Q: I’ve heard the Biden administration is planning to forgive student loans. What do I need to know about this plan?
A: In August 2022, U.S. President Joe Biden announced his plan to cancel thousands of dollars in student loan debt for qualifying individuals. The plan officially went into effect on Sept. 29, 2022. Here’s what you need to know about Biden’s plan for student loan forgiveness. Is every student eligible for loan forgiveness? According to Biden’s announcement in August, the administration plans to forgive up to $10,000 in student loan debt for individuals earning less than $125,000 a year, and as much as $20,000 for eligible borrowers who are also Pell Grant recipients. For couples, the maximum income eligibility requirement jumps to $250,000 a year. How do I apply for loan forgiveness? Approximately 8 million people already have income information on file with the U.S. Department of Education (DOE); these individuals will likely have their qualifying debts automatically forgiven. All others, however, will need to submit an application with the DOE . Applications can be downloaded here and will take 4-6 weeks to process. The final deadline for submitting applications is Dec. 31, 2023. However, the DOE recommends getting it in before Nov. 15, 2022 . This will give the department enough time to process your application before the student loan payment pause ends and interest starts accruing again on Dec. 31. What kinds of loans are included in Biden’s forgiveness plan? Undergraduate loans, graduate loans and Parent PLUS loans managed by the Department of Education are all eligible for loan forgiveness. It’s important to note, though, that Biden’s plan only applies to federal student loans. This means private student loans are not eligible for forgiveness, even if they began as federal loans. If you’re unsure what type of loans you have, contact your loan servicer to find out. Which income year should I look at to see if I qualify for forgiveness? According to a senior White House official, you can look at the income from 2020 or 2021 to determine whether you fall within the income threshold for loan forgiveness. If I meet the income requirements, will all of my debt be canceled? You may have noticed news items about the loan forgiveness program using language like “up to $10,000 or $20,000 in forgiveness”. This is referring to the maximum amount of loan forgiveness an individual can expect. The rationale behind this language is that some borrowers who fall within the income eligibility may owe less than the full forgiveness amount they are eligible to receive. This means that a student who owes $8,000 in student loan debt and is eligible to have $10,000 forgiven will not be able to pocket the remaining $2,000. Instead, that money will remain with the federal government. I continued paying off my student loans during the payment pause. Is there any way I can get that money back and have more of my loan forgiven? Many borrowers kept up with their loan payments during the pause. With interest paused as well, it was a great way to get ahead on loan payments. Fortunately, these borrowers can still benefit from the new loan forgiveness plan. According to the Education Department’s office of Federal Student Aid, “You can get a refund for any payment (including auto-debit payments) you made during the payment pause (beginning March 13, 2020). Contact your loan servicer to request that your payment be refunded.” Before contacting your lender, though, check to confirm you fall within the income eligibility requirements for loan forgiveness. What steps do I need to take now? If you haven’t yet applied for loan forgiveness, and the DOE does not have your income information on file, you can submit an application here at your earliest convenience. In addition, take these steps to ensure eligibility:
At this time, it’s important to be aware of loan forgiveness scams that will likely arise within the next few months. Be sure to submit your application directly to the DOE through the link provided above, and not to click on links that are embedded in ads or unsolicited emails. In addition, be aware that there is no fee necessary to submit your application, nor is there a need to pay for assistance with your application. Never share your personal information or Student Aid account password with anyone. Biden’s student loan forgiveness plan will bring relief to millions of borrowers. Use this guide to take advantage of this offer and learn what you need to know about the loan forgiveness plan. Your Turn: Will you be applying for student loan forgiveness? Tell us about it in the comments.
0 Comments
With inflation at record highs, many Americans are finding it difficult to stick to a budget. After all, when groceries have leapt in price and household staples can be double, or even triple, what they cost just a year ago, how can the same amount of money get you through the month?
