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Are Medical Collections Still Relevant to Your Credit Score?

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do medical collections still affect your credit score

Staying healthy can be surprisingly expensive. As a result, many households end up with large medical bills. At times, the bills pile up so high that paying them seems (or legitimately becomes) impossible, causing the household to default on the debt. When that happens, the account can end up in medical collections. If you’re wondering do medical collections still affect your credit score, here’s what you need to know.

How Medical Debt Impacts Your Credit

Medical debt doesn’t usually have an impact on your credit score as long as you are paying the bill on time every month. When that happens, most healthcare facilities don’t bother reporting the account to the major credit bureaus, so neither the amount you owe nor your payment history ends up in your file.

In some cases, even a late or missed payment or two doesn’t cause an issue. Typically, it’s only when you default on the debt and end up in medical collections that you put your credit at risk.

What Are Medical Collections?

Medical collections are a recovery process designed to help healthcare facilities secure payments on past-due medical debt. In some cases, the standard procedure involves selling the debts to a traditional collections agency. However, larger healthcare facilities may have internal collections departments that essentially serve the same function.

It’s important to note that internal collections teams can differ from the healthcare facility’s regular billing department. However, some may use a blended approach.

Do Medical Collections Still Affect Your Credit Score

Once a medical debt ends up in collections – either internally at the healthcare facility or by being sold to a debt collection agency – the default can end up on your credit report. Once it does, it has a similar impact to any other debt that is past due, including a negative impact on your credit score.

However, unlike traditional debts, medical collections don’t appear on your report right away. All three major credit bureaus have a grace period of 180 days, giving you time to resolve the debt before it ends up on your credit report and impacts your score.

Once the grace period passes, the account appears on your report. At that time, you’ll see a negative impact on your score, including potentially a drop of 100 points or more.

How to Avoid Medical Collections

Usually, the simplest way to avoid medical collections is to make payment arrangements. Many healthcare facilities offer payment plans, particularly for large balances. At some facilities, extended payment arrangements can be set up for free and may not involve any interest.

If you can pay most, but not all, of what you owe, the healthcare facility may be open to considering your account paid-in-full in exchange for that lump sum. This is particularly true if you can pay in cash, as some clinics and hospitals do offer discounts for that.

If you’re a low-income household, you may qualify for financial assistance through the healthcare facility as well. Many larger hospitals and clinic systems do have financial assistance programs available, though you typically have to ask about them directly. Request information about eligibility and, if you may qualify, see what you need to do to apply. With that, your balance may end up fully paid or significantly reduced, making it more manageable.

What to Do If Your Account Is in Medical Collections

If your debt is already in medical collections and is legitimately yours, paying it off is usually your best bet. For internal collections, contact the healthcare facility to see if you can work out payment arrangements. If the debt has been sent to an external collections agency, then you’ll need to work with them.

While paying off the debt won’t remove the account from your credit report, the account details will be updated to show that you ultimately ended up handling it. This can benefit your credit score.

If paying it genuinely isn’t feasible, then you need to do some research. Learn more about the statute of limitations on debt collection efforts based on where you live, as the rules can vary from one state to the next. Additionally, find out what kinds of actions reset the clock, as a seemingly innocuous statement on your end can potentially give a collections agency more time to pursue you.

It’s also important to note that, even when a collections agency can no longer attempt to collect the debt, it doesn’t disappear from your credit report right away. Instead, it can show up for up to seven years from the date the account originally became delinquent, causing long-term harm to your score.

How to Dispute Medical Debt That Isn’t Yours

Sometimes, a medical collections account appears on a credit report even though the debt doesn’t belong to that person. This is normally identity theft or administrative errors relating to the account.

If the medical debt isn’t yours, then you do have the ability to dispute it. Usually, the first step you’ll need to take is to contact the collections agency or healthcare facility. Do this by sending a certified letter and tell them you want them to validate that the debt is yours. Also say that, if they can’t provide validation within 30 days (or whatever is allowed by state law in your area), you want the account removed from your credit report.

You can also go another route. All three major credit bureaus have dispute procedures in place. Through those, you can provide information showing that the debt doesn’t belong to you and request it be removed from your report. However, this approach usually only yields results if you have proof of an error.  Which isn’t always easy to find.

While disputing a medical debt can be a lengthy process, it can be worth pursuing. That way, you can get the illegitimate account off your report. Thus, restoring your credit score along the way.

Do medical collections still affect your credit score to this day? Has there been an impact in your financial life in other ways due to a medical bill going to collections? Share your thoughts in the comments below.

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Every Homeowner Should Have Flood Insurance-Here’s Why!

