The Women’s Institute for Financial Education (WIFE.org) is the oldest non-profit organization dedicated to providing financial education to women in their quest for financial independence. Follow this site and find articles, information and help for women and money.
You’ve heard of home loans, car loans, and student loans, but what if you need money to pay for other big expenses in your life? For everything else, you may be able to qualify for what is known as a “Personal Loan.” These are typically unsecured loans that you can apply for with certain online companies or possibly even your bank. Some banks limit what you can spend the money on, but others let you spend it any way you want.
It can be tempting to see a personal loan as a blank check, but if you splurge it all on a massive vacation, you’ll still have to pay it back, with interest. Instead, consider the personal loan as a last-resort tool that can help you cover a necessary expense.
Here are five reasons you might want to take out a personal loan:
1. To Consolidate Credit Card Debt
One of the best reasons to apply for a personal loan is to gather up all of your credit card debt and put it in one place. This will make payments much simpler and lower your chances of missing a payment and getting hit with a late fee. The loan will also force you on a path to full repayment, rather than just paying the minimum on each card and staying in credit card debt limbo for the rest of your life. Finally, a personal loan can save you a significant amount of money if you currently have high-interest cards. For example, switching your debt from a credit card with a 20% interest rate to a personal loan with a 12% interest rate can save you hundreds or thousands of dollars in interest over the life of the loan.
Even if you have health insurance, you may have a high deductible or be expected to pay a percentage of your healthcare costs. If you get sick or are involved in an accident that puts you in the hospital, the bills can mount quickly. If you can’t pay a $30,000 medical bill (the average cost for a 3-day hospital stay) out of pocket, then a personal loan can break it into more manageable chunks. It’ll also keep you from going overdue, which will wreck your credit and invite a swarm of calls from collection agencies.
Emergency vet treatments are expensive, but if Mr. Fluffums needs to have your keys surgically removed from his stomach, of course you are going to pay up. Your vet won’t exactly let you pay off the bill by being the office’s official pet cuddler for the next 20 years. Instead, a personal loan will help spread out the cost so that you can finally invest in a good key ring.
You’ve been dreaming of that kitchen remodel for five years, and it’ll take you another five years to save up for it. Instead of waiting, use a personal loan to cover the remodel now. Sure, you’ll pay more in interest, but at least that’s five years more you can enjoy your amazing kitchen. Also, if you need to justify the cost to your spouse, just remind him that you’ll get some of the cost back when you sell.
At WIFE.org, we do not encourage readers to splurge unnecessarily, but your wedding is (hopefully) a once-in-a-lifetime event. While we strongly advise you to keep your costs as reasonable as possible (seriously, you can hold off on the $500 wedding invites), you’ll be better off taking out a personal loan for the wedding rather than cramming $26,645 (the average cost of a wedding in the U.S.) onto high-interest credit cards. If your parents aren’t shelling out for the festivities, then use a combo of a personal loan plus cost cutting measures (did you know that you can rent wedding dresses?) to have an amazing celebration. Just be ready to start paying it off in a quick and responsible manner…after the honeymoon.
Of course, there are many other things you can spend a personal loan on, but make sure to ask yourself: “Is the personal loan going to help me improve my financial health?” If the answer is “no,” consider whether saving for the splurge is the smarter option.
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As hard as it is to admit, you know that your marriage is heading toward divorce. As the realization sets in, it’s time to start planning how to get through this thing and on to the next chapter of your life. You probably have tons of questions, such as how much is it going to cost? How long will it take? You don’t have to look far to find a nightmare divorce story among your friends. We all have that friend who seemed to be going through a divorce FOR-EV-ER. Seriously, it took her TWO YEARS and $100,000 in attorney’s fees to finally put her marriage to rest. Is that your fate? Should you just buckle up for a two-year stint in divorce purgatory?
In one word: No! Many divorces can be wrapped up in a matter of months, and the majority of them take less than a year. It’s likely that your friend went to court rather than trying to settle the divorce peacefully first. Going to court takes lots of time and money. Let’s look at how you can avoid her mistakes.
