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Is Lifestyle Creep Ruining Your Financial Future?

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Lifestyle Creep

As you progress in your career and receive a raise or promotion, or you finish paying off a debt, one thing usually occurs; you suddenly find yourself with more money in your bank account. Typically, it’s an exciting moment, particularly if your budget previously felt tight. However, the higher bank balance might also lead to some unwise financial decisions, particularly in the area of lifestyle creep. If you’re wondering how lifestyle creep can ruin your financial future, here’s what you need to know.

What Is Lifestyle Creep?

Lifestyle creep is a scenario where your spending increases when your income rises. Essentially, whenever you have more room in your budget, you use those funds to improve your lifestyle.

Often, lifestyle creep is discrete and seemingly innocuous. It typically plays out as a series of small lifestyle improvements, many of which aren’t immediately noticed by members of the household. Minor luxuries are purchased more frequently, or versions of regularly purchased items – like groceries – elevate slightly over time. It’s the slow nature of the shift that led to the use of “creep” in the term.

How Lifestyle Creep Harms Your Financial Future

On the surface, lifestyle creep doesn’t seem overly harmful. In many cases, an improving lifestyle is simply viewed as a reward for hard work, allowing a household to make purchases that weren’t previously within reach.

However, lifestyle creep can harm your financial future. For example, if you were previously living paycheck-to-paycheck, a raise or paying off a debt could let you escape that cycle. But if you allow lifestyle creep to occur and increase your spending, you could end up living paycheck-to-paycheck again. As a result, you’re functionally in the same financial place as you were previously.

In many cases, the signs of lifestyle creep are reasonably clear. After seeing your income increase or your debt obligations reduce, a stagnant savings account balance typically means you are spending more. Using more of your money on outings or social events is another red flag. The same is true of an unshakeable feeling that you can’t get control of your budget no matter how much you earn.

Tips to Avoid Lifestyle Creep

Generally speaking, avoiding lifestyle creep requires some vigilance and planning. Fortunately, it’s not difficult to head in the right direction. Here are some tips to help you avoid lifestyle creep.

Know Your Financial Goals

Lifestyle creep is more likely to occur if you don’t have any well-defined financial goals to guide your actions. Spend time considering what you’d like to achieve to ensure your financial well-being. Be specific when you outline the targets, assigning dollar amounts, deadlines, and more to help you stay on target.

Once you have your goals defined, find ways to keep reminders on you. For example, putting a picture of your dream house in front of your debit card could give you pause when you’re about to make an unnecessary purchase. It gets you thinking about how your behavior could negatively impact reaching your goal, and that’s often enough to slow down excessive spending.

Update Your Budget

The moment your income rises, take the time to update your budget. Consider how the extra cash in your account can make reaching high-priority goals easier, then work to direct your money in those directions.

When you update your budget, make sure to allocate some cash toward discretionary spending. That essentially lets you have a little spontaneous fun while preventing you from going overboard.

Track Your Spending

Another critical tip to avoid lifestyle creep is to continuously track your spending, at least initially. By doing so, you’ll notice if you’re starting to spend more than you planned, making it easier to nip any newly forming bad habits in the bud.

Automate Your Savings

Generally, it’s harder to succumb to lifestyle creep if you don’t leave the money in your checking account. If you have savings goals you’d like to achieve, take advantage of the automatic transfer features offered by most banks and credit unions. That way, when your paycheck is deposited, the designated amounts automatically shift to the specified savings account, preventing you from accidentally seeing that money as spendable.

Increase Your Retirement Contributions

If you want to use your boosted income to secure your financial future, increase your retirement contributions right away if you aren’t currently maxed out. Make sure you’re capturing your full employer match if you receive one through your work plan. Otherwise, plan your contributions to get you closer to the maximum contribution limit.

Use the 72-Hour Rule

The 72-hour rule is a strategy for limiting impulse purchases that you may later regret. When you see a product or service and feel the urge to buy right away, make a note of what it is and then wait to take any action for at least 72 hours. In many cases, the impulse to buy will diminish during that time.

However, if the urge doesn’t go away, you are still giving yourself time to consider whether moving forward works with your budget. At a minimum, that helps you avoid splurges that would harm your financial well-being, which is still a win.

Pay Down a Debt

If you have a solid emergency fund and your retirement contributions are relatively high, use the extra money in your budget to speed up debt repayment. By doing so, you’ll pay less in interest over the life of the debt. Plus, you can eliminate the obligation sooner, allowing you to get even more room in your budget. In some cases, this strategy may also boost your credit score, which is always beneficial.

Don’t Make Big Changes Immediately

If your income increases significantly, it may encourage you to make certain big changes, like moving into a larger home or buying a nicer car. While there are situations where that could make sense, don’t make these adjustments to your lifestyle right away.

Instead, spend time reviewing the short and long-term implications of those changes, as the financial impact is often significant and lasting. That way, you can ensure you aren’t getting in over your head or putting yourself back in a position where you’ll struggle financially.

Be Cautious About Automated Spending

Subscription-style services may seem convenient, but they’re often costly. Additionally, most people don’t have the same level of awareness when it comes to subscription-style services as they do with other types of spending.

Whether it’s gym members, streaming services, meal kits, automatic product deliveries, or anything of that nature, make sure you’re tracking those activities. Additionally, review your subscriptions every month to determine if they’re worth keeping in place. That way, if something you’re paying for automatically stops providing value, you can end the subscription promptly.

Did you struggle with lifestyle creep and encountered financial hardships because of it? Do you have any tips that can help others avoid lifestyle creep to ensure their financial lives stay on track? Share your thoughts in the comments below.