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every homeowner should have flood insurance

No homeowner imagines being the victim of a natural disaster. A serious flood can be devastating. Floods can damage your home and personal property with surprising speed. However, not having flood insurance can make the entire situation worse. Without the right coverage, your losses may not be covered. If you’re wondering why every homeowner should have flood insurance. Here’s what you need to know.

What Flood Insurance Is and What It Covers

Flood insurance is a type of coverage that is separate from a traditional homeowners insurance policy. Anyone who lives in an area with flood risk can potentially purchase this supplemental policy.

It specifically focuses on flood-related damage caused by natural disasters, as well as other causes. Usually, flood insurance covers damage in specific categories.

First, flood insurance will commonly handle structural damage to your home. This includes the actual building, as well as some related systems, like electrical, plumbing, and HVAC.

Second, flood insurance may cover your personal property. This includes damaged furniture that isn’t salvageable and similar household items, as well as clothing. However, this isn’t always part of the starting flood insurance policy, so you may need to request it be added if you want this protection.

Now, certain high-value items may not be fully covered by base flood insurance. This can include art, antiques, jewelry, firearms, or electronics above a certain value. In those cases, you may need flood insurance riders to add that coverage, just as you do with traditional homeowners policies.

Additionally, it’s important to note that every policy is different. Before you make assumptions about your coverage, review your flood insurance policy carefully. Ask questions about what is and isn’t protected, and request add-ons if needed to provide you with the level of protection you’re after.

Why Homeowners Need Flood Insurance

Typically, flood insurance fills a gap that many homeowners have in the primary policy. While homeowners insurance does cover some types of water damage under the hazard insurance segment of their policy, flooding events usually aren’t classified as the covered kind of hazard. As a result, damage caused by a flood may not be covered, leaving you without financial support to repair your home or replace your personal property.

Essentially, if you don’t have flood insurance, you’ll have to handle all related costs out of pocket. For most homeowners, this simply isn’t feasible. Flood repairs to a structure can be incredibly costly. Similarly, replacing all of your damaged personal belongings could take thousands and thousands of dollars.

It’s also important to note that homeowners with mortgages who live in higher-risk areas may be required by their lender to have flood insurance. This is especially true for anyone who uses government-backed financing sources, as there are federal laws requiring the coverage for properties they finance in high-risk zones. However, other lenders often follow suit, even if there isn’t a legal requirement.

The mandate for flood insurance is similar to them requiring homeowners insurance in general. It ensures the property is protected should a flood event occur and, since the lender is technically the owner until you pay off the mortgage, they have a vested interest in protecting its value.

How to Find Out if You’re in a High-Risk Flood Area

If you want to see if a property is in a high-risk flood area, the simplest way is to use the Federal Emergency Management Agency (FEMA) Flood Map Service Center. Simply enter your address into the search bar, and the site will display a map that identifies your home’s risk level.

You may be able to turn to other state and local resources as well. State emergency management agencies may have flood maps, for example, so they can be worth checking if you find the FEMA results lacking.

Should Low-Risk Property Owners Skip Flood Insurance?

No, homeowners in low-risk areas shouldn’t skip flood insurance. Even if you live in a low-risk area, going without flood insurance means you aren’t protected should the unexpected occur.

Low-risk doesn’t mean risk-free. Many natural events are unprecedented. But even if they weren’t deemed likely, your base homeowners policy won’t cover the related damage if it is excluded in your policy.

Additionally, risk levels can change over time. An area that wasn’t previously flood-prone can suddenly become so for a variety of reasons. Climate change, land development, and similar shifts can alter water flow through regions, turning areas that previously didn’t experience flooding into moderate or high-risk areas.

Where to Get Flood Insurance

If you need flood insurance, you can call your homeowners insurance company to see if they offer it. Some insurers have flood insurance riders, while others may require a separate policy for that specific kind of coverage.

However, not all insurance companies offer flood insurance. If that’s the case, you may not be able to secure flood insurance through your homeowners policy provider. Instead, you’ll turn to the National Flood Insurance Program, a system run by FEMA, that can help you find a provider that covers homeowners in your area.

Do you think every homeowner should have flood insurance?  Have you decided to risk it and go without flood insurance? Has flood insurance ever saved you from financial hardship? Share your thoughts in the comments below.

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What Is a PACE Loan and Are You Eligible for One?

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PACE Loan

When you want to update or upgrade a property, finding the right kind of financing options is often essential. For some property owners, PACE loans may be the perfect fit. However, it won’t work for everyone. PACE loans have unique benefits. Yet, they can only be used under specific circumstances. If you are wondering what a PACE loan is and whether you’re eligible for one. Here’s what you need to know.

