JetBlue announced on Sept. 19 that it would open two new airport lounges and launch a premium credit card.
This move is JetBlue’s latest effort to differentiate itself in a competitive space. By adding a premium lounge experience and credit card, JetBlue can better capture more of the high-spend traveler market while continuing to cater to budget-conscious flyers. Still, JetBlue is much smaller and has a limited route network compared with American Airlines, Delta Air Lines or United Airlines, so its offerings might be relatively niche, appealing only to a specific set of JetBlue flyers.
Who can access JetBlue’s new lounges?
This plan is the airline’s first move into a standalone lounge experience, responding to growing customer demand for the “highly requested perk.” Each lounge will feature complimentary refreshments, high-speed Wi-Fi and quiet areas designed for travelers.
Complimentary access will be available to:
JetBlue will also sell day passes and an annual pass, though details on pricing and eligibility have yet to be finalized.
Airport lounges are in high demand
JetBlue’s future lounges won’t be the only new options at JFK or BOS. Airlines and banks are moving away from relying on third-party lounge networks like Priority Pass, opting instead to invest in branded spaces that allow for greater control over the customer experience. In 2024 alone, JFK saw some new lounges and plans, including:
Capital One Lounge: In June 2024, Capital One announced it would open a 13,000-square-foot lounge in Terminal 4; an opening date hasn’t been shared.
Delta One Lounge: The largest Delta lounge in the world, located in Terminal 4, opened in June 2024.
Chase also opened a Sapphire Lounge by The Club in BOS in 2023 and Delta added a nearly 21,000-square-foot Sky Club last year, in addition to two others that were already there.
This underscores other airlines’ commitment to branded lounges, as well as ways that banks are increasingly getting into the airport lounge space. More lounge options are welcomed, especially as overcrowding has become a notorious issue among even among the most upscale lounge offerings.
JetBlue’s new premium card benefits
While details are scant, JetBlue has already made it clear its new premium card will include lounge access for the cardholder and a guest. JetBlue’s current credit cards are all issued by Barclays, which will also issue this forthcoming card.
With only two lounges planned so far, it’ll be interesting to see at what price point JetBlue lands with its upcoming card and what other benefits will come with it. It’s unknown if lower-tier cardholders will have discounted or limited lounge access.
It’s worth noting that several premium cards include Priority Pass Select membership to access over 1,600 Priority Pass lounges around the world. While quality varies, it’s a way issuers offer airport lounge access when cardholders travel beyond a smaller lounge network. If it’s not a perk of JetBlue’s new card, it’ll be a tough sell to enter two specific lounges unless the other benefits are truly stellar.
Snapshot: As of September 18, the Federal Reserve cut interest rates by .5%. Although consumers shopping for a mortgage may not see rates come down within the year, people shopping for auto loans or paying off credit card debt may see interest rates come down faster.
On September 18, 2024, the Federal Reserve announced that it was cutting interest rates by .5%. This is the first time the Fed has lowered interest rates since 2020. During that time, the Fed has been raising interest rates to keep inflation in check and prevent a recession.
Although half a percentage point may not seem like a huge cut, it is expected to have an impact and the Fed has indicated that more cuts may be coming later on.
What happens when the Federal Reserve cuts interest rates
In a nutshell, when the Federal Reserve cuts interest rates, it makes it cheaper to borrow money. Here’s how that can directly affect you:
Lower Borrowing Costs: Banks can borrow money from the Fed at a lower cost, and they often pass those savings on to consumers. This means loans for things like cars, homes, or credit cards can have lower interest rates.
Encourages Spending: When borrowing is cheaper, people are more likely to take out loans and spend money. This can help boost the economy because businesses benefit from increased sales.
Investment Boost: Lower rates can also encourage businesses to invest in new projects since financing is cheaper. This can lead to more jobs and economic growth.
Impact on Savings: On the flip side, lower rates can mean less interest earned on savings accounts, which might discourage people from saving money.
So, in short, when the Fed cuts interest rates, it’s aimed at stimulating the economy by making borrowing cheaper and encouraging spending and investment.
Will interest rates keep dropping?
It looks like rates will continue to drop: members of the Federal Reserve’s rate setting committee have said that they expect to see interest rates come down another half a percentage point in 2024 and then another full point in 2025.
How will this affect my debt?
The decrease in interest rates is most likely to have an immediate effect on APR – annual percentage rate. If you’re looking to take out an auto loan or a credit card, APR is what determines the interest on those lines of credit.
If you already have a car loan, this probably won’t affect you. Generally, the APR on a fixed-rate car loan does not change after you take out the loan. It remains constant for the duration of the loan term. However, if you have a variable-rate loan, the APR could change based on market conditions or specific terms outlined in your loan agreement.
If you already have a credit card, it is possible for the interest rates (APR) on your credit card to change even after you get the card. Many credit cards have variable interest rates that can fluctuate based on changes in the prime rate or other benchmarks. Check your card’s terms and conditions to understand how and when rates might change
Will the rate cut help mortgage rates?
Although the rate cut may not affect mortgage rates immediately, it might have more of an impact later on. As it is, mortgage rates have already shown signs of decreasing even before the Fed announced it was making cuts, dropping to an average of less than 6.05%.
If you’re thinking about buying a home, applying for an auto loan or getting a new credit card, lower interest rates could mean this is a better time than before. Before you apply for anything, make sure you check your credit to make sure that you’re ready to qualify for the best interest rates possible.
You can see your FICO score and a free summary of your credit profile with our Credit Snapshot tool.
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
SoFi’s marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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?
[embedded content][embedded content]
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.
Who are ITIN borrowers? An ITIN is issued by the IRS to individuals who need to pay taxes, but are not eligible for a Social Security number. Some may have entered the country legally but overstayed their visas, while others may have crossed borders illegally. Regardless of their immigration status, Senko notes that many of … [Read more…]
The reverse budgeting method is an approach that prioritizes savings. Budgets typically start by looking at monthly bills and expenses and allocating whatever is left over to saving. Reverse budgeting turns this approach on its head — it considers savings first and spending second.
Also known as the “pay yourself first” method, reverse budgeting starts by allocating a certain amount of your monthly income to your savings goals (such as retirement or an emergency fund). Whatever is left over after that is how much you have to spend. Essentially, it involves pretending that your paycheck is smaller than it actually is.
If your top goal is saving or you’ve tried budgeting in the past without complete success, the reverse budget might be for you. Here’s what reverse budgeting means and how it works.
Key Points
• Reverse budgeting prioritizes savings by allocating a portion of income to savings goals first, then spending the remainder on other expenses.
• Reverse budgeting simplifies budgeting since you can focus on saving a predetermined amount and then spend the rest as needed or desired.
• The reverse budgeting method can help achieve financial goals faster and allows guilt-free spending within remaining income limits.
