential clients. They are out there and can be found with a little research.
• Consider a second chance bank account. These are designed for people who have been denied a checking account previously. These accounts may have higher fees or more restrictions than regular bank accounts. They can, however, help you establish a positive banking history and, if managed well, transition to a standard checking account in the future.
• Use prepaid debit cards in the short term for spending and bill payment. You can load funds onto these cards (which typically charge fees) and then take care of daily needs with that money.
The Takeaway
ChexSystems is a nationwide reporting system for closed bank accounts. Qualified institutions may access ChexSystems reports to evaluate individuals who are applying for new checking or savings accounts. Being listed in ChexSystems means you likely have negative incidents on your closed accounts (e.g., overdrafts, fraud, unpaid negative balances). This can prevent you from opening new accounts. In this situation, you can focus on cleaning up your ChexSystems report or try some workarounds so you can manage daily financial transactions.
SoFi is among the banks that do not rely on ChexSystems when reviewing account applications.
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FAQ
What happens if you are on ChexSystems?
If you have a file on ChexSystems, you may find it hard to open a bank account. ChexSystems gathers negative information about past bank accounts, such as past overdrafts or involuntary account closings.
Can you remove yourself from ChexSystems?
It may be possible to remove yourself from ChexSystems if your report includes information that’s inaccurate or reported in error. You’ll need to dispute the information through ChexSystems in order to have it corrected or removed from your file. Or if, say, you owe overdraft charges on a now-closed account, you could contact your former bank, pay what you owe, and see if they would remove the negative information from ChexSystems.
How do I know if I am in ChexSystems?
You can request a free copy of your ChexSystems report annually. If there is a report on file for you (those in good standing may not be listed), getting this record can reveal the details of negative information.
How long does a person stay in ChexSystems?
Generally, negative information can stay on a ChexSystems report for up to five years. If you have multiple negative items on your ChexSystems report, the five-year reporting time frame applies separately to each one.
Which banks report to ChexSystems?
ChexSystems doesn’t specify which banks use its reporting system. If you’re unsure whether a bank reports to ChexSystems or reviews ChexSystems reports when you apply for a new account, you can call the bank and ask. You can also ask whether second-chance banking is an option, in case you’re denied a traditional bank account.
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As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
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Mortgage rates fell below 7% last week for the first time since March — leading to an uptick in the number of applications for loans from would-be home buyers.
The rate for a 30-year fixed mortgage fell from 7.02% to 6.94% for the week that ended June 14, according to Mortgage Bankers Association data released on Wednesday.
The five-year adjustable-rate mortgage fell to 6.27% from 6.45% — the lowest level since February, according to the data, which was first reported by Bloomberg News and MarketWatch..
Mortgage rates fell below 7% last week for the first time since March. Getty Images
There was also an increase in the number of mortgage applications for home purchases in the seven-day period that ended on Friday.
The market index rose 0.9% to 210.4 for the week ending June 14 from a week before. A year ago, the index stood at 209.8.
“Purchase applications increased a small amount for the week, led by applications for conventional loans,” Mike Fratantoni, MBA chief economist, said in a statement.
Federal Reserve is more likely to cut interest rates sometime this year.
Investors are banking on at least one rate cut.
Last week, Fed officials said that while inflation has crept closer to their 2% target, they still expect to cut their benchmark interest rate just once this year — possibly as late as December.
The housing market has been in a slump which has been exacerbated by sky-high interest rates and sticky inflation. REUTERS
The policymakers’ forecast for one rate cut was down from their previous projection of three cuts.
Inflation has remained stubbornly high, forcing the Fed to keep the benchmark rate between 5.25% and 5.50% — the highest in 23 years.
The benchmark rate has remained at that level since July of last year, after the Fed raised it 11 times to try to slow borrowing and cool inflation.
High mortgage rates and rising prices continued to put a damper on the spring home-buying season.
Existing home sales fell 1.9% to a seasonally adjusted annual rate of 4.14 million in April from a revised 4.22 million in March, the National Association of Realtors reported.
An anticipated interest rate cut by the Fed could spur more home-buying. REUTERS
Sales dropped across the country — down 4% in the Northeast, 2.6% in the West, 1.6% in the South and 1% in the Midwest.
The median price of previously occupied homes rose 5.7% to $407,600 — the tenth straight increase and a record for April.
Lawrence Yun, the association’s chief economist, called the sales drop “a little frustrating.’’ Economists had expected sales to come in at 4.2 million.
“As Montanans face more economic challenges due to inflation, it can weigh heavily on our most vulnerable populations, including senior citizens,” Cheryl Cohen, division administrator for the housing division at the Montana Department of Commerce and executive director of the Montana Board of Housing, wrote in a recent op-ed.
“Housing costs are soaring across the nation, thanks in part due to a lack of supply keeping up with demand. While many Montana seniors own their own homes and have little or no remaining mortgage debt, they struggle to make ends meet on fixed incomes.”
This is where the RAM program can come into play. Cohen describes the program as overseeing “low-interest rate loans [which] allow senior homeowners to benefit from an additional income source from their home equity while offering the financial flexibility they need to continue living at home.”
Differences with HECM
HousingWire’s Reverse Mortgage Daily (RMD) submitted questions to Montana’s Department of Commerce about the RAM program and received responses from a spokesperson.