Court Is Long and Expensive
Going to court will stretch out the length of your divorce and will add significant costs. You’ll need to file your complaint, be assigned a judge, and placed on their docket. Depending on how busy the judge is, it could take months for you even to step into a courtroom. You’ll likely want your divorce attorney present to represent you, which means you’ll be paying for every moment they are with you, including while you wait for the judge to call your case and even the time it took them to drive to the courthouse and park.
This will happen for every new motion you file! Keep in mind that dragging your spouse to court will increase the chance that he retaliates and drags you to court too. It’s a dangerous and expensive self-repeating cycle.
Start with Mediation
Rather than going to court right away to fight your divorce battle, put your feelings aside as much as possible and seek divorce mediation with your spouse. In mediation, you and your spouse work together to divide your estate in a fair and equitable manner with the help of a third-party mediator who guides you through the process.
Mediation can be difficult, and emotions can run high, but most spouses are able to work out the majority of their differences with this process. Mediation will save you from going to court for all but the most difficult questions that you can’t agree on together.
If you and your spouse want to work together to achieve the best divorce solution possible, but you want attorneys at your side, a collaborative divorce may be an option. In collaborative divorce, you and your attorneys meet with a financial professional and divorce coaches to settle your matter respectfully. This can be an empowering choice that saves time and money and promotes emotional healing.
Both these options will dramatically speed up your divorce process. If you can work out everything through mediation or collaboration, you likely can wrap up your divorce in months, not years.
Court as a Last Resort
Unfortunately, court cannot always be avoided. If your spouse is combative, if you two cannot come to an agreement on child custody or how to divide your estate, or if your spouse is breaking the law by hiding assets, you may need to go to court to fight for your rights. But court should be your last resort and not your first option.
If you to explore your options, attend the next Second Saturday Divorce Workshop in your area. Here you’ll meet attorneys, financial consultants, therapists and others who can help you decide the best way to proceed.
The sweeping tax bill signed by President Trump in December 2017 includes major changes that are sure to affect every American when tax day arrives. For those considering a divorce, one provision in particular could mean thousands of dollars saved or lost each year.
The Alimony Reversal
According to the Census Bureau, roughly 243,000 people received alimony in 2016. Ninety-eight percent of those recipients were women. Before the tax bill became law, those who received alimony (also called spousal support) were required to report those payments as income and pay taxes on them. The spouse paying the alimony was able to deduct those payments.
The big change in the tax bill is that now the spouse paying alimony will not get a tax deduction for that amount. The spouse receiving the alimony will not pay taxes on it. This could represent big savings for women if they are on the receiving end of alimony, and increased expense for their ex-husbands!
It is important to note that this change will only apply to support agreements reached after December 31st, 2018. All support agreements that are official before this date will remain under the previous tax rules.
Why the Change?
If the higher-earning spouse can’t take a tax deduction for alimony paid, that ultimately puts more money in the pocket of the government. A higher earning spouse will be in a higher tax bracket, which means he’ll have to pay a higher tax rate on the amount than his lower-earning wife would have had to pay.
For example, let’s say that Bob pays $30,000 a year to his ex-wife, Denise. He is a high earner and in the 35% tax bracket. Denise earns far less than Bob and is in the 12% tax bracket. If Denise pays 12% in taxes on the $30,000 she receives, the IRS will get $3,600 in April. If Bob is the one paying taxes on the amount, he’ll have to hand over $10,500. That means Uncle Sam pockets an additional $6,900 when Bob pays instead of Denise.
This change also puts alimony in line with the way child support is taxed.
What This Change Means for Divorce
Divorce attorneys and Certified Divorce Financial Analysts have been mulling over this change trying to determine how it will affect their clients. Some attorneys fear that this will end up lowering the amount of alimony higher earning spouses are willing to offer. It could also induce them to fight harder against alimony and spousal support obligations in the first place.
If you are considering divorce, it is crucial that you remember that this change doesn’t go into effect until 2019. If you expect to receive alimony and your support agreement is reached in 2018, you’ll be the one paying taxes on that income. Speak with your divorce attorney to determine if it is best to wait to finalize your support agreement until 2019.