• Reverse budgeting may not be ideal for those with high-interest debt or irregular income.
• Automating savings and periodically reassessing the budget are key steps to making reverse budgeting work effectively.
Reverse Budgeting Explained
The reverse budgeting method prioritizes setting money aside for your savings and investing goals. This might include building an emergency fund, saving for a new car or down payment on a house, or investing for retirement. Once that money has been set aside, the rest of your income can be used to cover your living expenses.
Reverse budgeting usually involves setting up automatic contributions to savings, typically on payday. As a result, the money leaves your bank account before you get a chance to spend it. That’s why this method is also known as the “pay yourself first” approach.
How Reverse Budgeting Differs from Traditional Budgeting
Making a budget typically involves listing all of your monthly expenses and assigning a portion of income to each category (e.g., housing, groceries, transportation). The goal is to ensure that expenses don’t exceed income, and any leftover funds can be saved or invested. This approach often requires meticulous tracking and discipline to avoid overspending in any category.
By contrast, reverse budgeting starts by looking at your financial goals and the things you want to save for. It helps you determine how much you need to put aside each month to accomplish them. You then subtract that sum from your monthly pay; what’s left is how much you have to spend on everything else.
Earn up to 4.50% APY with a high-yield savings account from SoFi.
No account or monthly fees. No minimum balance.
10x the national average savings account rate.
Up to $2M of additional FDIC insurance.
Sort savings into Vaults, auto save with Roundups.
Steps to Create a Reverse Budget
Creating a reverse budget tends to be less complicated than setting up other types of budgets. It doesn’t require establishing spending categories and totals for how much you will spend on each. That said, there are a few steps involved. Here’s a look at how to do a reverse budget.
1. Assess Your Spending
To know how to set your savings goals, you’ll need to get a general sense of your current cash flow. You can do this by pulling the last few months of financial statements, then adding up how much is coming in and going each month on average. You might also want to make a list of your essential monthly expenses, as well as how much you tend to spend each month on nonessentials.
This type of spending audit will give you a clear picture of your spending patterns. It can also help you identify any discretionary spending you may be able to reduce to accommodate your savings goals. There are also budgeting apps that can do a lot of this work for you. Start by seeing what your financial institution offers that could help with this process.
2. Identifying Your Savings Goals
Next, you’ll want to think about your savings goals. These might include building an emergency fund, saving for a down payment on a house, doing a home renovation, going on a vacation, paying for a wedding, contributing to retirement accounts, or any other financial objectives.
You’ll likely want to set your savings goals in terms of dollars as well as the timeframe within which you want to work.
3. Allocate Income to Savings
Once you’ve identified your savings goals, you might pick just a couple to start with. For each, as noted, you’ll have determined how much money you’ll need, along with a realistic timeline for reaching the goal. With that information in mind, you can then allocate a portion of your income to each goal.
For example, if you want to save $5,000 for an emergency fund over the next year, you would need to save approximately $417 per month.
As you go through this step, you’ll want to be realistic about how much you can afford to siphon off your paycheck for savings. It’s important to have enough spending money left over to cover your bills and also have some fun.
Recommended: 10 Most Common Budgeting Mistakes
4. Automate Your Saving
To ensure consistency and reduce the temptation to spend your savings, it’s a good idea to automate the saving process. If you have a 401(k) at work, you can do this by letting your employer know how much of your paycheck to put into your retirement account.
For shorter-term goals, consider setting up an automatic transfer from your checking account to a savings account for the same day each month, ideally right after you get paid. Some employers even allow you to split up your direct deposit into two different bank accounts.
5. Make Adjustments as Needed
Once you’re living on your reverse budget, you may find that you don’t have enough wiggle room to comfortably cover your bills and everyday spending. Or you might realize that you can afford to put more money towards savings and, in turn, reach your goals faster. Either way, it’s important to periodically reassess your reverse budget and, if necessary, make some adjustments in your savings rate.
This is especially important as your life circumstances and financial goals change. If you get a raise, for example, consider increasing your savings rate (this can help you avoid lifestyle creep). Conversely, if you encounter unexpected expenses, you may need to temporarily reduce your savings rate to accommodate these costs.
Pros and Cons of Reverse Budgeting
As with any financial strategy, reverse budgeting has its advantages and disadvantages. Understanding these pros and cons can help you determine if this method is right for you.
Pros of Reverse Budgeting
First, consider the upsides of reverse budgeting:
• It can help you reach your goals faster: One of the main advantages of reverse budgeting is that it takes savings right off the top of your paycheck. This can help you build an emergency fund, save for a major purchase, or invest for retirement more quickly than traditional budgeting methods.
• Low maintenance: Reverse budgeting simplifies the budgeting process. Instead of meticulously tracking every expense category, you focus on saving a predetermined amount and spend the remainder as you see fit. This low-maintenance approach can be particularly appealing for those who find traditional budgeting too time-consuming and/or restrictive.
• Spending without guilt: With reverse budgeting, you can enjoy spending within the limits of your remaining income. Since your savings goals are already met, you have the freedom to spend on discretionary items without worrying that you are derailing your future progress.
In these ways, the reverse budgeting method can help you prioritize savings and achieve financial security.
Recommended: The Most Important Components of a Successful Budget
Cons of Reverse Budgeting
Next, keep these potential downsides of reverse budgeting in mind:
• It could lead to overspending: Since reverse budgeting doesn’t require setting up spending categories and strict spending limits for each one, you could end up overspending on certain things. Then, you might have to dip into savings to cover the shortfall.
• You might be better off focusing on debt: If you have high-interest debt, paying down those balances could provide a better return on investment than saving or investing. If this is the case, a more traditional budgeting approach that prioritizes debt repayment might be more effective.
• Not ideal for people with variable income: Reverse budgeting generally depends on earning a set amount of money each month. For people with variable income, such as freelancers or those with seasonal work schedules, maintaining a fixed savings rate could be challenging.
The Takeaway
Reverse budgeting, also known as the “pay yourself first” method, prioritizes saving and simplifies the entire budgeting process. By automating saving, it also reduces the chance that you’ll spend money today that you were intending to set aside for the future. However, reverse budgeting may not be the best approach if you have a lot of high-interest debt or your income fluctuates. You might be better off with another budgeting technique.
Choosing the right banking partner can also help you budget more effectively.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.50% APY on SoFi Checking and Savings.
FAQ
How does reverse budgeting help with saving money?
Reverse budgeting helps with saving money by prioritizing savings over expenditures. With this approach, you allocate a set percentage or amount of your income to savings first and then use the remaining amount to cover your expenses. This ensures that you don’t spend money you were planning to use for future goals.
Can reverse budgeting work for irregular income?
