Tamila McDonald, Author at The Free Financial Advisor

How Long Will My Retirement Funds Last?

September 21, 2020 by Tamila McDonald Leave a Comment

Whether you’re currently retired or simply want to be prepared for the future. Figuring out how long your retirement funds will last is critical. That way, you know when you can safely leave the workforce, or if you need to make changes to retire on your preferred date. While determining the health of your retirement account is challenging, it can be done. If you want to know how long your retirement funds will last, here’s what you need to do.

Estimate Your Needed Withdrawal

If you’re close to retirement, it’s wise to do a solid estimate of your post-retirement expenses. Ideally, you want to create a reasonably accurate budget. Along with any debts or recurring bills, factor in fluctuating costs – like groceries – as well as entertainment, travel, hobbies, or any other places you may want to spend money.

However, you don’t want to stop there. You also need to take a look at all of your sources of retirement income. For example, you may want to factor in Social Security. If you head to the mySocialSecurity portal, you can take a look at how much you’re likely to receive, allowing you to factor it into the equation.

By getting a grip on your expenses and all of your sources of income, you can determine how much you’ll need to withdrawal each month or year from your retirement account. That way, you can move onto the next step with greater ease.

Head to a Retirement Calculator

There are a number of retirement calculators that will help you determine how long your money will last. Usually, all you need to know is the average annual rate of return on your account, the balance at the time you plan on making withdrawals, and how much you want to withdrawal each month or year. It’s also helpful to know your marginal tax rate if the money you pull will be taxable.

At times, you may need to do some additional math to determine how much you’ll have saved before you retire. If so, you can try the calculator by Dave Ramsey to get an idea of the potential value of your retirement account.

Beyond that, if you’re looking for a simple place to start, the calculator by Mutual of Omaha is a solid option. It’s easy to use and produces a simple chart. The only drawback to this one is that it only goes out for 30 years. If your retirement savings will outlast that, then you may need to do a second calculation to get the exact amount of time before it’s gone.

However, if you’re savings is going to last you more than 30 years, and you’re not retiring early, you could likely assume that you’re fine. But it may also be wise to redo the calculation, adjusting certain parameters to ensure you aren’t being overly optimistic.

For example, reduce the expected Social Security growth rate and the expected return on your retirement account. That way, you can see how long it will last if things don’t go as well, giving you another perspective on the staying power of your retirement fund.

Do you have any tips that could help someone figure out how long their retirement funds will last? Share your thoughts in the comments below.

What Makes Gold So Valuable?

September 14, 2020 by Tamila McDonald Leave a Comment

At some point, every would-be or current investor hears that they should consider adding gold to their portfolio. Gold often has a substantial amount of allure, a psychological impact that affects how people perceive its value, stemming back to ancient times when it was highly coveted. It’s also viewed as a form of safe haven, an investment that remains stable even during tumultuous times. If you are wondering what makes gold so valuable, and if its value is deserved, here’s a look at it from an investment perspective.

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When Are Manufactured Homes a Good Investment?

September 8, 2020 by Tamila McDonald Leave a Comment

Manufactured homes are a popular option for budget-conscious people who want to own a house. However, they don’t always have the best reputation. And they certainly have their quirks. As a result, figuring out if buying one is a smart move isn’t easy. As with all real estate-oriented purchases, the value can vary depending on a wide range of factors. If you are wondering, “Are manufactured homes a good investment?” Here’s what you need to know.

What Is a Manufactured Home?

A manufactured home is a form of housing that’s built in a factory. They are usually built on a steel frame, instead of on-site. After a person purchases one. The structure is brought to the buyer’s property. Which could include land they own or a rental plot, such as in a manufactured or mobile home park. Once on-site. It is assembled and secured to a base. The type of which can vary.

Some argue that manufactured housing and mobile homes are different. This is true to a degree. Technically, to be a mobile home, the structure must have been constructed before 1976. Anything after that point is a manufactured home. Additionally, manufactured homes had to meet different building standards. These standard are higher than what their pre-1976 counterparts had to follow.

However, they are both factory-built structures that are usually assembled before being placed on the owner’s land or rental plot. Further, each of these housing types may not be on permanent foundations, depending on the requirements set forth by the state when they were placed. As a result, the general public usually uses the terms interchangeably.

There is also a third category of factory-built housing: the modular home. These can be similar to manufactured homes but are typically delivered in pieces and put together on site. They are also more likely to resemble a stick-built home and more commonly have a traditional foundation.