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How To Ensure Your Budget is Working For You

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Is Your Budget Working

 

When it comes to personal finances, the most common recommendation from experts is to have a budget. However, many people create an initial framework for their spending only to continue struggling. Often, that’s a sign that your budget isn’t quite where it needs to be to serve you well. If you’re wondering, “Is your budget working?” here’s what you need to do to figure it out.

Do You Feel Overly Restricted?

In many ways, budgets are inherently restrictive, as they’re designed to ensure your money is going to the right places. However, if it’s restricting what you do to the point where it leaves you feeling miserable, that’s an issue.

Ideally, your budget needs to have some room for spontaneity and enjoyment. Otherwise, the rules you’re placing on yourself are challenging to follow over time. Essentially, your budget starts seeming like a punishment or burden, and that can leave you frustrated, unmotivated, or even angry.

While it’s wise to ensure you’re handling all of your financial responsibilities, try to designate some of your money for activities you genuinely love. By doing so, you’re giving yourself an outlet for fun, and that can positively impact your well-being. In turn, following the rest of your budget isn’t as difficult, as you’re still getting some joy from your hard-earned money.

Are You Being Too Idealistic?

When many people sit down to create a budget, they outline their perfect spending plan. The issue is that budgets drawn up in that manner don’t always align with reality. Instead, they’re overly optimistic based on how household members typically act and spend or don’t account for realistic costs for needed goods and services.

Overly idealistic budgets are incredibly common during periods of economic uncertainty, particularly issues like high inflation. They don’t provide enough room for rising prices, which causes households to bust their budgets even if they’re trying to be responsible.

Additionally, not accounting for actual spending patterns means missing the mark more often than not. As a result, it’s critical to take an honest look at your typical spending and set realistic targets in discretionary categories. That helps you mold your budget to your preferences and priorities, ensuring you aren’t being overly idealistic.

Do You Have an Emergency Fund?

Even the best-planned budget is quickly derailed if you can’t cover the cost of an unexpected event. Whether it’s medical bills, car repairs, or anything else, being able to cover those expenses without harming your budget makes a difference.

By having an emergency fund, you’ve got a stash of cash you can tap when the unexpected happens. As a result, the rest of your spending can simply align with your usual budget in most cases.

Make saving money in your emergency fund part of your monthly budget, allowing you to build up the account and recover the cash you had to spend to handle the unexpected. Ideally, you want to make your initial target at least $1,000. Then, work your way up to three months of living expenses, and then try six. That way, you get a sizeable cushion in place.

Did You Factor in Everything?

Common advice is to review your spending over several months as you create your budget. That lets you see where your money is going, which can make it easier to choose reasonable targets.

The problem is that only looking at a few months means you aren’t seeing irregular expenses that occur during the year. For example, you might overlook how much you usually spend on gifts for holidays and celebrations or miss routine expenses that don’t occur monthly, like vehicle maintenance.

If you don’t factor in everything and plan for it correctly, you’ll encounter months where your budget just won’t work. Instead, examine all of your spending during a year. Identify those irregular expenses, and break them down to see how much you need to set aside for them each paycheck or month to ensure they’re covered. Then, shuttle the cash to a designated savings account during the year, allowing you to tap that money when it’s time to cover those costs. That way, you’re planning for those expenses while keeping your monthly budget consistent.

Can You Actually Afford Your Lifestyle?

In some cases, the reason your budget isn’t working is your trying to maintain a lifestyle that you genuinely can’t afford. If your expenses and spending exceed your income, all you’ll do is rack up debt if you keep pushing toward a lifestyle you can’t support. In turn, the cost of your debt repayment usually rises, potentially to the point of becoming entirely unmanageable.

While it’s hard, it’s critical to get a grip on a situation like this quickly. Examine your spending across every account, including bank accounts and debt-related ones, like credit cards. Then, see if your outgoing money exceeds what you’re bringing in, and if it does, find ways to scale back. Otherwise, you’ll need to boost your income to cover the difference.

Are You Making the Right Adjustments?

Budgets aren’t a one-and-done document. Instead, they need to live, breathe, grow, and change. If you aren’t adjusting your budget regularly, what’s currently in place may not match your reality, as it’s based on old information, out-of-date costs, and other irregularities.

Make a plan to review your budget at least quarterly. See if the categories and allocations make sense for where you are today. If not, change your budget to fit what’s happening now, allowing it to grow and change with your circumstances and ensuring it’s easier to follow.

Do You Genuinely Want to Follow a Budget?

While creating a budget is an excellent first step when you want to get control of your financial life, writing one down won’t magically change how you act and spend. Instead, you need to actively commit to sticking with your budget. If you don’t, then the work you put into creating one won’t improve your situation.

Consider what you hoped to accomplish when you created your budget. Think about how adjusting your habits help you reach important goals and what it would feel like to achieve them. Use that as ongoing motivation, regularly reminding yourself of what’s most critical to you to keep yourself focused on the target.

 

Do you have any other tips that can help people answer the question, “Is your budget working for you?” Have you ever discovered that your budget wasn’t working and want to share details about how you got back on track? Share your thoughts in the comments below.

 

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Top 7 Financial Resolutions For 2023

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Financial Resolution for 2023

The start of the year is a classic time for creating new goals, giving you direction for the months to come. With inflation and a possible recession on the horizon, many people are focused on their finances. Fortunately, there are plenty of suitable objectives that can help you get your money in order. Here are the top seven financial resolutions for 2023.

