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Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.

Why Does Carvana Offer Better Deals Than Car Dealerships?

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When you’re shopping for a new car, finding the best possible deal is a common priority. As a result, most buyers turn to a variety of resources. Along with heading to local dealerships, many check out Carvana cars to see if the pricing is better, often being pleasantly surprised by what they find. However, it’s easy to assume that an excellent price isn’t what it appears. Fortunately, it can be the real deal. Here’s a look at why Carvana offers better deals than car dealerships.

What Is Carvana?

Carvana is a non-traditional car dealership that focuses on used cars. It was founded in 2012 and captured ample attention after installing car vending machines in several major cities.

The company focuses on online sales over a traditional dealership model. Along with the car vending machines for picking up a car after buying it, Carvana will deliver your recently purchased vehicle to your home if you prefer.

In many ways, Carvana is a leader when it comes to convenience. Fewer operating models make a used vehicle purchase quite as streamlined, which is why it’s become such an attractive option.

How Carvana Works

Primarily, Carvana operates in the used car space. They focus on high-quality but affordable vehicles, mainly targeting Millennials by introducing unique technologies and ample convenience.

Car purchases through Carvana are predominately handled online. Since that means buyers can’t see a vehicle in person before making a buying decision, the listings are highly detailed. Along with a slew of photos, you’ll see information about the specs and the results of Carvana’s in-house inspection. Additionally, you’ll be able to review photos that show any flaws the company discovered along the way, leading to reasonable transparency.

Another feature of Carvana that is designed to offset the risk of not being able to check out the vehicle in person is the return policy. Buyers have seven days to make sure the car is right for them. If not, they have the option to return the vehicle and get their money back.

If you find a car you’re interested in, you can begin the purchase paperwork with a few clicks. However, if another buyer has already started the paperwork for that vehicle, you’ll get a notification that the car is temporarily on hold, along with a timer that shows how long the other buyer has before the vehicle is released for sale again.

The purchase dashboard is pretty straightforward. You provide personal details, information about trade-ins, and delivery and pickup preferences. You also tell the company if you’re using a loan or cash to complete the purchase or even arrange financing through the application. Overall, the entire process takes between 10 and 20 minutes in most cases.

Why Carvana Has Better Deals Than Dealerships

First, it’s important to note that not every vehicle at Carvana is automatically the lowest price you can find. The pricing is based on several factors, and there are instances where you may be able to score something a little better by looking elsewhere.

However, Carvana generally comes out ahead. One main reason is that you don’t end up paying certain dealer fees along the way. Instead, Carvana doesn’t pass certain paperwork filing costs onto the buyer.

Second, this approach to selling vehicles eliminates certain employee-related expenses. They aren’t paying salespeople to be on the lot, and they don’t owe them commissions. The latter part impacts pricing in two ways. Along with lowering Carvana’s operating costs, it means buyers aren’t haggling with someone whose pay is dependent on convincing you to pay a bit more.

Third, Carvana doesn’t operate as many locations as some competitors with similar purchase models. That reduces its overall overhead, making it easier to undercut competitors by several hundred dollars on most cars.

Finally, Carvana does give you an easy way to trade in your current vehicle, but it isn’t necessarily offering you the best price. This may come as a surprise, considering some people using the site have seen unexpectedly high offers recently. However, that isn’t reflective of Carvana. Instead, that’s simply the state of the used car market.

By purchasing cars for as little as possible, Carvana can then sell them below their fair market value and still snag a tidy profit. The trick is that it’s the lower sales prices that draw people in, not the trade-in or cash offer prices. As a result, they hope that buyers with a vehicle to unload will simply accept the lower price because doing so is incredibly convenient.

Should You Use Carvana to Buy a Car?

Generally, there’s no reason not to consider Carvana when you’re purchasing a vehicle. Most customers say that you can expect great customer service if you need help. Plus, the pricing is based on avoiding negotiations, so even if you have to call the company, they aren’t going to pressure you into higher-priced options. The price on the website is what it is, and that’s that.

The purchasing process itself is reasonably simple and quick, too. If you look at financing options through Carvana, the rates are typically competitive as well (though it’s still a good idea to comparison shop). It’s also hard to beat the option to have your car delivered to your front door, and if you aren’t satisfied, you can arrange a return during the initial seven days for any reason and get your money back.

However, if you have a trade-in or a vehicle you’d otherwise like to sell, Carvana isn’t going to give you the best price. Since that’s the case, you may need to explore other options. Fortunately, there are plenty available, including many you can handle online to get quick cash offers. While it may take more effort than having Carvana pick it up, the significant price difference could make it worth the extra time.

Carvana Cars May Not Have Comprehensive Inspections

Additionally, while Carvana does an inspection before it sells a vehicle, understand that it isn’t always as comprehensive as what you’d get directly from a mechanic. Since that’s the case, get your own inspection right away. Then, if they spot a problem that you don’t want to mess with, return the vehicle to Carvana during that seven-day window and get your money back.

Finally, Carvana may not work for you if you aren’t sure what you want. Remember, there are no test drive options when you shop and buy online like this. The only way to get in and check out the vehicle is to buy it, and while you can return it within seven days, that’s a big step for a test drive. As a result, you may be better off going another route or, at least, doing some research before you head to the Carvana site, allowing you to figure out what you’re after first.