Your “I do” has turned into “I don’t.” When you walked down the aisle, you envisioned a life of permanent marital bliss, but reality has not been so kind. It is now time to end your marriage. You want a divorce, but how do you go about actually preparing for this huge life change? In this article, we’ve pulled together some of our best pre-divorce prep articles. With this divorce preparation guide in hand, you’ll know what to expect so you can power through your divorce and come out the other end stronger, better, and ready for the next chapter in your life.
You’re Going to Need Money
You may think that the first step to getting a divorce is to file a petition with the court. Nope! As long as your situation isn’t dire, you should first make sure that you have access to cash. You’re going to need to be able to pay your attorney and possibly look for new housing before your settlement. Build up a cash reserve so that your husband can’t leave you high and dry when he receives your divorce petition.
Consider Whether a Separation Might Be the Better Option
Even if you want your marriage to be over, a separation may be a better choice for important financial reasons. For example, if you are self-employed or work at a small company, you may rely on your husband’s health insurance to cover your medical expenses. If you and your husband are on agreeable terms and neither of you is seeking to re-marry right away, a separation may be the pragmatic choice.
Every woman’s situation is different when she approaches divorce, so there really is no one-size-fits-all divorce plan. That’s why it can be so helpful to hire a divorce attorney before you file the paperwork. Your divorce attorney can help you determine the full scope of your marital estate, search for hidden assets, and develop your settlement strategy before you pull the trigger. Your attorney can also walk you through different settlement approaches, including mediation and collaborative divorce.
The key to getting your fair share of your marital estate is knowing the full scope of the assets you and your husband own. Many women are surprised to learn the full value of their husband’s business, and some have no idea that their husbands own land or extra vehicles. Finding these assets will become much more difficult after you serve your husband with divorce papers. When he realizes that he may lose a big chunk of his wealth, he could start trying to hide assets. That’s why it is important to look for and reveal as many assets as possible before the divorce.
If your husband’s income allowed you to stay at home, then a divorce means you’ll likely need to find a job to get by. While you can certainly ask for both child support and spousal support (also known as alimony), it likely won’t be enough to keep you afloat. As you prepare for divorce, update your resume and put out feelers. It will be much less stressful to jump into the job search before you are on your own and the bills are past due.
The average woman faces a 73% loss in her standard of living after a divorce. Let that sink in for just a bit. Even as you start to consider divorce, now is the time to begin preparing for your new financial reality. You don’t want to have to figure out why you can’t pay your bills when the debt collectors are calling. Instead, put together your post-divorce budget NOW so that you can use it as a guide during your divorce negotiations.
The best way to prepare for a divorce is to attend a Second Saturday Divorce Workshop in your area. In these workshops, you will hear from divorce attorneys, divorce financial specialists, psychologists, and other professionals who can give you the tools you need to prepare for this huge life change.
For something so important, it’s amazing how many women don’t know how their credit score is calculated. Your credit score could be the thing standing between you and that mortgage loan you need to buy your first home. It might tip the scale for or against you when you apply for your dream job. It might make the difference between paying 12% or 20% interest on your credit cards. In other words, your credit score matters. That’s why you need to understand how your credit score is tabulated and what you can do to improve it.
The Three Credit Reporting Agencies
It’d be nice if there was only a single agency that determined your credit score but that’s just not the case. Instead, three different agencies each separately compile a credit report on you and give you a score:
The scores may vary by a couple of points (sometimes more). Fortunately, all three agencies use the same criteria and weight that criteria in a similar way. Let’s look at the five things that will make or break your credit score*.
Payment History – 35%
The biggest factor in determining your credit score is whether or not you pay off your loans on time. That means paying your rent, making your auto and student loan payments, and paying at least the minimum balance on your credit cards.
The easiest way to tank your credit score is to miss a payment. As soon as a payment is 30 days late, a creditor can add a note to your credit report.