Reverse budgeting can be challenging for those with irregular income, such as gig workers. Here’s why: It relies on setting aside a certain amount of money into savings each month — before other expenses are paid. If your income fluctuates significantly, it may be difficult to meet your savings goal monthly.
However, you may be able to make it work by taking a flexible approach. For example, you might set a minimum savings rate based on your lowest expected income and then, during higher-income months, increase your savings contributions. Building an emergency fund can also help smooth out the fluctuations.
Is reverse budgeting suitable for paying off debt?
Reverse budgeting isn’t ideal for paying off debt, since it focuses on saving first, which can divert funds from debt repayment. If you have significant high-interest debt, prioritizing debt repayment might provide better financial benefits in the long run compared to the returns from savings or investments.
However, you might consider a hybrid approach — allocating a portion of your income to debt repayment and another to savings, ensuring you address both goals.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.
SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.50% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
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 4.50% 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 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Do you want to learn how to make money baking? Baking can be more than just a fun hobby; it can also be a great way to make extra money from home. From selling dog treats and cakes to starting a YouTube channel for baking tips, there are many ways to turn your passion into…
Do you want to learn how to make money baking?
Baking can be more than just a fun hobby; it can also be a great way to make extra money from home. From selling dog treats and cakes to starting a YouTube channel for baking tips, there are many ways to turn your passion into profit. By exploring these opportunities, you can find a side hustle or a small business idea that fits your lifestyle and interests.
Whether you enjoy creating sweet treats or savory goodies, there’s a market for your baked goods. You don’t have to be a professional chef to make money baking; with some creativity and effort, you can start earning and sharing your delicious creations with others.
Best Ways To Make Money Baking
Below are the best ways to make money baking.
1. Sell dog treats
Selling dog treats is a fun way to make money. If you love dogs and baking, this is a perfect match. You can make treats from home and sell them online, at local markets, or even work at a dog treat bakery.
I have bought many dog treats over the years, and I think it’s a wonderful business and baking side hustle!
You can start by finding easy recipes, such as this free peanut butter dog treat recipe. You’ll want to use ingredients safe for dogs like peanut butter, pumpkin, and oats (don’t forget to label the ingredients in case some dogs have allergies), and you can find many recipes online that are easy to follow.
Packaging is important too when it comes to dog treats. You may want to use cute bags or boxes to make your treats look special.
To get customers, you can advertise your treats on social media, such as by posting pictures and videos of your baking process.
You can learn more about this topic at How I Make Up to $4,000 Per Month Baking Dog Treats (With Zero Baking Experience!). Plus, you can sign up for this free training workshop that will teach you how to start your own side hustle baking and selling dog treats.
10
This free workshop will teach you how to start your own dog treat bakery business.
2. Sell custom cakes
Selling custom cakes is a fun way to make money from home. People love ordering unique cakes for birthdays, weddings, and other special events. You can decorate cakes with different designs, colors, and themes to match any occasion.
To learn how to make custom cakes, you can start practicing your cake decorating skills by watching tutorials online or taking a class in person (there’s probably a company near you that teaches this skill!).
The better your cakes look, the more customers you’ll attract, so learning through trial and error and/or with tutorials and classes will go a long way.
To get customers, you can start social media accounts (I’ve seen several custom cake accounts on TikTok and Instagram, for example), and post in local Facebook groups (such as wedding groups or parent groups).
You can learn more about this at How To Make Extra Money By Starting A Home Bakery.
3. Host baking workshops
Hosting baking workshops can be a fun way to make money baking. You can invite people to your home or rent a small space. Teach them how to make cakes, cookies, or whatever you love to bake. They will pay to learn from you.
You can sell workshops for beginner or experienced bakers, and make your classes based on what people want to learn. You could even focus on themes like holiday baking or gluten-free recipes. This way, you can get more students interested.
You can share your workshops on social media and tell your friends to spread the word. You can also make flyers and put them in local stores or cafes (make sure to add pictures of your tasty baked goods to grab people’s attention).
Another idea is to host online workshops on sites like Skillshare and Udemy. This way, you can reach even more people who want to learn from the comfort of their own homes. Use video calls to teach and send out ingredient lists beforehand. You can even record the classes so participants can rewatch them later.
4. Start a baking blog
Starting a baking blog can be a fun way to share your passion for baking and make money at the same time.
With a blog, you can post recipes, share baking tips, and talk about your favorite tools and ingredients. This gives you a platform to connect with others who enjoy what you create (and recipes that they can recreate).
To begin, you’ll need to choose a niche (you can go wide or very specific – up to you). For example, you could focus on gluten-free baking, cake decorating, family meals, healthy meals, budget meal ideas, or bread recipes.
Once your blog is up and running, you can monetize it through affiliate marketing, ads, sponsored posts, and even selling your own products like ebooks or online courses.
Building a blog takes time and effort, but it can be a rewarding way to turn your baking passion into a steady income stream.
You can start a blog by using my free How To Start a Blog course.
You can learn more about this at How I Make $110,000 A Year As A Food Blogger.
5. Become a food photographer
You can make money from home by working as a freelance food photographer. This means taking pictures of food for things like blogs, magazines, and ads.
Bloggers often hire photographers to make and photograph recipes for their blogs, using professional photos to make their posts look great.
Some food photographers earn $50,000 a year, and some even make over $100,000 working with bloggers.
You can learn more about this at How To Become a Food Blog Photographer And Earn Over $50,000 Each Year.
6. Partner with local cafes and coffee shops
Partnering with local cafes can be a great way to make money with your baking. Cafes look for fresh, homemade treats to sell to their customers, and many times the treats are made by local bakers.
I have a friend who does this as her full-time business – she has a home bakery business and she makes the most delicious treats. She sells them on her website, but also to local restaurants near where she lives.
You can start by visiting local cafes and talking to the owners. Bring samples of your best baked goods. This way, they can taste your work and see the quality for themselves.
Once you have a few interested cafes, you can set up a supply schedule. Decide how often you’ll deliver baked goods and how much you’ll charge. Make sure to keep track of orders and deliveries to avoid mistakes.
Building a good relationship with cafe owners is important, so you will want to be reliable and deliver on time. Happy cafe owners are more likely to keep ordering from you and might even recommend you to other businesses.
7. Start a YouTube baking channel
Creating a YouTube baking channel is an exciting way to share your passion for baking while making money.
I have watched many baking YouTube videos over the years so that I can learn how to make a recipe. Many people just love baking shows too!
With video content, you can teach others how to bake, demonstrate fun recipes, and build a community of baking enthusiasts who love your style.
You can start by choosing a specific niche for your channel – whether it’s cake decorating, gluten-free baking, or quick and easy desserts. This helps attract viewers who are interested in exactly what you have to offer.