Have you purchased from Carvana and want to tell others about your experience buying Carvana cars? Did you consider using Carvana but decided to go in another direction and want to discuss why? Share your thoughts in the comments below.

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Can I Move Out Of My Parent’s House With No Money?

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How To Move Out With No Money

Figuring out how to move out with no money isn’t easy. In many cases, moving comes with some significant expenses. For example, there are deposits required when you rent an apartment. Additionally, you’ll need to have a way to get your belongings to your new place, as well as pay your bills moving forward. However, that doesn’t mean that you can’t move out of your parent’s house with no money. Here are some options that can help you make it happen.

Start with a Budget

Even if you don’t have any savings to support your move, you may be able to make it work, depending on your income. Create a budget that outlines your current expenses. Next, add in costs you’d need to handle once you move, including rent payments, utilities, renter’s insurance, groceries, and similar expenses. Usually, you can find the average cost for those expenses in your area with a bit of research.

Once you know what you’ll need to cover, compare that to your income. That lets you see if you can potentially afford to move out, as well as if you have room in your budget to start saving for deposits and moving expenses.

Focus on Low-Cost Rentals

While you may have visions of having a luxury apartment, if you don’t have any money set aside, you’re going to need to start out in a low-cost rental. This might include small studio apartments or roommate arrangements.

With the latter, you may be able to save a bit more on your move. For example, if a friend has a room they’re willing to rent – and the landlord allows it – you might not need to cover security or utility deposits. Even if you do have to contribute to a security deposit, what you’d need to pay could be far less than if you moved out on your own.

If you need to move out as quickly as possible, you may be able to talk to other family members or friends to see if you can stay with them for a short period while you get on your feet. However, you do need to have a frank conversation to ensure everyone’s on the same page regarding how this plays out. Additionally, it’s best if you can show a concrete plan – including a timeline – that lets them know when you’d be ready to move into your own place.

Sell Your Excess Stuff

If you want to reduce the cost of your move and give yourself a little cushion, sell any personal belongings that aren’t essential. While it could mean living a little sparsely initially, it lets you get a bit of cash that you can use to cover transporting your other property to your new place, handle security deposits, or build up a small emergency fund to make sure you’re ready for the unexpected.

Secure or Maintain a Source of Income

When you don’t have a financial buffer, maintaining a source of income is essential if you’re going to move out of your parent’s house. Ideally, you want something reliable and reasonably consistent, especially if you want to rent a place on your own. Otherwise, you may have trouble meeting the income requirements for the rental.

In some cases, you may want to supplement your core income, as well. Options through the gig economy can be excellent ways to bring in a bit more money. Plus, if you start before you move out, you may be able to build up some savings to support your move.

Live within Your Means

Living within your means is crucial if you don’t have a financial buffer. Make sure you keep your expenses as low as possible and focus on saving before you move and after you transition into your new place. An emergency fund provides you with some security, so it’s crucial to build one as fast as possible.

While this can mean forgoing niceties for a while, it’s a sacrifice worth making if moving out is important to you. So, focus on keeping your expenses down and stash as much cash as possible. That way, you’ll increase your odds of success.

Do you have any other tips that can help people figure out how to move out with no money? Did you manage to move out on a dime and want to tell others about your experience? Share your thoughts in the comments below.

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How Much Cash Should I Have In My Wallet?

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Today, carrying cash in your wallet can feel a bit antiquated. However, that doesn’t mean it isn’t a good idea to have some bills tucked away, just in case they become a necessity. If you’re wondering, “How much cash should I have in my wallet?” here’s what you need to know.

Why Should I Carry Cash in My Wallet?

One reason that carrying cash feels a bit old-school is that there is a slew of more modern payment options. Various technologies have made alternatives plentiful, allowing you to avoid hassles like going to the bank and speaking with a teller or using an ATM to get enough cash to pay for purchases.

Debit cards, credit cards, and mobile payment apps are generally more convenient, and many people rely entirely on them. At times, these other options also carry less risk. If you drop your cash by mistake, there’s little recourse if you can’t find it. With cards or phone-based options, you can shut the cards or accounts down temporarily, safeguarding your money until you get a new card or can replace your phone. Plus, you can dispute charges on a credit card if you didn’t make them.

In many ways, it may seem like the alternatives are naturally better choices. The issue is that they don’t always work. Here are some times when cash is a must.

Technical Issues

Stores can have technical issues that prevent card readers from working. Similarly, a tech problem might prevent phones from connecting to registers using near-field communication (NFC) technologies, stopping payment methods like Apple Pay or Google Pay from going through. Here, without an alternative form of payment like cash, you can’t complete a purchase.

Not Accepting Cards

While it may seem odd, not all merchants take cards. Generally, it’s rare that a retailer wouldn’t take some form of electronic payment, but some businesses do operate as cash-only for payments. This is more common if you’re not heading to a traditional brick-and-mortar store.

For example, if you want to eat at a food truck or are heading to a craft fair, your odds of a payment issue are higher. That means that, without a bit of cash, you may miss out on what a cash-only business has to offer.

Not Accepting Your Card

Similar to the point above, some retailers take specific card types but not others. This issue is more common with Discover and American Express, but it can technically happen with Visa and Mastercard, too. Without some cash available, you may not be able to complete necessary purchases. As a result, having a little money in your wallet is a wise choice, safeguarding you from the expected and ensuring you can access any retailer you’d like to use.

