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When you apply for a loan, you might have the option to add a co-signer or co-borrower. And while the terms are similar, a co-borrower — or joint applicant — shares ownership of the loan and assumes responsibility for payments from the start.

On the other hand, a co-signer is only liable for the loan if the primary borrower fails to make payments.

Quite a few lenders will allow co-borrowers on a loan, but co-signers are much rarer. When you apply, confirm with your lender and the other person on the loan which term applies best to avoid confusion down the road.

Get pre-qualified

Answer a few questions to see which personal loans you pre-qualify for. The process is quick and easy, and it will not impact your credit score.

What are the differences between a co-signer and a co-borrower?

The most important difference between a co-borrower and a co-signer is the degree of investment in the loan.

A co-borrower has more responsibility (and ownership) than a co-signer because a co-borrower’s name is on the loan, and they are expected to make payments. A co-signer only backs your loan and will not need to make payments unless you are unable to.

Co-signers

A co-signer agrees to take responsibility for repaying a loan if the primary borrower misses a payment. The co-signer typically has better credit or a higher income than the primary borrower, who might otherwise not get a loan application approved without the help of a co-signer.

Co-signers typically have a close relationship with the primary borrower. A co-signer is typically a parent, immediate family member or spouse.

How it works

A co-signer is a guarantor for the primary borrower. Co-signers promise to assume responsibility for repayment if the primary borrower doesn’t pay as required.

Pros of a co-signer

Adding a co-signer to a loan application could improve a borrower’s chances of qualifying and securing a lower rate. Plus, if the loan is repaid on time, it can improve both parties’ credit scores.

Risks of co-signers

Like co-borrowers, co-signers take on financial risk. Co-signers are legally responsible for paying the outstanding debt that the primary borrower fails to pay.

Who a co-signer is best for

Co-signing is typically preferable if only one of the borrowers will benefit from the loan. For example, if a young person without established credit wants a personal loan, the bank might decide that the loan is too risky unless someone with better credit agrees to share legal responsibility for repayment. A parent with good credit might agree to co-sign with the understanding that their child will pay it back.

Co-borrowers

A co-borrower, sometimes called a co-applicant or joint applicant, is a person who shares responsibility for repaying a loan with another person — and who has access to the loan funds. Applying for a loan with a co-borrower reassures the lender that multiple sources of income can go toward repayment.

Applicants with co-borrowers are more likely to receive larger loan amounts since they are viewed as less risky for lenders.

How it works

In addition to both parties being responsible for making payments toward the loan, assets that guarantee the loan — like a home or car — may be owned by both co-borrowers. Each co-borrower has equal access to the loan funds. And if the loan was used to secure property — like a vehicle — both co-borrowers will be listed on the vehicle’s title.

Pros of a co-borrower

Similar to adding a co-signer, adding a co-borrower could help a consumer secure a lower interest rate. In addition, depending on the co-borrower’s income, it might also help them qualify for a higher loan amount.

Risks of co-borrowers

The biggest risk for co-borrowing on a loan is that each co-borrower is responsible for repayment from the start. Any actions by either co-borrower that impact the loan will have a ripple effect on the other borrower.

Who a co-borrower is best for

Co-borrowing is typically preferable if both borrowers will benefit from the loan. For example, if two people start a business together, they might take out a personal loan as co-borrowers and work on paying it back together. Both directly benefit from borrowing and enter the transaction knowing that they’ll each be making payments.

How to choose between a co-signer or co-borrower

The right approach depends on what your goals are for the loan. Consider these factors when choosing between a co-signer and a co-borrower.

Co-signers

A co-signer won’t have to put up collateral or accept responsibility for regular payments. Also, if the primary borrower makes on-time payments, the co-signer will never have to worry about the loan — and may still benefit from an improved credit score. .

On the flip side, if the primary borrower defaults, the co-signer will be on the hook for payments. Plus, they won’t be able to use the loan funds and might have difficulty getting approved for other loans since it still counts toward their total debt-to-income ratio (DTI).

Co-borrowers

A co-borrower benefits from the loan directly. Lenders may also offer lower rates and higher loan amounts, especially if both borrowers have good credit. And since each borrower has equal responsibility, you may not need to provide additional collateral to secure the loan.

What should I do before co-borrowing or cosigning?

Before co-borrowing or cosigning a loan application, have an open conversation with the other person. Determine if the loan is necessary, consider what alternatives there are and discuss each person’s financial picture and future goals.

Because both options have considerable financial risk, you should consider a contract that outlines how responsibility will be split and what happens in worst-case financial situations. It is also useful to research your state’s co-borrower and co-signer rights. There may be protections around property ownership and how credit is impacted.

Bottom line

Ask yourself a few questions before applying for a loan with someone else:

  • Can you afford to make payments toward the loan?
  • How stable is your source of income?
  • How will co-signing or co-borrowing affect your future goals?
  • What are the financial habits of the co-applicant or primary borrower?

Co-borrowing might make sense if you know the risks and want to borrow money with someone to accomplish a common goal. Alternatively, co-signing might be right for you if you want to help out a loved one by guaranteeing a loan.