The Benefits of Owning a Manufactured Home

Manufactured homes are often appealing because they can cost less than a comparably sized and appointed stick-built house. Since they are factory-made en masse, the production costs are lower. Some of that savings is passed on to the buyer.

Many of the construction materials used are also similar to other kinds of houses. Depending on the requirements in your area, the building codes may be equal to, or even more stringent than, stick-built homes, too.

At times, buying a manufactured home may even cost less than being a renter in certain areas. To include if you have to purchase land. However, this isn’t universally true. So it’s important to examine the costs on both fronts before committing to a manufactured home purchase.

The Drawbacks of Investing in a Manufactured Home

There are some drawbacks that come with purchasing a manufactured home. Usually, if it isn’t on (or being placed upon) a permanent foundation. You may not be able to get a traditional mortgage to buy one. Similarly, if you don’t own the land – or aren’t in the process of buying it as well – most mortgage lenders won’t finance the purchase.

Even if you do buy land and want to put down a permanent foundation. You may not be able to place a manufactured home just anywhere. Local zoning laws may prohibit them in certain areas. If that’s the case, getting an exception can be incredibly challenging, and may not even be possible.

There can also be insurance concerns. Manufactured home insurance is generally more expensive than typical homeowners’ policies. They may not be at risk of greater damage during certain kinds of catastrophic events, such as fire, high winds, and floods. In some regions, manufactured houses have a higher rate of theft claims, something that causes elevated insurance rates for all owners in the area.

Negative Opinions About Manufactured Housing

Additionally, while some people are beginning to view manufactured homes more favorably, others still have negative opinions of them. This harms their resale value significantly. Even when they are on permanent foundations and can qualify for mortgage loans. When they aren’t on permanent foundations. The situation is usually worse.

Now, local market conditions, maintenance and upkeep, and similar factors can help manufactured homes retain value. Similarly, the value of the land can rise. Thus, offsetting some losses. However, this is almost universally an uphill battle. So it’s important to keep that in mind.

Finally, if you don’t intend to purchase land, that means you’ll have to rent a property. With this, permanent foundations usually aren’t an option. Plus, renting plots at mobile home parks can be costly, and some neighborhoods may not be the nicest options.

It can also put you at the mercy of the property owner. Especially, since moving a manufactured home once it has been set in place can be costly, structurally devastating, or both. As a result, you may not have a choice but to deal with plot rent price increases, neighborhood quality declines, or other potential issues that could arise.

Are Manufactured Homes a Good Investment?

As you can see, whether a manufactured home is a good investment depends on your goals. Paying for a manufactured house (even with land) may cost less than renting a comparable-sized space. Additionally, the value of your land may rise. Which is one aspect that could work in your favor.

However, the structure itself will typically decline in value. This is something that doesn’t always occur with stick-built homes. There can also be issues with obtaining a loan. As most don’t qualify for traditional mortgages. Not only can this be troublesome for would-be buyers, particularly when it comes to finding a reasonable interest rate. It also means you’ll face hurdles if you ever want to sell.

Additionally, while many may call them mobile homes, moving them may not be an option, or may be incredibly costly. If you were considering placing a manufactured home on a rented lot, you could be making a long-term commitment to that arrangement, and that may not work in your favor over time.

Do you think that a manufactured home can be a good investment? Why or why not? Share your thoughts in the comments below.

Is My Credit History Important During a Job Search?

August 31, 2020 by Tamila McDonald Leave a Comment

While the average FICO credit score is around 703, an estimated 68 million people have scores below 601. Which gives them a poor or bad rating. That is dependent on exactly where they fall. Plus, about 45 million adults have no credit score. Either because their credit history is insufficient or there is nothing on record. As a result, many people worry that their credit history will hold them back. And not just when they need a financial product. They may wonder if their credit history can hurt their chances of getting a new position. If you’re trying to figure out if your credit history matter during a job search. Here’s what you need to know.

Do Employers Check Candidates’ Credit Reports?

While it isn’t universal, some employers do check the credit reports of job candidates. However, they won’t see a job seeker’s credit score. That’s usually unnecessary.

Usually, companies are looking for signs of financial trouble, mainly because they believe it could demonstrate a higher theft or fraud risk. Additionally, certain facts from a report could indicate a candidate lacks certain skills. For example, a slew of missed payments may mean a job seeker isn’t particularly organized or isn’t good with deadlines. It may also suggest a person doesn’t take their commitments seriously.