How to Improve – Just make all of your payments on time. If you can’t fully pay off your credit cards, at least make the minimum payment. If you can’t make a loan payment, don’t just ignore it. Call the creditor and try to negotiate. Many banks will allow customers to skip one payment a year or will allow you to make a partial payment.
Amounts Owed – 30%
This refers to how much credit you are using versus the amount of credit you have available (known as your “credit utilization ratio”). If you charge $500 on a credit card with a $1,000 line of credit, your credit utilization ratio is 50% for that card. The more debt you charge to your card, the more likely it will hurt your credit.
How to Improve – It’s always a good idea to keep balances low on your cards anyway, so our advice here is to try to pay down your credit cards as much as possible. (Paying interest = throwing away your money.) Ideally, you want to try to keep below 20% usage on each individual card and below 20% usage of all credit cards combined. One quick hack is to call your bank and ask for a higher line of credit. This will lower your credit utilization ratio… as long as you don’t increase your charges to fit your new allowance.
Length of Credit History – 15%
The minute you get approved for your first credit card or start making payments on your student loans, you’ll start building your credit history. The longer you hold credit, the higher your credit score will be.
How to Improve — It is as least worth considering getting credit as early as possible, as long as you can handle the responsibility. You can legally get a credit card at age 18 in the United States (though you’ll need to show proof of income).
New Credit – 10%
Credit scoring agencies will ding your credit score if you take out too much new credit in too short of a time. Be careful when applying for new credit cards, including store credit cards. Saving 10% on a purchase is nice, but is it worth lowering your credit score?
How to Improve – Sometimes life just happens and you need to take out multiple forms of credit in a short period of time. Be aware of this factor, and if you can, avoid opening a lot of lines of credit or taking out loans in the same year.
Credit Mix – 10%
You’d think that paying off your credit cards in full each month would be enough to give you a perfect credit score. Not so fast! Credit scoring agencies want you to show that you can handle holding different types of credit. This includes “revolving debt” (credit cards) and “installment loans” (mortgages, auto loans, student loans).
How to Improve – Younger folks often struggle with this one, since they may simply not have had the opportunity or need to take out a loan. One easy way to do this is to take out a loan for a new furniture purchase that you were already planning to buy, such as a mattress. Usually these loans include a special interest-free introductory period. Do you best to pay off the loan before the interest-free period runs out, and then you’ll get the credit boost without any extra cost!
It’s always a good idea to check your credit reports regularly to see how you are doing (and so that there aren’t any surprises when you sit down with your banker to discuss a mortgage loan). The U.S. government allows you to request your credit score for free once a year at https://www.annualcreditreport.com/index.action. Many banks also let their customers regularly check their credit scores for free.
Need help to improve your credit score? Consider creating a Money Club with your friends who want to improve their finances as well!
Women all across the country are starting their own business or joining the “gig economy” as freelance graphic designers, photographers, or even Uber drivers. According to the U.S. Bureau of Labor Statistics, just over 10% of all U.S. workers are self-employed. Women make good entrepreneurs because they are able to juggle lots of tasks and respond to a myriad of demands. If you are proudly working for yourself, you may be wondering how to plan for retirement. Unlike your cubicle-working friends and family members, you do not have access to a convenient 401(k) and can’t take advantage of an employer match. A nice pension at the end of your working life also isn’t in the cards.
This just means that you’ll have to be a little more focused and directed as you establish and fund your own personal retirement. Here are your choices.
The easiest plan is to establish is an Individual Retirement Account, (IRA). The biggest drawback, however, is that you can contribute only $5,500 a year ($6,500 if you are 50 or older). An IRA might be a good choice if you’re just starting out and can afford only minimal contributions. Regular IRAs are tax-deductible, but if you are in a low tax bracket, consider a non-deductible Roth IRA that will grow tax-free instead.
Just as at the burger joints, you can super-size your IRA easily. If you want to contribute more than $5,500 to an IRA, the SEP-IRA (SEP stands for Simplified Employer Pension) will let you plunk 13.04 percent of your net business income into the SEP-IRA, up to $30,000. What’s the catch? You’ll have to cover all employees over twenty-one years of age who have been working for you for the past three years, and that can get expensive. SEP-IRAs are more popular among self-employed business owners with no employees.