Sticking to a budget during times of high inflation is challenging – but not impossible. Here are five ways to budget while in times of inflation. 1. Plan your grocery purchasesGroceries can take a huge bite out of a monthly budget. Fortunately, there are ways to trim your grocery bill, even when prices are soaring. First, shop your pantry and fridge before hitting the store. You may not remember exactly what you have at home, and doing a quick scan of your food items can help you stick to purchasing only what you need. Next, plan your week’s dinner menu before shopping so you can pick up exactly what you need for the week in just one go. The fewer trips you make to the grocery, the less you’ll spend on impulse buys. Also, when you have the ingredients you need and plans in place for dinner each night of the week, you’ll be less likely to make a last-minute decision to indulge in takeout or fast food. Consider joining a club store at this time as well. You’ll need to spring for a membership, but you’ll enjoy steep savings on groceries and other products. Just be careful to only buy what you need, no matter how cheap an item might be. Finally, don’t forget to shop sales and to couponize. Use apps like Reebee, Checkout 51, Flipp and Grocery IQ to stay in the know of what’s on sale in each store, and to download coupons for even bigger savings. 2. Consider an energy auditWith winter approaching and the cost of energy sources still climbing, this can be a good time to have an energy audit performed on your home. An audit will help identify energy drains around your home, such as air leaks near your windows and doors, so you can fix them to make your home more energy-efficient. You can also take additional measures toward saving on energy costs, such as switching all lightbulbs to LED bulbs, unplugging electronics when not in use and setting your thermostat a little lower during winter, and a bit higher in the summer. 3. Choose your indulgenceEveryone needs to treat themselves to something special every now and then, but with costs rising on restaurant meals, movie tickets and clothing, something’s gotta give. Take a closer look at your just-for-me purchases of the last few months, and try to narrow them down to just one or two treats. You can swap them with an enjoyable activity that doesn’t cost much, such as a hike or bike ride, or cut them out completely. Alternatively, you can find ways to trim the cost of your indulgences. For example, if you love dining out but restaurant meals are destroying your budget, you can decide to eat out but skip the desserts and wines, or opt for a midday meal so you can take advantage of lunchtime specials. 4. Switch your auto insurance planIf you’ve had your auto insurance policy for a while and you’ve maintained a good driving record during that time, there’s a good chance you can save a bundle by switching to a new insurance plan and/or provider. Reach out to a representative at your current insurer to discuss your options. Ask about raising your deductible in exchange for a lower premium, reducing overall coverage or negotiating for a safe driving discount. After obtaining a quote, call several other providers to get competing quotes. You can choose to go with your lowest offer, or call back your present provider and ask them to match it for your continued business. 5. Pad your incomeAs always, when income doesn’t meet expenses, you have the choice of trimming expenses or boosting your income – or you can do both! In addition to following the cost-cutting tips outlined here, you can also look for ways to increase your income. If your paycheck is suddenly not enough to support your lifestyle, consider asking for a raise. Your workplace may have already given you a cost-of-living raise to reflect rising inflation last year, but this may prove to be insufficient as costs have continued to rise. Don’t be afraid to ask for another raise at this time. In addition, you can look for other ways to pad your monthly income. Find a side hustle, like driving for a ride-share company or consulting for hire, which you can do at your leisure on weekends. Ask your workplace about taking on additional projects on an as-needed basis for additional pay. Open a small service business doing something you love and excel at. Every extra dollar earned counts! Times are hard for the average American consumer, but with careful planning, you can ride out the record-high inflation rates and keep your budget intact. Use the tips shared here to get started. Your Turn: How are you adjusting your budget for inflation? Share your tips and hacks with us in the comments. It’s back-to-school season, and that means you’ve got a list of stuff a mile long to buy. The good news is that you don’t need to break the budget during the second-biggest shopping season of the year. There are lots of ways to save, and if you plan your shopping well in advance instead of frantically rushing to get everything done at the last minute, you can save a lot of money. Below, we’ve compiled seven back-to-school shopping hacks to get you started.
Take inventory Don’t set foot in a single store without first checking to see what you have at home. You may have stocked up on lined paper in the spring, or maybe you bought some autumn wear for your child at the end-of-season sale last year and you’ve put it in storage until you’d need it. Keep a running list of everything you find so you know exactly what you have before you spend a dime on new supplies and clothing. Shop tax-free Many states offer a sales-tax holiday sometime during the summer, and if you use these days to shop for big-ticket items, like a new laptop or pair of school shoes, you can shave a significant amount of money off the final price. You can find a list of sales-tax holidays by state here. Shop with a list And we’re not talking about the list of required supplies your child’s school or teacher has sent home. When shopping for anything, especially with kids and teens, it’s best to start out with a clear goal of what you plan to buy. This way, you’ll be less likely to overspend and come home with bags of stuff you don’t really need, along with lots of buyer’s remorse. Make a list before hitting the mall, the school supplies store and even before shopping online. Divide and conquer The circulars are packed with specials on school supplies all summer long. The problem is that, while one store is offering a crazy-low deal on crayons this week, another store is running a super sale on pencils – and the stores are across town from each