The College Investor Blog | Millenial Personal Finance Blog
Robert Farrington is on a mission to help Millennials start building real wealth for their future. With Millennials often times strapped down with student loan debt, The College Investor provides tips on managing debt, investing as a millennial and achieving financial freedom.
Mailbox money is the idea of getting money in your mailbox with little or no work. In the "old days", this meant getting checks in the mail - but today, it basically means passive income that hits your account without much effort.
The idea of mailbox money has always been around, but was made popular by the late rapper Nipsey Hussle, who named his final commercial mixtape "Mailbox Money".
The idea of mailbox money is passive income. Now, nothing is truly passive, but you can usually invest time and/or money up front, and get the reward in your mailbox every month.
Here's our favorite mailbox money ideas, from traditional to out-of-the-box.
Real estate is one of the best ways to earn mailbox money (and it's likely the income stream that started this trend because renters would send you a check to your mailbox every month).
It's important to note that traditional real estate requires both time and money - you need to buy properties (which costs a lot of money), and spend time managing them as a landlord.
However, the internet has revolutionized real estate investing - making it easier and cheaper (and take much less time) than ever before. Here's how.
Do you have at least $500 and want to get started investing in real estate that will push cash into your mailbox (or bank account). Well, check out Fundrise.
Fundrise is an online REIT - Real Estate Investment Trust. This means that you invest in Fundrise, and you actually are part of a portfolio of properties. The fund has to pay out at least 90% of it's earnings, so that usually means you'll get a check in your mailbox.
If you're looking for a more traditional path to real estate investment, check out Roofstock. This company allows you to buy cash-flow positive single family rentals (with a duplex or fourplex throw into the mix every now and then)! You can sign up and start searching properties today. Check out Roofstock here.
Plus, they now have a service called Roofstock One where you can buy shares in other properties, and not even have to worry about managing it!
The great thing about using a platform versus doing it yourself is that the income is even more passive. Check out our full Roofstock review here.
If you don't want to be a landlord, but still want real estate, then consider being a limited partner in a large development. With these options, you can invest in multi-family or commercial properties. You get the income and tax treatment just like regular real estate ownership, but you don't do any of the work!
Our favorite platform for this is RealtyMogul because you get the flexibility to invest as little as $1,000, but can also participate in REITs and private placements – typically not offered to the public. Investors can fund real estate loans to gain passive income or buy an equity share in a property for potential appreciation. Their platform is open to both accredited and non-accredited investors.
Investing in the stock market is a great way to earn that mailbox money! The reason? It requires almost no work after you invest. Seriously. The trick to earning that money is to invest in dividend paying stocks and mutual funds. These are stocks that pay you cash just for owning them.
If you start small, the mailbox money won't be huge. But over time, as you keep investing and growing your portfolio, you could easily live off the dividends you receive each month.
To get started, you need to open an investment account. We recommend using M1 Finance because it's free, and designed to help you build a long term portfolio of stocks. It has automatic deposits, allows you to build a portfolio and automatically invest, and more!
This is probably one of those ideas that you think is lame, but it's actually a great way to earn some mailbox money safely with no time or effort.
If you already have a little bit of money, you can deposit it in a high yield savings account and start getting interest payments every month.
The best accounts out there right now are paying around 2.45% APY. That means, for every $100 you deposit, you'll get $2.45 per year. Once again, not a lot, but it adds up over time with no work or effort. Think about how that changes if you now have $20,000 in the account. That's over $40 per month you'll get paid!
Oh, and it's 100% safe because it's FDIC insured - so you can't lose!
CDs are the next level up about savings accounts. In general, they typically pay a little bit more interest, but they have a catch - you have to "lock" your money in for a period of time.
It's not that you can't take your money (you always can), but you typically will lose the interest you earned as a penalty for taking your money out early. The goal here is to incentivize you to leave your money a long time - and they'll pay you more for it.
For example, if you commit to locking your money up for 2 years, you can get 2.70% APY on your money - that's 0.25% more than you get in a savings account.
Lending money to people has been going on since the dawn of time - and it's a huge source of mailbox money for those that do it. The idea here is that you give someone $X, and they pay you back that amount with interest.
Today, there are formalized ways that you can lend money easily. A popular solution is using a service like Lending Club. What happens is someone wants to borrower money - say $20,000. Lending Club puts together a group of people who all lend $100 together to give that other person a loan.
You get paid back your percentage of the interest (on your investment of say, $100). Now, of course, this is riskier, because what if the person doesn't pay? It does happen. But on the flip side, you have the potential to earn more because of the risk.
A relatively new trend in earning mailbox money is to lend money to businesses (rather than people). Some people think this is a little safer (but still not without risk), and new tools are making it easier to connect business and people together.
There are two popular options - both of which provide a 5% annual return! That means you'll get over double what you can earn in a savings account right now.
One of the most modern ways to make mailbox money is to build an online empire through affiliate marketing, Amazon FBA, drop-shipping, and more. This is one of the ideas on this list that doesn't take much money, but does take a lot of time and effort.
I like to think of building websites and online products and services like online real estate. But unlike real real estate, you can spend a lot of your own time and effort making the money up front, versus having to spend a lot to invest.
There are so many blogs and resources that can teach you what to do, the question is, do you want to invest the time and effort up front to have something passive later on?
Do you have extra space in your house? If so, you should be taking advantage of this to get your mailbox money (or really, cash under the door). You can easily list your spare rooms for rent, or even space in your backyard.
