Accredited Asset Management Specialist (AAMS)

What is the AAMS certification?New financial advisors need something to help them stand out. Consequently, the AAMS does just that. Designed for newcomers to the financial advice business, the AAMS trains advisors to identify investment opportunities as well as help clients with other financial goals. It also gives more experienced advisors a fast and simple way to learn more about asset management and improve their credentials. Here’s how it works.

AAMS Defined

An Accredited Asset Management Specialist (AAMS) can advise clients on college savings, taxes, and retirement savings. The course and tests for this certification are designed to ensure advisors can assist clients with their complete financial needs. It emphasizes evaluating the client’s assets and making appropriate recommendations.

The AAMS certification is granted by the College for Financial Planning, a unit of the Kaplan Company. The college oversees a large number of financial certification programs, including the Certified Financial Planner designation, one of the most valued certifications in the field.

AAMS Certification Requirements

What is the AAMS certification?

To receive an AAMS, students first have to complete a 10-module education program provided by the College for Financial Planning. Then they have to pass an examination. Finally, they must agree to abide by a code of ethics and promise to continue their education.

The courses are online and can be delivered in self-study or instructor-led formats. Courses are open-enrollment, therefore students can begin at any time without waiting for the next session.  The 10 modules cover the following material:

1.:The Asset Management Process

2. Risk, Return & Investment Performance

3. Asset Allocation & Selection

4. Investment Strategies

5. Taxation of Investments

6. Investing for Retirement

7. Deferred Compensation and Other Benefit Plans

8. Insurance Products for Investment Clients

9. Estate Planning for Investment Clients

10. Fiduciary, Ethical, and Regulatory Issues for Advisors

The College of Financial Planning provides everything necessary to study for and complete the modules and take the test. Students have access to the study materials and tests through an online portal.

Streaming video lectures, audio files, and interactive quizzes also can be found through the college’s site. Meanwhile, students can access live classes online and contact professors with questions and issues.

The AAMS Test

To get the AAMS certification, students have to pass just one test. However, they have to make their first attempt at the test within six months of enrollment and pass it within a year.

The fee for the first attempt at taking the test is included in the course tuition. There are no prerequisites for signing up to take the AAMS course.

Time and Money Requirement

Tuition for the AAMS courses is $1,300. This includes the fee for the first attempt at passing the certification exam. It also includes all needed course materials. Each additional attempt costs $100.

Students employed with certain financial services firms may be able to get tuition discounts. The college may also provide scholarships.

The College for Financial Planning recommends students plan to spend 80 hours to 100 hours on the course. Since the course is self-study, this amount of time is flexible.

To maintain AAMS certification students have to commit to completing 16 continuing education credits every two years. Also, continuing education has to cover one or more of the topics covered in the AAMS coursework.

AAMS certificate holders also have to agree to follow a professional standard of conduct. As a result, they have to maintain integrity, objectivity, competency, confidentiality and professionalism in providing financial services.

AAMS Certificate Holder Jobs

AAMS certificates are generally earned by entry-level workers in the financial advice business. Consequently, AAMS holders are typically trainees. In some cases, they may provide support services to more experienced and highly credentialed advisors.

The AAMS designation does not confer any special powers or privileges. Instead, it’s an optional credential that students may obtain to advance their careers and enhance their knowledge of financial advice.

Comparable Certifications

What is the AAMS certification?

In addition to the AAMS, the College for Financial Planning offers an Accredited Wealth Manager Advisor (AWMA) certificate. This is a somewhat more advanced designation. As a result, it requires a course equivalent to three graduate level college credits and requires 90 hours to 135 hours to complete.

Chartered Mutual Fund Counselor (CMFC) is sponsored by the Investment Company Institute along with the College of Financial Planning. It is similar to the AAMS certificate except it focuses on mutual fund assets.

Accredited Financial Counselor (AFC) is a general personal finance advice certificate from the Association for Financial Counseling and Planning Education. First, it requires 1,000 hours of financial counseling experience. Secondly, it demands three letters of reference. Finally, applicants must both complete coursework and pass an exam.

Bottom Line

The AAMS designation is usually for newly minted financial advisors, but even experienced pros can use it to bulk up their credentials. The courses and tests associated with the AAMS teach advisors how to evaluate assets and make recommendations.

While this certification doesn’t give an advisor any real powers, it’s a sign that they can identify investment opportunities specific to their clients. Above all else, it can be a great relief to a client who has a child going to college or a retirement house on their wish list. As a result of obtaining an AAMS, and advisor can point them toward the right investments for their goals.

Investing Tips

  • If you’re looking to identify investment opportunities, consider using an AAMS as your advisor. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
  • An AAMS can help you with college savings, taxes, and retirement savings if you know what your goals are. However, if you are unsure how much you want to invest, what your risk tolerance is, or how inflation and capital gains tax will affect your investment, SmartAsset’s investing guide can help you take the first steps.

