The following is a contribution from Nate Matherson of LendEDU
For parents all across the country, back to college or into college season is coming up fast. With decision day and spring term behind us, there are just a few months of sun before college students head back to campus. The rising cost of college has made financial aid a necessity for the vast majority of college students. Included, federal student loans are used by many students to help afford the cost of higher education.
However, for many families, financial aid and federal student loans aren’t quite enough. The next option for students and families is to use private student loans as a way to finance an education. Private student loans should always be used as a last resort, but the reality is that many college students need private funding at some point during the four (or five!) years in order to get to the finish line.
Did you know that 90% of private student loans are cosigned?
According to our research, we found that 90% students who were approved for a private student loan had the help of a cosigner. A cosigner, most often a parent but sometimes a guardian or grandparent, agrees to apply with and then take mutual responsibility for the private student loan. In short, the parent uses their credit history and income in order to get the student approved for the loan. The reality is that only a small fraction of college students have enough income and the credit history required to get approved on their own.
Fortunately, my parents were able to cosign on my loans through Sallie Mae. I wouldn’t have made it to graduation without their help, and I really appreciate the financial risks they took for me. And fortunately for them, I never made a late payment and I was actually able to get them released as a cosigner from the loan when I refinanced after graduation.
Whew, that was a long intro, but this is an important topic. Here are the four things you need to know before you cosign a student loan this year!
#1 – Your Credit and Income Will Impact Rates & Terms
Did you know that not all cosigners are equal?
During the approval and origination process private student loan companies look to evaluate a cosigner on an individual basis. Much like applying for a mortgage or for an installment loan, the rates and terms offered on a private student loan are determined by creditworthiness and income. However, it is the cosigner’s creditworthiness and income which primarily determine the rate and terms that the student (the primary borrower) receives.
At the time of this writing, private student loan rates range from as low as 4.74% to as high 13.99%. Cosigners with a high credit score and high income may be able to provide the primary borrower (the student) with a much lower rate, vs. a cosigner with a moderate credit score and moderate income.
It is also worth mentioning that some smaller startups have started offering student loans without a cosigner. Companies like Funding University, Ascent, and Sixup among others specialize in this type of student loan. This might be an alternative option to consider, however, the approval process and terms are somewhat ambiguous from lender to lender.
#2 – There Are Risks for Cosigners
Did you know that cosigners are equally responsible for repayment?
If the student misses a payment, whether in-school or after graduation, the cosigner’s credit will be negatively impacted. In short, both the primary borrower and the cosigner are responsible for making payments on the loan. Cosigners should stay in communication with the primary borrower to make sure that payments are being made on time.
As the cosigner, you need to have an upfront conversation with the primary borrower about the importance of on-time payments not only for themselves but for yourself.
#3 – Some Companies Offer Cosigner Release
Did you know that some private student loan companies offer cosigner release?
The following lenders offer cosigner release:
– College Ave (24 months)
– Sallie Mae (after 24 months)
Sometimes it is as simple as just asking. And for parents who are currently cosigned, you should regroup with the student after graduation and talk about the steps to take to meet cosigner release requirements. Remember, without release cosigners are on the hook for about 10 years, and release could make all the difference in just a year or two.
Did you know that you can refinance student loan debt like you would a mortgage or an auto loan?
I refinanced my student loans about a year after graduation. In short, I was able to lower my rate dramatically from over 9% to under 6%. The interest savings are great, but importantly I was also able to release my parents as cosigners.
When you apply for student loan refinancing, depending on the company, you will have the option to apply solo or with a cosigner. I decided to apply solo. Fortunately, after a year of steady income and on-time payments I met the requirements for refinancing without a cosigner. This was a big deal for me and my family.
In short, the refinancing company paid off my old student loans and issued a new student loan without my parents included.
After graduation, families should have a conversation about refinancing and if possible work to remove the cosigner from the loan.
I hope that this article was helpful for both primary borrowers (students) and well as the cosigners (parents)! I am excited to answer any follow-up questions about this topic in the comments below!
My questions are in bold, Patricia’s follow in plain text
About Patricia Bossano
My name is Patricia Bossano, middle child, seeker of supernatural wisdom, and Hispanic Aquarian.
I became a smashing hit shortly after I redefined ‘success’ for myself and took the proverbial leap into the void—to the lay person, I’m referring to the moment, 3 years ago, when I lost the stability of my corporate job and I understood that the time had come to live my dream.
I flipped tradition on its side and went rogue; I became an indie author with all my eggs in the fiction writer basket, for better or for worse.
What have you learned from your success?
One should never deny what is in her nature to do.
Through the ages, humanity has wondered what life is about; its meaning, its purpose. Sooner or later we all ask those questions and some of us become obsessed with finding the answer.
Behind every existential shift in my life there has been a key event: leaving my parents’ home and country, becoming a mom, going through a divorce, letting go of an important job, etc., and what those events have had in common is that they all tested my ability to handle what life throws at me.
All that testing must be for the purpose of getting to know myself, right? And if the purpose of life is ‘knowing myself’ then I must also accept that ‘defining’ myself is part of the process.
I believe that writing philosophical fictions not only broadens self-knowledge, but it continues to shape me, making a successful lifer out of me.
Is there a mistake you have made starting out that you wish you could change?
I tend to procrastinate, and that’s a mistake.
Procrastination is an ongoing thing for me, and it’s something I mean to conquer just as soon as I finish this interview!
If not for procrastination (the mother of all mistakes) I would stumble sooner, learn the corresponding lesson, and get on the right track that much quicker.
What is the best advice you have received?
I heed advice more fully if it comes in the guise of a maxim.
For example, “Piss or get off the pot,” totally hits home for me because it directly grates at the procrastinator in me. 9 out of 10 times my left brain crossly utters those words to my right brain…
Also, a ring I wear bears Lao Tzu’s mantra, “The journey of a thousand miles begins with a single step.” This is my daily prompt to hurry up and get on with it!
But here is the most magical maxim of all, I repeat this one to myself whenever I’m stressed over mundane things, so I don’t forget what truly matters:
“All you need is love,” my right brain whispers this, and immediately the faces of all the people who love me, and whom I love, parade before me, setting my heart at ease and reminding me that whatever is troubling me, it too shall pass.
This one totally resets my perspective!
What advice would you give someone starting out?
I would say, follow your heart and persevere unflinching on that path.
Professionally, what accomplishment are you most proud of?
I believe Faeries are the new Wizards, and I am dotingly proud of the matriarchal clan I have brought to life. These powerful ladies are rocking the minds of escapists the world over!
Celeste, Maité, and Nahia (pronounced Nah–yah) are the heroines of my Faerie Legacy series, respectively; Faery Sight,Cradle Giftand Nahia.
At the heart of this epic trilogy is the relationship between women in a hybrid, faery-human family, and the unbreakable bond between mothers, daughters, and sisters.
Looming in the horizon and soon to manifest: a film franchise, and the Spanish version of my faerie saga.
Is there something you learned from the industry that you found surprising?
I misjudged Social Media—on its surface merits, I saw Facebook, Instagram and Twitter as the vessels that would transport me to the glorious lands of fulfillment, not realizing that said vessels sail on algorithmic waters.
Now that I do realize it, I’m too far out to sea to return, so instead, I’m bent on successfully navigating those waters. For an indie, this means a great deal of learning and re-inventing of the wheel…
Are there any upcoming projects you are working on?
After the release of Seven Ghostly Spins, on All Souls Day 2018, and continuing on a supernatural vein, I began work on my next title: Daughters of the Bride, a philosophical fiction slated for publication on Mother’s Day 2020.
“To recover from the unexpected death of their father, the ‘weird sisters’ cling to one another and to their widowed mother; the ‘head witch.’
However, no traditional mourning rituals await them, instead, the three women flex their powers and embark on a distressing journey of reflection; to know themselves and the mother they thought they knew.
Amid the hilarity brought on by the head witch’s disconcerting return to a youthful attitude, difficult questions will be asked. Genetic memories must be acknowledged and banished. Painful feelings must be expressed, and life-altering decisions will be made because, at the end of their journey, the new reality must be embraced by all if the family bond is to be preserved.”
If you could recommend a book to help people be more successful, what would it be and why?
I’m a fiction reader and writer, through and through.
I have lots of favorite books, and I can say that each one has taught me something relevant to a different aspect of life. But rather than recommending a book I will tell you about the first grown-up book I ever read and how it affected me—maybe my experience will resonate with others?
My mother gave me a copy of Henri Charrière’s Papillon when I was about 12 or 13 and, totally skipping the introduction, I jumped right into the first chapter. It took only a few days to read, but when I finished, my mind had been forever changed by the man’s experiences and his ‘never give up’ attitude.
I was so stimulated by it that I couldn’t think of anything better to do than to start right up again—I just loooooove re-reading books!
The 2nd time around, I did not skip Jean-Pierre Castelnau’s introduction and that’s when the dream of being a writer came to me. Henri had sent a letter to Jean-Pierre saying, “Here are my adventures: have a professional write them up.”
