Trio Mistakes People Make When They Need a Car Loan

Tuesday, July Nineteen, 2016

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Jackie Lam

Jackie Lam is a freelancer writer who covers private finance topics for millennials and Gen X.

Shopping for a car loan can be a financially and mentally draining practice. More than 86% of car buyers used at least some amount of financing to purchase cars in the beginning of 2016, according to the latest data from Experian.

Unluckily, many car buyers make crucial, yet preventable, mistakes when they take out a loan for a fresh car. The MagnifyMoney research team determined to find out just where shoppers are going wrong. We asked more than six hundred car owners a series of questions about how they shopped for a car loan.

The answers we received were pretty troubling, to put it mildly. Read on to see where buyers are going wrong:

1. Too many people let their car dealer do the homework for them.

Almost two-thirds of the drivers we surveyed committed the ultimate auto financing mistake: they let the dealer find their loan.

When you let the dealer determine find the loan for you, you have no way to gauge whether what’s introduced to you is in fact the absolute best suggest you can get. You also forfeit pretty much all of your negotiating power right off the bat. Only about one-third of the borrowers we surveyed shopped online for a loan with a lower interest rate before walking onto the dealer’s lot. Spend some time on comparison websites before you go to the dealership to get the best rate.

[Disclosure: LendingTree is the parent company of MagnifyMoney.]We recommend beginning with LendingTree. There are hundreds of lenders participating on this platform. Once you accomplish the application, you can then see real interest rates and approval information. Some lenders will do a hard pull on your credit, which is normal within the auto lending space. Reminisce, with auto loans, numerous hard pulls will only count as one pull. So, in this case, the best strategy is to have all your hard pulls done at once. You can shop for the best rate on LendingTree’s website.

Once you get the rate, you can always attempt to make the dealer give you a better deal. But you should never walk onto the lot without a low rate in your pocket.

“Many otherwise-savvy consumers feel intimidated by the car buying practice and react by letting the dealership take control of the deal,” says Thomas Nitzsche, a credit educator at Clearpoint Credit Counseling. “Some consumers also feel their credit is slightly good enough to secure an auto loan, so take whatever they are suggested or buy into the dealers telling them that they are doing them a favor.”

Tips on pre-shopping for an auto loan:

Empower yourself by shopping for auto loans before you head to the dealership. When you walk into a dealership with a pre-approved auto loan rate from a bank or credit union, you can use that as leverage. Your dealer will be more inclined to match that rate or find you a better deal, explains Matt DeLorenzo, a managing editor at Kelley Blue Book.

“With the resources available on the internet, from financing to determining what your trade-in is worth, there’s no excuse for walking into a dealership not knowing the prevailing interest rates, what sorts of incentives are out there, and what sort of pricing and what others are paying,” he says.

Have your credit score in arm to ensure your credit info is accurate. A dealer can lightly say that you don’t qualify for a better rate without having run a decent credit check. You can check your credit score on a number of sites for free.

Don’t shop at the last minute. We can’t predict things like car accidents, but there are steps you can take to be sure you won’t get caught in a desperate car buying situation. Dealers will smell that desperation from a mile away and take utter advantage of it. If your car is demonstrating signs of needing repairs, take care of them right away. If you’re in a pinch, think about renting a car temporarily, taking public transit or carpooling until you’ve had time to get your ducks in a row.

Two. More than half of car buyers never had their income verified.

Car dealers should verify your income when they take your loan application. But that doesn’t mean they always do. More than 52% of our survey respondents said their income wasn’t verified. When irresponsible dealers don’t verify your income, they could potentially give you a loan that you can’t actually afford. Some dealers skip this step in order to speed up the application process and increase your chances of getting approved for a loan.

To get a sense of what you can reasonably afford to buy, use a free contraption like this cost calculator from Edmunds. It permits you to take into account not just your income but also the value of any car you are trading in, how much you can afford to put down on your fresh car, and any balances on existing car loans. If you go into a dealership knowing what you can afford, they will be less likely to sell you something you know is outside of your budget.

Three. Most people agreed to a longer-term loan to make their payments more affordable.

A whopping 82.6% of drivers we surveyed said they took out a loan with a term longer than five years to lower their monthly payment. This may seem like a fine way to save on your monthly payments. But you will wind up paying more in the long run, thanks to interest. Auto loans with longer terms usually carry a higher interest rate. Not remarkably, almost one in five car buyers told us they signed up for a long-term auto loan because it was the dealer’s idea.

“The dealer is going to suggest the longest term possible, because it means selling a more expensive car—and likely [earning] a higher commission,” explains Nitzsche. Because dealers want you to concentrate on the monthly payment and not on the total cost of the car, it’s lighter to mask the total cost of the car by spreading out the length of the loan and lowering the monthly payment.

People with poor credit are much more likely to take out these longer term loans. The fact that poor credit customers also wind up with loans with the highest interest rates, they can actually wind up indeed hurting themselves here.

In a worst case script, you could find yourself owing more on your auto loan than the car is actually worth. Fresh cars lose up to 25% of their value every year according to Edmunds. To save the most money, get a loan with monthly payments you can afford for the shortest term possible.

Jackie Lam is a writer at MagnifyMoney. You can email Jackie here

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6 Bad Money Habits That Could Wreck Your Finances — and How to Break Them

Thursday, August 24, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Brittney Laryea

Brittney Laryea is a private finance reporter for MagnifyMoney. She graduated from the University of Georgia’s Grady College of Journalism and Mass Communication and lives in Brooklyn, N.Y.

Bad spending habits — everyone has at least one of them. Maybe for you it’s adding “just one more thing” to your shopping cart, or repeatedly getting smacked with overdraft or late payment fees.

These bad habits may seem innocuous at very first but could lightly turn into financial self-sabotage.

“Breaking a habit like these can be truly difficult because these habits have developed over the years, and they provide us with psychological convenience and safety,” says Thomas Oberlechner, founder and Chief Science Officer at FinPsy, a San Francisco-based consulting hard that integrates behavioral expertise into financial services and products.

Oberlechner says the key to overcoming a bad money habit lies in knowing when you’re using the impulsive, right side of your brain — as opposed to the focused, concentrated left side — in financial decision-making.

“It’s truly about psychological practice. It’s about behavior. If we understand the role of emotion, then we have a chance to fix it,” Oberlechner says.

Once you understand yourself and can identify your bad habit, Oberlechner adds, then you can create a plan “that turns your impulsive or unconscious behavior into the healthy financial behavior that [you] actually want.”

Of course, violating any bad habit is lighter said than done.

MagnifyMoney spoke to financial professionals to hear how they and their clients broke their bad habit. See if any of their hacks could help you break yours.

Bad money habit #1: Spending money as soon as you get it

The solution: Automation

If you’re permanently feeling broke just a few days after you receive a paycheck, you may be guilty of this bad money habit. One way to make sure you hold onto some of your cash is to use what the behavioral finance community calls a “commitment device” to lock you into a course of act you wouldn’t choose on your own, like saving your money.

In this case, the device is automation. Automating your savings won’t help you stop siphoning money from your checking account the same day your direct deposit clears, but it can make sure you save what you need to very first. Check with your bank or the human resources department at work to have a portion of your paycheck automatically sent to a savings account instead of putting the entire sum in your checking account.

You should automate your bills and credit card payments for the pay period, too. Once your obligations are automated, “you can be impulsive with your play money,” says Oberlechner.

Bad money habit #Two: Reaching for your credit card all the time

The solution: A cash diet

Paying for everything you buy with a credit card can be good practice if you pay off your card every month. If you’re chronically swiping your credit card for things you can’t afford to pay off by the next billing cycle, leave your card at home and use cash instead.

When you don’t pay off your card each billing cycle, you rack up interest charges on everyday purchases, and that may cost you a lot more money in the long run. If you’re using more than thirty percent of your total credit limit each month, you may also be harming your credit score.

To break your habit, leave your credit card at home and use cash or a debit card for your purchases.

“Take a certain amount of cash and say ‘I can spend no more than that,’” says Vicki Bogan, an associate professor at Cornell University in Ithaca, N.Y., who researches behavioral finance. “If you have a fat [spending] problem, attempt to limit yourself so that you only have access to a certain amount of money.”

If you truly want to challenge yourself, you can attempt going on what’s called a spending freeze, where you stop spending any money on non-essentials for a period of time. On top of helping you save money, the freeze can help you notice how much money you may be wasting simply because you’re always pulling out your credit card. After your freeze finishes, you may be less inclined to swipe your credit card.

Another rule that could help you break your swiping habit is the $20 rule. The financial rule of thumb is elementary: Anytime your purchase is less than $20, pay in cash, not credit. The $20 rule coerces you to think about whether or not a purchase is worth swiping your card for. Chances are, if what you’re buying costs less than $20, it’s not something you’d be OK paying interest on.

Bad money habit #Trio: Spending beyond your means

Solution: Budgeting

If you chronically spend beyond your means each pay period, you are likely digging yourself into debt. Get a treat on this habit by understanding how much money you have coming in and how much you can afford to spend on a monthly basis. You can use budgeting apps like Mint or YNAB to make that part lighter. These contraptions can also help you identify the spending categories that are costing you more than you might realize.

Oak Brook, Ill.-based certified financial planner Elizabeth Buffardi tells MagnifyMoney that after examining one of her client’s expenses she found the client was spending a lot of money at drugstores picking up snacks and little things after work. So the client gave herself a budget of $Ten per drugstore visit to save money.

“We’ve been observing her spending at drugstores go down steadily over the last few months,” says Buffardi.

Buffardi had two other clients who struggled with overspending because they loved to shop online. They both created boundaries for themselves when it came time to pay for the items in their online shopping carts. One client determined to buy a certain amount of bounty cards that she could use on a given site.

“If she spent all the bounty cards in the very first day, then she was done until the next paycheck. If she wished something that was more expensive than the amount she had on the bounty cards, she had to hold off on other purchases in order to purchase the more expensive item,” says Buffardi.

The other client simply eliminated her credit card number from her payment profiles so it would be more difficult to make thoughtless purchases. Her theory, Buffardi tells MagnifyMoney, was that if she was coerced to stop and pull out her credit card before she could make the purchase, it might slow her down and give her time to think about the purchase she is about to make and — maybe — stop some purchases from happening.

Bad money habit #Four: Always buying lunch from a restaurant

The solution: Plan your lunches a week in advance

If you’re losing $10-$15 a day to the local deli during the workweek, reminisce this: You don’t have to buy lunch if you bring it to work with you. However, organizing your day so that you actually have time to prepare and pack your lunch may be where you fight.

Leave room in your busy schedule to pack your lunch in the mornings, or during the evening when you may have more time to yourself.

Melville, N.Y.- based certified financial planner David Frisch says he packs his lunches in the evening because he knows he runs late in the morning. He puts together everything but the dressings and sauces he plans to eat while making dinner, so lunch is already 90% done, then he adds the last ten percent in the morning.

Frisch suggests setting a budget for how much you’d like to spend on food per pay period, then tracking how much money you typically spend on the convenience of frequently going out to lunch. Again, a budgeting app can be handy here to lightly identify places where you spend the most.

Compare that amount to how much you spend on food for entertainment purposes, like going out to dinner with friends over the weekend and for your necessities, like eating lunch to fuel your workday.

“If you are spending so much money on convenience, you have that much less money to spend on everything else,” says Frisch. If you’re spending money from your food budget for convenience purposes, you may be more reluctant to go out on Saturday night for dinner.

If you’re already packing your lunch, but purchase a 2nd lunch because you’re still thirsty or you no longer want to eat what you packed, attempt packing a larger meal or having leftovers for a 2nd lunch.

Bad money habit #Five: Ordering out for dinner because you’re too tired to cook

The solution(s): Prep when you have time/energy; attempt meal delivery services

It’s effortless to spend more than $50 getting dinner delivered three to four days out of the week, or buying groceries that go to waste because you’re too tired to cook. Oberlechner suggests doing some of the “work” of making dinner when you know you have more energy.

“If you’re too tired to cook in the evening, substitute the spontaneous behavior by preparing dinner in the morning. So in the evening you don’t have the work of preparing anything,” he tells MagnifyMoney.

Another hack Oberlechner suggests is making a little extra dinner for the days you know will be especially long, when you won’t want to cook dinner. For example, if you know Tuesday is a truly long day but Monday is not, cook a little extra on Monday and have those leftovers for dinner on Tuesday.

If cooking dinner simply isn’t a habit for you, you can attempt a meal kit service like Blue Apron, Plated, or HelloFresh to get interested in cooking, suggests Brooklyn, N.Y.- based certified financial planner Pamela Capalad. She tells MagnifyMoney she’s advised many of her clients to sign up for a meal kit service, then transition into grocery shopping and cooking at home regularly.

Generally, the services cost about $Ten to $15 per serving and can serve up to four people.

Bad money habit #6: Letting your kids throw extra things in your shopping cart

The solution(s): Shop solo or lay ground rules early

Frisch says he and his wifey solved this problem with their now 15-year-old triplets when they were four years old.

“Up until they were four we couldn’t bring them to a supermarket because it was unlikely for my wifey and I to witness three kids at the same time,” says Frisch. The easiest recommendation, he says, is to have somebody observe them at home while you go do the shopping. You may spend some money on a sitter, but you are also saving money without an impatient child sneaking candy and fucktoys into your shopping cart as well.

If an extra set of mitts at home isn’t available, then attempt to set ground rules before you go to the store. For Frisch, that meant permitting the triplets to get one — just one — extra item at the store.

When a child dreamed to add something “extra” to the cart, Frisch or his wifey would say, “If you want this now, then you have to put the other one back.”

“Ultimately what happened was they kind of had to make a decision as to which one they would indeed get,” says Frisch.

The triplets quickly realized they could all benefit from working together.

“They actually commenced to communicate and say ‘if you get this and I get this, we can share,’” Frisch told MagnifyMoney. “They just figured out that if they all got one thing and collective, they ultimately all got more than they would have.

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at [email protected]

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Advertiser Disclosure: MagnifyMoney is an advertising-supported comparison service which receives compensation from some of the financial providers whose offers emerge on our site. This compensation from our advertising fucking partners may influence how and where products emerge on the site (including for example, the order in which they show up). To provide more finish comparisons, the site features products from our fucking partners as well as institutions which are not advertising playmates. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

Featured, Health

6 Career Strategies for People Who Are Coping With Depression

Thursday, August 24, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Brynne Conroy

Brynne is the blogger behind FemmeFrugality.

Jana Lynch was twenty seven years old when she was formally diagnosed with depression. The illness wasn’t severe enough for her to embark seeking regular treatment until eight years later, when a fright attack at work sparked a series of events that switched her career — and her finances — forever.

At the time, Lynch was working full-time for a social service agency. “Not only was my anxiety and depression through the roof, making it hard to get out of bed, concentrate on tasks, meet deadlines, communicate with coworkers, and recall meetings, but the nature of my job made it a dangerous environment for my mental health at the time,” she says.

Rather than resign outright, she determined to take a four-month leave on short-term disability. A break, she thought, might help. But when the time came to come back to work, the same issues began to surface again. In the end, she chose her mental health over working total time.

“Looking back, it was a terrible choice because of the influence on my long-term private finances,” she says. “But in the moment, it was the best decision for me and my family.”

Lynch’s story is not unique. In a two thousand four investigate that followed workers over the course of six months, researchers found workers with depression dropped out of the workforce at a rate of twelve percent compared to only two percent of their peers.

While depression may force affected workers out of active employment at higher rates, it is also true that those who become unemployed are more likely to demonstrate signs of depression — three times more likely, according to a two thousand ten NIH explore.

Thomas Richardson, a leading researcher at Solent NHS Trust, one of the largest community providers in the UK’s National Health System, notes that there is most undoubtedly a correlation inbetween unemployment and depression, but that causation is not as effortless to pin down.

“In research such as this it’s always a case of chicken and egg: Which came very first?” he says. “A lot of research is only at one time point, so it’s hard to say which came very first.”

Some research shows losing your job impacts depression because it makes it hard to cope financially, but other studies suggest it has little influence.

“I think it most likely works both ways and is a perverse cycle,” Richardson resumes. “Someone becomes depressed, fights at work, and loses their job. This then exacerbates their depression further.”

6 Strategies to Manage Depression and Work

Abigail Perry, author of Frugality for Depressives, had already been formally diagnosed with depression as a part of a bipolar disorder when unrelated chronic exhaustion coerced her out of traditional employment.

“I thought I’d be nothing but a cargo for the rest of my life,” says Perry. “I wondered who would ever want someone who couldn’t pull her own weight financially, and I became suicidal. A lot of therapy and medication management doctor visits later, I eventually began believing that I might have worth despite not being able to work.”

Those fighting with balancing their career and depression need not lose hope.

Richardson notes that many are able to develop coping strategies, permitting themselves to stay in the workplace. He’s developed six key strategies that his research has exposed to be helpful to workers with depression.

1. Intentionally look for work you love.

“Try and do a job you love or are interested in,” Richardson encourages. “If not possible, then attempt and concentrate on those bits of your job you do love.”

Allyn Lewis, lifestyle blogger and storytelling strategist from Pittsburgh, Pa., has learned this technology through the course of building her business.

Diagnosed with a depression that was further fueled by her father’s suicide when she was a teenage, Lewis never truly entered the traditional workforce, but has found self-employment to suit her disability.

Her motivating enjoyment comes from the community-based aspect of her business.

“Telling my story and talking openly about my anxiety, depression, and the loss of my dad is what keeps me active in my career,” says Lewis, 26. “That might sound strange, but when I keep my mental health journey to myself, it feels like it’s all about me. And if I’m having a down day, week, or month, what’s it matter if I do the work or get the things done? But, by talking about my mental health and using my own story to raise awareness, it makes it something that’s much thicker than myself.”

Two. Don’t thrust yourself too hard.

“Don’t thrust yourself too hard at work,” says Richardson. “Acknowledge when you are fighting. It’s best to slow down early on than to keep going until you crash.”

Lewis learned this lesson through practice.

“Back in the day when I possessed my own public relations stiff, I would take on any client, under any circumstance, for any amount of money, and I’d make any accommodation or request they asked for. I ended up overbooked, underpaid, and at a point that was way beyond burnt out,” Lewis says.

“I kept attempting to shove my anxiety and depression aside to pretend like it wasn’t getting in the way, but the best thing I ever did was commencing to tune into what my mental health was telling me. Only then was I able to shift into a business model that worked for me.”

Trio. Ask for help — and know your rights.

Richardson recommends going to your manager or supervisor for access to resources when your symptoms become too much to bear. If you work at a larger company, it may be more suitable to get in touch with your human resources department.

This can seem intimidating, as you don’t want to give your superiors any reason to question your work ethic or your capability to provide value to the company.

But Perry, who now works total time in a remote position, notes that depression is covered by the Americans with Disabilities Act (ADA). This means your employer cannot fire you because of your disability — in this case, depression — and that they have to provide reasonable accommodations in order to permit you to do your job.

“Even if you don’t ask for accommodations, you need to make it clear that your absences or other work difficulties are based on a real medical condition,” Perry says. “Imagine being a supervisor with an employee who takes a lot of sick days, or may be lightly agitated by interpersonal interaction or extra stress. In a vacuum, that’s a problem employee. Understanding the context, that’s someone who is doing their best to be a good employee despite a disability.”

Four. Keep a healthy perspective on your career goals.

“It’s effortless in a career to concentrate on goals, but this makes you vulnerable to depression,” says Richardson. “If you don’t get that promotion it might truly influence you and lead to self-critical thoughts which fuel depression.”

He recommends instead harkening back to why you love your work and the current position you’re in.

Lynch, who presently works as a freelance writer and editor, relates to the depression that can be felt when career expectations aren’t met.

“I attempt hard not to get angry at myself if I didn’t do as much as I’d like, or if my inbox isn’t bursting with inquiries,” says Lynch, “which is hard to deal with when you like to work and tie your work to your self-worth. But depression makes it difficult to look for clients. It’s a horrible, perverse cycle that I deal with only by telling myself this is improvised. It will get better at some point.”

Five. Nurture hobbies and social contacts.

Lynch and Lewis both note exercise as a way of sustaining a healthy hobby. Lewis trains yoga, and Lynch regularly attends a gym. While not the primary aim, a side effect of going to the gym or studio happens to be spending time with other people of similar interests.

Nurturing hobbies and maintaining social contacts are significant from Richardson’s research — even if doing so originally feels tremendous.

6. Practice mindfulness.

Ultimately, Richardson recommends practising mindfulness, even when you’re not in the throes of depression. Emerging research suggests that mindfulness may not only alleviate depression, but could prevent relapses.

Richardson has produced a free mindfulness resource, which can be accessed here.

Depression and Your Finances

Career and finance often go arm in arm, so it’s no surprise that the ripple effects of depression can often extend into your finances as well.

By understanding and confronting these challenges head-on, there are strategies you can use to protect your finances as you learn to manage depression.

In a latest probe published in the British Psychological Society’s Clinical Psychology Forum, Richardson studied people with bipolar disorder as they were going through a depressive gig. During these scenes, he found four key ways that their finances suffered.

Missing bills

Lynch notes that before she set up automatic payments, she would have trouble remembering pay upcoming bills. She’d get her statements, but overlook them. This led to unnecessary costs like late fees.

Richardson’s investigate finds that this behavior is typical for depressives. It found that missing bills was a financial manifestation of avoidant coping behaviors. In order to avoid being late on charges you may not know or reminisce exist, it’s significant to get in the habit of confronting through that pile of mail as you establish the habit of paying through automation.

Poor planning

“It can be stiffer to keep track of your finances when things get rough,” relates Perry. “Monitoring spending, keeping up with due dates — it’s tedious even in good conditions. If you spend more because of depression, or if you simply don’t keep as close of an eye on things, your budget could take a big hit.”

Perry’s insights are congruent with Richardson’s findings. Those with depression have a stiffer time completing tasks like budgeting because planning ahead is made more difficult. The examine also exposed that rational thinking and the capability to reminisce past purchases in order to log them into a spreadsheet were impaired.

Convenience spending

Perry says that when you’re depressed, you’re more likely to get caught up in convenience spending.

“This could be anything from convenience or junk food, which adds up, or going out for drinks, dinner, or entertainment. Alternately, you may be more likely to spend money on things that you think will make you blessed or comforted — from convenience gadgets to home décor to clothes.”

Richardson adds the example of being overly generous with one’s family as an example of convenience spending.

Compounding anxiety

Richardson’s investigate finds that financial stress compounds anxiety and depression. This stress leads to more dire mindsets, like extreme anxiety and hopelessness.

“As a business possessor, there’s always so much pressure around profit,” says Lewis. “Even when you’re up, you never know how long it will last, so you have to keep hustling. When I’m going through a period of depression, this puts me in a cycle of ‘I’m never making enough,’ which is a thought that likes to pair itself with ‘I’m not good enough.’ Depression has a sneaky way of switching my mindset from one of abundance to one of scarcity.”

Lewis’s reports of low self-worth are also common, according to Richardson’s work. Self-criticism over “economic inactivity” was detected in explore participants.

Seeking Mental Health Care

For help developing more coping strategies or getting resources that can help you manage your depression, consider seeking out mental health care services.

“I think all depressives — especially ones who aren’t on medications — should have therapists,” says Perry. “It may take a few attempts to find someone you work well with, but then that person will be a excellent lifeline. Therapists can help you deal with the things that depression makes stiffer with strategies, workarounds, or just working through past events that are contributing to or causing your current depression.”

Therapy and medication management specialists can be expensive, tho’. Many regions in America face a shortage of mental health care providers, and the matter is further complicated when you consider that some providers may be out-of-network, bringing copays up even if you are presently insured.

Related article: five ways to find lower the cost of therapy

If you can’t figure out how to fit these services into your budget, seek out therapists who suggest sliding-scale payment options based on your income. Another affordable resource is public mental health care clinics, tho’ their availability may be limited.

If you have insurance and don’t instantly need medication, keep in mind that a mental health care professional may not have an M.D. or Ph.D. after their name. Licensed Clinical Social Workers (LCSWs) and other counselors often accept insurance and are able to provide therapy, referring you out to a psychiatrist for prescription needs when necessary.

Lynch did seek therapy and go on medication for a while, however she now leans on other coping mechanisms such as avoiding triggers and exercising regularly.

“I recommend it if you feel you need it,” she says. “There is no shame in getting whatever kind of help you need.”

Today, Lynch operates from a place of acceptance. Depression is a part of her life that she has learned to deal with. While she doesn’t categorize herself as what we would consider classically “happy,” she does consider herself to be as content as possible, and actively seeks out happiness within her circumstances.

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne at [email protected]

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Advertiser Disclosure: MagnifyMoney is an advertising-supported comparison service which receives compensation from some of the financial providers whose offers emerge on our site. This compensation from our advertising playmates may influence how and where products show up on the site (including for example, the order in which they show up). To provide more finish comparisons, the site features products from our fucking partners as well as institutions which are not advertising playmates. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

Featured, Life Events, News

How to Get ‘Unstuck’ From Your Starter Home

Thursday, August 24, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Bob Sullivan

Bob Sullivan is an award winning American online journalist, author and one of the founding members of msnbc.com.

Andrew Cordell bought his very first home at the worst possible time — ten years ago, right before the housing bubble burst.

He’s not going to make that mistake again.

“We had instantaneous fear put in us as homeowners,” says Cordell, 40. “We know how dangerous this can be.”

So the petite “starter home” he purchased in Kalamazoo, Michigan back in two thousand seven now feels just about the right size.

“When we bought, we figured we’d get another home in a few years,” he says. “But the more we lodged, the more we thought, ‘Do we truly need more space?’ We don’t actually need a large chest freezer or a large yard. Kalamazoo has a lot of parks.”

Evidently, slew of homeowners feel the same way.

It’s a phenomenon some have called “stuck in their starter homes.” Bucking a decades-long trend, youthful homeowners aren’t looking to trade up — they’re looking to stay put. Or they are compelled to.

According to the National Association of Realtors, “tenure in home” — the amount of time a homebuyer stays — has almost doubled during the past decade. From the 1980s right up until the recession, buyers stayed an average of about six years after buying a home. That’s leaped to ten years now.

Other numbers are just as dramatic. In 2001, there were 1.8 million repeat homebuyers, according to the Urban Institute. Last year, there were about half that number, even as the overall housing market recovered. Before the recession, there were generally far more repeat buyers than first-timers. That’s now reversed, with first-time buyers dwarfing repeaters, 1.Four million to one million.