Photo credit: ©iStock.com/SARINYAPINNGAM, ©iStock.com/fizkes, ©iStock.com/Suwanmanee99

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How to Financially Prepare for Post-Pandemic Life

As the dust slowly begins to settle and we observe businesses putting their action plans in place to recover, we all sit and wonder what this may look like for us. How will I recover from this? How am I going to cover these unexpected expenses? How will I increase my earning potential? Whether you’re navigating the muddy waters of being unemployed, furloughed, return to office plans or continue working remotely – we have many things to consider as time continues to quickly progress. How should we handle debt? Are there any more relief programs or funding? How can we pick up the pieces and properly recuperate what may have been lost? Use the tips below to jumpstart your journey of reclaiming your finances.

Identify your financial focuses

Over the course of this year, many financial goals that were initially set needed to be tweaked or came to a screeching halt altogether. While it would be nice if we could rectify the many financial aspirations we have for ourselves and our families all at once, it’s simply not realistic. To alleviate the impounding pressure many have had to experience for a good chunk of time this year, it’s best to identify two to three key areas of focus. Not only does narrowing your focus help direct where your efforts should lie, it removes unnecessary stress so that a plan of attack can be created and executed upon. For example, if you would like to begin rebuilding your emergency fund, savings or simply get caught up on bills and other overhead expenses – make sure the actionable steps you take align with the overarching goal. This helps create tunnel vision to execute on the goal while quieting the noise of things that can be tackled at a later time. You owe it to yourself and your finances to see these goals through to the finish line.

Revisit your budget and make adjustments as necessary

Many think of budgeting like that pesky chore you put off every single week. It’s that ‘thing’ you know needs to be done, but you always find something else to do instead. However, once it’s done – you’re always glad that you did it. Even if you have to have an adult temper tantrum, pull out the pen and paper (once again) to compare your income with expenses. Has your income increased or decreased? Are there expenses that are no longer on the list? Are there certain wants or luxuries that can be temporarily put on hold until things settle down? Take all of these factors into consideration when recalibrating your budget. Since there’s an increased amount of time indoors, are there any spending habits you’ve noticed that have been on the rise? If these questions are not easily answered, commit to reviewing the last few months of your bank statements. Do you notice more to-go food orders? An increased amount of emotional or impulsive purchases? Be honest with yourself and your habits so that you can address and make changes to healthily rebuild your finances.

Adjust debt payoff plan

If you haven’t taken the opportunity to contact your creditors – consider this as a reminder! It’s imperative you maintain an open line of communication with all lenders. These conversations can potentially lead to various options being available to assist you in your debt payoff process. Remember to keep in mind that you are not the only person experiencing financial hardship, so let pride become a thing of the past and be candid. Are there relief options during the pandemic? Are interest rates being lowered because of the current climate? If I were to miss a payment, what are the consequences? Are negative remarks being reported to the credit bureaus? Be very clear in your delivery. There are thousands and thousands of people attempting to pick up the pieces on their money journey. Take some time to check all creditor accounts for the most recent balances. From there, create (or readjust) your plan based on your personal circumstances. If it’s easier to tackle the smallest debt, shift your attention to those accounts. If catching up and restoring good standing with utilities and other overhead expenses need to be addressed first, do that. There is no right or wrong way to approach your plan; just don’t adopt the spirit of avoidance.

Monitor your credit score regularly

There’s been a huge surge in personal data being compromised due to the pandemic. To protect yourself and your credit score, be sure to obtain a copy of your credit report from at least one of the bureaus (Experian, TransUnion and Equifax) and review regularly. Normally, you are allotted one free credit report every year – however, because of the pandemic you can now request your report weekly at no cost to you until April 2021. We all know there’s a lot on all of our plates, but this can be incorporated in your weekly routine to make sure information stays accurate. During your review if there’s anything that’s false, submit a dispute and be sure to have any supporting documentation that can serve as evidence to support your claim.

Even though we don’t like to admit it, life can present a lot of challenges that we may not be fully prepared for in our ever-changing adulthood journey. This pandemic has shined a light on the areas in our lives that can use some more time, intention and attention. Instead of beating ourselves up about the lack of preparedness, let’s be sure to make adjustments now so no matter what happens with the economy or the state of this country it does not have such a huge, negative impact to our financial goals. Let’s face it – even in the midst of tragedy, this year equipped us with a different level of endurance and resilience. It reminded us what really matters and where our energy should really be dedicated to. Start where you are and do what you can. Refrain from comparing your personal money story to someone else’s. We all have unique situations and obligations that influence our saving and spending plans. Dust yourself off, grant yourself grace and begin a new chapter in your financial journey.

 

The post How to Financially Prepare for Post-Pandemic Life appeared first on MintLife Blog.

Source: mint.intuit.com

The ABCs of Financial Empowerment

A quick Google search of ‘financial literacy’ will yield thousands of results, listing an infinite amount of do’s and don’ts that should (and shouldn’t) be followed to guide you along on your financial journey.

However, when you think of financial empowerment – what comes to mind? As defined by Merriam-Webster, empowerment is “the act or action of empowering someone or something: the granting of the power, right, or authority to perform various acts or duties.” No matter what your current sentiments are related to your finances, we will explore three key areas to not only embrace; but to help you prepare for a strong financial future.