Source: thesimpledollar.com

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Not even the smallest of small businesses can thrive without setting realistic financial goals. A set of financial goals is like a company’s road map, always providing a frame of reference for where the business is and appears to be going. It enables business owners to put each day’s actions into context and make decisions in accordance with a broad vision. If you have decided to start a small business, there is no better time than now to begin the financial goal setting process. Sadly, the apparent difficulty of small business accounting scares many entrepreneurs away from doing a real, thorough job of this.

Following are some practical steps that will demystify the process.

Allot Regular Time to Set & Adjust Your Goals

Despite the obvious importance of financial goal setting to small business success, it’s easy to neglect in favor of other, seemingly more “urgent” tasks. Getting a new product out the door, signing a big client or eliminating corporate waste can quickly take precedence over far-off financial goals. Therefore, it is critical that business owners allot specific, regular times to both set new financial goals and review progress on existing ones. Like any other business task, financial goal setting is unlikely to get done without a firm date for completion. Nor does this need to be an especially complicated system. Something as simple as agreeing to review company finances each Monday for two hours might be all your small business needs to get and stay on track.

Set S.M.A.R.T Goals

That said, it is not enough to merely spend regular time sitting around and theorizing about financial goals. To truly get the most out of the exercise, strive to set S.M.A.R.T goals instead. As Goal-Setting-Guide.com explains, S.M.A.R.T is an acronym for “specific, measurable, attainable, realistic, and timely.” Using this criteria, it soon becomes clear that vague goals like “making a lot of money” are totally insufficient. Same goes for far-off goals like “start taking out dividends by next summer.” These types of goals are unhelpful because they express what you hope will occur without specifying in any detail how it will happen.

A S.M.A.R.T goal, in practice, might be something like “double our sales by the start of the third quarter using weekly split-testing of ad copy and improvement of our follow-up sequence.”

Consult Your Numbers

S.M.A.R.T goal setting demands that your actual numbers (rather than future, hoped-for “dream” scenarios) be used as the starting point. You must accept the current reality of your small business as portrayed by your cash flow, the income statement and balance sheet. If you are new to the business world (or have been neglecting company finances up until now), these documents may be unfamiliar. Nevertheless, they are critically important and foundational to small business goal setting. MoneyInstructor.com offers a sample income statement, while AccountingCoach.com provides a sample balance sheet.

Compare Yourself Financially to Competitors

While it may be impossible to know exactly how competitors are doing financially, it is generally common knowledge what the profit margins, labor and production costs in most businesses are. This, too, should be incorporated into the goal setting process. Do not look at your company as though it exists in a vacuum. It can be disheartening to learn that competitors are currently more profitable, but it is also an opportunity to reflect on why and how they got to that point – and how you can, too.

Create Action Plans

In accordance with the S.M.A.R.T goal philosophy, it is necessary to create specific, detailed action plans for how all goals will be reached. Once a goal has been set, move on immediately to delineating the necessary tasks. If new advertising copy needs to be written, make whomever is responsible aware of this and provide a deadline for completion. If customer support is a bottleneck, decide what needs to change, who will carry out the bulk of the work and when it needs to be done. Never be content to just set the goal. Always follow through.

Document Progress

Once the action plan is in place, document all progress made in implementing it. Task spreadsheets often work well in this regard. Simply create a shared spreadsheet in Google Docs or a similar service with the following headers:

  • Task
  • Date Posted
  • Responsibility
  • Date Due
  • Done?
  • Comments

Insist that anyone with a role to play in carrying out company financial plans use this spreadsheet to record what they are doing. This way, everyone can get a read on progress by looking in one set place.

Don’t Get Comfortable

Finally, there is much to be said for not growing complacent about financial goal setting. There is a tendency in new businesses to get comfortable with the status quo once a certain level of financial success has been achieved. Perhaps the company is turning a healthy profit, paying out handsome salaries to the owners and showing no signs of weakness. Be that as it may, no business owner can take up an attitude of complacency for long. The financial goals must always be on where the company currently is, where the owners want it to go, and what actions are needed to get there.

About the Author: Robert Steere is a staff writer at Business Owner’s Toolkit. Business Owner’s Toolkit provides information on small business accounting. They also provide useful tools for small business owners such as a sample balance sheet.

Source: goodfinancialcents.com

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The Offer

Check your emails for the following offer on the Amazon store card from Synchrony: ([email protected])

  • Earn $20 back in rewards when you spend $200 or more. Or, earn $40 back in rewards when you spend $400 or more on Amazon.com with your Prime Store Card between November 17, 2022 and December 31, 2022. Requires activation.


The Fine Print

  • Offer must be activated and qualifying purchases must be made between November 17, 2022 and December 31, 2022.
  • To qualify you must use your Prime Store Card to make qualifying Amazon.com purchases (minus returns and adjustments) totaling $200 or more to earn a $20 reward, or $400 or more to earn a $40 reward.
  • Qualifying purchases must post to your account by January 10, 2023.
  • Your reward of $20 or $40 will post to the Prime Store Card account 1-2 billing cycles after the end of the offer period.
  • Account must be open, be in good standing, and not be delinquent at the time the reward is applied.
  • Maximum of one $20 or one $40 reward can be earned for this offer.
  • This offer is for the intended recipient of this communication only and is not transferable.