In terms of how the RAM program aims to solve issues that a Home Equity Conversion Mortgage (HECM) might not address, the department said that many of the goals are the same but that the RAM program may come with more flexibility on qualifications.
“The Montana Board of Housing’s RAM program provides interest rates that are competitive or lower with requirements that are simple and easy to understand,” the spokesperson said. “Board staff and participating counselors work closely with the borrowers helping to set up the reverse mortgage with closing costs often several hundreds to thousands of dollars less than similar programs.”
These closing costs are limited to the “actual charges from the appraisals and title companies with no administrative costs added by the Board,” and the administration of the reverse mortgage itself is handled by state housing staff “who can easily be personally contacted for any questions or assistance. The Montana Board of Housing is administratively attached to the Montana Department of Commerce,” the spokesperson said.
Additionally, Cohen explained in her op-ed the different types of proceeds available for RAM borrowers.
“The RAM program helps senior Montana homeowners with monthly payments back to them to manage everyday expenses while living in their homes,” she said. “Eligible homeowners can borrow a minimum of $15,000 up to a maximum of $150,000. The maximum loan amount is determined based on 80 percent of the FHA-determined value of the home.
“Additionally, lump sum advances are available at loan closing, and up to $10,000 is available for payment of prior mortgages, liens and pledges or for accessibility improvements and other home repairs.”
Longer retirements
The loan values for the HECM program are generally larger depending on the age of the borrower and the value of the home, with the HECM limit in 2024 topping $1.1 million. The minimum qualifying age for a HECM is 62 years, while the minimum for the RAM program is 68. There’s a reason for this, the spokesperson said.
“With Montana’s elderly population growing and living longer, we find that even with an age limit of 68, many of our borrowers outlive the 10 years of payments allocated,” the spokesperson explained. “Providing loans to a younger population may add to financial issues as more participants outlive those payments.”
The program’s availability is also subject to the financial disbursements the state Legislature gives to the department itself. The origination process also has similarities to the HECM program, with some state-specific requirements.
“Applicants must go through trained RAM counselors from the non-profit sector before qualifying for our financing,” the spokesperson stated. “Once they’ve completed the session, housing staff work with the participant to determine needs and financing availability. Staff assist in obtaining an appraisal and in closing the loan and setting up payments. The Montana Board of Housing is the only entity to provide this service.”
Renewed communication efforts
As for why the state is interested in spreading more awareness about the RAM program now, the spokesperson cited the economic circumstances faced by the state’s seniors as a key reason.
“The board hopes to increase knowledge of this program for the elderly in Montana and offer this option to help with costs that surpass what can be paid by social security or other pension receipts,” they said. “Since the RAM proceeds don’t need to be paid back until the home is vacated, additional funds become available without incurring further debt. We hope those monthly payments provide peace of mind and assist in our RAM participants’ quality of life.”
That being said, the reputational issues faced by the wider reverse mortgage industry have also been faced by the RAM program, which may have depressed consumer demand, according to both Cohen and the department’s spokesperson.
“Reverse Annuity Mortgages scare some seniors because of scams that have taken place by some providers of such financing,” the spokesperson said. “For this reason, we require counseling and have staff available to speak directly with participants and their families about any issues they may have. Payments we can provide often cover costs of medications or shortfalls concerning income to help pay monthly expenses for food or utilities.”
The spokesperson also mentioned a borrower’s success story granted by the program.
“One borrower mentioned to staff that she was having to sell her furniture a piece at a time to help pay for her medication but was able to stop when she started receiving the RAM monthly payments,” they said.
FHA loans have made their mark as Federal Housing Administration-insured mortgages whose generous terms make homeownership accessible to many borrowers. They come with either a fixed or adjustable interest rate.
The latter, known as FHA ARMs, are very much a niche product – less than 1 percent of FHA loans originated in April 2024 had adjustable rates, according to federal data. But they offer a lot of benefits, particularly a low introductory rate.
Before signing on the dotted line for an FHA adjustable-rate mortgage (ARM), however, it’s important to know what’s involved and how these types of mortgages work. Here are the basics of FHA ARMs.
What is an FHA adjustable-rate mortgage?
First, here’s a quick primer on how ARMs and FHA loans work.
An adjustable-rate mortgage, or ARM, is a type of home loan with an interest rate that changes over time. It has a lower fixed rate at the start of the repayment period, which usually lasts three, five, seven or 10 years. Afterward, the rate adjusts at predetermined intervals, such as every six months or one year, up to a certain percentage limit. This means your monthly mortgage payment could increase or decrease over the remaining loan term. If the payment goes up, it might no longer be affordable. For this reason, lenders typically qualify ARM borrowers based on their ability to repay a higher payment.
FHA home loans are insured by the Federal Housing Administration (FHA) and offered by FHA-approved mortgage lenders. These loans are geared toward lower-credit score borrowers, including first-time homebuyers, who often wouldn’t qualify for a conventional loan with no federal guarantee. FHA loans only require a 3.5 percent down payment but mandate the borrower to pay mortgage insurance premiums (MIPs). They also limit how much you can borrow.
FHA loan rates often run lower than conventional mortgages too, but sometimes the presence of their various fees (including the MIPs) actually makes their APRs higher.
How do FHA ARM loans work?
An FHA adjustable-rate mortgage works similarly to other adjustable-rate mortgages: The interest rate initially remains the same for a set time, then changes at preset times until the borrower fully repays the loan.