1. Build an Emergency Fund

One of the most critical steps you can take to secure your financial well-being is building an emergency fund. By having some cash set aside for the unexpected, you give yourself a safety net that doesn’t rely on debt.

If you’re just starting out, set your initial savings target at $1,000 or the total cost of your vehicle and homeowner’s or renter’s insurance deductibles, whichever is higher. If you already have that set aside, work to increase your emergency fund to cover three months of living expenses, giving you a cushion in case of sudden unemployment.

Once you have three months of living expenses, six months of expenses is the next target you should go after. Then, work your way up to a year. That way, you’re covered against emergencies big and small.

2. Create a Workable Budget

Having a functional budget gives you a framework for your financial life. The issue is that many people are overly optimistic about how they’ll handle their money. As a result, it’s smart to focus on being realistic.

The easiest way to create a workable budget is to start by writing down information about your debts and recurring expenses, such as utilities and insurance. Next, review your spending over the last three months to see how much you commit to groceries, fuel for vehicles, and other cost areas that typically fluctuate.

By seeing where your money is going now, you can identify areas for adjustments. Start with minor tweaks, making it easier to adapt to stricter spending limits and focus on other financial goals, like saving. Then, if that first month is a success, see if other minor adjustments are viable. That strategy lets you take a slow and steady approach, making it easier to stay realistic while making positive changes.

3. Capture the Entire Employer Match

If you’re employed at a company that offers an employer match on retirement contributions, make sure you’re contributing enough to qualify for the full match offered. The employer match can significantly impact your financial future by giving you more funds for retirement. Plus, it’s essentially free money, so it’s an employee benefit that’s worth maximizing.

Just be aware of any vesting rules in place at your company. Usually, you can only keep the employer match if you remain employed at the organization for a minimum time period. By knowing how long it takes to become vested, you can make sure that you’re fully capturing this financial benefit before leaving for opportunities elsewhere.

4. Pay Down One High-Interest Debt

If you’re carrying any high-interest debt, choose one account and make it your focus for 2023. It’s ideal if you can aim to pay it off during the year. However, if the balance is high, simply work on paying it down as much as possible.

Begin by ensuring that you’re making the minimum payment on it and every other account as required, as well as handling your recurring expenses. Then, send any extra cash to the chosen debt that you can without completely derailing the rest of your budget. Every little bit more helps chip away at the principal faster. As a result, you’ll pay less in interest over time.

If the debt you’re focused on is a credit card or other revolving account where the minimum payment shrinks as the total owed declines, keep your monthly payment the same, using the current payment as the guideline. That creates consistency in your budget and helps you make progress faster. Additionally, don’t add to that debt along the way, as that undoes your work.

5. Adopt the 72-Hour Rule

Using the 72-hour rule can curb unnecessary spending significantly. Essentially, if you see a non-essential item you’d like to purchase, make yourself wait at least 72 hours before actually buying. By using this strategy, you’re delaying splurges that are potentially motivated purely by the emotion of seeing the item in the moment. When you revisit the idea of buying the product in 72 hours, that initial feeling is typically gone, making you less likely to purchase anything you don’t actually need.

If you still feel strongly about purchasing the product after 72 hours, take a moment to reflect on why. By considering your motivations, you can understand more about what’s driving you to get the item. At that point, if you have a legitimate reason and the money in your budget, you can potentially move forward. However, if you still have doubts, wait another 72 hours to see if the picture becomes clearer.

6. Try a No-Spend Challenge

No-spend challenges involve not spending any money on anything aside from bills and certain living expenses you can’t cover in advance – such as refueling a vehicle or fresh foods that won’t last for the entire time – for a specific period. Many people try no-spend February since it’s the shortest month of the year. However, if that idea is intimidating, try a no-spend two weeks as a starting point.

Before your no-spend period, you have to make sure that you plan your groceries for that entire period. Use a frugal approach by taking advantage of bulk items, sales, freezer meals, and similar strategies that can reduce your costs and make the experience less stressful. Just make sure you don’t go on a spending spree to compensate for a no-spend period before or after it happens, as that doesn’t positively impact you financially.

After the no-spend period, you should have some extra cash available. Take that and put it toward a specific goal, such as paying down debt or beefing up your emergency fund. That way, it has a positive impact on your financial picture.

7. Start Investing Outside of Retirement

While many people have company-sponsored retirement plans, investing outside of them can make it easier to ensure your long-term financial security. Whether you have access to a 401(k) or similar program at work, consider opening an IRA – either traditional or Roth, depending on your financial situation – to shore up your retirement savings. If you have children, you may want to explore 529 plans to put money aside for their college education.

However, even if you only have general saving goals, investing is still worth considering. You can open an account at a brokerage and start putting money into the market, potentially letting you capture better gains than if you put the cash into a savings account. Just make sure that you diversify. In many cases, going with index funds or ETFs makes that easy. Do a little research to find funds with solid track records and align with your risk tolerance, creating a personalized portfolio that meets your needs.

Did you decide to have a financial resolution for 2023? If so, what did you pick and why? Do you think resolutions are helpful or not? Why do you feel that way? Share your thoughts in the comments below.

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How To Save On Your Electric Bill In The Winter

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How To Save On Your Electric Bill

During the winter, many households spend far more on electricity. In many cases, this is due to needing to heat their homes. Whether you use wall heaters, central heat, or anything in between, it can cause your electric bill to rise. Fortunately, there are steps you can take to save on your electric bill this winter. Here’s what you can do.

Have Your Heating System Serviced

Routine maintenance ensures that your heating system is operating efficiently. At the start of winter, check your filters and replace them if needed. Then, consider replacing them monthly or as needed, as buildup on the filters strains your heating system.