High-quality videos are key, so invest in good lighting and a decent camera, but don’t stress – you don’t need to be a pro to get started. Many popular baking channels started with basic equipment like their cell phone and grew over time.
8. Create an Instagram baking account
I have a friend who has a baking side hustle where she shares the recipes she’s made on her Instagram. Her recipes always look so good too!
Starting an Instagram baking account can help you make money from your baking skills through sponsored partnerships, affiliate marketing, and even by selling baked goods.
Instagram is perfect for visual content, so your beautifully decorated cakes, cookies, and pastries can really shine. Plus, it’s a great platform to connect with potential customers and others who love to bake.
9. Sell baked goods at farmers markets
Selling baked goods at farmers markets is a great way to make money. You can meet your customers face-to-face, which helps build a loyal customer base.
You can start by finding a local farmers market. You’ll need to know the rules and fees, which can usually be found on their website. Some markets may have special requirements for food sellers.
You could sell baked goods like cookies, muffins, bread, pies, and more.
There’s a small farmers market near where I live, and I try to go at least once a month to specifically buy bread from a home bakery that I love. They also sell dips and different kinds of butter for the bread too.
10. Sell baking ebooks
Selling baking ebooks is a great way to make money from your baking skills. With ebooks, you can share your favorite recipes and tips with a wide audience.
Creating an ebook takes some time. You’ll need to write down your recipes, take photos, and maybe even make some videos. Once it’s ready, you can sell it online.
Amazon Kindle Direct Publishing is a popular platform where you can sell your ebook. It’s easy to use, and many people have had success with it.
Another option is to sell your ebook on your own website. This way, you keep more of the money from each sale. You can also create a blog to attract readers who might be interested in your ebook.
Even though it takes some work to create an ebook, it can be a good source of income. Once it’s done, you can keep selling it without much extra effort.
I have personally bought several books with recipes from “normal” people like you and me. They are personally my favorite ways to get new recipes. In fact, one of the things I like to do on my travels is buy a cooking book from a local author so that I can recreate local meals when I’m at home!
Getting Started With a Baking Business
Now that we have gone over 10 different ways to make money baking, I also wanted to talk about how you can get started with a new baking business.
When starting a baking business, you need to find your unique style, make your kitchen ready for baking, and get the equipment you need. These steps will help you turn your love for baking into a way to actually make money.
Note: The below won’t be everything that you need to do (or it may not be applicable to the bakery business idea that you are wanting), but it is a good start.
1. Finding your niche
Finding your baking niche means deciding what type of baked goods you want to specialize in. You could focus on cupcakes, bread, cookies, or even custom cakes for special events. Think about what you love to bake and what you’re best at.
If you enjoy making gluten-free or vegan desserts, that could be your niche. Selling something unique will make your business stand out, and it will also attract customers looking for specific types of baked goods.
2. Setting up your kitchen
The equipment you need will depend on what you plan on selling. But, overall, here are some tips to get started.
Clean your kitchen thoroughly to meet health standards.
Dedicate a section of your kitchen for baking supplies. This includes ingredients, baking pans, and mixing bowls. Labeling the shelves can help you quickly find what you need. If you’re limited on space, consider adding shelves or storage bins.
You may also need cooling racks, spatulas, and piping bags for decorating your baked goods.
Invest in quality items that will last. If new equipment costs too much, consider buying secondhand items in good condition.
Extra things like display cases and packaging materials are important. They help you present your baked goods attractively to customers. Good packaging also keeps your baked items fresh during delivery or pickup.
3. Marketing your baked goods
Marketing your bakery business can go a long way and help you to make more money.
Your brand is your bakery’s personality so I recommend that you make a catchy name and logo. Think of colors and fonts that match the feel of your baked goods.
Social media can help you reach many people fast too. Start with platforms like Instagram and Facebook, and post pictures of your baked goods.
4. Managing finances
When you run a baking business, handling your money well is key. You must price your products right, keep track of your expenses, and understand tax rules.
To make a profit, you need to set your prices carefully. Start by figuring out the cost of ingredients, packaging, and any special tools. Then, add in your labor costs.
A simple way to price is to use this formula:
(Cost of Ingredients + Labor + Overhead) x Markup = Sale Price
For example, if it costs $5 to make a baked good and you want a 50% profit, your markup might be 2x. So, the baked good should be $10.
5. Legal things to think about
There are some legal things that you will want to think about, such as:
Check if you need a business license in your area.
Keep records of all sales and expenses throughout the year. This will make it easier when tax time comes.
Taxes can be tricky, so hiring an accountant or using tax software can help you stay on track.
If you feel that this is over your head, I highly recommend finding a professional/expert in your local area to help you further.
Frequently Asked Questions
Below are answers to common questions about how to make money baking.
What can I bake to make money?
To make money, you can bake custom cakes, cookies, cupcakes, and bread. Many people also have success with unique items like decorated sugar cookies or themed cupcakes. Dog treats are popular too!
Can baking be profitable?
Yes, baking can be profitable. By marking up your prices for profit and finding your niche, you can make a good income from your baked goods.
How to make passive income as a baker?
You can create a YouTube channel, start a baking blog, or sell baking ebooks. These options allow you to earn money even when you’re not actively baking.
Can you make a living from baking?
Yes, it’s possible to make a living from baking. Many home bakers turn their passion into a full-time business by consistently selling high-quality products and building a loyal customer base.
How much does a bakery make per month?
The amount of money that a bakery makes per month varies widely, just like with any business. Factors like location, pricing, and customer base influence earnings. Some small bakeries might make a few hundred dollars a month, while others can make thousands.
Do I need special permission or a license to sell my homemade baked goods?
Yes, you usually need a license or permit to sell homemade goods. Check your local government regulations for specific requirements. Food safety certifications might also be necessary.
How can I turn my cake decorating skills into a profitable business?
You can sell custom cake services for special occasions like birthdays and weddings.
Is it possible for kids to make money by baking and selling treats?
Yes, kids can make money by baking and selling treats. They can start small by selling to friends, family, and neighbors.
How To Make Money Baking – Summary
I hope you enjoyed this article on how to make money baking.
Baking can be a rewarding way to make extra income while doing something you love. Whether you’re selling dog treats, custom cakes, or starting a baking blog, there are many opportunities to turn your passion into a profitable side hustle or business.
I have many friends who have baking businesses, and it looks like so much fun. I have a friend who makes dog treats, a friend who sells baked goods online and in local cafes, a friend who decorates the most amazing cookies, and a friend who makes custom birthday cakes. They all seem to really love what they do, and it’s a skill that they learned over the years.
Are you interested in making money baking? Which baking business idea above do you think you’ll try?
Working with a professional real estate agent can make buying or selling a home easier. After all, they are likely to be well versed in the ins and outs of your area, how to best negotiate in the current market, and how to access any other resources (say, a home inspector) that you may need.