This plan also requires that you cover employees, but to a lesser extent. This Savings Incentive Match Plan for Employees (whew, that mouthful of a name is far from “simple”) operates like a simplified 401(k) salary deferral plan with an employer match. It requires you to kick in only three percent of your employees’ wages, and it covers employees who have earned at least $5,000 in two prior years and are expected to earn $5,000 this year. You can put in up to $12,500 for yourself (plus another $3,000 if you are 50 or older), and your employees can make tax-deductible contributions to the plan as well.
Defined Benefit Plans
A Defined Benefit plan is the Rolls Royce of entrepreneur retirement plans, but significant red tape is involved. With a Defined Benefit plan, you can tailor the plan to allow hefty contributions for yourself while requiring much smaller contributions for your employees. With a defined benefit plan, you can contribute 100 percent of your salary, or whatever is necessary to generate a maximum of $215,000 retirement benefit per year. But they require the services of an actuary, and you must file a Form 5500 tax report with the IRS on a regular basis.
If you are an employee and your business is a sideline, you should contribute the maximum possible amount to your work 401(k) or 403(b) plan before investing in a self-employed plan. The advantages here are that your employer may match your contributions, the contributions to the 401(k) plan are by painless payroll deductions and most 401(k) plans allow you to borrow from the plan for education, hardships, or general purposes.
You can set up any of these plans through most financial institutions, brokerage houses, and mutual fund companies. You can find more detailed information on retirement plans for entrepreneurs at the retirement section of quicken.com.
Are you living from paycheck to paycheck? Do you hate the way your credit card debt keeps creeping up? Do you dream of buying your own home or a new car but don’t think you’ll ever have enough money? There are no magical solutions to suddenly getting out of debt, being able to save hundreds of dollars each month, and affording life’s luxuries… but there are good money habits!
If you are ready to change your relationship to money, then we can help.
Here at WIFE, we have designed a totally free program called The Money Club. The beauty of the Money Club is that you don’t have to do it alone! In fact, the whole point is bringing women together so that they can provide each other with support, accountability, and friendship.
How the Money Club Works
The Money Club is designed as a series of 33 unique money lessons called “Money Zones.” Each month, your group meets and reviews one of the lessons. You can go in order, or switch around the order to focus on the zones that are the most meaningful to you.
In each meeting, one member leads the lesson. Don’t worry, you don’t need to be a financial guru or an investment advisor to lead a lesson. Just follow our guides and worksheets, and it’s easy. Each lesson contains:
A short summary on the money topic
An icebreaker which helps the group think about how they relate to the topic
Conversation topics for the group to discuss
Share your success – a prompt to encourage members to express what they’re doing right
Goal setting – A list of small changes members can make to improve their money habits related to the topic
Money attraction affirmations – A short affirmation to help members stick to their goals and develop a positive relationship with money.
The beauty of the Money Club is that it utilizes the power of group accountability and female friendship to make learning about money enjoyable and empowering. This group is meant to be a fun, welcoming, and inclusive environment.
Anyone can get something out of the Money Club, whether you are struggling just to pay your bills or whether you have the basics down and want to take your money game to the next level.
Did we mention that it is totally free?
Here’s a look at just a handful of the Money Zone Topics you’ll tackle as part of the Money Club:
Your Money Style
Credit Card Debt
Kids and Money
Buying a House
Providing for Parents
There’s no time like the present to start a Money Club. Grab some of your best gal pals and get started today!
Many of the young women of the millennial generation fully expect to go to college and develop their own careers regardless of whether they get married and have children. In fact, the growing expectation of freedom and autonomy today’s women possess may explain why both men and women in the United States are waiting longer to get married (the average age for a woman is 27, up from age 20 in 1960) and to have children (in 1970, the average woman was 21 when she had her first child. The average age today is 26). This wasn’t always the case!