Recognizing the raw talent JP said in his introduction to Papillon; “he writes the way you tell a story. You see him, you feel him, you live his life.”
After having read the book, I completely agreed!
I remember grinning and telling myself “I will be a writer too!” and Papillon’s voice and style would be the model for me.
Other favorites over the years have been, Alexandre Dumas’ Count of Monte Cristo, Isabel Allende’s El Zorro, The Shining, Misery, Gone with the Wind, Pride and Prejudice, The Thorn Birds, García Márquez’ Cien Años de Soledad,Dracula, the Harry Potter series, Carlos Ruiz Zafón’s La Sombra del Viento, Anne Rice’s Vampire chronicles, The Witching Hour, Holes, Dan Brown’s stuff, Girl with the Dragon Tattooseries, Me Before You, older John Grisham stuff.
Do you have any apps, books or tips that you use to be more productive?
Tough question for a procrastinator, and I will say this, us writers are a superstitious, quirky bunch who will do just about anything to summon our shape-shifting muses—those elusive little tricksters who taunt us like a sneeze.
As an explorer of the supernatural, anxious to summon my muse, I won’t bypass the performance of curious rituals before I hit the keyboard. Yes, I will light up that salt lamp; pet my magic blue quartz; wink at the faery reading a book under the monitor; and turn on those tunes!
I beseech you not to judge, instead, discover and embrace your own quirks because, rest assured, their effect on productivity is priceless.
Has fitness factored into your success?
I cannot let myself sit at a desk 8+ hours per day, so in partnership with Google home, I get up every 90 minutes and do 20 x push-ups, squats, and sit-ups. Plus, at the end of my workday I do my debriefing while walking briskly, 3-4 miles.
This level of physicality keeps my brain oxygenated and eases my dread of inadvertently becoming one with my chair.
Has Social Media factored into your success?
Even before I took the proverbial leap, I knew this: it is a truth universally acknowledged that, in order to succeed, a self-published author must brand and promote herself. For us indies, that is a war waged strictly online.
Social media presence is a good first step to building a respectable following. From there, you commit to generating meaningful content and campaigns that grow your following and your mailing list, which greatly contributes to getting some traction along the indie route.
Any mistakes you see people routinely make with social media?
I was told once, by a PR agent, that to build my following I should ‘follow’ people and days later ‘unfollow’ them.
I think that sucks, and I consider it a mistake that many people make. The rule that I stick to, for myself, is to follow other authors, indies and pros. If someone follows me, I follow them back only if they’re related to the literary arts somehow (or they’re family/friend). I also follow celebrities or political figures whose views I identify with.
Another common mistake I glare at is the use of social media platforms, including LinkedIn, as dating apps. I’m wary of wide net profiles that say stuff like ‘loyal, kind, fun, animal lover, boat owner…’
Where can people connect with you online?
Ooooh! Subscribe, follow, like, all of it makes me so faery happy!
For many people, the first thing that comes to mind when you hear the word estate is a fancy house with land in another country. But an estate is everything you own or control, including property, assets, and debts. And unless you plan to live forever, it’s best to have a plan.
Let’s take a walk through the basics of what your estate plan might include and what options are available. Estate planning isn’t just for the rich and famous. If you have minor children or pet, or any kind of property or assets, you likely want a say in what happens to them when you are gone. Your needs may vary but almost everyone can benefit from having an estate plan.
An estate plan is more than just a plan for how to divide any property or assets you have once you have passed on. It’s easier to understand what an estate plan involves if you call it an end of life plan.
A full estate plan includes planning for carrying out your wishes if you should become incapacitated or otherwise unable to act for yourself prior to death along with what should happen to your assets and debts, pets, and minor children when you die.
Some things that may be part of your estate plan can include:
Power of attorney
Advance directive/Living will/medical power of attorney
Provisions for pets
Transfer on death deed or accounts
Beneficiary designations on insurance or retirement accounts
Do You Need a Will?
Whether you need a will versus a trust depends on a few factors that we will address in a minute. But having either a will or a trust is preferable to not having any kind of plan.
If someone dies without having a will (or trust) in place, it is said that they died intestate. What happens next, in that case, will depend on the state laws regarding intestacy, and which state laws govern could be the state where the person lived, the state where their property is located, or both. The property would pass through the probate process and be distributed according to the state’s laws regarding intestate succession. Information about your estate would be public and may open up your estate to inquiries from fake creditors.
What happens to your estate if you die intestate can get complicated, but the important thing to know is that if you do not have a will or trust, then your property may not get distributed in the way you had hoped or imagined.
What is a Will?
A last will and testament is simply a document setting forward your wishes regarding the distribution of your property and/or assets after you die. Getting a simple will in place is not difficult. You just need to be of “sound mind” (i.e. know what you are saying or agreeing to on paper) and have two witnesses. And even that isn’t always necessary—some states will accept handwritten (or “holographic” wills) as valid.
And your will can address more than just your probate-eligible property and assets. In your will, you can also:
Choose guardians for any minor children
Make financial and care arrangements for pets
Give instructions for paying debts/liabilities
Name an executor for your estate (the person who makes sure estate property is distributed and debts are paid)
What is Not Included in a Will?
It may be helpful to understand what a will does not include. For instance, specifying your preferred funeral arrangements in your will is not helpful, since wills are not usually read until after the funeral. This can be a separate part of your estate plan.
You also cannot leave certain kinds of property or accounts to heirs in a will, such as payable on death accounts (POD), accounts with specified beneficiaries (like life insurance, 401(k), IRA, etc.), property held in joint tenancy, or property held as joint tenants with rights of survivorship. Those properties will pass to the beneficiaries outside of the probate process.
A will cannot be used to put conditions or timelines on gift either. Once the will passes through the probate process, the property and assets are distributed essentially all at once. The executor is not like a trustee, who may be involved in the administration or management of assets for years to come.
Should I Have a Will? Some Advantages
Whether you should have a will or a will and a trust depends on a number of factors: the size of your estate, protecting your children and/or spouse, potential tax liabilities, your state’s probate process, the possibility for family conflict, etc.
If you do not have a lot of assets or want to get the ball rolling on an estate plan with the most cost-effective plan for right now, then a will is a good move. It is easy to get at least a basic will in place, and a will gives you a substantial amount of control over what happens to your things when you die. You can always decide to set up a trust when you have the funds or desire to do so.
A will is also a good idea in states where the probate process is fairly straightforward and simple and if your estate does not approach the federal estate tax threshold, which is currently $11.4 million per individual (2019).
There are some disadvantages to having a will that are worth mentioning. For instance, if you have a will, then your estate will go through probate after you die. Probate is a lengthy, public process, and there may be delays in your heirs getting the property you intended for them. Because the estate details are made public, your estate may be susceptible to claims or inquiries from false creditors.
If you have an heir or heirs that you expect will not manage their inheritance well, and you would like to put some limits on it, then you probably need a trust fund. And if you anticipate conflict in your family because of the will that might lead to lawsuits, then perhaps a will is not the best choice.
Even if you decide to put all of your assets in a trust, an estate planner would tell you to have a pour-over will in place in case there are assets at the end of your life that were not placed in the trust.
What Does an Executor Do?
The executor of the estate is responsible for making sure the will is enforced after the person who wrote it die (dies). This includes locating the will and filing a copy with the probate court, contacting banks, creditors, and relevant government agencies (like Social Security Administration) to let them know decedent has passed away, making sure debts and taxes are paid, maintaining will property, making and filing a property inventory with the court, and distributing assets and property, among other things.
The executor is typically paid out of estate assets, though the amount varies by state.
Choosing an Executor
You can choose who you want to be the executor of your will, as long as it is someone of some mind over the age of 18. But remember to revisit your will later—the person you would choose at 30 may not be the same person you would choose at 60.
If you die intestate, the court will appoint someone as an administrator or personal representative, according to state law. The administrator carries out the same duties that an executor would. Many states have a priority list to follow for appointing an estate administrator. In most states, the surviving spouse would be named as the administrator. The person named as an administrator can refuse to serve in that position, and then it would pass on to the next priority relative.
Probate is the process of having a will legally be recognized and appointing an executor or administrator to manage the estate and distribute assets to beneficiaries according to a will or state law. This process varies from state to state. In some states, it is somewhat drawn-out and expensive, but in many states, it is relatively fast and inexpensive.
In states where the probate process is simple and relatively streamlined, there is less cause to try to avoid probate but transferring assets to a trust or putting them in special accounts that payout or distribute directly to beneficiaries at the owner’s death.
What is Included in the Probate Process?
The probate process varies somewhat from state to state, as mentioned earlier. But the basic steps are the same.
First, a petition is filed with the court to admit the will and appoint the executor, or to appoint an administrator is there is no executor. Notice of a court hearing to admit the will should be given to all the heirs and beneficiaries, and notice is usually published in the newspaper as well, in case there are unknown creditors.