other. You don’t want to spend all weekend hunting down supplies, and you don’t want to lose all your savings to fill the tank of your car either. Keep your savings, and your sanity, by teaming up with another school mom. Divide the school supply list between the two of you, pooling costs and paying back as necessary. This way, while one of you can go pick up the crayons at half-price in Walmart, the other can load up on marked-down pencils in Staples. Let your kids choose some items on their own Teach your kids a lesson in budgeting by allowing them to shop for one or more of the costlier items they need now on their own. For example, you can have your middle-schooler choose and pay for their own backpack. Set a reasonable budget together, but let your child do the actual choosing and paying on their own. They’ll learn how to make responsible money choices and so much more. To encourage thriftiness, you can offer to allow your child to keep the change. Save some stuff for later Yes, your child will be starting school soon and they’ll need some supplies and clothing before the big first day. But the stores won’t be going anywhere, and there’s no need to purchase a complete autumn wardrobe before Labor Day. Waiting a bit for the mid-season sales will save you a ton of money. As a bonus, shopping without the pressure of having everything ready for the new school year will help you make better money choices. Scan receipts to get cash back Put more money back in your wallet by scanning or uploading your receipts to cash-back sites or apps. Some popular cash-back apps include Coupons.com, Dosh and Ibotta. It’s like getting paid to shop! It’s back-to-school shopping season, but that doesn’t mean you need to spend yourself broke! Cash in on savings with these hacks and get your shopping done without breaking your budget. Your Turn: How do you save on back-to-school shopping? Share your favorite hacks in the comments. Q: Now that Russia has invaded Ukraine, and the fighting does not seem to be ending anytime soon, I’m worried about the U.S. entering the war. It really has me wondering; How does war impact the economy and how can I protect my money in case of war?
A: While we all hope the war taking place between Russia and Ukraine won’t spread further, when major countries are at war it does impact the global economy. Here’s how the war in Ukraine is influencing the U.S. economy and American banking, additional fallouts we may be facing soon and steps you can take to protect your assets in case of war. How does war affect American banking? The U.S. Treasury Department has banned all financial institutions in the U.S. from opening or maintaining correspondent banking accounts for Russia’s largest bank (Sberbank) and its subsidiaries. By March 26, Sberbank will be effectively cut off from the U.S. financial system. This directive is part of a group of sanctions the Biden administration has placed on the Russian state-owned VTB Bank, and new debt and equity restrictions on more than a dozen Russian entities. All assets held by the blacklisted companies and institutions are now frozen, and U.S.-based individuals and companies can only conduct business with them if they receive exclusive permission from the U.S. Treasury Department. However, despite these sanctions, most U.S. banks and credit unions will continue to operate in a regular capacity throughout this time. Financial institutions have compliance officers on staff to ensure all federal laws, including wartime sanctions like these, are followed completely and without interrupting ongoing service. In addition, the financial service industry has experience dealing with similar sanctions from Russia’s annexation of Crimea in 2014, and more recently, sanctions related to China and Venezuela. Some U.S. banks are also fearful that there may be a wave of retaliatory cyberattacks from Russia in response to the sanctions placed against the country by the U.S. and other Western countries. While there is no way to predict what will happen, it’s a good idea to be extra alert for possible banking hacks. How does war affect the economy? Various wars in our country’s history have had an inflationary effect on the economy. During the Civil War, this was caused by the Confederacy printing money to pay its soldiers. During WWII, the U.S. economy was running at almost full capacity with high levels of government spending. These factors, along with a shortage of workers, led to wartime inflation. In addition, the shortage of goods and services, which is common during war, as well as a shortage on raw materials like crude oil, also trigger inflation. Unfortunately, we have already begun feeling the effects of war on a challenged economy. You may surely have experienced a spike in prices at the pump. In some areas of the country, like San Francisco, prices had already hit an all-time high of $5 in the beginning of March. This increase is a direct result of the many severe sanctions that have been placed on Russia by the U.S. and the European Union, which impact Russia’s ability to sell crude oil. The price for this crucial component of gas has consequently skyrocketed. Beyond the pump, prices on goods, like grains and metals, are also rising due to increased fuel costs as well as worries about possible future shortages. Russia and Ukraine are also major exporters of wheat and corn, as well as essential metals like palladium, aluminum and nickel, which are used in a wide range of products from mobile phones to automobiles. An interruption in the supply of these goods due to war automatically leads to an increase in prices. Yet another factor causing prices to soar is air transport. As of March 7, 2022, Russia has closed its airspace to 36 countries. This means each of these countries must divert shipping planes to routes that are lengthier and more expensive. The extra cost of shipping, of course, gets passed on to consumers. How can consumers protect their money in case of war? The stock market has already taken a hit from the war, and many Americans are fearful that the war may spread and/or further impact the economy. Here’s what you can do to protect your assets:
Your Turn: Have you taken any steps to protect your money in case of war? Tell us about it in the comments. It’s tax season, and while that may mean you’re drowning in forms and paperwork, for scammers it means millions of taxpayers they can potentially dupe out of refunds or scare into making irrational moves. Here’s what you need to know about tax return scams and how to avoid them.
