Trade School vs. College: Weighing The Costs

Should I go to trade school or college? This was a much more common question 40 to 50 years ago than it had been until recently. With college tuition costs soaring each year and no guarantee of a job after you graduate, the trade school vs. college debate has gained momentum in recent years. When deciding on college or trade school, the answer will be different for everyone. But let’s take a look at the pros and cons of both.

For most people, the cost of school can be the most significant factor in what route to choose. Expectations also play a decisive role in determining what path to take after graduating from high school. But rather than letting expectations determine your future, let’s take a look at the facts.

What Is a Trade School?

Trade schools, also known as vocational schools or technical schools, exist to teach skills related to one particular job. Trade schools reduce your potential job market but greatly enhance your hireability and likelihood of employment after you graduate.

People might expect that the average salary for someone that went to a four-year college would be significantly higher than someone that went to a trade school, but the difference is not as high as you might think.

The National Center for Educational Statistics shows a median salary from a trade school education at $35,720. Compared to the predicted earnings for someone with a bachelor’s degree, $46,900, the difference is just $11,180 per year.

It should be noted that the expected salary for someone that attends trade school will be determined significantly by the industry and level of experience.

Modern Job Market

While it used to be a no-brainer that you would try to get good grades in high school to get accepted at a quality four-year college, the changing job landscape has made the decision murkier.

It is much less frequent these days for companies to be hiring people straight out of college without specialized degrees. If you go to a four-year college and receive a general degree, you may find yourself looking at potential graduate schools after your four years are up to further specialize your education.

If graduate school becomes necessary, the cost of your college education increases to a much larger degree.

Cost of Four-Year Colleges

The cost of college varies widely, depending on whether the college is public or private and whether you live in-state or out of state. According to a recent study by ValuePenguin, here are the average costs of going to college for the 2017-2018 school years:

  • Public School In-State: $25,290
  • Public School Out of State: $40,940
  • Private School: $50,900

Public College Costs

Tuition costs account for just under $10,000 worth of the $25,290 average for in-state public schools. For those attending out of state, tuition costs rise to $25,620. Another $10,800 is added on for room and board, while books and other expenses account for the remaining $4,500.

These costs are on an annual basis. When multiplied by four years, the average total cost of an in-state public college is $101,160, and that goes up to $163,760 if you are out of state.

Private College Costs

For private schools, tuition accounts for a more significant percentage of the total costs, averaging $34,740. The price of room and board is slightly higher for private schools at just over $12,000, while other expenses remain similar.

Add it all up, and the total cost of attending four years at a private college comes to $203,600.

Cost of Two-Year Colleges

For a much cheaper option, you can consider a two-year college. Typically these are community colleges, although some community colleges also offer four-year degrees.

The average cost of public community college for people in-state is $4,864, and that number goes up to $8,622 for those living out of state. One of the main cost advantages of community college can be seen if your school is local and you can save money on room and board.

The average cost of a private community college goes up to $15,460 annually.

Drop-Out Rate

One major factor to consider for whoever is paying the bill for your education is the drop-out rate at four-year colleges. According to the Institute of Education Statistics, 40% of students drop out of college without finishing their degrees.

You may believe that a four-year college is right for you and have always planned to attend one. However, many people are not ready for life on their own, where going to class can appear optional and distractions abound.

Further, even if you don’t drop out, 64% of students take longer than four years to graduate. This means additional tuition costs, as well as a later entry into the workforce.

Cost of Trade School

Trade school programs are typically two years in length, which means that you can get into the workforce quicker than the typical college route.

The average total cost of attending trade school is $33,000.

That number is $68,160 less than an in-state four-year college and is $130,760 less than out of state costs.

Advantages of Trade School

We’ve already gone over some advantages of trade school, such as lower cost and quicker entry to the workforce. But the main benefit of getting a degree from a trade school is job security.

With the decline in popularity of trade schools in the past 40 years, the average age of workers in these industries is older than in other sectors. This means that as time goes on, there will be more openings for these jobs.

Trade schools also prepare you for jobs that are harder to outsource overseas. So your job is not in danger of being lost to someone willing to work for cheaper in another country.

The final job security advantage is that you now have a specialized skill. As long as you choose an industry that will always be in demand, you are likely to have less time out of a job and more time as a paid member of the workforce.

The Federal Reserve Just Cut A Key Interest Rate: What Should You Do Now?