How Much Cash Should I Have in My Wallet?

When it comes to the amount of cash a person should have in their wallet, there isn’t a specific magic number that works for everyone. Instead, you need to consider the broader situation, allowing you to find a figure that’s right for you.

On a day-to-day basis, having about a day’s worth of typical spending cash is enough. For example, that might involve enough cash to put gas in your car to get to work, cover tolls or parking fees, and pay for a meal or two. For many people, that works out to $100 to $200, though some may be able to get away with a bit less or might require a little more.

If you’re heading out to an event – such as a fair or swap meet – then you may want to carry your full spending budget in cash. While many retailers that travel with events do accept cards, your odds of running into a few that don’t are high.

When you’re carrying a more considerable sum, don’t keep all of it in your wallet. Instead, consider splitting it up, putting some in your wallet and the rest in a concealed money belt. That way, if you drop your wallet, you don’t lose everything. Plus, many money belts are designed to prevent you from becoming a victim of pickpocketing, and they’re usually quite comfortable to wear.

How to Carry the Cash in Your Wallet

If you’re open to having some cash in your wallet, you need to make sure the bills are in the right denominations. Usually, only larger retailers are willing to accept $100 bills, so it isn’t wise to carry your cash in hundreds. Smaller businesses may feel that taking a hundred is too risky, or they might not have enough change available if your purchase total is small.

At times, even $50 bills may be hard to use. Again, some retailers won’t accept bills that large, and others may run into issues with change.

Since that’s the case, it’s usually best to stick with nothing larger than $20 bills. In fact, you may want to mix it up a little to give yourself some versatility.

For example, if you decide to carry $100 in your wallet, go with three $20 bills, two $10 bills, three $5 bills, and five $1 bills. That way, if you need to leave a tip for a meal in cash or make a smaller purchase, you can use smaller bills.

As with the total amount you carry, the mix of bills in your wallet may vary depending on your exact needs. Just keep in mind that $100 or $50 bills might be harder to use, so make sure most of your cash is in smaller denominations.

Are you surprised at how much cash you should have in your wallet? Do you think that carrying cash is a smart move or completely unnecessary? Share your thoughts in the comments below.

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These Are The 5 Best Retirement Gifts For Women

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These Are The 5 Best Retirement Gifts For Women

When a person retires, giving them a gift to celebrate the occasion is a common practice. However, choosing an appropriate present isn’t always easy. If you aren’t sure where to begin, here are five of the best retirement gifts for women.

1. Spa Gift Certificate

Most people view retiring as a positive. However, it’s still a significant transition, and that may cause some people to experience some anxiety. As a result, giving a gift that promotes relaxation can make a potentially stressful time easier to navigate. That can make a spa gift certificate a perfect choice.

Choose a spa that offers a range of services, allowing retiree to select treatments that they’ll enjoy most. Additionally, consider having a little extra on the gift certificate, as that may let them use the excess amount as a tip.

2. Hobby Items

During retirement, many people get to spend more time doing activities they enjoy. If the retiree has a favorite hobby, consider giving a gift that connects to it. For example, craft supplies, lessons that help them grow their skills, cooking equipment, or gift certificates to related stores could all work well.

3. Travel Gifts

Many people dream of traveling more when they retire. If the retiree wants to spend some of their newly available time exploring new cities, states, or countries, travel-related gifts can be a solid choice. You could provide them with a high-quality set of luggage, gift certificates to large hotel chains, or even a vacation package, depending on how much you’d like to spend.

4. Annual Entry Passes

For retirees that adore a particular type of attraction, an annual entry pass is a solid option for a retirement gift. Many museums, zoos, and aquariums offer yearly passes. Similarly, you can typically find annual passes for national or state park systems. With these gifts, you’re giving them the opportunity to spend time at their favorite attractions without having to pay to get in, which can allow them to spend more time there during the year.

5. Subscription Boxes

Today, there is a wide array of subscription boxes that can make great retirement gifts for women. Whether they’d appreciate a box of international snacks, wines from different regions, beauty supplies, puzzles, books from a specific genre, or nearly anything else, there’s likely a subscription box that can meet that need.

If you go with a subscription box, make sure that the duration is suitable. If you can pay for a full year, that’s ideal. However, if that isn’t in your budget, a three or six-month subscription can also work well.

Have you given any of the best retirement gifts for women listed above and want to tell others about the experience? Can you think of any other outstanding retirement gifts women may appreciate? Share your thoughts in the comments below.

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What Is Indebtedness And How Do I Avoid It?

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What Is Indebtedness And How Do I Avoid It

Many people have heard that indebtedness can lead to financial troubles. But what exactly is indebtedness, and how do you avoid it? Fortunately, the concept of indebtedness is pretty easy to understand. Additionally, it’s possible to prevent indebtedness – or keep it manageable – with some planning. If you’re wondering what indebtedness is and how to avoid excessive debt, here’s everything you need to know.

What Is Indebtedness?

In the simplest sense, indebtedness is the state of owing something to someone else. Traditionally, people use indebtedness to describe financial debts, such as credit cards, loans, or mortgage balances. However, it can also apply to the sense of owing someone for doing you a favor, leading you to feel obligated to return that favor in kind at a future date.

For the purposes of this article, the focus is on traditional financial indebtedness, primarily involving owing a lender based on previously borrowing money. Often, that form of indebtedness creates the biggest challenges for households, so it’s wise to have a plan for avoiding it specifically.