Awareness

Now more than ever, we all have a laser-sharp focus on our money and where it’s being spent. The pandemic has generated a hypersensitivity to how we treat our finances while also determining what essential expenses look like and where they fit into our budget.

Before life as we knew it to be shifted, many of us don’t have to look too far back to remember a time where we didn’t check our accounts as often, our savings plan would fluctuate month-over-month or our emergency fund was used to bail us out of some impulsive spending.

To make sure those days are forever of the past, make it a habit to take inventory and audit all of your accounts. Take at least 15 – 30 minutes to review over any transactions and deposits across all active accounts. Not only does this help improve your self-accountability, but you are also able to make any disputes if anything appears incorrect and resolve quickly.

Another small but impactful tip is to acknowledge your financial health. What top three areas will be your main point of focus? If this is something you don’t know offhand, review your transactions from the last three months and categorize them. How much of your money went to impulsive buys or things that could have been purchased at a later date? Are you seeing an influx in overhead expenses or credit card payments? Are there any spending patterns you can explicitly see? Allow this exercise to serve as an eye-opening experience.

In order to determine where you want to be, you must first truthfully acknowledge where you are. This sets the blueprint and overall expectations with your personal finance journey. Knowing where you are may not feel pleasant but avoidance will lead to bigger consequences.

Betterment

Even though we don’t like to admit it, there’s always room for improvement and our finances are no exception. The first thing that guarantees mastery is actually following the budget that’s created. This serves as a guardrail – it’s used to keep us on track so we can greet our financial destination with open and inviting arms.

Once that’s in motion, explore ways to enhance your financial experience. Begin by automating recurring expenses, such as cellphone service or utility bills. That’s why it’s so important to be as honest and accurate as possible when setting a budget. Nothing should come to you as a surprise outside of any emergencies. When you trust yourself and the financial work you’ve put in, your finances have no choice but to follow suit.

If you haven’t already (or need to get back on track), work to beef up your emergency fund and savings account. Emergency expenses have a tendency to appear out of nowhere, so you want to dedicate a set dollar amount or a percentage every pay period. Setting up an automatic transfer to these accounts establish a routine while putting your mind at ease in the process.

Is there a hobby or skill you’d like to put to use and monetize? No matter how grandiose or small, this can definitely expedite achieving your financial goals. The money earned from a passion project can go toward savings, paying off debt or simply getting back to a place of comfort financially. Vacation funds or prepping for large purchases such as a car or home can also fall within this category. If you want to seek the assistance of a professional, search for financial advisors or coaches that could help you with reaching your goals. Preparation is key and your future depends on it!

Confidence

The foundation has been laid and you’ve been committed to crushing your financial goals. The budget and savings goals are in motion; so what’s next? It’s time to celebrate! Walk into your financial future with your best foot forward. When times seem bleak, remind yourself of your goals early and often.

Reinforcement such as daily reminders on your phone, having goals posted somewhere in your home you can see daily or reciting positive financial affirmations will serve as a second wind when you want to throw in the towel. Be sure to celebrate wins along the way such as debt payoff, reduction or hitting a new savings goal. Never been able to invest before and now you have the additional income to get in the game? Celebrate that!

The best way to generate excitement is to rally your family and get them involved. Create family challenges to get your children excited about saving funds and reallocating money. Come up with creative ways you all can commemorate knocking out a goal by ordering from your favorite restaurant or saving for a family staycation.

In order to walk in confidence, you have to build up the courage to begin no matter where you are or how many times you’ve had to start over. Each step counts – each successful budget, savings goal and consistent reduction of overall expenses. Be sure to keep in mind, financial freedom looks different for everyone and has the ability to pivot over time. While some may want to vacation throughout the year, save for their children’s college fund or wipe debt out completely, all are significant and take sacrifice. What is the key to achieving such a pinnacle level of confidence? Time.

 

Be kind to yourself and understand mistakes should never be equated to failures. Your commitment to this financial journey will always be rewarded.

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Source: mint.intuit.com

5 Reasons You Need To Hire A Financial Consultant

If you’re a busy individual and have no time for the day-to-day management of your money, you may need to consult a financial consultant.

Beyond being busy, however, there are major turning points in your life where working with a financial consultant is absolutely necessary.

For instance, if you’re approaching retirement, you’ll have to figure out how much money you need to live during your non-working years.

So what is a financial consultant? And what do financial consultants do? In this article, we’ll run you through situations where financial consulting makes sense.

We’ll show you where you can get a financial consultant that is ethical and who will act in your best interest, etc.

Of note, hiring a financial consultant is not cheap. A fee-only financial advisor can charge you anywhere from $75 to $300 per hour. If your situation is simple, you may not need to hire one.

However, hiring a financial consultant in the situations discussed below is worth the cost.

Related: 5 Mistakes People Make When Hiring A Financial Advisor

What is a financial consultant?

A financial consultant is another name for financial advisor. They can advise you on a variety of money subjects.

They can help you make informed decisions about managing your investments and help you navigate complex money situations.