On Sunday, March 15, the Federal Reserve announced it would slash interest rates to zero. The benchmark U.S. interest rate now ranges from 0% to 0.25%, down from a range of 1% to 1.25% on March 3. The cut comes as the Federal Reserve seeks to boost the economy in the face of the coronavirus outbreak, which has “harmed communities and disrupted economic activity, ” the Fed said in a statement.

The Fed also announced it would purchase at least $700 billion in government and mortgage-related bonds in an effort to protect the economy from the impact of COVID-19. The rate cut and $700 billion bond purchase (commonly known as “quantitative easing”) were both seen as emergency actions taken by the Fed in an effort to bolster the economy and get financial markets running smoothly again, and were the most drastic measures that have been taken since the 2008 financial crisis.

Bottom line: Zero interest rates make borrowing cheap for Americans and businesses in crisis. In other words, a Fed rate cut is good news for borrowers, and for savers it’s an opportunity to make sure you’re getting the best yield you can.  The goal whenever the Fed slashes rates is to give the economy a boost.

But what does this mean for you? And what should you do now?


Still getting less than 0.1% on your savings? Even without this Fed rate cut, it’s time to shop around. 

Bankrate is showing that the average yield for a one-year CD is around .75%, but many online banks are offering more than 2% on a $500 deposit. The federal funds rate does have a direct impact on the savings and CD offers you will get, and an interest rate cut of 0.50% can be passed along to you, so if you’re looking at a longer investment horizon, you may want to compare 5-year CDs or look at CD laddering (buying multiple CDs with staggered maturation dates).

COMPARE RATES: Looking to up your yield? Compare savings account offers from our partner Fiona.

What does this mean for mortgage rates and other loans?

Mortgage rates have an indirect tie to the federal funds rate—they’re more closely tied to the 10-year Treasury — but mortgage rates have been steadily falling over the past year. Mortgage rates have been below 5% for almost a decade, and right now are below 4%. 

But mortgages aren’t the only loans that offer you a chance to save by locking in lower rates as the Fed cuts rates. Car loans and student loans can be refinanced. Credit card interest rates can be lowered, too, sometimes by asking your lender for a break, others by transferring your balance.  

Here are some other things you need to do to put some of your interest-related dollars back into your wallet:


Your credit score is a major factor in determining the interest rate you’ll pay on a loan. For the best rates, you should have a really good credit score (760 or above) and a near-perfect payment history. Don’t know your score? No problem. It’s easy to snag for free. Amex, Discover and Capital One are just a few of the companies offering free credit scores as part of their card perks. You can also get your score from sites that want to sell you better deals on credit like Credit Karma and Savvy Money.  

Your credit scores should be free. And now they are. Check your scores anytime and never pay for it. Credit Karma

Statistic: Federal funds rate level in the United States from 1990 to 2019 | Statista
Find more statistics at Statista

You can (and should—looking at you, mom!) also pull a free copy of your credit report from each of the major credit bureaus once every 12 months. Just head to to get your copies. If you find mistakes, they may be one of the things dragging your score down. The first step in getting this remedied is to file a report with the bureau that there’s information on your report that doesn’t belong to you. 

What if your score isn’t where you want it to be? Start paying your bills on time every time (automating payments can help); if you have revolving debt on your credit cards, work up a plan to pay it down. Aim to use no more than 10% to 30% of the credit limits available to you. Don’t apply for credit you don’t need. And don’t close old cards you’re not using unless they have hefty annual fees. Your score won’t pop overnight, but it will over 12 to 24 months of good behavior.


There may be no financial move easier than refinancing an auto loan. Seriously, it can be done in less than an hour, and auto loan rates are likely lower than they were when you got yours (particularly if you didn’t shop for financing strategically), and they’re going to move lower. ValuePenguin reports that the average interest rate on a 48-month auto loan from a commercial bank has fallen by more than 40% over the last decade. Credit unions often have the best interest rates, but you can use a number of online auto loan search tools to compare loan rates in your area.  

Refinancing a home loan is likely something you’ve done already if you’ve been in your home a while. But if you’ve been improving your credit score, it could be time to tap the well again to get a better interest rate, especially with mortgage rates below 4%. Refinancing a home loan is a more involved transaction than a car loan, but the general rule of thumb is that you should plan to be in the home long enough to recoup the closing costs with the money you save by refinancing to a lower rate. To do the math, try running your numbers through Fannie Mae’s refinance calculator. (Here’s more on what you need to know about refinancing your mortgage.)


