6 Out of 10 Millennials Really Need to Get a Credit Card

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Are millennials really focused on cash (or debit cards)?

Almost two-thirds of millennials don’t have a credit card, according to a recent study from Bankrate.com, but only 35 percent of adults over 30 shy away from plastic. When the figures were revealed, cheers went up from the Dave Ramsey loyalists who believe credit cards are the financial equivalent to the serpent in the Garden of Eden. But other (perhaps more practical) personal finance experts point to the potential pitfalls of avoiding credit cards.

Can That Really Be True?

When I first read the above stat, I thought it must be grossly inaccurate. As a millennial, I started to poll random friends and only found one who shied away from owning plastic. Then it dawned on me that the study identifies millennials as 18 to 29. This means college-aged millennials are the anchors, dragging down the overall number.

Read the rest on DailyFinance

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Frugal Find Friday: Groupon (and Happy Anniversary Peach)

If anyone is clicking on this post because he or she doesn’t know what Groupon is, then it’s nice to meet someone who is more of a late adopter than myself! Thanks for being here!

Being a frugal person, I’ve naturally heard of Groupon before, but I’d never used it until this week.

Today is my four-year (dating, not marriage) anniversary to Peach. It’s the longest relationship either of us have ever been in (and NO we are not planning to get engaged anytime soon).

Peach and I spent the last three years of our relationship long distance, and he recently moved to New York City for three months to do the student teaching component of his master’s degree. It’s an unpaid position, so he’s on a very tight budget and I only have so much available in my “sugar mama” fund.

10547708_10152365576876137_7387312402087983774_nI asked him to set an amount he’d be comfortable spending on our anniversary and I’d match the amount, then we’d make plans. We also put a ban on presents and prefer to put all of our money towards an experience.

Our contributions to the anniversary experience totaled to $80 and at first I struggled to come up with a plan. Everything I kept thinking about started to creep us towards the $150 mark (mostly due to my desire to see It’s Only a Play on Broadway).

Then I changed gears. I wanted us to do that didn’t exhaust our limited funds so we could do more than one activity.

After a day of asking friends for some suggestions, one finally told me to just get on Groupon and look for activities in NYC.

It didn’t even take me 10 minutes to find about 20 different deals I wanted to buy (therein lies the danger of Groupon!).

I aggregated a list of 10 choices and sent them along to Peach to have him narrow them down. I pointed out which ones could be combined to fit within our budget and which ones meant we could only do one activity.

Ultimately, we’ve opted for a two-part date. Tonight, we’ll be going to a wine bar/restaurant for a wine tasting (something we both love to do) which comes with three glasses of red, three of white and then one appetizer, two entrées and a bottle of wine. It was a $49 deal that’s said to be a $179 value. Then I ended up with a Groupon discount and got the deal for $39. I’m adding $30-$35 on for a tip though, because you should tip at retail price not on the discounted price.

Later this weekend, we’ll be going to the Museum of Gangsters. May sound like an odd option, but our first date was watching The Godfather, followed by another date watching Gangs of New York and we’ve watched all of The Sopranos together and the one-season-only Black Donnellys. Notice a trend? He’s Italian, I’m Irish and we like to debate, which has a superior mob.

We got a $20 Groupon deal for admission for two plus a tour. Unlike other NYC museums, this one doesn’t have a donation option.

Before the tip on our dinner, we’re at $59 spent on the anniversary.

After the tip, we’ll likely be $10 over budget, but I’m willing to bust our budget a little bit.

Using Groupon was an incredibly easy experience. You register for a profile, click on the item you want, input your credit card information and the deal shows up in your email moments later. You can print out the voucher or download the app and present the coupon in your app when you want to redeem the deal.

Perhaps I’ll need to update this after actually using the Groupon deals, but thus far, it’s been a frugal and worthwhile find.

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Our height difference and my refusal to wear heels longer than 30 minutes makes dancing a little tricky. And yes, I’m on my tip-toes.