What a PACE Loan Is

A PACE loan is a property improvement financing option that focuses on energy efficiency-related upgrades. PACE actually stands for Property Assessed Clean Energy, denoting the purpose of the program.

There are two segments of the PACE program. First, there are commercial PACE loans that focus on business properties. The second option is a residential PACE loan. This is also known as an R-PACE, that is available for qualifying residential projects.

With a PACE loan, the property itself serves as collateral, similar to what you’d see with a renovation mortgage, a cash-out mortgage, or other options many people pursue to finance improvements. However, with a PACE loan, you can finance up to 100 percent of the renovation costs, all without having to cover a down payment or go through a traditional underwriting process.

Plus, unlike those alternatives, the PACE loan is tied to the actual property, not the property’s owner. Since the loan is associated with the property, the remaining balance can be passed from one owner to the next if the property is sold.

Additionally, how a PACE loan is paid back also differs. Instead of the typical monthly payment approach, PACE loans are subject to property assessments. The assessments occur regularly over the course of a set amount of time, usually between five and 20 years, depending on the life of the improvements involved in the project.

The assessment functions similarly to a property tax. Once the assessment is complete, the property owner pays the identified amount. Failing to do so usually carries consequences that are a lot like what you encounter if you don’t pay property taxes.

PACE Loan Eligibility Requirements

The primary eligibility requirements for a PACE loan are two-fold. First, you have to be a property owner, not just a renter or lessee. Second, the updates must be energy efficiency improvement-related. This can include a wide range of project types, including solar panel installations, boiler upgrades, and LED installations, as well as for certain disaster preparedness purposes, like earthquake seismic retrofitting.

It’s also important to note that your project may need to meet a minimum cost requirement. For example, you typically have to borrow at least $2,500.

However, a few other factors may disqualify you. For example, being behind on your mortgage or property taxes, a recent bankruptcy, or liens or judgments on the property could prevent you from securing PACE financing.

Otherwise, you have to be in an area with an active PACE program. The PACE loans are usually administered by a local municipality or through a partnership between a government entity and a private company. They aren’t broadly available, particularly for residential property improvements.

It’s also important to note that you may have to choose from a select list of approved contractors. You’ll need to review your local PACE loan program to determine if only specific contractors are permitted.

How to Apply for a PACE Loan

If you want to apply for a PACE loan, you’ll need a loan servicer in your local area, as that may be the only entities you can work with based on how the programs are usually structured. Since these are administered at the local level, some of the application processes may vary.

However, applying tends to be straightforward and not completely unlike securing other kinds of renovation financing. You’ll need to provide details about yourself – including credit and wage-related information – as well as information about the property and your proposed project.

Once you submit that information, your eligibility is determined quickly. After approval, the funds are disbursed for the qualifying project in accordance with program rules.

Have you ever gotten a PACE loan? If so, what was your experience like? If not, do you feel it is a good option for you? Share your thoughts in the comments below.

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Can an Employer Charge Fees to Turnover Your 401(k) After You Quit a Job?

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Fees to Turnover Your 401(k)

Nobody wants to pay fees to turnover your 401(k). When you quit a job, you usually lose access to the various benefits your former employer provides. However, while the company may manage your 401(k), that doesn’t mean you don’t have a right to the funds. In some cases, you may even be required by your former employer to move the money out of their program.

While you may have the option of leaving your retirement savings in place, there are also benefits to rolling over your 401(k). However, you may be worried that your former employer will charge you a fee to make that happen. If you want to ensure you’re fully aware of the potential costs, here’s what you need to know.

Can an Employer Charge Fees to Turnover Your 401(k) After You Quit?

Generally, no, a former employer can’t charge a fee if you are rolling over your 401(k) into a new retirement account after quitting. They have to turn over the balance that belongs to you. At a minimum, this means your personal contributions, along with any vested matching funds from your employer.

Now, if you have a match from your employer but it isn’t fully vested, then the employer can keep that money. Until it vests, it isn’t technically yours. So, while losing the unvested match may feel like a fee, it actually isn’t.

It’s also important to note that you may have to contend with fees when you roll over your 401(k) from the company or program that is managing the receiving retirement account. All retirement programs come with costs, and they can vary from one program to the next.

However, there usually isn’t any fee to actually complete the rollover. Instead, the new account will come with unique maintenance and administration fees, commission costs, or similar expenses.