Americans owe more than $1.52 trillion in student loan debt, spread out among about 45 million borrowers, according to Student Loan Hero. And many of us are paying more than we should in interest. Refinancing your federal student loans—and parent loans, like PLUS loans—with a private lender is worth a look to make sure you’re still paying the lowest interest rate possible.

You likely have loans at a variety of interest rates (I know I do), so choose to refinance only the ones that will save you in the long run. And be sure that by refinancing to private loans you’re not giving up something you’d like to keep: Federal loans have protections — plus loan forgiveness for public service workers — that private loans do not.  

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Editor’s note: We maintain a strict editorial policy and a judgment-free zone for our community, and we also strive to remain transparent in everything we do. This post contains references and links to products from our partners. Learn more about how we make money.

8 Bartering Websites and Apps to Trade Your Stuff

Bartering is the original form of commerce. The exchange of goods and services is what keeps the world running. Bartering may have gone out of style for a while, but it has made quite the comeback with the help of the internet and social networking. And when you’re on a budget or just trying to save money, bartering can be a great alternative to buying something new. Below, we will look at the five best bartering websites and then go through the three best bartering apps.

What Is Bartering?

Bartering is simply making a trade with someone else. Ideally, you trade something that you do not need anymore, have an excess of, or can readily replace. Bartering is not limited to just physical items. You can trade a service that you provide for something you consider equal to the value of the service. Bartering can take many different forms, but it boils down to an exchange of goods or services with another person.

Bartering also tends to be local. If services are exchanged, they may have to be done in person. Staying local also means there is no shipping involved, which opens the door to larger items that would be challenging to ship.

Best Bartering Websites

When talking about bartering websites, the 800-pound gorilla in the room is Craigslist. Craigslist might be the only legitimate bartering website that works as well as it does.


On the front page of your local Craigslist site, you will see a “for sale” section. Under this category is a link titled “barter.” Click on the link, and you will be taken to your local bartering page where people have offered up items for trade.

If you have an item you know you want to barter with, list it along with whatever you would be willing to barter it for. If you have nothing to list but see something you would like, you can email the person who listed the item and make them an offer. You can also offer up an item you currently have listed and offer an exchange for another person’s listing.


BizX is an exchange for business owners to barter their business goods and services. The way it works is by using BizX dollars that you can earn and spend rather than spending cash. BizX can help you to discover new clients for businesses and is a way for business owners to acquire services without having to use cash.


Freecycle is not your typical bartering site. It may not technically be a bartering site at all. But it is a place where items are exchanged. Instead of asking for something in return, Freecycle is all about giving things away for free. Now, it is not good form on the site to always be taking stuff and not giving anything away. But the freeness of this site gives it a much more relaxed atmosphere.

Freecycle also has an app to help further facilitate your exchanges, and there are over nine million members around the world. Once you sign up, you choose a group of people that’s closest to you and then go ahead with trades or free exchanges.

Game Trading Zone

Game Trading Zone is a community for gamers to buy, sell, and exchange video games and movies. There are no credits involved at this site. You can check out user’s libraries and propose trades. Once you have agreed on the deal, you ship the games out to each other.


PaperBackSwap just makes sense. If you enjoy reading books and don’t have a home out of Clue with a billiards room and a library, you’ve undoubtedly run out of room to store your collection.

At this point, you have to prioritize which books you actually deem worthy of keeping. So what do you do with the rest of those books? You could try selling them to a used book store, but you aren’t going to receive anywhere close to what you paid for the books.

Enter PaperBackSwap. The way it works is you come up with ten books you are willing to give up in exchange for two credits on the site. Each credit can be exchanged for one book. Anytime one of the books you have listed gets requested by another user, you send it to them using shipping labels you can print right from the website.

Best Bartering Apps

To avoid app bloat on your devices, we’re limiting this list to the three best bartering apps.


The LetGo app makes it easy to quickly get rid of old items. It’s also helpful if you’re looking to acquire a specific item. When you first log in, you select three categories to start getting personalized deals arranged for you on the app. When you see an item you want, you can send a message to the other user. Some users may want to stick to their offered price, but others are willing to barter with you to get a deal done.