Next, the executor or administrator takes inventory of all estate property and informs creditors of the death of the decedent to allow them time to make a claim. The inventory may be done by a court-appointed appraiser or by a third party.
Then, all debts, liabilities, taxes, and expenses incurred by the estate or the decedent must be paid out of estate assets.
Finally, remaining estate property and assets are distributed to heirs according to the will or to the state laws regarding intestacy (if there was no will).
Regardless of what the will may say, certain property must go through probate, and other property skips probate. It generally depends on if it is shared with someone else and whether or not there is a beneficiary designation.
Probate property includes:
Real property for which the decedent was the only owner or was designated as tenant-in-common (and not designated as trust property)
Bank accounts in decedent’s name only
Interests in partnerships, corporations or limited liability companies
A life insurance policy that lists the estate or the decedent as the beneficiary
Other property, such as vehicles, furniture, automobiles, etc.
Non-probate assets or property are those that have some kind of survivorship or beneficiary designation. For example, if you have a life insurance policy, there is a specific beneficiary named in the policy. When you die, the benefit gets paid out to the beneficiary without going through probate.
Similarly, if you have a property that you own with your spouse, for example, as joint tenants, or joint tenants with rights of survivorship, that property passes to your spouse when you die.
Other types of assets that are non-probate assets include retirement accounts with a named beneficiary, such as 401(k), 403(b), and IRA accounts, any bank accounts that have a payable on death (POD) or transfer on death (TOD) designation, and assets held in trust.
Converting Probate Property to Non-Probate
You can convert many kinds of assets and property from probate to non-probate by switching it to non-probate accounts. For instance, you can shift cash in your bank account to an account with a POD or TOD designation.
For property and other assets that you cannot convert to non-probate otherwise, you can set up a trust and use the property or assets to fund the trust.
Why would you want to do this? For the same reasons listed above about why you may want to avoid probate. And also, because certain non-probate assets, such as a life insurance policy with a beneficiary who is not the estate or the decedent, are generally protected from being seized by creditors. Your situation may vary based on your estate and the state you live in.
Trusts are generally positioned as a will alternative, but they can exist in addition to a will or serve the function of a will. A trust can assist your estate planning in various ways.
A trust is a fiduciary arrangement where you (the grantor) give a third party (the trustee) legal title to the property to manage on behalf of someone else (the beneficiary). The trustee is responsible for managing the trust for as long as there are trust assets. The trustee’s duties vary based on the trust assets but can include making investments, paying bills, and managing and maintaining real estate property.
Different Types of Trusts
Trusts can be classified into two types: revocable and irrevocable. A revocable trust is one that the grantor can change (or “revoke”) while alive. The grantor retains a great degree of control over a revocable trust. The revocable trust usually does not have a tax advantage, but it does allow property in the trust to avoid probate. A revocable trust automatically converts to irrevocable when the grantor dies.
An irrevocable trust is one that cannot be modified without the beneficiary’s permission once the trust is set up and funded. The grantor does not retain control over an irrevocable trust, and many people use irrevocable trusts to remove property from the taxable estate in order to reduce tax liability and/or protect assets from creditors.
Advantages of Having a Trust
There are a number of advantages to having a trust. One is more control over your assets, where they go, when, and how they are used. If you have a potential heir but you have concerns about giving them a large amount of money or property all at once, you can set up the trust, title your asset in the name of the trust (thus funding it) and give the trustee instructions on how and when you would like it distributed.
Another advantage is privacy. The probate process is public and putting property that would otherwise be probate property into a trust help keep the distribution of your estate private.
If you have minor children at the time you pass away, having a trust in place can make sure that your children are provided for over many years.
Some estates have a lot of expenses or debts to pay, and some of the biggest assets may not be liquid, so if you have a trust fund with assets, some of that would be used to pay estate expenses. For example, you could have a trust that is funded by a life insurance policy, and by having the death benefit pay into the trust, you can avoid possible gift or inheritance taxes on the payout while also making those funds available to pay fees on the estate.
And one of the biggest reasons that people set up trusts is for tax benefits. If you have a large estate, you can possibly reduce or avoid capital gains tax, gift tax, or estate tax liability, and/or claim a charitable giving deduction.
Disadvantages of Having a Trust
Having a trust can be extremely useful and beneficial, but it’s not for everyone. Creating, maintaining, and distributing a trust can cost money, and you would have to decide if the benefits are worth the cost.
Additionally, depending on the type of trust and the assets that fund it, the trust could potentially be taxes annually on income.
It’s possible that a trust is unnecessary for you, and that because of the nature of your assets and other factors, you are just fine with a will.
How to Fund Your Trust
A trust is useless if there are no assets or property that belong to it. You need to fund your trust in order for it to function. So once the trust is set up, retitle all of the assets that you want in the trust in the name of the trust. It may look like a lot of work, but just start with the biggest asset and work your way to the smallest.
Some accounts you can retitle in the name of the trust include:
Investment and brokerage accounts
If you plan on adding real estate to the trust, you generally need a quitclaim deed to transfer it. It should be done according to the laws in the state where the property is located.
If an asset is not titled in the trust’s name when you die, it may go through probate and may not be distributed as you intended.
Make sure you choose a trustee carefully, especially if they are part of your family. Consider what position it might put them in with the family if they are solely responsible for the administration of trust assets.
Checking in on Your Trust
Just like you should do with your will, revisit your trust periodically to make sure it is established the way you wanted. You may want to change the trustee, for example, if you appointed Uncle Bob and it turns out he is careless with other people’s money.
Guardians for minor children have been mentioned several times, but having a provision for who should be the guardian of your minor children, if you have them, is a prime reason for people to get a will or trust before they think they have the assets to warrant it.
No one can tell you how to choose a possible guardian for your children, and those with children hope that it never becomes a real issue. But try to make a wise choice for a guardian among your family and friends, and then check with them if it’s OK. In the worst-case scenario, if your minor children lose their parents, you may not want them be raised by someone who would have never agreed while you were alive.
If you don’t name a guardian, the court will appoint one for your minor child(ren).
Your pets can’t inherit property, though some pet owners have tried to pass it on to them. You can specify in your will who you would like your pets to go to, if alive, and earmark money for the caretaker for that purpose, or you can set up a trust for longer-term care by setting up a trust.
Preventing a Will or Trust Contest
One of the things that will have the most impact on your estate, and that you have the least control over, is having heirs go to court to contest the will or trust. There are a few ways you can avoid this.
You may have strong opinions about how you want to divide your estate, but think two or three time before you divide your estate in a way that appears to favor one person over another, because an uneven division of your property is likely to result in a subsequent lawsuit, which could end up reducing the size of your estate.
If you still prefer to distribute your property and assets unequally to your heirs, you might consider setting up a trust for the inheritance of an heir that is problematic or that you prefer to gift with less.
Power of Attorney, Living Wills and Other End of Life Planning
The last part of estate planning is a very important part—it addresses decisions to be made before you die, but at the end of your life.
No one hopes to get to a point where they cannot make their own decisions or express their opinions on medical, financial, and other matters, but it happens. Before you arrive at a point where you are incapacitated, make sure you have a living will in place.
These documents and powers are called different things in different states, and sometimes to different effects, but the basics are the same. In the event that you become incapacitated, you will want someone who can call the shots for you.
The following documents will help you achieve that:
Durable power of attorney (POA)
Medical power of attorney or Healthcare Proxy (HCP)
Advance health directive
Guardianship for adults
Certification of trust/declaration of intent
Durable Power of Attorney
A general power of attorney allows someone to sign and make business and financial decisions on your behalf—but only while you’re well and able to communicate and act for yourself. A general power of attorney is just a matter of convenience in doing business. What you need for end of life planning is a durable power of attorney, which is like the general power of attorney, but it stays valid even if or when you become incapacitated.
Medical Power of Attorney
A medical power of attorney, sometimes called healthcare power of attorney, is by definition a durable power of attorney. It only kicks in after you become incapacitated, and only for medical decisions.
The durable power of attorney for finance, etc. and medical power of attorney do not cross over in responsibilities, they are totally separate. For both documents, make sure you choose someone you trust, and make sure they are aware of what your preferences are.
Once you grant someone durable power of attorney, it is not set in stone. You can revisit and reassign at any time, as long as you are still in possession of your faculties.
Advance Health Directive
An advance health directive is a document with instructions for what you want to have done in certain medical situations. That can include a “Do Not Resuscitate” order, if you do not want them to shock you or perform CPR on you if you go into cardiac arrest while on a hospital stay. It can include orders not to intubate or not to keep you alive using a breathing machine or other means if your organs are failing.
What you put in your directive is up to you, but it is important to have someone who has medical power of attorney as well—if you just have an advance health directive, your wishes may not be followed. Your medical power of attorney can be your advocate to make sure you get the care and treatment you wish for and deserve at the end of your life.