How to Avoid Indebtedness

Have a Dedicated Emergency Fund

When it comes to avoiding monetary debt, your best starting point is to build an emergency fund. This allows you to have some cash set aside to deal with the unexpected, ensuring you don’t have to turn to credit cards or loans to cover a cost that catches you off guard.

If you don’t have anything set aside for emergencies, make $1,000 your first target. Usually, that’s enough to cover a vehicle, renter’s, or homeowner’s insurance deductible, ensuring you aren’t struggling should an accident, fire, or similar incident occur. Plus, it can cover a wide array of other emergencies, such as an unplanned medical bill, car repair, or appliance breakdown.

Once you have $1,000 set aside, work on increasing the balance of that savings account. Build up to one month of household expenses, then shift up to three months. That can help you weather larger emergencies or a short period of unemployment.

When you gather up three months of expenses, you can choose a new target. Some people feel most comfortable with six or 12 months of household costs, as that can cover major emergencies or an extended period of unemployment.

Whenever you tap into your emergency fund, focus on building it back up once the situation resolves. That allows you to restore this critical cushion, making it easier to avoid indebtedness long-term.

Create a Reliable Budget

In some cases, debt is generated because households don’t plan for their spending needs. As a result, they overspend during the month, having little choice but to turn to credit cards or loans to cover any remaining expenses until their next payday.

By having a reliable, formal budget, you have a spending roadmap. You know how much it takes to cover your bills and debt payments, as well as handle costs relating to food, gas, utilities, and more.

Often, the easiest way to start is to review your spending habits over the past several months. That allows you to determine how much you’re spending in various categories. Then, create a simple list – ordering debts and other costs by their due date – and outline how much of your income needs to go to that expense.

If you have money left over, commit some of it to savings. Additionally, it’s wise to include “fun money” in your budget, giving yourself a small amount that you can use as you please for entertainment, items that are wants instead of needs, and similar purchases.

Make Saving Automatic

Since having money in savings can help you deal with emergencies or plan for larger upcoming expenses – such as home repairs, vehicle down payments, future appliance replacements, and more – making your savings routine automatically works in your favor. By automating your savings, you ensure that you don’t accidentally forget to move that money into the proper account.

Designate a specific amount from each paycheck that needs to go to savings. Then, set up a recurring, automatic transfer for the day your pay arrives (or the following business day if payment delays may occur). That ensures your money is moved in accordance with your plan without you having to physically manage the transfer every single payday.

In most cases, you can set up several transfers to different accounts every month. As a result, you can move cash into several accounts, allowing you to divide up the money based on individual savings goals.

Adopt a Cash-First Mindset

In some cases, using credit cards or loans to pay for various items feels like a quick, convenient option. However, the more debts you acquire, the harder they typically are to manage. Even if the monthly payments are reasonable, you’ll have more due dates to juggle. Plus, if you experience financial hardship or underestimate what you’re currently paying, you could quickly find yourself in over your head.

Additionally, debts typically come with interest payments. As a result, you’re spending far more by financing a purchase than if you used cash. If you rely on cash instead, you’ll have more money to direct to other goals or needs, including saving for retirement, a college education, a home, and more.

Instead of relying on debt, adopt a cash-first mindset. Make it a goal to use as little borrowed money as possible. For example, instead of financing an entire vehicle purchase, at least prepare a sizeable down payment in advance. That ensures you can keep the loan as small as possible.

Similarly, resist the urge to use a credit card to cover the cost of want if you can’t pay off the balance in full right away. While it could mean delaying a purchase, it saves you a significant sum in the long run.

Use the 72-Hour Rule

With the 72-hour rule, you don’t purchase any spur-of-the-moment wants right away. Instead, you wait for 72 hours after learning about the item before deciding if you’ll ultimately buy it.

The delay allows any immediate emotional reaction that can come from initially seeing a product to dissipate, allowing you to look at the purchase more realistically. In many cases, you’ll determine that moving forward with buying the item isn’t actually a smart move, allowing you to walk away. However, if you still want it, it can make you more confident about your decision.

This strategy isn’t just helpful when it comes to items you’re thinking about financing; it can apply to cash purchases, too. By using it at all times, you avoid spending money in a way you might regret later, allowing you to focus your spending on items that are more likely to be beneficial.

Pay More Than the Minimum

If you can’t pay the debt off in full right away, it’s wise to put forth an extra effort to knock down the balance quickly. Unless there is a stiff penalty for paying off a debt early, work to pay more than the minimum payment on at least one debt. Ideally, you want to focus on the debt that has the highest interest rate. By doing so, you can reduce the amount of interest you’ll need to pay over the life of that debt dramatically, resulting in financial gain.

Once you tackle the highest interest debt, you can move on to the one that now has the highest interest rate. Continue working through your obligations in this manner, and you can tackle what you owe in less time.

Increase Your Credit Score

Having an excellent credit score can actually help you avoid certain trappings that can come with borrowing money. Generally speaking, the higher your credit score, the better the borrowing terms. You’ll have an easier time securing low-interest rates on credit cards and loans when you do need them, which can make managing – and paying them off – easier.

Usually, the foundation of an excellent credit score is sound borrowing habits. Make your monthly payments on time, keep your credit utilization ratio low, and avoid opening unnecessary accounts. Maintaining a good credit mix – featuring a small selection of loans and credit cards in your history – can work in your favor, too, as it shows that you can handle different types of debt effectively.