At times, a poor credit report could indicate a candidate isn’t ideal for financially-oriented positions. Employers may believe that if they can’t keep their financial life in order, asking them to manage a client’s file or money-related tasks might not be a good idea.

The Kinds of Jobs That Check Credit Reports

Not all jobs will require credit checks. Typically, this kind of background check is only needed in certain scenarios.

If a job requires a security clearance, a credit check is more likely. Similarly, if the role means handling large sums of money, directly accessing financial accounts, working with sensitive customer data, or using confidential information, one may be part of the hiring process.

What Information Do Employers See?

When an employer runs a credit check, it’s not the same report that a bank may receive when trying to determine if you’re eligible for a credit card. For employment, a credit report usually won’t contain information that could indicate certain kinds of statuses or belonging to specific demographics.

Account numbers also aren’t displayed. However, your payment history, amount still owed, and available credit amount are visible.

Will an Employment Credit Check Hurt My Score?

Generally, no, an employment credit check doesn’t hurt your credit score. Usually, it is listed as a “soft inquiry,” which is different from the hard pull most lenders use when determining if you qualify for credit.

Further, it won’t necessarily hurt your chances with other employers, either. Your report doesn’t show any other soft inquiries. If you apply to multiple companies, and they all require a credit report, they won’t know that other employers are also taking a look.

A Job Seeker’s Legal Rights

There are rules governing when and how an employer can use a credit check as part of their hiring process. Above all else, you must be notified that one is going to take place, and you have to give your written permission. Additionally, the company must tell you in advance how the information impacts its hiring decision, as well as give you a pre-adverse action notice, where they outline that information as well as cover any rights you have legally.

You also have to be given adequate time to explain any potential red flags or have errors corrected with the credit bureau that provides the data. Usually, that’s about three to five business days.

Additionally, if there is an adverse action, you have to be given a notice. Within that document, the contact information for the credit agency and your rights to get a copy of the report have to be outlined.

It is important to note that some states and cities bar the use of employer credit checks entirely, or highly restrict how any discovered information can be used. If you’re interviewing for a job that requires a credit history check, review your local laws to make sure it is being done correctly and in accordance with any mandates.

How to Prepare for an Employment Credit Check

If you know a credit check could be on the horizon, it’s wise to review your reports first. You can head to AnnualCreditReport.com to get a free copy from each bureau every year. That way, you can review the content and dispute any errors if the need should arise.

Otherwise, good financial habits can help you ensure your credit report is strong. Pay your bills on time whenever possible, use your available credit responsibly, and only take out new credit when absolutely necessary.

You may also want to use a free credit monitoring service. Whenever someone accesses your report or opens a new line of credit, you’ll be notified. If the activity is legitimate, you’ll know that it is now on your report. If it isn’t, you can act quickly to remedy the issue, increasing the odds you can preserve your credit.

Finally, if you put a freeze on your credit reports, you’ll need to lift them (at least temporarily) when your employer runs their check. Many people put freezes in place after the major Equifax breach in 2017. Those prevent anyone from check your credit report, even if you give permission. If you froze your reports, make sure to temporarily lift the freeze, or the prospective employer won’t be able to complete the check.

Has your credit history ever impacted your job search? Share your thoughts in the comments below.

Is There Any Recourse for an Eviction Due to Job Loss?

August 24, 2020 by Tamila McDonald Leave a Comment

Due to COVID-19, millions of Americans lost their jobs. While moratoriums were put in place to protect them from eviction, time is running out. The protection offered by the CARES Act ended on August 24, leaving many renters vulnerable if their state didn’t extend protection beyond that date. Additionally, the CARES Act requirement didn’t apply to all properties, meaning some renters were experiencing trouble before that help came to an end. As a result, it’s normal to wonder if there is any recourse for an eviction due to job loss. If you’re concerned about being forced out of your home, here’s what you need to know.

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Should You Add Your New Spouse to the Deed of Your Home?

August 17, 2020 by Tamila McDonald Leave a Comment

When you get married, it’s common to merge the majority of your financial lives. After all, when you live together, it’s normal to both be involved with handling expenses and planning for the future. However, if you owned your home before you wedding. Figuring out if you should add your new spouse to the deed of your home isn’t always easy. Ultimately, there are advantages and disadvantages to adding them. As well as leaving them off. If you’re trying to decide which option is right for you. Here’s what you need to know.