You may also have to deal with taxes or withdrawal penalties. When you are not of retirement age and choose to cash out your 401(k) when you leave your former employer, you’ll have to deal with both. If you are of retirement age, then you’ll bypass any early withdrawal penalties but will still owe taxes in most cases.

If you choose to roll over your 401(k), you may or may not have to pay taxes. That will depend on how the rollover is managed, as well as the kind of account receiving the funds.

Can You Keep Your 401(k) With Your Former Employer?

If you like the 401(k) program your former employer offered, keeping it in place may seem like a good idea. However, whether that is an option depends on the company’s program and policies, along with other factors.

With a 401(k), the employer is responsible for the program’s management, and that comes with costs. As a result, they may not want to shoulder that burden for former employees. Instead, they require them to transition the money out of that account and into another one, such as by rolling it over into a new employer’s 401(k) or an IRA.

Mandating that you move the funds is more common for 401(k)s with contributions made – and earnings achieved – during your time with that employer totaling to less than $5,000. It isn’t actually the balance that matters; it’s the amount of money added to your account while you were working for that company.

For example, if you rolled over a previous 401(k) worth $9,000 and then contributed $4,000 to the account while working with the new employer, your balance would be $13,000. However, only that $4,000 is factored into this decision process.

Contribution Factors

With contributions below $5,000, the expenses associated with managing the account may seem unreasonable to them, and they are perfectly within their right to tell you to move the money.

If the contributions are below $1,000, the company might just cut you a check for the balance. In most cases, this is something you want to avoid, as you’d end up owing taxes on the money and may also have to pay an early withdrawal penalty, depending on your age. Luckily, you usually have 60 days to transition the funds into a different kind of retirement account, giving you a pathway for avoiding the fees and taxes.

If the contributions are between $1,000 and $5,000, your former employer may even initiate an involuntary cashout. With this, they transition your money to an IRA of their choice, suggesting you don’t take other action. To avoid this, you’ll need to handle a rollover within 60 days, giving you the ability to choose the destination.

For accounts with contributions above $5,000, you can typically keep the money in place. This can be beneficial if there is a unique aspect of the program that you can’t get in your new employer’s plan or with an IRA. For example, if the fees are far lower than what’s common or there are investment options that are hard to access otherwise, it could be worth leaving the savings in place.

However, you won’t be able to make new contributions to a former employer’s 401(k) plan. Instead, it will simply exist as-is, only growing based on the investments themselves.

What It Means to Rollover a 401(k)

Rolling over a 401(k) simply means transitioning the money into a different retirement account. It isn’t a withdrawal, as you won’t actually gain access to the cash. Instead, it’s shifting the held assets straight into another similar retirement plan.

Generally, you have two options for rolling over a 401(k). First, if you have a new job with an employer that has a 401(k) or similar retirement plan, you might be able to roll over the money into that account. This would allow you to centralize and consolidate your 401(k) savings into a single place, which could make it easier to monitor and manage.

Second, you could roll over a 401(k) into an IRA. With this option, you may get access to a wider range of investment opportunities, have the ability to choose a company with a better fee structure, or, if you already have an IRA, consolidate some of your retirement savings.

With a 401(k) to IRA rollover, you will be responsible for overseeing the account. If you decide to roll over your 401(k) into your new employer’s program, they’ll handle most of the management, though you may still need to set asset allocations or make similar decisions.

Should You Rollover your 401(k)?

Whether you should roll over your 401(k) depends on several factors. First, it may not be optional, particularly if your contributions are under $5,000.

Generally speaking, if your 401(k) contributions are below $5,000, it’s wise to plan for a rollover. There is a decent chance the company may require it, so it’s best to prepare for that situation. However, if you like your 401(k) offerings and the company is fine with maintaining your account, you can always opt not to initiate the rollover.

If your balance is below $1,000 and your former employer would cut you a check for that amount, rolling it over is more urgent. If you don’t, you’ll owe taxes, as well as an early withdrawal penalty if you aren’t of retirement age.

For contributions above $5,000, then you’ll want to look at the virtues of the program. If it has a low fee structure, unique investment options, or other benefits you can’t get elsewhere, then you may want to leave it in place. If not, then exploring your rollover options is wise, as it may let you pay less in fees, access investments you can’t tap currently, and more.

Have you ever had an employer try to charge a fee to turn over your 401(k) after you quit a job? If so, what did you do? Share your thoughts in the comments below.

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Is It Ever Okay To Accept Unsolicited Financial Advice From Your Bank?