Ultimately, while using credit cards and loans result in debt, when used responsibly, you won’t be overwhelmed by it. As a result, indebtedness won’t necessarily become an issue, allowing you to maintain a favorable financial picture while keeping your credit score up.

Do you have any other tips that can help someone avoid indebtedness? Have you used any of the strategies above and want to tell others about your results? Have you found your way back from indebtedness and want to share your experience? Share your thoughts in the comments below.

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Should You Really Fear A Recession Coming?

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Should You Really Fear A Recession Coming

Certain economic indicators show that spending is cooling, but inflation remains a major issue in the United States. While July figures were lower than June, the 8.5 percent figure based on July data is still near record-setting. As a result, an increasing number of Americans are worried that a recession is on the horizon. However, are recession fears justified, or will various steps taken by the government, the Federal Reserve, and typical consumers stave it off? If you’re curious about whether you should really fear an upcoming recession, here’s what you need to know.

Where Recession Fears Are Coming From

First, it’s essential to understand why Americans are generally worried about a recession. One of the biggest factors is inflation. Rising costs are apparent in nearly every spending category. From food to housing – essentially across the board – prices continue to climb.

Ultimately, higher costs diminish the purchasing power of a dollar. Additionally, the odds that inflation will remain an issue – at least in the short term – are relatively high. This is particularly true since, while wages have risen during 2022, pay rates aren’t keeping pace with inflation. As a result, even larger paychecks aren’t enough to offset inflation, and many households are worse off when it comes to purchasing power regardless of their raises.

Rising interest rates are also influencing the bigger picture. When interest rates rise, it generally slows spending since borrowing money is more expensive. While this is a positive when it comes to battling inflation, it can make a recession more likely. In many cases, higher interest rates can hamper the job market and broader economy. It essentially slows everything down.

Another troubling sign involves a decline in the gross domestic product (GDP). For two straight quarters, the GDP has fallen. Often, that’s considered a classic sign of a recession, either one currently occurring or one being on the horizon, depending on the broader perspective and the influence of other potential factors.

Can You Predict a Recession?

Whether a recession is genuinely on the horizon isn’t fully clear, as it’s challenging to predict what will happen in many situations. While some of the signs and concerns above are legitimate, they aren’t enough to guarantee that a recession will or won’t happen.

One reason that current inflation and GDP figures alone aren’t enough to declare a recession is that unemployment remains incredibly low. Typically, unemployment climbs during a recession. Pervasive labor shortages in many industries are essentially keeping that indicator from developing, so that a possible red flag isn’t present.

However, a similar situation occurred in the 1970s, right before a recession. The reason it wasn’t identified earlier is that conflicting economic indicators aren’t uncommon before a recession. Some data may make it seem like various aspects of the economy are strong enough to potentially offset troubles in other areas. Whether that turns out to be true can vary.

Additionally, recession fears can spur actions that actually prompt a recession. Many economic points are influenced or directed by consumer behavior. As a result, when consumers begin broadly changing their activities within the economy in response to concerns, they can potentially create conditions that make their fears a reality.

For example, consumers reeling back spending and increasing savings could shift the United States toward a recession, depending on the degree. That move signals that consumers lack confidence. That could alter the direction of many businesses, causing them to have to rethink their strategies and earnings potential. In turn, it could reduce investor confidence, leading to a stock market downturn.

After that, you can end up with a self-perpetuating cycle. The economy begins to look weaker, increasing recession fears. As a result, consumers alter their behavior, even more, impacting business plans and investor activity. Then, that cycle repeats, often until a positive sign shifts consumer behavior in the other direction.

Are Experts Predicting a Recession?

Generally speaking, economists don’t believe that the United States is currently in a recession. However, most agree that one could undoubtedly be on the horizon, potentially within the next 12 months.

While unemployment is currently low – a point that many experts use to show why a recession may not be guaranteed – some companies are moving forward with actions that could alter that picture in response to other economic woes. Some large tech companies have instituted hiring freezes. Others organizations have already initiated some layoffs since business growth has slowed and labor costs are rising.

Overall, these are the types of actions that can alter unemployment numbers. While some are responses to a post-pandemic landscape – as certain companies flourished during that period, only to see declines at things returned to “normal” – that doesn’t mean they aren’t impacting the equation. That’s particularly true since consumer reactions to such news can influence their behavior, potentially causing the scenario they were worried about to play out.

Couple that with declining GDP and shifts in consumer spending, and many feel that a recession is likely. However, that doesn’t mean it will inherently be devastating or long-lasting.

Is a Soft Landing Possible?

While many economic indicators suggest that a recession could occur, and some experts feel that one is likely in the coming year, that doesn’t mean a massive crash is going to happen. Some experts believe that a “soft landing” is more likely. Essentially, they feel an economic decline – potentially to the point of qualifying as a recession – could occur, but that it will be a gentler downturn.

Essentially, certain economists feel that the strength of the job market and a few other positives could prevent troubled areas from having the level of impact they otherwise would if unemployment was higher. As a result, even if a recession develops, it won’t be as painful for households and businesses to weather. While that doesn’t mean it wouldn’t be difficult, it’s less challenging than if job market data was also looking poorly.