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5 Reasons to Pay off Your Home Loan Before You Retire

August 10, 2020 by Tamila McDonald Leave a Comment

Retirement is a significant transition, often representing a major financial shift in a person’s life. Having as few expenses as possible is typically ideal, ensuring that any retirement funds can last through the remainder of a person’s life. By paying off debts, your monthly obligations can be lowered. If you are wondering whether your mortgage is one of the debts you should tackle, here are five reasons to pay off your home loan before you retire.

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How Do I Cancel My Gym Membership?

August 3, 2020 by Tamila McDonald Leave a Comment

Gym memberships are notorious for how challenging they are to cancel. Even during the COVID-19 pandemic, when many fitness centers were barred from welcoming customers due to social distancing requirements and health concerns. Some gyms tried to hold members to their contracts. But even if a person was eligible for cancellation. Fitness centers typically don’t make quitting easy. If you need to cancel your gym membership, here’s what you need to do.

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Can My Savings Account Affect My Financial Aid?

July 27, 2020 by Tamila McDonald Leave a Comment

Many households do their best to save up for college. Their hope is to set aside enough in savings to avoid student loans. Debts that can often take years, if not decades, to pay off in full. Plus, having a hefty emergency fund is often considered wise. Ensuring a household can navigate the unexpected. However, many worry, “Will my savings account affect my financial aid?” If you’re wondering whether it has an impact. Here’s what you need to know.

Will My Savings Account Affect My Financial Aid?

The short answer to that question is yes. Savings account balances will impact your financial aid. Money held in a savings account is considered an asset. And it does affect a student’s expected family contribution (EFC) calculations when they complete their free application for federal student aid (FAFSA).

However, the impact of a savings account may not be as dramatic as you’d think. It’s only part of a larger equation. Students aren’t expected to hand over their entire savings account balance to cover tuition.

What Has the Biggest Impact on Financial Aid?

While your savings account balance may have a slight impact on your financial aid package. Your income level is a bigger factor. It’s given the most weight when it comes to calculating college affordability.

If you are low-income, you’ll usually qualify for a substantial amount of support unless your assets are high. It would take a considerable amount of savings to completely wipe out your financial aid. Though technically wouldn’t be impossible.

It’s also important to understand that the cost of your chosen college plays a role as well. After completing the FAFSA, your EFC is compared to the estimated cost of going to that college. Thus, influencing the amount of aid that may be available.

How Much Does Savings Impact Financial Aid?

Generally, about 20 percent of a student’s savings account and other cash-oriented assets are counted on the FAFSA as being eligible for use when it comes to covering the cost of college. That means 80 percent is essentially protected from the equation.

For dependent students who are worried about the value of their parent’s saving, the math is even more in their favor. Less than 6 percent of those assets are viewed as potentially useable by the FAFSA.

Generally speaking, savings will potentially reduce how much you receive in financial aid. However, precisely how much of an impact it will have depends on a range of factors, including the total value of your assets, your income level, whether you’re a dependent or independent student, whether the savings is in your name or your parent’s names, and more. Often, the reduction is fairly minimal, as income level is the biggest determiner when it comes to how much a student receives in financial aid.

Making the Most of Your Savings

If the money you have set aside in savings is for college, then do put it toward your education. As that balance shrinks each year, it will have less of an impact on your EFC. As a result, if your income either remains largely unchanged or falls while you’re in school, you could qualify for more financial aid over time.

For dependent students who have money in savings but whose parents also set money aside for college, it’s best to spend your own money first. Personal savings has a bigger impact on your EFC than what your parents have in the bank, so it makes sense to spend the cash that’s saved in your name first.

Did your savings impact your financial aid? Did you decide to change how much you had in savings to secure more financial aid? Share your thoughts in the comments below.

Here’s How to Redeem Your Old Saving Bonds

July 20, 2020 by Tamila McDonald Leave a Comment

Today, a surprising number of people may have old savings bonds lying around. Many Millennials received them as gifts when they were children. Many often tucking them away and forgetting about them until digging into a file much later. Luckily, forgetting about these savings bonds wasn’t a bad thing. As there’s a good chance they are now mature. If so, redeeming that old savings bond becomes an option. If you’re trying to figure out how to cash savings bonds that you’ve found. Here’s what you need to know.

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