Guardianship for Adults
Having a guardianship document is also important in the event you become incapacitated, and it would only take effect in the event that that happens. Having someone who is appointed your guardian if you become incapacitated allows you to let someone who knows you and knows what you would if you could communicate.
Some of the decisions that a guardian can make in your stead include:
What facility you go to
Refusing or consenting to medical treatment
Where you will live
What medical facility you will go to
Filing, defending, or settling lawsuits
Borrowing or lending money
Certification of Trust/Declaration of Intent
These last two documents help protect your trust, if you have one, to make sure they function as you intended. A certification of trust states who the trustees are and who will succeed them after you are gone.
A declaration of intent document states that you intend to put all of your titled and non-titled assets in the trust that you set up. That way, if there are any assets that were meant to be a part of your trust, they can be added by your agent or guardian.
There are a lot of parts that go into estate planning, but if you start now, and start with what is most important to you, you can get it settled.
We can help! Tomorrow can provide you and your family with peace of mind by helping you create a free legal will, or a trust fund with their premium product. Your family is worth it.
If you or your child is about to graduate from college, chances are they feel inexperienced, innocent, yet perhaps not so enthusiastic. After all, post-graduates could be riddled with debt, plus scared out of their minds, wondering what to do next.
Nonetheless, time is on their side. The “salad days,” as they know them, may be over. However, they can replace those “days” with the healthier notion that the next few years will be the best time of their life.
The generational attitude of “YOLO”, you only live once, is both a positive and negative for college grads. Using a “devil-may-care” attitude when you are young stems from the sense of infallibility. That sense can be used to a young person’s advantage.
Nevertheless, taking unnecessary and extreme risks without planning for a very long life ahead, will be detrimental. The next few years after graduation are the best time for young people to think from a place of abundance instead of a place of scarcity.
I am a Classic Example.
When I finished my postgraduate work in special education, I fulfilled my parent’s dreams and went to work with kids who had special needs. And I loved the work. Only, I soon realized that I could not afford to do very much outside of going to work.
I had no student debt. Yet, I also had none of the baggage that most older people have. Nevertheless, I could barely make ends meet. I knew nothing about saving or investing. My dad, a letter carrier for the U.S. Post Office, never discussed business and finance at the dinner table.
What saved me from a life of scarcity, was youth, enthusiasm and very little baggage. If it save me, it could save you.
Through a friend, I went to the NY Commodities Exchange Floor in the World Trade Center to check it out. The proverbial lightbulb went off in my head. I knew at once this is where I had to be.
I got a job as an analyst for ContiCommodites on the Coffee, Sugar and Cocoa Exchange. That meant I spoke on a squawk box to brokers around the world about the happenings in that Exchange. That job became my crash course in trading. It gave me the chance to change my life and financial condition.
Beating the Odds
As a woman and a teacher with no business background and even less money, the odds of my succeeding were against me.
But I was young and extremely enthusiastic. Plus, I was ready to do a complete about face from what my parents had said was the “safe” thing to do, “become a teacher as you will always have a secure job.”
The key to my success was that as a teacher, I set out to learn everything I could about trading. I never thought about losing. I only thought about what I needed to do to win. In just one year, I was promoted to become a Member of the Coffee, Sugar and Cocoa Exchange. I never looked back.
When I read most of the advice to postgraduates, the words that come up are “budget,” “save,” and “live frugally.” Had I done that, I would have never taken the leap into finance.
Now, working on Wall Street the way I did is not a necessity for young people to learn how to invest. With electronic trading and mobile devices, anyone can open an account with as little as $500.
I got a fast – track education. Postgraduates who want to invest can learn from the plethora of online sites and books that teach strategies.
Here are 5 Tips for Postgraduates:
1. Switch your mindset from saving money to building wealth. (Scarcity to abundance)
2. Think about what you know or like as where to make your first investment. That may include a product, store or megatrend.
3. You know how to learn and study. Use those skills to master one repeatable and consistent trading strategy. In my book Plant Your Money Tree: A Guide To Growing Your Wealth, that means becoming a specialist in phases. Phases serve as a compass or navigation system for investing at the right time with the least amount of risk.
4. Understand that the rules have changed since your granddad invested. The speed and amount of information has increased exponentially. Think about your investments as a “moving” business, not a “storage “business. Use phases to avoid costly passive investing in case the market takes a longstanding downturn.
5. Find a mentor. But before you follow anyone blindly, make sure they have a repeatable and easily defined strategy. Otherwise, you could get lucky and find someone on a hot streak. Yet, once that streak is over, if you have no idea what their process was for making money, you will be left in the dark holding big losses.
A former special education teacher, Michele “Mish” Schneider was one of the first female floor traders on Wall Street. Today she serves as Director of Trading Education at MarketGauge.com, a 20-year industry-leading financial publishing company. With Plant Your Money Tree: A Guide to Growing Your Wealth, Mish combines her love of teaching with her world-class expertise in finance and investing. The book is #1 on Amazon as a new release in retirement planning, intro to investing and business and finance
A few months ago I received a request to publish a post about a weird way some people make money, and the post was a surprise hit. Since then I have been on the lookout for odd jobs, interesting side hustles, and interesting ways to make money. Some of these ideas may work for you, or you may find they are interesting to read about. Today, Ms. FireMum explains how she makes money virtually risk free with matched betting.
Now before you dismiss me as a lunatic and hit that close button, hear me out. Pure betting or gambling is a fool’s game. I know that you know that everyone knows that. But matched betting is NOT gambling. It is risk-free promo arbitraging – precisely, making arbitrage bets to take advantage of betting promotions.
What on Warth is Matched Betting?
Let’s step back a bit. Matched betting started in the UK when the betting market became increasingly saturated. In order to entice customers and increase their active client list, bookmakers started offering promotions to join their site. Some very clever people came up with a way to take advantage of those promotions AND avoid the risk of losing their money.
Most bookmakers often offer a sign-up bonus. This usually comes in the form of “Deposit $100, and we’ll match it with a $200 bonus bet”. That bonus bet is essentially free money. But the bookies aren’t stupid; they don’t want you to deposit $100 and withdraw $300, straight up. They want you to put the money back into the system by betting on a game before withdrawing the money out (or, better still, lose all your money).
Here’s how we make it risk-free. The matched betting scheme, in short, is to make opposing bets that cancel each other out. For example, in a Liverpool vs. Newcastle match, I place a bet with the bookmaker Ladbrokes that Liverpool will win. This is called a back bet. I then place an opposing lay bet with a betting exchange (e.g., Betfair) that Liverpool will NOT win (importantly, this also covers a draw). The two bets cancel each other out. Either you win at Ladbrokes and lose at Betfair or vice versa. Zero Sum.
What this gets you is the $200 bonus – risk-free! All yours for the taking, and you still haven’t lost your $100 deposit.
No way – you haven’t accounted for the spread!
But wait – you say. It’s impossible to find exact odds between bookies, so how does this become a zero-sum game?
That’s true, and this is where a good matched betting calculator and match finder comes in.
Matched betting calculators are freely available on the internet, and they all work the same way. You plug in the odds given by the bookmaker, and the odds offered at the betting exchange. You’ll want the odds to be as close as possible (ideally the same) to reduce your spread loss. The matched betting calculator then calculates the amount you should lay at the exchange with your opposing bet so that your spread loss is as small as possible.
To keep costs to a minimum, you could manually find the best matches yourself. I personally chose to subscribe to a premium match finder to find the matches for me to save time wading through the myriad of matches offered by the bookmakers.
Because bookmakers odds often differ, the amount you can extract from a bonus is lower than the bonus itself due to the spread difference. This can range anywhere from 20% to as high as 80%, with most opportunities sitting between the 70-75% mark. This means that you’re only likely to extract about $150 out of your $200 bonus bet. That’s still a $150 profit, tax-free*!
*Gambling profits are considered winnings and not subject to income tax in Australia.
Okay, so how did you do?
Here are my stats after my first week of matched betting.
Initial capital: $1200 (fully retained)
Number of bookies played: 2
Total bonuses on offer: $700
Total cost: $23.50 (for the match finder subscription)
Total revenue: $571.55 (Includes losses from spread difference)
Total profit: 548.05
Bonus extraction rate: $571.55 ÷ $700 = 81.65%
And here’s a record of all my bets. Bookies and matches redacted as I don’t want the bookies to figure out who I am and ban me – I’m still in the game!
My Top 5 Observations
It’s an Active Income.
You have to work for it. Even with the premium match finder’s help, I was spending a couple of hours every night looking for the best matches to place bets on. This was more so because I was doing multiple bets with two bookies. Having a small starting bank also limited the types and amounts of bets I could make in a single day, which meant I had to strategize my moves. A larger float would make your progress quicker – but please don’t go all in with your emergency fund.
It’s all too Easy to Make Human Errors.
For example, I didn’t pay attention to the liquidity available on Betfair before placing a lay bet, resulting in one of my opposing (lay) bets not getting matched. Luckily it was matched at the very last second before the game started, otherwise, I would have been hit with a $150 loss due to a rookie mistake. Human error can wipe out your profits and capital altogether – especially if you’re placing bets with larger odds.