These changes are based on an index of prevailing interest rates — for FHA loans, either the Constant Maturity Treasury (CMT) index or the Secured Overnight Financing Rate (SOFR) — plus a margin, or extra amount, that the lender opts to add on. After the loan’s initial fixed period ends, the lender adds this margin to the index to come up with new rates. Depending on current economic conditions and prevailing interest rates, the adjusted rate might be higher or lower.
Your rate can’t increase or decrease beyond a specific amount, however. On ARM loans, there are both annual and lifetime caps, which limit annual rate changes, as well as changes over the loan’s entire term.
Types of FHA ARM loans
There are five kinds of FHA ARM loans:
1-year FHA ARM: Your interest rate stays the same for the first year of the loan’s term. After that, the rate can only increase by one percentage point (for example, 5.5 percent to 6.5 percent) per year and five percentage points for the life of the loan.
3-year FHA ARM: Your interest rate stays the same for the first three years, but the caps are the same as the 1-year ARM.
5-year FHA ARM: Your interest rate stays the same for the first five years. After that, the rate can only increase annually by one percentage point, and by five percentage points over the life of the loan; or by two percentage points annually and six percentage points over the life of the loan.
7-year FHA ARM: Your interest rate stays the same for the first seven years, then can adjust by up to two percentage points per year and six percentage points over the life of the loan.
10-year FHA ARM: Your interest rate stays the same for the first 10 years, but the caps are the same as the 7-year ARM.
There is also a difference between standard and hybrid ARM loans. The FHA has a one-year standard ARM loan, whose interest rate changes regularly based on the market. In addition, the FHA has four hybrid ARM loan products. These hybrid loans have a fixed introductory rate for a set number of years (3, 5, 7 or 10), after which the rate will adjust after a set period for the remainder of the loan term.
FHA ARM loan requirements
Borrowers and the homes they wish to buy must meet certain FHA loan qualifications, including:
Acceptable properties: Primary residences
Borrowing limit: For 2024, $498,257 for a one-unit property; $1,149,825 for a one-unit property in high-priced housing markets
Credit score: At least 580, or as low as 500 with a bigger down payment
Debt-to-income (DTI) ratio: 43 percent for housing and other long-term debt (some lenders may go up to 50 percent if the borrower has compensating factors); 31 percent for just housing debt.
Down payment: 3.5 percent with a credit score of 580 or higher; 10 percent with a credit score of 500-580
Employment: Proof of steady employment from the past two years
Income: Latest pay stub along with proof of any bonuses, commissions, etc., if consistent
Mortgage insurance premiums (MIP): 1.75 percent of the amount borrowed at closing, plus annual premiums based on the amount borrowed, down payment and loan term (15 or 30 years)
If your credit history is lacking, especially in the realm of handling debt, the FHA now allows lenders to include a borrower’s rental payments in their underwriting assessment, as well. You need to be able to show proof you’ve paid your rent on time every month for the past year.
FHA ARM loan rates
ARMs’ introductory rates tend to be lower than those of fixed-rate loans. As of June 13, 2024, the average interest rate for 5/1 ARM loans is 6.48 percent, compared to the average rate of 30-year fixed-rate mortgages at 7.08 percent, according to Bankrate’s survey of national large lenders. Even a 7/1 ARM loan has an interest rate of 6.72 percent.
When comparing FHA ARM offers, consider the introductory rate along with the lender’s margin. Generally speaking, the lower the margin, the better.
With rates rising, consider the type of FHA ARM, as well. The one-year and three-year ARMs, for example, have lower caps, meaning you won’t see as big of a jump in your rate if prevailing rates do go up in the future.
Should you get an FHA adjustable-rate mortgage?
If getting a lower initial interest rate will help you afford a home, choosing an FHA adjustable-rate mortgage can be a good option — as long as you factor in your ability to afford potentially higher payments later. An FHA ARM loan can also be a smart option if you only plan to own your home for a couple of years. You can take advantage of the lower introductory rate and then sell your home before the rate adjusts. Even if you do not sell your home, you might be able to refinance your loan into a fixed-rate mortgage, which will keep your monthly payments the same for the remainder of the loan term.
There might also be some instances where you expect you’ll be able to afford a higher payment in the future. For example, a future raise or promotion could mean an increase in earnings, enabling you to afford a higher mortgage payment later. However, if the prospect of a higher rate in the future is scary to you, then you should skip the ARM and opt for a fixed-rate mortgage.
Pros and cons of FHA ARM loans
Pros
Attractive introductory interest rates
Easier to qualify for if your credit needs work
Gets you into a home sooner thanks to a lower down payment and more affordable monthly payment
Cons
Risk of future increases to your rate, which can make monthly payments unaffordable, potentially forcing you to sell the home and move or increasing your risk of foreclosure
Need to refinance to remove mortgage insurance premiums
Limited to buying a home with a mortgage within loan limits and for use as a primary residence
Alternatives to FHA ARM loans
An FHA mortgage is not your only option. Some alternatives to FHA ARMs that can help you buy a home include:
HomeReady mortgage: Fannie Mae‘s HomeReady program requires a minimum 620 credit score. You do not have to be a first-time homebuyer, but you will need an income lower than 80 percent of the area median income. You’ll also need to take a homeowner’s education course.
Standard 97 Home Loan: Also provided by Fannie Mae, this mortgage requires 3 percent down, and at least one borrower must be a first-time homebuyer.
