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The year was 2008. I was 25, pregnant with twins, and very much in love. And we had just hit the quintessential American rite of passage: We bought our first home.
The large, open floor plan beckoned us. Before the ink was dry, we’d bought a lawnmower, buckets of paint, and some new appliances. We were all in. We wanted to get as much done as we could before the babies came.
A month later, my husband brought home a pink slip and the housing market died a fiery death — both results of the economic crash.
Overnight, instead of a homeowner’s blissful daydream, the house became a nightmare we couldn’t afford. We’d purchased the house for $240,000. Just weeks later, it was worth less than $150,000. Our mortgage stood at $1,200 a month, plus utilities, taxes, insurance, and everything that goes with the American Dream.
And before we could even process all this (and figure out how to move forward on my meager $40,000 salary), the twins came early. We found ourselves trapped in a hospital for 10 days while my tiny babies struggled to live and get bigger. In just two months, we’d gone from two people on the brink of traditional adult life to four people unable to afford the most basic necessities.
We struggled to feed our children and make ends meet, delving into our savings to cover the mortgage and other bills until that was totally depleted. Then we moved on to the life-saving state and federal programs available to people who have fallen on hard times.
And then things got worse. Our beautiful new-to-us home in Connecticut, built in 1987, needed more than updated cabinets. We found out the hard way.
One freezing day in late October, when my babies were just two months old, our furnace broke. No warning. It just stopped. Nothing cements the fear of poverty and the shame of helplessness like looking at your two newborn children swaddled in six layers crying in the cold of your home.
We paid for a new furnace, having no other choice — the cheapest on the market. Then another thing broke, and another. We patched and fretted and waited, filling out our sentence in that now dreary and dismal house until my husband found work again. A full two years later.
With nothing left, we moved across the country, rented a condo for the cheapest price we could find, and tried to start a new life. The house remained. We tried to rent it, but being so far away made closing a deal difficult. When we finally found tenants, it wasn’t enough to cover our costs. We still had to pay $300 a month on the mortgage for at least a year after moving out. Then the tenants left and we were back at square one.
We tried to sell it, but no luck. The economy hadn’t improved enough to get even half of what we paid for it. By the grace of the universe, we managed to get the bank to give us a deed in lieu of foreclosure, and we simply walked away. All that time, sweat, and money wasted, and we got off lucky. Because of the emergency programs in place at the time, our credit was ruined only for a few years and we never had to declare bankruptcy.
And I felt free. We could finally start to live a new dream. One not cemented to a wooden box on a patchy lawn with unforgiving and grueling maintenance issues.
It’s been six years. Our credit is clear. We’re renting a house, but soon the rent will go up to an amount we can’t afford. My husband suggested we buy another house so as not to throw our money away. But I’m still suffering from the trauma and extreme stress of it all. I’m still suffering from that old American Dream.
Darlena Cunha is a former television producer turned freelance journalist. She writes for TIME Magazine, The Washington Post, The Atlantic and The Gainesville Sun, among others. You can find her on Twitter: @parentwin.
This piece first ran on DailyWorth on March 23, 2015
If I had a bitcoin for every time someone told me they were “all in for crypto,” I’d be …not as wealthy as you’d think.
“Crypto” is short for cryptocurrency. It’s the mother-term for digital currencies like bitcoin, which became a popular investment in 2017. Watching the bitcoin investing craze explode and then tank over the last year has been illuminating. It underscores four critical reminders about how most of us should approach investing.
1. Moving money to bitcoin is more speculation than it is “investing.”
Speculation means that there are too many uncertain factors to be sure about how an asset will grow in value, with a risk of total loss. Alternatively, an investment, such as a Vanguard index fund, has decades of performance data, tracks similarly with the stock market, and adheres to certain patterns. Sure, index funds fluctuate in value, but over a 10-year period, it’s possible to make a measured estimate of overall returns. Compare that with speculating in cryptocurrency, which is like angel investing in someone’s startup—you hope for significant returns, but could also lose everything.
2. Past growth doesn’t mean future growth.
You’ve probably heard folks praise Apple stock, New York City apartments, gold, AirBNB rental properties, and now …cryptocurrency. But don’t always believe the hype. Sure, many of these investments were great at one time, or at least they earned well for lucky people who like to brag a lot. But there are no permanent and absolute sure things. Past performance is not necessarily an indication of future growth. Still, if you really want to try and “get in on the action,” that’s understandable. Remember to make sure you consider all the factors influencing an investment’s future performance—and please, know how much risk you can really afford take.