This is no mere statistical curiosity. Trade-up buyers are critical to a smooth-functioning housing market, says Logan Mohtashami, a California-based loan officer and economics pro. When starter homeowners get gun-shy, home sales get stuck.

“Move-up buyers are especially significant … because they typically provide homes to the market that are suitable for first-time buyers,” he says. When first-timers stay put, the share of available lower-cost housing is squeezed, making life firmer for those attempting to make the leap from renting to buying.

Getting unstuck from your starter home

There are slew of potential causes for this stuck-in-a-starter-home phenomenon — including the fear Cordell describes, families having fewer children, fast-rising prices, and vapid incomes. But Mohtashami says the main cause is a hangover from the housing bubble that has left first-time buyers with very little “selling equity.”

Buyers need at least twenty eight to thirty three percent equity to trade into a larger home, and often closer to forty percent, he says. Those who bought in the previous cycle might have seen their home values recover, but many purchased with low down payment loans, leaving them still equity poor.

That wasn’t such a problem before the recession, as lenders were glad to give more aggressive loans to trade-up buyers. Not any more.

“In the previous cycle you had exotic loans to help request. Now you don’t. [That’s why] tenure in home is at an all-time high,” Mohtashami says. “Even families having kids aren’t moving up as much.”

Fast-rising housing prices don’t help the trade-up cause either. While homeowners would seem to benefit from increases in selling price, those are washed away by higher purchase prices, unless the seller plans to stir to a cheaper market.

“You’re always attempting to catch up to a higher priced home,” Mohtashami says.

Cassandra Evers, a mortgage broker in Michigan, says she’s seen the phenomenon, too.

“It’s not for lack of want. It seems to be the inability to afford the cost of the fresh home,” she says. “It’s not the interest rate that’s the problem, obviously because those are at historic lows and artificially low. It’s because to buy a ‘bigger and better house,’ that house costs significantly more than their current home. The cost of housing has skyrocketed.”

There’s also the very practical problem of timing. In a fast-rising market, where every home sale is competitive, it’s effortless to lose the game of musical chairs that’s played when a family must sell their home before they can buy a fresh one.

“Folks are worried about selling their current house in one day and being incapable to find a suitable replacement quick enough,” Evers says.

Cordell, who lives with his wifey and eight-year-old son, says the family considered a stir a few years ago and shortly looked around. But they quickly concluded that staying put was the right choice.

“We looked at some homes and we thought, ‘I guess we could afford that. But we don’t want to be house broke’,” he says. “We don’t want to take on so much debt that ‘What else are we able to do?’ What if one of us loses our job? I guess you could say we have a Depression-era sensibility. … Who would want to get upside down on one of these things?”

The Urban Institute says this stuck-in-starter-home problem shows a few signs of abating recently. Repeat buyers were stuck around 800,000 from two thousand thirteen to 2014. Last year, the number pierced one million. But that’s still far below the 1.Five million range that held consistently through the past decade.

There are other signs that ease might be on the way, too. ATTOM Data Solutions recently released a report telling that one in four mortgage-holders in the U.S. are now equity rich — values have risen enough that owners hold at least fifty percent equity, well above Mohtashami’s guideline. Some 1.6 million homeowners are freshly equity rich, compared to this time last year, and five million more than in 2013, ATTOM said.

“An enlargening number of U.S. homeowners are amassing amazing stockpiles of home equity wealth,” says Daren Blomquist, senior vice president at ATTOM Data Solutions.

So perhaps pent-up repeat homebuying request might re-emerge. Evers isn’t so sure, however.

“Most folks I talked with are no longer interested in being house poor and maxing out their debt to income ratios. They seem to be staying put and pushing money into their retirement accounts,” Evers says.

The Cordells are content where they are in Kalamazoo and plan to stay long term. If anything would make them stir, it’s not growing home equity but a growing family.

“If we ended up with a 2nd (kid), I suppose we’d have to look,” Cordell mused. “But we have no plans for that.”

Four Signs You’re Ready to Trade Up Your Home

• YOU’VE GOT Slew OF EQUITY: Your home’s value has risen enough that you securely have at least twenty eight percent equity and, preferably, more like thirty five to forty percent.
• YOU’RE EARNING MORE: Your monthly take-home income has risen since you bought your very first home by about as much as your monthly payments (mortgage, interest, insurance, taxes, condo fees, etc.) would rise in a fresh home.
• YOU STAND TO MAKE A HEALTHY PROFIT: You are certain that if you sell your home, you’d walk away from closing with at least thirty percent of the price for your fresh home — or you can top up your seller profits to that level with cash you’ve saved for a fresh down payment. That would let you make a standard twenty percent down payment and have some left over for surprise repairs and moving costs that will come with the fresh place. Recall, transaction costs often surprise buyers and sellers, so be sure to build them into your calculations.
• YOU CAN Treat THE RISK: You have the belly for the game of musical chairs that comes with selling then buying a home in rapid succession. Also, if you are in a hot market, you have extra cash to outbid others or a place for your family to stay in case there’s a time gap inbetween selling and buying.

Bob Sullivan is a writer at MagnifyMoney. You can email Bob here

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Featured

Under Pressure: one in five Parents Will Go into Debt to Send Kids Back to School

Tuesday, August 22, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Hannah Rounds

is a freelance writer and quantitative marketing consultant. Hannah founded the site Unplanned Finance.

After a long summer break, many parents feel anxious to send their kids back to school. But back to school can translate into debt, according to a latest MagnifyMoney national survey of more than seven hundred parents. More than one in five parents will go into debt to pay for back-to-school expenses. And more than half (55 percent) of parents who are going into debt say they feel pressure to buy fresh things for their kids during the back-to-school time compared to just twenty nine percent for parents not going into debt.

It’s no question that back-to-school clothes, supplies, and gear can put a dent in a family’s budget. Almost three in four parents will spend more than $100 on back-to-school supplies this year, and almost one in four will spend more than $500.

Key insights

• 55 percent of parents who are going into debt say they feel pressure to buy fresh things for their kids for back to school (versus twenty nine percent for parents not going into debt)
• Almost half (44 percent) of parents are spending over $300 on back to school.
• Midwest parents are least likely to feel pressure to buy fresh things for their kids (30 percent) compared to forty three percent in the Northeast and thirty eight percent in the South and West.
• Parents in the South are most likely to spend $500 or more on back to school (28 percent) compared to twenty five percent in the Northeast, twenty percent in the Midwest, and twenty one percent in the West.
• 41 percent of parents who feel stress about back-to-school shopping expect to go into debt for back-to-school shopping.
• Just thirty six percent of parents who will go into debt feel the cost of school supplies required is reasonable. Fifty two percent of parents who don’t expect to go into debt for back-to-school shopping feel the cost is reasonable.
• 65 percent of parents going into debt plan to spend $300 or more, compared to thirty eight percent of those not going into debt. And thirty seven percent of those going into debt plan to spend $500 or more, versus twenty one percent of those not going into debt.

Pressure to spend

The survey indicated that for parents expecting to take on debt, back-to-school shopping is fraught with negative emotion. Almost a third (33 percent) of parents who expect to go into debt for back-to-school shopping feel the cost of expected school supplies is unreasonable. Just one in five parents who won’t go into debt feel the same way. With school supplies pushing one in five families into debt, it’s no wonder that so many feel the costs are unreasonable — that’s especially true for families already carrying credit card debt into the back-to-school season.

According to the two thousand fifteen Report on the Economic Well-Being of U.S. Households, thirty one percent of American households carry credit card debt all year round, and twenty seven percent of households carry credit card debt from time to time. A MagnifyMoney analysis showcased that households carrying credit card debt have an average balance of $7,700. Adding several hundred dollars to an existing credit card debt can make the entire debt feel unmanageable.

In the survey, taking on debt is one of the leading indicators for feeling back-to-school shopping stress. Parents taking on debt were almost three times as likely to feel that back-to-school shopping was stressfull compared to those who were not. A third of parents going into debt feel that back-to-school shopping is tense, but just twelve percent of parents not going into debt feel the same.

The stress doesn’t come just from crowded malls and added debt. Instead, it comes from social pressure to take on debt and buy fresh things for kids. Over half (55 percent) of parents who are going into debt feel pressure to buy fresh things for their kids during the back-to-school time framework. Less than three in ten (29 percent) parents who aren’t going into debt feel that same pressure.

The pressure to go into debt for kids doesn’t just occur during back-to-school time. Almost half (46 percent) of all moms admit to going into debt for child-rearing costs, according to the two thousand fifteen Cost of Raising a Child survey from BabyCenter.com. The pressure to give kids better lives (and better school supplies) can lead parents to make expensive decisions, including going into debt.

Store cards and debt

Most parents, ninety three percent, use traditional credit cards or cash to pay for back-to-school items. Only a puny percentage plan to use retail credit cards (like the Target RedCard) to pay for back-to-school items. However, parents going into debt are more than three times as likely to use store credit cards as parents not going into debt (15 percent vs. Five percent).

With coupons, points, and cash prizes, store credit cards can feel enticing, but the interest rates on store cards are bruising.

Retail credit cards have notoriously high interest rates. Presently, Target REDcard and the Walmart Credit Card have interest rates of 22.9 percent, and the Kohl’s credit card is 24.99 percent.

Financing $300 on a store credit card (with a 22.9 percent APR) means that a parent will spend $38.50 on extra interest if they pay off the loan over the course of the year compared to a regular card.

Real Cost of Back-to-School Spending on Store Credit Cards (22.9 percent APR)

Overall, thirty three percent of parents use traditional credit cards to pay for back-to-school items, including thirty seven percent of parents planning to take on debt. These parents will likely yield substantial interest rate savings by choosing to use a traditional credit card rather than a store card. Presently, the average interest rate on a credit card is fourteen percent, according to the Federal Reserve Bank of St. Louis, but people with decent credit can find slew of zero percent APR interest rate offers.

Avoiding cards and debt

Parents who avoid debt tend to avoid plastic altogether. Over three in five (63 percent) parents who don’t expect back-to-school debt won’t spend on credit or retail cards.

As a group, avoiding plastic seems to keep spending down as well — sixty two percent of parents who eschew plastic will spend less than $300 on back-to-school supplies. By comparison, just fifty three percent of parents using plastic will spend less than $300.

Only thirty one percent of parents who are avoiding debt will spend on a credit card and reap prizes points or cash back options. It might seem like this group is missing out on good deals, but they may just concentrate their attention on fatter saving opportunities. Two-thirds of parents who won’t use plastic this season will take advantage of back-to-school sales.

Survey methodology

MagnifyMoney.com commissioned Google Consumers Surveys to obtain online survey data with seven hundred parents living in the United States with children going back to school. Interviews were conducted online via Google Surveys in English during August 5-8, 2017. Statistical results are weighted to correct known demographic discrepancies. The margin of sampling error was plus or minus Five.Three percentage points for the seven hundred two people who said they felt stress during back-to-school shopping.

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah at [email protected]

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Featured, Strategies to Save

What Your Teenage Should Do With Their Summer Earnings

Friday, August Legal, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Aja McClanahan

Aja McClanahan is a individual finance blogger and founder of www.principlesofincrease.com.

According to a two thousand seventeen survey released by the National Financial Educators Council, 54% of respondents (all eighteen years and older) said a course in money management in high school would benefit their lives. Another survey — the most latest from the Program for International Student Assessment — reports that only about 10% of U.S. 15-year-olds are skilled in individual finance matters, falling in the middle among the fifteen countries studied. The message is clear: Youthful Americans need to learn more about money and managing it wisely. One way to embark them off is providing them hands-on practice with their own money. Come in the summer job.

Having a summer job can be a good introduction to adulthood for many reasons: The discipline, conformity to management, team work, and a regular paycheck are just a few of the things a teenager will get used to with their very first summer job.

It’s also a good way to introduce kids to the real world of money. However the money your teenage earns is technically theirs, as a parent, you should use summer job earnings as an chance to help your kids form good habits with money. There’s no better time to showcase them the value of money than in the crucial years before they’ll be saddled with obligations like student loans, car notes, and mortgages.

Here are a few ways to make sure your teenage will get the most out of their money-making practice that will keep them money savvy for years to come.

Pay their fair share

Once your teenage commences making money, you’ll to want consider how they can begin to cover certain expenses. You’ll be tempted, no doubt, to let your teenage keep their hard-earned money for themselves. Trust this process. If the aim is to raise money-smart kids who become even savvier adults, there will have to be simulations of the real world that include actually paying for things

If your teenage uses the car, consider having them cover a portion or all of their car insurance bill. Another option is to have them contribute to their cellphone bill or even some of the Wi-Fi they use.

Having expenses is a real part of life, so it’s better to help them understand that now rather than later when ignorance isn’t so blissful.

If the thought of making your child pay for expenses bothers you, consider a different treatment: Train them about the costs of everyday life by asking them to cover their portion of a bill, but take that money and put it away for them. You can save up all that money and, as a nice gesture, give it to them when they need it most, like when they go away to college or ultimately leave the nest to launch out into the real world.

Open bank accounts

While many families do not have access to or elect not to participate in the traditional banking system — it’s estimated that 27% of U.S. households are unbanked or underbanked — you’d ideally want to get your teenage familiar with banks and how they work. However check use has been on the decline since the mid-1990s, it’s still significant for teenagers to learn how to write a check, along with keeping a checkbook register. Sure, this practice most likely won’t last long, as electronic payments and money management apps proceed to grow, but this treatment gives your kids the gist of how to keep track of their cash flow.

While your teenage has a bank account, you’ll also get them used to understanding how a debit card works. They’ll get familiar with how effortless it is to swipe for things they want, yet how difficult it can be to replenish their account with the money they’re making at their job.

Eventually, you’ll want to make sure that your teenage opens a savings account. In most states, a person can open a bank account when they become Legitimate. For junior teenagers, many banks have special teenage or kid accounts that a child can share with their parents. Co-owned checking accounts can be opened as youthfull as 13, while custodial savings accounts can be opened at any age.

Developing good habits around saving and managing money takes time and some getting used to. So using their summer earnings would be a flawless chance to get into the groove of budgeting for expenses and managing money through a bank account.

Set money goals

Once money starts to flow into your kid’s palms, seize the moment and get them to see the fatter picture. Summer money is fine, but paying for life will take much more than what your teenage earns from a few hours of work in a bike shop. Begin to display them the cost of things like college, cars, homes, and luxuries like vacations or hobbies.

Once you compare the costs with their summer job earnings, it should help them come to conclusions about how money works: The more you have, the more you can do. The idea is to inspire them to increase their earning potential with implements like education or savings to invest in income-producing assets.

Another result of these conversations could be your teenage realizing they’ll want to begin saving up for life sooner than later. They may determine to put away money for the purpose of paying for school or their very first condo.

Ron Lieber, Fresh York Times financial columnist and author of the book The Opposite of Spoiled, says parents should prompt their kids with an instantaneous objective like having a college fund. “The best thing to do is to use any earnings to begin a conversation with parents about college, if your teenage plans on going,” Lieber says.

Lieber suggests questions to guide the conversation:

• How much of your college expenses will be covered by parents versus the child?
• How much have the parents saved for the child’s college expenses?
• How much are kids/parents willing to borrow or spend out of their current income?

According to Lieber, “The answers to these questions may cause a teenage to save everything, if they think it will help them avoid debt in their effort to attend their wish college.”

No matter how improvised their summer job is, you’d do well to use it as a springboard for more conversations about money. Whatever their long-term money goals are, it’s never a bad idea to embark working toward them early on.

Learn compound interest

While your teenage is making all of those big money goals, you could drive the point home with a lesson in compound interest. Using a compound interest calculator, you can display your teenager many scripts where interest can either work for or against them.

Run scripts around savings for big-ticket items versus financing them. The math will speak volumes:

In the above screenplay, you’d end up paying a total of $226,815 in interest. That same amount ($226,815) invested for thirty years with a moderate Trio.5% comeback yields over $636,000!

Eyeing these numbers in activity should motivate your teenage to commence a savings habit that they will maintain via adulthood.

If they are truly excited about the prospects of compound interest working on their behalf, encourage them to open their own IRA to begin investing themselves. This way, they’ll not only understand the theory of investing but also get hands-on practice with it. After all, the time value of money works even better when you’ve got more time. Investing as a teenage could set the stage for copious comes back later on in life.

Create a budget

Making money can be the joy, somewhat effortless part of a summer job. Figuring out how to spend it can be difficult. Make your teenage prioritize needs and wants by learning to create a budget. A good practice would be to have your teenage make a list of things they’ll spend money on versus how much money they will bring in. You could also introduce them to a money-management app — here are some of the best ones.

This will help them understand the finite nature of money and how their current cash flow stacks up against their current earnings.

Have joy

According to Brian Hanks, a certified financial planner in Salt Lake City, “Don’t be worried if your teenage ‘blows’ a portion of their earnings on things you consider to be worthless.” Hanks goes on to say that it’s better to make money mistakes as a youngster: “Everyone needs to learn raunchy money lessons in life, and learning them as a teenage when the consequences are relatively petite can save fatter heartache down the road.”

A summer job should be joy and low-stress, but it can also be used as a learning practice that prepares your teenage for the real world. If your teenage turns out to be a terrible budgeter or extreme spendthrift, give them more than a summer to learn better ways. Recall, they’ll have the rest of their lives to proceed grabbing and mastering money concepts.

Aja McClanahan is a writer at MagnifyMoney. You can email Aja here

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Auto Loan, Featured, News

Auto Loan Interest Rates and Delinquencies: two thousand seventeen Facts and Figures

Thursday, August 17, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Hannah Rounds

is a freelance writer and quantitative marketing consultant. Hannah founded the site Unplanned Finance.

Led by a prolonged period of low interest rates, consumers now have a record $1.Two trillion one in outstanding auto loan debt. Despite record high levels of issuance, the auto lending market shows signs of tightening. With auto delinquencies on the rise, consumers are facing higher interest rates on both fresh and used vehicles. In particular, over the last three years, subprime borrowers eyed rates rise quicker than the market as a entire. MagnifyMoney analyzed trends in auto lending and interest rates to determine what’s truly going on under the fetish mask of automotive financing.

Key insights

1. Overall auto delinquency is on the rise, and the very first quarter of two thousand seventeen eyed near record levels of fresh auto loan delinquency rates. 54
2. Interest rates are on the rise, with average fresh car loan rates up to Four.87%, sixty basis points from their lows in late 2013. Two
3. The average duration of auto loans (fresh vehicles) is a record 67.37 months, reducing the monthly payment influence of higher interest rates. 31

Facts and figures

• Average Interest Rate (Fresh Car): Four.87% Two
• Average Interest Rate (Used Car): 8.88% Trio
• Average Loan Size Fresh: $29,314 Four
• Average Loan Size Used: $17,180 Five
• Median Credit Score for Car Loan: seven hundred six 6
• % of Auto Loans to Subprime Consumers: 31.34% 7

Subprime auto loans

• Total Subprime Market Value: $229 billion 8
• Average Subprime LTV: 113.4% 9
• Average Interest Rate (Fresh Car): 11.05% Ten
• Average Interest Rate (Used Car): 16.48% 11
• Average Loan Size (Fresh Car): $28,099 12
• Average Loan Size (Used Car): $16,026 13
• % Leasing: 25.9% 14

Prime auto loans

• Total Prime Market Value: $717 billion 15
• Average Prime LTV: 97.91% 16
• Average Interest Rate (Fresh Car): Three.77% 17
• Average Interest Rate (Used Car): Five.29% Legitimate
• Average Loan Size (Fresh Car): $32,153 Nineteen
• Average Loan Size (Used Car): $20,778 20
• % Leasing: 37.4% 21

Auto loan interest rates

Interest rates for auto loans proceed to remain near historic lows. As of the very first quarter of 2017, interest rates for used cars was 8.88% on average. The average interest rate on fresh cars (including leases) is Four.87%. However, the low average rates belie a tightening of auto lending, especially for subprime borrowers.

Fresh loan interest rates

Consumer credit information company Experian reports that the average interest rate on all fresh auto loans was Four.87%, up six basis points from the previous year. Twenty four The puny interest rate increase masks a larger underlying tightening in the auto loan market for fresh vehicles.

During the last year, lenders tilted away from subprime borrowers. Just Ten.88% of fresh loans went to subprime borrowers compared to 11.41% the previous year. The movement away from subprime borrowers led to a smaller increase in fresh car interest rates compared to if car rates had stayed the same. Twenty five

Across all credit scoring segments, borrowers faced higher average borrowing rates. Subprime and deep subprime borrowers spotted the largest absolute increases in rate hikes, but super prime borrowers also spotted an eighteen basis point increase in their borrowing rates over the last year. The average interest rate for super prime borrowers is now Two.84% on average, the highest it’s been since the end of 2011. Twenty seven

When comparing credit scores to lending rates, we see a slow tightening in the auto lending market since the end of 2013. The trend is especially pronounced among subprime and deep subprime borrowers. These borrowers face auto loan interest rates growing at rates quicker than the market average. Consumers should expect to see the trend toward slightly higher interest rates proceed until the economic climate switches.

Even with the tightening, interest rates remain near historic lows, but that doesn’t mean consumers are paying less interest on their vehicle purchases. The estimated cost of interest on fresh vehicle purchases is now $Four,223, twenty nine up 42% from its low in the third quarter of 2013.

Growth in interest paid over the life of the loan stems from longer loans and higher average loan amounts. The average maturity for a fresh loan grew from 62.Five months in the third quarter of two thousand eight to 67.Four months in early 2017. Thirty one During the same time, average loan amounts for fresh vehicles grew 14.7% to $29,134. Thirty two

Used loan interest rates

Over the past year, interest rates for used vehicles fell by thirty five basis points to 8.88%. The drop in average interest rates came from a dramatic increase of prime borrowers injecting the used car financing market. In 2017, 47.4% of used car borrowers had prime or better credit. The year before, 43.99% of used borrowers were prime. Thirty four

On the entire, borrowers in the used car market face almost identical rates to this time last year. Super prime and prime borrowers spotted upticks of fifteen basis points and four basis points, respectively. This brought the average super prime borrowing rate up to Trio.56% for used vehicles, and the prime rate to Five.29%. Thirty six

On the other end of the spectrum, subprime and deep subprime borrowers witnessed their interest rates fall by approximately ten basis points year over year. Despite the decrease, interest rates for these borrowers are up a dramatic two hundred fifty basis points (Two.5%) from their two thousand eight rates.

Albeit average interest rates on used vehicles proceed to fall, the estimated interest paid on a used car loan rose $12 from the previous year to $Four,046. The increase in overall interest is part of a larger trend. Over the past four years, estimated interest on used cars was 8.4%. Almost all of the increase comes from longer average loan terms (61 months vs. Fifty seven months), thirty eight leading to more interest paid over the life of a car loan.

Auto loan interest rates and credit score

As of March 2017, the median credit score for all auto loan borrowers was 706. Forty A credit score of seven hundred six is just bashful of the prime credit rating (720). This is the highest median rate since the very first quarter of 2011.

In the very first quarter of 2017, just 31% of all auto loans were issued to subprime borrowers compared with an average of 35% over the past three years.

Total auto loan volume decreased dramatically inbetween two thousand eight and 2010. During that time, subprime and deep subprime lending contracted swifter than the rest of the market. Since early 2010, auto lending as a entire is near prerecession levels. However, subprime lending has not fully recovered. In the very first quarter of 2017, banks issued just $41.Five billion to subprime borrowers. That’s $6.7 billion less than the average $48.Two billion of subprime auto loans issued each quarter inbetween two thousand five and 2007.

Loan-to-value ratios and auto loan interest rates

One factor that influences auto loan interest rates is the initial loan-to-value (LTV) ratio. A ratio over 100% indicates that the driver owes more on the loan than the value of the vehicle. This happens when a car possessor rolls “negative equity” into a fresh car loan.

Among prime borrowers, the average LTV was 97.91%. Among subprime borrowers, the average LTV was 113.40%. Forty four Both subprime and prime borrowers display improved LTV ratios from the 2007-2008 time framework. However, LTV ratios enhanced from two thousand twelve to the present.

Research from the Experian Market Insights group forty six showcased that loan-to-value ratios well over 100% correlated to higher charge-off rates. As a result, car owners with higher LTV ratios can expect higher interest rates. An Automotive Finance Market report from Experian forty seven displayed that loans for used vehicles with 140% LTV had a Three.03% higher interest rate than loans with a 95%-99% LTV. Loans for fresh cars charged just a 1.28% premium for high LTV loans.

Auto loan term length and interest rates

On average, auto loans with longer terms result in higher charge-off rates. As a result, financiers charge higher interest rates for longer loans. Despite the higher interest rates, longer loans are becoming increasingly popular in both the fresh and used auto loan market.

The average length to maturity for fresh car loans in two thousand seventeen is 67.37 months. Forty eight For used cars, the average is 61.12 months. Forty nine The increase in average length to maturity is driven primarily by a concentration of borrowers taking out loans requiring 61-72 months of maturity. Fifty

In the very first quarter of 2017, just 7.1% of all fresh vehicle loans had payoff terms of forty eight months or less, and 72.4% of all loans had payoff periods of more than sixty months. Fifty one Among used car loans, Legal.5% of loans had payoff periods less than forty eight months, and 58.3% of loans had payoff periods more than sixty months. Fifty two

Auto loan delinquency rates

Despite a trend toward more prime lending, we’ve seen deterioration in the rates and volume of severe delinquency. In the very first quarter of 2017, $8.27 billion in auto loans fell into severe delinquency. Fifty four This is near an all-time high.

Overall, Trio.82% of all auto loans are severely delinquent. Delinquent loans have been on the rise since 2014, and the overall rate of delinquent loans is well above the prerecession average of Two.3%.

Inbetween two thousand seven and 2010, auto delinquency rates rose sharply, which led to a dramatic decline in overall auto lending. So far, the slow increase in auto delinquency inbetween two thousand fourteen and the present has not been associated with a collapse in auto lending. In fact, the total outstanding balance is up 33.4% to $1.167 billion since 2014. Fifty seven

However, the increase in auto delinquency means lenders may proceed to tighten lending to subprime borrowers. Borrowers with subprime credit should make an effort to clean up their credit as much as possible before attempting to take out an auto loan. This is the best way to ensure lower interest rates on auto loans.

Three Common Car Loan Mistakes People Make

Trio Mistakes People Make When They Need a Car Loan

Tuesday, July Nineteen, 2016

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Jackie Lam

Jackie Lam is a freelancer writer who covers individual finance topics for millennials and Gen X.