There are places now that you could even list your driveway or garage to help people store bigger items like RVs or boats.
The bottom line is, do you want to earn from the extra space around your house? If so, then get going on services like Airbnb.
In memory of Nipsey Hussle, this can be a great way to earn mailbox money if you're musically inclined. You might think that the only way to get paid for your music is to create a record and sell it. But another way to really earn passive income is to create a beat and license it.
Every TV show, movie, and more use music in the background. Where do they get it? They find it in music catalogues and they pay licensing fees for it. And today, with the rise of YouTube, the demand for music is higher than ever.
The trick is that you have to put in the work of creating the music, and submitting it to music libraries that will get your music picked up. You can then be paid a royalty when people use your songs.
Investment fees are one of the biggest culprits in reducing investment returns. Beyond the performance of your stocks and bonds, if you're paying out a bunch of fees every year - you're just losing money.
While some investment fees are transparent, many fees are hard to spot, and harder to calculate how much they cost over time.
The most common investment fees that erode returns are:
Commissions (this is what it costs to buy and sell your stocks, bonds, and ETFs)
Annual Fees (this is what ETFs and mutual funds charge annually as a percentage of your holding)
Loads (this is a commission built into a mutual fund)
Advisory Fees (these are fees your financial advisor or firm charge you to manage your money)
Imagine you had a ETF that returned 5% last year. Well, if the ETF charged an 0.50% annual fee, and your advisor charged another 1% annual fee per year, that 5% return dropped to 3.5%. That's how fees can eat away at your returns.
But what if there was a simple solution that allowed you to know what you were paying in fees, AND suggested a better alternative? That's exactly what FeeX does - and it does it for free!
A free app that analyzes your investments and provides fee savings
Looks at the expense ratio of funds and tell you alternatives that will give you a better return due to less fees
FeeX is a FREE service that allows you to connect your investment accounts to their software, and it will analyze your holdings and provide you with recommendations about similar investments with less fees.
For example, in a past article I showed you how the majority of people who invest in the S&P 500 invest in an ETF called SPY. However, SPY charged double the fees of a fund by Vanguard, VOO. They both own the same 500 stocks - the stocks that make up the S&P 500. But you pay 50% more to own SPY versus VOO. Crazy!
The fact is, unless you had spent a lot of time doing your homework, navigating different financial sites, and looking directly at the annual investment fees, you would have never know that. But FeeX does all the work for you, instantly.
FeeX saves you time, but more importantly, they save you money (and potentially lots of it).
How It Works
When you connect your accounts to FeeX, it analyzes all of your holdings and provides you with a set of recommendations. Here's an example from my accounts:
When I first signed up for FeeX, I actually had a single fund that was potentially costing me $30,000 because of outrageously high fees - and I didn't even know about it. FeeX caught it. That's a good amount of money right there.
If you want to learn about the savings, FeeX gives you a full breakdown, including how similar the funds are to each other:
As you can see, there is 0.14% expense ratio savings between the two funds, but the Schwab fund also has a little better historical performance. However, this is a Fidelity account, so FIPDX is commission free!
By switching from the TIP to the FidelityFIPDX, FeeX estimates that I will lower my annual fees from $146.13 to just $38,45 - that's a huge savings!
At the top of the screen, it shows you your potential savings over time - and that can be a bit exaggerated, but it makes a point you should consider!
At this point, FeeX leaves the choice to you. Now you at least know the options, and what else is out there to potentially invest in.
They bring transparency to your investments and fees
They provide a great comparison, so you know WHY they opt for one ETF over another
All of the information they provide is FREE
There is currently not a better solution to optimizing your portfolio for fees that by using FeeX.
How FeeX Makes Money
FeeX does look to make money, and I really appreciate how they go about making money. Why? Because they provide an awesome free tool, and don't charge for it.
They make their money by providing services to brokers and RIAs who want to leverage their investing tools for their clients. They have other tools that help with account management.
Try FeeX Out For Free
If you have 10 minutes, try out FeeX right now. I think you'll be very surprised by how easy it is to use - and whether you use any of their paid services or not, you'll at least know where your portfolio stands when it comes to fees.
If you’re like most college students, you walk around with several thousand dollars in your book bag. Not cash, of course, but several thousand dollars worth of electronics including your phone, laptop, and noise-canceling headphones.
What would you do if your book bag (and all those electronics) were stolen? Could you afford to replace them? If not, you need to think about protecting your assets.
Here are a few ways to protect yourself from financial problems due to stolen, lost, or broken items.
Buy Insurance . . . Just for the Things (and Experiences) You Need Insured
One of the most important ways to protect yourself financially is to buy insurance for your things. That doesn’t mean you should pay for the overpriced extended warranties or phone insurance offered by your carrier. Instead, look into insuring your items à la carte with companies like Traverse Insurance.
Currently Traverse insures phones, electronics, musical equipment, sports equipment, jewelry, handbags, and cameras. You only have to pay to insure the items you want insured.
Even better, Traverse Insurance offers plans with no deductible. That means if you drop your phone in the toilet (we all know someone who has), Traverse will reimburse you for the whole cost of buying a new item.
Coverage for cell phones starts at just $4.75 per month, and coverage for other electronics starts at just $2.00 per month.
Traverse allows you to protect up to $5,000 of items with an insurance policy, but you can use up as much or as little of the policy as you need. That means if you only need to insure a few items, you’ll pay less than someone who has a ton of stuff to insure.