Moreover, a financial consultant can help you come up with financial goals such as saving for retirement, property investing and help you achieve those goals.

To get you started, here’s how to choose a financial advisor.

5 Reasons You Need To Hire A Financial Consultant:

1. You have a lot of credit card debt.

Having a lot of credit card debt not only can cause you severe emotional distress, it can also negatively impact your ability to get a loan (personal loan or home loan).

For instance, if you see 50 percent of your income is going towards paying your credit card debt, then you need professional help to manage debt. Your best option is to find a financial consultant.

Luckily, the SmartAsset’s matching tool is free and it helps you find a financial consultant in your area in just under 5 minutes. Get started now.

2. You are on the verge of bankruptcy.

If you have way too much debt and can’t seem to pay it off within a reasonable time, another option for you is to file for bankruptcy.

Although bankruptcy will free you from most of your debts, avoid that option if you can.

One reason is because it can have a long, negative impact on your credit file. Once you go bankrupt, the bankruptcy will be on your credit report for a long time.

Working with a financial consultant can help you come up with different strategies. They may advise you to consider debt consolidation, which can significantly lower interest rates.


Speak with the Right Financial Advisor

You can talk to a financial advisor who can review your finances and help you reach your goals. Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.


3. You’re ready to invest in the stock market.

If you’re thinking about investing in the stock market, then the need for a financial consultant is greater. Investing in the stock market has the potential of making you wealthy.

But with great returns come great risks. The stock market is volatile. The price of stock can be $55 today, and drops to $5 the next day.

So, investing in the stock market can be very intimidating. And if you’re a beginner investor and unsure about the process, it is wise to chat with a financial advisor to see if they can benefit you.

A financial consultant can help build an investment portfolio and help manage your investments.

4. You’re starting a family.

If you’re just got married seeking a financial consultant is very important. A financial advisor can help you figure out whether you should combine your finances, file taxes jointly or separately.

You also need to think about life insurance as well, in case of death of one spouse. And if you’re thinking of having kids, you need to think about saving for college to ensure the kids’ future.

Turning the job over to a financial consultant can save you a lot of money in the long wrong and is worth the cost.

Related: Do I Need A Financial Advisor?

5. You’re just irresponsible with money.

If you make emotionally based financial decisions all of the time, you’re buying things without planning for them, you may be irresponsible financially and therefore need professional advice.

If you’re spending money on expensive items when you could be planning and saving for retirement, then you may need a financial consultant.

You may find yourself having trouble saving money. Then it may make sense to speak with a financial advisor.

Speak with the Right Financial Advisor For You

You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

 

The post 5 Reasons You Need To Hire A Financial Consultant appeared first on GrowthRapidly.

Source: growthrapidly.com

The Average Salary of an Architect

The Average Salary of an Architect

The average salary of an architect is $76,100 per year.

Have you ever wondered how much an architect earns? Becoming an architect requires an investment of money and time, but pays off in the form of a rewarding career that comes with above-average earnings. And for those lucky few who become “starchitects,” it’s a path to fame. Let’s take a closer look at the average salary of an architect. 

The Average Salary of an Architect: The Basics

The Bureau of Labor Statistics (BLS) finds that the average salary of an architect was $76,100 per year, $36.59 per hour in 2015. There is wide range of architect salaries, however. The top 10% of architects earn an average salary of $125,520 per year, $60.34 per hour. The bottom 10% of architects earn an average salary of $46,080 per year, $22.15 per hour.

Architects’ salaries are fairly high, but what do the future job prospects look like for architects? The BLS releases a “job outlook” for the fields it studies. The job outlook predicts the percent by which the number of people in a given job will grow between 2014 and 2024. For architects, the BLS job outlook is 7%, which is around the average for all the jobs the BLS studies. The field isn’t shrinking, but it’s not growing at faster-than-average rates either.

Related Article: The Average Salary of a Doctor 

Where Architects Make the Most

The Average Salary of an Architect

The BLS examines state- and metro-level data on earnings, too. Where does it pay the most to be an architect? According to BLS data, the top-paying state for architects is California, where the annual mean wage for architects is $97,880. Other high-paying states for architects are Georgia ($93,940), Massachusetts ($90,430), New Jersey ($89,130) and Minnesota ($88,680).

What about metro areas? The top-paying metro area for architects is West Palm Beach-Boca Raton-Delray Beach, FL, where the mean annual wage for architects is $117,870. Other high-paying metro areas for architects are Santa Maria-Santa Barbara, CA; Oxnard-Thousand Oaks-Ventura, CA; Syracuse, NY and Oakland-Hayward-Berkeley, CA.

Related Article: The Cost of Living in California

The Cost of Becoming an Architect

The first step to becoming an architect is to earn a bachelor’s or master’s degree in architecture. A poll by the American Institute of Architecture Students (AIAS) found that poll respondents (all architecture school graduates) had an average post-graduation student debt of $40,000. The students also reported spending thousands on extra costs such as modeling materials, textbooks and more.