Shopping for a car loan can be a financially and mentally draining practice. More than 86% of car buyers used at least some amount of financing to purchase cars in the beginning of 2016, according to the latest data from Experian.

Unluckily, many car buyers make crucial, yet preventable, mistakes when they take out a loan for a fresh car. The MagnifyMoney research team determined to find out just where shoppers are going wrong. We asked more than six hundred car owners a series of questions about how they shopped for a car loan.

The answers we received were pretty troubling, to put it mildly. Read on to see where buyers are going wrong:

1. Too many people let their car dealer do the homework for them.

Almost two-thirds of the drivers we surveyed committed the ultimate auto financing mistake: they let the dealer find their loan.

When you let the dealer determine find the loan for you, you have no way to gauge whether what’s introduced to you is in fact the absolute best suggest you can get. You also forfeit pretty much all of your negotiating power right off the bat. Only about one-third of the borrowers we surveyed shopped online for a loan with a lower interest rate before walking onto the dealer’s lot. Spend some time on comparison websites before you go to the dealership to get the best rate.

[Disclosure: LendingTree is the parent company of MagnifyMoney.]We recommend kicking off with LendingTree. There are hundreds of lenders participating on this platform. Once you accomplish the application, you can then see real interest rates and approval information. Some lenders will do a hard pull on your credit, which is normal within the auto lending space. Recall, with auto loans, numerous hard pulls will only count as one pull. So, in this case, the best strategy is to have all your hard pulls done at once. You can shop for the best rate on LendingTree’s website.

Once you get the rate, you can always attempt to make the dealer give you a better deal. But you should never walk onto the lot without a low rate in your pocket.

“Many otherwise-savvy consumers feel intimidated by the car buying practice and react by letting the dealership take control of the deal,” says Thomas Nitzsche, a credit educator at Clearpoint Credit Counseling. “Some consumers also feel their credit is hardly good enough to secure an auto loan, so take whatever they are suggested or buy into the dealers telling them that they are doing them a favor.”

Tips on pre-shopping for an auto loan:

Empower yourself by shopping for auto loans before you head to the dealership. When you walk into a dealership with a pre-approved auto loan rate from a bank or credit union, you can use that as leverage. Your dealer will be more inclined to match that rate or find you a better deal, explains Matt DeLorenzo, a managing editor at Kelley Blue Book.

“With the resources available on the internet, from financing to determining what your trade-in is worth, there’s no excuse for walking into a dealership not knowing the prevailing interest rates, what sorts of incentives are out there, and what sort of pricing and what others are paying,” he says.

Have your credit score in mitt to ensure your credit info is accurate. A dealer can lightly say that you don’t qualify for a better rate without having run a decent credit check. You can check your credit score on a number of sites for free.

Don’t shop at the last minute. We can’t predict things like car accidents, but there are steps you can take to be sure you won’t get caught in a desperate car buying situation. Dealers will smell that desperation from a mile away and take utter advantage of it. If your car is demonstrating signs of needing repairs, take care of them right away. If you’re in a pinch, think about renting a car temporarily, taking public transit or carpooling until you’ve had time to get your ducks in a row.

Two. More than half of car buyers never had their income verified.

Car dealers should verify your income when they take your loan application. But that doesn’t mean they always do. More than 52% of our survey respondents said their income wasn’t verified. When irresponsible dealers don’t verify your income, they could potentially give you a loan that you can’t actually afford. Some dealers skip this step in order to speed up the application process and increase your chances of getting approved for a loan.

To get a sense of what you can reasonably afford to buy, use a free contraption like this cost calculator from Edmunds. It permits you to take into account not just your income but also the value of any car you are trading in, how much you can afford to put down on your fresh car, and any balances on existing car loans. If you go into a dealership knowing what you can afford, they will be less likely to sell you something you know is outside of your budget.

Three. Most people agreed to a longer-term loan to make their payments more affordable.

A whopping 82.6% of drivers we surveyed said they took out a loan with a term longer than five years to lower their monthly payment. This may seem like a good way to save on your monthly payments. But you will wind up paying more in the long run, thanks to interest. Auto loans with longer terms usually carry a higher interest rate. Not remarkably, almost one in five car buyers told us they signed up for a long-term auto loan because it was the dealer’s idea.

“The dealer is going to suggest the longest term possible, because it means selling a more expensive car—and likely [earning] a higher commission,” explains Nitzsche. Because dealers want you to concentrate on the monthly payment and not on the total cost of the car, it’s lighter to mask the total cost of the car by opening up out the length of the loan and lowering the monthly payment.

People with poor credit are much more likely to take out these longer term loans. The fact that poor credit customers also wind up with loans with the highest interest rates, they can actually wind up truly hurting themselves here.

In a worst case screenplay, you could find yourself owing more on your auto loan than the car is actually worth. Fresh cars lose up to 25% of their value every year according to Edmunds. To save the most money, get a loan with monthly payments you can afford for the shortest term possible.

Jackie Lam is a writer at MagnifyMoney. You can email Jackie here

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Featured

6 Bad Money Habits That Could Wreck Your Finances — and How to Break Them

Thursday, August 24, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Brittney Laryea

Brittney Laryea is a individual finance reporter for MagnifyMoney. She graduated from the University of Georgia’s Grady College of Journalism and Mass Communication and lives in Brooklyn, N.Y.

Bad spending habits — everyone has at least one of them. Maybe for you it’s adding “just one more thing” to your shopping cart, or repeatedly getting smacked with overdraft or late payment fees.

These bad habits may seem innocuous at very first but could lightly turn into financial self-sabotage.

“Breaking a habit like these can be truly difficult because these habits have developed over the years, and they provide us with psychological convenience and safety,” says Thomas Oberlechner, founder and Chief Science Officer at FinPsy, a San Francisco-based consulting rock-hard that integrates behavioral expertise into financial services and products.

Oberlechner says the key to overcoming a bad money habit lies in knowing when you’re using the impulsive, right side of your brain — as opposed to the focused, concentrated left side — in financial decision-making.

“It’s truly about psychological practice. It’s about behavior. If we understand the role of emotion, then we have a chance to fix it,” Oberlechner says.

Once you understand yourself and can identify your bad habit, Oberlechner adds, then you can create a plan “that turns your impulsive or unconscious behavior into the healthy financial behavior that [you] actually want.”

Of course, cracking any bad habit is lighter said than done.

MagnifyMoney spoke to financial professionals to hear how they and their clients broke their bad habit. See if any of their hacks could help you break yours.

Bad money habit #1: Spending money as soon as you get it

The solution: Automation

If you’re permanently feeling broke just a few days after you receive a paycheck, you may be guilty of this bad money habit. One way to make sure you hold onto some of your cash is to use what the behavioral finance community calls a “commitment device” to lock you into a course of activity you wouldn’t choose on your own, like saving your money.

In this case, the device is automation. Automating your savings won’t help you stop siphoning money from your checking account the same day your direct deposit clears, but it can make sure you save what you need to very first. Check with your bank or the human resources department at work to have a portion of your paycheck automatically sent to a savings account instead of putting the entire sum in your checking account.

You should automate your bills and credit card payments for the pay period, too. Once your obligations are automated, “you can be impulsive with your play money,” says Oberlechner.

Bad money habit #Two: Reaching for your credit card all the time

The solution: A cash diet

Paying for everything you buy with a credit card can be good practice if you pay off your card every month. If you’re chronically swiping your credit card for things you can’t afford to pay off by the next billing cycle, leave your card at home and use cash instead.

When you don’t pay off your card each billing cycle, you rack up interest charges on everyday purchases, and that may cost you a lot more money in the long run. If you’re using more than thirty percent of your total credit limit each month, you may also be harming your credit score.

To break your habit, leave your credit card at home and use cash or a debit card for your purchases.

“Take a certain amount of cash and say ‘I can spend no more than that,’” says Vicki Bogan, an associate professor at Cornell University in Ithaca, N.Y., who researches behavioral finance. “If you have a hefty [spending] problem, attempt to limit yourself so that you only have access to a certain amount of money.”

If you indeed want to challenge yourself, you can attempt going on what’s called a spending freeze, where you stop spending any money on non-essentials for a period of time. On top of helping you save money, the freeze can help you notice how much money you may be wasting simply because you’re always pulling out your credit card. After your freeze finishes, you may be less inclined to swipe your credit card.

Another rule that could help you break your swiping habit is the $20 rule. The financial rule of thumb is ordinary: Anytime your purchase is less than $20, pay in cash, not credit. The $20 rule compels you to think about whether or not a purchase is worth swiping your card for. Chances are, if what you’re buying costs less than $20, it’s not something you’d be OK paying interest on.

Bad money habit #Three: Spending beyond your means

Solution: Budgeting

If you chronically spend beyond your means each pay period, you are likely digging yourself into debt. Get a treat on this habit by understanding how much money you have coming in and how much you can afford to spend on a monthly basis. You can use budgeting apps like Mint or YNAB to make that part lighter. These contraptions can also help you identify the spending categories that are costing you more than you might realize.

Oak Brook, Ill.-based certified financial planner Elizabeth Buffardi tells MagnifyMoney that after examining one of her client’s expenses she found the client was spending a lot of money at drugstores picking up snacks and little things after work. So the client gave herself a budget of $Ten per drugstore visit to save money.

“We’ve been watching her spending at drugstores go down steadily over the last few months,” says Buffardi.

Buffardi had two other clients who struggled with overspending because they loved to shop online. They both created boundaries for themselves when it came time to pay for the items in their online shopping carts. One client determined to buy a certain amount of bounty cards that she could use on a given site.

“If she spent all the bounty cards in the very first day, then she was done until the next paycheck. If she desired something that was more expensive than the amount she had on the bounty cards, she had to hold off on other purchases in order to purchase the more expensive item,” says Buffardi.

The other client simply liquidated her credit card number from her payment profiles so it would be more difficult to make thoughtless purchases. Her theory, Buffardi tells MagnifyMoney, was that if she was coerced to stop and pull out her credit card before she could make the purchase, it might slow her down and give her time to think about the purchase she is about to make and — maybe — stop some purchases from happening.

Bad money habit #Four: Always buying lunch from a restaurant

The solution: Plan your lunches a week in advance

If you’re losing $10-$15 a day to the local deli during the workweek, recall this: You don’t have to buy lunch if you bring it to work with you. However, organizing your day so that you actually have time to prepare and pack your lunch may be where you fight.

Leave room in your busy schedule to pack your lunch in the mornings, or during the evening when you may have more time to yourself.

Melville, N.Y.- based certified financial planner David Frisch says he packs his lunches in the evening because he knows he runs late in the morning. He puts together everything but the dressings and sauces he plans to eat while making dinner, so lunch is already 90% done, then he adds the last ten percent in the morning.

Frisch suggests setting a budget for how much you’d like to spend on food per pay period, then tracking how much money you typically spend on the convenience of frequently going out to lunch. Again, a budgeting app can be handy here to lightly identify places where you spend the most.

Compare that amount to how much you spend on food for entertainment purposes, like going out to dinner with friends over the weekend and for your necessities, like eating lunch to fuel your workday.

“If you are spending so much money on convenience, you have that much less money to spend on everything else,” says Frisch. If you’re spending money from your food budget for convenience purposes, you may be more reluctant to go out on Saturday night for dinner.

If you’re already packing your lunch, but purchase a 2nd lunch because you’re still greedy or you no longer want to eat what you packed, attempt packing a larger meal or having leftovers for a 2nd lunch.

Bad money habit #Five: Ordering out for dinner because you’re too tired to cook

The solution(s): Prep when you have time/energy; attempt meal delivery services

It’s effortless to spend more than $50 getting dinner delivered three to four days out of the week, or buying groceries that go to waste because you’re too tired to cook. Oberlechner suggests doing some of the “work” of making dinner when you know you have more energy.

“If you’re too tired to cook in the evening, substitute the spontaneous behavior by preparing dinner in the morning. So in the evening you don’t have the work of preparing anything,” he tells MagnifyMoney.

Another hack Oberlechner suggests is making a little extra dinner for the days you know will be especially long, when you won’t want to cook dinner. For example, if you know Tuesday is a indeed long day but Monday is not, cook a little extra on Monday and have those leftovers for dinner on Tuesday.

If cooking dinner simply isn’t a habit for you, you can attempt a meal kit service like Blue Apron, Plated, or HelloFresh to get interested in cooking, suggests Brooklyn, N.Y.- based certified financial planner Pamela Capalad. She tells MagnifyMoney she’s advised many of her clients to sign up for a meal kit service, then transition into grocery shopping and cooking at home regularly.

Generally, the services cost about $Ten to $15 per serving and can serve up to four people.

Bad money habit #6: Letting your kids throw extra things in your shopping cart

The solution(s): Shop solo or lay ground rules early

Frisch says he and his wifey solved this problem with their now 15-year-old triplets when they were four years old.

“Up until they were four we couldn’t bring them to a supermarket because it was unlikely for my wifey and I to witness three kids at the same time,” says Frisch. The easiest recommendation, he says, is to have somebody witness them at home while you go do the shopping. You may spend some money on a sitter, but you are also saving money without an impatient child sneaking candy and fucktoys into your shopping cart as well.

If an extra set of forearms at home isn’t available, then attempt to set ground rules before you go to the store. For Frisch, that meant permitting the triplets to get one — just one — extra item at the store.

When a child dreamed to add something “extra” to the cart, Frisch or his wifey would say, “If you want this now, then you have to put the other one back.”

“Ultimately what happened was they kind of had to make a decision as to which one they would indeed get,” says Frisch.

The triplets quickly realized they could all benefit from working together.

“They actually embarked to communicate and say ‘if you get this and I get this, we can share,’” Frisch told MagnifyMoney. “They just figured out that if they all got one thing and collective, they ultimately all got more than they would have.

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at [email protected]

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Advertiser Disclosure: MagnifyMoney is an advertising-supported comparison service which receives compensation from some of the financial providers whose offers emerge on our site. This compensation from our advertising fucking partners may influence how and where products show up on the site (including for example, the order in which they show up). To provide more finish comparisons, the site features products from our fucking partners as well as institutions which are not advertising fucking partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

Featured, Health

6 Career Strategies for People Who Are Coping With Depression

Thursday, August 24, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Brynne Conroy

Brynne is the blogger behind FemmeFrugality.

Jana Lynch was twenty seven years old when she was formally diagnosed with depression. The illness wasn’t severe enough for her to begin seeking regular treatment until eight years later, when a scare attack at work sparked a series of events that switched her career — and her finances — forever.

At the time, Lynch was working full-time for a social service agency. “Not only was my anxiety and depression through the roof, making it hard to get out of bed, concentrate on tasks, meet deadlines, communicate with coworkers, and reminisce meetings, but the nature of my job made it a dangerous environment for my mental health at the time,” she says.

Rather than resign outright, she determined to take a four-month leave on short-term disability. A break, she thought, might help. But when the time came to comeback to work, the same issues began to surface again. In the end, she chose her mental health over working total time.

“Looking back, it was a terrible choice because of the influence on my long-term private finances,” she says. “But in the moment, it was the best decision for me and my family.”

Lynch’s story is not unique. In a two thousand four examine that followed workers over the course of six months, researchers found workers with depression dropped out of the workforce at a rate of twelve percent compared to only two percent of their peers.

While depression may force affected workers out of active employment at higher rates, it is also true that those who become unemployed are more likely to demonstrate signs of depression — three times more likely, according to a two thousand ten NIH examine.

Thomas Richardson, a leading researcher at Solent NHS Trust, one of the largest community providers in the UK’s National Health System, notes that there is most certainly a correlation inbetween unemployment and depression, but that causation is not as effortless to pin down.

“In research such as this it’s always a case of chicken and egg: Which came very first?” he says. “A lot of research is only at one time point, so it’s hard to say which came very first.”

Some research shows losing your job impacts depression because it makes it hard to cope financially, but other studies suggest it has little influence.

“I think it very likely works both ways and is a perverse cycle,” Richardson proceeds. “Someone becomes depressed, fights at work, and loses their job. This then exacerbates their depression further.”

6 Strategies to Manage Depression and Work

Abigail Perry, author of Frugality for Depressives, had already been formally diagnosed with depression as a part of a bipolar disorder when unrelated chronic weariness coerced her out of traditional employment.

“I thought I’d be nothing but a cargo for the rest of my life,” says Perry. “I wondered who would ever want someone who couldn’t pull her own weight financially, and I became suicidal. A lot of therapy and medication management doctor visits later, I ultimately commenced believing that I might have worth despite not being able to work.”

Those fighting with balancing their career and depression need not lose hope.

Richardson notes that many are able to develop coping strategies, permitting themselves to stay in the workplace. He’s developed six key strategies that his research has exposed to be helpful to workers with depression.

1. Intentionally look for work you love.

“Try and do a job you love or are interested in,” Richardson encourages. “If not possible, then attempt and concentrate on those bits of your job you do love.”

Allyn Lewis, lifestyle blogger and storytelling strategist from Pittsburgh, Pa., has learned this mechanism through the course of building her business.

Diagnosed with a depression that was further fueled by her father’s suicide when she was a teenage, Lewis never truly entered the traditional workforce, but has found self-employment to suit her disability.

Her motivating enjoyment comes from the community-based aspect of her business.

“Telling my story and talking openly about my anxiety, depression, and the loss of my dad is what keeps me active in my career,” says Lewis, 26. “That might sound strange, but when I keep my mental health journey to myself, it feels like it’s all about me. And if I’m having a down day, week, or month, what’s it matter if I do the work or get the things done? But, by talking about my mental health and using my own story to raise awareness, it makes it something that’s much fatter than myself.”

Two. Don’t shove yourself too hard.

“Don’t thrust yourself too hard at work,” says Richardson. “Acknowledge when you are fighting. It’s best to slow down early on than to keep going until you crash.”

Lewis learned this lesson through practice.

“Back in the day when I wielded my own public relations rock hard, I would take on any client, under any circumstance, for any amount of money, and I’d make any accommodation or request they asked for. I ended up overbooked, underpaid, and at a point that was way beyond burnt out,” Lewis says.

“I kept attempting to shove my anxiety and depression aside to pretend like it wasn’t getting in the way, but the best thing I ever did was commencing to tune into what my mental health was telling me. Only then was I able to shift into a business model that worked for me.”

Trio. Ask for help — and know your rights.

Richardson recommends going to your manager or supervisor for access to resources when your symptoms become too much to bear. If you work at a larger company, it may be more suitable to get in touch with your human resources department.

This can seem intimidating, as you don’t want to give your superiors any reason to question your work ethic or your capability to provide value to the company.

But Perry, who now works total time in a remote position, notes that depression is covered by the Americans with Disabilities Act (ADA). This means your employer cannot fire you because of your disability — in this case, depression — and that they have to provide reasonable accommodations in order to permit you to do your job.

“Even if you don’t ask for accommodations, you need to make it clear that your absences or other work difficulties are based on a real medical condition,” Perry says. “Imagine being a supervisor with an employee who takes a lot of sick days, or may be lightly agitated by interpersonal interaction or extra stress. In a vacuum, that’s a problem employee. Understanding the context, that’s someone who is doing their best to be a good employee despite a disability.”

Four. Keep a healthy perspective on your career goals.

“It’s effortless in a career to concentrate on goals, but this makes you vulnerable to depression,” says Richardson. “If you don’t get that promotion it might truly influence you and lead to self-critical thoughts which fuel depression.”

He recommends instead harkening back to why you love your work and the current position you’re in.

Lynch, who presently works as a freelance writer and editor, relates to the depression that can be felt when career expectations aren’t met.

“I attempt hard not to get angry at myself if I didn’t do as much as I’d like, or if my inbox isn’t bursting with inquiries,” says Lynch, “which is hard to deal with when you like to work and tie your work to your self-worth. But depression makes it difficult to look for clients. It’s a horrible, perverse cycle that I deal with only by telling myself this is improvised. It will get better at some point.”

Five. Nurture hobbies and social contacts.

Lynch and Lewis both note exercise as a way of sustaining a healthy hobby. Lewis trains yoga, and Lynch regularly attends a gym. While not the primary aim, a side effect of going to the gym or studio happens to be spending time with other people of similar interests.

Nurturing hobbies and maintaining social contacts are significant from Richardson’s research — even if doing so originally feels tremendous.

6. Practice mindfulness.

Ultimately, Richardson recommends practising mindfulness, even when you’re not in the throes of depression. Emerging research suggests that mindfulness may not only alleviate depression, but could prevent relapses.

Richardson has produced a free mindfulness resource, which can be accessed here.

Depression and Your Finances

Career and finance often go arm in palm, so it’s no surprise that the ripple effects of depression can often extend into your finances as well.

By understanding and confronting these challenges head-on, there are strategies you can use to protect your finances as you learn to manage depression.

In a latest investigate published in the British Psychological Society’s Clinical Psychology Forum, Richardson studied people with bipolar disorder as they were going through a depressive scene. During these gigs, he found four key ways that their finances suffered.

Missing bills

Lynch notes that before she set up automatic payments, she would have trouble remembering pay upcoming bills. She’d get her statements, but overlook them. This led to unnecessary costs like late fees.

Richardson’s investigate finds that this behavior is typical for depressives. It found that missing bills was a financial manifestation of avoidant coping behaviors. In order to avoid being late on charges you may not know or recall exist, it’s significant to get in the habit of confronting through that pile of mail as you establish the habit of paying through automation.

Poor planning

“It can be tighter to keep track of your finances when things get raunchy,” relates Perry. “Monitoring spending, keeping up with due dates — it’s tiring even in good conditions. If you spend more because of depression, or if you simply don’t keep as close of an eye on things, your budget could take a big hit.”

Perry’s insights are congruent with Richardson’s findings. Those with depression have a firmer time completing tasks like budgeting because planning ahead is made more difficult. The investigate also exposed that rational thinking and the capability to recall past purchases in order to log them into a spreadsheet were impaired.

Convenience spending

Perry says that when you’re depressed, you’re more likely to get caught up in convenience spending.

“This could be anything from convenience or junk food, which adds up, or going out for drinks, dinner, or entertainment. Alternately, you may be more likely to spend money on things that you think will make you glad or comforted — from convenience gadgets to home décor to clothes.”

Richardson adds the example of being overly generous with one’s family as an example of convenience spending.

Compounding anxiety

Richardson’s explore finds that financial stress compounds anxiety and depression. This stress leads to more dire mindsets, like extreme anxiety and hopelessness.

“As a business holder, there’s always so much pressure around profit,” says Lewis. “Even when you’re up, you never know how long it will last, so you have to keep hustling. When I’m going through a period of depression, this puts me in a cycle of ‘I’m never making enough,’ which is a thought that likes to pair itself with ‘I’m not good enough.’ Depression has a sneaky way of switching my mindset from one of abundance to one of scarcity.”

Lewis’s reports of low self-worth are also common, according to Richardson’s work. Self-criticism over “economic inactivity” was detected in explore participants.

Seeking Mental Health Care

For help developing more coping strategies or getting resources that can help you manage your depression, consider seeking out mental health care services.

“I think all depressives — especially ones who aren’t on medications — should have therapists,” says Perry. “It may take a few attempts to find someone you work well with, but then that person will be a good lifeline. Therapists can help you deal with the things that depression makes tighter with strategies, workarounds, or just working through past events that are contributing to or causing your current depression.”

Therapy and medication management specialists can be expensive, tho’. Many regions in America face a shortage of mental health care providers, and the matter is further complicated when you consider that some providers may be out-of-network, bringing copays up even if you are presently insured.

Related article: five ways to find lower the cost of therapy

If you can’t figure out how to fit these services into your budget, seek out therapists who suggest sliding-scale payment options based on your income. Another affordable resource is public mental health care clinics, tho’ their availability may be limited.

If you have insurance and don’t instantly need medication, keep in mind that a mental health care professional may not have an M.D. or Ph.D. after their name. Licensed Clinical Social Workers (LCSWs) and other counselors often accept insurance and are able to provide therapy, referring you out to a psychiatrist for prescription needs when necessary.

Lynch did seek therapy and go on medication for a while, tho’ she now leans on other coping mechanisms such as avoiding triggers and exercising regularly.

“I recommend it if you feel you need it,” she says. “There is no shame in getting whatever kind of help you need.”

Today, Lynch operates from a place of acceptance. Depression is a part of her life that she has learned to deal with. While she doesn’t categorize herself as what we would consider classically “happy,” she does consider herself to be as content as possible, and actively seeks out happiness within her circumstances.

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne at [email protected]

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Advertiser Disclosure: MagnifyMoney is an advertising-supported comparison service which receives compensation from some of the financial providers whose offers emerge on our site. This compensation from our advertising playmates may influence how and where products emerge on the site (including for example, the order in which they show up). To provide more finish comparisons, the site features products from our fucking partners as well as institutions which are not advertising fucking partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

Featured, Life Events, News

How to Get ‘Unstuck’ From Your Starter Home

Thursday, August 24, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Bob Sullivan

Bob Sullivan is an award winning American online journalist, author and one of the founding members of msnbc.com.

Andrew Cordell bought his very first home at the worst possible time — ten years ago, right before the housing bubble burst.

He’s not going to make that mistake again.

“We had instantaneous fear put in us as homeowners,” says Cordell, 40. “We know how dangerous this can be.”

So the petite “starter home” he purchased in Kalamazoo, Michigan back in two thousand seven now feels just about the right size.

“When we bought, we figured we’d get another home in a few years,” he says. “But the more we lodged, the more we thought, ‘Do we indeed need more space?’ We don’t actually need a large chest freezer or a large yard. Kalamazoo has a lot of parks.”

Evidently, slew of homeowners feel the same way.

It’s a phenomenon some have called “stuck in their starter homes.” Bucking a decades-long trend, youthful homeowners aren’t looking to trade up — they’re looking to stay put. Or they are coerced to.

According to the National Association of Realtors, “tenure in home” — the amount of time a homebuyer stays — has almost doubled during the past decade. From the 1980s right up until the recession, buyers stayed an average of about six years after buying a home. That’s hopped to ten years now.

Other numbers are just as dramatic. In 2001, there were 1.8 million repeat homebuyers, according to the Urban Institute. Last year, there were about half that number, even as the overall housing market recovered. Before the recession, there were generally far more repeat buyers than first-timers. That’s now reversed, with first-time buyers dwarfing repeaters, 1.Four million to one million.

This is no mere statistical curiosity. Trade-up buyers are critical to a smooth-functioning housing market, says Logan Mohtashami, a California-based loan officer and economics pro. When starter homeowners get gun-shy, home sales get stuck.