Posted in Frugal Find Friday Tagged with: ,

How to Set Your Rates as a Freelancer

The following post comes from Danielle of ThisQuarterLife.com. I know a lot of bloggers (and even non-bloggers) indulge in the fine side hustle of freelancing, but we all deal with one awful question: how do you set your rates as a freelancer? Danielle offers some advice, and a nice mathematical equation, for our problem.

Whether you’ve freelanced before, or you’re just starting out, establishing a rate at which you agree to work for can be a difficult thing to decipher. According to career expert Jill Jacinto, a major shift has begun toward a freelance economy. “Many people with full-time jobs still have passions that they want to pursue,” Jill says, “and one of the ways to do that is to hone those skills through freelancing.”

If you’re making the jump for the first time, or want to make sure you’re on the right track with what you’ve been charging, read Jill’s advice for establishing your rate as a freelancer.

1) Get in touch with the industry

Before you speak with any potential clients, find out what the industry norms are for freelancers in your region, and for your particular skillset. Visit LinkedIn, take a look at the groups they have for your field of work, and see if you can connect with someone who is established in the line of freelancing that you’re interested in, and could speak to you about hourly rates for that field. Searching sites like Elance or TaskRabbit will give you a good feel for what number would make sense for you to charge.

2) Follow the equation

Full-time freelancers can use an equation to figure out what to charge their clients per hour.

You’ll need to know:

Annual salary: The salary you were making when you were employed full-time (or a comparable full-time salary to what someone at your experience level would make in the industry you are freelancing in).

Annual profits: Which should be 10% to 15% of your annual salary.

Annual billable hours: Meaning, the hours that you work per year. Take 365 days, minus vacation and sick days, weekends off, and the time that you’d spend doing administrative tasks (such as billing) and then multiply that by the number of hours you would work per day.

Annual expenses: Things that are not provided to you by a company anymore now that you’re a freelancer, such as internet and health insurance costs.

Then follow this equation: Your annual salary + your annual expenses + annual profits / by annual billable work hours = basic hourly rate

3) Weigh the pros and cons of charging hourly vs. charging per project

When you’re deciding whether or not you should charge an hourly rate, or if you should ask for a flat price for the project, look at the pros and cons. Working hourly may be great because there is no ceiling, but if you can’t finish the project in time, it’s going to reflect poorly on you. However, charging a flat rate could mean that you end up doing much more work than you had anticipated. Be realistic about the time that it’s going to take you to complete a project before you choose whether to charge hourly or per project.

4) Don’t undervalue your work

You need to think about what a livable wage is for you, especially if you’re freelancing full-time. Your rates are going to be different depending on the size and caliber of the company you’re working for (ex: an article you write for the New York Times won’t pay the same as an article for a smaller publication), but that doesn’t mean that you should just accept any rate your client offers you. When you’re setting your rate, think of yourself as a business, evaluate how much your time is worth, and how much of your time is going to be spent on your assignment. Based on that information, come up with a smart number to ask from your client.

Note from Erin: For those of you looking to find freelance gigs, go check out this post about Asking For the Order! Or if you want to hear me talk about the financial ramifications of a quarter life crisis, click here.

The Quarter LifeAbout ThisQuarterLife: Does your Google search history include phrases like “tricks to assembling Ikea furniture,” “the right time to ask for a raise,” or “how to tell if something is microwaveable?” Then visit us at ThisisQuarterlife.com — we’re here to help you navigate all the hard parts of this awkward phase of pseudo-adulthood.

Gifs taken from GIPHY

Posted in Freelance Tagged with: ,

Frugal Find Friday: Venmo

“Lucas Likes to Dance” “Lucas Does Laundry” “Lucas Rides the Subway”

New York City dwellers probably know where I’m going with this (assuming you actually do take the subway, but if you can afford cabs everywhere then you probably aren’t reading this blog).

An odd ad started popping up all over New York City transportation in early 2014. These simple posters featured a declarative sentence, a mid-twenties Asian man (apparently named Lucas) with the shadow of a goatee,  giving a dead-pan look at the camera and in tiny writing on the lower left hand corner the cryptic word, “Venmo.”

HUH?!

Like most New Yorkers, I found the ads strange, then annoying and, eventually, borderline enraging when I stepped into a car completely plastered with Lucas‘ face. That was, until I started using Venmo.