Our Verdict

I got this offer via email. The offer might only be showing for Prime members and it might also be targeted.

For me this is as good as getting $40 free since I’d be spending that amount on the card anyway since it earns 5% back on Amazon. Another option is to reload your Amazon account (affiliate link) with $400 and knock it out in one shot.

Source: doctorofcredit.com

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What Is a Credit Report and Why Does it Matter? – MintLife Blog

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financial wellness. Your credit report includes your revolving accounts — such as credit cards and home equity lines of credit — as well as non-revolving accounts like school and car loans. Credit reports also note any missed payments, the length of your credit history, and your utilization rate on each account. On the whole, the report acts as a central location for measuring your current credit health in detail.

This vital collection of data gathered by a credit bureau helps calculate your credit score and inform potential lenders, landlords, and even employers about your financial wellness, habits, and routines. Your credit report is also a place to keep yourself on track. View your borrowing habits at a glance, make adjustments to possibly raise your credit score, or even catch fraudulent activity. Overall, understanding your credit report is a crucial step in gaining financial confidence.

What Information Is Included in a Credit Report?

You may still be wondering: what is a credit report exactly and how much data does it include? Credit bureaus collect a range of information, from basic, personal data to detailed borrowing history in order to paint a picture of your credit habits. Identification details clarify who you are, where you’ve lived, and a bit about your life. They will list your full name and any alternately used names, your birthday, current and former addresses, social security numbers, and your phone number.

The meat of the credit report includes your account history including the types of credit accounts, how long they’ve been open, and their credit limits. Each month, your balance will rise or fall on your report based on payments or charges. This in turn affects the utilization rate on each card as well. Each account will also note your payment history, noting any late payments for up to around seven years. Your credit report will also include the number of recent hard inquiries, which usually occur when you apply for a new credit card or loan.

Certain public records and legal details — such as lawsuits — may also be listed on your report. It also lists if you’ve filed for bankruptcy, received a tax lien or had a bill sent to a collection agency. Though specifics vary, the majority of these details are wiped from your report after seven years, so there are often ways to improve your credit standing over time.

How Does Information Get on Your Credit Report?

A credit bureau, also known as a credit reporting agency, gathers this information in one place so you don’t have to. Though there are hundreds throughout the world, the three main U.S. reporting agencies are TransUnion, Equifax, and Experian. They receive information via lending companies, courts, and local government to build your credit record. Every month, an assortment of data transfers from these locations to the credit bureau database.

If you open a new credit card, make a purchase on your store card, or pay down a balance, this data is sent to update your report. The agency organizes the data and displays information on your credit report in a clear layout for you or a potential lender to view. This constantly updating system means that your credit score may fluctuate at times. It also allows you to take immediate action on any troublesome accounts or in the case of identity theft.

Why Is It Important to Get a Credit Report?

Credit reports are an excellent tool for guiding large financial decisions. Say you’re looking to purchase a home in the next five years. Your report allows you to fully assess how to raise your score and which credit accounts most strongly affect your overall financial balance. Your report is also a glimpse into why your credit score has remained low or stagnant. It could be helpful to request a report before applying for a new credit card or transitioning to a new phase in life like graduate school.

Checking your credit report at least once a year, even if you are not planning any large financial changes, is often suggested for several reasons. Credit reports allow you to catch any discrepancies either in how your data was reported or if someone attempted to open an account under your name.

Where can you get a free credit report? Free credit report programs, like Turbo, can give you a glimpse into your score and history. If you’re looking to improve your credit score, these tools may be useful for frequent tracking and do not count against your credit as a hard inquiry.

How Does Your Credit Report Impact You?

Potential lenders and employers may check your credit report for the same reason you check in on yourself. Your credit report may signal that you can be trusted to make timely payments and prioritize your financial health. Employers have been known to check credit reports in order to confirm you’re able to stick to contracts and agreements.

Credit reports are most commonly used to determine approval for loans, credit limits, and interest rates. If you have some troubling details on your account, lenders may protect themselves by offering higher interest or lower credit limits until you’ve proven a strong history of payments. On a higher level, credit reports affect your mortgage interest rate or simply your likelihood of being approved for the mortgage in the first place.

In some cases, your credit report could also affect your insurance rates and other monthly bills. Some utility companies and cell phone companies determine offers and down payments based on your credit score. Overall, the healthier your credit report, the more chances you’ll have to practice good borrowing habits with a range of accounts.

A credit report is a detailed tracking tool of your borrowing and repayment history. The greater you understand your credit report, the more it can act as a tool for financial growth. Feeling confident about borrowing and managing debt comes over time, and your credit report is there to help track your progress along the way.

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Source: mint.intuit.com

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Everyone knows mortgage rates aren’t as low as they used to be. In fact, they’re currently up about 1% from the ultra low levels seen back in early May, per Freddie Mac data.

The good news is that they seem to have settled in at their current levels, which historically aren’t bad at all. Still quite low.

However, with mortgage rates higher, prospective home buyers will need to come to terms with paying a little bit more each month.