Swapub is a bartering app with an interface that is easy to navigate. When you upload a picture of an item you want to exchange, you have the option to add art and flair to the posting to make it stand out. Swapub has a category for anything you can think of and has a “Wishwall” feature, which lets you post all of the items you’re looking for, making it easy for other users to set up a trade.


The app TradeMade might be the best true bartering app available. It has a more polished look than Swapub but offers slightly different features. TradeMade lacks the Snapchat-like flair offered in Swapub but has a cleaner trading interface.

You first upload an item, either a good or service. Add a picture, a description, a value range, and the quality of the item. Then you browse trades which you can filter by distance, your Facebook friends, or by what other users want. You then propose a trade and barter back and forth before agreeing on a deal.

Debt Weighs Heavily On People Near Retirement

The duel between debt and income is spilling over into the retirement years for more and more people.

At one time, it was common to have all the major bills paid and live a quiet, but comfortable retired life with Social Security as the financial foundation.

Now, mortgage, home equity loans, car loans, credit card and even student loan debt are chasing people into their Golden Years.

And income from Social Security can’t hold them off.

The Social Security Administration (SSA) says the average retiree receives $1,301 a month in benefits, or about $15,600 a year. The average for married couples is $2,111 a month or $25,332 a year.

That is less than half the median income of $54,939 (far less in the case of individuals) that the Census Bureau says the median American household took home in 2014.

Average Debt Load For Seniors $140,000

The SSA estimates that about one-third of retirees are trying to live off Social Security alone. Even when people receive money from 401(k) investments, pensions and savings, the median income only grows to $35,107. The disturbing fact is they need every dime of it to deal with the debt they dragged into retirement.

The Federal Reserve Board of St. Louis estimates the average 55-64 year old carries $140,000 of debt, a jump of about $45,000 since 2000.

“Debt is definitely tarnishing the Golden Years,” said Pam Villarreal, a senior fellow at the National Center for Policy Analysis, who specializes in tax and retirement issues. “The expectations used to be that by the time you got to retirement, you’d at least have the mortgage debt paid off and all the other bills pretty much under control.

“But we’re in a different culture now.”

The new culture seems immune to concerns over debt and unaware of how scarce income is when you quit working.

Most Debt Falls In 4 Categories

Mortgages, credit card debt, car loans and student loans are creating financial headaches for people as they near retirement. Each of the four categories includes surprising spending from people who should be using the money for retirement investments or savings.

For example, people who sell their home in one market, then retire to another state and buy another home, often end up with another mortgage payment at a time when they were done or nearly done with that form of debt. Also, the Consumer Financial Protection Bureau says that median monthly spending on housing for seniors with a mortgage is $1,257 a month, compared to $437 for those without a mortgage.

Credit card spending also produced some astonishing examples of careless spending. TransUnion, one of the three major credit bureaus that tracks spending, says that in the first half of 2014, people in the 60-69 category had an average credit card balance of $4,891, more than double the $2,135 balance held by credit card users under 30.

The median balance on car loans for 55-to-64 year olds was $11,700 and the New York Federal Reserve says that the number of people 50-and-older with student loans has more than doubled – from 3 million to 6.9 million – in just the last six years.

The result of dealing with this debt is that people nearing retirement, don’t have much money to devote to it. Only half of the country’s middle-class households – and less than 10 percent of low-income households – have a retirement fund at all.

“People used to be more aware of debt and how crucial it was to pay it off before you retired,” Villarreal said. “But it’s not considered crucial to pay off your debt early anymore. You see people in their 40s and 50s taking out 30-year mortgages at a time when you would hope they would be finished paying them off.

“Debt is just not considered a horrible thing anymore.”

5 Tips To Get Fit On A Budget This Fall

Looking and feeling good doesn’t have to cost a fortune. We picked, online health and fitness coach, Megan Ewoldsen’s brain on her top tips to get in shape on a budget this fall.

1. Personal trainers are costly, as are, gym memberships. Instead, try an at home fitness program like Beach Body.

2. Save money on your fresh fruits and veggies by purchasing them at your local farmers market.

3. Instead of purchasing weights use items around your home recreate the experience. Cans of soup or bleach bottles make excellent substitutions.

4. Replace your daily java or fast food run with a meal replacement shake. The shakes will run you approx. $4 a day!

5. Start a “fit club” with your friends! Share/Trade fitness videos and equipment.

Want more ideas on how to get healthy this fall? Check out Megan’s website or follow her on social media!