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Getting on the Venmo train

My younger sister (who, at the time was still in college) introduced me to the world of Venmo. She owed me money for our parents’ Christmas presents and didn’t want to deal with going to an ATM.

“Can you just download Venmo?” she dramatically sighed in that way only a younger sibling can.

“What’s Venmo?” I inquired, always the technological Luddite (totally just got snapchat last week).

“It’s an app that you link your bank account to and then you can transfer someone money,” she explained. [Think of it as Chase Quickpay, but it doesn’t matter which bank you have.

“Um, I don’t really like the sound of linking my bank account to some app,” I retorted.

[Insert eye roll here]

“Fine. But it makes it way easier to pay people back or get paid,” she fired the final shot before we changed the subject.

Fast-forward a few weeks and I started seeing Lucas and Venmo’s ads everywhere. I finally caved and did some research.

How to use Venmo

From the mouth of Venmo (or fingers of the people who write copy on their website): “Venmo uses bank-grade security systems and data encryption to protect you and prevent against any unauthorized transactions or access to your personal or financial information.”

You download the app, or signup via their website. You can link a bank account, debit card or credit card to your account in order to make transactions. Most Venmo transactions are free. Those linked to your bank account or using your existing Venmo balance are free. Most debit cards (unsure which ones aren’t) are free, but there is a 3% fee for using a credit card.

Once you’re in the app, you can pay or request payment from friends. The app will access your contacts (made me a bit uneasy at first) and assess who already has Venmo. It will make it easy for you to type in a contact’s name and pay via Venmo. You can also pay to an email address.

Once you’re paid, you can “cash out” so the money is sent to your bank account. Or you can just leave the money there to use on future Venmo transactions.

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One (sort of) flaw

My only worry about Venmo is small a security issue, which you never want to have when you’re talking about protecting your finances. I trust the app and feel it’s just as secure as using the app associated with my bank. My concern is what happens if my phone is ever compromised.  Transactions don’t require a password, and your app will constantly stay logged on (unless you log out). So, if someone were to ever steal my phone and get by my passcode, he could theoretically send a significant amount of money from my checking account to any account he wanted (but it seems that would make a petty thief pretty easy to track). Now, I could log out of Venmo and need to log in each time I use it to appease my concerns. The company also addresses these concerns on their site stating:

“Venmo uses bank-grade security systems and data encryption to protect you and prevent against any unauthorized transactions or access to your personal or financial information. Furthermore, we guarantee all user funds against any unauthorized transactions.” And “If you have lost your phone, or feel that someone besides you is using your account, Venmo allows you to disable a device from accessing your Venmo account. By revoking access, your account will be logged off of that device. Access revocation can be found under ‘Passwords & Authorizations’ here.”

IMG_0086As an iPhone user, I could also remotely wipe my phone and clear all the data off it, so a thief wouldn’t have access to any of my personal information.

I also find it annoying that people can see your transactions on their homepage, unless you change that setting in privacy. People tend to make snarky remarks about what they’re paying friends for, so the homepage is populated with things like “Players gonna play play play play” or “Xanax & Rangas”. This part can be amusing, but I’m too private to want people to be able to see my information.

Ultimately, I’m a huge fan

Tiny security concern aside, that’s mostly chalked up to me being hyper-paranoid, I’m a huge fan of Venmo. These days, so few people carry cash (I feel like I’m a dying breed), that it makes splitting bills insanely easy. It also makes it hard for your friends to avoid paying you back with the, “oh man, totally forgot to bring your money” excuse. For roommates, it’s also a quick way to pay each other for split bills, in my case that’s the utilities. So, I’m going to continue to sing their praises, until there is a major breach of Venmo data (which could be accompanied by a PayPal breach because PayPal owns Venmo).

What other apps do you use to make your financial life easier?

Posted in Frugal Find Friday

4 Strategies for Handling Consumer Debt

Debt: it’s an ugly four-letter word.

