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Best Online Bookkeeping Software for Small Businesses

If you tried hiring a bookkeeper before, then you know it can be expensive. You probably even considered DIYing it, but you know you can’t handle another task. You started your business so that you can do what you love, not all those administrative tasks. That’s why you need a bookkeeping software.

Bookkeeping software automatically tracks and categorizes your finances so you get a bite-sized view without the hassle of doing them yourself.

Here are some of the best bookkeeping software options that help small businesses focus on what’s important.

Best Online Bookkeeping Software: Bench

Bench helps entrepreneurs and small business owners through their cash-basis bookkeeping services. Founded in 2012, their software works on PC, Mac, and the iPhone app. You have the advantage of both software and dedicated bookkeepers working on your side with Bench.

Dedicated Bookkeepers

Working just like hired bookkeepers, Bench bookkeepers are in-house employees, so you don’t have to worry about your information being outsourced to someone overseas. Each bookkeeper at Bench goes through a rigorous background and criminal check, so rest assured that only trusted individuals have access to your books. They care about your business, want you to succeed, and work together as your virtual bookkeeping team.

Together, they work with an intuitive software to provide accurate, error-free books. For the first two months of your services, they’ll go over your books with you on the phone so you can better understand the process. These calls benefit both your team of bookkeepers and you because they get to better understand your business. 

Services

Your bookkeepers reconcile your accounts to catch any errors they may find, categorizes your transactions so you can see where you’re spending most of your money, and produces your financial statements which include an accurate income statement and balance sheet. If you make one-off transactions that your bookkeeping team can’t categorize, they’ll send you a quick message to ensure that your books are as accurate as possible. Your income statement and balance sheet (profit and loss) let you visualize how much you spend, have, and owe.

Bench connects with all major banks and leading paying platforms such as Square and Stripe. So, don’t worry about sending over your financial statements. Once you set it up, it’ll automatically sync every month. They understand that business gets tough so they won’t bother you every month for bank statements.

Timeframe

You can expect your books to be completed 15 business days after all financial documents are received. Once completed, your team will send you a message letting you know when you can review them. So, no more guessing about the status of your books.

If they see that your books aren’t adding up, they’ll make the necessary adjustments to ensure that they are tax-compliant. Additionally, if you’re behind on your books, no sweat. Bench helps you catch up on a year’s work in less than a month.

You get a Year-End Financial Package that takes all your financial information and has it ready for you and your accountant for tax season. You’ll have access to your income statement balance sheet, trial balance, journal entry summary, and general ledger.

Business taxes can be a tricky beast, which can make the process of choosing a tax provider overwhelming. Bench helps you tame it by connecting you with an expert that can help you file your taxes painlessly. If your CPA has any questions or needs to make a correction on your books, your bookkeeping team can work directly with them. It’ll save you the trouble of being the messenger. Also, everyone who needs to see your finances can log in to your account, making it easier for the job to get done.

Communication

The best online bookkeeping services will have multiple contact options. You can contact your team whenever you like via the Bench app and expect a reply within one business day. Real-time messaging lets you talk to your team and answer any questions that may be bugging you. 

Pricing

Bench services start at $135/month. But you can sign-up for a free trial to test it out. They understand that your business needs may change. If you ever need to transfer over to another software, you won’t be locked in with them. You can cancel at any time and take your books with you.

There are four pricing options that are based on monthly expenses: Micro, Boutique, Venture, Corporate. Each plan lets you customize pricing for multiple businesses, catch up on your books, and scalable plans to ensure that your business is getting the most out of their services.

Bench has your best interests in mind. While plans based on your monthly expenses may seem strange, it gives them a general understanding of how complex it’ll be to manage your books. Plus, it helps make their services more accessible to smaller businesses. 

Best Online Bookkeeping Close Second: Pilot

Pilot offers cash-basis and accrual bookkeeping services to startups and tech companies. It combines the strengths of both human and software to make sure your books are accurate and error-free. They’re a bookkeeping service that integrates a bookkeeping software that lets their team of bookkeepers use the software while you focus on your business.

Dedicated Bookkeepers

The best online bookkeeping service will have dedicated bookkeepers. Pilot is one of them. You’ll be working with the same in-house bookkeeper each month, so they’ll understand the ins-and-outs of your business. 

Services

Pilot integrates with the services you already use and automatically receives financial statements. You don’t have to worry about sending CSV files every month. They also do their bookkeeping with Quickbooks Online because most tax preps and other financial professionals know how to use the software.

Your bookkeeper works on profit and loss, balance sheet, cash flow statements, payroll, and balance sheet reconciliation. By the 15th of each month, you will receive a detailed report of your books. Once you receive your reports, your bookkeeper will also ask you any questions about the previous month financial statements.

When tax season comes, all your books will be in the Quickbooks Online software making it easy to use and access. Pilot also helps you during tax season by giving all the necessary information to a tax firm of your choice or recommending someone for you.

Communication

Support is included in the price. When you need to contact support, you’ll talk to, the person who is actually doing your books. Your bookkeeper will normally respond to your query in one business day.

Pricing

Pilot services start at $195/month. One thing to note is that when your business grows, the amount you’ll have to pay each month will grow as well. They don’t try to make you stay with them, even if you subscribed to their annual plan.

If you feel that you don’t need their services anymore, they’ll refund you for the remainder of the year. Since your books were done with Quickbooks Online you get immediate access to your books when you leave once you subscribe to Quickbooks.

Plans are based on your monthly expenses.

Best Online Bookkeeping Honorable Mention: RemoteBooksOnline

best online bookkeeping

RemoteBooksOnline is a bookkeeping and accounting service for small business owners.

Dedicated Bookkeepers

Bookkeepers at RemoteBooksOnline are certified in Quickbooks and work alongside the accountant leads to ensure that your bookkeeping is perfected.

Services

RemoteBooksOnline offers bookkeeping and accounting services. Your bookkeeper will track your financial records, invoices, and review your books weekly. They’ll enter and prepare your payroll for tax season and update year-end inventory and capital assets. They’ll also reconcile all bank and credit card accounts, create monthly profit and loss and balance sheet statements, update monthly inventory, sales, and other reports.

If you’re backed up on your books, then RemoteBooksOnline will have a year’s worth of books up-to-date in a week. Once your books are finished for the year, your lead accountant will go over them with you. If you’re happy with it and understand what’s going on, you’ll receive your Year End Financial Package for when you go file your taxes. Also, if your CPA has any questions about your books, then your lead accountant will talk to them directly.

Communication

Your lead accountant will be the person you contact with their bookkeeping questions. You’ll be able to contact them by phone or message. But if they’re not available and your question is pressing, then you can contact the support team for same day assistance as well.

You’ll hear from your lead accountant every quarter for a review meeting. During this meeting, you can discuss what’s going on in your business, financially.

Pricing

RemoteBooksOnline prices start at $95/month. Unlike the previous bookkeeping services, this one price by checking accounts. So, if you’re running one business checking account, you’ll pay the lower-tier plan. Most businesses, however, will fall into the intermediate plan which is between $130/month and $585/month.

Final Thoughts On the Best Online Bookkeeping

The best online bookkeeping service will be user-friendly and accessible. Bookkeeping doesn’t have to be an overwhelming task that leaves you frustrated. Our top choices here have plenty to offer aside from being innovative services. They can help you manage your finances without being overly complicated. Find the one that works for you and get started today.

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Is it Common for Married Couples to have Separate Bank Accounts?

marriage - joint bank accounts question

Congratulations! You’ve made the leap into a lifetime together, and now you’ve joined your families, your friends and … your back accounts? Financials are an important topic in any relationship and become even more important as you make big steps towards building a life together. But, how do you do that? Is one joint account the answer, or should your keep your own accounts?

marriage - joint bank accounts question

Some newly-weds are concerned that separate bank accounts make it easier to keep your lives separate and to split up in the case of a rough-spot in your marriage. However, it is not uncommon to have married couples having separate accounts. A 2014 TD Bank Survey of people married or in long-term relationships who have joint bank accounts also have separate bank accounts. So, there’s no right or wrong answer for your banking set-up. What works for the couple next store doesn’t necessarily work for you. There are a few important steps to make sure that you’re your love and money both have a happily ever after.