“Move-up buyers are especially significant … because they typically provide homes to the market that are adequate for first-time buyers,” he says. When first-timers stay put, the share of available lower-cost housing is squeezed, making life tighter for those attempting to make the hop from renting to buying.

Getting unstuck from your starter home

There are slew of potential causes for this stuck-in-a-starter-home phenomenon — including the fear Cordell describes, families having fewer children, fast-rising prices, and vapid incomes. But Mohtashami says the main cause is a hangover from the housing bubble that has left first-time buyers with very little “selling equity.”

Buyers need at least twenty eight to thirty three percent equity to trade into a larger home, and often closer to forty percent, he says. Those who bought in the previous cycle might have seen their home values recover, but many purchased with low down payment loans, leaving them still equity poor.

That wasn’t such a problem before the recession, as lenders were blessed to give more aggressive loans to trade-up buyers. Not any more.

“In the previous cycle you had exotic loans to help request. Now you don’t. [That’s why] tenure in home is at an all-time high,” Mohtashami says. “Even families having kids aren’t moving up as much.”

Fast-rising housing prices don’t help the trade-up cause either. While homeowners would seem to benefit from increases in selling price, those are washed away by higher purchase prices, unless the seller plans to stir to a cheaper market.

“You’re always attempting to catch up to a higher priced home,” Mohtashami says.

Cassandra Evers, a mortgage broker in Michigan, says she’s seen the phenomenon, too.

“It’s not for lack of want. It seems to be the inability to afford the cost of the fresh home,” she says. “It’s not the interest rate that’s the problem, obviously because those are at historic lows and artificially low. It’s because to buy a ‘bigger and better house,’ that house costs significantly more than their current home. The cost of housing has skyrocketed.”

There’s also the very practical problem of timing. In a fast-rising market, where every home sale is competitive, it’s effortless to lose the game of musical chairs that’s played when a family must sell their home before they can buy a fresh one.

“Folks are worried about selling their current house in one day and being incapable to find a suitable replacement quick enough,” Evers says.

Cordell, who lives with his wifey and eight-year-old son, says the family considered a stir a few years ago and shortly looked around. But they quickly concluded that staying put was the right choice.

“We looked at some homes and we thought, ‘I guess we could afford that. But we don’t want to be house broke’,” he says. “We don’t want to take on so much debt that ‘What else are we able to do?’ What if one of us loses our job? I guess you could say we have a Depression-era sensibility. … Who would want to get upside down on one of these things?”

The Urban Institute says this stuck-in-starter-home problem shows a few signs of abating recently. Repeat buyers were stuck around 800,000 from two thousand thirteen to 2014. Last year, the number pierced one million. But that’s still far below the 1.Five million range that held consistently through the past decade.

There are other signs that ease might be on the way, too. ATTOM Data Solutions recently released a report telling that one in four mortgage-holders in the U.S. are now equity rich — values have risen enough that owners hold at least fifty percent equity, well above Mohtashami’s guideline. Some 1.6 million homeowners are freshly equity rich, compared to this time last year, and five million more than in 2013, ATTOM said.

“An enlargening number of U.S. homeowners are amassing extraordinaire stockpiles of home equity wealth,” says Daren Blomquist, senior vice president at ATTOM Data Solutions.

So perhaps pent-up repeat homebuying request might re-emerge. Evers isn’t so sure, however.

“Most folks I talked with are no longer interested in being house poor and maxing out their debt to income ratios. They seem to be staying put and thrusting money into their retirement accounts,” Evers says.

The Cordells are content where they are in Kalamazoo and plan to stay long term. If anything would make them stir, it’s not growing home equity but a growing family.

“If we ended up with a 2nd (kid), I suppose we’d have to look,” Cordell mused. “But we have no plans for that.”

Four Signs You’re Ready to Trade Up Your Home

• YOU’VE GOT Slew OF EQUITY: Your home’s value has risen enough that you securely have at least twenty eight percent equity and, preferably, more like thirty five to forty percent.
• YOU’RE EARNING MORE: Your monthly take-home income has risen since you bought your very first home by about as much as your monthly payments (mortgage, interest, insurance, taxes, condo fees, etc.) would rise in a fresh home.
• YOU STAND TO MAKE A HEALTHY PROFIT: You are certain that if you sell your home, you’d walk away from closing with at least thirty percent of the price for your fresh home — or you can top up your seller profits to that level with cash you’ve saved for a fresh down payment. That would let you make a standard twenty percent down payment and have some left over for surprise repairs and moving costs that will come with the fresh place. Recall, transaction costs often surprise buyers and sellers, so be sure to build them into your calculations.
• YOU CAN Treat THE RISK: You have the tummy for the game of musical chairs that comes with selling then buying a home in rapid succession. Also, if you are in a hot market, you have extra cash to outbid others or a place for your family to stay in case there’s a time gap inbetween selling and buying.

Bob Sullivan is a writer at MagnifyMoney. You can email Bob here

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Featured

Under Pressure: one in five Parents Will Go into Debt to Send Kids Back to School

Tuesday, August 22, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Hannah Rounds

is a freelance writer and quantitative marketing consultant. Hannah founded the site Unplanned Finance.

After a long summer break, many parents feel antsy to send their kids back to school. But back to school can translate into debt, according to a latest MagnifyMoney national survey of more than seven hundred parents. More than one in five parents will go into debt to pay for back-to-school expenses. And more than half (55 percent) of parents who are going into debt say they feel pressure to buy fresh things for their kids during the back-to-school time compared to just twenty nine percent for parents not going into debt.

It’s no question that back-to-school clothes, supplies, and gear can put a dent in a family’s budget. Almost three in four parents will spend more than $100 on back-to-school supplies this year, and almost one in four will spend more than $500.

Key insights

• 55 percent of parents who are going into debt say they feel pressure to buy fresh things for their kids for back to school (versus twenty nine percent for parents not going into debt)
• Almost half (44 percent) of parents are spending over $300 on back to school.
• Midwest parents are least likely to feel pressure to buy fresh things for their kids (30 percent) compared to forty three percent in the Northeast and thirty eight percent in the South and West.
• Parents in the South are most likely to spend $500 or more on back to school (28 percent) compared to twenty five percent in the Northeast, twenty percent in the Midwest, and twenty one percent in the West.
• 41 percent of parents who feel stress about back-to-school shopping expect to go into debt for back-to-school shopping.
• Just thirty six percent of parents who will go into debt feel the cost of school supplies required is reasonable. Fifty two percent of parents who don’t expect to go into debt for back-to-school shopping feel the cost is reasonable.
• 65 percent of parents going into debt plan to spend $300 or more, compared to thirty eight percent of those not going into debt. And thirty seven percent of those going into debt plan to spend $500 or more, versus twenty one percent of those not going into debt.

Pressure to spend

The survey indicated that for parents expecting to take on debt, back-to-school shopping is fraught with negative emotion. Almost a third (33 percent) of parents who expect to go into debt for back-to-school shopping feel the cost of expected school supplies is unreasonable. Just one in five parents who won’t go into debt feel the same way. With school supplies pushing one in five families into debt, it’s no wonder that so many feel the costs are unreasonable — that’s especially true for families already carrying credit card debt into the back-to-school season.

According to the two thousand fifteen Report on the Economic Well-Being of U.S. Households, thirty one percent of American households carry credit card debt all year round, and twenty seven percent of households carry credit card debt from time to time. A MagnifyMoney analysis demonstrated that households carrying credit card debt have an average balance of $7,700. Adding several hundred dollars to an existing credit card debt can make the entire debt feel unmanageable.

In the survey, taking on debt is one of the leading indicators for feeling back-to-school shopping stress. Parents taking on debt were almost three times as likely to feel that back-to-school shopping was tense compared to those who were not. A third of parents going into debt feel that back-to-school shopping is strained, but just twelve percent of parents not going into debt feel the same.

The stress doesn’t come just from crowded malls and added debt. Instead, it comes from social pressure to take on debt and buy fresh things for kids. Over half (55 percent) of parents who are going into debt feel pressure to buy fresh things for their kids during the back-to-school time framework. Less than three in ten (29 percent) parents who aren’t going into debt feel that same pressure.

The pressure to go into debt for kids doesn’t just occur during back-to-school time. Almost half (46 percent) of all moms admit to going into debt for child-rearing costs, according to the two thousand fifteen Cost of Raising a Child survey from BabyCenter.com. The pressure to give kids better lives (and better school supplies) can lead parents to make expensive decisions, including going into debt.

Store cards and debt

Most parents, ninety three percent, use traditional credit cards or cash to pay for back-to-school items. Only a petite percentage plan to use retail credit cards (like the Target RedCard) to pay for back-to-school items. However, parents going into debt are more than three times as likely to use store credit cards as parents not going into debt (15 percent vs. Five percent).

With coupons, points, and cash prizes, store credit cards can feel enticing, but the interest rates on store cards are bruising.

Retail credit cards have notoriously high interest rates. Presently, Target REDcard and the Walmart Credit Card have interest rates of 22.9 percent, and the Kohl’s credit card is 24.99 percent.

Financing $300 on a store credit card (with a 22.9 percent APR) means that a parent will spend $38.50 on extra interest if they pay off the loan over the course of the year compared to a regular card.

Real Cost of Back-to-School Spending on Store Credit Cards (22.9 percent APR)

Overall, thirty three percent of parents use traditional credit cards to pay for back-to-school items, including thirty seven percent of parents planning to take on debt. These parents will likely yield substantial interest rate savings by choosing to use a traditional credit card rather than a store card. Presently, the average interest rate on a credit card is fourteen percent, according to the Federal Reserve Bank of St. Louis, but people with decent credit can find slew of zero percent APR interest rate offers.

Avoiding cards and debt

Parents who avoid debt tend to avoid plastic altogether. Over three in five (63 percent) parents who don’t expect back-to-school debt won’t spend on credit or retail cards.

As a group, avoiding plastic seems to keep spending down as well — sixty two percent of parents who eschew plastic will spend less than $300 on back-to-school supplies. By comparison, just fifty three percent of parents using plastic will spend less than $300.

Only thirty one percent of parents who are avoiding debt will spend on a credit card and reap prizes points or cash back options. It might seem like this group is missing out on good deals, but they may just concentrate their attention on fatter saving opportunities. Two-thirds of parents who won’t use plastic this season will take advantage of back-to-school sales.

Survey methodology

MagnifyMoney.com commissioned Google Consumers Surveys to obtain online survey data with seven hundred parents living in the United States with children going back to school. Interviews were conducted online via Google Surveys in English during August 5-8, 2017. Statistical results are weighted to correct known demographic discrepancies. The margin of sampling error was plus or minus Five.Three percentage points for the seven hundred two people who said they felt stress during back-to-school shopping.

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah at [email protected]

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Featured, Strategies to Save

What Your Teenage Should Do With Their Summer Earnings

Friday, August Legitimate, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Aja McClanahan

Aja McClanahan is a private finance blogger and founder of www.principlesofincrease.com.

According to a two thousand seventeen survey released by the National Financial Educators Council, 54% of respondents (all eighteen years and older) said a course in money management in high school would benefit their lives. Another survey — the most latest from the Program for International Student Assessment — reports that only about 10% of U.S. 15-year-olds are skilled in private finance matters, falling in the middle among the fifteen countries studied. The message is clear: Youthful Americans need to learn more about money and managing it wisely. One way to embark them off is providing them hands-on practice with their own money. Come in the summer job.

Having a summer job can be a good introduction to adulthood for many reasons: The discipline, conformity to management, team work, and a regular paycheck are just a few of the things a teenager will get used to with their very first summer job.

It’s also a good way to introduce kids to the real world of money. However the money your teenage earns is technically theirs, as a parent, you should use summer job earnings as an chance to help your kids form good habits with money. There’s no better time to display them the value of money than in the crucial years before they’ll be saddled with obligations like student loans, car notes, and mortgages.

Here are a few ways to make sure your teenage will get the most out of their money-making practice that will keep them money savvy for years to come.

Pay their fair share

Once your teenage commences making money, you’ll to want consider how they can begin to cover certain expenses. You’ll be tempted, no doubt, to let your teenage keep their hard-earned money for themselves. Trust this process. If the objective is to raise money-smart kids who become even savvier adults, there will have to be simulations of the real world that include actually paying for things

If your teenage uses the car, consider having them cover a portion or all of their car insurance bill. Another option is to have them contribute to their cellphone bill or even some of the Wi-Fi they use.

Having expenses is a real part of life, so it’s better to help them understand that now rather than later when ignorance isn’t so blissful.

If the thought of making your child pay for expenses bothers you, consider a different treatment: Train them about the costs of everyday life by asking them to cover their portion of a bill, but take that money and put it away for them. You can save up all that money and, as a nice gesture, give it to them when they need it most, like when they go away to college or ultimately leave the nest to launch out into the real world.

Open bank accounts

While many families do not have access to or elect not to participate in the traditional banking system — it’s estimated that 27% of U.S. households are unbanked or underbanked — you’d ideally want to get your teenage familiar with banks and how they work. Tho’ check use has been on the decline since the mid-1990s, it’s still significant for teenagers to learn how to write a check, along with keeping a checkbook register. Sure, this practice most likely won’t last long, as electronic payments and money management apps proceed to grow, but this treatment gives your kids the gist of how to keep track of their cash flow.

While your teenage has a bank account, you’ll also get them used to understanding how a debit card works. They’ll get familiar with how effortless it is to swipe for things they want, yet how difficult it can be to replenish their account with the money they’re making at their job.

Ultimately, you’ll want to make sure that your teenage opens a savings account. In most states, a person can open a bank account when they become Legal. For junior teenagers, many banks have special teenage or kid accounts that a child can share with their parents. Co-owned checking accounts can be opened as youthful as 13, while custodial savings accounts can be opened at any age.

Developing good habits around saving and managing money takes time and some getting used to. So using their summer earnings would be a ideal chance to get into the groove of budgeting for expenses and managing money through a bank account.

Set money goals

Once money starts to flow into your kid’s forearms, seize the moment and get them to see the thicker picture. Summer money is good, but paying for life will take much more than what your teenage earns from a few hours of work in a bike shop. Begin to demonstrate them the cost of things like college, cars, homes, and luxuries like vacations or hobbies.

Once you compare the costs with their summer job earnings, it should help them come to conclusions about how money works: The more you have, the more you can do. The idea is to inspire them to increase their earning potential with contraptions like education or savings to invest in income-producing assets.

Another result of these conversations could be your teenage realizing they’ll want to begin saving up for life sooner than later. They may determine to put away money for the purpose of paying for school or their very first condo.

Ron Lieber, Fresh York Times financial columnist and author of the book The Opposite of Spoiled, says parents should prompt their kids with an instantaneous aim like having a college fund. “The best thing to do is to use any earnings to begin a conversation with parents about college, if your teenage plans on going,” Lieber says.

Lieber suggests questions to guide the conversation:

• How much of your college expenses will be covered by parents versus the child?
• How much have the parents saved for the child’s college expenses?
• How much are kids/parents willing to borrow or spend out of their current income?

According to Lieber, “The answers to these questions may cause a teenage to save everything, if they think it will help them avoid debt in their effort to attend their fantasy college.”

No matter how makeshift their summer job is, you’d do well to use it as a springboard for more conversations about money. Whatever their long-term money goals are, it’s never a bad idea to embark working toward them early on.

Learn compound interest

While your teenage is making all of those big money goals, you could drive the point home with a lesson in compound interest. Using a compound interest calculator, you can demonstrate your teenager many scripts where interest can either work for or against them.

Run screenplays around savings for big-ticket items versus financing them. The math will speak volumes:

In the above script, you’d end up paying a total of $226,815 in interest. That same amount ($226,815) invested for thirty years with a moderate Three.5% come back yields over $636,000!

Eyeing these numbers in act should motivate your teenage to embark a savings habit that they will maintain across adulthood.

If they are indeed excited about the prospects of compound interest working on their behalf, encourage them to open their own IRA to begin investing themselves. This way, they’ll not only understand the theory of investing but also get hands-on practice with it. After all, the time value of money works even better when you’ve got more time. Investing as a teenage could set the stage for copious comes back later on in life.

Create a budget

Making money can be the joy, somewhat effortless part of a summer job. Figuring out how to spend it can be difficult. Make your teenage prioritize needs and wants by learning to create a budget. A good practice would be to have your teenage make a list of things they’ll spend money on versus how much money they will bring in. You could also introduce them to a money-management app — here are some of the best ones.

This will help them understand the finite nature of money and how their current cash flow stacks up against their current earnings.

Have joy

According to Brian Hanks, a certified financial planner in Salt Lake City, “Don’t be worried if your teenage ‘blows’ a portion of their earnings on things you consider to be worthless.” Hanks goes on to say that it’s better to make money mistakes as a youngster: “Everyone needs to learn rough money lessons in life, and learning them as a teenage when the consequences are relatively puny can save thicker heartache down the road.”

A summer job should be joy and low-stress, but it can also be used as a learning practice that prepares your teenage for the real world. If your teenage turns out to be a terrible budgeter or extreme spendthrift, give them more than a summer to learn better ways. Reminisce, they’ll have the rest of their lives to proceed taking hold of and mastering money concepts.

Aja McClanahan is a writer at MagnifyMoney. You can email Aja here

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Advertiser Disclosure: MagnifyMoney is an advertising-supported comparison service which receives compensation from some of the financial providers whose offers emerge on our site. This compensation from our advertising fucking partners may influence how and where products emerge on the site (including for example, the order in which they emerge). To provide more finish comparisons, the site features products from our playmates as well as institutions which are not advertising playmates. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

Auto Loan, Featured, News

Auto Loan Interest Rates and Delinquencies: two thousand seventeen Facts and Figures

Thursday, August 17, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Hannah Rounds

is a freelance writer and quantitative marketing consultant. Hannah founded the site Unplanned Finance.

Led by a prolonged period of low interest rates, consumers now have a record $1.Two trillion one in outstanding auto loan debt. Despite record high levels of issuance, the auto lending market shows signs of tightening. With auto delinquencies on the rise, consumers are facing higher interest rates on both fresh and used vehicles. In particular, over the last three years, subprime borrowers spotted rates rise swifter than the market as a entire. MagnifyMoney analyzed trends in auto lending and interest rates to determine what’s truly going on under the fetish mask of automotive financing.

Key insights

1. Overall auto delinquency is on the rise, and the very first quarter of two thousand seventeen witnessed near record levels of fresh auto loan delinquency rates. 54
2. Interest rates are on the rise, with average fresh car loan rates up to Four.87%, sixty basis points from their lows in late 2013. Two
3. The average duration of auto loans (fresh vehicles) is a record 67.37 months, reducing the monthly payment influence of higher interest rates. 31

Facts and figures

• Average Interest Rate (Fresh Car): Four.87% Two
• Average Interest Rate (Used Car): 8.88% Trio
• Average Loan Size Fresh: $29,314 Four
• Average Loan Size Used: $17,180 Five
• Median Credit Score for Car Loan: seven hundred six 6
• % of Auto Loans to Subprime Consumers: 31.34% 7

Subprime auto loans

• Total Subprime Market Value: $229 billion 8
• Average Subprime LTV: 113.4% 9
• Average Interest Rate (Fresh Car): 11.05% Ten
• Average Interest Rate (Used Car): 16.48% 11
• Average Loan Size (Fresh Car): $28,099 12
• Average Loan Size (Used Car): $16,026 13
• % Leasing: 25.9% 14

Prime auto loans

• Total Prime Market Value: $717 billion 15
• Average Prime LTV: 97.91% 16
• Average Interest Rate (Fresh Car): Three.77% 17
• Average Interest Rate (Used Car): Five.29% Legitimate
• Average Loan Size (Fresh Car): $32,153 Nineteen
• Average Loan Size (Used Car): $20,778 20
• % Leasing: 37.4% 21

Auto loan interest rates

Interest rates for auto loans proceed to remain near historic lows. As of the very first quarter of 2017, interest rates for used cars was 8.88% on average. The average interest rate on fresh cars (including leases) is Four.87%. However, the low average rates belie a tightening of auto lending, especially for subprime borrowers.

Fresh loan interest rates

Consumer credit information company Experian reports that the average interest rate on all fresh auto loans was Four.87%, up six basis points from the previous year. Twenty four The petite interest rate increase masks a larger underlying tightening in the auto loan market for fresh vehicles.

During the last year, lenders tilted away from subprime borrowers. Just Ten.88% of fresh loans went to subprime borrowers compared to 11.41% the previous year. The movement away from subprime borrowers led to a smaller increase in fresh car interest rates compared to if car rates had stayed the same. Twenty five

Across all credit scoring segments, borrowers faced higher average borrowing rates. Subprime and deep subprime borrowers spotted the largest absolute increases in rate hikes, but super prime borrowers also eyed an eighteen basis point increase in their borrowing rates over the last year. The average interest rate for super prime borrowers is now Two.84% on average, the highest it’s been since the end of 2011. Twenty seven

When comparing credit scores to lending rates, we see a slow tightening in the auto lending market since the end of 2013. The trend is especially pronounced among subprime and deep subprime borrowers. These borrowers face auto loan interest rates growing at rates swifter than the market average. Consumers should expect to see the trend toward slightly higher interest rates proceed until the economic climate switches.

Even with the tightening, interest rates remain near historic lows, but that doesn’t mean consumers are paying less interest on their vehicle purchases. The estimated cost of interest on fresh vehicle purchases is now $Four,223, twenty nine up 42% from its low in the third quarter of 2013.

Growth in interest paid over the life of the loan stems from longer loans and higher average loan amounts. The average maturity for a fresh loan grew from 62.Five months in the third quarter of two thousand eight to 67.Four months in early 2017. Thirty one During the same time, average loan amounts for fresh vehicles grew 14.7% to $29,134. Thirty two

Used loan interest rates

Over the past year, interest rates for used vehicles fell by thirty five basis points to 8.88%. The drop in average interest rates came from a dramatic increase of prime borrowers injecting the used car financing market. In 2017, 47.4% of used car borrowers had prime or better credit. The year before, 43.99% of used borrowers were prime. Thirty four

On the entire, borrowers in the used car market face almost identical rates to this time last year. Super prime and prime borrowers spotted upticks of fifteen basis points and four basis points, respectively. This brought the average super prime borrowing rate up to Three.56% for used vehicles, and the prime rate to Five.29%. Thirty six

On the other end of the spectrum, subprime and deep subprime borrowers witnessed their interest rates fall by approximately ten basis points year over year. Despite the decrease, interest rates for these borrowers are up a dramatic two hundred fifty basis points (Two.5%) from their two thousand eight rates.

Albeit average interest rates on used vehicles proceed to fall, the estimated interest paid on a used car loan rose $12 from the previous year to $Four,046. The increase in overall interest is part of a larger trend. Over the past four years, estimated interest on used cars was 8.4%. Almost all of the increase comes from longer average loan terms (61 months vs. Fifty seven months), thirty eight leading to more interest paid over the life of a car loan.

Auto loan interest rates and credit score

As of March 2017, the median credit score for all auto loan borrowers was 706. Forty A credit score of seven hundred six is just bashful of the prime credit rating (720). This is the highest median rate since the very first quarter of 2011.

In the very first quarter of 2017, just 31% of all auto loans were issued to subprime borrowers compared with an average of 35% over the past three years.

Total auto loan volume decreased dramatically inbetween two thousand eight and 2010. During that time, subprime and deep subprime lending contracted quicker than the rest of the market. Since early 2010, auto lending as a entire is near prerecession levels. However, subprime lending has not entirely recovered. In the very first quarter of 2017, banks issued just $41.Five billion to subprime borrowers. That’s $6.7 billion less than the average $48.Two billion of subprime auto loans issued each quarter inbetween two thousand five and 2007.

Loan-to-value ratios and auto loan interest rates

One factor that influences auto loan interest rates is the initial loan-to-value (LTV) ratio. A ratio over 100% indicates that the driver owes more on the loan than the value of the vehicle. This happens when a car possessor rolls “negative equity” into a fresh car loan.

Among prime borrowers, the average LTV was 97.91%. Among subprime borrowers, the average LTV was 113.40%. Forty four Both subprime and prime borrowers demonstrate improved LTV ratios from the 2007-2008 time framework. However, LTV ratios enlargened from two thousand twelve to the present.

Research from the Experian Market Insights group forty six demonstrated that loan-to-value ratios well over 100% correlated to higher charge-off rates. As a result, car owners with higher LTV ratios can expect higher interest rates. An Automotive Finance Market report from Experian forty seven displayed that loans for used vehicles with 140% LTV had a Three.03% higher interest rate than loans with a 95%-99% LTV. Loans for fresh cars charged just a 1.28% premium for high LTV loans.

Auto loan term length and interest rates

On average, auto loans with longer terms result in higher charge-off rates. As a result, financiers charge higher interest rates for longer loans. Despite the higher interest rates, longer loans are becoming increasingly popular in both the fresh and used auto loan market.

The average length to maturity for fresh car loans in two thousand seventeen is 67.37 months. Forty eight For used cars, the average is 61.12 months. Forty nine The increase in average length to maturity is driven primarily by a concentration of borrowers taking out loans requiring 61-72 months of maturity. Fifty

In the very first quarter of 2017, just 7.1% of all fresh vehicle loans had payoff terms of forty eight months or less, and 72.4% of all loans had payoff periods of more than sixty months. Fifty one Among used car loans, Legal.5% of loans had payoff periods less than forty eight months, and 58.3% of loans had payoff periods more than sixty months. Fifty two

Auto loan delinquency rates

Despite a trend toward more prime lending, we’ve seen deterioration in the rates and volume of severe delinquency. In the very first quarter of 2017, $8.27 billion in auto loans fell into severe delinquency. Fifty four This is near an all-time high.

Overall, Trio.82% of all auto loans are severely delinquent. Delinquent loans have been on the rise since 2014, and the overall rate of delinquent loans is well above the prerecession average of Two.3%.

Inbetween two thousand seven and 2010, auto delinquency rates rose sharply, which led to a dramatic decline in overall auto lending. So far, the slow increase in auto delinquency inbetween two thousand fourteen and the present has not been associated with a collapse in auto lending. In fact, the total outstanding balance is up 33.4% to $1.167 billion since 2014. Fifty seven

However, the increase in auto delinquency means lenders may proceed to tighten lending to subprime borrowers. Borrowers with subprime credit should make an effort to clean up their credit as much as possible before attempting to take out an auto loan. This is the best way to assure lower interest rates on auto loans.

