Category Archives: Money Management

How to Get Out of Paying Your Security Deposit

Um, this is freaking amazing. This company helps you move into your new place without the huge security deposit---lifesaver!

When we moved into the place we’re living now, we had to have just shy of $2,500 on hand. That included first month’s rent, last month’s rent and a security deposit.

That’s an insane amount of money when you’re making just above minimum wage—which we were. We’re fortunate that our income has gone up since then, but even still, security deposits are one of the big expenses that have made staying put rather than moving a better financial choice for us over the past few years. Even if we get our full security deposit back, rent inflation has gotten a little crazy lately, which means the deposit refund wouldn’t cover the security deposit at our hypothetical new place.

Get Out of Paying Your Security Deposit

What if you could eliminate that security deposit? It seems like a dream, but in an era of progressive financial products, it’s not.

Jetty, an insurance company that serves city-dwellers like us, has this really cool product called Passport Deposit. Essentially, you’re buying a surety bond through Jetty. You purchase this bond for 17.5% of the cost of your security deposit. Then, you don’t have to pay your security deposit up front.

Your landlord is the recipient, and carries no risk. Jetty is literally insuring that you won’t trash the place. If you do, you’ll have to pay for damages. So don’t mess your place up.

If we were to move right now, we’d likely be looking at a place with a minimum monthly rent of $1,100. That means our security deposit would also likely be $1,100.

Yikes.

We could save for that for sure. But to be honest, it’s preferable for me to not have to pay that much upfront.

With Jetty, we’d only have to pay $192.50. We wouldn’t get that money back, but we could take the other $907.50 and invest it. Assuming a 6% annual return, we’d have made that $192.50 back and then some by 2020. Within 11 years, we would have more than doubled our initial investment.

That’s way better than throwing it all at a security deposit that will lie dormant for the duration of your rental period.

If you don’t have the $1,100 upfront, to invest or give to the landlord, Jetty’s Passport Deposit can be a lifeline. While I don’t advocate for living outside your means, the reality is that the rental market is wreaking havoc on American families. We frequently like to think about housing from a buyer/seller perspective, but since the bubble burst in 2008, renters have been paying a steep price.

If you can afford the rent, are a responsible tenant and just don’t have the extra money for the security deposit, this product can help you get into your place with a lot less stress.

When You Don’t Meet Income Requirements

The last time we moved, we were lucky that our landlord didn’t set income requirements. Like I said, we were making just above minimum wage.

We’ve never missed a month, by the way. Even in hard economic times.

A lot of other landlords did, though, and it disqualified us from moving to those locations. We aren’t talking about luxe high rises with amazing city vista views, either. We’re talking about basic, affordable housing.

The only place I could find where we made 3x-4x the monthly rent every month had a blanket hanging in the stairwell, separating us from our future neighbors, and a busted up stove. When I asked the potential landlord about replacing it so we could do things like cook, he said, “Well, that’s expensive.”

Yeah.

Let’s take our $1,100 per month place as an example again. With kids in Pittsburgh, one of the most stable housing markets in the country, we’re talking about some pretty basic housing. It likely won’t be in a blighted neighborhood, but it’s not going to be in a super ritzy part of the city, either.

To make 3x-4x monthly rent, you’d have to be pulling in $3,300 to $4,400 per month. Fifty percent of families in this country make under $68,000 per year. While people at the top of the $0-$68,000 income range would have no issue meeting those standards, those in the middle of the pack would. And do.

That’s why Jetty also has Passport Lease. If you don’t meet income requirements, you typically will need a cosigner. The standards for that cosigner are typically higher, requiring that they make 8x-10x your monthly rent.

With Passport Lease, you don’t need a cosigner. You can move in without meeting the income requirement for a one-time fee of 5%-10% of your annual rent on a 12-month lease. On the $1,100 place, that would be $660-$1320.