HomeOne Loan: Freddie Mac offers the HomeOne Loan for first-time homebuyers, and it has no income or geographic limits. You can put down a minimum of 3 percent on a home with this loan.
Home Possible Mortgage: Also offered by Freddie Mac, the Home Possible mortgage is a loan option for very low- to low-income homebuyers. You must meet qualifying income limits: no more than 80 percent of the area median income.
These mortgages are for primary residences only, so you will need to look at other options should you require a mortgage for a second home or investment property.
Refinancing an FHA ARM
Many borrowers refinance before the first ARM rate reset. You might want to refinance out of an ARM loan into a fixed-rate one if rates have dropped since you first obtained the loan and you want the stability of a non-fluctuating rate. You can also refinance to another ARM.
If you qualify, you might want to refinance from an FHA mortgage to a conventional loan, too. This allows you to eliminate (or work toward eliminating) mortgage insurance premiums, as conventional loans only require insurance if you have less than 20 percent equity in your home. In contrast, most FHA loans require you to pay insurance for the entire loan term, regardless of how much you’ve paid down the mortgage.
Keep in mind, refinancing is typically only worthwhile if you can get a lower rate and pay the closing costs. If you won’t be in the home long enough to recoup those costs and realize the savings, it might not make financial sense to refinance.
Bottom line on FHA adjustable-rate mortgages
The considerations for getting a FHA adjustable-rate mortgage vs. a fixed-rate one are similar to the considerations for their conventional loan cousins. ARMs work best for homeowners who are pretty sure they’ll be leaving their home within a certain number of years (coinciding with the end of the ARM’s fixed-rate period, or before) or who anticipate a big increase in income (because the ARM’s new, reset rate often means higher repayments).
Other than that, your main decision is whether it’s worth jumping through the extra application/appraisal hoops and paying the MIP that comes with FHA loans. If the better terms still seem worth it, then go for it.
Moda Domus Handcrafted Ceramic Cabbage Dinner Plate
While you can–and should–eat all your meals off this ceramide cabbage plate, it’s so beautiful that it should really count as a piece of art.
An Iron Catchall
Jan Barboglio Golondrina
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Jan Barboglio’s gothic-meets-medieval pieces are truly stunning to behold, and this cast iron dish from the designer is perfect for storing your jewelry, keys, or everyday nicknacks.
A Decorative Candle
Fornasetti Frutto Proibito Candle
You would be forgiven for thinking this candle is too pretty to burn, but its wonderful notes of jasmine and blood orange will make you eager to light it. Once the wax has burned down, the apple-shaped ceramic container can also easily be repurposed.
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An Unusual Lamp
Tennant New York L’Escargot Lamp
For the creature lovers out there, this unique lamp is inspired by sea snails found in the Galapagos. The base is wrapped with leather cord and is sure to be a conversation starter.
A Cozy Throw Blanket
Barefoot Dreams CozyChic Throw Blanket
This plush throw blanket might seem quite classic, but its fuzzy finish adds some textural interest.
A Statement Throw Pillow
Schumacher The Wave 20″ Pillow
Starring a faded, waved print by esteemed interior designer Miles Redd, this throw pillow offers added cushioning and a hint of edge to an otherwise simple living room.
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A Luxury Coffee Table Book
Paul-Gérard Pasols Louis Vuitton: The Birth of Modern Luxury
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Though an interesting read in itself, this book is too stylish not to be displayed. Leave it out for your guests to educate themselves and learn a little more about your interests.
A Decorative Box
Bordallo Pinheiro Small Pimiento Box
You get bonus points for storing veggies in here, but even as a fun decorative box in your collection, this piece stands out. It’s microwave and dishwasher-safe and makes for the perfect piece of coffee table eye candy.
A Glass Figurine
Daum Crystal Coral Sea Small Shell Figurine
French glassware company Daum has been making lovely, colorful figurines for centuries. Whether placed above the mantle or on your bedside table, this blue conch shell style will help bring the beachy aesthetic into your home.
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A Sculptural Vase
Michael Aram Butterfly Ginkgo Small Vase
Fresh flowers will look even more striking in this sculptural vase. The ginkgo-adorned piece catches the light in the most luminous way.
Minimalist Nesting Trays
Open Spaces Nesting Trays
Simply tossing your keys or jewelry into one of these nesting trays can immediately make your home feel more put together. What’s more, they’re stackable.
A Time Keeper
Vitra Nelson Night Clock
Opening your phone to check the time will simply never be as glamorous as glancing at this cool clock.
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Elevated Salt & Pepper Shakers
L’objet Han Salt & Pepper Shakers
For something equally luxe to match your pristine tableware, these crystal and gold-plated salt and paper shakers fit the bill.
A Designer Pillow
Dior Large Square Pillow
Dressed in a print so recognizable it needs no introduction, this Dior style is the ultimate throw pillow for fashion lovers. You can also get it custom embroidered to make someone’s day.
Vintage-Inspired Wall Decor
Crosley 1950 Payphone
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As a decor item, this retro-inspired phone will become you room’s next focal point. But the best part is, this device is fully functional—with or without coins.
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An Elegant Water Jug
Toast Jack Welbourne Wave Jug
Replacing modern designs with handmade ceramics is an easy way to add a warmer, holistic energy to your home. Rather than filling up your cup in the sink, pour from this elegant water jug instead.