Talk it Out

Before heading down the aisle, talking about the future is important. Amongst the discussions of career and family, the important though less exciting financial talks should happen. If you have yet to have The Money Talk, then make a date and get started. Everyone manages their money differently. Some people save every penny, while others splurge at every opportunity, and there’s every style in between. In The Money Talk, you both need to define and describe how you deal with money. And you have to do it honestly. Of course, we would all like to be that person who only spends responsibly and has healthy savings accounts. However, you can’t plan your financial future for yourself and for your new life partner without a clear understanding of your monetary ways.

When you both have an honest picture of your finances, share them with each other. How do you like to spend your money? Do you have credit card debt? What’s your credit history like? What are your savings goals? When would you like to retire? What is your current bank and what kinds of accounts do you have? Do you want to rent or buy a home? If you want to buy, when and how much do you want to have saved before buying? Do you have student loans? Do you want to go back to school? Do you want to travel the world? These kinds of questions are important to ask. You won’t have answers to them all, but the asking them is an important step. Be patient and don’t worry if you find some answers surprising. It’s normal. Finances can be a stressful topic. Some people are happy to review every penny and others freak out at the thought their accounts. The talk might be simple or complicated, but either way, the hardest part will be over with: starting The Money Talk.

Once you have an understanding of your financial situation along with your personal and couple goals, then you should talk to your banker. The first meeting with your banker (or bankers, if your accounts are at different institutions) is an informational one. No papers should be signed and no accounts opened or closed. Simply ask what your options are for both joint and separate accounts. Understand the logistics and costs. With this information, you’ll know a bit more of what to expect from the accounts aspect.

Decision Time

Based on your discussions and the information provided by your bankers, you can now make a decision about what kind of accounts you would like set-up. There are a range of options, though the three most basics ones are: one joint account, one joint account with two separate accounts, or two separate accounts. Any of these choices are great so long as you and your partner are comfortable with it. Pick the best option for the two of you, based on your needs and financial styles, not based on what you think you should have.

Set-up Your Accounts

When your decision is made, you can then start planning your accounts. Perhaps nothing will change. Perhaps you’ll combine your spending accounts for bills and monthly expenses, but keep separate savings ones. Perhaps you’ll merge everything, including some of your investments. Whatever the combination, you need to set-up certain check-ins. Responsibilities of who pays which monthly bill need to be decided. For large purchases, like a shopping trip or new computer, some couples will want to have a check-in before the purchase. For joint savings efforts, like vacations or a home down payment, some couples will want to discuss contributions, or even set up automatic ones. With these roles defined, you can move forward with your new financially joined lives.

Keep On Talking

Of course, finances change as life does. With promotions and layoffs, holidays and vacations, births and deaths, different situations require emotional and pragmatic consideration. When these changes arise, you’ll need to address how that will affect your spending. For good or for bad, these conversations need to happen. No one likes surprises (unless it’s the surprise of winning the lottery!), so it’s essential to have an open dialogue about money matters. Be prepared to share your concerns and expectations, and to change your earning and spending based on what’s needed for your relationship.

Conclusion

There is no one correct way to set up your financial systems as a married couple. With a range of options, you need to figure out the best one for you two. And there’s nothing to say that you might change your account set-up in the future. As your marriage evolves, your finances will, too. It’s important to stay honest, to be clear and direct. Your banking style can be wildly different from your partner’s, but with good communication and planning, that difference will not only not be a problem, but could provide valuable new perspective. Building a happy marriage takes lots of love and hard work. Put some of that hard work towards your collective finances and it will certainly pay off.

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Should I Refinance My Private Student Loans?

college savings option

There’s no denying that college is expensive. A recent report shows that the average 2018 college graduate has nearly $40,000 in student loans. Depending on the salary of their first “real” job, a graduate might be struggling to make the monthly payments once their student loans enter repayment status. This is where refinancing comes into the picture!

should i refinance my student loans

What Is Student Loan Refinancing?

Each college student has the option of applying for federal and private student loans to pay for their education. Both types of student loans can be refinanced (federal loans call the process consolidation instead of refinancing). This article will focus on private student loan refinancing.

Refinancing of any loan is renegotiating your outstanding loan balance and accrued interest for a new interest rate and repayment terms. As a college graduate might have private loans from two or three different lenders, the refinancing process will merge all those loans into one account with a single interest rate and one monthly payment. That means instead of paying $257 the 15th of each month to “Bank A” for a loan with a 6.0% interest rate and $200 to “Bank B” on the 27th for a loan with 6.3% interest, only one payment of $425 needs to be paid on the 1st of each month and the new interest rate is 5.5%.

Advantages of Student Loan Refinancing

Possibly the best benefit of student loan refinancing is the potential to secure a lower interest rate than what is charged on your current student loans. As you have a steady income and a potentially higher credit score than when the loans were originated during college, you might qualify for lower interest rates. As a cautionary note, these lower interest rates might have a longer repayment period than your original loans. This means you are charged less interest each month but will pay more if you use the full loan repayment period (10 years, 15 years, 20 years, etc.) to pay off the principal.

Sometimes it takes a year or two to earn a salary high enough that allows a graduate to pay their bills without struggling to make ends meet. Because a lower interest rate is charged, you should have a lower monthly payment and a longer repayment period.

If you struggle to make the minimum payment on your original loans, think about refinancing. The difference could potentially make all the difference in your monthly budget by refinancing. Of course, if you can pay more than the minimum payment, you will pay off the loan sooner and pay less interest.

Additional Benefits

Another benefit of refinancing is a single due date. Depending on when the due dates are for your current student loans and when you receive your paycheck, your wallet might feel very thin. Plus, having multiple bills due on multiple days during the month increases the likelihood of forgetting to make a payment.

With one due date for all your student loans, it is easier to keep track of when you need to make the payment. You should be able to schedule the due date for after you receive your paycheck, ensuring you have plenty of money in the bank.

Disadvantages of Student Loan Refinancing

If you have a mixture of federal and private student loans, you might have to refinance each type of loan separately. Due to several nuances between federal and private loans, many lenders will not refinance federal and private student loans in the same package.

While refinancing can be a lifesaver for some, refinancing can cost more money in the long-run if you only make the minimum monthly payment each month. Besides the potential application and origination fees a refinancing lender may charge an applicant, they do not offer lower interest rates. Some graduates need the lower payments just to make ends meet in the short-term, but will still have to pay back the entire loan amount plus interest even if it takes the entire 15 or 25-year life of the loan to do it.

This is the same thing when comparing a 15-year mortgage to a 30-year mortgage or a 3-year auto loan to a 5-year auto loan. Shorter loans require a higher monthly payment to meet the deadline. As long as the loan doesn’t have an early payoff or prepay penalty, you can pay back your student loan sooner without having to pay an additional fee. Even if you do, it might be cheaper to pay the penalty than pay interest for the life of the loan.

Fixed or Variable Interest Rate

Depending on how much of a monthly payment you can afford and how fast you intend to pay off your loans, you will need to decide between a fixed interest rate or variable interest rate.

Fixed Interest Rates

Fixed interest rates are best for those that will require at least 5 years to repay their loans because the rate will remain constant for the life of the loan. Nobody can predict the future, but, interest rates for most loans are near record lows at the present moment and they are more likely to increase instead of decrease in the future.

Current fixed rates for student loan refinancing range from 6% to 12%. If you secure a rate today at 6% and rates increase to 10% in 15 years when you pay off the loan, think of all the extra money you saved by going with a fixed interest rate instead of a variable interest rate.