While it’s not ideal to have to pay an extra fee, it is worth it if Passport Lease can get you and your family into a safe and healthy home.

Be a Responsible Renter

Only move into a place if you know you’ll be able to pay the rent on time each and every month. Cover yourself with renters insurance—which is insanely affordable and covers you in times of disaster, theft or liability. Take care of the place while you live there.

If you do all of these things and the barrier to entry is still just too high, look to Jetty’s Passport. It’s an innovative new product that can help you get your foot in the door.

 

This post is brought to you by Jetty Insurance, who has recently expanded into the Pittsburgh region.

Chime Review: Disrupt Banking

This could actually really help me save more money and develop better money habits...

I went to a conference last month that was all about disruption. Essentially, the idea is that we become so ingrained in the way things are that we limit the way we imagine the future. We were asked this question:

What would your business look like if you set it up today?

This reminded me so heavily of what I read in Financial Inclusion at the Bottom of the Pyramid. The book outlines how FinTech has taken off in third-world countries and emerging economies in ways that the US is still struggling to catch up with.

Things like mobile payments were happening in the Philippines in the early 2000’s when I was still using MySpace and a hotmail address. My bank account wasn’t available on a PC nonetheless my flip phone.

The reason it worked there was because there weren’t established systems. There were zero to few platforms to overhaul. The regulations that keep us as consumers safe from predatory practices within our current financial system didn’t yet exist in these countries because people didn’t traditionally bank.

Traditional banks in the US have struggled to keep up in the age of tech. Things are improving, but it’s been a long, hard road, and there’s still room to do better.

Look Who’s Doing Better: Chime

Unsurprisingly, one of the companies that is actually doing better is new to the scene. They’re not a traditional bank. They haven’t been around for over 100 years. They’re a mobile-first bank account, and they’ve built something that defines “better.”

That company is Chime, and their mobile bank account does a lot.

Banking at a Glance

When you have a Chime bank account, you’ll wake up to a morning greeting telling you what your balance is. This helps you make good decisions throughout the day as you’re already conscious of where you money stands.

Whenever you go into the app, you’ll be able to see your whole financial situation at a glance:

  • Your checking account balance
  • Your savings account balance
  • Your three most recent transactions
  • Debts and savings from outside accounts

And that’s just on the home screen.

Check out all the cool features Chime gives you to help you establish better money habits.

WTH did I buy?

When you go into your transaction screen, not only can you see your transactions, but you can actually click on them to open them up in their respective apps. For example, you can click on an Amazon purchase and it will bring up what was included in that purchase.

Pay Your Bills

Another awesome thing you can do straight from the app is pay your bills. You can do this digitally, or, if you really need a paper check to do something like pay rent, you can draft it right from the app and they’ll mail it for you.

When you write a check, the money will be automatically taken out, unlike the traditional method where the money is withdrawn when the recipient cashes it.

Split the Bill

Going out with friends? You can easily split the bill with them either via THEIR Chime account or by using Venmo within the Chime App itself.

Setting Up Direct Deposit

You can easily set up direct deposit from your phone, or get your routing and bank account number to fill out an ACH form with your employer.

You can also automate your savings every month to go directly from your checking to your savings account. This is ideal no matter who you bank with. It’s easy to say, “I’ll save $200 this month…”

But to actually do it?

That’s why automation is so beautiful. You don’t even have to think about it. Chime does it for you, removing the temptation to spend.

Round Up Your Savings

Speaking of savings, you also have the option of using “Round Up.” Every time you spend money using your Chime debit card, Chime will round up to the nearest dollar, transferring the difference to your savings.

For example, let’s say you spend $1.07 on a pack of gum. Chime would round that up to $2.00, taking $0.93 from your checking and moving it into your savings account.

At the end of the week, Chime will pay you a 10% bonus on all of your Round Up deposits. So if you had $15.00 worth of round ups, you’d get $1.50. They’ll do that up to $500 per year.