Working with a professional real estate agent can make buying or selling a home easier. After all, they are likely to be well versed in the ins and outs of your area, how to best negotiate in the current market, and how to access any other resources (say, a home inspector) that you may need.
While there may be some agents you hit it off with personally, this isn’t a friendship you’re pursuing but an important business relationship. It’s a collaboration that could impact both your finances and your stress level.
No matter which side of a real estate transaction you’re on (buying or selling), it can be wise to have the right professional in your corner. Eighty-nine percent of homes sold in the U.S. involve an agent or a Realtor®, according to a 2023 report. (Realtors are agents who belong to the National Association of Realtors, or NAR.)
If you’re on the hunt for an agent, it’s important to know what to ask to identify the right match. Read on to learn questions to ask, whether you’re buying or selling a property — or doing both at once. (This is a lengthy list of interview questions for real estate, so pick and choose the questions that resonate the most.)
Table of Contents
Key Points
• Interviewing realtors requires asking targeted questions to assess their suitability for your real estate needs.
• Experience, local market knowledge, and client load are critical factors to inquire about.
• Understanding a realtor’s team structure and communication methods is essential for collaboration.
• Specific questions about buying or selling processes help gauge a realtor’s expertise and alignment with your goals.
• Discussing contract terms and fees upfront avoids future misunderstandings and ensures financial clarity.
How to Interview a Realtor
First, a bit about terminology: Not all real estate agents are Realtors, but for the purposes of this article, we’ll sometimes use the two terms interchangeably.
There are different options for interviewing Realtors. You could schedule an interview:
• Over the phone
• In person
• Virtually via Zoom or Skype.
You might aim to interview at least three agents for comparison’s sake, though you may choose to interview more or fewer.
Create a list of interview questions beforehand to help you stay on track, and begin researching a home loan so you will have a sense of your budget. By the time the interview process is over, you should understand:
• What the agent’s personality and character are like: Is this person supportive and positive? Do they sound rushed and distracted?
• What kind of services they offer and what experience they bring to the table.
• How much you’ll pay for their help.
You’ll learn about how to do this in more depth as you read on.
Recommended: Tips When Shopping for a Mortgage
What to Ask About a Realtor’s Background
Any real estate agent you choose to work with should have the professional qualifications you’re looking for. But it’s also important to get a sense of who they are as an individual to avoid personality clashes. Here are some questions to ask as you evaluate an agent who might help you buy or sell a home.
1. How Long Have You Been a Realtor?
It helps to understand how long an agent you’re considering working with has been buying or selling homes. The median real estate experience of all Realtors is eight years, according to NAR.
Working with an agent who’s newer to the profession isn’t necessarily a bad thing. But one who’s more experienced may be more adept at handling any challenges that arise when buying or selling a home.
2. How Well Do You Know the Local Market?
A Realtor who knows a particular area and its local housing market trends can offer an advantage when buying or selling. Ideally, you should work with an agent who understands the local market and what trends drive it.
The more informed they are, the better equipped they are to do things like comparative market analysis, which can give you a sense of how home prices in the area are trending. They will also likely know details like, say, which parts of town are more prone to flooding than others.
Recommended: Local Housing Market Trends: Popular neighborhoods, home prices, and demographics
3. How Many Clients Do You Work With at One Time?
The answer can give you an idea of how much time an agent will be able to dedicate to working with you. Especially if you ask the follow-up question, “And how many clients do you currently have?”
4. Do You Work Alone or as Part of a Team?
Keep in mind that you may not be working with your Realtor alone to finalize the purchase or sale of a home. Agents may have a team of individuals they work with, including office managers, personal assistants, or marketing directors, who may reach out to you during the process.
Asking who else you may be connected with can help you avoid surprises if you decide to enter into a working relationship with a particular agent.
5. How Will We Communicate and How Often?
Being able to communicate with an agent is important to keep the process moving. Plenty of Realtors email and text to keep in touch with clients. If you’re the kind of person who prefers phone calls or in-person meetings, it’s good to identify communication styles up front and make sure they are in sync.
6. Do You Specialize in Buying or Selling?
Some real estate agents may choose to work exclusively with buyers, while others work only with sellers. And some can act as dual agents, representing both the buyer and seller in the same transaction. Dual agency is rare, and it’s illegal in several states. A dual agent can’t take sides or give advice.
The answer to this question will help you get a better idea of whether the agent is attuned to your side of a real estate transaction. Ideally, you want someone who is passionate about your deal, whether that’s finding the perfect house with a picket fence or selling the condo you’ve outgrown.
7. How Many Transactions Did You Close Last Year?
Asking this question can give you an idea of an agent’s overall success rate and the volume of transactions they handle.
The median number of residential transactions Realtors took part in per year in 2023 is 10. If you’re interviewing agents with closings well below that number, it could be a sign that they aren’t always successful in closing deals. If their number is much higher, it could mean they are super busy and you might not get as much attention as with another agent.
8. How Long Does It Normally Take You to Close a Deal?
Once the seller and the buyer of a property have signed their purchase agreement, closing on a home can take anywhere from a week (for an all-cash offer) to a couple of months (for those involving a mortgage) to close. As of mid-2024, the average closing time on a house was 43 days after an offer was accepted, reports ICE Mortgage Technology, Inc.
Asking a Realtor what their average closing time is can give you an idea of how efficiently and diligently they work to satisfy their clients.
If their average closing time is closer to four or six months, for example, that could be a red flag, though some deals do wind up being more complicated than others.
First-time homebuyers can prequalify for a SoFi mortgage loan, with as little as 3% down.
9. What Are the Terms of Your Contract?
Working with a Realtor means entering into a contract, and it’s important to know what that contract says. These documents may be more common when you work with a broker to sell a home, but there are also buyer’s agreements.
These ensure that if they invest the time scanning the market for you, scheduling walk-throughs, and negotiating on your behalf, you won’t then complete the deal with, say, a relative of yours who just got their real-estate license.
When you are selling a house, you’ll sign a document agreeing that the agent will handle the sale. Once you sign a contract you’re typically locked in to working with them unless they agree to release you.
The listing agreement will last for a set period, such as three or six months. From your perspective, shorter may be better so that you’re not trapped if you don’t like the agent’s services.
10. What Fees Do You Charge?
Closely connected to contracts is the topic of money. How does it change hands? What are you liable for? Historically, real estate agents worked on commission, and the fee was paid by the seller. Now, real estate commission fees are changing, and while sellers will still likely pay agents a commission, there is no guarantee that the seller will pay the buyer’s agent. If you’re buying, you’ll need to discuss a fee structure with an agent before you begin working together. It might be an hourly fee, or perhaps a flat rate. Some agents may request a percentage of the home price.