According to a study by MagnifyMoney.com, almost half of Americans carry credit card debt with an average of $10,000.  $10,000 of credit card debt can cost thousands and thousands of additional dollars in interest. But, instead of simply throwing away money in the form of interest payments to the credit card lender, there are repayment strategies available to help those carrying debt slash the interest. Here are four empowering strategies:

1. Request a reduction of your interest rate

Many personal finance experts recommend giving your lender a call to negotiate the interest on your credit card debt. As banks hold most of the power in your financial relationship they aren’t likely to give you much wiggle room when it comes to reducing interest rates on debt.  Banks are always on the hunt to acquire new customers, so the best deals are given to the “acquisitions.” In order to compensate for giving great deals to the new clients, banks will raise prices on existing customers.

So, the worst case is that they’ll do nothing. That being said, the best-case scenario is that your bank might drop your interest rate by two percent.

Read the rest on GoGirlFinance

Image from Giphy

Posted in GoGirlFinance Tagged with: ,

College Students Still Face Crippling Credit Card Rates

HS gradCredit card lenders around the country are beginning to salivate as college students head to campus — though not as enthusiastically as they once did. Young adults used to be a powerful debt-generating machine, and banks took full advantage. Then the CARD Act of 2009 made many of the old practices that lenders used to lure and keep college students in debt illegal. However, even with those changes, college student credit cards carry some of the highest annual percentage rates in the country, rivaling those of store credit cards.

The CARD Act Didn’t Eliminate the Problem

Pre-CARD Act, college students could simply sign up for a card at age 18. Now, individuals younger than 21 cannot be offered pre-approved credit cards. They must have proof of income or a co-signer older than 21. But these restrictions don’t make it hard for the average college kid to obtain plastic.

Post-CARD Act, credit card companies were largely banned from their old tricks of handing out free T-shirts, pens, tote bags or Frisbees to entice naive students. Instead of offering tangible goods, lenders moved to using rewards to lure college students to spend, spend, spend their way into owing money at cripplingly high annual percentage rates.

Analyzing the APR of Student-Targeted Credits Cards

Read the rest on DailyFinance

Posted in Credit Cards, DailyFinance Tagged with: ,

Frugal Find Friday: Paperless Post

To most of you it’s 2014, but to me it’s the year of weddings. I’ve been invited to five his year, with the privilege of being the Maid of Honor to my best friend in one. Since May, I’ve witnessed a variety of wedding ceremonies and receptions, from a vineyard to a traditional church and hotel ballroom to a backyard. While budgets and preferred styles for the actual wedding may fluctuate, there is one point where all weddings find a commonality: invitations.

Frankly, I’ve always figured a Facebook event would do the job just fine. (Yes, I’m cheap). But I’ve been told that’s a no-go.

When my cousin Bridget sent out the invitations to her wedding I was floored, relieved and wanted to send her major snaps for ingenuity. Why? Because Bridget’s wedding invitation arrived in my inbox, not my mailbox. Why was I relieved? Because this opens the door for me to do something similar one day, in the very distant future.

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A modified version of the invite

Using a website called Paperless Post, Bridget and her husband-to-be designed a beautiful invitation, and saved themselves hundreds of dollars.* Not to mention tons of time, because guests RSVP right to the email, which eliminates having to keep track of all those tiny RSVP cards. The terrifying website Cost of a Wedding says the average cost of wedding invites is $812! Have you ever noticed just how much paper goes into a wedding invite? The big invitation, then that little one about the reception, the RSVP card, maybe one with directions and another with details on brunch for the next day? I’m sure Paperless Post would please the environmentalist crowd.

I decided to investigate just how much it would cost to invite people to a hypothetical party using Paperless Post.

When you sign up for Paperless Post, for free, you’re automatically given 25 “coins”. You can also buy coins, starting at 20 for $6. I went through the process of creating my own invitation to play around with price points.

Paperless Posts offers a variety of free, customizable cards. Naturally, I started there. There are plenty of beautiful invitations for people going the wedding route, but I went with a fun card to send out for my fake party.

I created a card with an envelope, so people feel like they’re opening up a virtual card, which is kind of fun.