How the scams play out In a tax return scam, a fraudster steals a taxpayer’s personal information and files a fake tax return on their behalf. The scammer will direct the refund to be deposited into the taxpayer’s checking account. After the refund is deposited, the scammer will call the victim, impersonating the IRS and claiming the refund was mistakenly inflated. They’ll instruct the victim to return the alleged extra funds via gift card or wire transfer. Of course, this money will go directly into the scammer’s pockets. In another variation of a tax return scam, a fraudster steals a taxpayer’s personal information and files a fake tax return on their behalf, as described in the first scenario. However, instead of directing the refund to be deposited into the victim’s account, the scammer has the funds deposited into their own account. When the taxpayer tries to file a legitimate return, the IRS will inform them they’ve already filed one – and collected the refund. Unfortunately, tax return scams are relatively easy to pull off. Scammers need only to get their hands onto a victim’s name, Social Security number and date of birth. All other information, including income and employment details, can be fabricated. Often, scammers get the information they need for the scam from employees who work at the same company as the target and are willing to sell information about their co-workers to fraudsters. Protect yourself Fortunately, there are steps you can take to limit your vulnerability to tax return scams. Here’s how to keep your money and your information safe this tax season:
It’s also important to be aware of the following information to help you identify possible scams:
If you’ve been targeted If you receive a phone call or letter from someone claiming to represent the IRS and informing you that you owe tax money, you can verify the claim by calling 1-800-829-1040. Emails allegedly sent by the IRS are scams, as the IRS does not reach out to taxpayers via email. If you haven’t received your tax refund within one month of filing, you can check your refund’s status on the IRS webpage. If the site shows that your refund was issued but you haven’t received it, you may be the victim of a tax return scam and identity theft. Alert the IRS at 1-800-908-4490. Stay alert this tax season, and stay safe! Your Turn: Have you been targeted by a tax return scam? Tell us about it in the comments. With shorter days approaching, bringing more hours of darkness along with them, it’s more important than ever to brush up on ATM safety. Using a compromised machine can mean risking identity theft and/or having cash stolen. With this simple machine, all it takes is a few short minutes for a victim’s life to be completely ruined.
Here at Ingersoll-Rand FCU, we take our members’ safety very seriously. We use multiple protective measures to keep you, your information and your money safe when you use one of our ATMs. We keep our machines well-lit, have security cameras in place and we’re careful to place them in areas with lots of foot traffic to keep isolation to a minimum. However, it’s important for you, as the member, to be aware of basic ATM safety so your transactions are never compromised. As with all banking platforms, you are the first and best defense for protecting your personal information and your money. Here are 10 tips to help you keep your ATM transactions completely secure. 1. Keep your PIN private. Your personal identification number should always be kept personal. Don’t share this number with anyone and don’t write it down anywhere or keep it stored in your phone. It’s also a good idea to choose a unique PIN for all your accounts and to change your number once a year to keep it fresh. 2. Check the ATM for a card skimmer. Scammers are experts at hiding their tracks and often do so by attaching a card skimmer to the payment terminal of an ATM. The skimmer fits right over the card slot and will read the card information as soon as it’s inserted. It is then passed onto the criminal, who may be hiding just a few hundred feet away. Sometimes, a skimmer is instead placed over the keypad to pick up the PIN. Look for a skimmer by checking to see if the card slot feels loose, is colored differently than the rest of the machine, or if the keypad is too thick or looks newer than the ATM. 3. Bring a buddy. A lone target is always more vulnerable. If possible, and especially if you’re using an ATM late at night, bring a friend along. 4. Be aware of your surroundings. As you use the machine, it’s crucial to be aware of your surroundings and to look for anything suspicious, like characters lurking nearby or dark cars parked in the area for far too long. 5. Use your body as a shield. Never let an ATM you are using be in easy view of a criminal. Stand close to the machine to block it from view and cover the keypad with your hand while you input your PIN. This way, no one will be able to steal your information just by watching you complete your transaction. 6. Have your debit card ready to be used. Make sure you can remove your card in just a few seconds when you reach the ATM. Those precious few moments of rummaging through your purse or wallet until you find your card can give a criminal the time they need to make their move. 7. Put away all cash as soon as you complete your transaction. If you’re making a withdrawal, be sure to move all cash out of sight as soon as the machine spits it out. Have your wallet or an envelope ready so this takes as short a time as possible. Never count cash in public; you can check that you’ve received the right amount when you’re safely in your car. 8. Lock all doors and roll up passenger windows when using a drive-thru ATM. If you’ll be remaining in your vehicle to complete your transaction, keep it as secure as possible. 9. If you suspect foul play, leave immediately. If something, or someone, looks suspicious, cancel your transaction, grab your card and leave the area as soon as you can. 10. Be sure to take your receipt. Don’t leave any evidence of the transaction you just completed. If you think you’ve been the victim of ATM fraud, report it immediately. If you report the scam within two days, your liability is capped at $50. Stay safe! Your Turn: How do you protect your information and your money when using an ATM? Share your tips with us in the comments. The visitors have returned home, the leftovers in the fridge have been tossed, the kids are back in school and you have work first thing Monday morning. After the excitement of the holidays, the return to normal can make even the most jolly of folks a little depressed.