That is, unless they buy down their interest rate, or alternatively, come in with a larger down payment, as the National Association of Home Builders pointed out earlier this week.

Unfortunately, many would-be home buyers seem to have enough trouble coming up with a minimal down payment, so gathering even more appears impracticable for most, especially with home prices also significantly higher than they once were.

Keeping Monthly Payments in Check

Check out the table above, which details how much more a potential buyer would need to bring to the closing table in order to keep their monthly mortgage payment from rising along with rates.

At the moment, rates on the 30-year fixed are around 4.5%, so a borrower putting down 20% on a $200,000 home would enjoy a mortgage payment of $811, before taxes and insurance.

However, if rates increased another half point, the down payment would need to be upped by about $9,000 to keep payments steady.

This is especially important if a borrower’s DTI ratio demands that monthly payments stay at a specific level. Without the higher down payment, they could be deemed ineligible for a larger loan amount set at a higher rate.

If a borrower were unable or unwilling to increase their down payment, the monthly payment would rise to roughly $859.

Assuming rates increased a full point to 5.5%, the down payment would need to be $57,000, up from the original $40,000 at 4.5%.

Otherwise, the monthly payment would be about $908, or roughly $100 more each month than the payment at 4.5%.

Tip: Another positive to a higher down payment is a lower LTV ratio, which should result in a lower mortgage rate in most cases (fewer pricing adjustments).

But Home Prices Might Just Fall Instead

While the housing market in its current state might call for larger down payments, or larger monthly payments (your choice), there’s also the chance it could lead to lower home prices.

If buyers are turned off and/or not qualified for mortgages with higher rates on more expensive homes, prices may need to come back down.

As seen in the second table, bid prices could drop as mortgage rates rise, per the NAHB.

So a $200,000 home at 4.5% may only be valued at $191,500 if rates were to rise to 5.5%, and just $187,500 if rates keep climbing to 6%.

Of course, there’s no clear correlation between home prices and mortgage rates. While the obvious relationship is an inverse one, the pair often moves in tandem.

For example, when the economy is doing well, housing is typically doing well, or even the cause of the economy doing well, and if all is going well, interest rates are typically moving higher to control inflation (the money supply). So it may not play out as people expect.

Read more: Check out my mortgage payment tables to compare rates on the fly.

Source: thetruthaboutmortgage.com

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In a bid to increase its listing business, Redfin has launched a new tool called the “Price Whisperer,” which aims to find out the value of your home before you list it.

By value, I mean what someone is willing to pay for it at any given time. The way it works is pretty interesting.

First, you enter your address and contact information, along with your “Test Price,” assuming you don’t want Redfin to figure that out for you.

Then a Redfin agent will contact you to iron out the details of your Whisper, including the number of bedrooms and bathrooms, square footage, some pictures, and will probably discuss your “hoped-for price.”

From there, Redfin will attempt to garner interest for your proposed asking price by sending e-mails to active buyers searching in your property’s area. They estimate an average of 200-300 potential buyers will be contacted.

The e-mail asks these prospective homeowners if they’d be interested in your home at the price you set, as seen in the image below:

As you can see, there are three options: Yes, No, or Maybe. Within 48 hours you will receive a report on their responses.

Those who respond first indicating that they want to see your property in person will get first dibs at touring your house, assuming you actually decide to sell it.

At the moment, Price Whisperer is available to both homeowners who have decided to use Redfin to list their home and also those who aren’t even quite sure they want to sell.

Either way, you aren’t obligated to use Redfin, though clearly the company will want to represent the buyer, and will likely get the opportunity in many cases I think.

So far, the company has sent Price Whisperer e-mails on behalf of six homeowners to 1,200 recipients. More than half of those e-mails were actually opened, triple the rate the company normally sees for its e-mails.

And five of the six homes sold, with prices tested “near the top of the market.” Of course, conducting a test anytime during the past few months probably yielded stellar results, given how hot the real estate market has been.

Saving Face

But there is a nice advantage to using this tool – you can save face. Instead of throwing up your property on the MLS and discovering that you asked way too much, you can do the research incognito.

This way you don’t have to worry about winding up with a stale listing, which often leads to a price reduction, and ultimately a lower selling price.

Oh, and for the record, your address is kept private, though a little bit of sleuthing could make it easy to determine what home it is.

One of their examples was a home located in Dana Point, CA that was listed for $695,000 in mid-May, pending in a week and eventually sold for $701,000 about a month later.

As time goes on, Redfin hopes to gather more data so it can correlate Price Whisperer responses to the eventual sales price of a home, which is kind of like a Zestimate on steroids.

The problem with Zestimates, as I’ve noted, is that they rely on dated and often incomplete/inaccurate data, and display quite a large range in price. In short, no one ever seems to agree with the valuation.

Redfin hopes to eventually show would-be sellers how many Price Whisperer inquiries resulted in a sale, and if so, how much above or below the test price. This would ostensibly give the seller more confidence when it came time to list. Or even if they should list to begin with.

For example, an underwater homeowner might think they’re stuck, only to discover that a prospective buyer would be interested at a price high enough to part with the property as a standard sale.