Variable Interest Rates

On the other hand, variable interest rates are best if you plan to pay off your loans in less than five years or sooner. Variable interest rates currently range from 2% to 8% depending on your creditworthiness and repayment terms. If rates do rise, they most likely will not exceed the current fixed rates by the time you pay off your loan.

Keep in mind that lower interest rates usually come with a shorter repayment period.  If you do not feel comfortable that you can make the required monthly payments to meet the deadline, you should opt for a longer repayment period, even it charges a higher interest rate. By choosing a variable rate you will probably still have a lower rate than a similar fixed rate loan.

Similar Rates

If both types of loans are charging near-similar interest rates, it might be better to go with a fixed rate plan. The interest rate might be a little higher than a variable, but you have an extra safety net for a longer repayment period in case you cannot meet the monthly payments required by a variable loan. Also, a fixed rate also hedges against any variable rate increases. If you can still prepay your loan, you will still be saving money overall.

When To Apply For Refinancing

The ideal candidate for refinancing is somebody struggling to make their current monthly payments. Refinancing might provide them the ability to pay their student loans, rent, electric bill, and build up an emergency fund. You might also benefit from refinancing if you can qualify for a lower interest rate than what your student loan provider currently charges. The potential savings increase with a larger balance (you might need a $10,000 minimum balance just to qualify for any student loan refinancing) as the principal will accrue less interest every month.

Refinancing might even be beneficial if you plan to pay off your loan early. As one of the perks of refinancing is the potential to save money, try to apply for a program that will not charge an application or origination fee. If your credit score is lower or you have a lower income this might be a little difficult, but, fee-free programs do exist.

When Not To Apply For Refinancing

Sometimes refinancing is more trouble than it is worth. This might be your case if you can already pay off your student loans within the next 4 to 5 years. Most programs also require a minimum loan balance (i.e. $10,000) to apply for refinancing. If you are right at this level and have a similar interest rate, it might not be worth the hassle.

Another reason to not pursue refinancing is if you have no trouble making the minimum payments and the interest rate isn’t significantly different. It might be tempting to refinance to get the lower monthly rate. But, if you are not disciplined to pay more than the minimum, it might be better to keep your original loans. The shorter repayment period might mean you will pay less interest, even if the overall interest rate is higher.

Should I Refinance My Private Student Loans Summary

Paying for student loans isn’t the most exciting facet of life. Refinancing can serve two different purposes. It allows low-earning graduates the ability to pay the student loan obligations by extending the repayment period or it helps others pay less interest even if they prepay. Many graduates can benefit from refinancing if done properly, and every college graduate should at least consider it if they qualify.

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How To Shop For the Best Deals On Car Insurance

should i buy a new or used vehicle?

Having car insurance is a good idea. Besides satisfying a legal requirement in many states to register a vehicle, car insurance also protects you from accident-related expenses. Car insurance can help you save thousands of dollars if you ever need to use it. But that doesn’t mean you need to spend all the money in your wallet each month to pay for this coverage. Let’s look at how you can get the best deals on car insurance.

best deal on car insurance

To Find the Best Deals On Car Insurance Shop Around

If you think each car insurance provider will charge you the same price, you should shop around. Insurance quotes will be very similar among several providers. But certain companies will charge higher rates if you recently received a ticket or bear responsibility for an at-fault accident.

Some insurance providers will also charge lower rates if you drive an alternative fuel vehicle like a gas hybrid or an electric vehicle. Parents can also benefit from additional price discounts when their high-school or college-aged children meet certain criteria like going through a driver education course or getting good grades.

Cheaper car insurance rates might also be available by opening a policy with the current insurance provider that you use for homeowner’s insurance or life insurance. This isn’t always the case though. Even if a price quote from your current insurance provider is well within your monthly budget, getting a second quote simply to compare rates is a good idea and only requires a few minutes of your time.

Certain insurance providers might offer low rates with some insurance products, yet, cannot compete with other products because they might contract with a third-party to provide coverage. If your current insurance provider charges a higher quote than a competitor, you might be able to get a price match by calling the provider.

Where To Shop For the Best Deals On Car Insurance

One of the easiest ways to shop for the lowest rates is to go on a website like Esurance. Here you can compare quotes from several leading car insurance providers including Esurance. Even if you find a rate from one of Esurance’s competitors, you still have saved a lot of time “insurance shopping.”

If you want to do your own independent research, you can also visit or call the various insurance websites and get a 6-month price quote that can also be broken down into a monthly price as well. As there are many insurance providers to choose from, here are a few of the best car insurance companies that might offer you the lowest rates.

Allstate

Allstate claims that the average person who switches from their existing car insurance policy to Allstate save $446 per year. That’s a monthly saving of $37, which might be the monthly amount that you are paying for a secondary vehicle with liability coverage. By going with Allstate, you can become part of the “Good Hands Team” and also receive discounts if your vehicle has anti-lock brakes (ABS). Although rates might differ, Allstate is the parent company of Esurance (that company that compares auto insurance quotes and happens to provide car insurance themselves).

Geico

Although Geico has been around for several decades, it has been known as one of the go-to insurance providers for drivers who want low rates. It has become the second largest auto insurer with good customer reviews. As the full name of Geico is Government Employees Insurance Company, federal employees and military members can receive additional discounts. To one-up Allstate, Geico also claims that the average driver has an annual savings of $500 when switching from another insurance provider.

Liberty Mutual

Teachers might like Liberty Mutual as they qualify for an additional discount. Liberty also offers two semi-unique optional coverage options like “New Car Replacement” and “Better Car Replacement” that will provide enough cash funds to replace your damaged vehicle with one that has 15,000 fewer miles on it and will either be the same model year or one year newer.

Progressive

Progressive is another company that offers great rates. They offer two additional ways to save money on your quote. Before purchasing car insurance with Progressive (and for existing customers too), they have a “Name Your Price Tool” where customers can list the price they are willing to pay. Progressive will do their best to match the price.

Another way to save money is to use their Plug-In Snapshot device. This device plugs into your car and gives you a rate based on your mileage and driving habits. Those that like to speed, drive at night, or drive in stop-and-go traffic often will be charged higher rates than traditional price quote criteria.

USAA

USAA is an “insurance cult” of sorts among military families. In recent years, USAA has extended membership from military officers to anybody who received an honorable discharge. USAA is a semi-exclusive insurance company. But they have received good ratings for customer service and price quotes on their various insurance products. They continually receive prestigious awards for being one of the best insurance providers.

Comparing Insurance Products To Find the Best Deals On Car Insurance

Another thing to consider with quote prices from the various companies is the coverage amounts. Two companies might provide you a quote for $50 a month. One might require a higher deductible ($1,000 compared to $500 before they pay for damages and repairs). Alternatively, they may offer fewer coverage options like roadside assistance, rental car reimbursement, vehicle replacement, etc.

The best way to get an apples-to-apples comparison is to receive quotes for basic coverage with the same deductibles for liability, collision, and comprehensive. If you own an older car, it might make more financial sense to get liability coverage. This is if the car isn’t worth the additional premium for comprehensive and collision policies.

If two insurance quotes are very similar, you might have a tough time deciding which company to go with. One way of reaching a decision is to see if you can switch any additional insurance policies over like homeowner’s or renter’s insurance to receive a multi-policy discount. Another tip might be asking your friends or family if they have a preference for either insurance company.

Word of mouth is consistently one of the best forms of marketing. If you do not know anybody personally that has coverage with either company, you can also look at online reviews. Note that these can be a little tough to cipher as most people either love or hate their insurance company.

Your current provider might still be your cheapest option. If so, there are several ways to reduce your car insurance premiums.

best deals on car insurance

Shopping For the Best Deals On Car Insurance

Out of all the insurance companies, there is not a single company that is always the cheapest. Every person has a different driving record and vehicle(s). Plus, each company treats this information in their own manner. Switching to a particular insurance company might save somebody hundreds of dollars and cost the next person a few extra dollars a month. For this reason alone, it pays to shop around to find the best deals on car insurance.