If your landlord requires renters insurance, you can add on a rental policy to your Traverse insurance policy. The renters liability policy costs just $2.95 per month.
Not only can you protect your things with Traverse, you can protect experiences like a vacation. Experience coverage with Traverse starts at just $5.35 per month, and Traverse will reimburse you if your car breaks down on vacation, your vacation rental is a nightmare, or something else goes horribly awry.
Buy Appropriate Protective Gear
Of course, buying insurance only protects you after something has gone wrong. It’s also important to protect yourself and your things preemptively. Putting your electronics, musical instruments, and cameras in appropriate cases can save you a bundle of money.
By buying the right protective gear, you reduce the likelihood that you’ll break or damage one of your costly items.
Don’t Leave Your Stuff in the Open
In addition to protecting your things from yourself, it’s also important to protect your things from theft. Don’t leave musical instruments, electronics, or other costly items in the front of your car. Instead, put them in the trunk. Better yet, keep those items on hand.
When it comes to storing things in your apartment or dorm room, be sure that you don’t leave valuables in front of a ground-floor window (or another place where people may see them). If you have a bike, be sure to lock it with a heavy-duty U-lock that nobody can easily break.
Avoiding letting your stuff look like an enticing target means you’re less likely to be a victim of theft.
Protect Yourself on the Cheap
With low-cost, à la carte insurance, and some basic planning, you can protect yourself and your stuff with very little out-of-pocket costs. If you don’t have insurance for your things, check out Traverse today.
Maven car sharing for owners allows car owners (with GM models 2015 or newer) to list their cars for short-term rentals.
When a Maven customer reserves the vehicle, the car owner drops the car off at a designated location. The owner then leaves the keys in a lockbox. The person reserving the car gets the keys from the lockbox, drives for a set period of time, and returns the vehicle to the designated location.
Maven covers the cost of insurance while renters drive the car. Additionally, owners can choose when their car is available to rent.
Right now, Maven operates in Baltimore, Boston, Chicago, Denver, Jersey City, Los Angeles, San Francisco, Southeast Michigan (Ann Arbor), and Washington, D.C.
How Much Can I Expect to Earn?
Maven car owners earn 60% of the rental price of the vehicle, but owners have very few expenses. Maven covers 100% of insurance costs associated with rentals. Plus, drivers get free access to OnStar benefits.
Car renters are expected to refuel the vehicle before returning it. Owners are expected to pay for maintenance costs on the car.
As a car owner, you set the rate for rentals. During big events (like huge concerts or the Super Bowl) you may be able to raise your rental rates. Maven will recommend rates for car owners, but you can choose rates on your own.
In addition to the rental income, you can earn $150 every 3 months for listing your car for at least 15 days each month. On top of that, you can earn referral bonuses if your friends start listing their cars.
Most car earners can expect to earn a maximum of about $500 per month with some owners earning less.
Do I Get to Pick My Hours?
Maven car owners can choose when their car is available for rent and when they need it for personal use. The Maven app allows owners to set the car availability in 30-minute increments. Owners can change their car’s availability anytime as long as it isn’t rented.
If you live or work near a downtown hub or close to an airport, listing your car could be an easy part of your everyday life. However, if you need your car, or you live out in the suburbs, listing your car could be a pain.
Maven Car Sharing Alternatives
Maven isn't the only car sharing service in town. In fact, it's one of the most limited.
The original car sharing service is Turo. Turo allows you to list your car for rental, and it's much more flexible than Maven. You can list more than just GM cars, and you can park it for pickup and drop in more places.
Maven car sharing isn’t likely to make you rich, but it’s a decent way to take a depreciating asset and earn some cash flow from it. People who enjoy driving nice, clean cars can use Maven to monetize an expense that otherwise takes a lot of money out of their pockets.
Overall, the hustle isn’t too time-intensive, and it can make a lot sense if you live or work close to one of Maven’s designated drop-off zones.
Every investor wants to get a "good deal". That's the premise of investing - buy low and sell high. But one of the biggest challenges investors face is fees and commissions. That's why we wanted to compare the lowest cost investing platforms available.
Technology has made it easier than ever to invest for free. And we've already highlighted all the ways you can invest for free. But, not all free investing platforms are equal. In fact, many of the free investing platforms are severely limited in what you can do.
That's why you may be considering looking beyond free, and into cheap and low cost investing platforms that are more robust for what you need. Here's our list of the cheapest investing sites.
We also break down a list of the cheapest robo-advisors to invest with as well.
Here is what you get at each of these major investment platforms.
M1 Finance is a newer investing platform that is commission free. This platform is a great choice for long-term buy and hold investor. You can invest in stocks and ETFs on the platform by building "pie" slices. You can also setup automatic investing to automate your portfolio.
The drawback with M1 Finance is that you are limited in your investment choices. No individual bonds, no options, and more.
Robinhood is another tech startup that was one of the first companies to offer commission free trading. This company focuses almost exclusively on stocks, ETFs, and options, but it does offer some limited cryptocurrency trading as well.
Their platform is pretty bare bones, support is all via a ticketing system, and you are limited in what investments you can purchase.
Vanguard is most well-known as being the creator of extremely low-cost index funds. While other companies now have lower cost index funds, Vanguard is still hailed as a low priced champion for investors.
Along those lines, Vanguard does offer commission-free investing for its funds on its platform. This can be a huge savings for beginner investors who want to invest in Vanguard funds.
The drawback is that if you want to invest in anything else outside of Vanguard, they are one of the most expensive places to invest.