Money Saving Tip: Store Wine On A Budget

Monday Money Saving Tip: Store Wine On A Budget

Skip buying a pricy wine refrigerator that needs to be powered at all times. Instead, store your wine in a cool, dark corner of a storage room or basement.

The money you save can go toward building your collection!

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Easy Ways to Pay Off Massive Debts

The key to great financial health is to stay on top of your debt and keep it under tight rein. If you have good control of your debt and are staying ahead of it in the right sense, you can be proud of yourself for being in sound financial health. But if you aren’t, you are in the company of a whopping segment of the American population that is staggering under a huge debt burden. Salaries across the country have risen at a fast clip over the past few years, even outpacing cost of living, but still, debt continues to grow at an even faster pace, drowning out the impact of the extra cash available with the average American.

In February 2018, CNBC carried a rather ominous headline announcing that the collective debt of the country had crossed the four trillion dollar mark. The consumer debt of the country has continued to grow at an alarming rate with car loans, credit card spending, and student loans all showing drastic increases over the past few years. A detailed survey in 2019 by NerdWallet brought the following not so pleasant numbers to light:

  • In December, credit card balances carried over at month end touched $466.12 billion.
  • Over the past five years, credit card debt had soared by about 37%.
  • All kinds of debts combined, the average American owes about $137,8879 in a year.
  • Student loans account for about $1.50 trillion of the total consumer debt in the country.
  • Auto loans come a close second standing at $1.33 trillion out of the $4 trillion in consumer debt.

About 10% of Americans who have credit card debt say that they will be paying it off for over more than a decade. 9% of the surveyed believed that they could never fully pay off their credit card debt.

Debt has affected Americans to such an extent that 37% are putting off having kids because they are not in financially sound health. For about half of the Americans who aren’t parents, it is the costs associated with a child that deter them from having a child.

Evidently, poor financial health and, in particular, massive debt are not problems to be ignored at all. In fact, it would not be wrong to call this an issue of epidemic proportions, given how common it is to find an American who is struggling under the enormous burden of debt, unable to find a way to pay it all off.

The fact is that saving for our golden years is the top priority, but right alongside that comes getting rid of debt by paying it all off. Ironically enough, the first cannot quite be done without achieving the second, simply because huge debts soak up every extra dollar you have and don’t let you save at all. The first step then towards financial security is to eliminate the debt you have. Getting rid of debt completely would be the ideal situation, but if this is impossible, what you need to focus on is paying off the biggest debts, the ones that are eating into your finances in a major way.

Luckily, there are ways to pay off the most massive of debts and become financially secure, and there is more than one thing you can do to improve your debt situation and financial health.

Debt Repayment Strategies You Should Adopt

Credit Card Debt

Let’s talk about credit card debt first because this is one of the most significant debts Americans carry and also one of the biggest debt burdens that the average American may be belaboring under. As per a CNBC report, card rates in 2020 are currently averaging at 17.4%, just down from the peak of 17.85% recorded last in July 2019. Still, credit cards are the most common way for Americans to chalk up more debt to their portfolio. An average American household may be paying out more than $1,000 per year merely by way of interest on credit card debt. That’s $1,000 that’s not giving you any value at all; it is just lining your credit card issuer’s pockets. Imagine how much of your debt you could eliminate with that extra $1,000 if only you did not have credit card dues stacked up.

A Compare Cards study showed that about 35% of cardholders had more debt in the beginning of the year 2020 than they did at the beginning of 2019. This clearly means they have either taken more credit or failed to pay off the debt efficiently during the previous year.

All of this indicates that, when it comes to credit cards, you need a lot of determination and will to bring things under control, but the good news is that with these, you can get a grip on the situation once more. The very first step is to be passionate about cutting down the use of credit cards. If you are the kind to always have a number of credit cards in your wallet, first get rid of all of them. Cut them up so that you don’t keep using them once you have your debt situation under control. If you are apprehensive about being left without money during emergencies, keep just one credit card, but keep it out of reach when you go shopping. Lock it away and use it only when there is an emergency

The second critical step is paying back the debt that has accumulated so far. There are two things to focus on here:

  1. Check with your credit card issuer about to see if you can get a lower rate. Remember that the issuer would rather get repaid at a slightly lower rate than risk losing all of it. It might be far easier than you think to get the issuer to revisit your interest rate and give you a lowered one. Once you do have lower rates, continue to pay back what you used to before at the higher rate so that, every month, you are steadily reducing accumulated debt.
  2. Get a balance transfer card with which you can move your high interest debt balance to a new card that offers a 0% introductory APR. If you can manage this, every installment that you pay during the 0% APR period is going entirely towards your principal and not towards interest. That means you are attacking your debt directly and reducing it dramatically. Try your best to pay all of the debt off within the 0% APR period so that you can save big on interest.