3. Diversity strengthens our world, and your portfolio.
Last year, when I heard how many people were divesting of their mutual funds and moving that money into cryptocurrency, my stomach turned to knots. I’ve taught thousands of women the things they need to do to ensure that their money grows safely and steadily—how to factor in the market’s normal ebbs and flows. Rule number one: Diversify. Buy equity in many, many different types of investments: stocks, bonds, mutual funds, ETFs, real estate, etc. Even some bitcoin is okay. Just don’t bet your life on only ONE THING.
4. Don’t blindly trust any financial expert, even professionals.
Throughout last year’s bitcoin frenzy, my Facebook feed was chock full of friends asking friends about whether to invest in bitcoin. It amazed me how many so-called “investing experts” were giving factually incorrect information. To be clear: No one, not even most financial advisors, can tell you with certainty whether an investment will increase or decrease in value. If they claim otherwise, run the other way. Then, get clarity on the fundamentals (start with my book → Worth It), tune out the hype, and make the decision that’s best for you and your money.
More Americans than ever are earning extra money on the side — driving for Uber, renting out spare rooms, selling items on Etsy, pet sitting, or blogging. In fact, twenty-nine percent of all paid workers have a side hustle, according to a survey from CareerBuilder.
But when the income isn’t reported on a W-2 you receive from an employer, you may not know whether you really have to pay taxes on it — or, even, how to pay taxes on it.
In most cases, you must report this kind of income to Uncle Sam. For single taxpayers under age 65 with a total income (from all sources) of at least $10,350, all income must be reported to the Internal Revenue Service (IRS).
For married couples under 65 and filing jointly, the income threshold is $20,700.
“Because you already have a filing requirement to report wages from your main job, any additional earned income is also subject to income tax and must be reported on your return,” says Shomari Hearn, CFP®, E.A., and managing vice president of Palisades Hudson Financial Group in Fort Lauderdale, Fla.
Paying taxes can be tricky, especially on a side hustle. Here’s what you need to know.
The world of finances and investing has long been an old boys’ club. Men have long dominated executive positions at financial services firms, and investment decisions within households have historically defaulted to men. But, fortunately, the stereotype that the man has the money (and therefore, the power) is no longer true.
New data reveals that the number of women investors is growing — and so are their returns. In fact, a recent Fidelity report found that women are actually out-investing men by 0.3 percent on average. And it’s a trend that has been holding steady for the past decade.
Part of the success of female investors, experts say, is their approach to investing. Men tend to buy and sell stocks too frequently, missing out on key growth opportunities, while women tend to buy and hold for the long term. Women aren’t necessarily taking less risk, but they are more selective in their stock purchases and less likely to sell them as quickly as men. This results in a greater return on average, the study found.
This emerging trend has led many brokerage firms, such as Edwards Jones, Ellevest (whose tagline is “invest like a woman”), and WorthFM, to begin catering to a female demographic.
The shift isn’t just an interesting development in the world of marketing strategies. It has important benefits for our culture: Studies show that empowering women with wealth is good for society as a whole. Women distribute spending more equally across the family, are more likely to share their wealth with family and friends, and make more responsible choices with their money, such as paying off loan debt. On a whole, families do better when mothers are managing the finances of the household instead of fathers.
Yet the majority of women report a lack of confidence — but not a lack of interest — in investing and other financial management techniques. As financial firms reach out to more women, they can help women realize that men never had some secret knowledge about money – they just had a whole industry geared toward helping them along the way.
Personally, I can relate. At my very first meeting with a financial advisor at a typical brokerage firm, I remember feeling frustrated when the (male) advisor insisted on talking to my husband the entire time. The advisor directed all questions to my husband, who would then look awkwardly at me to answer. I would comply, and then the whole ridiculous scenario would start all over again with the next question.
The assumption was clear: I, as a woman, was either uninterested or incapable of understanding the ins and outs of our financial portfolio. In fact, the opposite was true. I was the one who had dragged my husband to meet with an advisor as soon as possible so we could use our youth to our investing advantage.
It was frustrating then, and it’s still frustrating now, as we have cycled through a few advisors (still male), who have repeated the same pattern. It’s always an interesting moment when the lightbulb goes on for them that I am the one who’s leading our financial future, and even then, it’s still a struggle for them to avoid defaulting to my husband.
But I — and the millions of women who, like me, are determined to master money management — can be reassured that the numbers are in our favor. Research, studies, and even major brokerage firms are all finally realizing that women are here to stay, so we have nothing to be intimidated by or feel embarrassed about. Women talking about money is not shameful; rather, it’s an important step towards empowerment and independence.