After designing the card I got to the checkout and started plugging in guests. It cost one coin per guest and the added envelope touch also set me back a coin. (You can also add a customized stamp for another coin.) So, to send the invite to two guests for a grand total of four coins (look at that fast math!).

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If I were using this same system for my wedding, and had 200 person invite list (completely realistic with the size of my extended family), I’d need 400 coins to send out my invites. It would cost $60 to buy 400 Paperless Post coins. That’s significantly cheaper than printing actual cards and mailing them out to guests. I know the Miss Manners of the world would gasp in horror. Call it uncouth if you’d like, but I find the snazzy email invite incredibly savvy.

Here is the snarky invitation to my fictional party!

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Hope to see you there!

* I later learned they did traditional invitations for the older generation, but they still must have saved a bundle on invites!

**If you like what you read here, or just find me super-duper in general, then please consider nominating me for this year’s Plutus Awards. Perhaps Best Blog for Teens/College/Young Adults?! Just click here to get to the voting page. **

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Leaving a Job? Here’s How to Rollover a 401(k)

**If you like what you read here, or just find me super-duper in general, then please consider nominating me for this year’s Plutus Awards. Perhaps Best Blog for Teens/College/Young Adults?! Just click here to get to the voting page. **

Back in April I took a big career leap and left my steady desk job for the thrill of joining a start-up – where I still have a desk and a steady paycheck, but you know what I mean.  I left behind one important thing when I started my new gig — my retirement fund. I needed to rollover a 401(k) before I felt I’d completely moved on. Fortunately, my new employers offered a matched on a new 401(k). Unfortunately, my only option was a Traditional 401(k), so I couldn’t easily roll over my current Roth 401(k).

Why, you ask? Because Uncle Sam and the IRS say so.

A Traditional 401(k) is a pre-tax account, so it lowers my taxable income (yay!) but it also means I’ll have to pay taxes on that money once I start making withdraws in retirement (boo…). A Roth 401(k) means my contributions were taxed before going into my investments. My income doesn’t get a tax break now, but I can take money out in retirement without Uncle Sam’s grubby fingers all over my fat stacks.

So, I had to make a decision about what to do with my original 401(k).

I had a few choices:

1)   Leave it: I had enough money in the account (just north of $8,000) to qualify for leaving it alone.

2)   Roll my employer’s contribution into my new 401(k) and roll the rest into a Roth IRA

3)   Roll all of it into IRAs (one Roth and one traditional)

But wait, why two IRAs? While I had been contributing post-tax money into my 401(k), my employer had not. The contribution from my former employer needed to be rolled into a pre-tax account. My new, traditional, 401(k) would qualify and so would a traditional IRA.

After slight deliberation, I felt it would be easiest to roll my old 401(k) into two Vanguard IRAs – one Roth and one Traditional. I already had a traditional IRA set up with Vanguard, so it took me all of five minutes to get a Roth IRA prepped for my roll over.

It’s incredibly simple to rollover a 401(k) into a Vanguard IRA(s). I started by doing what any millennial would do:

Screen Shot 2014-08-20 at 5.55.47 PMand was taken to this page:

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I clicked on “start your rollover online”. After answering some simple questions they directed me how to split my 401(k) into the two IRAs. I found it easiest to just ask the kind folks in charge of my current 401(k) how much had been taxed (my contributions) and how much had not (the employer contribution).

I then filled out paperwork from my former employer to start the rollover process.

Then I hit a snag.

My former employer was in the process of moving their 401(k) program from a company called Plan Destination to Fidelity. I had been warned I had to rollover a 401(k) before the black out date when the change occurred. So – even though I filled out my paperwork on time, they didn’t finish it in time on their end and started rolling over my 401(k) to Fidelity.

Now I had another decision to make.

Do I just leave my 401(k) with Fidelity – another reputable brokerage firm – or continue with the initiation to rollover into Vanguard? Admittedly, another Fidelity product caught my eye: the 2% cash back card, because you can put your cash back into an IRA. After some more deliberation, I decided to go ahead and move it all to Vanguard. I liked the idea of simplifying where my money would be, plus I had a relationship with Vanguard and loved their customer service.