Preparing for a Possible Recession

Ultimately, it’s wise to prepare for a possible recession. However, panicking and dramatically altering your behavior isn’t necessarily ideal. Instead, using tried-and-true strategies and a metered approach can help you get ready with greater ease, all without making the kind of drastic changes that might make a recession more likely.

Generally, the first step households should take to set some money aside in savings. If you don’t have any savings, try to get $1,000 in an emergency fund, giving you a small financial cushion. Once that’s done, you can slowly work your way up to one month of expenses, followed by three months of expenses if you have the ability.

Paying down high-interest debt is also wise. Along with not adding to your debt, work to pay off as much of what you owe as possible, as that can free up room in your budget. If you’re financially stable, one great place to start is to stop using credit cards. Then, look at your next payment, and make that the default payment amount moving forward.

Minimum payments on credit cards usually decline as your balance falls. However, by paying more than the minimum, you conquer the debt faster. Plus, if you end up in financial trouble if a recession occurs, you can transition to the minimum payment at that time, which will be smaller than if you used another approach.

Another great debt-related option is paying off any debts with small balances quickly, even if the interest rates are lower. By getting rid of the debt, you have one less monthly payment to worry about if you experience financial hardship. That can also make saving up several months of expenses easier, as the total cost of your expenses is lower.

Are recession fears dragging you down? Are you taking any steps to prepare for a potential recession, or is that not an option for you? Share your thoughts in the comments below.

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These Are The Best Credit Cards For 18 Year Olds

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These Are The Best Credit Cards For 18 Year Olds

Having a strong credit history is often essential, but it takes time to build up a solid record and secure a great credit score. For young adults, this can create some challenges. When someone turns 18, they usually just gain access to credit-building options since they typically have no credit. Fortunately, some credit cards can help them on their journey. Here’s a look at the best credit cards for 18-year-olds.

Can 18-Year-Olds Have Credit Cards?

Before diving into the best credit cards for 18-year-olds, it’s important to talk about various rules and restrictions that may limit young adults who want a credit card. Technically, 18-year-olds can have a credit card. However, they need to meet specific criteria.

Anyone under 21 may be required to either have a cosigner or provide proof of independent income. Without that, lenders won’t allow them to open a credit card account. The reason for that is a relatively recent law that was passed by Congress that legally requires lenders to ensure young adults have the means to pay off what they charge. Income shows they can handle the payments, while a cosigner makes someone else equally responsible for the debt, limiting the overall risk.

The Best Credit Cards for 18-Year-Olds

Which credit card is best for an 18-year-old can vary depending on a few factors. However, certain options are potentially better choices than others for those without any credit history, a situation that usually applies to 18-year-olds. As a result, focusing on credit cards that are more open to applicants with little or no credit history is typically the ideal strategy.

Here’s a look at some of the best credit cards for 18-year-olds.

Discover it Student Cash Back

Since it focuses on college students, the Discover it Student Cash Back credit card doesn’t require a credit score or history to qualify. Additionally, it comes with perks you may not see with other cards available to young adults.

Along with no annual fee, users can earn up to 5 percent cash back in the currently listed spending categories (which rotate every quarter). Additionally, they can earn 1 percent cash back on everything else.

In some cases, new users may also qualify for a 0 percent introductory APR for six months. After that, the card has a reasonably competitive rate, particularly for young adults without credit histories.

Petal 2 Cash Back No Fees

For young adults that want to avoid credit card fees, the Petal 2 Cash Back No Fees credit card is a solid option. The issuer advertised no fees of any type, so users won’t have to worry about annual, foreign transaction, or late fees at all. Plus, by making on-time payments, cardholders can start earning unlimited cash back.

Another reason this option is great for 18-year-olds is that it’s an unsecured card that is open to applicants without credit histories. For young adults with a credit score, that can factor into the lender’s decision. However, if no credit score is present, the lender also looks at the activity in a linked bank account to see if the person demonstrates sound financial judgment. As a result, a lack of a substantial credit history may not hold a young applicant back.

Chase Freedom Student

Another student-oriented card, the Chase Freedom Student credit card also comes with no annual fee and 1 percent cash back on every dollar spent. While the rewards rate is lower than some other cards that may work well for 18-year-olds, the lack of credit requirements can make it a solid choice.

Additionally, after five on-time payments during the initial ten months of opening the account, borrowers can qualify for an automatic credit line increase. That allows a young adult to start small and receive a boost in relatively short order, something that may not happen with some of the other cards on the list.

Capital One Platinum Secured

Often, secured credit cards are easier to open than their unsecured brethren. Since 18-year-olds can seem like a significant financial risk, this approach may help young adults secure better interest rates or increase their odds of approval.

One benefit of the Capital One Platinum Secured card is that the initial security deposit can be quite low. As a result, young adults may not have to send in hundreds or thousands of dollars to open an account.

After demonstrating good financial habits and meeting other criteria, it’s also possible to transition the account to an unsecured version. As a result, this is a credit card that can functionally grow with a young adult, allowing them to avoid having to get a new credit card later after their situation changes.

Journey Student Rewards from Capital One

Another option from Capital One is the Journey Student Rewards credit card. Initially, users can earn 1 percent cash back on purchases. However, with on-time payments, the cashback reward rate can increase to 1.25 percent.

Like other student cards, this option focuses on borrowers with little to no credit history. Plus, it has a few other perks, including no foreign transaction fees. If a student may want to study abroad, this could be a boon, as it allows them to earn rewards and avoid a costly fee for using the card overseas.