Also, have a professional service technician come in and go over your system. They can make sure that it’s in good shape or make repairs to increase your energy efficiency.

Lower Your Temperatures

One of the simplest ways to save money on your winter electric bill is by lowering the temperature on your thermostat. Even a few degrees can make a difference, so find the lowest temperature that you can deal with and keep your thermostat there.

If you have a programmable thermostat, you can also make other changes. For example, you can reduce the temperature a little more at night while you’re sleeping. You could also set it up to keep your house cooler when you’re at work, suggesting it’s high enough to keep any pets comfortable.

Lowering the temperature on your electric water heater can also make a difference. If yours is set to 140°F, reduce it to 120°F instead. Generally, that still keeps baths and showers comfortable, but it costs far less.

Warm Your House with the Sun

Opening up curtains on windows that are hit with direct sunlight can warm your home, even during the winter. When you wake up in the morning, make sure to open the curtains on any south-facing windows, as those typically get the most sunlight. Then, as the sun starts getting low, close the curtains to keep the heat inside.

Improve Your Insulation and Windows

Home insulation and the quality of your windows impact heat transfer. If there isn’t enough of a barrier between your interior and the outside world, you’ll spend more heating your home.

Check your attic insulation to see if it’s suitable. If not, consider refreshing it to improve your home’s energy efficiency. Having double-pane windows also helps. However, if you can’t afford to upgrade your windows, putting on insulating window films can make a difference.

Install Insulating Curtains

Insulating curtains are designed specifically to help maintain your home’s temperature. By installing them on your windows, you get an extra barrier against the cold air outside. By making sure they fit close to the window, they can also combat drafts.

Turn on Your Ceiling Fans

While it’s counterintuitive, turning your ceiling fans on can actually reduce your heating costs. Most ceiling fans have switches that change their direction. By reversing the spin, the ceiling fan pushes hot air down, keeping you more comfortable. Just make sure to clean off any dust first and use the lowest speed setting available.

Do you have any tips based on what you did when figuring out how to save on your electric bill that would help others? Have you tried any of the options above and want to discuss your results? Share your thoughts in the comments below.

 

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Take These 5 Steps to Recession Proof Your Savings

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Recession Proof Your Savings

Currently, the economy is in flux. Inflation remains high, but there’s also a strong chance that a recession is on the horizon. Many of the steps that were taken to curb inflation make a recession more likely. As a result, experts generally believe one will occur this year. As a means of protecting your well-being, protecting your savings is a must. Here are five steps you can take to recession proof your savings.

1. Have a Separate Emergency Fund

While an emergency fund is a type of savings, it’s different from the money that’s set aside for specific goals, such as buying a house or securing your retirement. With an emergency fund, you have cash available that you can tap into when genuine financial emergencies occur. Plus, by separating it from your other savings, you won’t accidentally tap into those funds.

At a minimum, strive to have $1,000 or enough money to cover your insurance deductibles – whichever is higher – in an emergency fund. Once you have that, aim for three to six months of living expenses. That ensures you have a cushion that you can use during legitimate emergencies, making it easier to protect your retirement and other goal-oriented savings.

2. Take Advantage of Higher Interest Rates

Due to steps taken to reduce inflation, interest rates are on the rise. While this isn’t ideal if you’re looking to open new debt accounts, it works in your favor if you want to recession proof your savings. By keeping any stashed cash in a high-yield online savings account with a higher interest rate, the money you set aside grows more quickly. Plus, it doesn’t come with the risks associated with investing.

Look at your current interest rates on your savings accounts and compare them to what’s offered by other institutions. If your current rate is notably below what’s available elsewhere, consider moving the cash to a savings account at a different bank or credit union. That way, your money grows faster, giving you a bigger cushion during a recession.

3. Revamp Your Budget Now

In many cases, it’s best to update your budget to address potential financial difficulties that a recession creates well before it’s necessary. By updating your budget now and eliminating unnecessary spending, you can focus more of your energy on building an emergency fund or saving for other purposes.

Then, if a recession negatively impacts your income, your budget might still work based on the new amount you have coming in each month. Essentially, by living below your means now, you’re giving yourself some space and preparing for a time when your earnings may drop, making any future adjustments either unnecessary or easier to manage. In turn, you might not need to turn to your savings as quickly, allowing you to preserve your stashed cash.

4. Reduce Your High-Interest Debt

High-interest debts – such as credit cards and specific personal loans – cost you a lot in interest over time. By working to reduce what you owe ahead of schedule, you’ll pay less in interest over time.

Plus, when you pay off more of your credit card, the monthly minimum payment declines. While you should aim to keep your payments high to tackle your debt, this can give you a bit of a reprieve during financially challenging months. If necessary, you can transition to the lower minimum payment to provide you with more room in your budget, making it easier to avoid tapping into your savings.

5. Don’t Make Dramatic Investment Changes

During a recession, stock market fluctuations are common. However, responding to those dips by pulling your money out of long-term investments isn’t necessarily wise. In most cases, recessions are short-term episodes, and markets ultimately recover (and typically continue to grow). Since that’s the case, it’s best to leave long-term investments in place if you aren’t planning to tap those funds in the near future.

Plus, it’s critical to remember that pulling money out of the market comes with a cost. Barring specific retirement accounts and being of retirement age, you’ll usually owe taxes on any market-related earnings. As a result, selling the investments and taking the cash often comes at a price.

Additionally, market downturns can be great investment opportunities. You may be able to add securities at a lower price, allowing you to benefit from any growth that occurs when the market recovers. Just make sure you research the investments before dedicating any funds, particularly if the company itself is financially at risk of a negative outcome due to the recession.