Use Chime's Round Up feature to save more than you thought possible without even trying!

Chime Debit Card

When you open a Chime account, you’ll get an associated VISA debit card. Debit cards are different from prepaid cards. You have to load money onto prepaid cards, and they’re usually laden with fees. Debit cards link directly to your bank account, and don’t typically come with fees.

So with Chime, you’re getting a fee-free debit card that links directly to your bank account. No loading necessary.

Fees & Interest Rates

Every time you open a financial account, you should ask about fees and interest rates. Chime is no different.

Fees

Chime has very few fees. Here are some common ones that they don’t charge:

  • No monthly maintenance fee.
  • No minimum balance required (and no fee for not having it.)
  • No overdraft fee. If you don’t have the money, you simply won’t be able to spend it.
  • No card replacement fee.
  • No foreign transaction fees.
  • No fees when you use a MoneyPass ATM. There are over 24,000 across the US. You can find the one closest to you using the app, but if you want to look at that data now, you can do so here.

You do have to pay a $2.50 fee every time you use an ATM that’s out of network. Honestly, though, a 24,000 ATM network is pretty darn huge.

Interest Rates

This is one area where you’re not going to get a lot from Chime. There is no interest on checking, and savings accounts only earn 0.01%.

However, you do get that 10% bonus when you use the Round Up feature, which is pretty huge.

If you’d earn more than $500 per year in interest on your savings account with a 1.00%-2.00% interest rate, it may be better to shop around. Do your math first.

Who Chime is Best For

Chime doesn’t have joint accounts, so it’s not going to be awesome for couples who like having a shared pot. While I’m a big fan of separate finances, I know I’m not in the majority, so that’s something to take under consideration.

If you’re single, or maintain separate finances, and rarely run into cash or paper checks, this could be a good option for you. While you can deposit cash at Green Dot locations, you can’t deposit paper checks. You could always go to a business that does cash checking and then take your cash to a Green Dot location, but there will be fees–and inconvenience–involved.

To sum up, Chime is probably good for you if:

  • You’re single OR
  • You’re in a relationship but maintain separate finances
  • You operate primarily on a paperless economy
  • You want to be more conscious of your cash flow
  • You want to establish good money habits

Get $5 For Trying It Out

If that profile sounds like you, this is a really good time to get an account. Right now through the end of June, you’ll get $5 just for trying Chime outYou do have to deposit at least $2 in order to get your $5 reward. The process is super easy and takes around five minutes.

 

Are you happy with your current mobile banking options? What’s going right and what could use a little more disruption? We’d love to hear what you think in the comments!

 

Should I Hire Employees or Contractors?

Definitely had this question when my small business started to grow--should I hire an employee or a contractor?

Women-owned businesses are growing disproportionately to small businesses in the rest of the economy.

These businesses tend to start out as an entity of one. But when you experience growth, you need to get more hands on deck to handle the workload.

At this point, you’re faced with a question: do I hire employees, or do I contract it out?

Hiring Employees

Hiring employees means establishing loyalty and priority, but those things come at a cost.

Cons

  • You’ll have to pay payroll taxes.
  • In all likelihood, you’ll have to pay for healthcare.
  • To be competitive, you may have to offer a retirement plan.
  • Once you get big enough, you’ll have to hire someone to manage all those people.
  • Unless you have a completely remote staff, you’ll have to rent a bigger space.

Pros

It’s not all bad, though. There are some added benefits of having a staff that’s W-2’d:

  • All those benefits mean people are likely to stick around longer.
  • Less competing priorities.
  • More ability to delegate without renegotiating contracts.
  • Though you may need a manager or have to become one yourself, your team will be far easier to coordinate than a group of freelancers.

Hiring employees? Be sure you follow this 12-step process to keep everything legit.

Contractors

I operate primarily as a contractor. When I’ve needed assistance in my business, I’ve hired contractors rather than full- or part-time employees. While there’s good things about us, there are some undeniable hangups, as well.