Ally Invest has been around for several years and has always been reasonably priced. They don't stand out as anything amazing, but if you're already an Ally customer, using their investment platform is an easy way to get access to more, for less.
Their base pricing is $4.95 per trade, but if you have over $100,000 in your account, or make over 30 trades per quarter, you get reduced pricing to $3.95. If you've been investing for a little bit, that's not a terribly high bar to clear.
The only real drawbacks of Ally are their poor mobile trading experience and minimal research tools.
Fidelity is one of the largest brokers on this list, and honestly, one of the most robust. They are usually one of our top picks on the best places to invest list. The reasons are exhaustive.
They have very reasonable pricing at $4.95 per trade, but they also have a large list of commission free mutual funds and ETFs that you can invest in. They also recently introduced the first 0% expense ratio mutual funds, which makes your investing experience completely free.
Fidelity also has access to every investment. You can find anything (though some may require special approval).
The drawback to Fidelity is also its win - it may be more than you need, especially starting out. But, if you're a long term investor, their commission-free funds are compelling.
Charles Schwab is another popular brokerage on this list that has continually lowered it's commissions to compete with others. Schwab is another well-known provider for having a solid cash management account (which depending on what specials are going on, sometimes makes it on our list of the best free checking accounts).
Like Fidelity, Schwab also has a wide range of commission free ETFs and mutual funds. While they don't have any 0% expense ratio funds, they do offer extremely low expense ratio funds - many even lower than Vanguard (the previous market leader).
The drawbacks to Schwab are similar to Fidelity - it may be more than you need. There are also lackluster support options compared to other major providers.
E*Trade is another major investment platform that originally made its name for itself for low costs. However, over time, the competition has push it to the bottom of the pack on pricing. However, it does set itself apart in some categories.
E*Trade currently offers a flat pricing of $6.95 per trade. But they also have a wide variety of commission free mutual funds and ETFs. One strong point for E*Trade is that they offer the most robust free solo 401k plan available.
TD Ameritrade is the last major investment platform on this list that is full service and relatively low-priced. Just like the others, its not the cheapest, but it does have many free features that are compelling.
Its base pricing is $6.95 per trade, but it has a huge commission-free mutual fund and ETF list. They also consistently offer promotions granting commission-free trades and even bonus cash offers. See all investing bonus offers here.
Here's our comparison summary of robo-advisor options. Remember, price isn't the only factor but it should be compelling for users since many of these platforms *should* build similar portfolios for you.
SoFi just recently launched SoFi Wealth, a game-changing robo-advisor platform that is enticing users with a 0% AUM fee. This platform has no fees, free access to financial advisors, and automatic investing.
The drawbacks, depending on who you ask, is that it doesn't offer tax-loss harvesting, it does invest in it's own funds, and it has limited asset selections.
Betterment was one of the first robo-advisor platforms, and it's currently the largest based on assets under management. It also offers a unique pricing structure that ranges from 0.15% to 0.40% AUM, depending on how much money you have and what services you select.
Most users will likely fall into the 0.25% AUM pricing - which is for their Digital account, with assets under $2,000,000.
Betterment also offers several unique products, like their Smart Saver account, and access to financial planners for a flat fee.
If you’ve spent much time on investing forums or sub-Reddits, you’ve probably come across the term “infinite banking” or “banking on yourself”.
The term comes from Nelson Nash who was an economist that aligned with the Austrian school of economics. Nash’s theoretical leanings certainly influenced the concept of infinite banking, but regardless of your economic ideals it’s important to ask the question is infinite banking for me.
In this post, we’ll explain the basic concepts behind infinite banking, and explain why the concept is probably not the best way to build wealth for the average (or slightly above-average) person. Plus, we'll give you some of the big red flags to look out for - especially if someone is pitching you hard on this concept.
If you’ve ever heard a pitch for a whole life insurance policy, one of the strong selling points for the product is that policyholders can borrow against the actual cash value of the life insurance policy. If you need to pay for an engagement ring, a child’s university bill or a new car, you can borrow against the policy.
According to Nash, an individual who has enough money in whole life insurance policies can continually borrow from himself using the policy as collateral. Under this setup, you would theoretically never borrow money from a bank again. Instead, you would borrow from yourself, and pay yourself back over time. This is the concept of "becoming your own bank".
The infinite part of infinite banking refers to the whole life insurance payout when you die. Since whole life insurance policies always pay out (as long as the premiums are paid), a person can continue to borrow against their insurance policy throughout their life. Upon their death, the payout from the insurance policy can go to the beneficiary and allow them to bank on themselves.
This could create something like a family bank, where now your beneficiaries (typically your children) can setup the same thing for themselves.
Practically Speaking, What Is Needed To Make Infinite Banking Work?
In general, infinite banking works best when the person banking on themselves has extremely strong cash flow. Whole life insurance policies can cost several hundred dollars per month (between five to fifteen times as much as term life insurance policies).
On top of that, building up cash value in the policies can take at least a few years, so a person has to be committed to infinite banking for it to work.
One of the big things here is to try to "superfund" the cash value as much as you can without tripping up the IRS rules around Modified Endowment Contracts (MEC).
Another precondition for infinite banking is a high yield environment. Most whole life insurance policies invest in conservative investments such as corporate and government bonds. Right now, these investments trail inflation which means that policy holders are actually losing cash value relative to inflation.
The Big Downside: The Insurance Is Expensive
The idea of having this "fund" that you can tap at any time sounds appealing, but there are always downsides. Insurance companies aren't offering these policies out of the kindness of their heart. They are offering these policies to make money, and that profit come from you.