After obtaining a degree (often a five-year degree), budding architects do an average of three years at an architecture internship. Finally, they must take the Architect Registration Exam (ARE). That means that even the fastest path to becoming an architect in the U.S. takes eight years, but most people take around 11 years. In the meantime, most of these aspiring architects are paying back student loans. The ARE also comes with stiff fees. Depending on which version of the exam you take, the exam fee itself is either $1,470 or $1,260. If you have to cancel your exam, the fees you pay are non-refundable.

Bottom Line

The Average Salary of an Architect

The job of an architect comes with glamour and prestige, as well as a high salary and a solid job outlook. However, the path to becoming an architect is a long and expensive one and not everyone who wants to become an architect makes it through the multi-year process. Still, if you have the discipline, talent and funds architecture is a financially rewarding career path.

Update: Have financial questions beyond an architect’s average salary? SmartAsset can help. So many people reached out to us looking for tax and long-term financial planning help, we started our own matching service to help you find a financial advisor. The SmartAdvisor matching tool can help you find a person to work with to meet your needs. First you’ll answer a series of questions about your situation and goals. Then the program will narrow down your options from thousands of advisors to up to three registered investment advisors who suit your needs. You can then read their profiles to learn more about them, interview them on the phone or in person and choose who to work with in the future. This allows you to find a good fit while the program does much of the hard work for you.

Photo credit: Â©iStock.com/Geber86, Â©iStock.com/vgajic, Â©iStock.com/monkeybusinessimages

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Secured vs. Unsecured Loans: Here’s the Difference

Whether you’re trying to buy a home or looking to get a college degree, you may need to take out a loan to finance your goals. If you’re seeking out your first loan, know that borrowing money is a common practice and you don’t need a degree in economics to understand it! Learning more about loans and the different types can help you make informed decisions and take control of your finances.

Loans take many forms but they all fall within two common categories: secured vs. unsecured loans. Whether you’re approved for either type of loan depends on your creditworthiness. Creditworthiness refers to how responsible you are at repaying debt and if it’s worthwhile or risky to grant you new credit. It’s helpful to be aware of your credit prior to seeking out a loan so you know where you stand.

Now that you’re familiar with the role creditworthiness plays in getting a loan, let’s discuss the differences between secured and unsecured loans, the advantages and disadvantages of each, and which one may be right for you.

What’s the Difference Between Secured vs. Unsecured Loans?

What’s the Difference Between Secured vs. Unsecured Loans?

The main difference between secured and unsecured loans is how they use collateral. Collateral is when something of economic value is used as security for a debt, in the event that the debt is not repaid. Usually collateral comes in the form of material property, such as a car, house, or other real estate. If the debt is not repaid, the collateral is seized and sold to repay all or a portion of the debt.

Key Difference: A secured loan requires collateral, while an unsecured loan doesn’t require collateral.

What Is a Secured Loan?

A secured loan requires collateral as security in case you fail to repay your debt. If secured debt is not repaid, the collateral is taken. In addition to seizing collateral, lenders can start debt collection, file negative credit information on your report, and sue you for outstanding debt. This generally makes secured loans more risky for the borrower.

Conversely, collateral decreases the risk for lenders, especially when loaning money to those with little to no credit history or low creditworthiness. Less risk means that lenders may offer some leeway regarding interest rates and borrowing limits. See the list below to review other typical secured loan characteristics.

Characteristics of a Secured Loan:

For borrowers:

  • Presence of collateral
  • Typically more risky
  • May require a down payment
  • May sell property to repay loan
  • Generally lower interest rates
  • Longer repayment period
  • Higher borrowing limits
  • Easier to obtain for those with poor or little credit history

For lenders:

  • Typically less risky
  • Lender can take your collateral
  • Lender can hold the title to your property until loan is repaid

Secured Loan Examples

The most common uses of a secured loan are to finance large purchases such as a mortgage. Usually, these loans can only be used for a specific, intended purchase like a house, car, or boat. A home equity loan is another example of a secure loan. Some loans like business loans or debt consolidation can be secured or unsecured.

Secured Loan Examples

What Is an Unsecured Loan?

An unsecured loan doesn’t require collateral to secure the amount borrowed. This type of loan is granted based on creditworthiness and income. High creditworthiness makes an unsecured loan more accessible.

The absence of collateral makes this type of loan less risky for borrowers and much riskier for lenders. If unsecured debt is not repaid, the lender cannot seize property automatically. They must engage in debt collection, report negative credit information, or sue. As a result of the increased risk, unsecured loans have characteristics that attempt to reduce the risk. These may include higher interest rates or lower borrowing limits, and you can see more in the list below.

Characteristics of an Unsecured Loan:

For borrower:

  • No collateral required
  • Typically less risky
  • Qualify based on credit and income
  • Stricter conditions to qualify
  • Generally higher interest rates
  • Lower borrowing limits

For lender:

  • Typically more risky
  • Lender can’t take property right away if you default

Unsecured Loan Examples

Common unsecured loans include credit cards, personal loans, student loans, and medical debt. Debt consolidation and business loans can also be unsecured. In each of these instances, collateral is not required and you are trusted to repay your unsecured debt.