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unsolicited financial advice from your bank

While many people know how to deal with unsolicited financial advice from friends, family members, and colleagues, a surprising number aren’t sure what to do when the recommendation is coming from their bank. After all, a bank may seem like an authority on all things money-related, leaving many people assuming that the information they are offering is sound. However, even if that is the case, that doesn’t mean your bank is always focused on your best interests. If you need to decide if it’s okay to accept unsolicited financial advice from your bank, here’s what you need to consider.

Are They Selling Something?

While most people don’t view banks the same way as retailers, that doesn’t mean financial institutions aren’t selling something. They can benefit from the accounts you open with them financially, so they have a vested interest in getting you to sign up for new products.

Now, this doesn’t mean that what they recommend may not benefit you. However, this kind of advice might not have your best interest in mind. Instead, it might be serving their best interest, which may or may not align with yours.

If the unsolicited financial advice from your bank seems like a sales attempt, review it with a grain of salt. Determine if their goal is really helping you or if it’s more about getting you to sign up for something new. If it’s the latter, accepting their advice might not be a smart move.

What Is the Impact of Following the Advice?

Another way to determine if accepting unsolicited financial advice from your bank is okay is to consider the impact it would have on you. For example, would you need to pay a fee? Will it hurt your credit score? Does it alter your monthly debt payments? Does it limit your financial options? Could it create a hardship?

Ideally, you should only follow advice from any source if it results in a notable, reliable gain and any negatives are manageable or acceptable. Only you can determine if that is the case.

If you get advice from your bank, always take your time to look at what accepting it means. Envision how things could play out, including the best-case and worst-case scenarios. Try to get a full picture. That way, you can ultimately make a choice that’s right for you.

In the end, there’s nothing wrong with accepting unsolicited financial advice from your bank if you’ll genuinely come out ahead and the risk associated with the move is reasonable or minimal. However, remember, if you do follow it, the consequences of doing so fall squarely on you and not on your bank. If you aren’t comfortable with that, then it may be better to decline.

Have you ever accepted unsolicited financial advice from your bank? If so, how did it turn out? If not, why did you choose not to follow the advice? Share your thoughts in the comments below.

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Should I Be Saving For My Ten Year Old’s Future?

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saving for your ten year old's future

If you have a ten-year-old child, you likely want to do all you can to secure their future. However, it isn’t uncommon to wonder precisely what steps you should be taking and whether now is the right time to make certain moves. If you can’t figure out if you should be saving for your ten-year-old’s future, here’s what you need to know.

Reasons to Save for Your Ten Year Old’s Future

In the end, there is a slew of reasons why saving for your child’s future is a smart move. Over time, your child is going to potentially have quite a few high-cost needs. Many of which can be hard to shoulder once those times arrive.

One of the biggest examples is paying for college. On average, college costs $35,720 per student per year. That’s more than many people can pay out of pocket without planning for the expense.

However, there are other costs you may also encounter. For example, if you want to help your child get their first car. That will likely cost several thousand dollars. If you want to have a little nest egg to lend a hand if they get married. You may need to save for that, too.

Plus, there is a range of expenses that you may not see coming. Anything from field trips to sports fees to medical costs not covered by insurance could all make saving important.

Ultimately, by saving for your child’s future now, you’re giving yourself time to gather up some cash before you need it. That can make a range of costs more manageable, both for you and for them.

Deciding If You Should Start Saving for Your Child’s Future Now

Even though most parents feel that there are plenty of good reasons to start saving for their child’s future, that doesn’t mean now is always the right time to do it. In the end, it isn’t the child’s age that should be a determining factor. Instead, it’s the household’s financial situation.

If you’re living paycheck-to-paycheck, your first priority should be to give yourself some breathing room. That way, you can handle other more crucial goals, like starting an emergency fund and paying off high-interest debt and then potentially move on to saving for your child’s future.

You may be able to get some space by reviewing your budget and trimming various expenses. Launching a job search to find a higher-paying position or a second job could also work, depending on your exact situation.

As you review costs, resist the urge to stop funding your own retirement. While you may think your child’s future is more important, you don’t want to neglect yours to make it happen. Instead, view your retirement contributions as high-priority expenses, and leave them as-is while you evaluate your budget.

If all of your financial needs are met, and you find room in your budget to save for your child’s future, then start right away. As with all kinds of saving, the earlier you start, the better, as it gives you time to benefit from compound interest and other kinds of gains you may experience.

How to Save for Your Child’s Future

When it comes to how to save for your child’s future, that may depend on the exact savings goal. Different techniques are often best in different situations, so you need to use a strategy that makes sense for what you want to accomplish.