Prioritize High Interest Debt

One of the most important things for you to understand before you can start tackling your mountain of debt is how each one of them affects your finances, both current and future. The smart move for you is to first make a comprehensive list of every single debt you have that needs to be paid off. This includes all kinds of debts – student loans, home loans, and credit card debt. Anything that you have to pay off goes on this list.

Once you have a clear picture of exactly how much you owe, you know the magnitude of the task ahead of you. That helps you get serious about the job at hand. Having a clear figure in hand also makes the task seem more achievable because now it’s not a looming undefined disaster that you should fear; you know exactly the size of your problem.

With your list of debts in hand, you are ready to take the next step: figuring out how to tackle them all. The first step here is to make a list of debt priority wise, organizing it by what you want to pay off first. Here is where smart thinking pays off handsomely and helps you reduce your debts quickly. Start by marking out the debts that are most expensive for you – the ones that carry the highest interest rates.

For example, say you have two loans – A and B, both for the same amount but charged at different rates. To pay off loan A, you shell out a monthly installment that is $20 more than what you pay for loan B. This means, every month, you are paying an extra $20. Target Loan A first, and repay it as soon as possible by making bigger repayments so that this extra payment can be avoided as soon as possible. With Loan A repaid, you are no longer frittering away your hard-earned money in interest instead of using it to pay off another loan. So the rule is, pay off the most expensive loans first and work down the list of debts in that order.

Establish a Second Line of Income

That’s easier said than done and no one has a treasure chest waiting to be found. However, finding a way to make extra money may not really be that difficult either. Especially if you have skills that let you work online. Maybe you are good at graphic design or writing. Then, you can take up small projects and make some extra money by working out of your home after work hours.

If that’s not your cup of tea, then how about doing some extra jobs around the neighborhood? Maybe some babysitting, tutoring, dog walking, or literally anything that pays you hard cash are all good. If that’s not going to be enough and your debt burden is too big, then look for a second job and create a whole second line of income that fully goes towards paying off your debts. Remember that every dollar you earn extra is a dollar of debt you have eliminated, and that comes with a huge bonus. Every dollar of debt you eliminate also takes away the burden of paying interest on that dollar from your head. That’s a double benefit for which working extra hard is totally worth it.

Keep this in mind to persuade you to take up that extra job. Only when you get rid of debt can you begin to save. Only when you save can you think of a happy retired life. With extra work today, eliminating debt is ensuring you a peaceful, independent retirement life.

Once you have paid off your debts, continue your second line of income so that you can build your nest egg for the golden years really quickly. With enough saved away, you will be financially secure in the truest sense of the word.

Working a second job is not the only thing you can think of though. If you have too many debts and you are desperate to pay off some really big ones that are eating into your income, consider selling things off to make money that can be used to eliminate the debt. Hold a garage sale, and use all of the proceeds towards debt elimination.

If you have a house that is bigger than you can manage with, put a portion of it to good use by letting it out. That’s a good chunk of income for you month after month. You might not even need to invest too much in sprucing it up for renting out. Just do the painting DIY to save money, call in friends to help you clear the space, and make it good enough to live or work in.

Cut Down Costs

If you put your mind to work, you can trim your monthly bills by quite a dramatic amount – much more than you think you can. Taking more care about your grocery bills, turning off the lights and the air conditioning when you are not in the room, and other small things may seem to be too small, but these savings can add up fast and free up some money that can be used to pay off your debts. In the long run, these habits ensure that you are not frittering away your money and letting it go to waste as well.

One of the best ways to cut down costs is to change the way you commute. Fuel costs can be a whopping contributor to your monthly expenses, and cutting down here can give you some major savings. See if you can walk to work, school, or to do your grocery shopping. In short, avoid taking the vehicle out whenever you can do so. If your workplace is too far to walk to, see if you can car pool with someone who will share costs with you, or take just the one car out and use the same to drop off your spouse at the workplace before you head on to yours, just saving on fuel for two cars. This will work wonders on your monthly bills, especially if you both travel pretty much along the same route to get to work. If you are thinking of buying a car, go for a used one to cut down the bills dramatically rather than opting for a brand new one.