Do you have any other tips that can help someone recession proof their savings? Have you already taken steps to recession proof your savings and want to tell others why you made the various moves? Share your thoughts in the comments below.

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What Tax Credits Can I Expect in 2023?

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Tax Credits

Now that 2023 is underway, many households are preparing for tax season. Keyboards ablaze with frantic efforts to figure out 2022 tax brackets and estimate tax refunds. As a result, it’s wise to learn about tax credits that may reduce your total financial obligation before you file. That way, you can prepare for how the adjustments impact the broader picture. While there are far more tax credits than an article can reasonably list, some are relatively widely used. Here’s a look at tax credits that a more significant number of tax filers are potentially eligible for, what they’re typically worth, and some initial information on qualifying.

What Tax Credits Can I Expect in 2023?

Child Tax Credit

The child tax credit is one of the most commonly claimed ones in the country. Generally, any household with a qualifying child as a dependent is potentially eligible. During the 2022 tax year – which is filed in 2023 – it’s potentially worth $2,000 per qualifying child. As a result, it’s potentially sizeable.

Earned Income Tax Credit

Another widely used tax credit is the earned income tax credit. Eligible taxpayers without children can receive a credit worth up to $500 when they file in 2023.

Child and Dependent Care Credit

While the child and dependent care credit is worth far less than it was in 2021 – when it sat at $8,000 – it’s still a decent amount. Qualifying households are eligible for up to $2,100 when they file their 2022 tax information in 2023.

Retirement Contributions Savings Credit

Individuals with adjusted gross incomes at or below $34,000 ($68,000 for married filing jointly) are potentially eligible for a tax credit related to their retirement savings. It’s worth up to 50 percent of the total contributions to a qualifying account, with the exact amount varying by income and the maximum value set at $1,000 (or $2,000).

American Opportunity Credit

During the first four years of college at a qualifying institution, students are potentially eligible for the American opportunity credit. This is worth up to $2,500 per student and is refundable up to 40 percent. However, it’s only available to individuals with incomes at or below $80,000 ($160,000 for married filing jointly).

Lifetime Learning Credit

The lifetime learning credit helps offset the cost of qualifying tuition or educational expenses for students at eligible institutions. Typically, that includes colleges, universities, and technical schools beyond high school. However, it’s only available to single taxpayers with income at or below $80,000 (or $160,000 for joint filers).

Premium Tax Credit

The premium tax credit helps offset the cost of purchasing health insurance through the Health Insurance Marketplace. Generally, it applies to lower or middle-income households, though the number of dependents and other factors do alter eligibility.

Clean Vehicles Tax Credit

Individuals who purchased a qualifying “clean vehicle” – typically an electric vehicle – are potentially eligible for a clean vehicles tax credit. The rules are complex, so not all EVs qualify. However, it’s worth exploring if you purchased an EV in 2022.

Federal Adoption Credit

Households that adopted a child in 2022 are potentially eligible for the federal adoption credit, which is worth up to $14,890 when you file your 2022 return in 2023. Income limits do apply, and it starts to phase out at $223,410. This credit is also non-refundable, so those who spend less on qualifying expenses can only receive up to the amount paid to cover eligible costs.

Credit for Other Dependents

The credit for other dependents allows households with dependents who aren’t eligible for a traditional child tax credit to potentially see some relief on their taxes. Generally, that includes individuals living in the household as dependents who are age 17 or older, and it’s worth $500 per qualifying dependent.

Determining Your Eligibility for Tax Credits

While the information above provides an overview of what it takes to qualify for many common tax credits, the rules are often far more complex than what’s outlined above. As a result, it’s wise to research any tax credits you might be able to use carefully, allowing you to ensure you qualify.

If you have doubts, consider working with a tax preparer this year, as they’re often well-equipped to help you determine if you’re eligible for a tax credit. You can also try tax preparation software, as many of those solutions have built-in guides or questionaries that can point you in the right direction.

Ultimately, being confident that you qualify is essential. Improperly claiming a tax credit comes with consequences, including fees, penalties, and potential criminal charges. As a result, it’s best to consult with an expert if you have any doubts about your eligibility.

Can you think of any other tax credits people may want to check out when filing their taxes in 2023? Have you run into issues with tax credits before and want to tell others about your experience? Share your thoughts in the comments below.

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8 Of The Best Independent Contractor Jobs for 2023

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Best Independent Contractor Jobs

 

Whether you’re interested in breaking away from a traditional day job or are looking for a side gig to boost your income, independent contractor jobs are potentially the answer. There are a surprising number of options available, too, allowing you to find something that’s both lucrative and that suits your skills. If you aren’t sure which independent contractor jobs are worthwhile in 2023, here are eight to consider.

1. Virtual Assistant

A virtual assistant performs the same function as an office assistant, ensuring that a company owner or manager has enough administrative support. Often, primary duties include managing correspondence, overseeing calendars, conducting research, writing reports, and similar tasks.

The main difference between traditional admin assistants and virtual assistants is that the latter work entirely remotely. If you’re interested in virtual assistant jobs, you’ll typically find part-time and full-time positions are available. Additionally, many don’t require working a set schedule, though some may prefer you have availability within a specific window.

Often, all you need to get started is a computer with an internet connection. Having a productivity suit is also essential, as well as the ability to download video conferencing or other communication software.

2. Graphic Designer

Graphic design is a field that lends itself well to independent contractor work. Many professionals choose to freelance, essentially working on a series of projects for a variety of companies. Duties can vary, though many involve activities like creating logos, designing social media ads, and other graphics.