A Spurge-Worthy Chess Set
Ameico Man Ray Chess Set
As both a mentally-stimulating game and luxe home accessory, this hand-finished beechwood chess set delivers on all fronts.
Preserved Roses
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Considering how much money these preserved roses will ultimately save you on weekly bouquet runs, they’re well worth the investment. Here, you get a bundle of two dozen, which should last at least three years with zero upkeep.
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Intricate Wallpaper
MINDTHEGAP The Station View Wallpaper
Adding wallpaper, even to a single wall in a room, can instantly transform your space. This intricate option from Anthropologie offers an old-world feel.
Hanging art in your home is one of the best ways to not only elevate the look of your space, but also show off your taste and sensibilities. This distinct photograph by Cas Friese can be bought in several sizes, depending on your needs.
Tatjana Freund is Hearst’s Fashion & Luxury Commerce Editor, covering beauty, fashion and more across multiple brands. Previously, she worked at ELLE.com and Marie Claire. She’s a fan of whiskey neat, podcasts that give her nightmares, and one time Zoë Kravitz laughed at a joke she made.
Federal regulators announced the approval of rules intended to provide quality control and eliminate potential discriminatory practices in the use of automated valuation models in appraisals.
The rules were originally proposed a year ago by a group of federal agencies involved in their design, including the Office of the Comptroller of the Currency, Federal Housing Finance Agency, Federal Reserve, Federal Deposit Insurance Corp., Consumer Financial Protection Bureau and the National Credit Union Administration.
The regulations will require mortgage originators and secondary market issuers to have procedures in place to ensure confidence in AVM estimates, protect against data manipulation and provide a backstop against conflicts of interest. They also mandate ongoing random sample testing and compliance with nondiscrimination laws.
The final rule does not spell out specific requirements for how institutions are to structure their practices but allows each to determine their own procedures based on their size and risk profile.
“The flexible approach to implementing the quality-control standards provided by the final rule will allow the implementation of the standards to evolve along with changes in AVM technology and minimize compliance costs,” the announcement said.
Finalization of the proposed regulations comes after a comment period, with the agencies receiving approximately 50 responses from stakeholders.
The addition of nondiscriminatory policy surrounding AVM use — what the regulators referred to as the rule’s “fifth factor ” — received support from many commenters but also detractors.
“While existing nondiscrimination law applies to an institution’s use of AVMs, the agencies proposed to include a fifth quality control factor relating to nondiscrimination to heighten awareness among lenders of the applicability of nondiscrimination laws to AVMs,” the federal announcement said.
Supporters said nondiscrimination could be seen “as a dimension of model performance and a required aspect of quality control,” adding that failing to address bias might result in ” safety and soundness risk.”
But public remarks also pointed to pushback involving such a mandate, with some comments suggesting documented instances of AVM bias were not prevalent. Others mentioned the fifth factor duplicated existing laws and other policies, while at the same time, provided no clear performance metric for users to determine if bias existed within data.
Some opposed pointed to the cost of compliance and limited resources at their institutions.
“They argued that small entities do not have access to an AVM’s data or methodology, are unable to validate the algorithms that AVM providers use, and lack the staff to assess the AVM models results,” according to the announcement.
Commenters also said the burden of nondiscrimination compliance should fall on the AVM providers, who often hold proprietary models. The regulators noted a number of individuals calling for the creation of a separate independent third-party nonprofit to test AVM systems to ensure compliance. Such an entity would both save lenders time and improve data quality, they said.
In addition to mortgage originations, the policy applies to AVM use in the determination of values for loan modification requests and applications for home equity lines of credit. But the regulation exempts licensed appraisers utilizing AVMs in the process of their work.
Use of automated models gained momentum as the government-sponsored enterprises began seeking alternative appraisal methods to address speed and costs. But their adoption previously drew criticism from the likes of CFPB, who raised concerns about potential algorithmic biases involved with any tools influencing credit decision making.
Inside: Learn what 26 an hour is how much a year, month, and day. Plus tips to budget your money. Don’t miss the ways to increase your income.
You’re probably wondering if I made $26 a year, how much do I truly make? What will that add up to over the course of the year when working?
Is $26 an hour good?
Is this wage something that I can actually live on? Or do I need to find ways that I can increase my hourly wage? How much more is $26.50 an hour annually?
When you finally start earning $26 an hour, you are happy with your progress as an hourly employee. Typically, this is when many hourly employees start to become salaried workers.
In this post, we’re going to detail exactly what $26 an hour is how much a year. Also, we are going to break it down to know how much is made per month, bi-weekly, per week, and daily.
That will help you immensely with how you spend your money. Because too many times the hard-earned cash is brought home, but there is no actual plan for how to spend that money.
By taking a step ahead and making a plan for the money, you are better able to decide how you want to live, make sure that you put your money goals first, and not just living paycheck to paycheck struggling to survive.
The ultimate goal with money success is to be wise with how you spend your money.
If that is something you want too, then keep reading. You are in the right place.
$26 an Hour is How Much a Year?
When we ran all of our numbers to figure out how much is $26 per hour is as an annual salary, we used the average working day of 40 hours a week.
40 hours x 52 weeks x $26 = $54,080
$54,080 is the gross annual salary with a $26 per hour wage.
As of June 2023, the average hourly wage is $33.58 (source).
Let’s break down how that number is calculated.
