Archives for April 15, 2018

What financial issues are worrying most Americans in 2018?

According to an analysis of the most Googled GOOG, -0.31% financial topics, student loans are the No. 1 topic on people’s minds with an average of 2.4 million people per month asking, “How do student loans work?”, the study, by Liberty Bank for Savings, found. This was followed by “What is a mortgage?” (No. 2 with 2.3 million searches), “What is a car loan?” (568,100 searches), “How do payday loans work?” (368,000 searches) and “What is a 401(k)?” (301,100 searches). The study looked at searches over the past 12 months.

The most searched question makes sense: Americans are currently grappling with $1.4 trillion in student loan debt. In fact, wiping away all of that outstanding loan debt for the 44 million Americans who carry it could increase gross domestic product by between $86 billion and $108 billion per year, on average, for the 10 years following the debt cancellation, according to a recent report published by the Levy Economics Institute of Bard College.

The Googled questions reinforce a sad truth: Americans aren’t very well-educated when it comes to financial matters. Few states require financial literacy courses in public schools. When asked to identify key mortgage qualification criteria such as down payment, credit score and debt-to-income ratio, approximately one half of consumers were unable to provide an answer, a 2015 survey of more than 3,000 adults by mortgage provider Fannie Mae FNMA, -1.92% found. “The lack of understanding is more pronounced among those with less education and lower income as well as among renters,” it added.

As the Dow Jones Industrial Average DJIA, -0.50% has experienced a volatile few months, in part fueled by fears of a potential trade war with China, Americans are understandably worried about their employer-sponsored 401(k) retirement plans. But many more may be wondering how 401(k) plans work and how they can get one. Some two-thirds of Americans do not participate or have access to a 401(k) plan, according to Census Bureau researchers.

Despite an improving jobs market and growing economy, many workers are weighed down by stagnant wages and are struggling to keep up with their living expenses. Just 39% of Americans say they have enough savings to cover a $1,000 emergency room visit or car repair, according to data released in January by the personal finance site Bankrate. Paying for a major unexpected expense was the No. 1 use for savings cited by millennials, Generation X, baby boomers and the older Silent Generation. “Everyone should strive to have at least six months’ expenses socked away for the unexpected,” said Greg McBride, chief financial analyst at Bankrate.

Pay raises for U.S. employees are not expected to improve this year, according to data from global professional services company Aon, based on a survey of more than 1,000 companies. Base pay is expected to rise just 3% in 2018, up slightly from 2.9% in 2017.

We recently asked members of the BuzzFeed Community to share their top money-saving tips for grocery shopping at the dollar store. Here are some of their best (and most practical) tips:

1. Hit up the dollar store before going to the grocery store to see what you can get first.

“I always go to the dollar store first, get what I can, and then go to get everything else at the grocery store”

—mariem409793262

“Rule of thumb is to always go shopping at the dollar store first.”

—toriu3

2. Try to buy the random, one-off ingredients you don’t use often at the dollar store.

“I try to get pantry items that I don’t use often, but need for certain recipes. For me that’s panko bread crumbs, spices, yellow rice, and brown sugar. It makes no sense splurging on items you don’t use a lot.”

—NewYearsEve

3. Don’t forget to check out the frozen fruit section — which is usually much cheaper than grocery stores and perfect for smoothies.

“I’ve found that the price-per-ounce is much cheaper than regular grocery stores. It’s true that not everything is a good deal because of smaller package sizes, but my Dollar Tree carries large packages of frozen blueberries or strawberries that are just as good as the grocery store — and about half the price.”

—balyssa

4. Instead of buying expensive candy at the movie theater, stop at the dollar store to stock up before the show.

“I sneak them into the movies and they’re not only cheaper, but generally the same size.”

—a4cc7f965d

5. Hit up their snack section for cheap road trip munchies.

“Dollar stores are perfect for shelf-stable snacks for the car such as nuts, peanut butter crackers, cheese spread, and pretzels.”

—pami45535c347

6. Check out their Tupperware section to get cheap containers perfect for meal prepping.

“Buying Tupperware from Dollar Tree was a great decision. They have sturdy Tupperware and water bottles, and they come in cute designs too! ”

—valeriec4452fb332

7. Stock up on cooking staples like measuring cups and spatulas — perfect for recent college grads.

“The dollar store is the best place to buy cooking supplies — especially if you’re right out of college and need basics to get you started. I’ve gotten tons of spatulas, measuring cups, hot pads — things you don’t really want to buy, but know you’ll need.”

—kirstenelysew

8. Buy your staple grains there, like rice and pasta.

“You get the same amount. And you’re not wasting money on a fancy brand that you don’t necessarily need.”

—hennypennystegosaurus

9. See if your dollar store has a spice section and buy the ones you won’t use often there.

“I always buy spices at the dollar store.”

—ericai5

10. Check to see if they have knockoff versions of your favorites.

“I get knockoff Girl Scout cookies at the dollar store. They’re cheaper and available year round!”

—ehaverstick

11. Check to see if there are any international dollar stores around you (such as Daiso) for new-to-you ingredients.

“Rice crackers, dried squid, and instant noodles from Daiso are really good. If you have an international dollar store in your neighborhood, just go through their food section and try something out. Be a bit adventurous and buy something you normally wouldn’t.”

—shayann4e8ad1c07

12. Check out their prepackaged snacks — perfect for school lunches.

“I get packs of cookies, chips, and crackers for my kids lunches at Dollar Tree. I can get four Individually wrapped packs of crackers/cookies for only a buck.”

—stephaniev23

Saving still cheapest way to fund getaway

Dreaming of a spring getaway with white-sand beaches and a cool drink in your hand?

A search for airline tickets can bring your dream down to earth, if the steep fares outstrip your savings.