If you live in a non-restricted state, your profits can be bigger. There is legislation in Australia that limits bookmakers from actively shoving signup bonuses into people’s faces to try and entice them to start gambling.
Call it responsible gambling laws – certain states are more restricted than others. I live in a restricted state which naturally limits the amount of bonuses available to me. If you live in Queensland – the world is your oyster. Go forth and prosper. The land of plenty won’t last though – on May 26th, 2019, all signup bonuses will be banned.
Watch Those Bank Transactions!
With new responsible lending laws coming into play, banks and financial institutions will be closely scrutinizing borrower’s expenses. Most won’t look at gambling expenses favorably – and matched betting is a bit hard to explain away. If possible, set up a separate bank account purely for matched betting, and keep all transactions on Paypal or a debit card. Avoid using credit cards because it will be treated as a cash advance.
Be Completely Objective.
Matched betting is risk-free because the math is sound. Place your arbitrage bets exactly as calculated. Now, if you have gambling tendencies, or if you find yourself leaning towards making a punt just because you think your team will definitely win… do yourself a favor and stop. Close your betting accounts and find another side hustle. The last thing you (and I) want is to go into a downward spiral of gambling and chasing losses.
Can you Match Bet in Other Countries?
If you’re in Australia and the UK – yes, absolutely. Matched betting is huge in the UK, and is just starting to take off in Australia. It is harder to do in the USA because of gambling restrictions, but it can still be done, depending on which state you’re in. I’ve also heard of people successfully matched betting in Europe, South and Central America, and even India. There are many websites and forums dedicated to sharing knowledge on how to match bet successfully – a simple Google search should turn something up in your country.
Is it Sustainable as a Side Hustle?
After the signup bonuses run dry, there are often other promotions available to existing customers. According to experienced matched bettors I’ve spoken to, these are apparently more lucrative than signup bonuses. I personally haven’t gotten to this stage yet. These existing customer promotions are what keeps matched bettors going for years.
There is also a risk well known to matched bettors: gubbing. Bookmakers don’t like unprofitable customers – no prizes for guessing which group of customers are amongst the most unprofitable. Getting gubbed – or banned from being eligible for promotions – is a badge of honor among matched bettors and is a sure way to cut your match betting career short. There are ways to avoid this of course, but even with the best strategies, having your account promo-banned is inevitable.
The other contributing factor to the longevity of a matched betting career is time. If you have lots of time on your hands, that’s one less barrier to cross. Mums in the UK have done this for years (if you don’t believe me, check out mumsnet.com where you’ll find many threads dedicated towards matched betting). I personally struggle to find a couple of hours to fit matched betting in among my other obligations (work, family time, chores, parenting, walking the dog, etc).
So – even though the profits are great, I’ll call it a day after I’ve milked all the signup bonuses. Whilst it sort of fits into our wealth strategy (growing our income) the fact that it requires regular, active management turns me off.
There’s the moral factor as well. I don’t support gambling but matched betting is different; personally, I see this exercise as one-upping the betting agencies. Though I can appreciate that some people will want nothing to do with gambling in any shape or form. Your mileage may vary. Who knows – you might find matched betting extremely suited as a side hustle.
Ms. FireMum is a seasoned investor who recently discovered FIRE. She is on a mission to achieve FIRE for her family by her mid-40s. Her blog is filled with her stories about being frugal, saving, investing, and learning new things on her family’s journey towards financial independence
Investing in Solar: 5 Ways to Make Money from Solar Farms
This is a post from Green Coast, a renewable energy and green living blog focused on helping you live a more sustainable life
While our quest for a clean and green energy source is getting some positive vibes, the renewable energy industry is also open for investment. Just like any other investment, renewable energy sector requires you to consider the investment horizon and risk tolerance. In fact, you should start with the least risky investments that offer maximum time horizon.
The economic growth of renewable energy has been outstanding. As time is passing, more and more individuals are investing in this field to get their share. For instance, making an investment in the solar power sector is a great idea to multiply your money without any serious risk.
Moreover, companies involved in the production of green energy are getting relief from governments such as solar tax credit in the U.S.
In addition, the prices of solar panels have continually been decreasing. Making solar a much more viable option compared to alternatives.
However, there is a major issue that precludes investors to make their move. This relates to the fact that investors don’t have an idea of where to start.
There are mixed opinions about how to invest in solar. Some prefer to invest in solar companies, while others want to invest in solar funds.
Apart from these, you can think about some other ways to invest in solar.
5 Ways to Make Money from Solar Power
Discussed below are 5 ways to make money from solar farms.
Invest with Wunder Capital
Wunder Capital is a reliable and safe way of investing in solar. It assists accredited investors while investing in solar projects. This type of investment not only helps to make money but also allows us to save our environment. A recent article published in Forbes has revealed that solar industry offers more jobs in the energy sector as compared to the production of oil, gas, and coal. Hence, this industry appears to be more promising when it comes to making an investment.
Being a proper investment platform, Wunder Capital serves as a bridge between investors and solar energy projects. It creates solar investment funds by taking on board a few small sized solar companies. Although Wunder Capital is a financial technology company, it manages almost every aspect of the investment process.
This helps the accredited investors to invest in solar projects and include these projects within their own portfolios. The investment funds also offer good returns. The companies associated with Wunder Capital are actually supplying solar energy to the commercial entities and properties. According to the representatives of Wunder, this is the area, which is still lagging behind as compared to utility and residential segments.
Wunder Capital is a U.S based company, with over 100 commercial solar installers and developers as their partner. These solar power companies contact their customers in the commercial sector and make independent deals. What Wunder Capital does is providing financial help to these companies by providing them with sufficient capital through its investment funds.
Hence, if you are not willing to start your own solar company, you can still earn profits by investing in solar companies of others. Your investment goes to the Wunder, which use this amount to fund mid-sized solar companies. The Wunder Capital usually runs three debt funds and out of these, two funds are still available for new investments.
Wunder Capital 5 Fund that was launched in October 2017, offers the following perks.
The projected annual return of this fund is 7.5 over five years of investment
This fund has a 20-year amortization of principal, which makes it viable to invest in solar projects that are large and offer maximum profits
This type of investment is only available to accredited investors (A person who have earned the income of $200,000 during each of the last two years). If you fall under this criterion, you can go for investing in solar power companies through Wunder Capital.
Lease your Land to a Solar Farm
It is the most simple and secure way of making an investment in the solar sector. In fact, you are not putting your physical money into the business; instead, you are just leasing your land for making a solar farm. If a company is looking to invest in solar farms, you can offer your land for this purpose.
However, prior to contacting a company, you need to analyze whether your land fulfills the criteria for solar installations. For this purpose, you can take help for an independent site assessment company. This will also allow you to ascertain how much revenue you can generate by leasing your land to a solar power company.
If your land passes the assessment test and has been approved for solar panel installations, the next step is to look for a solar developer. Usually, these solar developers or financing companies provide all type of assistance when making a solar farm.
In fact, you are not making a solar farm but providing the land for solar installations. Hence, there is nothing much for you to lose when leasing your place to a solar company. Instead, this allows you to earn a lucrative amount of income on a monthly basis.
The solar company will build each structure with your approval. The operation and maintenance of such a solar farm will be the responsibility of the operating company. Furthermore, solar developers will obtain all the permits and meet the regulations for building a solar farm.
TerraForm is a company that owns solar, wind, and other clean energy assets. This company is a YieldCo. YieldCos utilize the cash flows through the assets of solar companies and use them to pay for the dividends.
Investors are more than interested in TerraForm, as the profit or yield is way more than the amount one can get through stocks trading options. Apart from the investors, developers are also keen to work with TerraForm, as it offers capital at a much lower cost.
This company is a $2.3 billion worth assets that include solar and wind power installations. The company has undergone some positive transformations during the last couple of years. The financial outcomes of this venture show that it is offering a handsome dividend. The management is hoping to get 5% to 8% annual dividend growth in the coming years.
By investing in solar companies like this one, you can yield considerable income in the shape of dividends. However, start with a small amount and see how things are working.
Create your Own Solar Farm
The industry associated with solar panel manufacturing and installation has seen a rapid boom. The advancement of this industry was slow in the past decade, but it is soaring at a great pace in the prevailing era.
The major reason for this surge relates to the large-scale installation of solar panels while building a solar farm. A wide range of individuals is planning to invest in solar farms due to the reliability and profitability of this option.
What is a Solar Farm
Before going deep into the discussion, it is essential to know about solar farms. In fact, a solar farm is a photovoltaic power station, which is a huge decentralized solar array that supplies electricity to the grid. Solar farms have long lifespans thanks to recent advancements in technology.
These farms are usually owned by the utilities or energy supply companies that use this renewable energy source to minimize the cost of the electricity. It also helps these utilities to improve their supply and enhance the coverage area.