Typically, the average workweek is 40 hours and you can work 52 weeks a year. Take 40 hours times 52 weeks and that equals 2,080 working hours. Then, multiply the hourly salary of $26 times 2,080 working hours, and the result is $54,080.
That number is the gross income before taxes, insurance, 401K, or anything else is taken out. Net income is how much you deposit into your bank account.
That is super close to the $55000 salary threshold, which is just below the median salary for a middle-income worker.
Work Part Time?
But you may think, oh wait, I’m only working part time. So if you’re working part time, the assumption is working 20 hours a week at $26 an hour.
Only 20 hours per week. Then, take 20 hours times 52 weeks and that equals 1,040 working hours. Then, multiply the hourly salary of $26 times 1,040 working hours and the result is $27,040.
How Much is $26 Per Month?
On average, the monthly amount would average $4,507.
Annual Amount of $54,080 ÷ 12 months = $4,507 per month
Since some months have more days and fewer days like February, you can expect months with more days to have a bigger paycheck. Also, this can be heavily influenced by how often you are paid and on which days you get paid.
Plus by increasing your wage from $21 an hour, you average an extra $867 per month. So, yes a few more dollars an hour add up!
Work Part Time?
Only 20 hours per week. Then, the monthly amount would average $2,253.
How Much is $26 per Hour Per Week
This is a great number to know! How much do I make each week? When I roll out of bed and do my job, what can I expect to make at the end of the week?
Once again, the assumption is 40 hours worked.
40 hours x $26 = $1,040 per week.
Work Part Time?
Only 20 hours per week. Then, the weekly amount would be $520.
Here are jobs that pay weekly.
How Much is $26 per Hour Bi-Weekly
For this calculation, take the average weekly pay of $1,040 and double it.
$1,040 per week x 2 = $2,080
Also, the other way to calculate this is:
40 hours x 2 weeks x $26 an hour = $2,080
Work Part Time?
Only 20 hours per week. Then, the bi-weekly amount would be $1,040.
How Much is $26 Per Hour Per Day
This depends on how many hours you work in a day. For this example, we are going to use an eight-hour workday.
8 hours x $26 per hour = $208 per day.
If you work 10 hours a day for four days, then you would make $260 per day. (10 hours x $26 per hour)
Work Part Time?
Only 4 hours per day. Then, the daily amount would be $104.
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$26 Per Hour is…
$26 per Hour – Full Time
Total Income
Yearly Salary(52 weeks)
$54,080
Yearly Wage (50 weeks)
$52,000
Monthly Salary (173 hours)
$4,507
Weekly Wage (40 Hours)
$1,040
Bi-Weekly Wage (80 Hours)
$2,080
Daily Wage (8 Hours)
$208
Net Estimated Monthly Income
$3,441
**These are assumptions based on simple scenarios.
Paid Time Off Earning 26 Dollars an Hour
Does your employer offer paid time off?
As an hourly employee, you may or may not get paid time off.
So, here are the scenarios for both cases.
For general purposes, we are going to assume you work 40 hours per week over the course of the year.
Case # 1 – With Paid Time Off
Most hourly employees get two weeks of paid time off which is equivalent to 2 weeks of paid time off.
In this case, you would make $54,080 per year.
This is the same as the example above for an annual salary making $26 per hour.
Case #2 – No Paid Time Off
Unfortunately, not all employers offer paid time off to their hourly employees. While that is unfortunate, it is best to plan for less income.
Life happens. There will be times you need to take time off for numerous reasons – sick time, handling an emergency, or even vacation.
So, let’s assume you take 2 weeks off without paid time off.
That means you would only work 50 weeks of the year instead of all 52 weeks. Take 40 hours times 50 weeks and that equals 2,000 working hours. Then, multiply the hourly salary of $26 times 2,000 working hours, and the result is $52000 per year.
40 hours x 50 weeks x $26 = $52,000
You would average $208 per working day and nothing when you don’t work.
$26 an Hour is How Much a year After Taxes
Let’s be honest… Taxes can take up a big chunk of your paycheck. Thus, you need to know how taxes can affect your hourly wage.
Also, every single person’s tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and a 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
Gross Annual Salary: $54,080
Federal Taxes of 12%: $6,490
State Taxes of 4%: $2,163
Social Security and Medicare of 7.65%: $4,137
$26 an Hour per Year after Taxes: $41,290
This would be your net annual salary after taxes.
To turn that back into an hourly wage, the assumption is working 2,080 hours.
$41,290 ÷ 2,080 hours = $19.85 per hour
After estimated taxes and FICA, you are netting $19.85 an hour. That is $6.15 an hour less than what you thought you were paid.
This is a very highlighted example and can vary greatly depending on your personal situation. Therefore, here is a great tool to help you figure out how much your net paycheck would be.
Plus budgeting on over $19 an hour wage is much different.
$26 an Hour Salary Calculator
Now, you get to figure out how much you make based on your hours worked or if you make a wage between $26.01-26.99.
This is super helpful if you make $26.40 or $26.44.
You are probably wondering can I live on my own making 26 dollars an hour? How much rent or mortgage payment can you afford on 26 an hour?
Using our Cents Plan Formula, this is the best-case scenario on how to budget your $26 per hour paycheck.
When using these percentages, it is best to use net income because taxes must be paid.
In this example, we calculated $26 an hour was $19.85 after taxes. That would average $3,440 per month.