Without the holiday festivities to distract us, the winter months can suddenly seem very gray and drab. If you find yourself feeling blue after the holiday season, you’re not alone. It’s normal to start feeling down as the flurry of the holidays winds to a lull. Fortunately, there are measures you can take to beat the blues, and they don’t need to cost you any money. Here are some simple tips to use this winter that may help lift your spirits: Stay social – not social media The holidays are centered around social gatherings, such as parties, big meals and traveling to see family or friends you haven’t seen in a long time. After such a flurry of social activity, you may find yourself feeling lonely when it’s all over. But there’s no rule that says your social calendar needs to be empty after Jan. 1. Plan some activities with a friend. They don’t need to cost money. Take a walk or watch a movie at home with a friend or family member. Talking on the phone can be a great social outlet as well. The important thing is to talk to someone verbally, not through texting or social media. Social media apps often give us the illusion that we’re being social, but in reality it’s not the same thing as truly talking with someone. Planning a fun social outing can help remedy the letdown after the holiday parties have ended. Get active Physical activity is one of the best things you can do for yourself, especially when you’re feeling a little down. When we exercise, our bodies release endorphins. Endorphins are natural chemicals in the brain that help trigger a positive mood. If you’ve got the blues, get out there and get some exercise. It may be tempting to veg on the couch with your favorite show all day, but before you begin the binge watching, try some physical activity first to see if getting the body moving and the blood flowing doesn’t help lift your mood. You may be surprised at how good you’ll feel after your workout. You don’t need to pay for a gym membership or an expensive exercise machine. Get outside for a quick run or walk. Stretch or do yoga in your living room, or try an aerobics class on YouTube for free. Focus on realistic resolutions New Year’s resolutions give us something to focus on after the holiday parties are over. It’s great to have goals and something to look forward to, but be careful not to become too perfectionist and hard on yourself about achieving your resolutions. Unattainable goals only cause stress and feelings of failure. Instead, focus on realistic goals that you can actually work toward and feel good about. Start by writing out specific and measurable goals you can realistically achieve. This will give you the best shot at success. For example, instead of making a vague goal of saving enough money to retire early, try setting a goal to save an extra $100 per month. This way you can see your success each month as you save money and build that nest egg. Look forward to the next big thing Thanksgiving through New Years isn’t the only fun season on the calendar. After the holidays, there is still plenty to look forward to with excitement and optimism. Start planning your next vacation or what you want to do on spring break. And there are still upcoming long holiday weekends to consider in January and February, such as President’s Day and Martin Luther King Jr’s birthday. Planning a simple family outing, staycation or dinner party with friends can refocus your thoughts. Weekend day trips can be done on the cheap and give you something to spur your spirits. Boost your mood with vitamin D Low levels of vitamin D, known as the “sunshine vitamin,” have been linked to depression and seasonal affective disorder (SAD). Our bodies produce vitamin D when our skin is exposed to the sun. Of course, in the winter months, exposure to sunshine can be a little hard to come by. Eating foods that are rich in vitamin D or taking a supplement is an affordable option that may help improve your mood until spring. Your Turn: What are your tips for beating the post-holiday blues? Tell us about it in the comments. Data breaches show up in the news almost as often as celebrity couple breakups. According to Risk Based Security’s Mid-Year Data BreachReport, there were 1,767 publicly reported breaches in the first half of 2021, exposing 18.8 billion records. One of the most far-reaching of these breaches was the T-Mobile data breach in August, which has impacted more than 50 million people.