In many cases, graphic designers working as independent contractors are paid on a per-project basis. Additionally, they typically set their own rates and can handle their work at any time as long as they’re able to meet the due dates set by the company.

What you need to get started can vary. Along with the necessary technical expertise, you’ll need a computer with an internet connection and your preferred design software as a starting point. Beyond that, it may depend on the client’s needs.

3. Social Media Manager

Another option for independent contractors is social media manager. These professionals assist companies with their social media accounts, handling tasks like designing posts, updating profiles, responding to comments, answering direct messages, and more. Additionally, they may tackle some research to help boost engagement, such as looking into popular hashtags to find ones that are appropriate for each new post.

Generally, social media managers can handle most of their responsibilities at any time, though comment and direct message responses often need to take place at some point during more traditional business hours. Since there is software that lets you schedule posts in advance, you can create posts at any time and set them up to go live at the desired moment.

If you have social media savvy and access to an internet-connected computer and smartphone, that’s potentially all you need to get started. However, having a marketing background is helpful, so keep that in mind.

4. Accountant

For those with a penchant for numbers and who have (or are willing to get) the necessary education and credentials, working in accounting as an independent contractor is a solid option. You could assist with financial decisions, payroll, tax preparation, accounts payable, accounts receivable, and more. Plus, you may have the ability to work part-time, full-time, or seasonally, depending on your niche.

If you’d like to limit the amount of education required, you could consider freelancing as a bookkeeper instead. While financial know-how is still required, you might not need the same level of degree or other credentials to get started.

5. Translator

If you’re bilingual, becoming a certified translator could be a solid choice. This is another option that lets you work on a project basis, so you can arrange a part-time or full-time schedule based on what you prefer. Pricing is also usually by the project, so you can set a rate that accounts for the amount of time and effort required.

As with many independent contractor jobs, you can typically work remotely. All you need is a computer and document creation software to get started in many cases.

6. Freelance Writer

Freelance writers assist with a wide variety of projects. Some focus primarily on creating blog posts for companies, while others concentrate on website copy. There are many freelance writers who specialize in e-books, as well as those that focus on white papers, grant writing, technical documentation, and other niches.

Generally, getting started as a freelance writer requires little more than a computer with document creation software. Additionally, it’s helpful to have a portfolio of writing samples, ensuring potential clients can see what you have to offer.

When it comes to pay, freelance writers usually charge on a per-project or per-word basis. However, some prefer using an hourly rate, so that’s potentially an option, as well.

7. Housekeeper

If you prefer a more active job, working as a housekeeper is a solid choice for anyone who likes working as an independent contractor. You can focus on homes or businesses, making sure they’re cleaned on a regular schedule based on the client’s preferences.

Often, the startup costs are relatively low. Some housekeepers use cleaning supplies that they provide, while others use what’s offered by the client. You will need reliable transportation, so keep that in mind. However, you can potentially work full- or part-time, which is a bonus if you’re looking for flexibility.

8. Home Daycare Provider

If your area doesn’t have enough daycare centers to support demand in the area, starting a home daycare is a potentially good option. You’ll care for other people’s children in your home, typically beginning a little before traditional business hours and until a bit after the end of a regular workday. Pay rates are potentially quite high, and you can use local daycare rates as a guide.

If you go this route, you typically need appropriate licensing. Additionally, having certain credentials and certifications – including first aid and CPR – is often a must. Make sure to research local regulations before you begin, ensuring you’re able to meet the requirements before you get started.

Do you know of any other independent contractor jobs that people shouldn’t overlook? Have you tried any of the independent contractor jobs above and want to tell others what it was like? Share your thoughts in the comments below.

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Why Did I Buy That House? Home Buyer’s Remorse

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Home Buyer's Remorse

Purchasing a home is typically exciting, regardless of whether you’re a first-time buyer, upsizing, or downsizing for retirement. The problem is that once the purchase goes through and you start living in the property, you may begin to wonder if you made a mistake. Owning the home can reveal problems you didn’t initially notice, and you might worry that buying was the wrong decision. If you’re asking yourself, “Why did I buy that house?” here’s what you need to know about home buyer’s remorse.

What Is Home Buyer’s Remorse?

Home buyer’s remorse is a sense of disappointment and regret that can follow a home purchase. Essentially, you think you made a mistake by purchasing the property, and the feelings of guilt, frustration, uncertainty, fear, or sadness because of it weigh you down.

In some cases, home buyer’s remorse happens due to your own views on the purchase. At times, it’s a result of opinions others express to you about your property, creating doubts that weren’t there previously.

Why Home Buyer’s Remorse Happens

Home buyer’s remorse isn’t uncommon, and it can occur for a wide array of reasons. Here’s an overview of some of the most common causes of buyer’s remorse among new homebuyers.

Your Mortgage Is Hard to Handle

While dealing with your mortgage payment is something you know is part of the equation, after paying it for a few months, you might realize it’s harder to handle than you expected. If paying becomes stressful, you may start regretting your purchase.

If this happens, go over your budget and review your spending. Figure out where your money is going and where you can scale back. Also, consider starting a side hustle to boost your income until you can reach a more comfortable place. You could also look for a higher-paying job or a raise at work.

Unexpected Issues with the Location

While you may have gotten some basic insights about the neighborhood when you viewed the home, living in it might reveal new issues. Perhaps a neighbor is unexpectedly difficult to deal with or dogs barking in nearby yards is noisier than you expected. Maybe you didn’t realize that your road was a path for ambulances, and there are sirens wailing at all hours of the night.