And, yes, if you’re wondering, I will totally be coming back to read this before our next check-in with our financial advisor! Even strong, money-minded women need a pep talk sometimes.
Women are inspiring. They hold high-powered positions across different industries; they start their own businesses; they raise families.
In fact, more than 70 percent of American women with children are in the workforce.
But with only 24 hours in the day, how do they do it all? We spoke to 10 real women who work full-time, raise children, maintain their homes, and still find room for personal time and growth. Here’s what they said.
Tax time is just around the corner. In my two decades as a professional bookkeeper working with small-business owners and solopreneurs, I’ve come across some common sticking points that make taxes especially challenging for business owners. Here are five things you can do to help prepare for your 2016 returns.
1. Get Educated
If you’re hazy on taxes, or you just don’t understand them, then it’s time to get educated. (You’re not alone: When NerdWallet asked more than 1,000 American adults 10 questions related to income tax, the average score was 51 percent.) In my bookkeeping business, I’ve found that more often than not, new clients know very little about how taxes work. Even worse: They’re afraid to ask about it out of fear of looking unprofessional or uneducated.
There are several tax forms you should understand if you are self-employed, the most basic being the federal forms 1040 and the Schedule C. If you don’t have an accountant who can sit down and explain these forms line by line, consider hiring one for an hour as a private tutor. These forms — and our current tax system — aren’t likely to change soon, so learning about them now will likely prove helpful for years.
2. Avoid a Big Tax Bill
Over the years, many people have asked me how they can save on their taxes. This is an important question, of course — all of us want to save money. But the single best thing you can do to avoid a big tax bill is to simplypay your taxes. Tax debt can be crippling, and penalties and interest rack up quickly, making it nearly impossible to get out of the tax debt cycle once you’re in it.
The only way to avoid a major tax headache is to pay your estimated taxes faithfully every quarter. A good rule of thumb is to put away 20 percent of all deposits in a savings account, and then turn those funds over to the state and federal government once a quarter. (Your estimated taxes are based on last year’s income, so if you’re having a banner year and sales are rising, be sure to raise your tax payments too.) Your accountant should provide you with estimated tax forms and the amounts due for each quarter. These are usually sent to you with your tax return for the previous year and are easy to overlook, so if you can’t find them be sure to ask.
3. Set Up a Bookkeeping System
Good bookkeeping means you’ll have accurate numbers to work from when you file your tax returns, which will help you get the most deductions. But let’s be honest — bookkeeping and accounting rank as some of the least enjoyable tasks of owning a business. The good news is that bookkeeping is much easier than it was even five years ago. Most bookkeeping apps connect right to your bank and credit card accounts, so transaction data is automatically pulled into the system — cutting way down on the time you spend doing (ugh) data entry. And these programs are getting smarter: You can “train” QuickBooks Online to remember your favorite suppliers, vendors, and stores so it will automatically categorize transactions to the right account, for example.
4. Get the Right Support
I see many small-business owners hold on to subpar business relationships that aren’t fulfilling their needs. But just like in our personal lives, bad relationships need to go. Wealth building and financial stability are dynamic, and you have to be engaged regularly and probably for your entire life. For this reason, it’s critical the relationships you have with your accountants and financial advisors are strong and are serving you well. If your accountant doesn’t map out tax strategies (or worse, doesn’t return your calls), it’s time to say good-bye.
Take inventory and see if the relationships with your financial professionals are working for you. If not, it’s time to put a little effort into finding “the one” — your dream relationship with a financial pro who is invested in you and your business. There are many smart, talented people who can help you save money on taxes and achieve financial success. The best way to find these people is to ask for referrals from colleagues you admire.
5. Save, Save, and Save Some More
I’ve heard business owners loudly object when tax preparers or financial advisors encourage them to save money for retirement. Many say it’s impossible to save when overhead costs are so high, and right there lies the mistake. Your retirement savings is part of your overhead — just like rent, labor, or utilities. And saving for retirement can also provide tax savings now or in the future, depending on the type of investment vehicle you use.
There are many retirement options available to small-business owners, including the SEP (self-employed pension), SIMPLE IRA, solo 401(k), and others (here’s a breakdown of retirement options).
The sooner you start to consider retirement savings as a non-negotiable expense, the better off you’ll be. And make sure to get it set up with automatic withdrawal. You’re more likely to save, and harness these tax benefits, if saving isn’t yet another task on your to-do list.