Three Common Car Loan Mistakes People Make

Trio Mistakes People Make When They Need a Car Loan

Tuesday, July Nineteen, 2016

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Jackie Lam

Jackie Lam is a freelancer writer who covers private finance topics for millennials and Gen X.

Shopping for a car loan can be a financially and mentally draining practice. More than 86% of car buyers used at least some amount of financing to purchase cars in the beginning of 2016, according to the latest data from Experian.

Unluckily, many car buyers make crucial, yet preventable, mistakes when they take out a loan for a fresh car. The MagnifyMoney research team determined to find out just where shoppers are going wrong. We asked more than six hundred car owners a series of questions about how they shopped for a car loan.

The answers we received were pretty troubling, to put it mildly. Read on to see where buyers are going wrong:

1. Too many people let their car dealer do the homework for them.

Almost two-thirds of the drivers we surveyed committed the ultimate auto financing mistake: they let the dealer find their loan.

When you let the dealer determine find the loan for you, you have no way to gauge whether what’s introduced to you is in fact the absolute best suggest you can get. You also forfeit pretty much all of your negotiating power right off the bat. Only about one-third of the borrowers we surveyed shopped online for a loan with a lower interest rate before walking onto the dealer’s lot. Spend some time on comparison websites before you go to the dealership to get the best rate.

[Disclosure: LendingTree is the parent company of MagnifyMoney.]We recommend beginning with LendingTree. There are hundreds of lenders participating on this platform. Once you finish the application, you can then see real interest rates and approval information. Some lenders will do a hard pull on your credit, which is normal within the auto lending space. Recall, with auto loans, numerous hard pulls will only count as one pull. So, in this case, the best strategy is to have all your hard pulls done at once. You can shop for the best rate on LendingTree’s website.

Once you get the rate, you can always attempt to make the dealer give you a better deal. But you should never walk onto the lot without a low rate in your pocket.

“Many otherwise-savvy consumers feel intimidated by the car buying practice and react by letting the dealership take control of the deal,” says Thomas Nitzsche, a credit educator at Clearpoint Credit Counseling. “Some consumers also feel their credit is scarcely good enough to secure an auto loan, so take whatever they are suggested or buy into the dealers telling them that they are doing them a favor.”

Tips on pre-shopping for an auto loan:

Empower yourself by shopping for auto loans before you head to the dealership. When you walk into a dealership with a pre-approved auto loan rate from a bank or credit union, you can use that as leverage. Your dealer will be more inclined to match that rate or find you a better deal, explains Matt DeLorenzo, a managing editor at Kelley Blue Book.

“With the resources available on the internet, from financing to determining what your trade-in is worth, there’s no excuse for walking into a dealership not knowing the prevailing interest rates, what sorts of incentives are out there, and what sort of pricing and what others are paying,” he says.

Have your credit score in mitt to ensure your credit info is accurate. A dealer can lightly say that you don’t qualify for a better rate without having run a decent credit check. You can check your credit score on a number of sites for free.

Don’t shop at the last minute. We can’t predict things like car accidents, but there are steps you can take to be sure you won’t get caught in a desperate car buying situation. Dealers will smell that desperation from a mile away and take total advantage of it. If your car is showcasing signs of needing repairs, take care of them right away. If you’re in a pinch, think about renting a car temporarily, taking public transit or carpooling until you’ve had time to get your ducks in a row.

Two. More than half of car buyers never had their income verified.

Car dealers should verify your income when they take your loan application. But that doesn’t mean they always do. More than 52% of our survey respondents said their income wasn’t verified. When irresponsible dealers don’t verify your income, they could potentially give you a loan that you can’t actually afford. Some dealers skip this step in order to speed up the application process and increase your chances of getting approved for a loan.

To get a sense of what you can reasonably afford to buy, use a free instrument like this cost calculator from Edmunds. It permits you to take into account not just your income but also the value of any car you are trading in, how much you can afford to put down on your fresh car, and any balances on existing car loans. If you go into a dealership knowing what you can afford, they will be less likely to sell you something you know is outside of your budget.

Trio. Most people agreed to a longer-term loan to make their payments more affordable.

A whopping 82.6% of drivers we surveyed said they took out a loan with a term longer than five years to lower their monthly payment. This may seem like a excellent way to save on your monthly payments. But you will wind up paying more in the long run, thanks to interest. Auto loans with longer terms usually carry a higher interest rate. Not remarkably, almost one in five car buyers told us they signed up for a long-term auto loan because it was the dealer’s idea.

“The dealer is going to suggest the longest term possible, because it means selling a more expensive car—and likely [earning] a higher commission,” explains Nitzsche. Because dealers want you to concentrate on the monthly payment and not on the total cost of the car, it’s lighter to mask the total cost of the car by spreading out the length of the loan and lowering the monthly payment.

People with poor credit are much more likely to take out these longer term loans. The fact that poor credit customers also wind up with loans with the highest interest rates, they can actually wind up truly hurting themselves here.

In a worst case script, you could find yourself owing more on your auto loan than the car is actually worth. Fresh cars lose up to 25% of their value every year according to Edmunds. To save the most money, get a loan with monthly payments you can afford for the shortest term possible.

Jackie Lam is a writer at MagnifyMoney. You can email Jackie here

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6 Bad Money Habits That Could Wreck Your Finances — and How to Break Them

Thursday, August 24, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Brittney Laryea

Brittney Laryea is a private finance reporter for MagnifyMoney. She graduated from the University of Georgia’s Grady College of Journalism and Mass Communication and lives in Brooklyn, N.Y.

Bad spending habits — everyone has at least one of them. Maybe for you it’s adding “just one more thing” to your shopping cart, or repeatedly getting smacked with overdraft or late payment fees.

These bad habits may seem innocuous at very first but could lightly turn into financial self-sabotage.

“Breaking a habit like these can be indeed difficult because these habits have developed over the years, and they provide us with psychological convenience and safety,” says Thomas Oberlechner, founder and Chief Science Officer at FinPsy, a San Francisco-based consulting stiff that integrates behavioral expertise into financial services and products.

Oberlechner says the key to overcoming a bad money habit lies in knowing when you’re using the impulsive, right side of your brain — as opposed to the focused, concentrated left side — in financial decision-making.

“It’s truly about psychological practice. It’s about behavior. If we understand the role of emotion, then we have a chance to fix it,” Oberlechner says.

Once you understand yourself and can identify your bad habit, Oberlechner adds, then you can create a plan “that turns your impulsive or unconscious behavior into the healthy financial behavior that [you] actually want.”

Of course, violating any bad habit is lighter said than done.

MagnifyMoney spoke to financial professionals to hear how they and their clients broke their bad habit. See if any of their hacks could help you break yours.

Bad money habit #1: Spending money as soon as you get it

The solution: Automation

If you’re permanently feeling broke just a few days after you receive a paycheck, you may be guilty of this bad money habit. One way to make sure you hold onto some of your cash is to use what the behavioral finance community calls a “commitment device” to lock you into a course of activity you wouldn’t choose on your own, like saving your money.

In this case, the device is automation. Automating your savings won’t help you stop siphoning money from your checking account the same day your direct deposit clears, but it can make sure you save what you need to very first. Check with your bank or the human resources department at work to have a portion of your paycheck automatically sent to a savings account instead of putting the entire sum in your checking account.

You should automate your bills and credit card payments for the pay period, too. Once your obligations are automated, “you can be impulsive with your play money,” says Oberlechner.

Bad money habit #Two: Reaching for your credit card all the time

The solution: A cash diet

Paying for everything you buy with a credit card can be good practice if you pay off your card every month. If you’re chronically swiping your credit card for things you can’t afford to pay off by the next billing cycle, leave your card at home and use cash instead.

When you don’t pay off your card each billing cycle, you rack up interest charges on everyday purchases, and that may cost you a lot more money in the long run. If you’re using more than thirty percent of your total credit limit each month, you may also be harming your credit score.

To break your habit, leave your credit card at home and use cash or a debit card for your purchases.

“Take a certain amount of cash and say ‘I can spend no more than that,’” says Vicki Bogan, an associate professor at Cornell University in Ithaca, N.Y., who researches behavioral finance. “If you have a giant [spending] problem, attempt to limit yourself so that you only have access to a certain amount of money.”

If you indeed want to challenge yourself, you can attempt going on what’s called a spending freeze, where you stop spending any money on non-essentials for a period of time. On top of helping you save money, the freeze can help you notice how much money you may be wasting simply because you’re always pulling out your credit card. After your freeze finishes, you may be less inclined to swipe your credit card.

Another rule that could help you break your swiping habit is the $20 rule. The financial rule of thumb is elementary: Anytime your purchase is less than $20, pay in cash, not credit. The $20 rule compels you to think about whether or not a purchase is worth swiping your card for. Chances are, if what you’re buying costs less than $20, it’s not something you’d be OK paying interest on.

Bad money habit #Trio: Spending beyond your means

Solution: Budgeting

If you chronically spend beyond your means each pay period, you are likely digging yourself into debt. Get a treat on this habit by understanding how much money you have coming in and how much you can afford to spend on a monthly basis. You can use budgeting apps like Mint or YNAB to make that part lighter. These instruments can also help you identify the spending categories that are costing you more than you might realize.

Oak Brook, Ill.-based certified financial planner Elizabeth Buffardi tells MagnifyMoney that after examining one of her client’s expenses she found the client was spending a lot of money at drugstores picking up snacks and little things after work. So the client gave herself a budget of $Ten per drugstore visit to save money.

“We’ve been witnessing her spending at drugstores go down steadily over the last few months,” says Buffardi.

Buffardi had two other clients who struggled with overspending because they loved to shop online. They both created boundaries for themselves when it came time to pay for the items in their online shopping carts. One client determined to buy a certain amount of bounty cards that she could use on a given site.

“If she spent all the bounty cards in the very first day, then she was done until the next paycheck. If she desired something that was more expensive than the amount she had on the bounty cards, she had to hold off on other purchases in order to purchase the more expensive item,” says Buffardi.

The other client simply liquidated her credit card number from her payment profiles so it would be more difficult to make thoughtless purchases. Her theory, Buffardi tells MagnifyMoney, was that if she was coerced to stop and pull out her credit card before she could make the purchase, it might slow her down and give her time to think about the purchase she is about to make and — maybe — stop some purchases from happening.

Bad money habit #Four: Always buying lunch from a restaurant

The solution: Plan your lunches a week in advance

If you’re losing $10-$15 a day to the local deli during the workweek, recall this: You don’t have to buy lunch if you bring it to work with you. However, organizing your day so that you actually have time to prepare and pack your lunch may be where you fight.

Leave room in your busy schedule to pack your lunch in the mornings, or during the evening when you may have more time to yourself.

Melville, N.Y.- based certified financial planner David Frisch says he packs his lunches in the evening because he knows he runs late in the morning. He puts together everything but the dressings and sauces he plans to eat while making dinner, so lunch is already 90% done, then he adds the last ten percent in the morning.

Frisch suggests setting a budget for how much you’d like to spend on food per pay period, then tracking how much money you typically spend on the convenience of frequently going out to lunch. Again, a budgeting app can be handy here to lightly identify places where you spend the most.

Compare that amount to how much you spend on food for entertainment purposes, like going out to dinner with friends over the weekend and for your necessities, like eating lunch to fuel your workday.

“If you are spending so much money on convenience, you have that much less money to spend on everything else,” says Frisch. If you’re spending money from your food budget for convenience purposes, you may be more reluctant to go out on Saturday night for dinner.

If you’re already packing your lunch, but purchase a 2nd lunch because you’re still thirsty or you no longer want to eat what you packed, attempt packing a larger meal or having leftovers for a 2nd lunch.

Bad money habit #Five: Ordering out for dinner because you’re too tired to cook

The solution(s): Prep when you have time/energy; attempt meal delivery services

It’s effortless to spend more than $50 getting dinner delivered three to four days out of the week, or buying groceries that go to waste because you’re too tired to cook. Oberlechner suggests doing some of the “work” of making dinner when you know you have more energy.

“If you’re too tired to cook in the evening, substitute the spontaneous behavior by preparing dinner in the morning. So in the evening you don’t have the work of preparing anything,” he tells MagnifyMoney.

Another hack Oberlechner suggests is making a little extra dinner for the days you know will be especially long, when you won’t want to cook dinner. For example, if you know Tuesday is a indeed long day but Monday is not, cook a little extra on Monday and have those leftovers for dinner on Tuesday.

If cooking dinner simply isn’t a habit for you, you can attempt a meal kit service like Blue Apron, Plated, or HelloFresh to get interested in cooking, suggests Brooklyn, N.Y.- based certified financial planner Pamela Capalad. She tells MagnifyMoney she’s advised many of her clients to sign up for a meal kit service, then transition into grocery shopping and cooking at home regularly.

Generally, the services cost about $Ten to $15 per serving and can serve up to four people.

Bad money habit #6: Letting your kids throw extra things in your shopping cart

The solution(s): Shop solo or lay ground rules early

Frisch says he and his wifey solved this problem with their now 15-year-old triplets when they were four years old.

“Up until they were four we couldn’t bring them to a supermarket because it was unlikely for my wifey and I to see three kids at the same time,” says Frisch. The easiest recommendation, he says, is to have somebody observe them at home while you go do the shopping. You may spend some money on a sitter, but you are also saving money without an antsy child sneaking candy and fucktoys into your shopping cart as well.

If an extra set of mitts at home isn’t available, then attempt to set ground rules before you go to the store. For Frisch, that meant permitting the triplets to get one — just one — extra item at the store.

When a child wished to add something “extra” to the cart, Frisch or his wifey would say, “If you want this now, then you have to put the other one back.”

“Ultimately what happened was they kind of had to make a decision as to which one they would indeed get,” says Frisch.

The triplets quickly realized they could all benefit from working together.

“They actually commenced to communicate and say ‘if you get this and I get this, we can share,’” Frisch told MagnifyMoney. “They just figured out that if they all got one thing and collective, they ultimately all got more than they would have.

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at [email protected]

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Advertiser Disclosure: MagnifyMoney is an advertising-supported comparison service which receives compensation from some of the financial providers whose offers emerge on our site. This compensation from our advertising playmates may influence how and where products show up on the site (including for example, the order in which they show up). To provide more accomplish comparisons, the site features products from our playmates as well as institutions which are not advertising playmates. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

Featured, Health

6 Career Strategies for People Who Are Coping With Depression

Thursday, August 24, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Brynne Conroy

Brynne is the blogger behind FemmeFrugality.

Jana Lynch was twenty seven years old when she was formally diagnosed with depression. The illness wasn’t severe enough for her to begin seeking regular treatment until eight years later, when a scare attack at work sparked a series of events that switched her career — and her finances — forever.

At the time, Lynch was working full-time for a social service agency. “Not only was my anxiety and depression through the roof, making it hard to get out of bed, concentrate on tasks, meet deadlines, communicate with coworkers, and recall meetings, but the nature of my job made it a dangerous environment for my mental health at the time,” she says.

Rather than resign outright, she determined to take a four-month leave on short-term disability. A break, she thought, might help. But when the time came to comeback to work, the same issues began to surface again. In the end, she chose her mental health over working total time.

“Looking back, it was a terrible choice because of the influence on my long-term private finances,” she says. “But in the moment, it was the best decision for me and my family.”

Lynch’s story is not unique. In a two thousand four probe that followed workers over the course of six months, researchers found workers with depression dropped out of the workforce at a rate of twelve percent compared to only two percent of their peers.

While depression may force affected workers out of active employment at higher rates, it is also true that those who become unemployed are more likely to demonstrate signs of depression — three times more likely, according to a two thousand ten NIH examine.

Thomas Richardson, a leading researcher at Solent NHS Trust, one of the largest community providers in the UK’s National Health System, notes that there is most undoubtedly a correlation inbetween unemployment and depression, but that causation is not as effortless to pin down.

“In research such as this it’s always a case of chicken and egg: Which came very first?” he says. “A lot of research is only at one time point, so it’s hard to say which came very first.”

Some research shows losing your job impacts depression because it makes it hard to cope financially, but other studies suggest it has little influence.

“I think it very likely works both ways and is a perverse cycle,” Richardson proceeds. “Someone becomes depressed, fights at work, and loses their job. This then exacerbates their depression further.”

6 Strategies to Manage Depression and Work

Abigail Perry, author of Frugality for Depressives, had already been formally diagnosed with depression as a part of a bipolar disorder when unrelated chronic weariness compelled her out of traditional employment.

“I thought I’d be nothing but a cargo for the rest of my life,” says Perry. “I wondered who would ever want someone who couldn’t pull her own weight financially, and I became suicidal. A lot of therapy and medication management doctor visits later, I eventually began believing that I might have worth despite not being able to work.”

Those fighting with balancing their career and depression need not lose hope.

Richardson notes that many are able to develop coping strategies, permitting themselves to stay in the workplace. He’s developed six key strategies that his research has exposed to be helpful to workers with depression.

1. Intentionally look for work you love.

“Try and do a job you love or are interested in,” Richardson encourages. “If not possible, then attempt and concentrate on those bits of your job you do love.”

Allyn Lewis, lifestyle blogger and storytelling strategist from Pittsburgh, Pa., has learned this mechanism through the course of building her business.

Diagnosed with a depression that was further fueled by her father’s suicide when she was a teenage, Lewis never truly entered the traditional workforce, but has found self-employment to suit her disability.

Her motivating enjoyment comes from the community-based aspect of her business.

“Telling my story and talking openly about my anxiety, depression, and the loss of my dad is what keeps me active in my career,” says Lewis, 26. “That might sound strange, but when I keep my mental health journey to myself, it feels like it’s all about me. And if I’m having a down day, week, or month, what’s it matter if I do the work or get the things done? But, by talking about my mental health and using my own story to raise awareness, it makes it something that’s much fatter than myself.”

Two. Don’t thrust yourself too hard.

“Don’t thrust yourself too hard at work,” says Richardson. “Acknowledge when you are fighting. It’s best to slow down early on than to keep going until you crash.”

Lewis learned this lesson through practice.

“Back in the day when I wielded my own public relations rigid, I would take on any client, under any circumstance, for any amount of money, and I’d make any accommodation or request they asked for. I ended up overbooked, underpaid, and at a point that was way beyond burnt out,” Lewis says.

“I kept attempting to thrust my anxiety and depression aside to pretend like it wasn’t getting in the way, but the best thing I ever did was beginning to tune into what my mental health was telling me. Only then was I able to shift into a business model that worked for me.”

Three. Ask for help — and know your rights.

Richardson recommends going to your manager or supervisor for access to resources when your symptoms become too much to bear. If you work at a larger company, it may be more suitable to get in touch with your human resources department.

This can seem intimidating, as you don’t want to give your superiors any reason to question your work ethic or your capability to provide value to the company.

But Perry, who now works utter time in a remote position, notes that depression is covered by the Americans with Disabilities Act (ADA). This means your employer cannot fire you because of your disability — in this case, depression — and that they have to provide reasonable accommodations in order to permit you to do your job.

“Even if you don’t ask for accommodations, you need to make it clear that your absences or other work difficulties are based on a real medical condition,” Perry says. “Imagine being a supervisor with an employee who takes a lot of sick days, or may be lightly agitated by interpersonal interaction or extra stress. In a vacuum, that’s a problem employee. Understanding the context, that’s someone who is doing their best to be a good employee despite a disability.”

Four. Keep a healthy perspective on your career goals.

“It’s effortless in a career to concentrate on goals, but this makes you vulnerable to depression,” says Richardson. “If you don’t get that promotion it might indeed influence you and lead to self-critical thoughts which fuel depression.”

He recommends instead harkening back to why you love your work and the current position you’re in.

Lynch, who presently works as a freelance writer and editor, relates to the depression that can be felt when career expectations aren’t met.

“I attempt hard not to get angry at myself if I didn’t do as much as I’d like, or if my inbox isn’t bursting with inquiries,” says Lynch, “which is hard to deal with when you like to work and tie your work to your self-worth. But depression makes it difficult to look for clients. It’s a horrible, perverse cycle that I deal with only by telling myself this is makeshift. It will get better at some point.”

Five. Nurture hobbies and social contacts.

Lynch and Lewis both note exercise as a way of sustaining a healthy hobby. Lewis trains yoga, and Lynch regularly attends a gym. While not the primary objective, a side effect of going to the gym or studio happens to be spending time with other people of similar interests.

Nurturing hobbies and maintaining social contacts are significant from Richardson’s research — even if doing so originally feels terrific.

6. Practice mindfulness.

Eventually, Richardson recommends practising mindfulness, even when you’re not in the throes of depression. Emerging research suggests that mindfulness may not only alleviate depression, but could prevent relapses.

Richardson has produced a free mindfulness resource, which can be accessed here.

Depression and Your Finances

Career and finance often go forearm in palm, so it’s no surprise that the ripple effects of depression can often extend into your finances as well.

By understanding and confronting these challenges head-on, there are strategies you can use to protect your finances as you learn to manage depression.

In a latest probe published in the British Psychological Society’s Clinical Psychology Forum, Richardson studied people with bipolar disorder as they were going through a depressive gig. During these scenes, he found four key ways that their finances suffered.

Missing bills

Lynch notes that before she set up automatic payments, she would have trouble remembering pay upcoming bills. She’d get her statements, but overlook them. This led to unnecessary costs like late fees.

Richardson’s examine finds that this behavior is typical for depressives. It found that missing bills was a financial manifestation of avoidant coping behaviors. In order to avoid being late on charges you may not know or reminisce exist, it’s significant to get in the habit of confronting through that pile of mail as you establish the habit of paying through automation.

Poor planning

“It can be firmer to keep track of your finances when things get raunchy,” relates Perry. “Monitoring spending, keeping up with due dates — it’s tiring even in good conditions. If you spend more because of depression, or if you simply don’t keep as close of an eye on things, your budget could take a big hit.”

Perry’s insights are congruent with Richardson’s findings. Those with depression have a tighter time completing tasks like budgeting because planning ahead is made more difficult. The probe also exposed that rational thinking and the capability to recall past purchases in order to log them into a spreadsheet were impaired.

Convenience spending

Perry says that when you’re depressed, you’re more likely to get caught up in convenience spending.

“This could be anything from convenience or junk food, which adds up, or going out for drinks, dinner, or entertainment. Alternately, you may be more likely to spend money on things that you think will make you glad or comforted — from convenience gadgets to home décor to clothes.”

Richardson adds the example of being overly generous with one’s family as an example of convenience spending.

Compounding anxiety

Richardson’s probe finds that financial stress compounds anxiety and depression. This stress leads to more dire mindsets, like extreme anxiety and hopelessness.

“As a business possessor, there’s always so much pressure around profit,” says Lewis. “Even when you’re up, you never know how long it will last, so you have to keep hustling. When I’m going through a period of depression, this puts me in a cycle of ‘I’m never making enough,’ which is a thought that likes to pair itself with ‘I’m not good enough.’ Depression has a sneaky way of switching my mindset from one of abundance to one of scarcity.”

Lewis’s reports of low self-worth are also common, according to Richardson’s work. Self-criticism over “economic inactivity” was detected in investigate participants.

Seeking Mental Health Care

For help developing more coping strategies or getting resources that can help you manage your depression, consider seeking out mental health care services.

“I think all depressives — especially ones who aren’t on medications — should have therapists,” says Perry. “It may take a few attempts to find someone you work well with, but then that person will be a superb lifeline. Therapists can help you deal with the things that depression makes firmer with strategies, workarounds, or just working through past events that are contributing to or causing your current depression.”

Therapy and medication management specialists can be expensive, tho’. Many regions in America face a shortage of mental health care providers, and the matter is further complicated when you consider that some providers may be out-of-network, bringing copays up even if you are presently insured.

Related article: five ways to find lower the cost of therapy

If you can’t figure out how to fit these services into your budget, seek out therapists who suggest sliding-scale payment options based on your income. Another affordable resource is public mental health care clinics, tho’ their availability may be limited.

If you have insurance and don’t instantly need medication, keep in mind that a mental health care professional may not have an M.D. or Ph.D. after their name. Licensed Clinical Social Workers (LCSWs) and other counselors often accept insurance and are able to provide therapy, referring you out to a psychiatrist for prescription needs when necessary.

Lynch did seek therapy and go on medication for a while, however she now leans on other coping mechanisms such as avoiding triggers and exercising regularly.

“I recommend it if you feel you need it,” she says. “There is no shame in getting whatever kind of help you need.”

Today, Lynch operates from a place of acceptance. Depression is a part of her life that she has learned to deal with. While she doesn’t categorize herself as what we would consider classically “happy,” she does consider herself to be as content as possible, and actively seeks out happiness within her circumstances.

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne at [email protected]

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Advertiser Disclosure: MagnifyMoney is an advertising-supported comparison service which receives compensation from some of the financial providers whose offers show up on our site. This compensation from our advertising fucking partners may influence how and where products emerge on the site (including for example, the order in which they emerge). To provide more accomplish comparisons, the site features products from our fucking partners as well as institutions which are not advertising playmates. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

Featured, Life Events, News

How to Get ‘Unstuck’ From Your Starter Home

Thursday, August 24, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Bob Sullivan

Bob Sullivan is an award winning American online journalist, author and one of the founding members of msnbc.com.

Andrew Cordell bought his very first home at the worst possible time — ten years ago, right before the housing bubble burst.

He’s not going to make that mistake again.

“We had instant fear put in us as homeowners,” says Cordell, 40. “We know how dangerous this can be.”

So the petite “starter home” he purchased in Kalamazoo, Michigan back in two thousand seven now feels just about the right size.

“When we bought, we figured we’d get another home in a few years,” he says. “But the more we lodged, the more we thought, ‘Do we indeed need more space?’ We don’t actually need a large chest freezer or a large yard. Kalamazoo has a lot of parks.”

Evidently, slew of homeowners feel the same way.

It’s a phenomenon some have called “stuck in their starter homes.” Bucking a decades-long trend, youthfull homeowners aren’t looking to trade up — they’re looking to stay put. Or they are coerced to.

According to the National Association of Realtors, “tenure in home” — the amount of time a homebuyer stays — has almost doubled during the past decade. From the 1980s right up until the recession, buyers stayed an average of about six years after buying a home. That’s hopped to ten years now.

Other numbers are just as dramatic. In 2001, there were 1.8 million repeat homebuyers, according to the Urban Institute. Last year, there were about half that number, even as the overall housing market recovered. Before the recession, there were generally far more repeat buyers than first-timers. That’s now reversed, with first-time buyers dwarfing repeaters, 1.Four million to one million.