Cons

  • Because there are no benefits, contractors don’t have as many scruples hopping from one job to the next. In fact, you probably aren’t your contractor’s only client.
  • Because you aren’t their only client, you may not always be priority #1. While I always try to make each of my clients feel like priority #1 and have been able to maintain some decently long relationships because of it, the fact remains that in order to pay the bills you almost always have to have more than one project going.
  • It’s difficult to coordinate contractors. They’re not all required to be in the same place at the same time for meetings, so communication may get fractured across different aspects of your project.
  • If you add tasks to a contractor’s workload, expect a conversation about contract renegotiations.

Pros

  • Contractors are cheap–even if you pay them more than you would a typical employee. No payroll taxes. No obligation for healthcare. No one’s expecting a 401(k) nonetheless a match.
  • Contractors tend to be extremely self-motivated. While coordinating between different aspects of a project may be difficult, once you sic them on a task they’ll likely require less management than a group of employees.
  • Contractors are much more likely to work remotely, reducing your overhead costs for rented space.
  • If you run into a budgeting problem, you can cut a contractor–or their hours–within the legal scope of your contract. This makes trimming costs easier when things are lean, and because you know they probably have other things going on in the background, you don’t necessarily have to feel like you’re putting them out of house and home (in most cases.)

The Best Way to Retain Workers

Once you’ve found good help,  you want to keep it, whether it’s coming from an employee or a contractor. The best ways to do this are to be fair in your compensation, flexible in your workplace structure and kind even in those teachable moments.

No matter who you hire, we’re all human beings, and the respect that breeds loyalty is a two-way street.

How have you handled new hires as your business grows?

 

Top 4 Reasons You May Need a Travel Credit Card

Huh. I didn't know credit cards were so much more secure for travel.

Using a credit card is a convenient and reliable means of payment if you’d like to travel overseas. You can book hotel rooms, buy tickets, rent a car, and pay in restaurants and stores.

In addition, if you take a credit card on your journeys you do not need to worry about:

  • Declaring cash at customs. There is no need to report the line of credit in your pocket when you travel with a credit card.
  • Safer than carrying cash. If your cash is stolen and you don’t have another form of payment on you, you’ll be stuck with no access to money for the rest of your trip. Cash has no protections, while credit cards do provide liability protections.
  • The safety of your funds. If the card is lost or stolen, it will be frozen when you report it. Liability measures provide much stronger protection for credit cards versus debit cards.

You need to pay attention to the best points credit cards for travelers if you want to select the most appropriate one.

Everything you need to know to get the maximum benefit from using a credit card

When traveling, remember that not all cards are accepted everywhere. Note that some European countries accept only “chip” cards, which provide the highest level of payment security. Make sure you know your accompanying PIN. Many American retailers only require a signature, so you might not be familiar. and that within Europe, some brands aren’t accepted at all. Such cards provide the highest level of payment security.

It’s also wise to carry an additional credit card in case you lose your main card, or in case it the issuer freezes it, mistakenly thinking your travels abroad are an indication of fraud. It’s convenient to carry cards of two payment systems (e.g. MasterCard Gold as the main, Visa Classic as additional). Moreover, Gold and Platinum class cards provide medical insurance for traveling abroad. Be sure to check your card’s policy before disembarking.

To avoid additional costs associated with currency conversion, it would be better for you to open an account in euros or US dollars depending on the region you are going to visit.

How to protect yourself from fraudulent transactions

To protect yourself from fraudulent transactions, take advantage of any SMS service your card issuer may provide. It will allow you to get all the information about the transactions associated with your account in real time.

If you become a victim of fraud, and realize it in real time, call your financial institution right away. If you don’t realize it until you read your statement, call them as soon as you are aware. You should follow up by writing a letter to your financial institution. You will be asked to specify the date of the suspicious transaction, the number in the system of payment as well as the code of the terminal. All this data can be found in your SMS or card statement. The financial institution will in turn consider all of this information, investigate, and determine the way of compensation.