Before the feminist movement of the 1960s and 1970s, a woman’s primary financial plan was…a man. Even in the decades after, many women still went to college primarily to pursue their “MRS” degree. According to the U.S. Department of Labor, only 43.9% of women were in the labor force in 1972. Additionally, even the women who did hold jobs in that era often made far less than their male compatriots. According to the Bureau of Labor Statistics, “Women’s work outside of home and marriage was restricted to a handful of occupations such as domestic service, factory work, farm work, and teaching.”
A Man is Not a Financial Plan
In the past, women were expected to leave their jobs when they married and to entirely rely on their husbands for financial support. Today, the world is a very different place. Women are graduating college in record numbers, closing the wage gap with men (in 2014, women earned 83 cents on the dollar compared to men), and building long-term careers for themselves.
As women embrace their earning potential, they must also accept the responsibility of effectively managing their finances. This means saving for retirement, which is even more important for women who live an average of five years longer than men! It also means protecting their assets with a prenuptial agreement before marriage, managing debt, and budgeting to keep from overspending.
If you happen to fall in love with a man (or woman) and get married, don’t allow your partner to hold all of the purse strings. If you decide to leave the workforce to take care of the home and/or the children, make sure this is a decision that you are both comfortable with. Relying only on a man (or your partner) for all your income needs to be a strategic decision, and you must face the reality that you could lose that income in the event that your partner loses his or her job or the two of you divorce.
At WIFE.org, one of our taglines is, “A Man is Not a Financial Plan!®” The goal of our organization is to empower women of all ages to take control of their financial destinies, whether they are single, married, divorced, or windowed. Embrace your earning power, grow your financial intelligence, and take control of your financial future! Check out our Savvy Women articles to start improving your financial knowledge.
WIFE.org by Candace Bahr And Ginita Wall, Cpa, .. - 5M ago
Can You and Your Spouse Cut it as Business Partners?
When you married your spouse, you promised to create and share a life together, but does that mean you can also create and share a business? Many couples successfully helm a business together, but they also face many unique challenges. Below are a few important pros and cons to consider before jumping into business with your spouse.
Let’s start with the Pros:
Pro – A Business Partner You Can Trust
Finding a solid, trustworthy, and responsible business partner who truly shares your vision of the company is a huge challenge. The dustbin of history is filled with businesses that failed because its partners failed to work well with each other. Your spouse is someone you already trust and who (hopefully) understands and respects you.
Pro – Sharing the Burden
Your spouse can help shoulder all the burdens of running a business, allowing you to divvy up the responsibilities so that you each can focus on the areas of your unique strengths. Heading a company by yourself can be lonely and stressful. With a spouse as a partner, you always have someone who understands your worries and can share in your triumphs.
Pro – Flexibility
You and your spouse are a team at home and at work. If you need to pick up the kids from school, you won’t get a write-up from the boss. Sharing a business means that you both can create your schedules together around the shared priorities in your lives. If you have young children, this extra flexibility can be especially welcomed.
That all sounds great, but there are some Cons as well:
Con – Troubles at Home May Lead to Troubles at Work
One of the biggest risks of partnering with your spouse is that troubles at home could leak into the office. If you two are experiencing marriage difficulties, it could affect how well you work together, stress out your employees, and distract you from growing the company. Also, if you end up separating, it could jeopardize the company if you fight over ownership.
Con – Too Much Time Together?
As much as you love your spouse, you still need a little space every now and again. Small irritations can chafe if you see your spouse morning, noon, and night. This can be especially challenging if you are having a work or personal conflict and can’t get away to cool down.
Con – Double the Risk
Starting a business is a risky endeavor, and you must accept the chance of failure as you hang your shingle and open your doors. When your spouse joins you in the business, all of your eggs are in the single basket of your business. Without a second outside income, a few slow business months could really hurt your family’s financials.
Every couple’s situation is different, and a business partnership may work great for some and go down in flames for others. Communication is the pillar of a strong marriage and a strong business partnership. Talk it out with your spouse. Discuss the pros and cons as well as your concerns and worries. Together, the two of you will make the right decision.