Recommended: Do You Still Need to Put a 20% Down Payment on a House?
Questions to Ask a Realtor When You Are Selling
If you’re selling your home, here are some questions to ask to help ensure that you partner with the right agent.
11. What’s Your Typical Marketing Strategy?
A real estate agent should have a clear plan for listing and marketing your home in a way that produces the greatest odds of success in selling it quickly and at your desired price point. Let the agent you are interviewing tell you about their strategy and the results it yields.
For instance, does the Realtor believe in listing at a low price in the hopes of starting a bidding war? If so, what kinds of prices has this achieved? Where will your listing be posted? Will videos be created? Will there be an open house?
These kinds of questions can help you see if you are impressed by and aligned with how a Realtor likes to market homes.
12. Will You Handle Staging and Prep Work?
If you’re selling a home, staging it could help influence buyers’ perceptions of the property and potentially net you a higher sale price.
Staging is something you can do yourself, but your Realtor may have a staging company they work with to get the job done.
Asking about staging or small cosmetic updates, such as painting, can help you figure out what you’ll be responsible for to get your home ready for the market. There’s a price tag attached to all improvements, so you’ll want to know the numbers to be better prepared.
13. How Do You Handle Viewings?
The use of digital tools such as virtual tours have made properties more accessible to more buyers. One survey by Zillow found that almost 40% of Millenials would be comfortable buying a home online vs. in person.
See if your agent plans to create a virtual tour, but you also want to be prepared for the majority of buyers who want to visit in person. Ask Realtors how many viewings they typically schedule in a day or a week, how often open houses will be scheduled, and how they’ll be marketed.
Questions to Ask a Realtor When You Are Buying
Now you’ve learned the questions to ask a Realtor when selling. How about the other side of the deal? Whether you’re shopping for a starter home or trading up, here are a couple of important questions to ask a potential real estate agent when preparing to buy a house.
14. What Happens When I’m Ready to Make an Offer?
If you’re a buyer, agents should be able to walk you through how this process works, what to do if the seller makes a counteroffer, and what you’ll need to do next if your offer is accepted. You also want to check if they have experience with successfully navigating bidding wars, which can happen in hot markets and with well-priced properties.
Also check that they can advise you on how much earnest money you might need to pay and how to find a good, affordable home inspector, as these are important aspects of the homebuying process.
15. Will You Help Me With Getting a Mortgage?
This question will shed more light on a prospective agent’s network and experience. Agents may be able to offer recommendations for mortgage lenders. They may also be willing to communicate with your lender if there are questions about the property or the offer during underwriting.
You’re not obligated to use your Realtor’s recommended lender. In fact, it’s helpful to compare mortgage loan terms and interest rates from multiple lenders to find the option that best fits your needs.
The Takeaway
Due diligence in the search for the right real estate agent may mean interviewing a few of them and not automatically going with a friend of a friend. It’s important to know how to interview a Realtor and which questions to ask, so you can pair up with the best possible professional as you navigate this major transaction.
If you’re a buyer, once you’ve found an agent, you can turn your attention to next steps: finding a home (and a home loan) that suits your needs.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.
SoFi Mortgages: simple, smart, and so affordable.
FAQ
What are the benefits of using a real estate agent to buy a house?
Having an agent to survey the available properties and recommend the ones that suit your needs could certainly save you time, and agents often have local market expertise and the inside scoop on properties that might be headed to market. An agent should also be well versed in the negotiation process (especially useful in a seller’s market) and able to help coordinate the many moving parts that lead to a closing.
What should a homebuyer do before talking to a real estate agent?
It’s wise to have an idea of your budget before consulting a real estate agent. You can prequalify for a mortgage with a few lenders to get a sense of what you might be able to borrow. Also do research online about your desired town or neighborhood to get a sense of where you would like to live. And know your non-negotiables — minimum number of bedrooms, whether you prefer an old home or new construction, for example.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Ina Garten, the beloved “Barefoot Contessa,” is known for her approachable yet sophisticated recipes, her love of comfort food, and her effortlessly chic kitchen style. With her Hamptons charm and signature style, Ina’s kitchen is both elegant and inviting — a place where both the apprentice cook and seasoned chef feel at home. If you’re looking to bring a bit of Ina Garten’s magic into your kitchen, this Rent. guide shares decor ideas that capture her timeless aesthetic, whether you’re buying a home in New York, renting a home in Mount Pleasant, SC, or a paradisal Miami apartment.
From Washington D.C. to the Barefoot Contessa
Ina Garten’s journey to culinary stardom began in an unexpected place: Washington D.C., where she worked in the White House Office of Management and Budget. In 1978, driven by her passion for cooking and entertaining, she took a bold step and purchased a small specialty food store, the Barefoot Contessa, in Westhampton Beach, New York. Over the next 20 years, Ina transformed it into a beloved destination known for its delicious foods, warm atmosphere, and friendly service.
After selling the store in 1996, Ina followed her heart into writing, and her first book, The Barefoot Contessa Cookbook (1999), became an instant bestseller. Her natural charm and inviting style caught the eye of the Food Network, leading to the launch of her show, “Barefoot Contessa,” in 2002. Filmed in her cozy East Hampton home, the show quickly became a favorite, celebrated for its warmth, simplicity, and Ina’s talent for making everyone feel at ease in the kitchen.
“In 2023, TV chef Ina Garten unveiled her newly renovated home kitchen to her Instagram followers, sharing the enviable open shelving, marble countertops, and display items that provide a purpose, such as showing off her cookbook collection and large glass canisters,” shares Amanda Bretz. “Although modern apartment kitchens have come a long way since the tiny galley style that was once the norm, rental kitchens may still lack the open “dream kitchen” vibe of the Garten residence.”
Ina-inspired kitchen ideas
“Luckily you can add some design elements from Ina Garten’s kitchen to just about any kitchen space by hanging floating wall shelves to hold your cookbooks, adding a marble cutting board or two, and displaying dry pantry goods like coffee, sugar, flour, or other grains in glass containers,” Bretz continues. “Replicating a few of these elements can elevate your home’s space for a small investment while giving you that dream kitchen feeling each time you enter it.”
1. Marble accents and backsplash
Marble is a recurring element in Ina’s kitchen, from the countertops to the backsplash. The subtle veining of marble offers a timeless elegance that complements the simplicity of a neutral kitchen base. If marble is out of your budget, consider quartz with a similar pattern or marble-effect tiles for the backsplash. The key is to choose materials that are durable, easy to clean, and add a touch of luxury.
2. Functional and stylish cooking tools
Ina is all about functionality in the kitchen. Her philosophy of using high-quality, everyday items is something anyone can embrace. Invest in stainless steel cookware, classic wooden cutting boards, and durable, professional-grade knives. The idea is to keep the kitchen stocked with essentials that are both beautiful and useful.