Being a working parent isn’t easy. Most spend their time working 40-plus hours a week, while striving to maintain healthy relationships, spending quality time with their spouse and children, and maybe even doing something for themselves in their free time.
Earlier this year, we spoke with 10 working mothers to see what it’s really like to work full time and be a mom. We got a lot of feedback on that post from readers, many asking, what about the dads?
We decided to take that on next, exploring just how working dads balance family and career. Here’s what we found out: Almost 52 percent of working dads find it difficult to balance family time and work. Yet, it’s a priority for them to be actively involved and present in their families’ lives. Here are their best strategies for balancing full-time work and parenting:
Before I got married, my husband and I talked about our financial situation, and we both agreed that I’d support our family so he could focus his full attention on school. I love my job and building a career for myself, so I never thought being the sole provider would be difficult for me. In fact, I thought it would be empowering.
However, I slowly started to feel resentment and discontent within the first year of marriage with regards to money, and I knew I had to address the problem.
After spending one too many late nights at the office, who among us hasn’t fantasized from time to time about leaving all of our responsibilities behind and heading to some far-off location — perhaps the white-sand beaches of Mexico, the rugged mountains of Switzerland or the stunning traditional architecture of Japan? But inevitably, reality sets in. You’ve got work to do, chores to finish and a steady drumbeat of bills, loans and expenses to pay.
What if that fantasy didn’t have to remain a fantasy, though? What if there were a way you could take off months, or even a year or more, and come back reenergized and ready to take on the corporate world, with a healthy bank account to boot?
We talked to a handful of real employees who have managed to pull it off, and according to them, it’s easier than you might think. If you’ve been waiting for a sign to go from daydreaming about a sabbatical to actually take the plunge, consider this it. But before you book your tickets, here are a few things you need to know.
The first year my husband and I “adopted” a family for Christmas it happened by accident. I heard through a friend that a local women and children’s shelter had a shortage of volunteers to buy presents for families in need. Our daughter was only six months old and certainly did not need anything for the holiday, so my husband and I selected a family from the shelter and headed to Walmart with their wish list in hand.
When we got to the store the list pulled at our heartstrings. Each child had chosen a toy they wanted, but they also listed necessities like underwear, coats, and toiletries. By the end of the night, our cart was heaping full. Instead of choosing a few items from each family member’s wishlist, we had brought nearly all of them, believing that no child should have to choose between having warm socks or warm gloves beneath the Christmas tree.
The evening cost us a few hundred dollars, but we both agreed it was the most meaningful money we had ever spent on Christmas. As we wrapped the presents and delivered the bulging bags of gifts I felt like Santa himself — giddy at the possibility of making this family’s Christmas something truly special.
That was three years ago and we have continued the tradition since, recruiting other family members to help us “adopt” a family in need during the holidays. This means we can supply gifts for larger families who are harder to match with donors since there are more people contributing.
For me, this is the perfect solution to balancing the screaming pull of consumerism with the true meaning of the holidays. I am still able to shop and get the thrill of finding a gift that is just right, but those goods go to someone who really needs them, rather than a family member who could quite easily buy what they want for themselves. As a bonus, my husband and I find it easier to stay on budget when shopping for strangers and our donations are tax-deductible since the program is organized through a charity.
Last Christmas, my daughter barely understood the idea of Christmas and Santa. She helped me select gifts for the family we had chosen, but she wasn’t aware enough of what was going on to wonder why the toys didn’t wind up beneath her tree.
This year, I anticipate a bit more of a learning curve. Christmas is weeks away, but my daughter now talks about Santa regularly. With the help of her preschool classmates, she has realized that Christmas is synonymous with presents. Although she’s aware in that sense, she’s still young enough that it will be hard to explain why we’re buying toys that are going to someone else. There will probably be a few meltdowns involved. However, I want to involve her in the process from an early age, so she grows up knowing that giving is more important than getting during the holiday season.
So far my daughter is being raised in a very different financial situation than I grew up in. We are careful not to spoil her, but as the only child and first grandchild on both sides of the family, she has everything she wants. Although we try to stick to buying “something to wear, something to read, something she wants and something she needs,” she inevitably ends up with quite a few presents on Christmas day. After all, giving her gifts brings to the adults who love her.
I want her to enjoy that aspect of the holidays, but also recognize that she’s in a place of privilege. Not everyone has money to spend on gifts (or even necessities) during the holidays. I hope that as she grows she will eventually get as much joy as I do from giving to others, and realize that for our family giving back is the true focus of the holiday season.