This is no mere statistical curiosity. Trade-up buyers are critical to a smooth-functioning housing market, says Logan Mohtashami, a California-based loan officer and economics pro. When starter homeowners get gun-shy, home sales get stuck.

“Move-up buyers are especially significant … because they typically provide homes to the market that are suitable for first-time buyers,” he says. When first-timers stay put, the share of available lower-cost housing is squeezed, making life firmer for those attempting to make the leap from renting to buying.

Getting unstuck from your starter home

There are slew of potential causes for this stuck-in-a-starter-home phenomenon — including the fear Cordell describes, families having fewer children, fast-rising prices, and vapid incomes. But Mohtashami says the main cause is a hangover from the housing bubble that has left first-time buyers with very little “selling equity.”

Buyers need at least twenty eight to thirty three percent equity to trade into a larger home, and often closer to forty percent, he says. Those who bought in the previous cycle might have seen their home values recover, but many purchased with low down payment loans, leaving them still equity poor.

That wasn’t such a problem before the recession, as lenders were blessed to give more aggressive loans to trade-up buyers. Not any more.

“In the previous cycle you had exotic loans to help request. Now you don’t. [That’s why] tenure in home is at an all-time high,” Mohtashami says. “Even families having kids aren’t moving up as much.”

Fast-rising housing prices don’t help the trade-up cause either. While homeowners would seem to benefit from increases in selling price, those are washed away by higher purchase prices, unless the seller plans to stir to a cheaper market.

“You’re always attempting to catch up to a higher priced home,” Mohtashami says.

Cassandra Evers, a mortgage broker in Michigan, says she’s seen the phenomenon, too.

“It’s not for lack of want. It seems to be the inability to afford the cost of the fresh home,” she says. “It’s not the interest rate that’s the problem, obviously because those are at historic lows and artificially low. It’s because to buy a ‘bigger and better house,’ that house costs significantly more than their current home. The cost of housing has skyrocketed.”

There’s also the very practical problem of timing. In a fast-rising market, where every home sale is competitive, it’s effortless to lose the game of musical chairs that’s played when a family must sell their home before they can buy a fresh one.

“Folks are worried about selling their current house in one day and being incapable to find a suitable replacement swift enough,” Evers says.

Cordell, who lives with his wifey and eight-year-old son, says the family considered a stir a few years ago and shortly looked around. But they quickly concluded that staying put was the right choice.

“We looked at some homes and we thought, ‘I guess we could afford that. But we don’t want to be house broke’,” he says. “We don’t want to take on so much debt that ‘What else are we able to do?’ What if one of us loses our job? I guess you could say we have a Depression-era sensibility. … Who would want to get upside down on one of these things?”

The Urban Institute says this stuck-in-starter-home problem shows a few signs of abating recently. Repeat buyers were stuck around 800,000 from two thousand thirteen to 2014. Last year, the number pierced one million. But that’s still far below the 1.Five million range that held consistently through the past decade.

There are other signs that ease might be on the way, too. ATTOM Data Solutions recently released a report telling that one in four mortgage-holders in the U.S. are now equity rich — values have risen enough that owners hold at least fifty percent equity, well above Mohtashami’s guideline. Some 1.6 million homeowners are freshly equity rich, compared to this time last year, and five million more than in 2013, ATTOM said.

“An enlargening number of U.S. homeowners are amassing exceptional stockpiles of home equity wealth,” says Daren Blomquist, senior vice president at ATTOM Data Solutions.

So perhaps pent-up repeat homebuying request might re-emerge. Evers isn’t so sure, however.

“Most folks I talked with are no longer interested in being house poor and maxing out their debt to income ratios. They seem to be staying put and pushing money into their retirement accounts,” Evers says.

The Cordells are content where they are in Kalamazoo and plan to stay long term. If anything would make them budge, it’s not growing home equity but a growing family.

“If we ended up with a 2nd (kid), I suppose we’d have to look,” Cordell mused. “But we have no plans for that.”

Four Signs You’re Ready to Trade Up Your Home

• YOU’VE GOT Slew OF EQUITY: Your home’s value has risen enough that you securely have at least twenty eight percent equity and, preferably, more like thirty five to forty percent.
• YOU’RE EARNING MORE: Your monthly take-home income has risen since you bought your very first home by about as much as your monthly payments (mortgage, interest, insurance, taxes, condo fees, etc.) would rise in a fresh home.
• YOU STAND TO MAKE A HEALTHY PROFIT: You are certain that if you sell your home, you’d walk away from closing with at least thirty percent of the price for your fresh home — or you can top up your seller profits to that level with cash you’ve saved for a fresh down payment. That would let you make a standard twenty percent down payment and have some left over for surprise repairs and moving costs that will come with the fresh place. Recall, transaction costs often surprise buyers and sellers, so be sure to build them into your calculations.
• YOU CAN Treat THE RISK: You have the belly for the game of musical chairs that comes with selling then buying a home in rapid succession. Also, if you are in a hot market, you have extra cash to outbid others or a place for your family to stay in case there’s a time gap inbetween selling and buying.

Bob Sullivan is a writer at MagnifyMoney. You can email Bob here

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Featured

Under Pressure: one in five Parents Will Go into Debt to Send Kids Back to School

Tuesday, August 22, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Hannah Rounds

is a freelance writer and quantitative marketing consultant. Hannah founded the site Unplanned Finance.

After a long summer break, many parents feel impatient to send their kids back to school. But back to school can translate into debt, according to a latest MagnifyMoney national survey of more than seven hundred parents. More than one in five parents will go into debt to pay for back-to-school expenses. And more than half (55 percent) of parents who are going into debt say they feel pressure to buy fresh things for their kids during the back-to-school time compared to just twenty nine percent for parents not going into debt.

It’s no question that back-to-school clothes, supplies, and gear can put a dent in a family’s budget. Almost three in four parents will spend more than $100 on back-to-school supplies this year, and almost one in four will spend more than $500.

Key insights

• 55 percent of parents who are going into debt say they feel pressure to buy fresh things for their kids for back to school (versus twenty nine percent for parents not going into debt)
• Almost half (44 percent) of parents are spending over $300 on back to school.
• Midwest parents are least likely to feel pressure to buy fresh things for their kids (30 percent) compared to forty three percent in the Northeast and thirty eight percent in the South and West.
• Parents in the South are most likely to spend $500 or more on back to school (28 percent) compared to twenty five percent in the Northeast, twenty percent in the Midwest, and twenty one percent in the West.
• 41 percent of parents who feel stress about back-to-school shopping expect to go into debt for back-to-school shopping.
• Just thirty six percent of parents who will go into debt feel the cost of school supplies required is reasonable. Fifty two percent of parents who don’t expect to go into debt for back-to-school shopping feel the cost is reasonable.
• 65 percent of parents going into debt plan to spend $300 or more, compared to thirty eight percent of those not going into debt. And thirty seven percent of those going into debt plan to spend $500 or more, versus twenty one percent of those not going into debt.

Pressure to spend

The survey indicated that for parents expecting to take on debt, back-to-school shopping is fraught with negative emotion. Almost a third (33 percent) of parents who expect to go into debt for back-to-school shopping feel the cost of expected school supplies is unreasonable. Just one in five parents who won’t go into debt feel the same way. With school supplies pushing one in five families into debt, it’s no wonder that so many feel the costs are unreasonable — that’s especially true for families already carrying credit card debt into the back-to-school season.

According to the two thousand fifteen Report on the Economic Well-Being of U.S. Households, thirty one percent of American households carry credit card debt all year round, and twenty seven percent of households carry credit card debt from time to time. A MagnifyMoney analysis showcased that households carrying credit card debt have an average balance of $7,700. Adding several hundred dollars to an existing credit card debt can make the entire debt feel unmanageable.

In the survey, taking on debt is one of the leading indicators for feeling back-to-school shopping stress. Parents taking on debt were almost three times as likely to feel that back-to-school shopping was stressfull compared to those who were not. A third of parents going into debt feel that back-to-school shopping is stressfull, but just twelve percent of parents not going into debt feel the same.

The stress doesn’t come just from crowded malls and added debt. Instead, it comes from social pressure to take on debt and buy fresh things for kids. Over half (55 percent) of parents who are going into debt feel pressure to buy fresh things for their kids during the back-to-school time framework. Less than three in ten (29 percent) parents who aren’t going into debt feel that same pressure.

The pressure to go into debt for kids doesn’t just occur during back-to-school time. Almost half (46 percent) of all moms admit to going into debt for child-rearing costs, according to the two thousand fifteen Cost of Raising a Child survey from BabyCenter.com. The pressure to give kids better lives (and better school supplies) can lead parents to make expensive decisions, including going into debt.

Store cards and debt

Most parents, ninety three percent, use traditional credit cards or cash to pay for back-to-school items. Only a puny percentage plan to use retail credit cards (like the Target RedCard) to pay for back-to-school items. However, parents going into debt are more than three times as likely to use store credit cards as parents not going into debt (15 percent vs. Five percent).

With coupons, points, and cash prizes, store credit cards can feel enticing, but the interest rates on store cards are bruising.

Retail credit cards have notoriously high interest rates. Presently, Target REDcard and the Walmart Credit Card have interest rates of 22.9 percent, and the Kohl’s credit card is 24.99 percent.

Financing $300 on a store credit card (with a 22.9 percent APR) means that a parent will spend $38.50 on extra interest if they pay off the loan over the course of the year compared to a regular card.

Real Cost of Back-to-School Spending on Store Credit Cards (22.9 percent APR)

Overall, thirty three percent of parents use traditional credit cards to pay for back-to-school items, including thirty seven percent of parents planning to take on debt. These parents will likely yield substantial interest rate savings by choosing to use a traditional credit card rather than a store card. Presently, the average interest rate on a credit card is fourteen percent, according to the Federal Reserve Bank of St. Louis, but people with decent credit can find slew of zero percent APR interest rate offers.

Avoiding cards and debt

Parents who avoid debt tend to avoid plastic altogether. Over three in five (63 percent) parents who don’t expect back-to-school debt won’t spend on credit or retail cards.

As a group, avoiding plastic seems to keep spending down as well — sixty two percent of parents who eschew plastic will spend less than $300 on back-to-school supplies. By comparison, just fifty three percent of parents using plastic will spend less than $300.

Only thirty one percent of parents who are avoiding debt will spend on a credit card and reap prizes points or cash back options. It might seem like this group is missing out on good deals, but they may just concentrate their attention on thicker saving opportunities. Two-thirds of parents who won’t use plastic this season will take advantage of back-to-school sales.

Survey methodology

MagnifyMoney.com commissioned Google Consumers Surveys to obtain online survey data with seven hundred parents living in the United States with children going back to school. Interviews were conducted online via Google Surveys in English during August 5-8, 2017. Statistical results are weighted to correct known demographic discrepancies. The margin of sampling error was plus or minus Five.Three percentage points for the seven hundred two people who said they felt stress during back-to-school shopping.

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah at [email protected]

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Featured, Strategies to Save

What Your Teenage Should Do With Their Summer Earnings

Friday, August Legal, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Aja McClanahan

Aja McClanahan is a individual finance blogger and founder of www.principlesofincrease.com.

According to a two thousand seventeen survey released by the National Financial Educators Council, 54% of respondents (all eighteen years and older) said a course in money management in high school would benefit their lives. Another survey — the most latest from the Program for International Student Assessment — reports that only about 10% of U.S. 15-year-olds are skilled in individual finance matters, falling in the middle among the fifteen countries studied. The message is clear: Youthful Americans need to learn more about money and managing it wisely. One way to commence them off is providing them hands-on practice with their own money. Inject the summer job.

Having a summer job can be a good introduction to adulthood for many reasons: The discipline, obedience to management, team work, and a regular paycheck are just a few of the things a teenager will get used to with their very first summer job.

It’s also a good way to introduce kids to the real world of money. Tho’ the money your teenage earns is technically theirs, as a parent, you should use summer job earnings as an chance to help your kids form good habits with money. There’s no better time to display them the value of money than in the crucial years before they’ll be saddled with obligations like student loans, car notes, and mortgages.

Here are a few ways to make sure your teenage will get the most out of their money-making practice that will keep them money savvy for years to come.

Pay their fair share

Once your teenage embarks making money, you’ll to want consider how they can begin to cover certain expenses. You’ll be tempted, no doubt, to let your teenage keep their hard-earned money for themselves. Trust this process. If the purpose is to raise money-smart kids who become even savvier adults, there will have to be simulations of the real world that include actually paying for things

If your teenage uses the car, consider having them cover a portion or all of their car insurance bill. Another option is to have them contribute to their cellphone bill or even some of the Wi-Fi they use.

Having expenses is a real part of life, so it’s better to help them understand that now rather than later when ignorance isn’t so blissful.

If the thought of making your child pay for expenses bothers you, consider a different treatment: Instruct them about the costs of everyday life by asking them to cover their portion of a bill, but take that money and put it away for them. You can save up all that money and, as a nice gesture, give it to them when they need it most, like when they go away to college or ultimately leave the nest to launch out into the real world.

Open bank accounts

While many families do not have access to or elect not to participate in the traditional banking system — it’s estimated that 27% of U.S. households are unbanked or underbanked — you’d ideally want to get your teenage familiar with banks and how they work. However check use has been on the decline since the mid-1990s, it’s still significant for teenagers to learn how to write a check, along with keeping a checkbook register. Sure, this practice very likely won’t last long, as electronic payments and money management apps proceed to grow, but this treatment gives your kids the gist of how to keep track of their cash flow.

While your teenage has a bank account, you’ll also get them used to understanding how a debit card works. They’ll get familiar with how effortless it is to swipe for things they want, yet how difficult it can be to replenish their account with the money they’re making at their job.

Eventually, you’ll want to make sure that your teenage opens a savings account. In most states, a person can open a bank account when they become Legal. For junior teenagers, many banks have special teenage or kid accounts that a child can share with their parents. Co-owned checking accounts can be opened as youthful as 13, while custodial savings accounts can be opened at any age.

Developing good habits around saving and managing money takes time and some getting used to. So using their summer earnings would be a flawless chance to get into the groove of budgeting for expenses and managing money through a bank account.

Set money goals

Once money starts to flow into your kid’s mitts, seize the moment and get them to see the fatter picture. Summer money is fine, but paying for life will take much more than what your teenage earns from a few hours of work in a bike shop. Begin to showcase them the cost of things like college, cars, homes, and luxuries like vacations or hobbies.

Once you compare the costs with their summer job earnings, it should help them come to conclusions about how money works: The more you have, the more you can do. The idea is to inspire them to increase their earning potential with implements like education or savings to invest in income-producing assets.

Another result of these conversations could be your teenage realizing they’ll want to commence saving up for life sooner than later. They may determine to put away money for the purpose of paying for school or their very first condo.

Ron Lieber, Fresh York Times financial columnist and author of the book The Opposite of Spoiled, says parents should prompt their kids with an instant aim like having a college fund. “The best thing to do is to use any earnings to begin a conversation with parents about college, if your teenage plans on going,” Lieber says.

Lieber suggests questions to guide the conversation:

• How much of your college expenses will be covered by parents versus the child?
• How much have the parents saved for the child’s college expenses?
• How much are kids/parents willing to borrow or spend out of their current income?

According to Lieber, “The answers to these questions may cause a teenage to save everything, if they think it will help them avoid debt in their effort to attend their wish college.”

No matter how makeshift their summer job is, you’d do well to use it as a springboard for more conversations about money. Whatever their long-term money goals are, it’s never a bad idea to begin working toward them early on.

Learn compound interest

While your teenage is making all of those big money goals, you could drive the point home with a lesson in compound interest. Using a compound interest calculator, you can demonstrate your teenager many screenplays where interest can either work for or against them.

Run screenplays around savings for big-ticket items versus financing them. The math will speak volumes:

In the above screenplay, you’d end up paying a total of $226,815 in interest. That same amount ($226,815) invested for thirty years with a moderate Trio.5% come back yields over $636,000!

Watching these numbers in act should motivate your teenage to embark a savings habit that they will maintain via adulthood.

If they are indeed excited about the prospects of compound interest working on their behalf, encourage them to open their own IRA to begin investing themselves. This way, they’ll not only understand the theory of investing but also get hands-on practice with it. After all, the time value of money works even better when you’ve got more time. Investing as a teenage could set the stage for copious comebacks later on in life.

Create a budget

Making money can be the joy, somewhat effortless part of a summer job. Figuring out how to spend it can be difficult. Make your teenage prioritize needs and wants by learning to create a budget. A good practice would be to have your teenage make a list of things they’ll spend money on versus how much money they will bring in. You could also introduce them to a money-management app — here are some of the best ones.

This will help them understand the finite nature of money and how their current cash flow stacks up against their current earnings.

Have joy

According to Brian Hanks, a certified financial planner in Salt Lake City, “Don’t be worried if your teenage ‘blows’ a portion of their earnings on things you consider to be worthless.” Hanks goes on to say that it’s better to make money mistakes as a youngster: “Everyone needs to learn raunchy money lessons in life, and learning them as a teenage when the consequences are relatively petite can save fatter heartache down the road.”

A summer job should be joy and low-stress, but it can also be used as a learning practice that prepares your teenage for the real world. If your teenage turns out to be a terrible budgeter or extreme spendthrift, give them more than a summer to learn better ways. Reminisce, they’ll have the rest of their lives to proceed gripping and mastering money concepts.

Aja McClanahan is a writer at MagnifyMoney. You can email Aja here

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Auto Loan, Featured, News

Auto Loan Interest Rates and Delinquencies: two thousand seventeen Facts and Figures

Thursday, August 17, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Hannah Rounds

is a freelance writer and quantitative marketing consultant. Hannah founded the site Unplanned Finance.

Led by a prolonged period of low interest rates, consumers now have a record $1.Two trillion one in outstanding auto loan debt. Despite record high levels of issuance, the auto lending market shows signs of tightening. With auto delinquencies on the rise, consumers are facing higher interest rates on both fresh and used vehicles. In particular, over the last three years, subprime borrowers eyed rates rise quicker than the market as a entire. MagnifyMoney analyzed trends in auto lending and interest rates to determine what’s indeed going on under the rubber hood of automotive financing.

Key insights

1. Overall auto delinquency is on the rise, and the very first quarter of two thousand seventeen witnessed near record levels of fresh auto loan delinquency rates. 54
2. Interest rates are on the rise, with average fresh car loan rates up to Four.87%, sixty basis points from their lows in late 2013. Two
3. The average duration of auto loans (fresh vehicles) is a record 67.37 months, reducing the monthly payment influence of higher interest rates. 31

Facts and figures

• Average Interest Rate (Fresh Car): Four.87% Two
• Average Interest Rate (Used Car): 8.88% Trio
• Average Loan Size Fresh: $29,314 Four
• Average Loan Size Used: $17,180 Five
• Median Credit Score for Car Loan: seven hundred six 6
• % of Auto Loans to Subprime Consumers: 31.34% 7

Subprime auto loans

• Total Subprime Market Value: $229 billion 8
• Average Subprime LTV: 113.4% 9
• Average Interest Rate (Fresh Car): 11.05% Ten
• Average Interest Rate (Used Car): 16.48% 11
• Average Loan Size (Fresh Car): $28,099 12
• Average Loan Size (Used Car): $16,026 13
• % Leasing: 25.9% 14

Prime auto loans

• Total Prime Market Value: $717 billion 15
• Average Prime LTV: 97.91% 16
• Average Interest Rate (Fresh Car): Trio.77% 17
• Average Interest Rate (Used Car): Five.29% Legitimate
• Average Loan Size (Fresh Car): $32,153 Nineteen
• Average Loan Size (Used Car): $20,778 20
• % Leasing: 37.4% 21

Auto loan interest rates

Interest rates for auto loans proceed to remain near historic lows. As of the very first quarter of 2017, interest rates for used cars was 8.88% on average. The average interest rate on fresh cars (including leases) is Four.87%. However, the low average rates belie a tightening of auto lending, especially for subprime borrowers.

Fresh loan interest rates

Consumer credit information company Experian reports that the average interest rate on all fresh auto loans was Four.87%, up six basis points from the previous year. Twenty four The petite interest rate increase masks a larger underlying tightening in the auto loan market for fresh vehicles.

During the last year, lenders tilted away from subprime borrowers. Just Ten.88% of fresh loans went to subprime borrowers compared to 11.41% the previous year. The movement away from subprime borrowers led to a smaller increase in fresh car interest rates compared to if car rates had stayed the same. Twenty five

Across all credit scoring segments, borrowers faced higher average borrowing rates. Subprime and deep subprime borrowers spotted the largest absolute increases in rate hikes, but super prime borrowers also eyed an eighteen basis point increase in their borrowing rates over the last year. The average interest rate for super prime borrowers is now Two.84% on average, the highest it’s been since the end of 2011. Twenty seven

When comparing credit scores to lending rates, we see a slow tightening in the auto lending market since the end of 2013. The trend is especially pronounced among subprime and deep subprime borrowers. These borrowers face auto loan interest rates growing at rates quicker than the market average. Consumers should expect to see the trend toward slightly higher interest rates proceed until the economic climate switches.

Even with the tightening, interest rates remain near historic lows, but that doesn’t mean consumers are paying less interest on their vehicle purchases. The estimated cost of interest on fresh vehicle purchases is now $Four,223, twenty nine up 42% from its low in the third quarter of 2013.

Growth in interest paid over the life of the loan stems from longer loans and higher average loan amounts. The average maturity for a fresh loan grew from 62.Five months in the third quarter of two thousand eight to 67.Four months in early 2017. Thirty one During the same time, average loan amounts for fresh vehicles grew 14.7% to $29,134. Thirty two

Used loan interest rates

Over the past year, interest rates for used vehicles fell by thirty five basis points to 8.88%. The drop in average interest rates came from a dramatic increase of prime borrowers injecting the used car financing market. In 2017, 47.4% of used car borrowers had prime or better credit. The year before, 43.99% of used borrowers were prime. Thirty four

On the entire, borrowers in the used car market face almost identical rates to this time last year. Super prime and prime borrowers spotted upticks of fifteen basis points and four basis points, respectively. This brought the average super prime borrowing rate up to Three.56% for used vehicles, and the prime rate to Five.29%. Thirty six

On the other end of the spectrum, subprime and deep subprime borrowers eyed their interest rates fall by approximately ten basis points year over year. Despite the decrease, interest rates for these borrowers are up a dramatic two hundred fifty basis points (Two.5%) from their two thousand eight rates.

Albeit average interest rates on used vehicles proceed to fall, the estimated interest paid on a used car loan rose $12 from the previous year to $Four,046. The increase in overall interest is part of a larger trend. Over the past four years, estimated interest on used cars was 8.4%. Almost all of the increase comes from longer average loan terms (61 months vs. Fifty seven months), thirty eight leading to more interest paid over the life of a car loan.

Auto loan interest rates and credit score

As of March 2017, the median credit score for all auto loan borrowers was 706. Forty A credit score of seven hundred six is just bashful of the prime credit rating (720). This is the highest median rate since the very first quarter of 2011.

In the very first quarter of 2017, just 31% of all auto loans were issued to subprime borrowers compared with an average of 35% over the past three years.

Total auto loan volume decreased dramatically inbetween two thousand eight and 2010. During that time, subprime and deep subprime lending contracted swifter than the rest of the market. Since early 2010, auto lending as a entire is near prerecession levels. However, subprime lending has not downright recovered. In the very first quarter of 2017, banks issued just $41.Five billion to subprime borrowers. That’s $6.7 billion less than the average $48.Two billion of subprime auto loans issued each quarter inbetween two thousand five and 2007.

Loan-to-value ratios and auto loan interest rates

One factor that influences auto loan interest rates is the initial loan-to-value (LTV) ratio. A ratio over 100% indicates that the driver owes more on the loan than the value of the vehicle. This happens when a car possessor rolls “negative equity” into a fresh car loan.

Among prime borrowers, the average LTV was 97.91%. Among subprime borrowers, the average LTV was 113.40%. Forty four Both subprime and prime borrowers demonstrate improved LTV ratios from the 2007-2008 time framework. However, LTV ratios enlargened from two thousand twelve to the present.

Research from the Experian Market Insights group forty six showcased that loan-to-value ratios well over 100% correlated to higher charge-off rates. As a result, car owners with higher LTV ratios can expect higher interest rates. An Automotive Finance Market report from Experian forty seven displayed that loans for used vehicles with 140% LTV had a Trio.03% higher interest rate than loans with a 95%-99% LTV. Loans for fresh cars charged just a 1.28% premium for high LTV loans.

Auto loan term length and interest rates

On average, auto loans with longer terms result in higher charge-off rates. As a result, financiers charge higher interest rates for longer loans. Despite the higher interest rates, longer loans are becoming increasingly popular in both the fresh and used auto loan market.

The average length to maturity for fresh car loans in two thousand seventeen is 67.37 months. Forty eight For used cars, the average is 61.12 months. Forty nine The increase in average length to maturity is driven primarily by a concentration of borrowers taking out loans requiring 61-72 months of maturity. Fifty

In the very first quarter of 2017, just 7.1% of all fresh vehicle loans had payoff terms of forty eight months or less, and 72.4% of all loans had payoff periods of more than sixty months. Fifty one Among used car loans, Legitimate.5% of loans had payoff periods less than forty eight months, and 58.3% of loans had payoff periods more than sixty months. Fifty two

Auto loan delinquency rates

Despite a trend toward more prime lending, we’ve seen deterioration in the rates and volume of severe delinquency. In the very first quarter of 2017, $8.27 billion in auto loans fell into severe delinquency. Fifty four This is near an all-time high.

Overall, Three.82% of all auto loans are severely delinquent. Delinquent loans have been on the rise since 2014, and the overall rate of delinquent loans is well above the prerecession average of Two.3%.

Inbetween two thousand seven and 2010, auto delinquency rates rose sharply, which led to a dramatic decline in overall auto lending. So far, the slow increase in auto delinquency inbetween two thousand fourteen and the present has not been associated with a collapse in auto lending. In fact, the total outstanding balance is up 33.4% to $1.167 billion since 2014. Fifty seven

However, the increase in auto delinquency means lenders may proceed to tighten lending to subprime borrowers. Borrowers with subprime credit should make an effort to clean up their credit as much as possible before attempting to take out an auto loan. This is the best way to ensure lower interest rates on auto loans.

Trio Common Car Loan Mistakes People Make

Three Mistakes People Make When They Need a Car Loan

Tuesday, July Nineteen, 2016

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Jackie Lam

Jackie Lam is a freelancer writer who covers private finance topics for millennials and Gen X.