According to the Cents Plan Formula, here is the high-level view of a $26 per hour budget:
Basic Expenses of 50% = $1720.42
Save Money of 20% = $688.17
Give Money of 10% = $344.08
Fun Spending of 20% = $688.17
Debt of 0% = $0
Obviously, that is not doable for everyone. Even though you would expect your money to go further when you are making double the minimum wage. So, you have to be strategic in ways to decrease your basic expenses and debt. Then, it will allow you more money to save and fun money.
To further break down an example budget of $26 per hour, then using the zero based budget template is extremely helpful.
recommended budget percentages based on $26 per hour wage:
Category
Ideal Percentages
Sample Monthly Budget
Giving
10%
$315
Savings
15-25%
$766
Housing
20-30%
$1,082
Utilities
4-7%
$225
Groceries
5-12%
$315
Clothing
1-4%
$45
Transportation
4-10%
$180
Medical
5-12%
$225
Life Insurance
1%
$23
Education
1-4%
$45
Personal
2-7%
$83
Recreation / Entertainment
3-8%
$135
Debts
0% – Goal
$0
Government Tax (including Income Taxes, Social Security & Medicare)
15-25%
$1,066
Total Gross Income
$4,507
**In this budget, prioritization was given to basic expenses. Thus, some categories like giving and saving were less.
Can I Live off $26 Per Hour?
At this $26 hourly wage, you are more than likely double the minimum wage. Things should be easy to live off this $26 hourly salary.
However, it is still slightly below the median income of over $60,000 salary. That means it can still be a tough situation.
Is it doable? Absolutely.
In fact, $26 an hour is higher than the median hourly wage of $19.33 (source). That seems backward, but typically salaried workers earn more per hour than hourly workers.
Can you truly live off $26 an hour annually?
You just have to have the desire to spend less than your income. Plus consistently save.
If you are constantly struggling to keep up with bills and expenses, then you need to break that constant cycle. It is possible to be smart with money.
You need to do is change your money mindset.
This is what you say to yourself… Okay, I have aspirations and goals to increase how much I make. This is the time to start diversifying my income into multiple streams and start investing. I am going to stretch my 26 dollars per hour.
In the next section, we will dig into ways to increase your income, but for now, is it possible to live on $26 an hour?
Yes, you can do it, and as you can see it is possible with the sample budget of $26 per hour.
Living in a higher cost of living area would be more difficult. So, you may have to get a little creative. For example, you might have to have a roommate. Move to a lower cost of living area where rent is cheaper.
Also, you must evaluate your “fun spending” items. Many of those expenses are not mandatory and will break your budget. You can find plenty of free things to do without spending money.
5 Ways to Increase Your Hourly Wage
This right here is the most important section of this post.
You need to figure out ways to increase your hourly income because I’m going to tell you…you deserve more. You do a good job and your value is higher than what your employers pay you.
Even an increase of 50 cents to $26.50 will add up over the year. An increase to $27 an hour is even better!
1. Ask for a Raise
The first thing to do is ask for a raise. Walk right in and ask for a raise because you never know what the answer will be until you ask.
If you want the best tips on how specifically to ask for a raise and what the average wage is for somebody doing your job, then check out this book. In this book, the author gives you the exact way to increase your income. The purchase is worth it or go down to the library and check that book out.
2. Look for A New Job
Another way to increase your hourly wage is to look for a new job. Maybe a completely new industry.
It might be a total change for you, but many times, if you want to change your financial situation, then that starts with a career change. Maybe you’re stressed out at work.
Making $26 an hour is too much for you and you’re not able to enjoy life, maybe changing jobs and finding another job may increase your pay, but it will also increase your quality of life.
3. Find a New Career
Because of student loans, too many employees feel like they are stuck in the career field they chose. They feel sucked into the job that they don’t like or have the potential they thought it would.
For many years, I was in the same situation until I decided to do a complete career change. I am glad I did. I have the flexibility that I need in my life to do what I want when I need to do it. Plus I am able to enjoy my entrepreneurial spirit.
This is a great way to find success and deny all of the naysayers.
4. Find Alternative Ways to Make Money
In today’s society, you need to find ways to make more money. Period.
There is no way to get around it. You need to find additional income outside a traditional nine-to-five position or typical 40 hour a week job. You will reach a point where you are maxed on what you can make in your current position or title. There may be some advancement to move forward, but in many cases, there just is not much room for growth.
So, you need to find a side hustle – another way to make money.
Do something that you enjoy, turn your hobby into a way to make money, turn something that you naturally do, and help others into a service business. In today’s society, the sky is the limit on how you can earn a freelancing income.
Must Read: 20 Genius Ways on How to Make Money Fast
5. Earn Passive Income
The last way to increase your hourly wage is to start earning passive income.
This can be from a variety of ways including the stock market, real estate, online courses, book sales, etc. This is where the differentiation between struggling financially to becoming financially sound.
By earning money passively, you are able to do the things that you enjoy doing and not be loaded down, with having a job that you need to work, and a place that you have to go to. And you still make money doing nothing.
Here is an example:
You can start a brokerage account and start trading stocks for $50. You need to learn and take the one and only investing class I recommend. Learn how the market works, watch videos, and practice in a simulator before you start using your own money.
One gentleman started with $5,000 in his trading account and now has well over $36,000 in a year. Just from practice and being consistent, he has learned that passive income is the way for him to increase his income and also not be a slave to his job.