To get my rollover started, I simply called Fidelity and told them I’d like to rollover my funds to existing IRAs with Vanguard. I made sure to verify the Roth (post-tax) funds would be on one check with the pre-tax funds from my employer’s contribution on another.

Unfortunately, another small inconvenience occurred.

If my paperwork had been processed properly prior to the blackout date, I could’ve just had Plan Destination roll my money over to Vanguard (by sending checks to a Vanguard P.O. Box) with no problem. Fidelity didn’t play that way. Instead, they insisted on sending me the checks and then I had to send them on to Vanguard.

I called Vanguard to explain I would be mailing in the checks myself, verified the address I should send them to and asked if I needed to do anything else. The kind customer service rep recommended I write a brief letter detailing exactly where each check should be deposited, even though it would be detailed on on the check.

Taking his advice, I wrote a quick summary of the amount on each check and which type of IRA it should be deposited into and the corresponding account numbers.

The checks showed up about a week later, and I walked them over to the post office, sprang 63 cents for a stamped envelope and dropped them in the mail. Like magic, I saw the funds in my Vanguard account three days later.

Many people find the most stressful part of this process picking the funds for your investments. I am by no means a professional in this arena, and had to seek a lot of advice from my Dad about setting up my first 401(k). As a general rule though: the younger you are the more risky you should be. 100 – your age = the percentage you should have in stocks. While some fight that it isn’t the case anymore, it’s at least a good suggestion for the young investor

But you probably want to know what I did.

You need a certain amount of money to buy into various funds, which limited some of my options. For my Roth IRA I went with a Vanguard 500 Index Fund and a Vanguard Target Retirement 2040 Fund. When in doubt, an S&P 500 fund is a pretty solid pick. My traditional IRA was already set up (also including the Vanguard 500 Index Fund) – so I just dumped my rollover funds in the existing investments.

Wait – you don’t even have a 401(k)?!

GASP! I know not everyone feels they can afford to be contributing to retirement yet, but if your employer offers an employer-matched 401(k) then you best be investing. At least enough to get the match. Otherwise, you’re throwing up the finger to free money. That wasn’t a typo. FREE MONEY! Still thinking about it? Then please read my post on the magic of compound interest or this one breaking down 401(k)s #MillennialStyle.

[Gif from GIPHY]

Posted in Retirement Tagged with: , , ,

A Beginner’s Guide to Using a Credit Card

Discover it

Not suggesting you get Discover. Just had this picture on deck.

I recently had a conversation with someone near and dear to me about credit cards. The conversation started innocently enough when I asked how using her first credit card was going? She flippantly mentioned she’d paid the minimums and I gasped. What? Why?! She seemed flummoxed by my questions.  She asked why her lender would put for a minimum payment on her statement if that isn’t what they wanted? I walked her through interest rates, minimum payments and how lenders are essentially trying to put you in debt. Does that sound cynical? It’s true.

In response to her conundrum, I decided to write an extensive guide on how to use a credit card for beginner’s on MagnifyMoney.com, because we make credit card recommendations there and it seems important to have this information available to any credit card rookies (and even some experienced users). 

So, you want to open a credit card? It’s a good idea – most of the time.

Opening a credit card provides a simple way to establish and build credit history. Yes, certain credit cards can earn users rewards for cash back, travel miles, and redemption points, but the road to reward chasing is littered with people who slipped into credit card debt. Beware of your budget and your personality if you elect to pursue the path of reward chasing.

If you have trouble paying bills on time, saying no to purchases you can’t afford or just sense a credit card may not be a good idea for you – then trust your gut. While a credit card is a great tool to build financial health, it can also lead to painful consumer debt when used improperly.

Still think you’re ready to take on the responsibility of owning a credit card? Then let’s walk through how to select, understand, apply and manage your credit card.

Step One: Select your type of credit card

Credit cards were not made equal and we’re not just talking in terms of interest rates and rewards. Your unique situation will determine which credit card you should (and could) apply for.

Click on over to MagnifyMoney to read the four steps for credit card rookies.

[Discover it image from Flickr]

Posted in MagnifyMoney Tagged with: ,