These are the ground-mounted solar panels that require a plain area for their installation. Due to the massive size of these solar arrays, it is possible to generate a sufficient amount of electricity to feed a large residential community.
Hence, these solar farms may either be commercial or community installations. The commercial solar farm produces electricity and cells it to various energy supply companies.
On the contrary, the community solar farm is specifically designed to meet the needs of the homes located in a particular area.
How much Investment is Necessary to Build a Solar Farm
The power generation capacity of a large-scale solar farm is at least 1 megawatt (MW). This capacity is equal to that of a power plant, which is capable of offering a constant supply of electricity to almost 200 households.
The cost of building a solar farm largely depends on different factors including available space, and sunlight hours. The cost of a utility-scale solar farm is something around $1/watt. Hence, you can easily calculate that in order to build a 1 MW solar farm, you have to make an investment of approximately $1 million.
The cost of the residential or community solar farm is relative higher, which stands at $3 to $4 per watt.
The reason for this difference is the fact that while building a large-scale solar farm, you buy solar panels and other equipment in bulk, which lowers their price to a great extent.
Buy Solar Company Stocks or Mutual Funds
Apart from the investment options, there are numerous other options that are less popular. However, if these investment options are suitable for you, there is no harm in trying them for once. Here are some of the more effective ways to invest in the solar power sector.
Buying Stocks Offered by Solar Company
This is one of the most regular ways of investing in solar. This method allows you to purchase the stocks of solar companies. The formula is quite simple, if the company grows and earns a profit, you will get the share.
In prevailing circumstances, businesses and governments are planning to go solar within the next ten years. Hence, investing in these companies would be quite beneficial in the coming years. You can get some huge returns by making even small investments.
For instance, Illumina is one of the biggest players in the field of solar energy. The stock price of this company has grown up to 1000%, which is a remarkable growth rate. Even though the prices of renewable energy stock are relatively lower than the previous year, the surge in the solar panel demands will give a nice push.
Solar Income Funds
This is an investment, which requires the investors to put their money into government-run solar power schemes. In order to live the dream of switching to solar energy, the government needs capital.
To get the required amount for building solar farms and other installations, solar income funds will be the major source. It allows investors to make some profits while achieving the goal of going solar.
You will get a share of the profit earned through the production of electricity. Hence, you are not only earning a handsome income but also helping your government to make a sufficient amount of electricity through solar power.
Renewable Mutual Funds
If you are confused while opting for any of the available investment options, you can take the assistance of a financial advisor. They can provide you with essential information and guidance to identify only the best opportunities.
A renewable mutual fund is an investment program, which will infuse your money with other investors. The financial advisor will then spread this pooled money into different renewable energy investments.
Since these advisors have the experience, they can find the best opportunities. They also make the arrangements to get the best returns from energy stocks, bonds, or government funds. They are the professionals who understand the industry and market. Hence, they are also capable of managing the risk.
Conclusion on Investing in Solar
If you are thinking of investing in the solar energy sector, this is the right time. Although different investment options are available, you need to choose the one that is just right for you. For instance, if you can invest a large sum of money, building a solar farm is the most viable investment. You can save money with renewable energy
On the contrary, if you don’t want to invest but earn from the investment of others, you may think about leasing your land for building a solar farm. Apart from this, companies like TerraForm also offer a handsome dividend if you invest in their company.
So, the choices are not limited but you need to do your homework before making any of these investments.
We’ve heard of the responsible way for managing credit cards by spending carefully, paying them off on time and in full. However, what if there was a way to be responsible with credit cards and use them to earn us awesome travel rewards at the same time? Enter the practice called credit card churning, discussed explicitly in a Reddit community (r/churning).
For those looking to travel hack their way to dream destinations on a shoestring budget, best practices can be found on how to credit card churn on Reddit. Read more on how travel hacking works, what you can do to maximize your chances for doing it successfully, how to minimize your credit impact with hard inquiries, and how to use the Reddit Churning community to your advantage.
What is Travel Hacking?
With all the great credit card rewards programs out there, there has been a rise of people using these perks to offset the costs of everyday life. Many programs offer cash back rewards, travel points, or other member features which make customers attracted to enrolling.
If these cards are used wisely, they can help you travel the world and the seven seas. Travel hacking involves working within program rules established by airlines, credit card companies, hotels, rental car companies, and more and using them to cut the cost of travel dramatically. This can include flights, lodging, food, and other available upgrades.
Despite the illicit nature of the term “travel hacking,” it is entirely legal. Even better, it is quite simple to do and earning free flights, hotel stays, rental cars, or other desirable travel-related amenities is within reach of many able to navigate the available offers with a discerning eye.
The “hacking” part accelerates the process for accumulating those available points received through credit card rewards programs and sign-up offers. Whether you want to travel the world alone, with those you love, or even travel the world for a job, travel hacking is a smart way to do it.
What are Credit Card Rewards Programs?
Credit cards offer you access to a line of credit when you need it. If you pay your balance each month, you incur no interest charges and can build a robust credit history showing you worthy of having access to more credit.
Some credit cards also come equipped with credit card rewards programs which offer the cardholder benefits related to any number of things. Favorite examples include cash back programs where the cardholders receive a percentage of qualified purchases back as an account credit to use at their leisure or travel rewards points which can be redeemed to travel the world at little cost.
Depending on your card issuer, they can partner with several companies to offer travel points or rewards credits to be redeemed toward travel-related purchases or in place of paying for items altogether.
What is Credit Card Churning?
Now that you know more about travel hacking and how credit card rewards programs can earn you travel points, miles, or other units redeemable for travel rewards, you will need to understand how to accelerate your rewards balance accumulation.
Credit card churning is straightforward yet can be challenging to do if you aren’t sure of where best to look for the best credit card offers. Put, credit card churning works like this:
Find credit card offers. Look for several available credit card offers you have an interest using. Examples include credit cards with airline miles rewards programs, hotel stay points, or other attractive travel amenities. What’s critical is assessing their sign-up bonus.
Apply for those credit cards. Once you’ve identified the applicable programs of interest, you need to execute. Apply for the cards and prepare to spend enough money to qualify for the sign-up bonus.
Spend the necessary minimum to receive a sign-up bonus. This is the part where some may struggle because each card almost always comes with mandatory minimum spending requirements to receive the sign-up bonus. However, if you make a lot of money, this might not be as hard. To meet these limits, you can find either bunch together many purchases you already needed to make and would be eligible for credit card payment, manufacture your spending or a combination of both. Many people choose to wait until they have many purchases to make at once, like at Christmas, or near other significant events to bunch their spending.
Cancel the rewards credit card. After you’ve spent the required minimum using organic or manufactured spending and received the sign-up bonus in your applicable travel account, you can cancel the credit card before you pay any annual fees.
Rinse and repeat. If you found this to be useful for receiving a decent travel benefit, why stop after one attempt? So long as you can meet the minimums and find the sign-up offers worthwhile, continue credit card churning so you can rack up rewards more frequently than you would by using only one or two credit cards. However, you should be mindful of the overall impact on your credit score, discussed more below.
What is Manufactured Spending?
Manufactured spending is a process to fabricate spending solely to meet the mandatory minimum spending requirements for credit card sign-up offers. This is a way of avoiding extra expenditure for the sake of meeting minimums and not having you waste money to earn a card’s sign-up offers.
The process works by buying items with a credit card which can then be converted to cash.
A widespread practice is purchasing a gift card and using this to make purchases at your leisure with a store or retailer already intended to be visited regularly. From here, the credit card holder pays the card with cash and earns the sign-up offer without spending any extra money.
Looking at this from a cost/benefit standpoint, you can quickly assess whether the rewards earned outweigh the fees incurred. If you have a net benefit, you can consider this process manufactured spending. Some other common examples of manufactured spending include making Amazon payments, reloading existing gift cards with the credit card in question, funding bank accounts, and other financial accounts, etc.
Manufactured Spending Example
As an example, let’s imagine Fred signs up for a credit card which offers 50,000 free skyline miles once he spends $2,000 within three months of sign-up. Fred could use his new rewards credit card to purchase a $2,000 gift card from Amazon, a place he frequently shops.
The $2,000 would go toward his credit card spending requirement, which he would pay with his bank account. He can then use this Amazon gift card at his own pace knowing he would have spent $2,000 at Amazon anyway over a more extended period.
Using this Amazon gift card example further, Fred might be able to purchase a gift card from a retailer and use it to pay his credit card bill.
Or, he could go to another store to purchase a gift card using the credit card and use it to pay for money orders. These money orders could be used to pay his credit card bill. Either route avoids having to spend any money.
However, a word of caution before pursuing either of these routes. Credit card issuers have smartened up to manufactured spending, and many have put rules in place to prevent you from gaming the system.
Many travel hackers bought reloadable cash cards at office superstores, grocery stores, or the like, but retailers have changed their practices in response. Many now require most of these cards to be purchased only with cash. Some companies have even instituted specific rules which limit the amount of credit card churning you can do within their credit system, such as Chase’s 5/24 rule.