It's important to compare Infinite Banking and Whole Life Insurance to their alternatives. The alternative here being using a traditional bank to save and borrow if needed, and an investment firm to invest.
When you have a whole life policy, you have the following expense considerations:
A well-structured whole life policy's cash value doesn't even start to break even for 5 to 7 years. Many policies aren't well structured, and you might never break even...
Agent commissions on these policies create a real incentive for insurance sales people to sell whole life policies that aren't always in the customer's best interest.
If you plan to borrow from your policy's cash balance, it's still a loan with rates ranging from 4-8% on average. You don't get free access to your cash balance.
Let's Look At Some Math
It's always easier to look at some math and see how this can work. Remember, each policy is different, and you have to look at the underlying math!
A reader recently shared his 7 year old guaranteed whole life insurance policy with us. It was issued in 6/2012. The reader is 40, male, healthy, and got the policy then at 33, when he was probably even healthier!
It’s a guaranteed whole life policy until age 99. It has a current death benefit of $1,551,262, with a current face value of $1,549,562. The monthly premium is $1,982.72.
This reader has been paying his policy for 79 months – so he’s paid a total of $156,634 for this policy.
Guess what the current cash value is in 2019? Just $88,459.
That’s almost a -40% return of the past 7 years…
But remember, if we're looking at this through the lens of infinite banking, you're getting life insurance AND a bank account.
If you want to separate the two – he has $88,459 in “investments/cash value” and paid $68,175 for a $1,500,000 insurance policy.
Any way you slice this it’s bad. If you wanted to get a $1.5 million term life policy, this reader would probably pay about $115/mo in a worst case. So, in the same 79 months he’s had the policy, he could have had the same insurance coverage for just $9,085. That’s a $59,090 difference! (Get a quote for yourself from the best online term life insurance companies).
I’m also assuming that he got a 0% return on his investments – because if you start changing the math on the life insurance portion, the return goes negative quickly!
And remember, we’re talking about the stock market from 2012 to 2019 – one of the longest bull markets in history! So this reader is getting a 0% return at best (likely negative though), that's just wrong.
Also, if you wanted to tap your cash value, you're still going to be paying interest on your loan - and if you're in a financial position to fund a life insurance policy like this, you are also probably in a financial position to get the best loan rates available.
This is an example of a really poorly structured whole life insurance policy, but I think it illustrates what can happen very well. You spend a lot of money on insurance, and you don't get the benefits promised by an insurance sales person.
Comparing The Alternatives
Remember, we're looking at two things here: life insurance and banking.
If you want to look at just getting life insurance, we recommend term life insurance. The goal of life insurance is simply to protect your family if you die and they lose your income. A good 20 or 30 year term policy should work for most. By the time you're 65, you shouldn't have people relying on your income - your kids should be grown, and you should have your own retirement savings.
If you want lifetime protection, look at Guaranteed Universal Life before a whole life policy. It's more expensive than term, but less expensive than whole.
In our situation above, our reader would pay just $115/mo for $1.5 million in term life insurance (in a worst case - in a best case this could be as low as $40/mo). Compare that to his current whole life insurance premium of $1,982.72.
You would save $1,867 per month NOT doing this. That's $22,404 per year.
Remember this reader's cash value after 7 years - $88,459. Well, if you didn't do anything by save the difference in premiums, you'd have that same amount saved in less than 4 years. In 7 years, assuming 0% interest, you'd have saved $156,828 saved. That's just the difference in premiums. And remember, you can get 2%+ in high yield savings accounts right now.
If you wanted to borrow money, if you can afford to spend $2,000 on insurance, you probably are a highly qualified borrower and can get top tier rates. Maybe even better than what your insurance company would charge to borrower from your whole life policy.
Finally, a big argument for these policies is that they are safe, forced savings. It's the argument that you won't save for yourself, and you won't invest the difference. And that you'll need this cash value in the future.
Well, if you're speaking to someone to setup this type of arrangement, you're also probably savvy enough to save on your own. And you're also probably savvy enough to speak to a financial planner than can help you properly setup your retirement.
Should The Average Person Pursue Infinite Banking?
At first blush, infinite banking sounds like a somewhat inefficient way to save money first and then spend it. In fact, until you have very strong cash flow, that’s exactly what it is.
If you want to “bank on yourself” and escape the tyranny of modern banking, an easy way to do it is to save money by earning more and spending less than you earn. That way, when you need to make a big purchase, you’ll have the cash you need to do it.
That said, for the mega-high income and mega-wealthy person, infinite banking could make some sense. Whole life insurance policies have certain advantages (cannot be garnished in a lawsuit for example), and could make sense for estate planning purposes (if you're looking at estate tax liability). The ability to draw down the cash value for investment or consumption is basically an added benefit.
Are you mega-wealthy ($10m plus in liquid assets)? If so, ask your financial advisor about infinite banking. If you’re not, skip the infinite banking for now, and work on saving cash for you next purchase and making long term investments.
If you’re a public servant — a teacher, a nonprofit worker, a public defender, a government worker, or another — you might have cheered when you heard about the Public Service Loan Forgiveness program. This program, in theory, allows borrowers to make 10 years of income-driven payments on their loans and then have the rest forgiven.
But the program’s rules are complex — so much so that we have a whole training course dedicated to getting it right — and when the first borrowers became eligible for forgiveness 10 years after the program’s start in 2007, hardly anyone who applied for loan discharge was able to get it processed.