Generally, if you are trying to set money aside for your child’s college education, a 529 College Savings Plan or 529 Prepaid Tuition Plan is your best bet. Which of those options is available depends on where you live, and they each have their own benefits and drawbacks. However, those are good places to start if setting money aside for school is the priority.

Uniform Gifts to Minors Act

You can also explore the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA) options. These are the most widely used types of trusts, allowing parents to set money aside for child-related expenses or to transfer the assets to their child once they reach the legal age. These accounts make it possible to purchase stocks, bonds, or other kinds of securities for a minor, so it could be an option that’s worth exploring if your goal is to hand those assets over to your child.

Brokerage Account

Alternatively, you can open your own brokerage account. Then, you can invest outside of plans that are designated solely for education or retirement and where withdrawals aren’t age-restricted. That way, you can pull the money when the time comes. Just make sure you also account for the taxes that can come with a withdrawal, as you’ll need to handle them.

Traditional Savings Accounts

In some cases, a traditional savings account is a better option for handling your child’s future expenses. For example, it could be a great choice if you want to help them buy a car, as that purchase is almost on the horizon if your child is already ten years old. Just make sure that you opt for a high-yield savings account. Look at the interest rate, as well as any fees, to find the option that lets your money earn the most.

Ultimately, all of those options are potentially viable. Choose the one (or ones) that align with your goals, and you can make significant strides toward helping secure your child’s future.

Do you think that it’s wise to start saving for your ten year old’s future? Do you think ten years old is a good time to begin or is another age a better choice? Share your thoughts in the comments below.

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Are You Financially Prepared to Return to The Office?

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financially prepared to return to the office

Now that vaccine rates are rising, and restrictions on gathering are loosening. Many professionals will soon be returning to their traditional workplaces. While the idea of transitioning back may not seem like a big deal. As many people have years and years of experiencing going to an office. That doesn’t mean there won’t be an impact. Returning to the office will come with a financial burden. If you aren’t ready, it can be hard to start shouldering again. If you want to make sure you’re financially prepared to return to the office. Here’s what you need to know.

The Costs of Heading Back to the Office

Often, you can’t determine if you’re financially prepared to return to the office without first understanding the costs you may face. That way, you can estimate how they may impact your budget, giving you a chance to make adjustments in advance.

Commuting

One of the biggest shifts in your expenses will involve your commute. Since you won’t be working from home, you’ll need to tackle transportation costs that may not have been a part of your life for some time. This can include increases in fuel expenses, tolls, parking fees, and wear-and-tear costs if you drive your own vehicle. If you use public transit, then you may need a new pass or to factor in the price of tickets.

Lunch, Drinks, and Snacks

Another point you may need to cover is food and drinks. While you can certainly pack a lunch to bring with you and only drink beverages available for free at work, meals and drinks out may also be part of the equation. If you don’t plan on bringing your own, you need to factor in these costs.

Wardrobe

Additionally, you may have to spring for new clothing. You’ll need to look at your wardrobe to determine two things. First, you need to see if your clothes are in good repair. Second, you need to find out if they still fit.

Many people saw their weight change during the pandemic, as being stuck at home altered activity levels and may have also led to diet changes. Since you want to look professional when you head back to the office, you need to make sure your clothing is the right size for you now.

PPE

Finally, you may need to cover some PPE costs that you didn’t have to shoulder before. This could include a higher quality mask, particularly if you aren’t yet vaccinated, and your job doesn’t allow for six feet of separation, as well as personal stashes of hand sanitizer, gloves, or other items that may not be available through your employer.

Child Care

If you have children at home, you may need to make child care arrangements for when you head back to the office. This is especially true if your children aren’t school-aged or if schools have not reopened in your area and your kids aren’t old enough to take care of themselves.

It’s also important to note that these costs may be higher than they were pre-pandemic. Many child care facilities have seen their costs rise and may still be dealing with restrictions about the number of kids who can be on-site at a time. As a result, they might have had little choice but to raise their prices in order to sustain their operations.

How to Financially Prepare to Return to the Office

If you want to make sure that you’re financially prepared to return to the office, your biggest step is to review your budget. Estimate the cost of any expenses you’ll have to cover once you start heading to a workplace and see if you can cover them comfortably. If not, you may need to cut back in various areas, ensuring that any costs that you can’t avoid can fit into your budget.

Additionally, for any items you need to buy – like clothing or PPE – shop around. Discount retailers like TJ Maxx or Ross Dress for Less may help you stretch your budget, or you may find solid options from thrift stores.

It’s also wise to keep a close eye on your food and drink expenses. Dining out is convenient, but it typically costs far more than bringing your own meals, snacks, and beverages. If you’re worried about safety, consider investing in an insulated lunch box or thermos if you need to keep items cold or hot. That way, you don’t have to store your food or drinks in areas that all employees can access, which may give you more peace of mind.