A data breach exposes confidential information of its victims, which can include Social Security numbers, account information, credit card numbers, passwords and more. If your personal information has been compromised by the T-Mobile data breach or another exposure, take these five steps to mitigate the damage. Step 1: Read all alerts and notifications from the compromised company The business whose data has been compromised in the breach will generally reach out to all potential victims to notify them about the exposure. They may instruct all recipients of this missive to check for signs that their information has been exposed and/or direct them toward their next step. If you believe your information may have been compromised in a breach, it’s important to read every message you receive from the exposed company. Step 2: Alert your financial institution Next, let Ingersoll-Rand FCU know your account may have been compromised. This way, we’ll know to keep an eye out for signs of fraud and place an alert on your account. We’ll be watchful of requests to approve any large transaction or withdrawal, and we’ll contact you if we notice any suspicious activity. Step 3: Change any exposed passwords A data breach generally means passwords of all kinds have been compromised. It’s best to change as many as possible after a breach to keep information and money safe. The quickest way to do this is by using a password manager, which allows you to store unique, complex passwords for each account. Although it’s important to have a different password for each account, it’s best to start by changing passwords you know were a part of the data breach. Step 4: Consider a credit freeze A credit freeze alerts lenders and credit companies to the fact that you may have been a victim of fraud. This added layer of protection will make it difficult, or impossible, for hackers to open a new credit line or loan in your name. You can freeze your credit at no cost with all three of the major credit bureaus, Equifax, Transunion and Experian. You’ll need to provide some basic information and you’ll receive a PIN for the freeze. Use this number to lift the freeze when you believe it is safe to do so. Step 5: File an identity theft report If your accounts have been compromised and you believe your identity has been stolen, file an identity theft report with the Federal Trade Commission (FTC) immediately. This will assist the feds in tracking down the scammers responsible for the data breach. It will also help you return your finances to their usual state as quickly as possible. Take these precautionary measures to protect your information from future data breaches of any kind:
Your Turn: Has your personal information ever been exposed in a data breach? Tell us about it in the comments. You and debt are so over. You’ve just about had it with those endless piles of credit card bills and those hideous numbers that never seem to get any lower. It’s time to kiss that debt goodbye!
Getting rid of high debt will take hard work, willpower and the determination to see it through until the end, but it is doable. Here, we’ve outlined six steps to help you start crushing debt today. Step 1: Choose your debt-crushing method There are two approaches toward getting rid of debt:
Step 2: Maximize your payments Credit card companies are out to make money, and they do this by making it easy to pay just the minimum payment each month, thus really paying only the interest without making progress on the actual principal, thereby trapping millions of consumers in a cycle of endless debt. Beat them at their game by maximizing your monthly payments. Free up some cash each month by trimming your spending in one budget category or consider freelancing for hire and channel those freed-up or newly earned funds toward the first debt on the list you created in Step 1. Don’t forget to continue making minimum payments toward your other debts each month! Step 3: Consider a debt consolidation loan If you’re bogged down by several high-interest debts and you find it difficult to manage them all, you may want to consider consolidating your debts into one low-interest loan. A personal loan from Ingersoll-Rand FCU can provide you with the funds you need to pay off your credit card bills and leave you with a single, low-interest payment to make each month. Or, you can transfer your credit card balances to a single card with a low-interest or no-interest introductory period. Be aware, though, that you will likely get hit with high interest rates when the introductory period ends. Step 4: Build an emergency fund As you work toward pulling yourself out of debt, it’s important to take preventative measures to ensure it won’t happen again. One of the best ways you can do this is by building an emergency fund. Ideally, this should hold enough funds to cover your living expenses for three to six months. Start small, squirrelling away whatever you can in a special savings account each month, and adding the occasional windfall, like a work bonus or tax return, to beef up your fund. Step 5: Reframe your money mindset Sometimes, like when there’s a medical emergency or another unexpected and expensive life event, a consumer can get caught under a mountain of debt through no fault of their own. More often, though, there is a wrongful money mindset at play leading the consumer directly into the debt trap. As you work on paying off your debts, take some time to determine what got you into this mess in the first place. Are you consistently spending above your means? Is there a way you can boost your salary or significantly cut down on expenses? Lifestyle changes won’t be easy, but living debt-free makes it all worthwhile. Step 6: Put away the plastic Credit cards are an important component of financial health and the gateway to large, low-interest loans. However, when you’re working to free yourself from debt, it’s best to keep your cards out of sight and out of mind. You can set up a fixed monthly bill to charge one or more of your cards to keep them active, but only do this if you know you will pay off the charge in full before it’s due. Learning to pay your way using only cash and debit cards will also force you to be a more mindful spender. Kicking a pile of debt can take months, or even years, but there’s no life like a debt-free life. Best of luck on your journey toward financial freedom! Your Turn: Have you kicked a significant amount of debt? Tell us how you did it in the comments. The Child Tax Credit, a part of the American Rescue Plan Act of 2021 that takes effect in July, is already drawing the attention of scammers. The newly expanded Child Tax Credit (CTC) will provide monthly payments of up to $300 per child for approximately 40 million households across the country. Payments will be issued via direct deposit, paper check, or debit cards, providing a plethora of opportunities for scammers to get in on the action.