So finally people can stop arguing and determine what someone will pay right now.

Real Estate Agents Aren’t Happy

However, one major concern with the Price Whisperer is that it creates a relationship with a Redfin agent from the get go, potentially shutting out other agents.

Yes, you’re under no obligation to use a Redfin agent, but chances are many people will if it’s their first point of contact.

Additionally, there’s fear that it could create situations where Redfin agents represent both buyers and sellers, though one Redfin agent cannot represent both.

Still, if two agents work for the same company, conflicts of interest can arise.

Some agents also expressed concern that a seller could conduct private tours and possibly sales, or be steered to sell to a buyer with a Redfin agent.

In other words, use the Price Whisperer at your own risk, and don’t be surprised if Redfin wants to list your property, or happens to find a buyer represented by one of their agents.

Of course, this type of stuff can happen with standard listings as well, so there’s never an entirely conflict-proof situation in the real estate world.

Source: thetruthaboutmortgage.com

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Even though the most recent housing crisis is barely behind us, many distressed homeowners have already moved on and apparently moved in.

A new study from credit bureau Experian notes that some 29% of those who sold a house short between 2007 and 2010 subsequently obtained another mortgage.

That means despite not making good on mortgage payments on a prior mortgage, they were able to successfully apply for another one just a handful of years later.

The waiting period for a new mortgage after short sale can be as short (no pun intended) as no time at all if you can meet certain conditions and apply for a FHA/VA loan.

For Fannie and Freddie, the waiting period can be as little as two years, but more often four years.

Of course, it’s been nearly a decade since things went south, so many former homeowners have already more than waited things out.

And because delinquencies like short sales, foreclosures, and bankruptcies only remain on a credit report for seven years, millions of borrowers are now blemish-free.

In fact, Experian says 2.5 million consumers will see these items fall off their credit files between June 2016 and June 2017.

Perhaps more importantly, 68% of these consumers are also seeing credit scores in the near-prime or higher credit segments.

That means the negative marks are gone and their credit scores are plenty good enough to qualify for new mortgages.

Specifically, consumers with a past short sale that subsequently opened a mortgage had an average credit score of 706, a 16.5% increase from the time of the short sale.

Some Short Sellers Who Bought Again Are Already Delinquent

So you’re probably wondering how this group of past short sellers is doing on the new mortgage.

Well, the good news is they’re doing quite well. In fact, they’re doing better than the rest of the population.

Per Experian, only 1.5% of the short-sale group is delinquent (60 days or more past due) on their mortgage, which is well below the national average of 2.8%.

Still, for that 1.5%, tsk tsk. Come on. Get it together.

Meanwhile, previously foreclosed borrowers are also getting back in the game. More than 12% of those who were previously foreclosed on have boomeranged back into the housing market with a brand new mortgage.

And they too are performing well on the new mortgages. These consumers have average credit scores of 680, up 20.8% since the time of foreclosure.

Just 3% are delinquent on the new mortgages, which is just slightly above the national average.

I think you can partially thank low mortgage rates for that, along with stellar home price appreciation. Housing is hot and there’s no reason not to pay the mortgage if you can.

Underwriting is also a lot better than it was pre-crisis, and most borrowers are making relatively safe loan choices, going with the 30-year fixed instead of an ARM.

The good news is that this trend of boomerang buyers should give the housing market another boost, even if we are getting into the later innings.

The bad news is that the very same folks who got foreclosed on or were forced to sell short might purchase homes at new market highs. It’s a nasty cycle.

Top Cities for Boomerang Buyers

Unsurprisingly, boomerang buyers have been most prevalent in some of the harder-hit areas of the nation including Los Angeles, Phoenix, and Sacramento.

But they’re also springing up in places like San Francisco and Denver where bidding wars are the norm and prices are at new all-time highs. So if they can do it, so can you.

Source: thetruthaboutmortgage.com

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Tax season has just come to an end, but that doesn’t mean you shouldn’t be preparing for next year. In fact, if you organize yourself throughout the year, you will have less work to do next year, and you will be more likely to plan for credits and deductions that can help you reduce your tax liability. (Of course, before you make any tax moves, you should consult a tax professional who can help you determine what might be best for your situation.) If you are a freelancer, it is especially important that you consider your tax situation, and remain organized throughout the year. Here are some tax tips for freelancers to consider:

Separate Business from Personal

The first thing you have to do as a freelancer, whether you are a sole proprietor, or whether you set up some sort of a business (LLC or S-Corp.), is recognize the difference between business and personal. If you want to deduct something as a business expense on your taxes, you had better make sure that it is, in fact, a business expense.

If you are using it for something else part of the time, it is not a business expense. One of the few exceptions to this real is your Internet service, in which case you can estimate how much of the Internet time in your home is used for business activities and use that percentage to figure your business expense related to online use.

It is a good idea to open a separate account for business purposes. Some banks won’t let you open a business account unless you are a registered as a business organization. But, even if you are a sole proprietor, you can open a second personal account and use that for your business activities. Even if you use your freelancing as your income, it is a good idea to have your freelance earnings deposited first into the account you designate for business, and then move the money (by writing a check or some other transfer) into your personal account. Make business purchases for supplies, travel and other business expenses, using your business account, and do not make personal purchases using your business account.