Just because one person didn’t get a good deal doesn’t mean you won’t either. The important thing about insurance is that you do not want to cut too many financial corners. The best deals on car insurance are the ones you never have to use. They also don’t cost a lot of money. You want to make sure there is good coverage and customer service in the event you do need it.

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What Is The Difference Between Federal and Private Student Loans?

federal and private student loans

Every fall and spring, a college student needs to apply for loans to cover the remaining cost of college that financial aid and scholarships will not cover. There are a couple different loan options to choose from, but the primary decision will be choosing between federal and private student loans. Each type of loan will pay the college bill, but are differences between federal and private student loans?

All About Federal Loans

Federal student loans are administered by the Department of Education. They are the most popular option among college students and their parents because of the multiple offerings and extra protection. They usually have lower interest rates than private loans. Let’s break down the different features offered by federal loans.

Interest Rates

Most federal loans have a fixed interest rate. This means you pay the same interest rate for the entire life of the loan. If interest rates drop, the rate might also lower but it will never exceed the original amount. Most private loans are variable rate loans (the rate can go up or down), although private fixed-rate loans exist as well. Variable rate loans typically have lower interest rates. But, you run the risk of paying more interest in the long run if rates increase and exceed the fixed rates offered at the time of loan origination.

Subsidized and Unsubsidized Loans

Depending on your total calculated need on the FAFSA form, you might qualify for a subsidized federal loan. These loans mean that the federal government pays the interest accrued while you remain actively enrolled in school. You will begin paying interest once the loan enters repayment status.

If you do not qualify for a subsidized loan, all the interest accrued will capitalize and be rolled into the principal when the loan enters repayment status six months after graduation. You can pay the accrued interest before it capitalizes to avoid paying interest on interest. Over the course of four years of study, the capitalization amount can be several thousand dollars.

Repayment Based On Income

Another benefit of federal loans is that you have more flexibility in negotiating the repayment of your federal loans each month. Certain professions pay less than others. It can be a struggle for a recent graduate to make the regular monthly payments of a federal or private loan until they have a few years of experience under their belt.

If you meet the income-to-expense requirements, your payment plan will be restructured to where you will owe up to 10% of your discretionary income. The loans will still need to be repaid, but this option allows you to make reduced payments without penalty.

Loan Forgiveness

Graduates that find employment for a government or non-profit organization may qualify for loan forgiveness after 120 (10 years) qualifying payments. Further qualification for this option also requires being enrolled in an income-driven repayment plan (discussed above) or a 10-year repayment plan.

Projecting your future employment situation at graduation, let alone 10 years after graduation, can be somewhat difficult to predict for college students or high school seniors. However, it can be a nice option to have in your pocket in case you need it.

Other circumstances when federal loans can be forgiven can be when the borrower dies or becomes permanently disabled. Note that it is harder to have private student loans forgiven for any of the reasons mentioned in this section.

federal and private student loans

Private Student Loans

For one reason or another, sometimes students will also need to go with private student loans. Here are the advantages of a private loan compared to federal loans:

No Borrowing Limit

A drawback of federal student loan programs is that a college student or family can only borrow so much money per college semester. If they do not have the cash to pay the difference, they will need a private loan. To avoid the hassle of applying for multiple loans, it might be easier to borrow all the money from one lender if the interest rates are similar to each other.

Competitive Interest Rates & Repayment Plans

Private lenders offer fixed and variable interest rates. They are usually a little higher than what is offered by federal programs. But applicants with great credit scores can qualify for rates that are competitive with or lower than federal interest rates. To qualify for these lower rates, the student will most likely need a co-signer with an excellent score. But, it is possible to get low rates through a private program.

Also, private loans also offer differ loan repayment terms. Federal loans often start with a 10-year repayment plan with the option to extend repayment up to 25 years. With a private loan, your repayment term will vary by the lender but it could be 15 or 20 years from the origination date. Loans with shorter repayment periods will have lower interest rates, but will charge a higher monthly payment to meet the payment deadlines.

A Private Market Solution

As a matter of principle, some families do not want to accept student loans from the government for personal reasons. It’s not required to fill out the FAFSA (required to qualify for federal loans) or accept federal loans before applying for a private loan. These loans offer another option to pay for school.

Similarities Between Federal and Private Student Loans

Although the two differ in a few ways, there are many similarities between federal and private student loans. The federal loans have more “perks” for students. This is especially true if a college graduate will be struggling to make the monthly payment. But, private loans are not the “scary monster” that people sometimes refer to. Federal and private student loans share some certain similarities.

Prepayment Penalties

Nobody wants to pay on their student loans until their own children begin attending college. Neither private nor federal loans charge prepayment penalties if you pay off your student loans in full before a certain date. Check the fine print before signing for a loan just to make sure. By paying more than the monthly minimum, you will save thousands of dollars in interest.

Refinance

With either type of loan, you can also consolidate or refinance your loans. A graduate with a combination of federal and private student loans will need to apply twice for refinancing (once for federal and once for private). Most lenders will not allow the applicant to refinance in the same loan because you lose the special privileges of federal loans when they are combined with private loans.

Interest Rate Discounts

To reduce your monthly interest charge, both federal and student loans types offer interest rate discounts if you meet certain criteria. This can include scheduling automatic payment withdrawals instead of manually having to send a check each month. You might also earn a discount if you go through loan counseling or maintain a good GPA.

One final similarity between both programs is that loan interest is tax-deductible. Each tax year, you can deduct up to $2,500 in paid student loan interest. This can help you receive a larger tax refund and is an indirect discount on your student loans.

federal and private student loans

Which Is Better Between Federal and Private Student Loans?

Each person has different financial and personal needs. As today’s college graduates are leaving with more student loan debt than ever before, it might make more sense to maximize the federal student loan offerings because of the repayment and loan forgiveness options.

Nobody can predict the future and these “safety nets” might come in handy. This doesn’t mean that a college student that solely takes out private loans is doomed to financial failure.

At the end of the day, each student and family need to do what makes the best sense financially. As it can take at least a decade to repay the loans, much interest can accrue. Choosing an option with the lowest principal and lowest interest rate is the best decision.

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Should I Buy a New or Used Vehicle?

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Buying a vehicle can be a very important financial decision. You want to buy one that is reliable and practical (a “soccer mom” probably won’t be driving her children around in a two-seater sports car).  Once you find your “dream car” the next question to answer is, “how much will it cost?” If you have ever shopped for a car before, you know that the prices can range anywhere from several thousand dollars for a car with 100,000+ miles to $50,000 for a brand new family SUV with that “new car smell.”

Choosing whether to buy a new or used vehicle is a polarizing decision for most car owners, largely depending on their personal experiences. Those who favor purchasing new vehicles say the extra cost means fewer repair expenses. Plus, you can drive the vehicle for an entire decade before having to purchase a replacement vehicle.

Proponents of “buying used” say the lower initial cost of buying a used vehicle and the occasional repair is normally cheaper than the monthly payment for a new car. They also point out that the new vehicle can depreciate up to 50% within the first three years.

So, should your next vehicle be new or used? That decision depends on your circumstances. This guide will hopefully help you make your purchase decision a bit easier.

New Vehicles

should i buy a new or used vehicle?Advantages of New Vehicles

Buying a brand-new vehicle has several advantages. They are equipped with the latest safety technology, possess more horsepower than previous model years, and have a cutting-edge design that makes you different than everybody else.

Wider Selection

With a new vehicle, you have more selection to choose from among dealer inventories. You can select from the various exterior paint colors. You can also choose whatever interior trim package or upgrades are available. These choices can cost as much or little as you allow them. But, the number of choices for used vehicles can be limited by what people are selling.

For example, you might want a dark red 4-wheel drive Toyota pickup truck with a leather interior. You know you can buy the truck with the exact specification brand new. How long will you have to wait for that same truck to be for sale? Will you have to compromise on a model with cloth seats or a different color? These are things to consider.