Here’s what you need to know about Child Tax Credit scams and how to avoid them. How the scams play out There are several variations of the Child Tax Credit scam, each ultimately designed to trick parents and guardians out of their rightful CTC funds. In one variation of the scam, victims receive phone calls, emails or social media messages appearing to be from the IRS and asking them to authenticate their personal details or share sensitive information in order to receive their CTC funds. In lieu of pretending to represent the IRS, the scammer may also claim to be in the position of “helping” the victim receive their funds. Unfortunately, in either scenario, if the victim follows the instructions of the contact, they will be playing right into the hands of a scammer. In another variation of the scam, victims land on a spoofed government website where they are prompted to input their personal information. This scam is especially common, as the IRS has announced that it will be launching two web-based portals for families who’d like to update their information for the CTC: one for taxpayers who file annual returns and would like to share their banking details or a change in the number of dependents they have in their household, and one for taxpayers whose income level falls below the threshold for filing returns. While the two separate sites will make the application process smoother for the IRS, they also open the door for more bogus sites to spring up and snag unsuspecting victims in their trap. What you need to know about the Child Tax Credit As always, knowledge is your best protection against potential scams. Here’s what you need to know about the CTC and the way the IRS operates:
If you’ve been targeted As the date of the first advanced CTC approaches, scams are exploding everywhere. If you believe you’ve been targeted by a CTC scam, follow the cardinal rule of personal safety by never sharing sensitive data with an unverified source. Triple-check the URL on any IRS webpage you visit, as these are easily spoofed. Note that all authentic government sites will end in .gov. Finally, report all suspicious activity to the IRS and the FTC immediately. For additional information on the upcoming Child Tax Credits, to check if you qualify or to update your dependent or banking information, visit the IRS’s CTC webpage directly at IRS.gov. The advanced Child Tax Credits will help millions of families struggling with the economic fallout of the pandemic, but scammers can ruin it all. Follow the tips outlined above and stay safe! Your Turn: Have you been targeted by a Child Tax Credit scam? Tell us about it in the comments. Re-acclimating to normal life as pandemic restrictions are lifted and businesses reopen across the country will mean more than just getting used to wearing real pants again and working without your cat on your lap. You’ll also need to consider your finances. How has your overall money management changed during the pandemic? Have you dipped into your savings? Have you been letting your retirement accounts slide? Or, maybe you’ve been waiting for the chance to hit your favorite retailers again, and you can’t wait to splurge after a 15-month financial fast.
As you prepare to leap back into normal life, proceed with caution. Be sure to consider your full financial picture as well as long-term and short-term goals. Here are some forward-thinking money moves to make as you adjust to post-pandemic life. Review and adjust your budget Pandemic times required their own budget, as people cut down on costs like dining out and updating work wardrobes, but spent more on things like at-home entertainment. Others may have had to adjust their spending to fit a changed income level or to help them coast during a stint of unemployment. The pandemic may have also shifted something in some people’s mental list of needs and wants, as they found they can live with a lot less than they’d believed. As you adjust to post-pandemic life, take some time out to review and tweak your monthly budget. Be sure to incorporate any changes in income, as well as a readjustment to pre-pandemic spending or changed priorities. You may need to review and adjust your budget, and maybe even your spending behaviors, every few months until you find a working balance. Rebuild your savings If you are one of the many Americans who were forced to dip into savings, or even to empty them completely, during the pandemic, create a plan to get your savings back on track. Tighten up your spending in one area until you’ve built up an emergency fund that can keep you going for 3-6 months without an income, or use a windfall, such as a work bonus or tax refund, to get the bulk of your emergency fund in place. Once your emergency fund is up and running again, continue to practice basic saving habits, such as setting aside 20% of your monthly income for savings, or whichever approach you prefer. If the pandemic taught us anything, it’s that it’s always best to be prepared, because you never know what can happen. Rethink your long-term and short-term financial goals The pandemic has prompted many people to reevaluate their goals. Retiring before you hit 50 or spending a month in Europe next summer may not be as important to you as you’d originally believed; or it may be even more important now. Similarly, you may realize your family has outgrown its living space and that moving to a new home is your number one financial priority. Or maybe you’ve decided you can live without a second car. Take some time to rethink your long-term and short-term financial goals and adjust your savings and budget accordingly. As you move through this step, be sure to consider any long-term goals you may have put on hold during the pandemic. Have you stalled your