Keeping all of this separate will show that you are conscientious, and if an IRS audit does happen, it will be easier to document your business expenses.

Use Financial Software

One of the best ways to get organized is to use financial software. Most financial software programs allow you to keep track of multiple accounts. You can use the financial software to track how you move money from your business account into your personal account, and you can use category tags to help you keep track of specific expenses, making your Schedule C form easier to fill out. Here are the most common expense categories that freelancers come across, as listed on Schedule C (which you use if you are a sole proprietorship — if you are an S-Corp. or LLC, you will use another form):

  • Advertising
  • Insurance (not health)
  • Legal and professional services
  • Supplies
  • Travel
  • Utilities
  • Repairs and maintenance
  • Other Expenses

There are other categories on Schedule C; look over them and set up the expense categories on your financial software to correspond with what’s on the tax forms. Note that health insurance premiums can be deducted above the line on the front of your Form 1040, if you are paying for individual insurance yourself. (If you are reporting a net profit of zero or a loss, you will have to itemize your health insurance premiums instead of using line 31.)

Keep Documentation in One Place

Have a specific file for business expenses. Keep receipts and other documentation in this file, keeping it all together, throughout the year. If you write reviews, and bought a movie ticket, make sure to keep the receipt, and then print out a copy of the review to show that you did use the experience as part of your freelance work. The same rules apply for conference attendance and related expenses. Make sure that you have something to back up the receipt.

Keeping your business expense documentation in one file makes it easy to retrieve it at tax time, and it will help you keep an eye out for proper deductions. When your tax return is filed, keep your documentation with your copy of your tax return. I like to put it all in one large manila envelope labeled with the tax year.

This is a guest post Miranda Marquit is a journalistically trained freelance writer and professional blogger working from home. She is a contributor for Mainstreet.com, Personal Dividends and several other sites. The opinions voiced in this material are for general information and are not intended to provide specific advice and/or recommendations for any individual.

*Please consult tax advisor for advice on specific situations.

Source: goodfinancialcents.com

Apache is functioning normally

Summer is full of simple pleasures: baseball games, barbecues, beach reads, and that great American classic, the road trip. Whether you are heading to a national park or a local lake, on a wine-tasting getaway, an antiquing jaunt, or just to hang with your college roommate, a road trip can be exciting, easily wrangled, and spontaneous.

But if you’re wondering how to save money on a road trip, a little bit of planning can go a long way to keep costs under control.

Learn how to minimize expenses when you head out on a summer road trip, from deciding which vehicle to use, where to get gas, how to eat on the road, and more. Here, 25 easy ideas for road tripping on the cheap.

1. Choose a Fuel-Efficient Car

If you have a choice of cars to take, you may want to go with one that is large enough to be comfortable but also gives you the best gas mileage. This is true whether you are using your own wheels or renting a car.

You can use FuelEconomy.gov’s Trip Calculator to determine which car will cost you the least in gas. This tool helps estimate fuel consumption and how much it will cost for a particular route using a specific car.

2. Drive at or Below the Speed Limit

This cautionary measure can help you save money in two ways. For one, you’ll be less likely to get pulled over and slapped with an expensive speeding ticket.

For another, observing the speed limit can actually reduce your gas consumption. In fact, according to the U.S. Department of Energy, you can save 18 cents a gallon on highways for every five miles per hour you slow down.

3. Pack Your Car Wisely

You can also cut your gas costs by placing items inside the car or trunk rather than piling them on your roof. By reducing drag, this tactic can increase your fuel economy by as much as 25% on highways according to one benchmark study.

If you’re out of room in the car, using a rear-mounted cargo box or tray instead of a roof rack can improve your fuel economy by up to 9%.

4. Set a Road Trip Budget

When you first start talking about the road trip, you may want to roughly map out where you want to go, how long it’ll take to get there, and if you’ll need hotels or motels. From there, you can calculate the approximate cost of gas (FuelEconomy.gov can help) and tolls (try Tollsmart ), as well as food and fun.

Once you’ve established an overall budget for the trip, you start creating a travel fund.

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5. Bring Your Own Food and Supplies

Packing a cooler with water bottles, drinks, hand-held snacks, and sandwiches before leaving home is a proven frugal traveler trick. You can end up saving a sizable chunk of cash by not having to buy drinks and snacks at rest stops, vending machines, and drive-throughs.

You’ll also have a quick solution the next time someone in the car wants to pull over because they’re hungry.

6. Sign up for an Electronic Toll Account

Depending on which state(s) you are traveling through, you may be able to save a fair amount of money on tolls by getting the region-appropriate quick pass (or transponder) for your car. In New York, for example, drivers with EZ-Pass can save about 30% on tolls.

7. Avoid Tolls Altogether

When your road trip isn’t on any set schedule, you may want to take the scenic route and completely avoid tolls. You can do this by setting your GPS app to “avoid tolls.”

If you’re in a location with pricey bridges and highways, your savings could really add up. You may want to make sure, however, that avoiding tolls doesn’t take you so far out of your way that you’re spending a lot more on gas.