Tips to Live on $26 an Hour
In this last section, grasp these tips on how to live on $26 an hour or just above a $50k yearly salary. On our site, you can find lots of money saving tips to help stretch your income further.
Here are the most important tips to live on $26 an hour. More importantly stretch how much you make, in case you are in the “I don’t want to work anymore” mindset. Highlight these!
1. Spend Less Than You Make
First, you must learn to spend less than you make.
If not you will be caught in the debt cycle and that is not where you want to be. You will be consistently living paycheck to paycheck.
In order to break that dreadful cycle, it means your expenses must be less than your income.
And when I say income, it’s not the $26 an hour. As we talked about earlier in the post, there are taxes. The amount of taxes taken out of your paycheck is called your net income which is $26 an hour minus all the taxes, FICA, social security, and Medicare are taken out. That is your net income.
So, your net income has to be less than your net income.
2. Living Below Your Means
You need to be happy. And living on less can actually make you happier. Studies prove that less is better.
Finding contentment in life is one thing that is a struggle for most.
We are driven to want the new shiny toy, the thing next door, the stuff your friend or family member got. Our society has trained you that you need these things as well.
Have you ever taken a step back and looked at what you really need?
Once you are able to find contentment with life, then you are going to be set for the long term with your finances.
Here is our story on owning less stuff. We have been happier since.
3. Make Saving Money Fun
You need to make saving money fun. If you’re good, since you must keep your expenses low, you have to find ways to make your savings fun!
Find new ways of saving money and have fun with it.
Even better, get your family and kids involved in the challenge to save money. Tell them the reason why you are saving money and this is what you are doing.
Here are 101 things to do with no money. Free activities without costing you a dime. That is an amazing resource for you and you will never be bored.
And you will learn a lot of things in life you can do for free. Personally, some of the best ones are getting outside and enjoying some fresh air.
4. Make More Money
If you want if you do not settle for less, then find ways to make more money. If you want more out of life, then increase your income.
You need to be an advocate for yourself.
Find ways to make more money.
It could be a side hustle, a second job, asking for a raise, going to school to change careers, or picking up extra hours.
Whatever path you take, that’s fine. Just find ways to make more money. Period.
5. No State Taxes
Paying taxes is one option to increase what you take home in each paycheck.
These are the states that don’t pay state income taxes on wages:
Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Washington
Wyoming
It is very interesting if you take into account the amount of state taxes paid compared to a state with income taxes.
Also, if you live in one of the higher taxed states, then you may want to reconsider moving to a lower cost of living area. The higher taxes income tax states include California, Hawaii, New Jersey, Oregon, Minnesota, the District of Columbia, New York, Vermont, Iowa, and Wisconsin. These states tax income somewhere between 7.65% – 13.3%.
6. Stick to a Budget
You need to learn how to start a budget. We have tons of budgeting resources for you.
While creating a budget is great, you need to learn how to use one.
You do not have to budget down to every last penny.
You need to make sure your expenses are less than your income and that you are creating sinking funds for those irregular expenses.
Budget Help:
7. Pay Off Debt Quickly
The amount that you pay interest on debt is absolutely absurd.
Unfortunately, that is how many of these companies make their money is from the interest you pay on debt.
If you are paying 5% to even 20-21% or higher, you need to find ways to lower that debt quickly.
Here’s a debt calculator to help you. Figure out your debt-free date.
Make that paying off debt fast is your target and main focus. I can tell you from personal experience, that it was not until we paid off our debt that we finally rounded the corner financially. Once our debt was paid off, we could finally be able to save money. Set money aside in separate bank accounts and pay for cash for things.
It took us working hard to pay off debt. We needed persistence and patience while we had setbacks in our debt-free journey.
Jobs that Pay $26 an Hour
You can find jobs that pay $26 per hour. Polish up that resume, cover letter, and interview skills.
Job Search Hint: Always send a written follow-up thank you note for your interview. That will help you get noticed and remembered.
First, look at the cities that require a minimum wage in their cities. That is the best place to start to find jobs that are going to pay higher than the federal minimum wage rate. Many of the cities are moving towards this model so, target and look for jobs in those areas.
Possible Ideas:
Virtual Assistant
Freelance writer
CDL Truck Driver
Managers
Entry Level Marketing Jobs
Data Entry Clerks
Customer service managers
Bank tellers
Maintenance workers
Freight broker – Learn how easy it is to start!
Administrative assistants
Athletic Trainers
Event Planners
Security guard
Movers
Warehouse workers
Certified Nursing Assistant
Companies that pay more than $26 per hour:
Costco
Wayfair
Amazon
Best Buy
Target
Wells Fargo
Disney World
Disney Land
Bank of America
JP Morgan
Cigna
Aetna
$26 Per Hour Annual Salary
In this post, we detailed 26 an hour is how much a year. Plus all of the variables that can impact your net income. This is something that you can live off.
How much is 26 dollars an hour annually…
$54,080
This is right between $50,000 per year and $56k a year. In this post, we highlighted ways to increase your income as well as tips for living off your wage.
Use the sample budget as a starting point with your expenses.
You will have to be savvy and wise with your hard-earned income. But, with a plan, anything is possible!
Still thinking I don’t want to work anymore, you aren’t alone and need to start to plan for your early retirement.
Learn exactly how much do I make per year…
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.