What is the 5/24 Rule?
Chase Bank prevents widespread abuse of credit card churning by enforcing its 5/24 rule, which limits you to open a new credit card with Chase bank under certain conditions. Specifically, if you have opened five or more personal credit cards across all banks or credit card issuers in the previous 24 months and apply for another through the bank, you will not be approved for the card.
Chase uses this rule to enforce credit card churners from gaming the system regularly but so far has been the only major bank to limit the practice. Chase recently expanded the 5/24 rule to include all co-branded cards. This information is relatively opaque because Chase never comments on the 5/24 rule, but multiple data points suggest denials due to the 5/24 rule for cards which were previously exempt.
Some cards subject to the Chase 5/24 rule include:
Chase Freedom Unlimited
Ink Business Cash Credit Card
Chase Sapphire Preferred Credit Card
Chase Sapphire Reserve
Marriott Rewards Premier Plus Credit Card
Southwest Rapid Rewards Plus Credit Card
Southwest Rapid Rewards Premier Credit Card
Southwest Rapid Rewards Premier Business Credit Card
Southwest Rapid Rewards Priority Credit Card
Starbucks Rewards Visa Card
United MileagePlus Club Card
United MileagePlus Club Business Card
United Explorer Card
United MileagePlus Explorer Business Card
Be mindful of applying to these cards too frequently over 24 months as doing so could lead to account scrutiny and possible Chase account shutdowns regardless of your 5/24 rule status.
The Chase 5/24 rule isn’t the only factor considered when applying for these credit cards. As is standard industry practice for all credit cards, lenders review your credit score, income, debt levels, and many other consumer credit variables related to your ability to repay the card balance.
Who is Credit Card Churning Not For?
Credit card churning is not for everyone. Churning repeatedly can have impacts on your credit score if not managed wisely. However, aside from the damage to your credit score changes, there are other risks to be aware of before proceeding with credit card churning as discussed on Reddit.
Be sure to think carefully before proceeding and consider if those credit card rewards are the best strategy if:
You’re planning to make a significant purchase which requires a pristine credit score. Before setting down the credit card churning route, be aware of the credit implications. Credit card churning could affect your chances of getting approved for a mortgage, auto loan, business loan, or any other dominant form of financing. All these financing arrangements require good credit scores to receive favorable loan terms. If you anticipate requesting a significant line of credit in the coming two years, think twice before pursuing the credit card churning strategy.
You cannot control your credit card usage prudently. If you have a history of managing your spending poorly, having added spending power might not be the best option to have at your disposal. Taking on multiple credit cards and spending thousands of dollars to qualify for rewards points likely isn’t the smartest choice if you have trouble living within your means. In this case, credit card churning isn’t for you. It’s likely best to avoid Reddit to avoid the temptation.
You lack organization skills. These credit card sign-up reward minimums are no joke. Some of them require you to spend thousands of dollars in tiny windows (think fewer than three months). If you are not organized enough or have difficulty paying attention to the finer details, credit card churning could quickly turn against you. Be sure to track the spending requirements, due dates, and fee schedules for these cards to avoid any negative consequences. Not having these organization skills makes you a weak candidate for credit card churning and following the discussion on Reddit.
For a more robust discussion of why credit card churning might not be for everyone, see this thread on Reddit.
What is the Reddit Churning sub?
The Reddit Churning community describes itself as a place to discuss the finer details for churning credit cards as a means to profit from sign-up offers and membership rewards. The community is a place to share credit card churning success stories, failures, new credit card offers, and tips and tricks to make the most of your efforts.
10 Ways, the Reddit Churning Community, Can Help You
The community offers multiple recurring discussion threads to manage the above-referenced topics. Specifically, the sub offers the following threads:
Daily Discussion Threads. The regular discussion threads contain questions used for debate about credit card churning. There are also separate threads for other items like manufactured spending related to credit card churning.
Daily Question Threads. These are useful for various questions, on-going credit card discussion, or other related topics.
Manufactured Spending Weekly. A thread entirely dedicated for all things manufactured spending discussion. Here is where you share methods, ideas, pain points, and anything else you can think of related to manufactured spending. Each thread also comes equipped with a link to an Introduction to Manufactured Spending.
Frustration Friday. A repository for any complications encountered in your credit card churning journey. Topics usually include manufactured spending missteps or roadblocks but can consist of anything which frustrates you related to credit card churning.
Storytime Weekly. A weekly digest of everyone’s ups and downs during the week related to credit card churning. The thread collects responses on trip reports, success stories, funny churning stories, and anything else relevant.
What Card Should I Get Weekly? Think of this as crowd-sourced decision-making. This is where you ask r/churning about which credit card is best suited to your needs. The thread even contains a flowchart break down the best card for your needs within the rule. It’s best to look at this thorough flowchart before asking the community to avoid getting blowback from members (see below).
Bank Account Bonus. Since credit card churning has grown in popularity, the sub separated the sign-up bonuses for bank accounts into its weekly thread. This includes all bank account discussion, including bank account churning mechanisms and data points.
Data Points Central. The subreddit relies on sharing experiences and data points to optimize the credit card sign up offers made available by card issuers. This is a thread which is lacking of structure, though on purpose, and contains weekly data point sharing.
Mega Threads. If there is a favorite subject for discussion or debate, the community can sometimes segregate this topic into its mega thread. If this happens, these are shown on the Reddit sidebar, and all related questions and comments should be posted there as opposed to standalone posts.
Finding the best credit churning offers for you. This community is excellent for finding offers useful for helping you save money, travel the world low cost, and earn free money. This subreddit provides you the necessary data points and discussion to optimize your credit card churning efforts.
Pros of Using r/churning
If all of the above sound manageable and you’re still interested in credit card churning, consider visiting the sub. In the community, members share their experiences and data points useful for you to track.
Some primary pros of using the Reddit Churning sub include:
Multiple sets of eyes are better than one. As is the case with many things in life, having multiple people working on a task can make for less time commitment. Make sure to vet each content submission in the group before proceeding with enrollment.
You are socializing with others interested in the same goal. Discussing the credit card churning process with others can lead you to new ideas, offers, and means of meeting spending requirements. You can discover more efficient ways to manufacture spending or manage your credit card churning efforts.
Readily available information. Managing credit card rewards spending progress is hard enough, never mind the task of finding contact information for each card issuer if you seek to cancel your card. The r/churning subreddit is filled with contact information useful for managing the credit card accounts you hold.
Cons of Using r/churning
Just as there are benefits to credit card churning and using the sub, there are drawbacks as well. Some prominent ones related to the community and credit card churning in general include:
Time Commitment. Learning to travel the world for free can be very rewarding as a young professional, retiree, or just about anyone else who’s ever enjoyed traveling on a minimal budget. However, if you must keep track of multiple credit cards, tally your spending on each, and make sure you pay any balances on time, it can be time-consuming. Make sure you set aside time to follow the requirements of each credit card and to be mindful of payment due dates. I’d strongly suggest logging all of your activity in a spreadsheet much like you would for creating a budget in Excel.
Credit score impact. As discussed above, credit card churning for travel hacking purposes can lead to disastrous results on your credit score. According to the FICO credit scoring model, new credit inquiries impact your overall credit score. Hard inquiries can remain on your Experian credit report for approximately two years, but only impact your FICO Score for 12 months. While applying for one or two cards is likely to have a minimal impact on your credit score, opening multiple accounts within a short period could raise a red flag and knock down your credit score accordingly.
Closing accounts can also be costly on your credit. If you’re not planning to hold the card long-term and wish to close the account shortly after receiving your sign-up bonus, this could backfire for your credit score. This factors into your credit report as well.
Lead to elevated spending. Using credit card churning can lead to high spending, which you otherwise wouldn’t have done. Manufactured expenditures can be a great way to combat this spending bulge but aren’t always as easy since many companies have changed their policies to counter this practice.
This subreddit is useful for finding excellent credit card churning opportunities. The above are factors for your consideration before proceeding on your travel hacking via credit card churning journey.
The usual advice is offered for anyone visiting a forum:
Be mindful of others’ thoughts and motivation behind the information being given
Not all offers will be relevant to you and your situation; be sure to check the fine print of any offer you pursue
If you can’t control your spending habits, avoid r/churning
Travel Hacking Sources Other than Reddit Churning
For those looking to expand their resources for churning beyond just the Reddit Churning community, there are other sites available for your needs. Some popular alternatives include:
Credit Karma. Credit Karma has long been a source useful for tracking your credit score but has also expanded to other services in recent years. The company primarily makes income from credit card reviews and affiliate links. Recently, many have begun to turn to Credit Karma for taxes and other useful products. The company reports multiple credit scores using the FICO scoring model and the VantageScore 3.0 method from TransUnion and Equifax. While VantageScore credit scores aren’t used as widely as FICO scores for credit decisions, they can still provide a good idea of where your credit stands and how your score may be impacted by pursuing credit card churning.