Finally, try to make room for saving. Keeping a solid emergency fund and your retirement on target should be priorities. While you may have to scale back while you regain your financial footing, try to stay committed to setting aside as much as possible. That way, you can maintain your savings habit.

Do you have any tips or insights that can help people financially prepare for a return to the office? Share your thoughts in the comments below.

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Here’s What Your Children Know About Investing That You Don’t

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what your children know about investing

While younger generations often get a bad rap when it comes to how they handle their finances. A decent portion of that reputation is underserved. In fact, on occasion, younger investors are savvier than their older counterparts. Causing them to make better choices than their parents. If you are wondering what your children know about investing that you don’t. You should keep reading.

Dodging Fees and Other Costs

Overall, younger generations are more fee and cost-conscious than older ones. They don’t just understand that investment-related expenses can hinder their progress. They also know how to find information about the associated fees.

Millennials and Gen Z aren’t afraid to get online and dig into the fine print about what various brokerages or investments will cost them. Additionally, Millennials are particularly value-driven. So they look for opportunities to save whenever they exist.

Thanks to the rise of low-cost robo-advisors, many younger investors have learned that high fees aren’t something they have to accept. That isn’t necessarily true of many older investors, particularly those that have been using the same approach for years, if not several decades. In the latter case, the investors simply settle into the status quo, and that can be costly in the long run. With the former, it’s all about finding the best value, ensuring that more of their money works for them instead of going to fees.

Investing Isn’t Just for the Rich

Investing is often touted as a pathway to long-term financial success. However, outside of retirement plans, a reputation of investing just being for the rich arose. In some cases, this was initially true, as getting access to a broker wasn’t an option for lower-income households. The issue is that the idea remained even as that became less and less of the case.

That myth that investing is only for the rich is often more pervasive among older generations than younger ones, causing some households to shy away from investing outside of retirement plans. Younger generations know that investing is something anyone can do. App-based robo-advisors are an expression of that fact, as they give people a quick, easy way to get started.

Plus, information about investing is usually only a few clicks away, either in the apps or online in general. For Millennials and Gen Z, this further demystifies investing, making it feel even more accessible.

Downturns Can Be Opportunities

During the early days of the coronavirus, stock markets tumbled. Many companies that were classically viewed as solid – and financially inaccessible from a stock-buying perspective – saw the price of their shares drop.

For younger investors, the downturn wasn’t just a crisis; it was an opportunity. Some investors who previously couldn’t afford to purchase certain stocks suddenly could, so they hopped on board with companies they believed would ultimately recover.

Older generations didn’t always view the situation similarly. The closer you get to retirement, the more you tend to focus on portfolio value preservation. In some cases, this led investors to abandon companies that were experiencing hardship, even if the odds of that hardship persisting were relatively low.

Investing Doesn’t Have to Be a Taboo Subject

For many older generations, the idea of having genuine conversations about money isn’t appealing. Money is often discussed in hushed tones, viewed as one of the most private topics in a person’s life.

Millennials and Gen Z don’t necessarily see it that way. Many younger people are comfortable with sharing details about their lives with the masses, thanks to their comfort level with social media. As a result, they aren’t averse to learning about and discussing investing with their peers, something that can work in their favor.

By being open to talking about money and investing, members of younger generations learn from each other. They can find out about mistakes their peers made and opportunities that were seized. The odds of them being pointed to valuable informational resources may also be higher.

Now, it is true that this can also lead to trouble. After all, not all information is accurate or reliable, so it can lead to the spread of misinformation, too. However, treating the topic as if it isn’t taboo is something that older generations could benefit from, as it can create openings for learning from others, getting support, and, ultimately, making better decisions.

Can you think of anything else young children know about investing that you don’t? Share your thoughts in the comments below.

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Work From Home? Here’s How to Take The Tax Deduction

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work from home tax deductions

If you’re self-employed. You may be eligible for a variety of tax deductions designed to reduce your tax burden. Overlooking these deductions means potentially paying more in taxes than necessary. Something that isn’t ideal for anyone. If you want to make sure you get every deduction you’re eligible to snag. Here are some work from home tax deductions that you should take advantage of if you qualify for them.

Home Office

If you have either a separate home office or a designated spot in your home where you work. You may be eligible for a home office deduction. The IRS does require that the space be used “exclusively and regularly” for work. Though, for many self-employed professionals who mainly handle computer-based tasks. This requirement is often fairly simple to meet.