Unsecured Loan Examples

Advantages and Disadvantages to Consider

When it comes to deciding on the type of loan you need, it’s important to consider the advantages and disadvantages of each.

Secured Loans

Secured loans present advantages for repayment, interest, and borrowing amount, but have disadvantages regarding a borrower’s risk and limitations of use.

Advantages

  1. Bigger borrowing limits
  2. Less risk for lenders usually means lower interest rates for borrowers
  3. Longer repayment period
  4. Available tax deductions for interest paid on certain loans (e.g., a mortgage)

Disadvantages

  1. Risky for borrower (potential for loss of collateral like home, car, stocks, or bonds)
  2. Specifically for intended purpose (e.g., a home, but home equity loans are an exception)

Unsecured Loans

Unsecured loans can be advantageous for borrowers regarding risk and time, but they pose a disadvantage when it comes to interest rates and stricter qualifications.

Advantages

  1. Less risky for borrower
  2. Useful loan if you don’t own property to use as collateral
  3. Quicker application process than for a secured loan (e.g., a credit card)

Disadvantages

  1. More risky for lenders usually means higher interest rates for borrowers
  2. Hard to qualify for if you have low creditworthiness or inconsistent income (can qualify with a cosigner)

Take a look at the chart below to compare the key advantages and disadvantages between secured and unsecured loans.

Secured Loans

Unsecured Loans

Advantages

• Lower interest rates
• Higher borrowing limits
• Easier to qualify
• No risk of losing collateral
• Less risky for borrower

Disadvantages

• Risk losing collateral
• More risky for borrower
• Higher interest rates
• Lower borrowing limits
• Harder to qualify

Which Loan Type Is Best for You?

After considering the advantages and disadvantages of both loan types, it’s helpful to know which one is the best for certain circumstances. Here are some common contexts in which one may be better than the other.

  • A secured loan may be best if you’re trying to make a large property purchase or don’t have the best credit. The piece of property that you are purchasing can be used as collateral if you don’t already own other property. Additionally, this loan is more accessible for you if you have low creditworthiness and may be more advantageous with lower interest rates.
  • An unsecured loan may be best if you have high creditworthiness and a steady income. High creditworthiness helps you meet strict qualification criteria and can also help you obtain better interest rates (given that this type is characterized by higher interest).

Overall, secured and unsecured loans are each useful in different situations. Remember that the key difference is that unsecured loans don’t need collateral, while secured loans do. Secured loans are less risky for the lender and may allow for some advantageous repayment conditions. On the other hand, unsecured loans are risky for the lender, and they often come with stricter conditions that try to lessen that risk.

It is important to make smart financial decisions such as repaying debt on time and maintaining a good credit history. High creditworthiness is the key to getting the best conditions on any loan. No matter your circumstances, identifying which loan type is best for you depends on your specific credit and goals. Visit our loan center for help in deciding which loan is right for you.

Sources: Consumer Financial Protection Bureau

 

The post Secured vs. Unsecured Loans: Here’s the Difference appeared first on MintLife Blog.

Source: mint.intuit.com

Dave Ramsey’s Baby Steps Explained

Whereas Dave Ramsey’s Baby Steps have often been dissected one at a time, my goal in this post is to give an overview of the steps as a unit and explain why the order is essential.

dave ramsey baby steps explained

Hopefully, these steps can help you create a focused life plan for your finances, regardless of your age or financial well being.

First, the Baby Steps:

  • Step 1: $1,000 in an emergency fund.
  • Step 2: Pay off all debt except the house utilizing the debt snowball.
  • Step 3: Three to six months of savings in a fully funded emergency fund.
  • Step 4: Invest 15% of your household income into Roth IRAs and pre-tax retirement plans.
  • Step 5: College Funding
  • Step 6: Pay off your home early.
  • Step 7: Build wealth and give.

The Power of Focus

Dave’s premise with the Baby Steps is that people can accomplish great things IF they can just be focused. When you read over these seven steps, you think, “Yes. I need to be saving. But I also need to be investing for retirement. I should get my house paid off early. But I also need to be getting out of debt and saving for my kid’s college.”

You would readily agree that all of these goals are important for successful financial planning. The problem is that your stress level kicks into overdrive with the prospect of doing them all. You clench your jaw and do what you are capable of doing while feeling anxious about the goals you place on the back burner.

The Baby Steps plan works because when you stay focused on one step at a time, you can knowingly put some important goals on hold without the nagging feeling that you are leaving something undone.

You can also check out my YouTube video where I break down each of Dave’s Baby Steps here:

Why?

Because accomplishing each step puts you in a great position to accomplish the next one.

You begin to feel an empowerment and a sense of control as you get one step behind you and start the next one. You are making progress instead of treading water.

Why Are the Baby Steps in the Order They Are In?

Dave Ramsey's Baby Steps

Steps 1 and 2: $1,000 Emergency Fund and Debt Snowball

Notice that Steps 3 through 7 are all about using your money to do something positive for you and your family. Of course this money comes from your income, but the problem with most of America is that we are using our income on debt payments.