8. Look for Hotels that Offer Free Breakfasts

If you’re comparing lodging options in a similar price and quality range, one way to save on hotel costs and on road trip expenses in general is to choose the hotel with a free breakfast.

Not only will you probably get a large, filling meal, but you might even be able to take a piece of fruit or cereal box as a snack for later on in the trip.

9. Pack Reusable Water Bottles for Everyone

You’ll no doubt get thirsty while driving and sightseeing, especially in summer, and buying water or drinks can put a major dent in your road trip budget.

Making sure everyone in the car has a large reusable water bottle (or two) to fill up at rest stops and in restaurants can help you avoid spending money on drinks, and also create less plastic waste.

10. Buy a National Park Pass

If you’re going to be road-tripping across the U.S. and visiting a few national parks, you may want to consider getting an America the Beautiful pass.

The pass (which costs $80 per year and $20 for seniors) covers entrance, standard amenity, and day use fees for a driver and all passengers in a personal vehicle (up to 4 adults) at more than 2,000 federal recreation sites.

Just remember that summer is primetime for many parks, from Yosemite in California to Acadia in Maine. If you need lodging, book early.

11. Hit the Grocery Store

Once you’ve run out of your cooler meals and snacks, consider re-stocking at a local grocery store while en route so you don’t have to resort to fast food or a pricey local restaurant for the rest of your trip.

This is also a good strategy if you’re going to be staying at a hotel for a few nights. Making good use of a hotel kitchenette and fridge can help you avoid having to eat out for every single meal.

12. Pre-Book Your Hotels

Spontaneity is great, but if you’re looking to save money on accommodations, it can be wiser to book ahead of time and stick to your plan. You can often secure a better rate by booking in advance (and online), than by showing up without a reservation or booking last minute.

13. Look Beyond Hotels

Your first thought when looking for roadside accommodation may be cheap hotels or motels. But you sometimes find a better deal (or a nicer option for the same price) using a home rental site, such as Airbnb, VRBO, or FlipKey, especially if you’re staying for more than one night.

When booking lodging, it can be smart to use a travel credit card, since every swipe can help you earn points, miles, or cash back that you might apply to future trips.

14. Plan to Visit Free Attractions

Part of the fun of a road trip is to enjoy the journey and scenery while en route to your final destination.

As you travel (or before you go), you may want to research free attractions, such as a hike, walk on a beach, or a free museum, on your route for times when you need to stretch and take a driving break.

You can also look for festivals and local events by checking out the online events calendar for the towns you’ll be visiting that day. You might also check out Meetup.com and see what kinds of local groups are gathering for experiences and outings.

15. Plan Gas Stops in Advance

Getting stuck in a big city with the tank close to empty can be costly (and driving in circles looking for a gas station when you’re en route to the beach is no fun either). To avoid overpriced gas, you may want to use a gas app like Gas Guru or GasBuddy, which can help you compare prices and find affordable gas no matter where you are. This hack is an easy way to lower your gas costs.

16. Set a Daily Spending Limit

You can use your overall budget to get a rough idea of how much you can spend on the road trip each day. This can help you avoid blowing the money you’ve saved, wherever you may keep your travel fund, before the end of the trip.

A spending plan can also let you know when you can splurge a bit and when you’ll have to reign it in with a meal, activity, or lodging. You may also want to set aside some of your budget for the unexpected, such as the car getting a flat and needing to be towed, or discovering the cheap hotel you planned to stay in is actually a total dump. Also factor in some summer road-trip treats: You’re likely to be stopping for ice cream here and there and maybe even a lobster roll.

17. Entertain the Kids on the Cheap

Road trips can help you afford a family vacation since you sidestep pricey plane tickets. But remember that kids have a tendency to get bored, tired, and antsy on a road trip. To avoid giving in to impulse toy purchases, you may want to bring along their favorite toys and also pick up a variety of new ones at the dollar store before you leave.

Good choices include coloring books and games they can play in the car that won’t create a mess. You might also consider borrowing audio books or DVDs from the library to give yourself an hour or so of peace and quiet.

18. Search Online for Local Coupons and Passes

It can be worthwhile to research online coupons and discount codes for local attractions and restaurants at some of your scheduled stops.

Consider checking Groupon or LivingSocial for deals and steals. Sometimes booking online ahead of time saves you money, and it’ll give you a reason to try to reach a specific destination by a certain day.

19. Save on Alcohol

Sipping a cold beer or glass of wine at a local bar at the end of your long drive might sound like the perfect way to unwind.

But alcohol costs can quickly add up on a road trip vacation. Consider buying a few local beers or a small bottle of wine that’s native to that area to enjoy in your hotel room. You’ll save money on tipping too.

20. Volunteer at a Festival

Yes, you read that correctly. Some festivals and special events offer discounts or free admission to volunteers. You can look up events taking place in the town you’ll be visiting and reach out to the event organizer to see if they need help. Summer is full of events like these, from concerts to craft fairs to food festivals.