Regardless of the reason, not liking the location is frustrating and can lead to home buyer’s remorse. Consider looking for ways to minimize the issues. For example, landscaping and fencing can potentially shield you from some noise and give you privacy.

Surprise Maintenance or Repairs

When you buy a home, you usually don’t expect to need expensive maintenance or repairs right away. Since that’s the case, when the unexpected happens, and you suddenly have to sell out hundreds or thousands of dollars, home buyer’s remorse can occur.

Fortunately, doing the repairs or maintenance means you now know when similar actions might need addressing in the future, allowing you to plan. Additionally, you’ll start forging a relationship with local repair and maintenance professionals, and that can make handling subsequent needs easier in some cases.

Surprisingly Challenging Commute

In some cases, a commute from a new home seems manageable until you start driving it. You might realize that you’re suddenly spending far more time on the road or that traffic conditions are significantly more stressful to navigate than you expected.

With this issue, there are potential solutions. You can explore telecommuting options with your current employer or look for a new job that’s either closer to home or lets you work remotely. Joining a carpool means you aren’t as responsible for as much of the driving, which can also make the commute feel more manageable.

Negative Opinions from Family or Friends

When you buy a house, showing it off to family and friends typically happens. While this is potentially reassuring if they focus on the positives, if they start sharing negative opinions, it can lead to buyer’s remorse.

Whether your loved ones are questioning how much you spent, express dislike for the home’s features, or say anything else along those lines, you might worry that you’ve made a mistake. However, what’s important to remember is that you’re the one living there. If the house makes you happy, don’t let their opinions drag you down.

How to Deal with Remorse

Above all else, it’s critical to know that buyer’s remorse about purchasing a house is normal. It’s a major investment that comes with a highly stressful buying experience. Plus, unless you built a house, no available home would likely have everything on your wish list, which can lead to some regret in nearly anyone.

Dealing with the feelings that come with home buyer’s remorse isn’t easy, but there is a way to move forward. Begin by reminding yourself why you purchase the home in the first place. Spend time appreciating the features that drew you to the property. In some cases, that alone helps you see that the house is an excellent fit for your needs, which can reduce negative feelings about the purchase.

It’s also wise to unsubscribe from any email or text alerts relating to real estate in your area. Seeing sale prices or attractive marketing photos may bring about new doubts. Since those comparisons won’t benefit you in any way, unsubscribing can save you unnecessary pain.

Finally, keep in mind that this home doesn’t have to be your last house. In many cases, first-time homebuyers have to make sacrifices due to limited budgets or other constraints. However, your house can put you on the path toward your dream home. By caring for it and improving it appropriately, you’ll build equity that can potentially make your perfect house more affordable down the line.

How to Avoid Home Buyer’s Remorse

If you’re considering purchasing a house and want to avoid home buyer’s remorse, begin by setting a realistic budget. Factor in the property’s price, closing costs, appraisal fees, inspection fees, down payment requirements, property taxes, homeowner’s insurance, potentially increased utility costs, an emergency fund for maintenance, and any other expense that could come with the purchase. By doing so, you can avoid regrets related to the financial side of the equation, as you’ll know what to expect.

Additionally, create a list of your genuine needs for a new home. Use that to guide the properties you consider, keeping your wants largely out of the equation until you begin narrowing down your options. That may give you a more realistic idea of what you can reasonably get, which could prevent later disappointment. Alternatively, it may show you that now isn’t the right time to buy, which is also helpful.

If you find a house with potential and place an offer, get the right inspections. Along with a general home inspection, consider paying for specialty roof, plumbing, electrical, HVAC, and pest inspections. While going that route means more upfront costs, it could reveal expensive repair needs that you can then negotiate for as you navigate the purchase. If nothing is found, it may give you peace of mind.

Finally, spend time exploring what living in the house is potentially like. Visit the neighborhood multiple times during the day and night, allowing you to gauge the noise and see traffic patterns. Also, consider heading to the area and doing your commute at the typical times on a few occasions. While that means going out of your way, it lets you know if the drive is an issue.

Were you happy with your home purchase, or did you experience buyer remorse for your house? If you did regret the decision, do you have any tips that can help aspiring homebuyers avoid mistakes? Share your thoughts in the comments below.

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How To Retrieve Your Vehicle After Repossession

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Retreive Your Vehicle After Repossession

Having a vehicle repossessed puts you in a difficult spot, particularly if you need the car to get to work, school, stores, or anywhere else. Fortunately, it’s possible to get your vehicle back after a car repossession. If you’re vehicle’s been repossessed and you’d like to get it back, or you’re at risk of a car repossession and want to prepare, here’s what you need to know.

Why a Car Repossession Happens

Generally speaking, a car repossession only occurs if you violate the terms of your auto loan. In most cases, that means failing to make your required payments, as that causes you to default on the loan. However, in some states, not having sufficient vehicle insurance may also trigger repossessions, even if you’ve made all of your payments on time.

How to Prevent a Car Repossession

If you’re at risk of a vehicle repossession, but one hasn’t occurred yet, preventing it from happening is potentially an option. Contact your lender immediately to discuss the issue. If missed payments are the reason for the car repossession, you might be able to negotiate better terms or qualify for a program that gives you more time to make up any missed payments.

For vehicle repossessions relating to insufficient insurance, you’ll need to find a car insurance provider and get a policy that meets the terms of the loan. Speak with your lender to determine precisely what coverage is required. Then, shop around for insurance that offers a compatible policy. Finally, once you have the policy, contact the lender again to provide them with your new coverage details.