Minimal Maintenance

One reason to purchase new is the peace of mind regarding maintenance and repairs. The worst feeling for any car owner is for the “Check Engine” light to illuminate shortly after buying a vehicle.  It is highly unlikely that a brand-new vehicle will need any repairs the first couple years beyond the routine oil change and tire rotation.

Certain parts come with warranties that are valid for the first couple years. If you plan on taking a coast-to-coast trip, you will feel more confident driving a new vehicle than a used car that is approaching 100,000 miles. Keep in mind there are some new car “lemons” as well. The first year of new vehicles or models with major redesigns is more prone to requiring repairs than other new vehicles.

Cost of Buying New is Almost the Same as Buying Used

Certain types of vehicles are difficult to buy used, in good condition, with low mileage, and minimal maintenance needs. Why? The owners who purchased the vehicles in new condition like them a lot and plan to keep them until the maintenance costs no longer justify hanging on to them.

Currently, it can be difficult to find used trucks and large SUVs with low miles or minimal needed repairs. Not many people want to buy a vehicle with high mileage or a faulty transmission when they can spend an extra couple thousand dollars for a trouble-free new vehicle with near-zero miles.

Cheaper Loan Rates

If you need to get a car loan for your next purchase, interest rates are usually lower by at least 1% (depending on your bank) for new cars. Even “like new” vehicles may qualify for the special interest rate. A new vehicle can be defined as any automobile less than two years old, although some lenders will extend new vehicle rates to any automobile 5 years old or newer.

The monthly payment for a used car still might be cheaper than a new car because of the lower principal amount. However, it doesn’t hurt to use an auto loan calculator to see the monthly price difference between a new and used vehicle loan payment. Buying new might not be as expensive as you think once you factor loan interest into the equation.

Disadvantages of New Vehicles

Depreciation

This is most likely the #1 reason used car advocates will tell you to buy used.

You have probably heard the saying, “a new car loses $2,000 in value as soon as you drive it off the lot.” This is very true. If you were to buy a vehicle, drive away, and return 15 minutes later wanting a refund, most dealers will not give you a full refund. A new car depreciates approximately 10% the second you leave the dealer lot and 20% overall for the first year of ownership. After the first three years, most cars will depreciate up to 50% from their original sticker price.

If you are one to trade vehicles every few years, you are affected the most by depreciation. This is realized each time you trade-in your current vehicle. Three years ago it could have been worth $30,000. Today, the dealer might only pay you $15,000 for it. That is $15,000 already put towards your new vehicle, but you still have pay or finance the difference to drive the new one. If you decide not to trade-in but keep the vehicle for another 7 years, will you spend less money overall by waiting?

Vehicles are not a wise financial investment because of the depreciation factor. Unlike stocks that will do up and down, most vehicles will only keep losing value each year. A very select few will actually appreciate in value.

Hidden Costs & Fees

Beyond the sticker price, new vehicles have higher taxes and fees. The dealer is primarily concerned about the sales price. After you have agreed on that, the “real fun” begins with the paperwork. You will soon realize any vehicle (new or used) will cost more than the sales price.

The largest “hidden cost” will be sales tax. Your state might charge an 8% sales tax on all vehicle purchases. For instance, the sales tax on a $7500 used vehicle is only $600 compared to a $2200 tax on a new vehicle that costs $27,500. Certain states also assess an annual personal property tax on vehicles as well. An older vehicle will have a lower tax burden than new vehicles.

Another fee to consider is the “doc fee” charged by dealers. Normally this fee is non-negotiable and is a couple hundred dollars. The easiest way to avoid this fee to purchase private-party using Craigslist or your local newspaper classifieds. Obviously, it’s easier to buy a “used vehicle” without a dealer. Not many people are going to buy a new car and immediately sell it themselves.

Higher Insurance Rates

A new vehicle will have higher insurance rates because they are more valuable. New vehicle owners are more likely to also carry comprehensive and collision insurance (required for any vehicle that is financed) that adds to the monthly cost. Depending on the value of the used car you might buy, it might not be financially wise to purchase additional insurance to cover damages to your vehicle if the deductible or premiums are comparable to the current vehicle value.

Before making a purchase, car insurance providers will provide free quotes for your new monthly premiums if you purchase a vehicle. Depending on the vehicle and provider, the premium price difference between a new and used vehicle might be narrow or wide. To get the full cost picture, it only takes a few minutes of your time to receive an estimate.

Used Vehicles

Nor for the other side of the discussion.  When is it best to buy a used vehicle?

Advantages of Used Vehicles

No Car Loan

One advantage of buying used is the increased ability to buy a car without borrowing money. It is easier to save and buy a car that only costs $10,000 instead of $20,000 or $30,000. For those with low credit scores or simply do not want another monthly payment, buying used vehicles are the best way to stay out of debt.

Buying a reliable, good quality pre-owned vehicle for $10,000 and the cost of an occasional repair is still cheaper than paying an extra $10,000 or $15,000 for a new vehicle that can only be purchased by borrowing money.

Less Depreciation

It’s a fact that new cars depreciate at a rate of 15-25% per year and will only be worth 50 to 70% of its original value after five years. Cars will continue to depreciate each year, but the rate slows after the five-year mark. Waiting to buy a car after it is five years old, means you can buy two used ones for the price of one new car.

Buying used might be a way for you to be a two-car family instead of a one-car family or a three-car family. Even if you decide to buy a 1-year old used car, you will still have saved several thousand dollars compared to buying new.

Not All Used Cars Are “Lemons”

A “used car” doesn’t mean every single one is like your very first car in high school with a funny smell or needed a quart of oil added every week. Used is a very broad term. It can be a one-year-old car with 20,000 miles on it or 12-year old sedan with 173,000 miles that needs new tires.

The beauty of buying a used car is that experts at places like Consumer Reports and Edmunds have long-term maintenance histories of vehicles you are considering. From these reports, you can learn what certain model years are more prone to having electrical or transmission troubles. These are model years you can avoid due to the experiences of previous owners.

Disadvantages of Used Vehicles

Old Technology

Depending on the age of the vehicle, it might not have certain features that new vehicles have. Such desirable features could be LED headlights, a backup camera, or a 6-speed transmission. If certain features are important to you, increasing your spending limit or waiting for another year or two to purchase a “new-to-you” vehicle will be the only way to the new technology.

Uncertain Vehicle History

Used cars get a bad rap for a particular reason. There are enough bad experiences that have convinced people to only buy new. Although buying used and having to pay for the occasional repair is still cheaper than the additional cost for a new vehicle, in most instances, some vehicles come with little or new maintenance history.

Not every owner keeps meticulous records of every oil change, preventative maintenance milestone, or unexpected repairs made. Tracing a vehicle history is even more difficult if it has had multiple previous owners. Vehicle longevity can differ greatly depending on the driving habits of prior owners as heavy towing or constant stop-and-go traffic will wear out a vehicle quicker than normal highway driving.

That Said, Should I Buy A New Or Used Vehicle?

Buying a new or used is ultimately an individual decision. These are not strict rules that determine whether to buy a new or used vehicle, but just some closing thoughts to help you make a decision.

When To Buy New

Buying new is best for those that want peace of mind for maintenance and might drive a lot of miles each year. You don’t want to have a vehicle malfunction when you have an important meeting to attend or plan to drive across the country to see family.

New vehicles may have mechanical issues too. However, they are more likely to be under warranty if they do occur. Purchasing a new vehicle is also a good option for buyers who want the latest technology, can afford a more expensive loan or plan to keep the same car for the next decade.

When To Buy Used

For those with low disposable incomes, bad credit scores, or families that want a reliable vehicle without going into debt, buying used is the best option. The money saved by not writing a check to the bank every month means more money that can be saved for other events like a vacation, a new house, or retirement. Buying used is also a good option for those that only need a vehicle to get from A to B and do not need the latest technology or body design to get there.