The Points Guy. The Points Guy is a site which does a deep dive into nearly everything credit card related. It provides detailed reviews of credit cards, blog posts about credit cards, credit scores, credit metrics, and numerous other topics. If you’re looking for more credit card options and reviews, be sure to visit the site regularly for their latest content.
You’re now equipped with everything you’d ever need to know before beginning your credit card churning journey. If you think this is the right fit for you and would like to travel for next to nothing, consider using r/churning to your advantage.
A Dime Saved was born after my incessant personal finance lecturing started boring my friends and family. Now, I give my advice to the internet anonymously and I don’t alienate my social circle. It’s pretty much a win-win!
I’ve always been interested in personal finance but my biggest “aha!” moment came when I lost my job. Newly pregnant, with a young son, I struggled for months to find a job. While we were spared the worst by still having my husband’s (low) income; it was a dark, dark time.
It really focused me on the importance of saving, investing, living below my means and giving charity. We still live on a low-income which I believe gives me a unique perspective in the personal finance world. I get the struggle because I live it.
My favorite blog post shows how I relate to money and budgeting. “How Budgeting Saved My Marriage” is the true story of how changing the way my husband and I dealt with money helped us relieve the money tensions in our marriage.
I want to thank Michael for letting me share with you all today. I really admire YMG and the library of resources he’s created here. I am honored to share the stage briefly!
I am Mr. SR, and I run a site about Semi-Retirement. To me, semi-retirement is the best way for middle-class workers to achieve their early retirement dreams!
The topic of Barista FIRE has been on my mind often, so I’d like to discuss it with you today.
What Barista FIRE Gets Wrong
One growing sect in the Financial Independence, Retire Early (FIRE) movement is Barista (or “Coasting”) FIRE. The idea behind Barista FIRE is that you can front-load most of your retirement savings early in your career, then work as a barista (or some other low-stress, low-paying job) and let your investments grow. Then when you’re older and can’t work anymore, you can live off of your portfolio.
Barista FIRE gets a lot of things right, but there are some red flags you should consider before going down that path.
You will be dependent on your employer
In Barista FIRE, you are necessarily reliant on your part-time job for income during your early retirement years. That job will pay for most of your living expenses so that you can protect your investments.
This immediately eliminates many of the “independence” benefits of FIRE.
If you limit your part-time job search to low-stress hourly work, you will be at the mercy of your manager and whatever varying schedule or number of hours they throw at you. What if you have a doctor appointment, a friend in town to visit, or even just an itch to travel for the weekend? Oh well, hope you can work it out!
At your hourly gig, you can’t just decide to work a bit extra on a certain week if you’re feeling energetic.
If you Barista FIRE, you’re still working for “the man.”
You will not meet your productivity potential
In the corporate world, I believe there is a misconception about what productivity really is. Too often, it’s equated with the number of hours worked. In reality, productivity would be better measured by meaningful results produced.
At your hourly job, you’re signing up to keep trading hours for dollars. And your hours will be spent doing activities that someone else chooses for you.
Worse still, in Barista FIRE, you will likely be earning a meager wage. If your FIRE timing math is based on earning such a small amount, you will be forced to stay at your full-time career and continue your high savings rate for years longer than you need to.
Since time is our most precious and limited resource, staying at your 9 to 5 longer than you have to is a major loss.
You could be more productive in another form of work during your early retirement years. But, I am not suggesting that you need to burn the candle at both ends. I will address this below.
You will be restricted in your pursuit of meaningful work
On my home site focused on semi-retirement, I describe how many traditional retirees feel depressed or a lack of purpose after leaving full-time work. A lot of conventional retirees actually choose to go back to work, even though they don’t need the money, just because it’s enjoyable and can help them feel driven.
I argue that you should account for these future wages (if it sounds like something you and your family would be interested in) so that you can retire from your full-time work even sooner.
On the surface, this sounds very similar to Barisa FIRE, but there’s a fundamental difference.
Barista FIRE sets the goal as low stress, low wage work. Semi-retirement sets the goal as work that is profoundly meaningful.
The beauty is, though, that many forms of meaningful work will generate higher wages than serving coffees or similar roles.
From Glassdoor.com, May 15, 2019.
For example, let’s say you are a career accountant, and you decide to retire early and do a little part-time work. You could work as a barista and make $10 an hour. But, you really enjoy playing the guitar as a hobby. You could, instead, teach guitar lessons for $30 an hour.
Assume you would like to work for 15 hours per week, 46 weeks of the year.
Also, assume the following:
Current age: 35
Current retirement savings: $250,000
$100,000 will grow until later retirement years when part-time work is not possible
$150,000 will grow until early retirement, then be drawn down to supplement income
Annual income during full-time working years: $80,000
Annual saving rate: 25% ($20,000)
Planned annual retirement expenses: $45,000
4% withdrawal rate during early retirement years
6% annual investment growth rate after inflation, compounded annually
($10 per hour)
Guitar teacher scenario ($30 per hour)
Annual income from part-time work
Supplemental income needed from investments
Total portfolio required to support this drawdown
Years needed to grow the $150,000 to the target portfolio value
By choosing to teach guitar lessons, you can semi-retire over five years earlier than if you wait to Barista FIRE.
If you plan strategically, you can maximize your fulfillment during your early retirement years, while also doing work you enjoy.
In the example above, teaching guitar lessons is an hourly job, in a sense. But you have the flexibility to reschedule lessons or advertise to get new students as your preferences shift.
If you semi-retire to project-based work, like consulting or freelance writing, you will have additional flexibility to optimize your productivity, working whenever you choose.
If you remember one thing…
I’ve found that when discussing politics or religion, people often don’t believe everything that their “label” may lead you to expect. Likewise, I want to acknowledge that some people pursuing Barista FIRE may have bigger plans than serving espresso.
My final plea is this: in a personal finance sphere where we’re obsessed with optimizing dollars, don’t sell yourself short on time. You can earn more dollars, but your years are limited.
You can retire even sooner, and invest your time in work that you actually care about.
How to Invest in the Right Software for Your Industry
Running your own business requires a lot of planning, organizing, and prioritizing. Back in the old days, you’d have to use a paper calendar and a lengthy to-do list on a yellow notepad to keep track of all of the day’s tasks. But in the digital age, business management is a different story. In many ways, it’s more complicated to grow your business in the digital world, but there are also plenty of tools tailored to your very industry that are ready to help you do everything from running your payroll to improving workflow efficiency.
But with a sea of tech tools on the market, how do you choose what’s right for you? Use these tips to discover some industry-specific tools that could help your business, and learn how you can properly vet software tools for your business.
Before you commit to any new software additions, use your local network to find out if any other leaders in your industry are using tools that are working for them. Many industries have online forum communities that foster dialogue between business owners and experts. With a quick search online, you could find an engineering and technology forum, a hotel management group, or a restaurant management community. Don’t be afraid to source answers from the people who know your industry best.
Read Reviews and Compare
Maybe you have an idea of the product you want to test out. That’s great! When a product or service claims to solve all of our pain points, it’s tempting to say “sign me UP” and pay into a contracted service agreement as soon as possible. But many of these programs require hefty subscription fees and tough-to-break contracts so you may want to do some research before signing on any dotted lines.
Start by reading some reviews of the product, considering both the positive and negative ones. If other products do the same thing, you may also want to look at some comparison charts to help you weigh the pros and cons of each—check out this professional tax software comparison chart for example.
Take Advantage of Free Trials
Many software programs and services offer free trials that you should definitely take advantage of. Many free CRM trials even let you upload your customer data, integrate your invoicing tools, and get the support of a sales representative to help you build your platform with best practices in mind. This may sound time-consuming, but this extra step will help you evaluate how the product helps your business, and if the investment is right for your business.
Make Sure Everything is Integrated
The beauty of software and technology is that there’s something for just about every one of your business needs. But where it can get chaotic is when you have all of your eggs in different baskets, so to speak. Your invoices are one platform, customer contact information on another, and documented processes and procedures on yet another program. Remember: these tools are designed to help you and make your life easier, not complicate things. Therefore, it is essential that you integrate your apps to keep your workflow consistent.
And in order to integrate, you must ensure that they are integratable. Asking this simple question can help you avoid switching programs, processes, and struggling with inconsistent data that may derail your day-to-day workflow.
Implement Strong Training Practices
Not even the best app can solve your business’ biggest issues if you don’t train your staff properly. In order to make sure the tool is functioning as it’s supposed to, it’s important to make sure all of your staff is trained consistently. If one person is utilizing the program one way, and another person is doing something completely different, it’s only going to worsen any pain points your organization is experiencing. Try to train staff all on the same day to help make sure everyone is on the same page. This will help your staff adapt easier to the new process and increase the ROI of your new product.
With the right tools at your disposal, your business operations can drastically improve. But in order to find products that do just that, simply follow these steps, and you’re sure to find tools designed to accelerate your cash flow.