What if you could book your trip today and pay for it later — without maxing out your credit cards?

Major airlines including American Airlines, JetBlue, Southwest Airlines and United Airlines integrate buy-now-pay-later concepts into their online booking. Working with technology startups that provide the financing, they offer loans to travelers who would rather pay a fixed amount over time than dip into savings or use high-interest credit cards.

Financing a trip may be a reasonable option in a few situations — for trips that are important and have inflexible dates, for example, or for emergency travel. But if you don’t know how you’ll pay, borrowing isn’t a good idea, experts say.

Loan or layaway

“We are trying to help people take the trips of a lifetime,” says Brian Barth, founder and CEO of UpLift, a Silicon Valley startup that gives travel loans through four major airlines’ websites.

Travel lenders say they appeal to people with average credit scores who may not qualify for travel reward cards that require excellent credit. The loans also can make sense for people who are building credit.

It’s not just airlines offering financing for travelers. Travel deal sites such as CheapAir.com, Expedia and Groupon Getaways offer loans through Affirm, a San Francisco-based online lender. Airfordable and FlightLayaway.com offer layaway-style plans, in which you pay off your ticket in online installments before you fly. Other sites like STA Travel market financing to college students.

Some experts advise against going into debt for travel at all, whether you use travel loans or credit cards.

“Taking out debt (to travel) is risky and can be harder to pay off in the long run,” says Brett Snyder, president and founder of airline industry blog Cranky Flier.

The cost of convenience

Even when a travel loan might make sense, know how you’ll pay it back, Snyder says.

Before you choose a loan, understand all the costs, says Graciela Aponte-Diaz, director of California policy for the Center for Responsible Lending, a nonprofit advocacy group.

The typical UpLift customer borrows $500 to $2,500, says Barth, and the company charges annual percentage rates from 8.99 percent to 36 percent, based on your credit profile. If you borrow $1,500, for example, and pay it back over 12 months at 17 percent — UpLift’s average rate for borrowers — you’ll pay $137 per month and a total of $1,642.

Affirm charges 10 percent to 30 percent APR, and travelers borrow $1,400 on average, says spokesperson Elizabeth Allin. Airfordable charges a one-time service fee equal to about 13 percent of the ticket, according to a website calculator.

Lenders may also charge cancellation and modification fees if your plans change.

The credit effect

Both UpLift and Affirm say they perform soft credit checks — essentially a background check of your credit report, which won’t hurt your score. If you are approved, the loan and your payment history will show up on your credit report. Paying on time can build your credit score; not paying will hurt it.

UpLift considers borrowers with average to low credit scores and looks at data beyond credit scores, such as the person’s travel history with an airline, says Barth.

Affirm — which targets those who are new to credit — says it may ask applicants for permission to scan checking account transactions to gauge financial behavior.

Alternatives to travel loans

Saving is the cheapest way to fund your dream getaway. In some cases, charging the trip to your credit card and paying more than the minimum monthly payment may be cheaper than a travel loan with interest, as long as you pay it off within a fixed time frame, says Aponte-Diaz.

“You don’t have to go to Bali. Go to Florida without putting yourself into debt,” he says.

While most of us check our credit scores and try to pay our bills on time, maintaining and monitoring your credit can be slightly more complicated than it seems. And bad credit can be costly.

“Places might run your credit and use your credit score to decide whether or not you need to put a deposit down and then how much of a deposit,” said Darby Sweeney, assistant vice president and loan officer at Peoples Bank in downtown Kankakee. “They might still rent to you, but they’re going to require a much higher deposit or might still let you open an electric account but require a big deposit. It really can affect you monetarily, not having good credit.”

Sweeney shared her tips for improving your credit score at the monthly meeting of Women in Networking a subcommittee of the Kankakee County Chamber of Commerce that works to connect and empower professional women.

Don’t rely on Credit Karma

“Your score can be off by 100 points or more depending on what scoring model is being used,” said Sweeney. “People will come in and say ‘I just checked my credit on Credit Karma, and I have a 720 credit score.’ Then I check and they have a 610.”

Depending on the scoring model used, your credit score can vary widely. The free online credit check at Credit Karma uses a different version of the model than many institutions, so someone who thinks they have good credit could find themselves rejected for a loan.

While Sweeney says Credit Karma can be a handy tool for spotting inconsistencies or monitoring changes in a score over time, it’s not a good idea to rely on that number. Instead, try annualcreditreport.com, which offers annual scores from the three nationwide consumer credit reporting companies. They might not be 100 percent accurate, but they offer a few perspectives.

Diversify your credit

“You have to have the right kinds of credit. Someone who only has credit cards can’t get to that 800. Ideally you should have a mortgage, an auto loan, and a major credit card with a high limit and a reasonable balance,” said Sweeney.

Opening accounts and keeping them open is a great way to maintain a good credit score, within reason. Think of the ratio of money owed versus your total credit limit, and remember to keep using them and paying them off.

Sweeney added that you should rarely close an account, including store-exclusive cards available at places like Target or Kohls. If the balances on those are paid off, the limits of those cards you use less often will help your score. Check store policy to make sure that your cards won’t be closed if left inactive for too long.

Look for flexibility

Starting this past September, the three major credit reporting agencies changed their rules on medical debt. In the past, a late medical bill could damage your credit in a manner of weeks, but there’s now a 180-day grace period and debt that is later paid by your insurance company will be erased from your score altogether.

When it comes to old bills you might not have realized weren’t paid, Sweeney says there’s nothing wrong with calling up and asking for a “pay for delete” arrangement.

“You can say ‘I’ll pay you in full, but you will you delete it?’ Some companies have the authority to do that,” she said. “They might say heck no, but why not ask?”