With this deduction, you have two potential approaches. If you’re looking for the easiest option, go simplified. With that, self-employed individuals have the ability to deduct $5 per square foot of office space, up to a total of 300 square feet.

If you aren’t afraid of handling some calculations. You can use the regular method. With that, you can calculate the percentage of your home that you are using for work only. Then, apply that percentage to eligible housing related costs. Which allows you to determine what portion of the allowable expenses are deductible.

In many cases, it’s wise to run both options to determine which approach results in the largest deduction. Just make sure that you handle the calculations carefully to ensure accuracy when you go through the more complex method.

Health Insurance

If you’re self-employed, bought your own medical coverage, and aren’t eligible for coverage through a spouse’s employer, you may be able to deduct the cost of your premiums. Technically, this isn’t a deduction. Instead, it’s an income reduction, so you don’t necessarily have to itemize to claim this benefit.

Vehicle Expenses

If you drive your car as part of your self-employment business, you may be eligible for vehicle expense tax deductions. Usually, you’ll get a specific amount per mile driven, allowing you to recoup some of the financial loss related to greater wear and tear on your car.

Claiming this deduction does require an accurate log of your miles traveled for business purposes. However, it can be substantial, so it’s worth keeping those records to reduce your tax burden.

Plus, there are also potentially deductible vehicle costs. For example, gas, parking fees, tolls, repairs, and similar expenses related to business-connected travel may be claimable.

Self-Employment Tax

While it may seem odd, it is possible to snag a tax deduction for paying self-employment tax. Self-employment tax is the Social Security and Medicare tax that people who are self-employed have to pay and comes in at a rate of around 15.3 percent.

With traditional employment, the employer and employee split that tax burden. If you’re self-employed, you have to pay it all. But you also get to deduct half of the amount you pay when you file your taxes, helping you to reduce some of that burden.

Internet and Phone

If you use your home internet for work or have a separate phone for business purposes, you can deduct the portion of your bill that aligns with your business use. For example, if half of your internet time is work-related, half of your internet bill can be a deductible expense. If you have a separate phone line for business calls that is only used for that purpose, that is 100 percent deductible.

Trade Publications, Memberships, or Subscriptions

Self-employed individuals who pay for specialty publications, memberships, or subscriptions that directly align with their work can deduct the cost as a business expense. The most critical part of the equation is that the content is specialized. For example, a trade magazine counts, while a national newspaper does not, as the latter is too general to be profession-specific.

Educational Expenses

Educational expenses related to honing work skills in your current self-employment field can be deductible. The course or skill has to connect to your existing business, not something you hope to do later or anything you do for personal growth. For example, a self-employed web developer can deduct the cost of a course on responsive design but wouldn’t be able to take the deduction for a yoga class or music theory course.

Advertising

If you spend money to advertise your business, that cost is deductible. This can include any kind of paid-for ad, including Facebook or Google ads, television commercials, bench ads, or mailed flyers.

Business Insurance

In most cases, business insurance premiums are deductible. There are some nondeductible premiums, though, so it’s wise to review IRS guidance to determine which ones you can use to reduce your tax burden.

Office Equipment and Supplies

In many cases, office equipment or supplies that you purchase to use for your self-employed business can reduce your tax burden. The value of the items may determine what kind of deduction or benefit you receive, as high-cost items like computers may be treated differently than pens and paper.

Credit Card and Loan Interest

If you paid interest on a business purchase because you used a credit card or loan to cover the cost, you might be able to deduct the interest. The card or loan doesn’t necessarily have to be a business one. However, you usually need to use that card or loan solely for business purposes to claim the deduction cleanly.

Travel (Including Meals)

If you’re gone on business, some of your travel-related costs are deductible. Plane tickets, hotel stays, Uber rides, and similar expenses that you incur while away from home handling a work-related activity can potentially qualify. Similarly, certain meal-related costs may be deductible, including if you take a client out for dinner or have to pay for meals because you are on the road.

Retirement Contributions

If you have a self-employed retirement plan – like an SEP IRA, Solo 401(k), or SIMPLE IRA – you can potentially deduct the contributions. This can be a boon if you save up to the contribution limit, though it does make a difference even if you are setting aside less than that each year.

Qualified Business Income

A newer self-employed tax deduction, the qualified business income deduction allows self-employed individuals – as well as some small business owners – to deduct part of their business income when they file their taxes. Your total taxable income from all sources does have to be below a set threshold to qualify. But if it is, you may be able to deduct 20 percent of your taxable business income.

Do you know of any other work from home tax deductions? Share your thoughts in the comments below.

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