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Utilizing Medical Premiums to Augment Retirement Saving

The Power of the Health Savings Account

Traditionally, medical insurance is purchased via our employers and premiums are deducted from our paychecks in exchange for medical coverage. Health Savings Accounts (FSAs) are challenging this traditional paradigm by allowing the employee to channel the vast majority of these premiums into an FSA bank account. In exchange for holding onto these premiums, the employee must shoulder more of the deductible burden. How nice would it be to keep the premiums you would’ve been paying anyway while still having access to the identical medical plan?

High Deductible Health Plans

Individuals, families, and corporations alike share a commonality with regard to reducing overall health care costs. Collectively, we’re constantly searching to reduce expenditures pertaining to medical expenses to decrease overall cost structures. More companies than ever are now offering High Deductible Health Plans (HDHPs) with a companion HSA option. More than two-thirds of companies with 1,000+ employees are offering this HDHP/HSA option. The popularity of the HDHP/HSA combination has increased substantially over the past decade.

As of 2014, 17.4 million people were enrolled in HDHP/HSA compared to a mere 3.2 million in 2006. In brief, an HDHP is a pre-tax medical plan that requires the employee to shoulder the cost of medical expenses out-of-pocket. It must also be paid upfront to a defined dollar amount to satisfy a deductible. Once this deductible is reached, the traditional medical plan provides coverage. These plans may be a win-win for both the employer and employee over the long-term.

For 2016, a qualified HDHP translates into a medical plan that has a minimum deductible of $1,300 for an individual and $2,600 for a family. This must be met prior to insurance benefits kicking in and providing coverage. HSAs offer many great advantages to address current medical needs. They also simultaneously provide the potential for long-term account accumulation.

Advantages of HSAs

Leveraging the advantages the HSAs offered via pre-tax contributions, tax-free earnings from interest and investments, and tax-free withdrawals for qualified medical expenses is just the beginning. There’s long-term potential in the fact that unused contributions roll over each year and are not subject to the “use it or lose it” rule.

At age 65, withdrawals can be made penalty-free for non-medical reasons. In turn, it can have a very significant impact on retirement. At age 65, the HSA acts in a similar fashion as a traditional IRA. It’s taxed at the individual’s effective tax rate. Thus over the long-term, HSAs can serve as an invaluable source of retirement income while simultaneously serving as a personalized long-term health care cost containment plan.

Key HSA Points

1) All HSA contributions belong to you and are deposited into a bank account in your name

2) All HSA contributions and earnings from interest and investments are tax-free

3) Withdrawals for qualified medical expenses are tax-free

4) Unused contributions roll over each year and are not subject to the “use it or lose it” rule

5) At age 65 withdrawals can be made penalty-free for non-medical reasons

6) At age 65 one can make withdrawals for non-medical expenses and taxed at his effective tax rate on those distributions

 

HDHPs and the HSA Component

HDHPs include an HSA that allows employees to save tax-free money for current or future medical needs, even in retirement. Unlike a Flexible Spending Account (FSA), money contributed to an HSA rolls over year after year and is not subject to the “use it or lose it” rule that governs FSAs. The funds deposited by you and your employer into the HSA belong to you forever and are never relinquished under any circumstance, except on the account holders’ accord.

These HSA funds are not limited to the cash deposits from each paycheck. Thus, funds in excess of a balance threshold amount (typically $2,000 but usually determined by your employer and the HSA provider) are eligible for investing in a variety of mutual funds and other investment products. For 2017, the contribution limits are set at $3,350 and $6,750 for individuals and families, respectively.

If over the age of 55, one may contribute an additional $1,000 as a catch-up contribution. These gross amounts are the total amounts deposited into the HSA account between yourself and the employer. Thus leveraging the HSA, one has the potential to benefit from long-term account accumulation, interest, and appreciation while saving for future medical needs and retirement.

HDHP and Traditional Medical Plan Premiums

HDHP premiums will cost a fraction of the price when compared to a traditional PPO90 plan. This means more money in your pocket each paycheck. However, the trade-off is the financial obligation to shoulder the entire deductible upfront prior to your selected medical plan kicking in. This means potentially paying higher maximum out-of-pocket expenses.

For 2017, the maximum out-of-pocket expenses for an individual and family are $6,550 and $13,100, respectively. Note that this may change. However, many companies will have much lower maximum out-of-pocket expenses built into their HDHP.

Many companies provide corporate wellness programs that incentivize employees to maintain a preventative and healthy lifestyle. These wellness programs typically require an annual biometric screening along with a blood panel. In return, the employer will apply discounts to the medical premiums employees pay.

Factoring in the wellness discount, individual policyholders may pay as low as $0 in premiums. A family will likely pay a nominal premium for access to the HDHP. The maximum contributions to an HSA are $3,350 and $6,750 for individuals and families, respectively. For a family, medical premiums can easily run north of $6,750 annually for a PPO90 plan. Instead of paying the ~$6,750 in premiums, you have an opportunity to contribute this amount to an HSA.

The potential for long-term account accumulation using the money that normally would have been allocated towards traditional medical premiums. Channeling these funds into an HSA instead presents a financially compelling case.

Deductible and Medical Coverage

Satisfying the predetermined deductible is a prerequisite within HDHPs prior to the medical plan kicking in and providing coverage. Per the IRS guidelines, the minimum deductible is $1,300 and $2,600 for an individual and family, respectively. To encourage employees to enroll in the HDHPs, typically the employer will make a one-time annual contribution on behalf of the employee to the HSA, thus offsetting the deductible amount.

Two-thirds of employers offering the HDHP/HSA options place money into those accounts. In many cases, the employer contribution can be significant. Contributions of $500 for individuals and $1,000 for families is commonplace throughout large corporations. This decreases your deductible by as much as ~40%, rendering your effective deductible to a much more manageable amount.

In terms of medical coverage using the HDHP, the insurance plan usually covers preventative care at 100%. Additionally, all ancillary medical expenses are billed directly to the insurance company. The policyholder is charged the negotiated rates between the provider and insurance company. The insurance coverage, albeit in the deductible phase, still provides financial benefits in your favor via these negotiated rates.

All covered medical expenses are applicable to this deductible, including prescriptions. Once the deductible is satisfied, your selected insurance coverage takes over as a normal plan would. The deductible amount that one must satisfy varies from company to company, however, the minimum is set by the IRS.

The Triple-Tax Advantage and Retirement Implications

HSAs provide a triple tax advantage

1) Contributions are tax-free or pre-tax

2) All earnings from interest and investments are tax-free

3) Withdrawals for qualified medical expenses are tax-free.

At age 65, withdrawals can be made on these accumulated funds, penalty-free for non-medical reasons. This is similar to a traditional IRA at the individual’s effective tax rate.

The HSA Flexibility

HSAs have tremendous flexibility with regard to making contributions and paying medical bills on your own terms and circumstances. When electing to enroll in an HDHP, you have the ability to modify your contributions at any time and in fact, you’re not required to contribute any money at all to the HSA account.

If you’re single, in good health, and don’t anticipate utilizing any non-preventative medical treatments, you can take the employer contribution. You may pay next to nothing for the HDHP while saving thousands. In the event a medical situation arises, you can increase your contributions accordingly. Therefore, you can contribute when and how much you want at any time as your medical situation dictates. You can even make a lump sum contribution from an external bank account and make the tax adjustments during filing.

You also have the ability to pay medical bills several different ways. Using your HSA debit card at the point of sale, reimbursing yourself after paying out-of-pocket, or coordinating with the HSA provider to pay the insurance company on your behalf using the funds in your HSA account are all options.

Utilizing the HSA as a Loss of Medical Coverage Hedge

HSAs can provide peace of mind in the face of an unexpected job loss or job transition and subsequent loss of medical benefits. The accumulated funds in this account are readily accessible and will likely mitigate the loss of medical insurance since money in this account has been earmarked for medical expenses.

Depending on the account balance, this may provide the option to purchase a lower value plan and thus pay much lower premiums in a job loss situation when expenses are particularly important.