21. Sign up for a AAA Membership

An auto club like AAA can save you time, money, and hassle should you run into car trouble during your trip. What’s more, a membership (often starting at around $5 a month) gives you access to discounts at loads of hotels, restaurants, and many retailers nationwide.

22. Travel During the Off-Season

Yes, summer can be the most welcoming time of the year to hop behind the wheel. But visiting national parks when kids are back in school can often help save money on lodging and activities. Planning a road trip to a destination like Disney World or Disneyland? You’ll likely find better deals if it’s not during a spring break or other school vacation.

You can often also save money by visiting warm weather locations during “shoulder seasons.” This is the period in between a destination’s low and high seasons of tourism, when prices for hotels tend to be lower, and crowds tend to be smaller, at popular attractions.

23. Do Some Camping

Outdoorsy road trippers might enjoy setting up a tent at a free or low-cost public campsite. You can find out more on the Bureau of Land Management site.

This can end up saving you a lot of money on hotel costs, provided you don’t go out and buy a lot of expensive camping equipment.

If you don’t have any camping gear, you may want to consider renting equipment from an outdoor specialty store or asking a friend who regularly goes camping if you can borrow their equipment. As noted above, summer can be prime time for basking in some of America’s natural beauty, so book your campsite early.

24. Eat Out for Lunch Instead of Dinner

If there are special restaurants you want to try without breaking the bank, consider going there for lunch. You might get a slightly smaller portion than you would if you ordered it off the dinner menu, but the price will likely be more affordable.

25. Take Advantage of Loyalty Programs

Booking with the same hotel chain as often as possible and signing up for their member loyalty (or “points”) program may net you a free night after a few stays.

Travel booking services, such as Expedia, Travelocity, or Hotels.com, may also offer discounted rates and free nights for loyal customers.

Recommended: Getting the Most Out of Credit Card Rewards

The Takeaway

Planning a summer vacation? A car trip might sound much more affordable than traveling by plane. However, gas, food, and accommodations can add up.

One of the best ways to cut road trip expenses is to plan out your trip and research deals, coupons, and discounts ahead of time. Packing wisely and loading up on drinks, snacks, toys, and activities can also help cut costs once you’re out on the road.

Ready to start planning and saving for your next road trip? Consider signing up for a SoFi Checking and Savings® account.

SoFi Checking and Savings has a special “vaults” feature that allows you to separate your savings from your spending, while earning competitive annual percentage yield (APY) on all of your money and paying no account fees. You can even set up a separate vault for your travel fund.

SoFi Checking and Savings: The smart, simple way to save for your next trip.

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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.

SoFi members with direct deposit can earn up to 4.20% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 4/25/2023. 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.
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.
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Apache is functioning normally

Save more, spend smarter, and make your money go further

Is your debt stressing you out? If so, we promise you’re not alone. Especially if you are financing a home. According to the Center for Microeconomic Data, mortgage balances—the largest component of household debt—rose by $60 billion during the second quarter of 2018.

If you’re committed to getting out of debt, we’ve got you covered on how to set up a debt repayment plan to make sure you stay on track and reach debt freedom as soon as you can.

Here are five simple steps on how to jump-start your debt repayment journey:

#1 Assess The Amount of Debt You Owe

Of course, that’s what Mint is here to help you do — easily and automatically track where every last penny goes. Tracking your expenses will help you see where you can cut down, thus helping you reduce outstanding debt, as well as your debt/income ratio (outstanding debt divided by annual net income). Having a clear view of the numbers will empower you to make a plan that actually works based on where you are now.

#2 Sleuthing For Savings

Don’t think you have any extra money to create a debt destroyer? Once you start tracking your expenses, you might be surprised. For example, can you can cut your cable bill (average of $75 a month) and switching to a streaming service (about $10.99 a month)? Or is there a subscription you’re paying for that you don’t actually use? The smallest things here and there can really add up, so make sure you understand what you don’t actually need to be paying for in order to find some extra cash to put toward your debt goals.

#3 Pick A Debt To Tackle First

Some people choose the smallest debt first because getting a few wins on the board helps motivate them to keep working toward bigger goals. Others choose to go after debt with the highest interest rate first because it’s costing the most money right now. Once you choose which debt to work on first, pay the minimums on all other outstanding debts, and put every leftover dime toward the debt you’re targeting.

#4 Start Snowballing

After you pay off the first debt, move on immediately to the next one on your list, instead of taking a break and using that extra money elsewhere. As your number of debts decrease, the amount of money you have to attack the ones that remain increases. This means you can snowball your payments until all of your debt is pummeled

#5 Enjoy Life After Debt

Once you’ve started paying down debt, now you’re ready to establish a commitment to saving. First, determine what you are you saving for! The first goal you should set is an emergency fund. This will help protect you in case of sudden unemployment, a medical emergency or other unexpected expenses. If you want to be consistent with your savings contributions, try automated savings. Start small and then increase the deposit amount when you feel confident that you can set aside more.

The earlier you get started with a strategic debt repayment plan, the better. Remember, take things step by step and first get organized to figure out what you owe. We know debt can feel overwhelming at times, but it’s important to remember it doesn’t have to last forever if you’re committed to creating a better financial future!

Save more, spend smarter, and make your money go further

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