Part of functionality is organization. “When putting away my dishes and cooking utensils in a new kitchen, I think about how I will use them. Obviously, hot pads go near the stove, but I also try to put the spices nearby,” shares Dr. Cinythia Croy with Dr. Cindy’s Recipes. “Storing baking supplies (flour, sugar, etc) near my mixer and measuring cups is helpful. I put flatware and dishes as close as possible to the eating area. Glasses near the fridge water dispenser, skillets, and pots near the stove, etc. Pie plates and baking dishes can go farther away, since I don’t use them as often, and will have prep time to be able to get them. The goal is to minimize steps and have my tools and supplies easily accessible.”
3. Neutral color palette with pops of blue
Ina’s kitchen decor often features a neutral palette with soft grays, whites, and creams, providing a calming and coastal backdrop. She adds pops of color with blue, which can be seen in her iconic striped dish towels, pottery, and kitchen accessories. Navy or cobalt blue elements are also welcomed through textiles like dish towels, rugs, or window treatments.
4. Natural elements and fresh flowers
Ina Garten’s kitchen is always adorned with natural elements, whether it’s a bowl of fresh produce, a vase of flowers, or rustic wooden accents. “One thing Ina has taught us over the years is to surround yourself with gorgeous, functional items in your kitchen,” shares Jathan and Heather Fink with Jadeworks Entertainment. “Grow fresh herbs like basil, rosemary, and thyme right on your countertop in glossy planters that compliment your decor and allow you to fill your meals with delightful flavors and aromas. Transfer oils, vinegars, salts, and other sundries to beautiful decanters.”
5. Dedicated stations
“Keep your wines and spirits nearby in custom-built racks that are tucked in with your cabinetry,” Jathan and Heather Fink continue. “This thoughtful storage and easy access to wonderful ingredients will inspire you to be more adventurous in your cooking, just like the Barefoot Contessa.”
Another station that’s Barefoot Contessa-approved is a baking area. Ina is known for her love of baking, and a dedicated station for all things baking is a hallmark of her kitchen. If you have the space, set aside a portion of your countertop for baking essentials like flour, sugar, mixing bowls, and measuring cups. You can easily keep it organized with glass jars, a marble slab for rolling dough, and a stand mixer in a classic shade. This functional area will inspire you to whip up your own batch of cookies or scones, just like Ina.
6. Comfortable seating for entertaining
Ina loves entertaining and dinner parties, and her kitchen accommodates friends and family comfortably. “Focus on creating a warm, welcoming space by incorporating cozy seating in your kitchen, even if it’s just a few bar stools at the counter,” recommends Lauren Slattery with Fancy Casual. “Who wants to cook alone in the kitchen when friends are over?”
7. Personal touches and timeless accessories for your Ina Garten kitchen
Ina Garten’s style is all about personal touches and timeless elegance. “Ina Garten’s kitchen interior design embodies her approach to creating a space that is both practical and welcoming,” Dinner Party and Cookery By the Book podcast host Suzy explains.
“To bring some of the charm of her 2,000-square-foot “barn kitchen” into your own kitchen, consider incorporating features like open shelving, a creamy color palette, and accent lamps. Ina enjoys blending vintage elements with modern touches. Incorporate pieces that tell a story, whether it’s a cherished cookbook, a family heirloom, or a piece of art. These elements add character and make your kitchen feel truly special.”
“How easy is that?”
Creating an Ina Garten-inspired kitchen is about balancing elegance and comfort, functionality and beauty. By incorporating classic design elements, quality materials, and personal touches, you can create a space that reflects her warm, inviting style. Whether you’re whipping up a weeknight dinner or hosting, your kitchen will be a place where everyone feels at home — just like Ina’s.
Thanks to high demand and inflation, the cost of home repairs has been on the rise in recent years. In 2023, the average household spent $2,458 on maintenance and $1,667 on emergency repairs, according to Angi’s State of Home Spending Report. The report also found that total spending across home improvement, maintenance, and emergency repairs increased 6% compared to 2022.
The most common home repairs include the usual suspects: electrical, plumbing, HVAC, water damage, and termite damage. Keep reading to learn more about these issues and the cost of repair or replacement, so you can be prepared when reality bites.
Estimated Cost of the Most Common Home Repairs
Low-cost preventive measures — like cleaning your gutters or getting your heating and cooling systems serviced annually — can help keep common home repair costs down. But even with the best preparation, surprises (like a busted pipe or roof leak) happen, and when they do, you can be on the hook for thousands of dollars. Whether you’re a new or longtime homeowner, it’s a good idea to plan for — and budget for — home repairs.
Below is a roundup of the most common home repairs and average costs.
Recommended: How to Pay for Emergency Home Repairs
[embedded content]
Foundation Repair
A number of different issues can occur with foundations, some of which are more serious (aka, costly) than others. Among the most common problems are foundation cracks, which can be caused by house settling or changes in soil pressure around the home. Cracks can lead to water damage or cause the walls in your foundation or home to bow. Foundations can also begin to sink, due to changing weather patterns, nearby tree roots, or erosion.
Since the foundation is the footprint of your home, repairs can be complicated and expensive. According to Angi, foundation repair costs can range anywhere from $2,196 to $7,921.
Average cost of foundation repair: $5,056
Electrical Issues
While there are many home repairs you can safely DIY, electrical issues and wiring are generally best left to professional electricians. Working with live wires can be dangerous and faulty electrical work can be a significant fire hazard. Some signs you may need to call an electrician include:
• Burning smell coming from an outlet
• Buzzing or sizzling noises coming from an outlet
• Flickering lights
• Outlets feel hot to the touch
• You have 2- rather than 3-prong outlets
• Circuit breaker continually trips
• Appliances spark when plugged in
Depending on the length and complexity of the job, the cost of hiring an electrician ranges between $163 and $535. Installing a new outlet can run $200 to $300, for example, while replacing a breaker panel can cost anywhere from $520 to $2,120.
Average cost of electrical repairs: $348
Recommended: What Is the Cost to Rewire a House?
Roof Repair
Your roof protects your home from the elements, so it’s important to keep it in top condition. If you notice any damage or signs of wear and tear, you’ll want to address them sooner rather than later. This can help prevent small problems from becoming serious and expensive. Signs that your roof may be compromised include broken, cracked, curling, or missing shingles, and any interior signs of water damage (such as dark spots or discoloration on walls or ceiling and/or mold or rotting wood in the attic).
The cost of a roof repair will depend on your home’s location, roofing material, size of your home, and the type of roof. On average, costs run between $391 and $1,901. By contrast, a full roof replacement can run between $5,900 to $12,900. Due to the significant price difference, you would generally only invest in a new roof if the damage to your existing roof is extensive or the roof is near the end of its life.