Shopping for a car loan can be a financially and mentally draining practice. More than 86% of car buyers used at least some amount of financing to purchase cars in the beginning of 2016, according to the latest data from Experian.

Unluckily, many car buyers make crucial, yet preventable, mistakes when they take out a loan for a fresh car. The MagnifyMoney research team determined to find out just where shoppers are going wrong. We asked more than six hundred car owners a series of questions about how they shopped for a car loan.

The answers we received were pretty troubling, to put it mildly. Read on to see where buyers are going wrong:

1. Too many people let their car dealer do the homework for them.

Almost two-thirds of the drivers we surveyed committed the ultimate auto financing mistake: they let the dealer find their loan.

When you let the dealer determine find the loan for you, you have no way to gauge whether what’s introduced to you is in fact the absolute best suggest you can get. You also forfeit pretty much all of your negotiating power right off the bat. Only about one-third of the borrowers we surveyed shopped online for a loan with a lower interest rate before walking onto the dealer’s lot. Spend some time on comparison websites before you go to the dealership to get the best rate.

[Disclosure: LendingTree is the parent company of MagnifyMoney.]We recommend beginning with LendingTree. There are hundreds of lenders participating on this platform. Once you accomplish the application, you can then see real interest rates and approval information. Some lenders will do a hard pull on your credit, which is normal within the auto lending space. Reminisce, with auto loans, numerous hard pulls will only count as one pull. So, in this case, the best strategy is to have all your hard pulls done at once. You can shop for the best rate on LendingTree’s website.

Once you get the rate, you can always attempt to make the dealer give you a better deal. But you should never walk onto the lot without a low rate in your pocket.

“Many otherwise-savvy consumers feel intimidated by the car buying practice and react by letting the dealership take control of the deal,” says Thomas Nitzsche, a credit educator at Clearpoint Credit Counseling. “Some consumers also feel their credit is scarcely good enough to secure an auto loan, so take whatever they are suggested or buy into the dealers telling them that they are doing them a favor.”

Tips on pre-shopping for an auto loan:

Empower yourself by shopping for auto loans before you head to the dealership. When you walk into a dealership with a pre-approved auto loan rate from a bank or credit union, you can use that as leverage. Your dealer will be more inclined to match that rate or find you a better deal, explains Matt DeLorenzo, a managing editor at Kelley Blue Book.

“With the resources available on the internet, from financing to determining what your trade-in is worth, there’s no excuse for walking into a dealership not knowing the prevailing interest rates, what sorts of incentives are out there, and what sort of pricing and what others are paying,” he says.

Have your credit score in mitt to ensure your credit info is accurate. A dealer can lightly say that you don’t qualify for a better rate without having run a decent credit check. You can check your credit score on a number of sites for free.

Don’t shop at the last minute. We can’t predict things like car accidents, but there are steps you can take to be sure you won’t get caught in a desperate car buying situation. Dealers will smell that desperation from a mile away and take utter advantage of it. If your car is displaying signs of needing repairs, take care of them right away. If you’re in a pinch, think about renting a car temporarily, taking public transit or carpooling until you’ve had time to get your ducks in a row.

Two. More than half of car buyers never had their income verified.

Car dealers should verify your income when they take your loan application. But that doesn’t mean they always do. More than 52% of our survey respondents said their income wasn’t verified. When irresponsible dealers don’t verify your income, they could potentially give you a loan that you can’t actually afford. Some dealers skip this step in order to speed up the application process and increase your chances of getting approved for a loan.

To get a sense of what you can reasonably afford to buy, use a free contraption like this cost calculator from Edmunds. It permits you to take into account not just your income but also the value of any car you are trading in, how much you can afford to put down on your fresh car, and any balances on existing car loans. If you go into a dealership knowing what you can afford, they will be less likely to sell you something you know is outside of your budget.

Three. Most people agreed to a longer-term loan to make their payments more affordable.

A whopping 82.6% of drivers we surveyed said they took out a loan with a term longer than five years to lower their monthly payment. This may seem like a fine way to save on your monthly payments. But you will wind up paying more in the long run, thanks to interest. Auto loans with longer terms usually carry a higher interest rate. Not remarkably, almost one in five car buyers told us they signed up for a long-term auto loan because it was the dealer’s idea.

“The dealer is going to suggest the longest term possible, because it means selling a more expensive car—and likely [earning] a higher commission,” explains Nitzsche. Because dealers want you to concentrate on the monthly payment and not on the total cost of the car, it’s lighter to mask the total cost of the car by spreading out the length of the loan and lowering the monthly payment.

People with poor credit are much more likely to take out these longer term loans. The fact that poor credit customers also wind up with loans with the highest interest rates, they can actually wind up truly hurting themselves here.

In a worst case script, you could find yourself owing more on your auto loan than the car is actually worth. Fresh cars lose up to 25% of their value every year according to Edmunds. To save the most money, get a loan with monthly payments you can afford for the shortest term possible.

Jackie Lam is a writer at MagnifyMoney. You can email Jackie here

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Featured

6 Bad Money Habits That Could Wreck Your Finances — and How to Break Them

Thursday, August 24, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Brittney Laryea

Brittney Laryea is a individual finance reporter for MagnifyMoney. She graduated from the University of Georgia’s Grady College of Journalism and Mass Communication and lives in Brooklyn, N.Y.

Bad spending habits — everyone has at least one of them. Maybe for you it’s adding “just one more thing” to your shopping cart, or repeatedly getting spanked with overdraft or late payment fees.

These bad habits may seem innocuous at very first but could lightly turn into financial self-sabotage.

“Breaking a habit like these can be truly difficult because these habits have developed over the years, and they provide us with psychological convenience and safety,” says Thomas Oberlechner, founder and Chief Science Officer at FinPsy, a San Francisco-based consulting stiff that integrates behavioral expertise into financial services and products.

Oberlechner says the key to overcoming a bad money habit lies in knowing when you’re using the impulsive, right side of your brain — as opposed to the focused, concentrated left side — in financial decision-making.

“It’s indeed about psychological practice. It’s about behavior. If we understand the role of emotion, then we have a chance to fix it,” Oberlechner says.

Once you understand yourself and can identify your bad habit, Oberlechner adds, then you can create a plan “that turns your impulsive or unconscious behavior into the healthy financial behavior that [you] actually want.”

Of course, cracking any bad habit is lighter said than done.

MagnifyMoney spoke to financial professionals to hear how they and their clients broke their bad habit. See if any of their hacks could help you break yours.

Bad money habit #1: Spending money as soon as you get it

The solution: Automation

If you’re permanently feeling broke just a few days after you receive a paycheck, you may be guilty of this bad money habit. One way to make sure you hold onto some of your cash is to use what the behavioral finance community calls a “commitment device” to lock you into a course of act you wouldn’t choose on your own, like saving your money.

In this case, the device is automation. Automating your savings won’t help you stop siphoning money from your checking account the same day your direct deposit clears, but it can make sure you save what you need to very first. Check with your bank or the human resources department at work to have a portion of your paycheck automatically sent to a savings account instead of putting the entire sum in your checking account.

You should automate your bills and credit card payments for the pay period, too. Once your obligations are automated, “you can be impulsive with your play money,” says Oberlechner.

Bad money habit #Two: Reaching for your credit card all the time

The solution: A cash diet

Paying for everything you buy with a credit card can be good practice if you pay off your card every month. If you’re chronically swiping your credit card for things you can’t afford to pay off by the next billing cycle, leave your card at home and use cash instead.

When you don’t pay off your card each billing cycle, you rack up interest charges on everyday purchases, and that may cost you a lot more money in the long run. If you’re using more than thirty percent of your total credit limit each month, you may also be harming your credit score.

To break your habit, leave your credit card at home and use cash or a debit card for your purchases.

“Take a certain amount of cash and say ‘I can spend no more than that,’” says Vicki Bogan, an associate professor at Cornell University in Ithaca, N.Y., who researches behavioral finance. “If you have a giant [spending] problem, attempt to limit yourself so that you only have access to a certain amount of money.”

If you indeed want to challenge yourself, you can attempt going on what’s called a spending freeze, where you stop spending any money on non-essentials for a period of time. On top of helping you save money, the freeze can help you notice how much money you may be wasting simply because you’re always pulling out your credit card. After your freeze completes, you may be less inclined to swipe your credit card.

Another rule that could help you break your swiping habit is the $20 rule. The financial rule of thumb is elementary: Anytime your purchase is less than $20, pay in cash, not credit. The $20 rule compels you to think about whether or not a purchase is worth swiping your card for. Chances are, if what you’re buying costs less than $20, it’s not something you’d be OK paying interest on.

Bad money habit #Three: Spending beyond your means

Solution: Budgeting

If you chronically spend beyond your means each pay period, you are likely digging yourself into debt. Get a treat on this habit by understanding how much money you have coming in and how much you can afford to spend on a monthly basis. You can use budgeting apps like Mint or YNAB to make that part lighter. These implements can also help you identify the spending categories that are costing you more than you might realize.

Oak Brook, Ill.-based certified financial planner Elizabeth Buffardi tells MagnifyMoney that after examining one of her client’s expenses she found the client was spending a lot of money at drugstores picking up snacks and little things after work. So the client gave herself a budget of $Ten per drugstore visit to save money.

“We’ve been eyeing her spending at drugstores go down steadily over the last few months,” says Buffardi.

Buffardi had two other clients who struggled with overspending because they loved to shop online. They both created boundaries for themselves when it came time to pay for the items in their online shopping carts. One client determined to buy a certain amount of bounty cards that she could use on a given site.

“If she spent all the bounty cards in the very first day, then she was done until the next paycheck. If she wished something that was more expensive than the amount she had on the bounty cards, she had to hold off on other purchases in order to purchase the more expensive item,” says Buffardi.

The other client simply liquidated her credit card number from her payment profiles so it would be more difficult to make thoughtless purchases. Her theory, Buffardi tells MagnifyMoney, was that if she was coerced to stop and pull out her credit card before she could make the purchase, it might slow her down and give her time to think about the purchase she is about to make and — maybe — stop some purchases from happening.

Bad money habit #Four: Always buying lunch from a restaurant

The solution: Plan your lunches a week in advance

If you’re losing $10-$15 a day to the local deli during the workweek, recall this: You don’t have to buy lunch if you bring it to work with you. However, organizing your day so that you actually have time to prepare and pack your lunch may be where you fight.

Leave room in your busy schedule to pack your lunch in the mornings, or during the evening when you may have more time to yourself.

Melville, N.Y.- based certified financial planner David Frisch says he packs his lunches in the evening because he knows he runs late in the morning. He puts together everything but the dressings and sauces he plans to eat while making dinner, so lunch is already 90% done, then he adds the last ten percent in the morning.

Frisch suggests setting a budget for how much you’d like to spend on food per pay period, then tracking how much money you typically spend on the convenience of frequently going out to lunch. Again, a budgeting app can be handy here to lightly identify places where you spend the most.

Compare that amount to how much you spend on food for entertainment purposes, like going out to dinner with friends over the weekend and for your necessities, like eating lunch to fuel your workday.

“If you are spending so much money on convenience, you have that much less money to spend on everything else,” says Frisch. If you’re spending money from your food budget for convenience purposes, you may be more reluctant to go out on Saturday night for dinner.

If you’re already packing your lunch, but purchase a 2nd lunch because you’re still thirsty or you no longer want to eat what you packed, attempt packing a larger meal or having leftovers for a 2nd lunch.

Bad money habit #Five: Ordering out for dinner because you’re too tired to cook

The solution(s): Prep when you have time/energy; attempt meal delivery services

It’s effortless to spend more than $50 getting dinner delivered three to four days out of the week, or buying groceries that go to waste because you’re too tired to cook. Oberlechner suggests doing some of the “work” of making dinner when you know you have more energy.

“If you’re too tired to cook in the evening, substitute the spontaneous behavior by preparing dinner in the morning. So in the evening you don’t have the work of preparing anything,” he tells MagnifyMoney.

Another hack Oberlechner suggests is making a little extra dinner for the days you know will be especially long, when you won’t want to cook dinner. For example, if you know Tuesday is a indeed long day but Monday is not, cook a little extra on Monday and have those leftovers for dinner on Tuesday.

If cooking dinner simply isn’t a habit for you, you can attempt a meal kit service like Blue Apron, Plated, or HelloFresh to get interested in cooking, suggests Brooklyn, N.Y.- based certified financial planner Pamela Capalad. She tells MagnifyMoney she’s advised many of her clients to sign up for a meal kit service, then transition into grocery shopping and cooking at home regularly.

Generally, the services cost about $Ten to $15 per serving and can serve up to four people.

Bad money habit #6: Letting your kids throw extra things in your shopping cart

The solution(s): Shop solo or lay ground rules early

Frisch says he and his wifey solved this problem with their now 15-year-old triplets when they were four years old.

“Up until they were four we couldn’t bring them to a supermarket because it was unlikely for my wifey and I to see three kids at the same time,” says Frisch. The easiest recommendation, he says, is to have somebody witness them at home while you go do the shopping. You may spend some money on a sitter, but you are also saving money without an impatient child sneaking candy and fucktoys into your shopping cart as well.

If an extra set of palms at home isn’t available, then attempt to set ground rules before you go to the store. For Frisch, that meant permitting the triplets to get one — just one — extra item at the store.

When a child wished to add something “extra” to the cart, Frisch or his wifey would say, “If you want this now, then you have to put the other one back.”

“Ultimately what happened was they kind of had to make a decision as to which one they would indeed get,” says Frisch.

The triplets quickly realized they could all benefit from working together.

“They actually began to communicate and say ‘if you get this and I get this, we can share,’” Frisch told MagnifyMoney. “They just figured out that if they all got one thing and collective, they ultimately all got more than they would have.

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at [email protected]

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Advertiser Disclosure: MagnifyMoney is an advertising-supported comparison service which receives compensation from some of the financial providers whose offers emerge on our site. This compensation from our advertising fucking partners may influence how and where products emerge on the site (including for example, the order in which they show up). To provide more finish comparisons, the site features products from our fucking partners as well as institutions which are not advertising fucking partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

Featured, Health

6 Career Strategies for People Who Are Coping With Depression

Thursday, August 24, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Brynne Conroy

Brynne is the blogger behind FemmeFrugality.

Jana Lynch was twenty seven years old when she was formally diagnosed with depression. The illness wasn’t severe enough for her to commence seeking regular treatment until eight years later, when a scare attack at work sparked a series of events that switched her career — and her finances — forever.

At the time, Lynch was working full-time for a social service agency. “Not only was my anxiety and depression through the roof, making it hard to get out of bed, concentrate on tasks, meet deadlines, communicate with coworkers, and recall meetings, but the nature of my job made it a dangerous environment for my mental health at the time,” she says.

Rather than resign outright, she determined to take a four-month leave on short-term disability. A break, she thought, might help. But when the time came to comeback to work, the same issues began to surface again. In the end, she chose her mental health over working total time.

“Looking back, it was a terrible choice because of the influence on my long-term private finances,” she says. “But in the moment, it was the best decision for me and my family.”

Lynch’s story is not unique. In a two thousand four investigate that followed workers over the course of six months, researchers found workers with depression dropped out of the workforce at a rate of twelve percent compared to only two percent of their peers.

While depression may force affected workers out of active employment at higher rates, it is also true that those who become unemployed are more likely to display signs of depression — three times more likely, according to a two thousand ten NIH probe.

Thomas Richardson, a leading researcher at Solent NHS Trust, one of the largest community providers in the UK’s National Health System, notes that there is most certainly a correlation inbetween unemployment and depression, but that causation is not as effortless to pin down.

“In research such as this it’s always a case of chicken and egg: Which came very first?” he says. “A lot of research is only at one time point, so it’s hard to say which came very first.”

Some research shows losing your job impacts depression because it makes it hard to cope financially, but other studies suggest it has little influence.

“I think it most likely works both ways and is a perverse cycle,” Richardson resumes. “Someone becomes depressed, fights at work, and loses their job. This then exacerbates their depression further.”

6 Strategies to Manage Depression and Work

Abigail Perry, author of Frugality for Depressives, had already been formally diagnosed with depression as a part of a bipolar disorder when unrelated chronic weariness compelled her out of traditional employment.

“I thought I’d be nothing but a cargo for the rest of my life,” says Perry. “I wondered who would ever want someone who couldn’t pull her own weight financially, and I became suicidal. A lot of therapy and medication management doctor visits later, I eventually embarked believing that I might have worth despite not being able to work.”

Those fighting with balancing their career and depression need not lose hope.

Richardson notes that many are able to develop coping strategies, permitting themselves to stay in the workplace. He’s developed six key strategies that his research has exposed to be helpful to workers with depression.

1. Intentionally look for work you love.

“Try and do a job you love or are interested in,” Richardson encourages. “If not possible, then attempt and concentrate on those bits of your job you do love.”

Allyn Lewis, lifestyle blogger and storytelling strategist from Pittsburgh, Pa., has learned this mechanism through the course of building her business.

Diagnosed with a depression that was further fueled by her father’s suicide when she was a teenage, Lewis never truly entered the traditional workforce, but has found self-employment to suit her disability.

Her motivating enjoyment comes from the community-based aspect of her business.

“Telling my story and talking openly about my anxiety, depression, and the loss of my dad is what keeps me active in my career,” says Lewis, 26. “That might sound strange, but when I keep my mental health journey to myself, it feels like it’s all about me. And if I’m having a down day, week, or month, what’s it matter if I do the work or get the things done? But, by talking about my mental health and using my own story to raise awareness, it makes it something that’s much fatter than myself.”

Two. Don’t thrust yourself too hard.

“Don’t thrust yourself too hard at work,” says Richardson. “Acknowledge when you are fighting. It’s best to slow down early on than to keep going until you crash.”

Lewis learned this lesson through practice.

“Back in the day when I wielded my own public relations rigid, I would take on any client, under any circumstance, for any amount of money, and I’d make any accommodation or request they asked for. I ended up overbooked, underpaid, and at a point that was way beyond burnt out,” Lewis says.

“I kept attempting to thrust my anxiety and depression aside to pretend like it wasn’t getting in the way, but the best thing I ever did was beginning to tune into what my mental health was telling me. Only then was I able to shift into a business model that worked for me.”

Trio. Ask for help — and know your rights.

Richardson recommends going to your manager or supervisor for access to resources when your symptoms become too much to bear. If you work at a larger company, it may be more adequate to get in touch with your human resources department.

This can seem intimidating, as you don’t want to give your superiors any reason to question your work ethic or your capability to provide value to the company.

But Perry, who now works total time in a remote position, notes that depression is covered by the Americans with Disabilities Act (ADA). This means your employer cannot fire you because of your disability — in this case, depression — and that they have to provide reasonable accommodations in order to permit you to do your job.

“Even if you don’t ask for accommodations, you need to make it clear that your absences or other work difficulties are based on a real medical condition,” Perry says. “Imagine being a supervisor with an employee who takes a lot of sick days, or may be lightly agitated by interpersonal interaction or extra stress. In a vacuum, that’s a problem employee. Understanding the context, that’s someone who is doing their best to be a good employee despite a disability.”

Four. Keep a healthy perspective on your career goals.

“It’s effortless in a career to concentrate on goals, but this makes you vulnerable to depression,” says Richardson. “If you don’t get that promotion it might indeed influence you and lead to self-critical thoughts which fuel depression.”

He recommends instead harkening back to why you love your work and the current position you’re in.

Lynch, who presently works as a freelance writer and editor, relates to the depression that can be felt when career expectations aren’t met.

“I attempt hard not to get angry at myself if I didn’t do as much as I’d like, or if my inbox isn’t bursting with inquiries,” says Lynch, “which is hard to deal with when you like to work and tie your work to your self-worth. But depression makes it difficult to look for clients. It’s a horrible, perverse cycle that I deal with only by telling myself this is makeshift. It will get better at some point.”

Five. Nurture hobbies and social contacts.

Lynch and Lewis both note exercise as a way of sustaining a healthy hobby. Lewis instructs yoga, and Lynch regularly attends a gym. While not the primary purpose, a side effect of going to the gym or studio happens to be spending time with other people of similar interests.

Nurturing hobbies and maintaining social contacts are significant from Richardson’s research — even if doing so originally feels tremendous.

6. Practice mindfulness.

Ultimately, Richardson recommends practising mindfulness, even when you’re not in the throes of depression. Emerging research suggests that mindfulness may not only alleviate depression, but could prevent relapses.

Richardson has produced a free mindfulness resource, which can be accessed here.

Depression and Your Finances

Career and finance often go arm in arm, so it’s no surprise that the ripple effects of depression can often extend into your finances as well.

By understanding and confronting these challenges head-on, there are strategies you can use to protect your finances as you learn to manage depression.

In a latest investigate published in the British Psychological Society’s Clinical Psychology Forum, Richardson studied people with bipolar disorder as they were going through a depressive scene. During these gigs, he found four key ways that their finances suffered.

Missing bills

Lynch notes that before she set up automatic payments, she would have trouble remembering pay upcoming bills. She’d get her statements, but overlook them. This led to unnecessary costs like late fees.

Richardson’s probe finds that this behavior is typical for depressives. It found that missing bills was a financial manifestation of avoidant coping behaviors. In order to avoid being late on charges you may not know or reminisce exist, it’s significant to get in the habit of confronting through that pile of mail as you establish the habit of paying through automation.

Poor planning

“It can be firmer to keep track of your finances when things get rough,” relates Perry. “Monitoring spending, keeping up with due dates — it’s tiresome even in good conditions. If you spend more because of depression, or if you simply don’t keep as close of an eye on things, your budget could take a big hit.”

Perry’s insights are congruent with Richardson’s findings. Those with depression have a firmer time completing tasks like budgeting because planning ahead is made more difficult. The probe also exposed that rational thinking and the capability to reminisce past purchases in order to log them into a spreadsheet were impaired.

Convenience spending

Perry says that when you’re depressed, you’re more likely to get caught up in convenience spending.

“This could be anything from convenience or junk food, which adds up, or going out for drinks, dinner, or entertainment. Alternately, you may be more likely to spend money on things that you think will make you blessed or comforted — from convenience gadgets to home décor to clothes.”

Richardson adds the example of being overly generous with one’s family as an example of convenience spending.

Compounding anxiety

Richardson’s explore finds that financial stress compounds anxiety and depression. This stress leads to more dire mindsets, like extreme anxiety and hopelessness.

“As a business holder, there’s always so much pressure around profit,” says Lewis. “Even when you’re up, you never know how long it will last, so you have to keep hustling. When I’m going through a period of depression, this puts me in a cycle of ‘I’m never making enough,’ which is a thought that likes to pair itself with ‘I’m not good enough.’ Depression has a sneaky way of switching my mindset from one of abundance to one of scarcity.”

Lewis’s reports of low self-worth are also common, according to Richardson’s work. Self-criticism over “economic inactivity” was detected in investigate participants.

Seeking Mental Health Care

For help developing more coping strategies or getting resources that can help you manage your depression, consider seeking out mental health care services.

“I think all depressives — especially ones who aren’t on medications — should have therapists,” says Perry. “It may take a few attempts to find someone you work well with, but then that person will be a superb lifeline. Therapists can help you deal with the things that depression makes firmer with strategies, workarounds, or just working through past events that are contributing to or causing your current depression.”

Therapy and medication management specialists can be expensive, tho’. Many regions in America face a shortage of mental health care providers, and the matter is further complicated when you consider that some providers may be out-of-network, bringing copays up even if you are presently insured.

Related article: five ways to find lower the cost of therapy

If you can’t figure out how to fit these services into your budget, seek out therapists who suggest sliding-scale payment options based on your income. Another affordable resource is public mental health care clinics, tho’ their availability may be limited.

If you have insurance and don’t instantaneously need medication, keep in mind that a mental health care professional may not have an M.D. or Ph.D. after their name. Licensed Clinical Social Workers (LCSWs) and other counselors often accept insurance and are able to provide therapy, referring you out to a psychiatrist for prescription needs when necessary.

Lynch did seek therapy and go on medication for a while, however she now leans on other coping mechanisms such as avoiding triggers and exercising regularly.

“I recommend it if you feel you need it,” she says. “There is no shame in getting whatever kind of help you need.”

Today, Lynch operates from a place of acceptance. Depression is a part of her life that she has learned to deal with. While she doesn’t categorize herself as what we would consider classically “happy,” she does consider herself to be as content as possible, and actively seeks out happiness within her circumstances.

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne at [email protected]

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Advertiser Disclosure: MagnifyMoney is an advertising-supported comparison service which receives compensation from some of the financial providers whose offers show up on our site. This compensation from our advertising fucking partners may influence how and where products emerge on the site (including for example, the order in which they show up). To provide more accomplish comparisons, the site features products from our fucking partners as well as institutions which are not advertising fucking partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

Featured, Life Events, News

How to Get ‘Unstuck’ From Your Starter Home

Thursday, August 24, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Bob Sullivan

Bob Sullivan is an award winning American online journalist, author and one of the founding members of msnbc.com.

Andrew Cordell bought his very first home at the worst possible time — ten years ago, right before the housing bubble burst.

He’s not going to make that mistake again.

“We had instantaneous fear put in us as homeowners,” says Cordell, 40. “We know how dangerous this can be.”

So the petite “starter home” he purchased in Kalamazoo, Michigan back in two thousand seven now feels just about the right size.

“When we bought, we figured we’d get another home in a few years,” he says. “But the more we lodged, the more we thought, ‘Do we truly need more space?’ We don’t actually need a large chest freezer or a large yard. Kalamazoo has a lot of parks.”

Evidently, slew of homeowners feel the same way.

It’s a phenomenon some have called “stuck in their starter homes.” Bucking a decades-long trend, youthfull homeowners aren’t looking to trade up — they’re looking to stay put. Or they are coerced to.

According to the National Association of Realtors, “tenure in home” — the amount of time a homebuyer stays — has almost doubled during the past decade. From the 1980s right up until the recession, buyers stayed an average of about six years after buying a home. That’s hopped to ten years now.

Other numbers are just as dramatic. In 2001, there were 1.8 million repeat homebuyers, according to the Urban Institute. Last year, there were about half that number, even as the overall housing market recovered. Before the recession, there were generally far more repeat buyers than first-timers. That’s now reversed, with first-time buyers dwarfing repeaters, 1.Four million to one million.

This is no mere statistical curiosity. Trade-up buyers are critical to a smooth-functioning housing market, says Logan Mohtashami, a California-based loan officer and economics pro. When starter homeowners get gun-shy, home sales get stuck.