In fact, as of September 2018, only 206 people out of more than 40,000 applicants had had their loans forgiven.
Basically, to meet the original requirements, you needed to have a specific type of loan (or consolidate your existing loans in order to get the specific type of loan), to be on a specific type of repayment plan, to certify that your employer qualified as “public service” every single year, and to make 120 payments under these conditions (not 120 payments overall, or 10 straight years of payments, but 120/10 years of payments while having this kind of loan and working for this kind of employer).
That’s a lot to keep track of, and being in the wrong kind of payment plan in particular seems to have bitten a lot of people.
Remember, it took 10 years for the first possible qualifiers to apply to have their loans forgiven, so that was in 2017. When news started to break that 99% of PSLF applicants were being denied due to not meeting requirements, it became a major scandal.
The money is finite, and will eventually run out — so it’s on a first come, first served basis. Hence, temporary. However, not much of it has been used so far due to another round of eligibility issues, so there’s a good chance that if you qualify, you’ll be able to use it.
The current focus of TEPSLF is on people who were in the wrong kind of repayment plan. Original-flavor PSLF required that borrowers be on one of the income-driven repayment plans: PAYE (Pay As You Earn), REPAYE (Revised Pay As You Earn), IBR (Income-Based Repayment), or ICR (Income-Contingent Repayment).
All of these plans tie the amount of your payments to your income, and since public service incomes are generally lower, it made sense that lots of PSLF applicants would be on one. But it turned out this often isn’t the case and lots of people were rejected for being on another payment plan.
TEPSLF expands the kind of eligible repayment plans. If you have been using a Graduated Repayment Plan, an Extended Repayment Plan, a Consolidation Standard Repayment Plan, or a Consolidation Graduated Repayment Plan, you’re now eligible as long as you meet all the other PSLF requirements.
Who Is Eligible? Part II: Procedure
It’s not just the kind of repayment plan you have though. You also have to go through a very specific procedure to have your loans forgiven under TEPSLF.
So here’s the skinny. In order to get access to TEPSLF:
You must submit a PSLF application for forgiveness and have that application denied (even if you already know you’ll be denied, you have to do this anyway).
The denial has to be because some of your payments were not made under a qualifying PSLF repayment plan (and not for any other reason).
You have to have 10 years of certified qualifying employment.
Your recent payments have to have been at least as much as they’d have been in a qualifying PSLF repayment plan.
You have to have made 120 payments that qualify (they need to have been made after October 1, 2007; to not have been more than 15 days late; and to have been made while employed by a qualifying employer). If your loans were in a grace period, a deferment, or forbearance when you made a payment, it won’t qualify. Also, the payments need to have been made on the loan(s) you’re seeking forgiveness on. If you consolidated halfway through the 10 years, then the payments you made on the unconsolidated loans won’t count.
Then you can go on to apply for TEPSLF.
What Kinds of Loans Are Eligible?
As with PSLF, only Direct Loans qualify for TEPSLF. If you had other loans but were able to consolidate them into a Direct Loan, that’s ok, but only payments you made on the Direct Loan will count.
Parent PLUS loans, FFEL loans, Perkins Loans, and private loans are not eligible.
Direct Loans in default are also not eligible.
What Do I Need to Do?
First, if you haven’t already made 10 years of payments while working for an approved employer, applied for PSLF, and been denied, you’ll need to do all those things.
That means your first stop should probably be FedLoan Servicing to ensure that your employers have been certified.
Next, you’ll need to apply for PSLF and wait to be denied. The denial has to be because you were using the wrong repayment plan for part or all of your 120 payments.
Then you send the Education Department an email. No, really! You do! I assumed there was a form to fill out, but nope:
Subject line: “TEPSLF Request.”
In the body of the email, use the sentence, “I request that the Education Department reconsider my eligibility for Public Service Loan Forgiveness.”
Include the same name under which you submitted that PSLF request that got denied (if you’ve married, divorced, or changed your name for another reason in the meantime, include the old name in the email).
Also include your date of birth in MM/DD/YYYY format.
Then, wait for FedLoan Servicing to reply to you. They’re required to confirm that you are eligible and to email you back with a determination. This might take several months (they say 60 to 120 days). You may be asked for additional information, especially about your income in the last 12 months, your family size, or your employer.
(They might want to know about your income or family size because they want to determine whether or not your recent payments were at least as much as they would have been on an income-based repayment program, which is one of the markers of eligibility for TEPSLF.)
If they do ask you for more info, move on it quickly, because you’ll need to provide it in 21 days or your request will be canceled.
If you’re denied, you may need to follow up with more information if you want to appeal. The denial ought to come with a reason and also an explanation of what you should do next. That may include submitting a PSLF application, making further payments (if you don’t have 10 eligible years’ worth), and/or getting your employer certified (which means following up with FedLoan Servicing and your employers during the 10-year period).
If you’re approved, that should be it. Your loans will be forgiven, along with any outstanding interest, and you can log into your account and see a $0.
One thing I really noted in that story is that while it’s really frustrating to deal with servicers, it can have benefits to keep pushing them. The woman in the story called her servicer maybe 20 times to check on things, insist that they look further into her situation, get documentation, and so on.
That sounds awful and it really sucks that it’s this challenging to access the program. But on the other hand, which would you rather do: call FedLoan Servicing 20 times or pay on your student loans for another 5 years when you don’t have to?