Average cost of roof repairs: $1,133
Repair or Replace a Water Heater
Due to mineral buildup and the routine breakdown of components, water heaters do not last forever. Depending on how extensive the repairs your water heater requires, you can be on the hook for a new unit entirely. And if you’ve ever taken a cold shower in the middle of winter, you know this is one repair that is essential to your quality of life.
On average, homeowners spend anywhere from $221 to $980 on water heater repairs. Your actual bill will depend on the cost of the part needed for the fix, how much your local water heater professional charges for labor, and the length of the job. Where you live and where the water heater is located in your home can also impact costs.
Average cost of water heater repairs: $600
Water Damage
Water damage is fairly common. It can result from a crack in an old pipe, a leaky roof, an unusually strong storm, or sewage backup. To prevent mold growth and further damage, it’s best to fix the issue and clear out moisture as soon as you spot it.
Water damage restoration can involve replacing wallboard, flooring, and/or ceilings, as well as ensuring that no mold spores are left behind to spread once the repairs are complete. Two important factors influencing price are the square footage affected and the type of water (i.e., whether it’s clean or has been contaminated with potentially harmful substances). The cost of water damage restoration generally ranges between $1,300 and $5,600.
Average cost to fix water damage: $3,300
Replacing Pipes
Replacing older pipes is a common home repair often needed after a home inspection. Common problems include dated construction materials with a known problem in their manufacturing, signs of corrosion, clogs, and leaks. And because pipes run behind walls and underground, repair costs often include patching up interior holes and dug-up yards.
The good news is that not all leaks, burst pipes, and signs of corrosion require replacing large amounts of plumbing. Often, a plumber can replace a small section of the pipe affected by the damage. The cost to install pipes for a repair ranges from $370 to $2,108, though it can run higher if the damaged pipes are difficult to access.
Average cost to install pipes: $1,237
Recommended: Renovation vs Remodel: What’s the Difference?
Septic System Repair
A septic tank contains and filters household wastewater. If it is damaged or not functioning properly, it’s important to deal with the problem quickly — otherwise, you could be dealing with a smelly and costly mess. Sewage backups can occur when the septic tank becomes clogged or full, there’s a problem with devices within the tank, or there’s a blockage in the home’s main drain line leading to the tank.
Depending on the type of repair, tank size, permits, and other factors, the cost of a septic tank repair runs, on average, between $630 and $3,035. A small fix like repairing a septic tank lid could cost less ($150 to $500); but if you need to replace the tank, you could be looking at a bill as high as $9,500.
Average cost to repair a septic system: $1,831
Heating or Air Conditioning Repair
Your home’s HVAC (which stands for heating, ventilation, and air conditioning) system plays a key role in keeping your home comfortable to live in. Though there are many different types of HVAC systems, they generally all work by using energy to heat or cool the air to a desired temperature. The system may also add/remove moisture and filter your home’s indoor air.
An HVAC system typically has two main components: a heater (which could be a furnace, boiler, or heat pump) and an air conditioning (AC) unit. The type of system you have and the component that’s broken will significantly influence the cost of repairs. For example, an AC system repair can run anywhere from $450 to $2,000, while a furnace repair tends to run between $130 and $1,200. On average, homeowners spend between $130 and $2,000 on HVAC repairs.
Average cost to fix a heating or air conditioning system: $350
Mold Removal
Mold develops inside homes as a result of moisture and can lead to health problems. Signs that you may have a mold problem include:
• Musty odor in a specific area
• Discoloration on the walls
• Peeling, cracking, or warping of floors or walls
• Leaks or water damage
• Darkening around tile grout
• Worsening of allergy symptoms
While you may be able to remove small amounts of mold yourself (provided you’re certain the mold isn’t toxic), often the best option is to hire a mold remediation professional.
The cost for mold removal will vary widely depending on where it is located in your home. Mold growth in hard-to-reach areas, like drywall or your HVAC system, generally costs more to remediate since it can require more time, materials, and labor. The size of the infestation and the type of mold that is growing also influence costs. On average, mold removal runs between $373 and $7,000.
Average cost of mold removal: $2,362
Termite Damage
The problem with termites is that they literally eat away at your house. They can also eat through your budget: The cost to repair termite damage can range anywhere from $1,000 to $10,000 or even more.
Generally, the longer termites chew on the wooden structure of your home, the more costly the repair will be, so it’s key to recognize — and deal with — any signs of a termite infestation early. If you catch a termite problem early, for example, you may only need to replace a few damaged boards or joists, which can run from $250 to $1,000. If the problem goes on for a while, however, you may need to replace damaged walls, framing, or floors — at a cost of $1,000 to $3,000. Worst-case scenario: Termites do enough damage to your home’s infrastructure (like beams or load-bearing walls) that it becomes structurally unsound. A major termite repair job can run from $3,000 to $10,000-plus.
Average cost to repair termite damage: $3,000
Average Cost of Home Repairs
Trying to predict — and budget for — home repairs can be challenging. However, there are several rules of thumb that can help homeowners:
• The 1% Rule. One common guideline is to set aside approximately 1% of your home’s value annually for home maintenance. So if your home is worth $500,000, you’d want to have $5,000 tucked away in savings to cover general upkeep and repairs for the year.
• The Square Foot Rule. Since a larger home typically costs more to maintain than a smaller one, another formula is to use the square footage of your home to estimate maintenance and repair costs. With this approach, you set aside $1 for every square foot of livable space. So if your home is 2,300 square feet, you would want to have $2,300 in savings earmarked for home repair costs.
• The 10% Rule. With this rule of thumb, you put aside 10% of all your main monthly expenses (such as mortgage, taxes, and insurance) for your monthly home maintenance budget. For example, if your mortgage is $1500/month, taxes are $300/month, and insurance is $150/month (a total of $1950), your budget for home maintenance would be roughly $195 per month or $2,340 a year.
If you don’t have enough savings to cover the cost of a necessary home repair, there are financing options, including home equity lines of credit (HELOC) and credit cards (though this can be an expensive choice).
You can also use a personal loan to cover the cost of home repairs or improvements. Available through banks, credit unions, and online lenders, this type of loan (sometimes called a home improvement loan) typically doesn’t require any type of collateral or home equity. However, you usually need good to excellent credit to qualify.
The Takeaway
It’s tough to predict the cost of home repairs. Different budgeting standards suggest putting aside 1% of your home’s value or $1 per square foot annually. In 2023, the average household spent $2,458 on maintenance costs and $1,667 on emergency repairs. Among the priciest home repairs are major foundation work (up to $7,921), roof replacement (as much as $12,900), and septic tank replacement (which can run $9,500). Even expenses like fixing termite damage or replacing a broken water heater can all but consume your savings.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.
SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.