Because we are paying others instead of ourselves, we need to get rid of our debt (Step 2) in order to free up our income for Steps 3-7.

Ask yourself,

“What if I could use all the money I am currently paying to creditors to start “paying myself”?

For many people this is $1,000 to $3,000 a month.

Baby Step 2 debt snowball is designed to do just that. Step 1 is necessary before Step 2 because you don’t want to start paying off debt without having a small cushion to absorb the little unplanned expenses that will occur during Step 2.

Step 3: 3 to 6 months of Savings

After completing the first two steps, you are out of debt (except for your house) and now have that cash flow you dreamed about: all of the money you used to pay others is at your disposal. The temptation is to start investing for retirement or saving for your kid’s college or pay off your house early.

NOT SO FAST! You will get to those, but doing so prematurely is way too risky.

Stop, take a deep breath and use that cash flow to build up your emergency fund so you will indeed be ready for emergencies. This fund needs to be liquid (in a top savings account or money market account).

If you skipped the step and started any of the ensuing steps, how would you handle emergencies? Pull money from your retirement account? Rob the kid’s college savings? Borrow money against your house? All bad ideas.

Step 3 is therefore always ahead of the following steps

Steps 4, 5, and 6: Saving for Retirement, College Funding, Pay Off Home

dave ramsey baby steps

You may be asking,

“Why is retirement ahead of college funding? Wouldn’t a good parent put his children ahead of himself?”

Good question. But what if you end up without sufficient retirement income because you made college funding a higher priority? Who will you be depending on in your later years? Your kids!

The thing about retirement planning is that you only get one shot at it. The years go by and you will someday be retirement age. You don’t have a choice. On the other hand, college funding is full of choices: kids can get scholarship, they can work, they can attend community colleges, they can find work/co-op programs, etc, etc.

Step 4 is therefore ahead of step 5. But notice that Step 4 is 15% of your income. If you have cash flow greater than 15% you can apply that to college funding immediately, and if you have more than enough cash flow to accomplish both steps 4 and 5, you can use all of the extra to pay off your house early (step 6).

Note that Step 6 comes behind retirement and college funding because reversing the order could possibly give you a paid for house at the expense of a dignified retirement or helping your kids through college. Most of us wouldn’t want that.

Not sure where to start investing for retirement? Here are some tips:

  • Best Places to Open a Roth IRA – Figuring out where to start investing your 15% of income can be confusing. A great place to start is a Roth IRA, but deciding a broker is confusing. This list will help you pick the best broker for your Roth IRA.
  • Best Online Stock Broker Sign Up Bonuses – You can get hundreds of dollars or thousands of airline miles just for opening up a brokerage account.
  • Beginner Investing Strategies – If you’ve never invested before it can be overwhelming. This list breaks down getting started into manageable pieces.

Step 7: Build wealth and give.

Life is now very good! You have no debt, a great emergency fund, and a paid for house. All of the cash flow that used to go toward debt reduction and house payments is now at your disposal.

This, by the way, is the step Mandy and I are on. Being semi-retired, we don’t have a huge income, but it is very sufficient because we also don’t have any debt. We continue to invest every month and we are able to give more than we have ever given before.

Once we got our house paid off, we started to budget “bless” money, which we put into an envelope every month just to have available so we can bless others as we see the needs. We are also able to help our grown daughter and daughter-in-law cash flow their college.

As I said, life is good. Mandy and I are experiencing great financial peace and we are very grateful for Dave Ramsey’s Baby Steps.

I wish the same for you.

This article is a general overview of what Dave Ramsey has to offer and is not intended to replace his course, nor is this sponsored or endorsed by Dave Ramsey or the Lampo Group.

The post Dave Ramsey’s Baby Steps Explained appeared first on Good Financial Cents®.

Source: goodfinancialcents.com

The Top Financial Resolutions for 2021

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Have you made your resolutions yet? It can feel a little daunting trying to figure out what you need to focus on, so we made it easy: These are the resolutions everyone else is taking on in 2021, according to a survey by Wallethub, and you should, too. Plus — how to accomplish them.

1. Make A Realistic Budget And Stick To It

This one sounds familiar, right? Oft-regarded as Old Faithful when it comes to New Years’ resolutions, it holds that title for good reason. Having a budget you can actually stick to will set you up for financial success, no matter what your goals are.

It’s easy to slip away from our good financial habits as the year goes on, so it’s particularly important to find a budgeting system that works for your lifestyle and won’t be hard to maintain.

We recommend the 50/30/20 method. It’s simple, yet effective, and has a bit of a cult following, too! Here’s how it shakes out:

50% of your take-home income every month covers your fixed expenses — rent, utilities, groceries, minimum debt payments, etc. 30% goes towards the things you can live without, but don’t want to (like food delivery, a Netflix subscription and travel). Finally, the last 20% of your monthly income is dedicated to your financial goals.

2. Look For A Better Job: Make up to $69/Hour

The most surefire way to achieve your financial resolutions and stay within that budget you made is to earn more money.

2020 made that really hard for most people. Which is why finding a better job, that you actually enjoy — and will pay you more — is a top resolution for 2021.