There’s much more to learn about protection from credit card fraud. The FTC goes into greater detail here.

Other useful tips

Before going on a trip, find out whether the use of credit cards is widespread in your destination country. Countries like Finland are paradise for tourists in this regard. Even in a small town you can pay for a purchase using a credit card.

However, in some countries it is much more convenient to pay in cash. For example, it will be difficult to impossible to use a credit card in rural Egypt. In the Czech Republic, cards are accepted in large shopping malls and hotels. However, in small cafes and restaurants it would be better to pay in cash.

 

This article is brought to you and contributed by George Wolfson.

Broke Millennial: Get Your Financial Life Together

Inside: all the personal finance education you needed but didn't get in high school. Broke Millennial.

I was extremely fortunate to have parents that taught me lots of money lessons growing up. I was encouraged to save from a young age. When it came time to buy things like car insurance, they made me shop around so I could find out for myself how much cheaper it would be to just add me onto their policy. I also learned that I never wanted to be in debt, and, conversely, that a credit score was an extremely important tool to be kept pristine.

Unfortunately, I was a young adult when the Recession happened. Even though I knew about investing, the stock market’s plunge scared me out of my wits. My aversion to debt led to a delayed education so I could do it debt free, which may have been a wise decision, but definitely led to a lower income as a young adult.

The things I learned at home, and the things I didn’t, could have easily been addressed in a personal finance class, which didn’t exist back then–at least as far as I was aware. I’m not alone in my lack of a formal education. A lot of millennials struggle with their money as they face their generation’s unique financial challenges.

Enter a book so new that you can’t even get your hands on it until tomorrow: Broke Millennial.

Really Real Financial Education

The book’s author, Erin Lowry, and I had some similar fortunes in our at-home financial education. Though I’d argue her parents addressed the topics of investing and debt with a lot more finesse.

In Broke Millennial, she passes on this education to the masses. She’s spent a good portion of her adult life as a financial writer, which has allowed her to learn even more about the nitty gritty of the financial world, and she shares her insights with humor, slang and pop culture references that keep a Gen Y audience engaged and paying attention.

It is way too easy to talk down to millennials. After the Recession, hoards of young adults returned home when they couldn’t find employment after graduation. The participation trophies we got in soccer when we were six somehow make us fair game for derogatory adjectives like “entitled” and “whiny.”

While those adjectives may be accurate in some cases, Lowry gives a nod to the stereotypes while simultaneously addressing the very real issues this generation faces like crushing student loan debt and retirement savings without Social Security benefits. While it’s void of patronization, there is no whining, either–it’s all about getting the financial knowledge you need to take charge of your situation and get your financial life together.

Not Just for Novices

While this book may be best suited for millennials, or even older members of Gen Z who are headed out into the real world with no background in personal finance, it’s not purely for novices.

In the third chapter, Lowry gives readers the option of either reading the book straight through, picking and choosing chapters as they’re interested, or choosing which chapters to read based on level of experience.

I chose to read the entire thing through, and found myself learning new little tidbits as I went. Some examples of things I didn’t know, despite what is now a pretty decent background in personal finance:

  • When a collection item shows up on your credit report, it doesn’t hold the same weight for the entire time it’s on there.
  • “Opt-out” or auto-enroll 401(k)s may not offer you the full employer match. You may have to “opt in” in order to take full advantage.
  • Mathematical formulas for how much you should have in retirement savings per your age.

Order Early, Get a Freebie

When you pre-order Broke Millennial, you’ll get a free bonus chapter simply by emailing your receipt to info {at} brokemillennial {dot} com. Today is the last day to pre-order, though, as copies hit shelves tomorrow!

 

 

*I was provided with a free copy of this book for review purposes. Regardless, all opinions are 100% honest and my own.*

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