“Move-up buyers are especially significant … because they typically provide homes to the market that are suitable for first-time buyers,” he says. When first-timers stay put, the share of available lower-cost housing is squeezed, making life tighter for those attempting to make the leap from renting to buying.

Getting unstuck from your starter home

There are slew of potential causes for this stuck-in-a-starter-home phenomenon — including the fear Cordell describes, families having fewer children, fast-rising prices, and vapid incomes. But Mohtashami says the main cause is a hangover from the housing bubble that has left first-time buyers with very little “selling equity.”

Buyers need at least twenty eight to thirty three percent equity to trade into a larger home, and often closer to forty percent, he says. Those who bought in the previous cycle might have seen their home values recover, but many purchased with low down payment loans, leaving them still equity poor.

That wasn’t such a problem before the recession, as lenders were blessed to give more aggressive loans to trade-up buyers. Not any more.

“In the previous cycle you had exotic loans to help request. Now you don’t. [That’s why] tenure in home is at an all-time high,” Mohtashami says. “Even families having kids aren’t moving up as much.”

Fast-rising housing prices don’t help the trade-up cause either. While homeowners would seem to benefit from increases in selling price, those are washed away by higher purchase prices, unless the seller plans to budge to a cheaper market.

“You’re always attempting to catch up to a higher priced home,” Mohtashami says.

Cassandra Evers, a mortgage broker in Michigan, says she’s seen the phenomenon, too.

“It’s not for lack of want. It seems to be the inability to afford the cost of the fresh home,” she says. “It’s not the interest rate that’s the problem, obviously because those are at historic lows and artificially low. It’s because to buy a ‘bigger and better house,’ that house costs significantly more than their current home. The cost of housing has skyrocketed.”

There’s also the very practical problem of timing. In a fast-rising market, where every home sale is competitive, it’s effortless to lose the game of musical chairs that’s played when a family must sell their home before they can buy a fresh one.

“Folks are worried about selling their current house in one day and being incapable to find a suitable replacement prompt enough,” Evers says.

Cordell, who lives with his wifey and eight-year-old son, says the family considered a budge a few years ago and shortly looked around. But they quickly concluded that staying put was the right choice.

“We looked at some homes and we thought, ‘I guess we could afford that. But we don’t want to be house broke’,” he says. “We don’t want to take on so much debt that ‘What else are we able to do?’ What if one of us loses our job? I guess you could say we have a Depression-era sensibility. … Who would want to get upside down on one of these things?”

The Urban Institute says this stuck-in-starter-home problem shows a few signs of abating recently. Repeat buyers were stuck around 800,000 from two thousand thirteen to 2014. Last year, the number pierced one million. But that’s still far below the 1.Five million range that held consistently through the past decade.

There are other signs that ease might be on the way, too. ATTOM Data Solutions recently released a report telling that one in four mortgage-holders in the U.S. are now equity rich — values have risen enough that owners hold at least fifty percent equity, well above Mohtashami’s guideline. Some 1.6 million homeowners are freshly equity rich, compared to this time last year, and five million more than in 2013, ATTOM said.

“An enhancing number of U.S. homeowners are amassing exceptional stockpiles of home equity wealth,” says Daren Blomquist, senior vice president at ATTOM Data Solutions.

So perhaps pent-up repeat homebuying request might re-emerge. Evers isn’t so sure, however.

“Most folks I talked with are no longer interested in being house poor and maxing out their debt to income ratios. They seem to be staying put and thrusting money into their retirement accounts,” Evers says.

The Cordells are content where they are in Kalamazoo and plan to stay long term. If anything would make them budge, it’s not growing home equity but a growing family.

“If we ended up with a 2nd (kid), I suppose we’d have to look,” Cordell mused. “But we have no plans for that.”

Four Signs You’re Ready to Trade Up Your Home

• YOU’VE GOT Slew OF EQUITY: Your home’s value has risen enough that you securely have at least twenty eight percent equity and, preferably, more like thirty five to forty percent.
• YOU’RE EARNING MORE: Your monthly take-home income has risen since you bought your very first home by about as much as your monthly payments (mortgage, interest, insurance, taxes, condo fees, etc.) would rise in a fresh home.
• YOU STAND TO MAKE A HEALTHY PROFIT: You are certain that if you sell your home, you’d walk away from closing with at least thirty percent of the price for your fresh home — or you can top up your seller profits to that level with cash you’ve saved for a fresh down payment. That would let you make a standard twenty percent down payment and have some left over for surprise repairs and moving costs that will come with the fresh place. Reminisce, transaction costs often surprise buyers and sellers, so be sure to build them into your calculations.
• YOU CAN Treat THE RISK: You have the tummy for the game of musical chairs that comes with selling then buying a home in rapid succession. Also, if you are in a hot market, you have extra cash to outbid others or a place for your family to stay in case there’s a time gap inbetween selling and buying.

Bob Sullivan is a writer at MagnifyMoney. You can email Bob here

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Featured

Under Pressure: one in five Parents Will Go into Debt to Send Kids Back to School

Tuesday, August 22, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Hannah Rounds

is a freelance writer and quantitative marketing consultant. Hannah founded the site Unplanned Finance.

After a long summer break, many parents feel antsy to send their kids back to school. But back to school can translate into debt, according to a latest MagnifyMoney national survey of more than seven hundred parents. More than one in five parents will go into debt to pay for back-to-school expenses. And more than half (55 percent) of parents who are going into debt say they feel pressure to buy fresh things for their kids during the back-to-school time compared to just twenty nine percent for parents not going into debt.

It’s no question that back-to-school clothes, supplies, and gear can put a dent in a family’s budget. Almost three in four parents will spend more than $100 on back-to-school supplies this year, and almost one in four will spend more than $500.

Key insights

• 55 percent of parents who are going into debt say they feel pressure to buy fresh things for their kids for back to school (versus twenty nine percent for parents not going into debt)
• Almost half (44 percent) of parents are spending over $300 on back to school.
• Midwest parents are least likely to feel pressure to buy fresh things for their kids (30 percent) compared to forty three percent in the Northeast and thirty eight percent in the South and West.
• Parents in the South are most likely to spend $500 or more on back to school (28 percent) compared to twenty five percent in the Northeast, twenty percent in the Midwest, and twenty one percent in the West.
• 41 percent of parents who feel stress about back-to-school shopping expect to go into debt for back-to-school shopping.
• Just thirty six percent of parents who will go into debt feel the cost of school supplies required is reasonable. Fifty two percent of parents who don’t expect to go into debt for back-to-school shopping feel the cost is reasonable.
• 65 percent of parents going into debt plan to spend $300 or more, compared to thirty eight percent of those not going into debt. And thirty seven percent of those going into debt plan to spend $500 or more, versus twenty one percent of those not going into debt.

Pressure to spend

The survey indicated that for parents expecting to take on debt, back-to-school shopping is fraught with negative emotion. Almost a third (33 percent) of parents who expect to go into debt for back-to-school shopping feel the cost of expected school supplies is unreasonable. Just one in five parents who won’t go into debt feel the same way. With school supplies pushing one in five families into debt, it’s no wonder that so many feel the costs are unreasonable — that’s especially true for families already carrying credit card debt into the back-to-school season.

According to the two thousand fifteen Report on the Economic Well-Being of U.S. Households, thirty one percent of American households carry credit card debt all year round, and twenty seven percent of households carry credit card debt from time to time. A MagnifyMoney analysis displayed that households carrying credit card debt have an average balance of $7,700. Adding several hundred dollars to an existing credit card debt can make the entire debt feel unmanageable.

In the survey, taking on debt is one of the leading indicators for feeling back-to-school shopping stress. Parents taking on debt were almost three times as likely to feel that back-to-school shopping was strained compared to those who were not. A third of parents going into debt feel that back-to-school shopping is stressfull, but just twelve percent of parents not going into debt feel the same.

The stress doesn’t come just from crowded malls and added debt. Instead, it comes from social pressure to take on debt and buy fresh things for kids. Over half (55 percent) of parents who are going into debt feel pressure to buy fresh things for their kids during the back-to-school time framework. Less than three in ten (29 percent) parents who aren’t going into debt feel that same pressure.

The pressure to go into debt for kids doesn’t just occur during back-to-school time. Almost half (46 percent) of all moms admit to going into debt for child-rearing costs, according to the two thousand fifteen Cost of Raising a Child survey from BabyCenter.com. The pressure to give kids better lives (and better school supplies) can lead parents to make expensive decisions, including going into debt.

Store cards and debt

Most parents, ninety three percent, use traditional credit cards or cash to pay for back-to-school items. Only a puny percentage plan to use retail credit cards (like the Target RedCard) to pay for back-to-school items. However, parents going into debt are more than three times as likely to use store credit cards as parents not going into debt (15 percent vs. Five percent).

With coupons, points, and cash prizes, store credit cards can feel enticing, but the interest rates on store cards are bruising.

Retail credit cards have notoriously high interest rates. Presently, Target REDcard and the Walmart Credit Card have interest rates of 22.9 percent, and the Kohl’s credit card is 24.99 percent.

Financing $300 on a store credit card (with a 22.9 percent APR) means that a parent will spend $38.50 on extra interest if they pay off the loan over the course of the year compared to a regular card.

Real Cost of Back-to-School Spending on Store Credit Cards (22.9 percent APR)

Overall, thirty three percent of parents use traditional credit cards to pay for back-to-school items, including thirty seven percent of parents planning to take on debt. These parents will likely yield substantial interest rate savings by choosing to use a traditional credit card rather than a store card. Presently, the average interest rate on a credit card is fourteen percent, according to the Federal Reserve Bank of St. Louis, but people with decent credit can find slew of zero percent APR interest rate offers.

Avoiding cards and debt

Parents who avoid debt tend to avoid plastic altogether. Over three in five (63 percent) parents who don’t expect back-to-school debt won’t spend on credit or retail cards.

As a group, avoiding plastic seems to keep spending down as well — sixty two percent of parents who eschew plastic will spend less than $300 on back-to-school supplies. By comparison, just fifty three percent of parents using plastic will spend less than $300.

Only thirty one percent of parents who are avoiding debt will spend on a credit card and reap prizes points or cash back options. It might seem like this group is missing out on good deals, but they may just concentrate their attention on fatter saving opportunities. Two-thirds of parents who won’t use plastic this season will take advantage of back-to-school sales.

Survey methodology

MagnifyMoney.com commissioned Google Consumers Surveys to obtain online survey data with seven hundred parents living in the United States with children going back to school. Interviews were conducted online via Google Surveys in English during August 5-8, 2017. Statistical results are weighted to correct known demographic discrepancies. The margin of sampling error was plus or minus Five.Three percentage points for the seven hundred two people who said they felt stress during back-to-school shopping.

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah at [email protected]

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Featured, Strategies to Save

What Your Teenage Should Do With Their Summer Earnings

Friday, August Legitimate, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Aja McClanahan

Aja McClanahan is a private finance blogger and founder of www.principlesofincrease.com.

According to a two thousand seventeen survey released by the National Financial Educators Council, 54% of respondents (all eighteen years and older) said a course in money management in high school would benefit their lives. Another survey — the most latest from the Program for International Student Assessment — reports that only about 10% of U.S. 15-year-olds are versed in individual finance matters, falling in the middle among the fifteen countries studied. The message is clear: Youthful Americans need to learn more about money and managing it wisely. One way to commence them off is providing them hands-on practice with their own money. Inject the summer job.

Having a summer job can be a good introduction to adulthood for many reasons: The discipline, subjugation to management, team work, and a regular paycheck are just a few of the things a teenager will get used to with their very first summer job.

It’s also a good way to introduce kids to the real world of money. Tho’ the money your teenage earns is technically theirs, as a parent, you should use summer job earnings as an chance to help your kids form good habits with money. There’s no better time to demonstrate them the value of money than in the crucial years before they’ll be saddled with obligations like student loans, car notes, and mortgages.

Here are a few ways to make sure your teenage will get the most out of their money-making practice that will keep them money savvy for years to come.

Pay their fair share

Once your teenage commences making money, you’ll to want consider how they can begin to cover certain expenses. You’ll be tempted, no doubt, to let your teenage keep their hard-earned money for themselves. Trust this process. If the aim is to raise money-smart kids who become even savvier adults, there will have to be simulations of the real world that include actually paying for things

If your teenage uses the car, consider having them cover a portion or all of their car insurance bill. Another option is to have them contribute to their cellphone bill or even some of the Wi-Fi they use.

Having expenses is a real part of life, so it’s better to help them understand that now rather than later when ignorance isn’t so blissful.

If the thought of making your child pay for expenses bothers you, consider a different treatment: Instruct them about the costs of everyday life by asking them to cover their portion of a bill, but take that money and put it away for them. You can save up all that money and, as a nice gesture, give it to them when they need it most, like when they go away to college or eventually leave the nest to launch out into the real world.

Open bank accounts

While many families do not have access to or elect not to participate in the traditional banking system — it’s estimated that 27% of U.S. households are unbanked or underbanked — you’d ideally want to get your teenage familiar with banks and how they work. Tho’ check use has been on the decline since the mid-1990s, it’s still significant for teenagers to learn how to write a check, along with keeping a checkbook register. Sure, this practice most likely won’t last long, as electronic payments and money management apps proceed to grow, but this treatment gives your kids the gist of how to keep track of their cash flow.

While your teenage has a bank account, you’ll also get them used to understanding how a debit card works. They’ll get familiar with how effortless it is to swipe for things they want, yet how difficult it can be to replenish their account with the money they’re making at their job.

Ultimately, you’ll want to make sure that your teenage opens a savings account. In most states, a person can open a bank account when they become Eighteen. For junior teenagers, many banks have special teenage or kid accounts that a child can share with their parents. Co-owned checking accounts can be opened as youthful as 13, while custodial savings accounts can be opened at any age.

Developing good habits around saving and managing money takes time and some getting used to. So using their summer earnings would be a ideal chance to get into the groove of budgeting for expenses and managing money through a bank account.

Set money goals

Once money starts to flow into your kid’s arms, seize the moment and get them to see the thicker picture. Summer money is superb, but paying for life will take much more than what your teenage earns from a few hours of work in a bike shop. Begin to demonstrate them the cost of things like college, cars, homes, and luxuries like vacations or hobbies.

Once you compare the costs with their summer job earnings, it should help them come to conclusions about how money works: The more you have, the more you can do. The idea is to inspire them to increase their earning potential with implements like education or savings to invest in income-producing assets.

Another result of these conversations could be your teenage realizing they’ll want to embark saving up for life sooner than later. They may determine to put away money for the purpose of paying for school or their very first condo.

Ron Lieber, Fresh York Times financial columnist and author of the book The Opposite of Spoiled, says parents should prompt their kids with an instant objective like having a college fund. “The best thing to do is to use any earnings to begin a conversation with parents about college, if your teenage plans on going,” Lieber says.

Lieber suggests questions to guide the conversation:

• How much of your college expenses will be covered by parents versus the child?
• How much have the parents saved for the child’s college expenses?
• How much are kids/parents willing to borrow or spend out of their current income?

According to Lieber, “The answers to these questions may cause a teenage to save everything, if they think it will help them avoid debt in their effort to attend their desire college.”

No matter how improvised their summer job is, you’d do well to use it as a springboard for more conversations about money. Whatever their long-term money goals are, it’s never a bad idea to begin working toward them early on.

Learn compound interest

While your teenage is making all of those big money goals, you could drive the point home with a lesson in compound interest. Using a compound interest calculator, you can display your teenager many scripts where interest can either work for or against them.

Run screenplays around savings for big-ticket items versus financing them. The math will speak volumes:

In the above screenplay, you’d end up paying a total of $226,815 in interest. That same amount ($226,815) invested for thirty years with a moderate Three.5% comeback yields over $636,000!

Witnessing these numbers in activity should motivate your teenage to commence a savings habit that they will maintain across adulthood.

If they are indeed excited about the prospects of compound interest working on their behalf, encourage them to open their own IRA to begin investing themselves. This way, they’ll not only understand the theory of investing but also get hands-on practice with it. After all, the time value of money works even better when you’ve got more time. Investing as a teenage could set the stage for copious comes back later on in life.

Create a budget

Making money can be the joy, somewhat effortless part of a summer job. Figuring out how to spend it can be difficult. Make your teenage prioritize needs and wants by learning to create a budget. A good practice would be to have your teenage make a list of things they’ll spend money on versus how much money they will bring in. You could also introduce them to a money-management app — here are some of the best ones.

This will help them understand the finite nature of money and how their current cash flow stacks up against their current earnings.

Have joy

According to Brian Hanks, a certified financial planner in Salt Lake City, “Don’t be worried if your teenage ‘blows’ a portion of their earnings on things you consider to be worthless.” Hanks goes on to say that it’s better to make money mistakes as a youngster: “Everyone needs to learn raunchy money lessons in life, and learning them as a teenage when the consequences are relatively puny can save fatter heartache down the road.”

A summer job should be joy and low-stress, but it can also be used as a learning practice that prepares your teenage for the real world. If your teenage turns out to be a terrible budgeter or extreme spendthrift, give them more than a summer to learn better ways. Reminisce, they’ll have the rest of their lives to proceed gripping and mastering money concepts.

Aja McClanahan is a writer at MagnifyMoney. You can email Aja here

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Advertiser Disclosure: MagnifyMoney is an advertising-supported comparison service which receives compensation from some of the financial providers whose offers emerge on our site. This compensation from our advertising fucking partners may influence how and where products emerge on the site (including for example, the order in which they show up). To provide more accomplish comparisons, the site features products from our playmates as well as institutions which are not advertising fucking partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

Auto Loan, Featured, News

Auto Loan Interest Rates and Delinquencies: two thousand seventeen Facts and Figures

Thursday, August 17, 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Hannah Rounds

is a freelance writer and quantitative marketing consultant. Hannah founded the site Unplanned Finance.

Led by a prolonged period of low interest rates, consumers now have a record $1.Two trillion one in outstanding auto loan debt. Despite record high levels of issuance, the auto lending market shows signs of tightening. With auto delinquencies on the rise, consumers are facing higher interest rates on both fresh and used vehicles. In particular, over the last three years, subprime borrowers witnessed rates rise quicker than the market as a entire. MagnifyMoney analyzed trends in auto lending and interest rates to determine what’s indeed going on under the rubber hood of automotive financing.

Key insights

1. Overall auto delinquency is on the rise, and the very first quarter of two thousand seventeen eyed near record levels of fresh auto loan delinquency rates. 54
2. Interest rates are on the rise, with average fresh car loan rates up to Four.87%, sixty basis points from their lows in late 2013. Two
3. The average duration of auto loans (fresh vehicles) is a record 67.37 months, reducing the monthly payment influence of higher interest rates. 31

Facts and figures

• Average Interest Rate (Fresh Car): Four.87% Two
• Average Interest Rate (Used Car): 8.88% Three
• Average Loan Size Fresh: $29,314 Four
• Average Loan Size Used: $17,180 Five
• Median Credit Score for Car Loan: seven hundred six 6
• % of Auto Loans to Subprime Consumers: 31.34% 7

Subprime auto loans

• Total Subprime Market Value: $229 billion 8
• Average Subprime LTV: 113.4% 9
• Average Interest Rate (Fresh Car): 11.05% Ten
• Average Interest Rate (Used Car): 16.48% 11
• Average Loan Size (Fresh Car): $28,099 12
• Average Loan Size (Used Car): $16,026 13
• % Leasing: 25.9% 14

Prime auto loans

• Total Prime Market Value: $717 billion 15
• Average Prime LTV: 97.91% 16
• Average Interest Rate (Fresh Car): Three.77% 17
• Average Interest Rate (Used Car): Five.29% Eighteen
• Average Loan Size (Fresh Car): $32,153 Nineteen
• Average Loan Size (Used Car): $20,778 20
• % Leasing: 37.4% 21

Auto loan interest rates

Interest rates for auto loans proceed to remain near historic lows. As of the very first quarter of 2017, interest rates for used cars was 8.88% on average. The average interest rate on fresh cars (including leases) is Four.87%. However, the low average rates belie a tightening of auto lending, especially for subprime borrowers.

Fresh loan interest rates

Consumer credit information company Experian reports that the average interest rate on all fresh auto loans was Four.87%, up six basis points from the previous year. Twenty four The petite interest rate increase masks a larger underlying tightening in the auto loan market for fresh vehicles.

During the last year, lenders tilted away from subprime borrowers. Just Ten.88% of fresh loans went to subprime borrowers compared to 11.41% the previous year. The movement away from subprime borrowers led to a smaller increase in fresh car interest rates compared to if car rates had stayed the same. Twenty five

Across all credit scoring segments, borrowers faced higher average borrowing rates. Subprime and deep subprime borrowers spotted the largest absolute increases in rate hikes, but super prime borrowers also spotted an eighteen basis point increase in their borrowing rates over the last year. The average interest rate for super prime borrowers is now Two.84% on average, the highest it’s been since the end of 2011. Twenty seven

When comparing credit scores to lending rates, we see a slow tightening in the auto lending market since the end of 2013. The trend is especially pronounced among subprime and deep subprime borrowers. These borrowers face auto loan interest rates growing at rates swifter than the market average. Consumers should expect to see the trend toward slightly higher interest rates proceed until the economic climate switches.

Even with the tightening, interest rates remain near historic lows, but that doesn’t mean consumers are paying less interest on their vehicle purchases. The estimated cost of interest on fresh vehicle purchases is now $Four,223, twenty nine up 42% from its low in the third quarter of 2013.

Growth in interest paid over the life of the loan stems from longer loans and higher average loan amounts. The average maturity for a fresh loan grew from 62.Five months in the third quarter of two thousand eight to 67.Four months in early 2017. Thirty one During the same time, average loan amounts for fresh vehicles grew 14.7% to $29,134. Thirty two

Used loan interest rates

Over the past year, interest rates for used vehicles fell by thirty five basis points to 8.88%. The drop in average interest rates came from a dramatic increase of prime borrowers injecting the used car financing market. In 2017, 47.4% of used car borrowers had prime or better credit. The year before, 43.99% of used borrowers were prime. Thirty four

On the entire, borrowers in the used car market face almost identical rates to this time last year. Super prime and prime borrowers witnessed upticks of fifteen basis points and four basis points, respectively. This brought the average super prime borrowing rate up to Three.56% for used vehicles, and the prime rate to Five.29%. Thirty six

On the other end of the spectrum, subprime and deep subprime borrowers spotted their interest rates fall by approximately ten basis points year over year. Despite the decrease, interest rates for these borrowers are up a dramatic two hundred fifty basis points (Two.5%) from their two thousand eight rates.

Albeit average interest rates on used vehicles proceed to fall, the estimated interest paid on a used car loan rose $12 from the previous year to $Four,046. The increase in overall interest is part of a larger trend. Over the past four years, estimated interest on used cars was 8.4%. Almost all of the increase comes from longer average loan terms (61 months vs. Fifty seven months), thirty eight leading to more interest paid over the life of a car loan.

Auto loan interest rates and credit score

As of March 2017, the median credit score for all auto loan borrowers was 706. Forty A credit score of seven hundred six is just bashful of the prime credit rating (720). This is the highest median rate since the very first quarter of 2011.

In the very first quarter of 2017, just 31% of all auto loans were issued to subprime borrowers compared with an average of 35% over the past three years.

Total auto loan volume decreased dramatically inbetween two thousand eight and 2010. During that time, subprime and deep subprime lending contracted swifter than the rest of the market. Since early 2010, auto lending as a entire is near prerecession levels. However, subprime lending has not totally recovered. In the very first quarter of 2017, banks issued just $41.Five billion to subprime borrowers. That’s $6.7 billion less than the average $48.Two billion of subprime auto loans issued each quarter inbetween two thousand five and 2007.

Loan-to-value ratios and auto loan interest rates

One factor that influences auto loan interest rates is the initial loan-to-value (LTV) ratio. A ratio over 100% indicates that the driver owes more on the loan than the value of the vehicle. This happens when a car holder rolls “negative equity” into a fresh car loan.

Among prime borrowers, the average LTV was 97.91%. Among subprime borrowers, the average LTV was 113.40%. Forty four Both subprime and prime borrowers demonstrate improved LTV ratios from the 2007-2008 time framework. However, LTV ratios enlargened from two thousand twelve to the present.

Research from the Experian Market Insights group forty six displayed that loan-to-value ratios well over 100% correlated to higher charge-off rates. As a result, car owners with higher LTV ratios can expect higher interest rates. An Automotive Finance Market report from Experian forty seven displayed that loans for used vehicles with 140% LTV had a Trio.03% higher interest rate than loans with a 95%-99% LTV. Loans for fresh cars charged just a 1.28% premium for high LTV loans.

Auto loan term length and interest rates

On average, auto loans with longer terms result in higher charge-off rates. As a result, financiers charge higher interest rates for longer loans. Despite the higher interest rates, longer loans are becoming increasingly popular in both the fresh and used auto loan market.

The average length to maturity for fresh car loans in two thousand seventeen is 67.37 months. Forty eight For used cars, the average is 61.12 months. Forty nine The increase in average length to maturity is driven primarily by a concentration of borrowers taking out loans requiring 61-72 months of maturity. Fifty

In the very first quarter of 2017, just 7.1% of all fresh vehicle loans had payoff terms of forty eight months or less, and 72.4% of all loans had payoff periods of more than sixty months. Fifty one Among used car loans, Legal.5% of loans had payoff periods less than forty eight months, and 58.3% of loans had payoff periods more than sixty months. Fifty two

Auto loan delinquency rates

Despite a trend toward more prime lending, we’ve seen deterioration in the rates and volume of severe delinquency. In the very first quarter of 2017, $8.27 billion in auto loans fell into severe delinquency. Fifty four This is near an all-time high.

Overall, Three.82% of all auto loans are severely delinquent. Delinquent loans have been on the rise since 2014, and the overall rate of delinquent loans is well above the prerecession average of Two.3%.

Inbetween two thousand seven and 2010, auto delinquency rates rose sharply, which led to a dramatic decline in overall auto lending. So far, the slow increase in auto delinquency inbetween two thousand fourteen and the present has not been associated with a collapse in auto lending. In fact, the total outstanding balance is up 33.4% to $1.167 billion since 2014. Fifty seven

However, the increase in auto delinquency means lenders may proceed to tighten lending to subprime borrowers. Borrowers with subprime credit should make an effort to clean up their credit as much as possible before attempting to take out an auto loan. This is the best way to ensure lower interest rates on auto loans.

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