Summary

Utilizing funds normally reserved for paying medical premiums can be earmarked for an HSA to augment your long-term retirement goals and contain long-term health care costs. A family that normally opts for the PPO90 medical plan and satisfies their deductible each year can make a meaningful impact on their retirement.

These funds can be withdrawn at age 65 without penalty for non-medical reasons at the individual’s effective tax rate. This could potentially serve a dual purpose; 1) additional retirement income and 2) the flexibility to content with current and future medical costs.

For further details and plan requirements, refer to http://www.irs.gov/publications/p969/ar02.html.

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How Much Do Weddings Actually Cost?

For some, dreamy ideals of the perfect wedding swirl around in the mind years before the right person comes along. Weddings are often referred to as the best day of a couple’s life together, and a well-planned event is remembered by guests for years to come. However, the dollars and cents that go into planning a wedding can add up quickly, given the sheer number of details necessary to pull off an event for potentially a few hundred people. Everything from invitations and seating charts to food and alcohol must be budgeted for, regardless of the extravagance of your big day. If you’re on the cusp of planning for a wedding or have already started the tedious process, it is important to know how much weddings actually cost.

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Average Total Cost by State

According to recent survey data, the average cost of a wedding held within the United States is an impressive $31,213. That’s quite a bit of dough! Costs vary widely from state to state with the lowest average coming in at $15,257 in Utah. Overall, the celebration of your nuptials is lower in the Midwest and Southwest. Arkansas closely follows Utah at the lowest average cost. For those planning to get wed in the Northeast, however, the average costs quickly creep up. On average, couples planning their big day in Manhattan pay an average of $76,328 – the highest in the nation. Northern and Central New Jersey, and Chicago, Illinois round out the most expensive wedding areas throughout the country.

What Goes into Wedding Costs?

Keeping a lid on the exorbitant cost of a wedding can be a challenge. This is especially true if you don’t know all of the factors involved in planning the event. Traditional weddings often require planning for a reception space. Additionally, the items that go along with throwing a fabulous party, like entertainment and music, decorations, tables, chairs, and linens can add up easily. A ceremony space is a must for the most conventional couples, which can either be held at the same venue as the reception or in a different location altogether.

Adding to the list is the attire for the couple, which not only includes pricey suits or dresses but also accessories, shoes, hair, and makeup services. Flowers for bouquets, boutonnieres, and ancillary décor may also be needed. Some couples include gifts for the supportive friends and family who are an integral part of the wedding party. Photography, videography, parking, and transportation should also be considered. Invitations, save the date announcements, and wedding rings are other items to consider. If you’d rather not take on the arduous task of planning every detail of your event, plan to spend some of your wedding funds on a planner, too. Last but far from least is the food and beverages that will be provided during the reception.

Given this lengthy list, it is not surprising that the cost of a wedding skyrockets for some. The average cost of each wedding expense is as follows:

  • Attire and accessories: $1,629
  • Beauty treatments (hair, nails, and makeup): $129
  • Entertainment (live music or DJ): $1,389
  • Flowers and décor: $1,563
  • Gifts, including guest favors: $702
  • Invitations: $789
  • Jewelry, including wedding rings: $4,133
  • Photography and videography: $2,835
  • Event planner: $827
  • Venue, including catering and table/chair/linen rentals: $11,944

Budgeting for the Wedding

To steer clear of a massive wedding bill, budgeting ahead of time is key. Establishing a budget for a wedding is not much different than it is for monthly expenses, but there are a few key differences. First, family assistance is often a major help in reducing the out of pocket costs for your big day. If you know parents, grandparents, or other relatives are planning to lend a hand with the wedding expenses, talk with them openly about how much they plan to contribute before you start spending. Not sure if the family is able to help? Simply ask. The worst that could happen is that the wedding cost falls squarely on your shoulders as a couple. It may result in pinching pennies along the way. But knowing what you’re up against prior to starting your planning will help overall.

Another aspect of creating your wedding budget relies heavily on the type of event you want. If you’re planning a formal ceremony and reception, you’re safe to add a substantial amount to your venue and catering budget. Conversely, a celebration that is more casual in terms of location and feel often costs significantly less. It is also important to know your projected guest list size, as this has a direct impact on your total spending. Invitation costs, favors, food, and venue costs all rise as your guest lists grows. Building out your wedding budget should be based on these considerations. You’ll have far more success when you create a system of budgeting – and stick to it.

Tips for Reducing the Expense

The cost of a wedding does not have to overwhelming. There are a number of methods to cut out expenses. First, pay close attention to the contracts you sign, specifically for the venue and the caters. Are there “hidden” fees such as overtime or cleanup that add to the total costs? Will tips be included in the contracted amount? Are you paying for their servers, security staff, and/or parking attendants? Most of the time, wedding vendors provide this information up front in the contract, but it is up to you to know what you’re getting into.

Sizing down your total guest list also helps reduce the total cost, as that number directly affects every aspect of your planning. Taking just 10 guests off the list could put nearly $1,000 back in your pocket. Don’t be afraid to trim the headcount as needed. Additionally, keep things simple as much as you can, leaving out glamourous details that simply don’t fit into the overall budget. Oftentimes, pricey additions are a waste of hard-earned cash, and you nor your guests will notice their absence.

Finally, be prepared to negotiate with wedding vendors before an agreement is signed. It never hurts to ask. Some wedding professionals offer discounts for referrals, while others may cut off a portion of the cost if you leave a solid review of their services online. If they are unwilling to wiggle in terms of price, it may be worth seeking out alternatives. Whatever you do in your wedding planning adventure, keep your bottom line in mind.

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How Much Money a Year Do You Spend on Your Pet?

Our pets are more than just furry faces that look at us longingly while we eat our meals at home –they are meaningful members of the family. Having a pet, whether it’s a dog or a cat, has advantages as well as disadvantages, but depending on who you ask (someone with pets or without), there will be far more advantages than disadvantages to having a pet.

Always there to keep you company and to greet you when you walk through the door after a long and exhausting day at the office, a pet is a welcomed invite to many people, but no matter how you feel about your four-legged friend, they can be one of the most expensive purchases you make in your domestic life, albeit worth it.

Below is a breakdown of what to expect as far as cost in a single year of owning a pet.

 

Surviving your first year of pet ownership.

Before we get into the logistics of owning a pet and the expenses included, first we have a question: what year are we talking about?

Like getting ready for a newborn child, the first year of pet ownership is more than likely going to be the most expensive year in the life of your pet (not that a newborn baby should be regarded as a “pet”, of course). The reason this first year is a giant spike on the chart that displays your financial burden over the lifetime of your pet is because it is the time that will adapting to the wants and needs of your chosen pet, and then buying and purchasing items accordingly from there.

First, you have to pay for ownership of your chosen pet. Buying a particular purebred animal with papers and official documentation can be one of the most expensive ways to go about buying a pet (or show dog, if you are trying to monetize your pet ownership), but for a much cheaper route, as well as the humanitarian route, you can always adopt a pet from your local shelter and give a fuzzy little friend a chance at a happy home life.

Whatever you decide, whether it’s buying a “no surprises” pure breed of pet, or adopting from a shelter, right there is a purchase. Adoption, although cheaper, will still lead to an adoption fee, as the processing of the paperwork comes with a cost (its still way cheaper than paying for a purebred, as in $100 versus a few thousand).

 

Onetime costs.

Past the adoption and take home fees of acquiring a new pet, you then are looking at the cost of one time purchases such as the essentials: leashes, collars (sometimes the collars that have GPS tracking in them), dog beds, scratching posts, fences… you get the idea. You need to set your home up to be more accommodating to your new pet, and that home altering will cost you a good amount, depending on the size of your pet and how willing you are to spoil them.

 

Taking your companion to the vet.

Before you can begin your life with your pet, proper pet care advises you to spay and neuter your pets, which is not a very cheap procedure, but the good news is that you only have to have this taken care of once –hopefully.