Do you know of any other credit cards for 18-year-olds that people should consider? Do you think that 18-year-olds should avoid credit cards, or are they a smart way to start building their credit? Did you have a credit card at 18 and want to tell others about your experience? Share your thoughts in the comments below.

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Which Is Better For A Small Business: Financial Advisor vs. Accountant

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financial advisor vs accountant

When you run a small business, having a strong financial team by your side is a difference maker. However, you may need to choose between different types of financial professionals. Financial advisor vs. accountant is a common debate among small business owners. If you’re wondering which option is best for you. Here’s what you need to know.

Financial Advisor vs. Accountant: What’s the Difference?

While financial advisors and accounts may have similar knowledge in some cases. They represent two different specialties, each with unique areas of expertise.

In many cases, an accountant focuses on the basics of your financial picture. Thus, ensuring that your ledger remains balanced. Additionally, they typically help with finding tax-saving strategies that align with your situation. That could involve how assets are managed from a tax perspective, recommending specific types of retirement accounts, ensuring you capture every deduction, or similar steps.

Financial advisors are a bit different. While they may also recommend strategies that are beneficial to your taxes, their main goal is to assist you with seizing financial growth opportunities. Along with financial planning, investment advice is commonly a part of what a financial advisor offers.

The unique perspective each of these professionals provides means they can work together to ensure your entire financial picture is well managed. However, not all small businesses can afford to hire both.

Pros and Cons of a Financial Advisor

Financial advisors are adept at planning and recommending paths that can lead to financial growth. Often, they focus heavily on the investment side of the equation, though many will also examine other areas to seek out opportunities. For a small business, financial growth can be a priority, particularly if they’re in a startup phase and are dealing with financial uncertainty or there are plans for various kinds of expansion.

Another area financial advisors focus on is insurance. They can assist with choosing the correct coverage for your business, ensuring any assets are adequately covered and that all critical scenarios are addressed in that coverage.

However, financial advisors don’t typically handle the more transactional side of the equation. Handling ledgers, tracking payments and expenses on a daily basis, and similar services aren’t commonly what a financial advisor offers. This leaves those tasks to someone else, which may not be ideal if you don’t have time to handle them personally and don’t have other financial professionals on board.

Pros and Cons of an Accountant

In many ways, accountants are more transactional. They track and log the flow of money in and out of a business, and make recommendations that often feel more logistical. For small businesses with complex financial activities, this can be a boon. It ensures someone is solely focused on the company’s earnings, expenses, taxes, and reporting, reducing the odds of errors and increasing your chances of securing tax savings.

Accountants can also assess the financial impact of various moves. For example, if you’re considering an acquisition, an accountant can help analyze the situation and produce estimates that give you a clearer picture regarding how proceeding may impact you financially.

When it comes to drawbacks, accountants aren’t as growth-oriented. While they may recommend investment accounts, they usually limit that to options that result in a tax benefit, as that results in a savings for the company. In some cases, this can make the level of financial guidance feel incomplete, suggesting you were looking for advice in the growth arena.

Financial Advisor vs. Accountant: Which Is Better for a Small Business?

Neither financial advisors nor accountants are inherently better for small businesses. Instead, you need to factor in your financial needs, allowing you to select the best option for your unique situation.

If you’re concerned about balance sheets, financial reports, transaction tracking, and tax preparation, an accountant is typically the way to go. Accountants specialize in that type of financial tracking, and they’re particularly adept at identifying tax-saving strategies that allow you to reduce what you owe legally.

For guidance about investments, insurance, and long-term financial plans, a financial advisor could be a better fit, as much of their focus is on financial growth and preservation strategies. They’re also skilled at asset management, which can be beneficial in some scenarios.

Consider what you need from a financial professional, and use that to guide your decision. That ensures you bring the right one on board. However, you can also consider hiring both. Financial advisors and accountants can work together to manage the entire financial picture. That ensures that every base is covered, which could be the better choice in the long run.

When it comes to financial advisor vs. accountant for small businesses, do you agree with the points above? Did you choose one over the other and would like to discuss your reasoning? Did you choose one only to discover that it either wasn’t the right fit or was the perfect match? Share your thoughts in the comments below.

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Is It Difficult to Cash Out A 401K When You Quit A Job?

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what happens to a 401K when you quit

When you quit a job, you typically have to decide the fate of your 401k. In some cases, the idea of cashing the account out might be particularly attractive. However, if you’ve never had to do it before, you might worry that the process is complex. If you’re wondering, “Is it difficult to cash out a 401k when you quit a job?” here’s what you need to know.

What Happens to a 401K When You Quit?

Precisely what happens to your 401k when you quit a job can vary depending on rules relating to the account. In some cases, your investments can stay right where they are, and you can tap them when you reach retirement age without much difficulty or financial penalties.

However, rolling over the 401k into your new employer’s plan or an IRA is also an option. For accounts that don’t allow the money to stay with your last employer, then a rollover might be more of a necessity, suggesting you don’t cash out.

Cashing out is technically on the table, too. You’d receive a lump sum distribution based on the account balance or the amount that’s vested. While this may seem wise, if you haven’t reached retirement age, it will trigger financial penalties along with taxes.

Is It Difficult to Cash Out a 401K When You Quit a Job?