How to Retrieve Your Vehicle After Repossession

Contact Your Lender

If your car has already been repossessed, the first step you’ll need to take is to contact your lender. Find out why the vehicle repossession occurred, as well as whether retrieval is an option.

After a repossession, lenders may prepare to auction the car. However, some states have mandated reinstatement or redemption periods, limiting how quickly a lender can move forward with an auction. As a result, you may have time to get your vehicle back without having to deal with the auction process, depending on how long you wait before reaching out and whether you can pursue alternative solutions.

In other cases, a lender may resell the car instead of auctioning it. Again, there is commonly a minimum waiting period before the lender can move forward with reselling, so ask about the timeline during the call.

Do Some Research

What options are available for getting your car back may vary by state. As a result, after speaking with your lender, it’s wise to research local laws regarding repossessed vehicles. That way, you’ll know whether what the lender stated aligns with any relevant legislation in your area.

In most cases, you can perform a simple online search to get an overview of applicable state laws. Simply search for “vehicle repossession [your state]” as a starting point. Alternatively, you may be able to reach out to your state’s attorney general’s office or a local consumer advocacy group for information.

Reinstate the Auto Loan

In specific states, reinstating the loan is a potential option. With this approach, you’d need to pay the entire past due amount along with any repossession-related fees, such as storage and towing costs, within a specific time period.

If reinstatement is available in your state, the lender will outline a timeline for providing them with the required funds and the dollar amount needed. In most cases, the timeframe is relatively short, usually coming with a deadline that’s 10 to 20 days after the date of repossession.

Whether a reinstatement is worth pursuing depends on your financial situation. Acquiring the needed cash is potentially challenging, particularly if you were already struggling to make the monthly payments. However, it’s worth considering if gathering up the money is an option.

Redeem the Auto Loan

Redeeming the auto loan involves paying off any missed payments and the remaining balance in full, as well as covering any repossession-related fees. In many cases, this requires significantly more funds than a reinstatement, as you’ll need to cover the entire balance due. However, if you pay in cash, it also means the vehicle is formally yours in the end, which is beneficial.

If you want to pursue this option after a car repossession, ask the lender for the pay-off amount, including any repossession-related fees. Additionally, find out the timeline for the redemption, letting you know when you’d need to provide the lender with the funds to get your car back this way.

Buy Your Car at Auction

If the lender decides to auction off your vehicle, you can attempt to buy it back then. Buying a car at an auction is relatively simple, but there are some costs involved.

First, you’ll need to register for the auction, and that usually comes with a fee. When you register, you also need to show that you have enough money to potentially participate. That could include providing a credit card number and a letter of guarantee from your bank or bringing cash to the event, depending on what the auction accepts.

Once you register and arrive on-site, you’ll get a numbered paddle. The auctioneer will present a vehicle – discussing its features and the starting price – and open it up to bidding. The auctioneer will then state new prices, and those who are willing to pay the indicated amount raise their paddle to make their bid. That process continues until no further bids come in, making the last bid the purchase price for the associated bidder.

Raise Your Paddle

When your car comes up, you’ll raise your paddle to correspond with the amounts you’re willing to pay. Just keep in mind that you’ll need to cover the entire cost at the end of the auction, as well as a buyer’s premium – which is typically about 10 percent of the bid price – so don’t place a bid that you can’t support financially.

The process is similar for online auctions; you just don’t have to deal with a paddle. Instead, when the auction goes live on the designated, it will show an initial price. Bidders can then submit offers over a specific time period.

Some online auctions show the updated price based on the submitted bids, giving others a chance to outbid the current leader. Others use a sealed-bid process, where the bid amounts aren’t displayed, essentially encouraging all participants to submit their best offer from the beginning.

Regardless, immediate payment is typically required for online auctions, too. As a result, you need to ensure you can cover the purchase price and any buyer fees.

Will You Owe Money After an Auction If You Don’t Buy the Car Back?

It’s important to note that having the vehicle go to auction doesn’t mean you’re immediately clear of the original loan. Whether the loan is complete after the sale primarily depends on the auction price.

If the amount the car sold for at auction meets or exceeds what’s left on your loan, then you won’t typically owe any money to the lender. However, if the auction sale price is less than the remaining balance of your loan, you are typically responsible for the difference.

For example, let’s say that the remaining loan balance and any required fees is $5,000 in total. If the vehicle sells for $5,000 or more at auction, the amount is covered, so you won’t owe any more money. However, if the car sells for $4,000 at auction, you’d still owe $1,000.

If you owe money, you’ll need to pay it like any other debt. Failing to do so can cause the account to go to collections or may make it possible for the lender to sue you for the amount due.

Owe Money After an Auction If You Don’t Buy the Car Back

Should You Retrieve a Vehicle After Repossession?

Even if you can retrieve your vehicle after repossession, that doesn’t always mean that you should. Look at your broader financial situation. Determine whether you’d be able to cover the costs of car ownership after a reinstatement, redemption, or auction purchase.

If so, then getting your vehicle back after a car repossession isn’t necessarily a bad idea if you need it for transportation. If not, then you may want to let it go and explore alternative forms of transportation, such as public transit or a cheaper vehicle you can buy with cash.

Additionally, regardless of whether you retrieve the vehicle after repossession, the action may still show on your credit report. As a result, you’ll want to focus on rebuilding your credit. Make on-time payments on any other debts, pay off your debts as soon as possible, and avoid opening new accounts as much as possible. That way, you can regain your footing.

Have you ever had to retrieve a vehicle after repossession and want to tell others about the experience? Did you go through a car repossession, decided not to get the vehicle back, and want to let others know what that was like? Share your thoughts in the comments below.

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