Here is another takeaway from that story: If you can afford it, it might help to hire a professional to assess your situation and help you make a plan. The woman in the story used a student loan lawyer. She still had to do a lot of the work of calling the servicer, etc., but it must have been comforting to have an expert on her side.
Meanwhile, the major Democratic presidential contenders have mostly signaled support for a bill introduced by one of them, Senator Kirsten Gillibrand, which would expand the types of eligible loans and payment plans permanently and reduce the payment period from 10 years to 5, among other things. (There are also some requirements for better information from the Education Department to students and an online application system that would be easier and clearer to use, etc.)
It definitely seems like PSLF has become a partisan issue, with Democrats trying to expand the program to more borrowers and Republicans trying to prevent borrowers from accessing it. This didn’t used to be the case — PSLF was signed into law by George Bush and the Obama education department didn’t exactly do a great job of keeping servicers from misbehaving — but unfortunately, it does seem now like the program has become a political football, meaning that its future probably depends a lot on who wins Congress and the presidency in 2020.
Your checking account is the centerpiece of your financial life. It’s how you get your paycheck, how you pay your bills, and, if you’re like most people, the balance in your account tells you when it’s time to stop spending.
But when was the last time you checked to see if your checking account is right for you? The answer for a lot of people may be never.
The spend account offers 1% cashback on every purchase with a business that has a high “Aspiration Impact Measure” (social responsibility score) and 0.5% back on all other businesses. Very few financial firms offer any sort of cash back on debit card purchases, so this is a great perk for debit card users. Cash back is credited to the spending account once per month.
Additionally, you’ll earn up to 2.00% Annual Percentage Yield (APY) on all deposits (minimum $10 opening deposit) in the save part of your account. Which is actually pretty incredible. It’s also helpful to note that Aspiration has a competitive rate on interest paid on deposits.
Opening a Spend and Save Account
The Spend and Save account has a $0 minimum balance, but you need $10 to open the account. You must be at least 18 years old and a US citizen or permanent resident to open the account.
In fact, it is one of the few banking products that has no international or domestic ATM fees. Aspiration will even reimburse you if the other bank charges you a fee for an ATM withdrawal.
However, you will have to pay any currency conversion fees.
The main fees on the account are $0.82 ingoing and outgoing domestic transfer fees, $2.50 international wire in fees, and $15.00 international wire out fees. You could also be charged $1.15 for a returned item fee if you bounce a check. A full list of service charges can be found here.
Is It Really Free?
The Spend And Save account really doesn’t charge you fees, but you can opt to pay a monthly fee for the account. Aspiration calls this “pay what is fair.”
However, Aspiration also has a charitable angle and pledges to give 10% of all profits to charitable causes, so you may want to pay for your account. The choice is yours.
Any Concerning Fine Print On The Spend and Save Account?
The main drawback to the Spend and Save Account from Aspiration is that it doesn’t have any branches. You can call them to get customer service, but you can’t walk into a branch.
This could prove to be a bit of an issue if you’re a baller who regularly gets large checks. Why? When you get a check over $5000 you have to mail the check to Aspiration’s partner bank: Coastal Community Bank, PO Box 2103, Everett, WA 98213.
The money won’t be available in your account until the physical check has been received and cleared.
Another possible issue with the Spend and Save Account is getting physical cash. Since you can’t go into a branch, you’re going to face certain limits. These include:
$5,000 per day external transfer limit
$500 cash limit
$2,000 PIN limit
$2,000 signature based limit
Usually, these limits won’t be a problem, but if you want to buy a used car using cash (for example), you might be hard pressed to get what you need from your account.
Finally, deposits in your Aspiration account are FDIC Insured up to $2,000,000 per depositor by being swept to FDIC Member institutions (visit https://www.fdic.gov for more on this). This is common practice for other cash management accounts like Fidelity or Schwab offer.
Final Take on Aspiration’s Spend and Save Account
Overall, the Spend and Save Account may bean awesome centerpiece to your financial life, but it’s not perfect.
Brick and mortar banks may still make some sense for you to consider, especially if you deal with cash on a regular basis.
If access to physical currency isn’t too important to you, the accounts from Aspiration could be a great choice.
Want an e-commerce platform that combines a social media experience with buying and selling designer clothes at discount prices? Or perhaps you have seen Instagram celebrities and wondered if you could raid their closets?
Neither of those is a far-fetched idea. Poshmark has been giving people the opportunity to do just that since 2011.
In fact, it is not uncommon these days for social media celebrities to do flash sales of their most-coveted clothes and luxury items on Poshmark.
If you have a Facebook or Google account, you can create a Poshmark account in minutes.
You can also sign-in via an email address if you don’t use either service.
After you sign in using one of the methods above, you will be directed to a page that allows you to choose your brand preferences.
You can always add more brands to follow or change the ones you follow later.
Once You’ve Created an Account
Once you have created an account, you will be able to see the Poshmark dashboard where you can either buy or sell your own designer products.
Let’s talk about how you can use Poshmark to start earning some extra money.
How to Use Poshmark as a Seller
Once you sign up as a user on Poshmark, you can begin listing items for sale by clicking on the “SELL ON POSHMARK” button.
Once you click on this button, you will be able to create a listing and pricing for whichever designer item you’re selling.
If you successfully list and sell an item, you will earn as much as 80% of the sale price of the item.
Want to Sell via a Party on Poshmark? You Can Do That.
Beyond listing your product, there are other ways to sell on Poshmark.