Generally speaking, it isn’t difficult to cash out a 401k when you quit a job. Once you formally leave the position, you typically have 60 days to take certain actions relating to the money, including requesting a cash-out. If you go that route, you’ll usually have to formalize your request in writing by completing some forms, and that’s typically the most difficult step.

However, withdrawing the money can trigger early withdrawal penalties. Along with the 10 percent penalty, you’ll be taxed on the amount you take out, which can potentially reduce the value of the withdrawal by 10 to 37 percent, depending on your tax bracket.

How to Cash Out a 401K After Quitting a Job

Cashing out an eligible 401k is pretty simple. Typically, you’ll need to contact the plan administrator and complete a few forms. Once that’s done, the administrator can usually send you a check for the value of the account.

Exactly how long it takes to receive the check can vary, though most will provide the funds within 60 days of the request processing. If you have questions about the timeline, you can request an estimate from the administrator.

Did you know what happens to a 401k when you quit a job? Do you think the process for cashing out is reasonably easy? If you’ve ever left a job, did you decide to cash out your 401k, or did you go another direction? Share your thoughts in the comments below.

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Minors Still Have to Pay Taxes

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minors still have to pay taxes

Even if your children are young enough to be considered dependents, that doesn’t mean they won’t have to pay federal or state income taxes. Like adults, income earned by minors is considered taxable. If you are wondering whether your child needs to pay taxes and file a tax return, here’s what you need to know.

When Do Minors Have to Pay Taxes?

As with adults, minors have to pay taxes when their income exceeds the standard deduction or exemption. This is true regardless of whether they’re considered a dependent and can apply to both federal and state taxes.

Generally, there are two types of income that may result in minors needing to pay taxes. First, there’s earned income, which is typically money that comes from a job. With this, a child is only considered to have taxable income on a federal level if their earnings exceed the standard deduction, which is set at $12,950 for 2022. The threshold for owing state income taxes can vary, so you’ll need to check your state’s exemption amount to determine if they’ll need to pay.

Second, minors may have unearned income. Usually, this is money relating to investments or savings, such as interest or dividends. With this, the exemption is only $1,150 for 2022. Anything above that is potentially taxable.

Do Minors Get Taxes Taken Out of Their Paycheck?

If your child works for a traditional employer, taxes are often taken out of their paycheck. Most employers use the same process to ensure they meet legal requirements regarding withholding, so they treat all employees the same in that regard, no matter their age.

Like adults, minors complete Form W-4. On that, they can use the form to alter what’s withheld, allowing them to essentially have less removed than would be standard for their earnings. If a minor knows they won’t cross the standard deduction amount with their earnings, this could help them limit the amount that’s taken out of their paycheck. However, if they may exceed the threshold, that strategy could cause them to under withhold, which would leave them owing money when it was time to file.

Additionally, unless a child works for a company owned by their parents, FICA taxes – those covering Social Security and Medicare – are removed from their paycheck. There are no available exemptions to these taxes, aside from the aforementioned case of them working for a parent’s business.

Do Minors Have to File Taxes?

Technically, minors that earn less than the standard deduction and all of their income has already been reported to the IRS aren’t required to file their taxes, as they don’t owe any money to the government. However, that doesn’t mean they shouldn’t file, either through a parent’s return or on their own.

Many employers remove taxes from the paychecks of minors. If your child had taxes deducted, filing their taxes allows them to receive a refund. Without filing, that money isn’t returned, which makes submitting their tax information during the filing period essential.

For minors that earn more than the standard deduction, filing their state and federal taxes is essential. In that case, they do owe federal and state taxes. Even if their payroll deductions cover what’s owed, they need to file to formally settle the amount and either pay any additional amount owed or get a refund on the excess.

Additionally, minors that earn tips that aren’t reported to the IRS through their employer – something that’s more common with cash tips that go unrecorded by the company – they’ll need to file regardless of how much they’ve earned. That ensures that FICA taxes owed on the tip money are collected.

Finally, self-employed minors need to file their taxes if they make more than $400 in profit. Additionally, if the amount of tax owed is expected to exceed $1,000, then making quarterly tax payments is essential.

How a Minor Needs to File Taxes

There are technically two approaches a minor might have to use to file their federal taxes. First, if they make more than the standard deduction, they have to file their own return, regardless of age. Generally, minors with self-employment income should also file separately. Per the IRS, children who can’t handle the task on their own can receive assistance from a parent or guardian.

For earnings below that threshold, parents can report the income on their tax return instead. This ensures it’s properly tracked. Thus, any potential refund is capturable without the complexity of having a minor file a separate return. However, filing a separate return is an option here. This could serve as a great financial lesson that introduces your child to filing taxes, setting up for refunds, and otherwise understanding how taxes work.

If you have any questions regarding filing taxes for a minor child, speaking with a tax professional is a wise move. It allows you to get explicit guidance relating to your unique situation, which is beneficial.

Filing Requirements May Vary

Additionally, it’s important to note that state filing requirements for minor children can vary. While they often align with the federal thresholds, there can be some variances that alter the picture. As a result, you’ll want to research the rules in your area. This will help to determine if your child has to file separately or if they can be on a parent’s return. When in doubt, speak with a tax professional operating in your state for additional guidance.

Does it surprise you to learn that minors still have to pay taxes? Do you think making minors pay taxes is a smart move or that they should be exempt? Share your thoughts in the comments below.

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