Past that, your pet will need to be seen regularly by your veterinarian to ensure you fuzzy family addition is keeping healthy and free of any otherwise concerning health problems. It’s worth the investment to take your pet in regularly, or just like a car that is not being taken care of, it will shut down entirely after a while or will need to be brought in for a very expensive operation. Taking your pet in every couple of months is a good idea, and will give you as the pet owner peace of mind over your companion’s well-being.

 

Don’t’ forget food and nourishment.

This may go without saying– but you need to feed your pet! And when we say “feed your pet”, we don’t mean your leftovers from last night’s steak dinner.

Proper nutrition for your pet is necessary, and that is in the form of specially made dog or cat food. How fancy you want to get with that specialized food is your choice, but more often than not you get what you pay for. They have “premium” dog food, and “regular dry”, and everything in between. Some pets can tell the difference, but that usually only comes with spoiling your pet with the premium stuff and then switching to the “less than premium” stuff.

Some dog foods come with additives such as enriched meat with vitamins and other goodies for your pet’s health. If you can afford to put your pet on a diet of this higher quality and health conscious goodness, then it is worth the extra investment, as some pet foods come with enriched bits that can help with known pet-ailments such as arthritis and worms and fleas and such.

 

Where will they stay when master is away?

You also should factor in what you are going to do if and when you plan to travel and cannot take your pet with you (even though taking your pet with you would be a ton of fun, in my opinion).

You, of course, could always contact your friend or neighbor or brother-in-law to do it for you for free (or at the very least a promising “I owe ya one”). This is always a great way to save money, but what if you have just moved and don’t know anybody well enough to make you feel comfortable enough to leave your dog with for a weekend?

Dog kennels and spas and hotels and other venues of the like are definitely a cost to factor in, and unless you are okay with leaving your pet overnight in a shoddy looking establishment that at the very least is inexpensive, you are looking at some pretty high costs.

To your benefit, there are more any more pet service companies popping up all over the place, one being Rover.com, and they will watch your pet for you for set periods of time and are pretty well trusted and loved by pet owners all over. Companies and services that are well known to your family and friends are the best places to start looking.

 

If you can afford year one…

Overall, the cost of your pet will diminish as time of ownership goes on. After your first year of pet car, the cost of owning your pet will dramatically lower, as buying papers and taking care of ownership fees and operations at the vet and necessity buying all go away once they are initially purchased by you. In other words, if you can survive your first year of pet ownership, you will be able to afford the rest of your pet’s lifestyle.

According to PetEducation.com, your first year of pet ownership (if it is a dog, which is more expensive than a cat) can be as high as $6,600. But if you make it through that first year and take care of everything that you need to to make sure that your animal will live happy and healthy for the rest of its residents with you, that annual rate will drop to as low as $2,485 –and that number is still on the high side! You don’t have to be paying premium rates for everything that pertains to your dog, only if you really to continually pamper your pet will the annual rate of care be that high.

According to our friends at PetEduaction.com, the cost of dog ownership can dip down to as low as $287, but that means that you really are living the thrifty life with your pet, and excluding regular vet visits, specialized dog food and treats, toys, apparel (who doesn’t love a dog in a hoodie?), and dental care.

Over the lifetime of your dog, which give or take is about 14-15 years, you as the owner and provider will spend about $5 grand on the low side of care, and as much as $40 grand on the high side.

 

We all love our pets, and when it comes to providing care for them would never dream of passing on the opportunity of taking proper care of them. Our pets are extensions of ourselves, only fuzzier.

We all knew the expense that adopting another member into the family would cost us, but don’t let the money make you think that pet ownership is not worth the investment because it certainly is.

 

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5 small changes to help you reduce your monthly spend

Many people think that the only way of drastically changing their financial lives is by making some big life changes. Although ditching that car and moving into a small home can definitely deliver great results, there are several more small steps you can take to make a positive impact on your monthly/yearly budget. Let’s take you through 5 such small changes that can make a huge difference:

5 small financial changes

Having at least one less restaurant meal each week

A US survey had revealed that the average cost of a meal eaten in a US restaurant is $ 32.60. This is in sharp contrast to the average cost of $ 4 for a meal eaten at home. Hence, eating just one extra meal at home rather than ordering in or eating out at a restaurant can save you around $ 28.60 per week. Considering how much we love food here in the US, we’d probably not move that loved restaurant meal to home, and instead may most likely replace one of our less expensive fast food meals with the home-made food! Even if we choose to do that, we’d be saving around $ 8 on every meal.

So, provided you save at least that $ 8 per week, your savings would add up to $ 416 per annum. That’s a good amount of savings in the long run.

An obvious disadvantage here is the effort that would go into preparation of home meal. However, even that problem can be tackled by opting for a fairly easy-to-prepare meal such as a simple pasta that can be made in less than 15 minutes.

Using only cash when going out

Are you someone who believes in working hard during the week and partying hard on the weekends? Perhaps you love clubbing with your friends or hitting up that favorite high street bar on your off days.

Partying during the weekends can be very expensive, and once the liquor starts flowing you don’t mind swiping your card more frequently than normal. The actual costs don’t become evident until the next morning or before the arrival of your credit card statement. Although credit cards can be a great blessing if used responsibly, they can also make you spend blindly sometimes.

You can save plenty on your weekend outing expenses by ensuring that you leave all your credit cards home before heading out. Instead, hit up the nearest bank ATM and withdraw some cash for such outings. Many financial planners refer to this as a ‘cash diet’ which involves buying things only using a certain amount of cash. You’d be significantly limiting your spend by leaving your credit cards home. And once you exhaust your cash amount, you’d have no option but to wait till the next withdrawal.

Giving up soda

As per an Associated Press report an average American drinks 44 gallons of soda each year. Replacing that much soda with plain water would not just provide some excellent health benefits, but also save you a great deal of money in the process.

You can purchase a 12-pack of soda cans (of 12 ounce each) for $ 2.5, giving you a fill of 144 ounces in total. Every gallon consists of 128 fluid ounces, so you can purchase 1.125 gallons of soda at $ 2.5. On the whole, you’d need to purchase 39 such 12-packs to touch the average annual soda consumption. Hence, the total money spent by an average person on soda would come out to $ 97.78 per year.

By rounding off that figure it’d be fair to say that an average American spends around $ 100 per year on soda cans, and that’s without factoring in the soda bought at restaurants and from vending machines (which are comparatively more expensive). Cut the consumption to zero and you’d end up saving at least $ 100 per year (assuming that you are an average soda drinker).

Apart from saving all that money, you’ll enjoy several health benefits such as weight loss, lower diabetes risk, better digestion and more (which in turn will also save you more on medical expenses).

Doing away with incandescent bulbs

A large number of American families are rapidly moving away from incandescent bulbs, and are replacing them with other lighting mediums such as LED bulbs. These bulbs are highly cost-effective in the long term and have an extremely long lifespan. This combined with the fact that they consume very less energy makes them an obvious choice for many households. However, there is one drawback – these LED bulbs have a high upfront cost.

We’d not go into the actual calculations here but several studies have revealed that the total per year operational cost of incandescent bulbs is around five times of LED bulbs. Hence, replacing a good number of incandescent bulbs in your home with LED ones can provide you with plenty of long-term savings.

Staying home at least one extra night each week

An Eventbrite study had revealed that an average event goer in US shells out $ 81 on every night out, and goes out at least two times per week. Although that may seem slightly on the higher side to you, especially if you’re married with children, we’ll go with their figures nevertheless.

Now, reducing your night outs by just one night per week can save you $ 324 per month. On the other hand, if you replace such night outs with indoor enjoyment (costing around $ 10) in the company of your friends, you’d still be saving $ 71 per week or $ 284 per month or $ 3,692 per year!

Let’s say that your night out cost is comparatively much lesser, around $ 50 per outing, you’d still end up saving $ 40 per week and eventually $ 2,080 per annum. That’s a huge sum of money!

Please remember that you’d not be getting bored at home, and would instead be spending time and money on entertaining guests/friends. Your savings could be even more if you read a book instead!