As a seller you can participate in “Posh Parties.” These are virtual selling and buying parties that happen on the Poshmark app. If you have other friends who own designer items, you can get together with them to participate in these parties.
Posh Parties are organized around themes or brands. And so for instance, there could be a “Best in Bags” party or a “Summer Gucci Party.”
The Posh Parties appear to add urgency to the Poshmark experience in a lot of ways that a QVC show would sell items with the clock on the screen.
When you make a sale on Poshmark, you get a prepaid, pre-addressed label that is ready to go on the box. So the added plus here is that you don’t need to go to the post office and stand in line to buy stamps.
This is a feature that a lot of online e-commerce platforms don’t have and so it was a pleasant surprise to see that Poshmark has it.
How to Use Poshmark as a Buyer
Using Poshmark as a buyer is a great way to get good deals on designer items.
Unlike a platform like Craigslist, where you would have to buy things “as is,” Poshmark has Posh Protect. Thus if you buy a product and are not happy or feel you have been duped, you could rely on this program to fix the situation.
It is always important to investigate what you’re buying and whom you’re buying it from before you spend your hard-earned money anywhere online. And this is especially true on a platform like Poshmark.
For sellers on Poshmark, it may be helpful to take a look at how many listings and followers they have.
Since Poshmark is basically a “shop-my-closet,” social-selling website, you can follow sellers on the platform and get to know them virtually before buying anything from them.
You can ask the seller questions publicly before buying from them.
However, like any e-commerce platform, it is always wise to do your research before buying anything.
Items More Than $500
Poshmark has a program called Posh Authenticate. If you buy a luxury item for more than $500, Poshmark will authenticate it for free. The seller will have to ship it to Poshmark first so it can be authenticated.
If they cannot authenticate it, Poshmark will issue you a full refund.
Once they successfully authenticate it, they will repackage the item and send it to you.
Is Poshmark Worth Your Time?
The creators of Poshmark have done a great job of combining several aspects of the online shopping experience that people like into one platform.
If you like to connect with people before you buy from them, Poshmark allows you to do that.
If you would like to buy and sell in a “party” format without having to leave your home, you get that with Poshmark too.
Can you get deep discounts on designer items you’ve always wanted to own? Poshmark has the answer to that.
Do you hate going to the post office to get stamps for mailing your sold items? Poshmark has your back.
And so on many levels, Poshmark is a great curated shopping experience for people who want designer products on a budget.
It also helps that given the high stakes involved — i.e., the typically high prices people have to pay to buy items on Poshmark — they have programs like Posh Protect and Posh Authenticate to protect buyers.
Based on our criteria, here are our choices for the best business savings and money market accounts available. Some of these are a little unorthodox, but they work!
1. US Bank Platinum Business Money Market
The US Bank Platinum Business Money Market is one of the best business money market accounts available. It pays a high APY, connects to your US Bank Business Checking Account, and even offers a bonus APY when you sign up.
Right now you can earn a solid 2.25% APY (current as of April 29, 2019) on your business cash in a Platinum Money Market Account. You do need to maintain a $10,000 balance to earn this APY.
Why I Like It: One of the best business money market accounts.
This account does have a small monthly fee, but that can be waived with a $5,000 minimum balance.
The real plus with this account is that it pays interest! You can earn 0.75% APY on balances over $5,000. This rate is current as of April 29, 2019. It's nearly unheard of to have a business checking account that pays interest.
This account also has the usual features you'd expect in a top notch business checking account:
Free ATM withdrawals
Free online bill pay
Mobile check deposits
Why I Like It: A business checking account option that can earn interest.
The Fidelity Business Account isn't technically a bank account - it's a brokerage account. However, you can open this brokerage account in your business's name, and you can invest in the Fidelity Money Market Fund (as well as just about any other investments you want).
The Fidelity Money Market Fund (SPRXX) currently yields 2.25% APY as of April 29, 2019.
This account has no minimums or annual fees, and charges the same commissions as a regular brokerage customer.
Why I Like It: Lots of options to invest for your business.
While there are business savings and business money market accounts, sometimes it makes sense to go with savings account alternatives.
We already mentioned a couple in this article - a high yield checking account and a business brokerage account.
But there are other alternatives as well. For many investment products, you can always open an account in your business's name. For example, the Wealthy Accountant recently wrote about how he is using Worthy Bonds to earn a 5% return on his money.
The key is to simply open an account in the name of your business, and use your business EIN.
What You Need In A Business Savings Account
You could find yourself needing or wanting a business savings account for a few reasons. Usually, it's because you have cash inside your business checking account, and hate seeing it earn 0% interest. If you're going to keep your money in your business, you want to at least see it earn something.
But why not simply take a distribution and put it in your personal account? Well, you may be saving it for a bigger purchase, future expenses, a business emergency fund, or simply to keep your business well capitalized.
In order to be one of the best business savings accounts, we put the following criteria in place:
No Monthly Maintenance Fees: This is a big one. All of the accounts we consider must not charge a monthly maintenance fee, or at least have an easy way to waive them.
No Or Low Monthly Balance Required: You shouldn't have to have huge amounts of money to waive fees or qualify for a business savings account. We only look for banks that don't have a monthly minimum balance requirement or if they do, it's incredibly low.
Awesome Online Access: The best business savings accounts will also have awesome online access, a great app or mobile site, and be accessible anywhere.
Hopefully you can see that there are good options for a business savings or business money market account.
You don't have to pay fees to have a business account - you just need to open your account at a good bank or brokerage.