contributions to your retirement accounts or toward your child’s college tuition fund? Have you been making only the minimum payments on your credit cards? If any of these apply to you, be sure to revert your savings and debt payments back to pre-pandemic levels as soon as you can. Spend with caution It’s perfectly fine to enjoy a shopping spree in celebration of a return to pre-pandemic norms, but it’s best to spend with caution. First, prepare to encounter inflated prices wherever you go. Gas prices have jumped recently, and costs of many consumer goods have spiked as well. If you planned to purchase a big-ticket item like a new car or tickets for a cruise, consider waiting it out a bit until prices cool off. Also, you may be eager to make up for lost time, but no amount of nights out on the town will bring back the months you spent at home. Similarly, overbuying for this fashion season won’t bring back the seasons you spent at home in a hoodie and sweatpants. To avoid irrational overspending, set up a budget before you hit the shops and only spend what you’ve planned. The restaurants and movie theaters are open for business again, and mask mandates are dropping all over the country. As life returns to pre-pandemic norms, be sure to consider the state of your finances and to make responsible, forward-thinking money moves like those listed here. Your Turn: What post-pandemic money moves will you be making now? Tell us about it in the comments. Q: I’ve heard that the IRS will start making advance payments toward the Child Tax Credit of 2021 this summer. What do I need to know about these payments? A: The advance payments of the Child Tax Credits of 2021 will be distributed monthly to eligible families, beginning on July 15, 2021. Here’s what you need to know about these payments. What are the changes to the Child Tax Credits for 2021? As part of the American Rescue Plan Act (ARPA) of 2021, the Child Tax Credit (CTC) for tax year 2021 will be significantly expanded. Here are the most important changes to the CTC for 2021:
Who is eligible for the Child Tax Credits? Taxpayers who have a primary residence in the U.S., and reside in it for at least half of the year, are eligible to receive the child tax credits. The payments will begin to be phased out for married taxpayers filing a joint return and earning more than $150,000 a year, for heads of household earning more than $112,500 a year and for all other taxpayers earning more than $75,000 a year. Income eligibility will be based on 2020’s tax return (more on this later). Do I need to take any action to receive the monthly payments? Taxpayers need not take any steps to receive the advanced Child Tax Credits. Of course, taxpayers need to file their 2020 taxes, which were due on May 15, 2021. Filing electronically may speed up the receipt of the CTC payments. How much money will I receive each month through the advanced Child Tax Credits? The advance payments being sent to qualifying families from July through December will be equal to up to 50% of each family’s total Child Tax Credit. The payments will be based upon the income information found in taxpayers’ 2020 tax returns. If these were not filed yet, the 2019 tax returns will be used to determine each family’s eligibility. Families eligible for the full CTC will receive half of the total across a six-month time span. This means eligible families will receive a total of $1,800 for children under age 6, or $300 a month per child from July through December, and a total of $1,500 for children ages 6-17, or $250 a month per child from July through December. How will I receive my monthly payments? The IRS has announced that payments will be issued in the same way as the three stimulus payments distributed to all eligible taxpayers since the start of the pandemic. If you received your stimulus payments via paper check, you’ll likely receive the CTC payments the same way, and if you received them via direct deposit, expect the same now. The one caveat here is for those who have not signed up to receive their Economic Impact Payments via direct deposit but have filed their 2020 tax returns electronically. These taxpayers will receive their CTC payments the same way they filed their taxes; either electronically or via direct deposit. Can I decline the opportunity to receive the advance payments of the 2021 Child Tax Credits? Eligible taxpayers who do not want advance payments of the 2021 Child Tax Credit can choose not to receive them at this time. The IRS has provided the public with instructions for how to officially decline the advance payments on its website. Is it a good idea to decline the advance payments of the 2021 Child Tax Credits? While it is generally better to receive money owed to you upfront, under certain circumstances it may be better to decline receiving the advanced Child Tax Credits. If you have reason to believe you will not be eligible for the full CTC amount at the end of 2021, you may end up owing the IRS some or all of the money you received when you file your 2021 taxes. This can happen if your income level rises in 2021, or if you have primary custody of the child(ren) receiving the credit in 2020, but not in 2021. If either of these may apply to you, consider opting out of the advance CTC payments. You won’t miss out on these payments, as you’ll receive whatever is owed to you at the end of 2021. The advance CTC payments will be a boon for families who are struggling with the financial fallout of the pandemic, but it may not be in every taxpayer’s best interest to accept these payments now. Use our guide to brush up on the details of these payments so you can make an informed decision. For more information, visit the IRS website. |
Archives
January 2024
Categories
All
|