But what if you could create that higher-paying and more rewarding job? There’s an idea…

Can you open an excel spreadsheet? Does earning $69 an hour sound appealing? How about the freedom to work remotely while helping others succeed?

Those are the perks of working as a bookkeeper, says Ben Robinson, a CPA and business owner who teaches others to become virtual bookkeepers through online courses called Bookkeepers.com.

You don’t have to be an accountant or even really good at math to be successful in this business. In fact, all you need are decent computer skills and a passion for helping business owners tackle real-world problems. The ability to stay moderately organized is helpful, too.

You can make up to $69 an hour, according to data from Intuit, the creator of QuickBooks, and you have no commute. It’s a great opportunity for parents who want a part-time job, recent college grads or anyone who wants to bring in real money working from home.

Robinson shares what it takes to be a virtual bookkeeper, plus tips for making this career work for you in his free class at Bookkeepers.com. If you stick with the classes, you could be running your own business in just a few months.

3. Pay Off Credit Card Debt: Wipe Out All Your Debt by Tomorrow

2020 was actually a good year for paying down credit card debt — Americans did more of it this year than they ever have.

But there’s still work to be done, which is why paying off credit card debt is one of the top financial resolutions this year.  Because if you still have credit card debt, you know. The anxiety, the interest rates, the fear you’re never going to escape…

And the truth is, your credit card company doesn’t really care. It’s just getting rich by ripping you off with high interest rates. But a website called AmOne wants to help.

If you owe your credit card companies $50,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.

The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month.

AmOne won’t make you stand in line or call your bank, either. And if you’re worried you won’t qualify, it’s free to check online. It takes just two minutes, and it could help you pay off your debt years faster.

4. Monitor Your Credit Report

Did your credit score take a dive this year? Or is still stuck at a “fair” grade? Then monitoring any changes on your credit reporting and working to improve your score should be one of your financial resolutions for this year, too.

When it comes to your credit score, it’s important to stay organized and keep tabs on it. After all, it’ll play an essential role in any big purchase you want to make — whether that’s a home or a car.

So if you’re looking to get your credit score back on track — or even if it is on track and you want to bump it up — try using a free website called Credit Sesame.

Within two minutes, you’ll get access to your credit score, any debt-carrying accounts and a handful of personalized tips to improve your score. You’ll even be able to spot any errors holding you back (one in five reports have one).

James Cooper, of Atlanta, used Credit Sesame to raise his credit score nearly 300 points in six months.*** “They showed me the ins and outs — how to dot the I’s and cross the T’s,” he said.

Want to check for yourself? It’s free and only takes about 90 seconds to sign up.

5. Get Insured In Case Of A Catastrophe. You Could Give Your Family up to $1 Million

Talk about a scary year. If a global pandemic didn’t have you thinking about your own mortality, what else could? With that thought in mind, people are adding “buy life insurance” to their list of 2021 to-dos.

Have you thought about how your family would manage without your income if something happened to you? How they’ll pay the bills? Send the kids through school? Now’s a good time to start planning for the future by looking into a term life insurance policy.

You’re probably thinking: I don’t have the time or money for that. But your application can take minutes — and you could leave your family up to $1 million with a company called Bestow.

Rates start at just $16 a month. The peace of mind knowing your family is taken care of is priceless.

If you’re under the age of 54 and want to get a fast life insurance quote without a medical exam or even getting up from the couch, get a free quote from Bestow.

6. Add A Month To Your Emergency Fund

Having an emergency fund is important; you know that. But it’s easy to deprioritize it when things are going fine. And as 2020 showed us, you can lose your job at the drop of a hat, meaning a full emergency fund can be what keeps your lights on.

So prioritize your emergency fund this year. If you don’t have one yet, start by opening an account that will help you grow your money.

One way to do that is with a company called Aspiration. It lets you earn up to 16 times the average interest on the money in your account.

Not too shabby!

Enter your email address here to get a free Aspiration Spend and Save account. After you confirm your email, securely link your bank account so they can start helping you get extra cash. Your money is FDIC insured and they use a military-grade encryption which is nerd talk for “this is totally safe.”

7. Pay Bills Right After Payday

It’s easy to get swept up in the joy that is payday and immediately start buying things you don’t need. But as the final financial resolution on this list, paying your bills right away can help keep the rest of your goals on track.

It means you can avoid late fees on your utilities, which can really add up and destroy your budget. You can pay off your credit card debt without mounting interest charges. And you can prevent any hiccups that would dock your credit score a few points.

Whatever your financial goals are this year, we know you can achieve them! Here’s to making 2021 your best financial year yet.

Kari Faber is a staff writer at The Penny Hoarder.

***Like Cooper, 60% of Credit Sesame members see an increase in their credit score; 50% see at least a 10-point increase, and 20% see at least a 50-point increase after 180 days.

Credit Sesame does not guarantee any of these results, and some may even see a decrease in their credit score. Any score improvement is the result of many factors, including paying bills on time, keeping credit balances low, avoiding unnecessary inquiries, appropriate financial planning and developing better credit habits.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com