Another very important area to focus upon to cut down expenditure is your weekly eating out and entertainment. While you may already be limiting your entertainment drastically since you are going through a cash crunch, eating out is still not something most people even think about when it comes to cost cutting. This makes up a massive chunk of your monthly bills though. Dispassionately eliminate all of your eating out, and choose to either make food at home beforehand if you leave for work early or go for foods that can be easily made in a jiffy.

If you have a mountain of debt that you are trying to tackle, then a focused, determined approach is the very first tool you need in your arsenal. Once you have that, the rest of the journey becomes easier than you think. Start by figuring out how much debt you have in all, and then, work through it without losing heart. Before you know it, you will be debt free and also have a much more sustainable financial lifestyle that will help you avoid falling into the debt trap yet again. As a result, you are better equipped than before to save up a nest egg that you can use for emergencies that may crop up and for your retired life.

What Is Inflation and How Does It Affect Your Personal Finances?

If you’re trying to save money and ensure that you have a good nest egg to fall back upon in your retirement years, it is imperative for you to make a sound financial plan right now. The earlier you make this road map and start following a reliable strategy for saving, the more you save. The more you save, the less anxious you are going to be at retirement time.

One of the key things that you have to figure out when you are making your financial plan is this: How much will you need at retirement? While this depends on your retirement goals, your expected expenses at that stage, your liabilities- current and expected, and your lifestyle preferences, there is also one very significant aspect to factor in before you can chalk up a strategy. You can’t afford to figure out what you will need at retirement based on exactly how much you spend today.

For example, if a family spends $60,000 a year today, can they get by comfortably and sustain the same lifestyle on $60,000 a year, 20 years down the line at retirement? Set aside any excess expenditure at that point for medical bills. Even if you do that the fact is that they can no longer buy the same things in 20 years’ time as they do now with $60,000. That’s because of inflation.

Inflation is what makes things more expensive for you over the years. Let’s tweak the example a bit. Jonah planned way back in 1999 for his retirement in 2019. In 1999, he was spending $40,000 a year on household expenses. He made a financial roadmap that ensured that he would have the same $40,000 in hand annually when he retired. However, thanks to inflation, what he could buy for $40,000 in 1999 no longer fits into that budget. Going by this useful calculator, he will need $61,281.07 to buy the exact same things in 2019 to cover his household expenses completely. Since Jonah did not factor in the impact of inflation when he did his retirement planning, he is going to be in a fix when retirement time rolls by.

The Current State of Inflation

Statistics show that inflation has risen in January 2020 and soared past forecasts to touch 2.49%. It was estimated to stay at 2.4%. In December the previous year, the inflation rate hovered at 2.29%, and in January that year, the low inflation was alarming economists and policy makers alike at a subdued 1.55%. The average inflation in 2019 stood at 1.81%, significantly lower than 2018’s 2.44%.

In addition, gasoline has shown a very steady, steep increase, mainly contributing to the higher inflation in January, but food remained steady with a 1.8% inflation. Clearly, even in a high inflation economy, it is quite possible for certain prices to remain low and not match the overall inflation rate.

What Exactly Is Inflation?

Inflation tells you how the purchasing power of a dollar has decreased over time. Purchasing power refers to what you can buy with one dollar. The opposite of inflation is deflation, and when this happens, you can buy more for a dollar than you used to be able to. While this might sound like a good deal for you, this is really not good news for the country’s economy at large, and governments try very hard to avoid a deflationary economy. They work very hard to turn the economy around and invite inflation back in if signs of deflation are creeping in.

Coming back to inflation, it is a measure of the rate at which the prices of a specific basket of goods are moving over a given time within the economy. It is expressed, as you have seen, as a percentage, and the government loves it when inflation is hovering around 2%, indicating an economy that is growing at just the right pace. If this is the case, then what you can buy today for $10 would cost you $12 next year.

Prices of goods rise in an inflationary environment, and your dollar can buy much less than it could earlier. The public has less purchasing power now. If inflation soars beyond a limit, the economy takes a serious hit because people are not buying things the way they used to, so sellers can’t sell as much. There is a general slowdown in the country’ economic growth. When the inflation is steady and stable, this is an indicator that the money supply with the public and in the economy is growing steadily as well but at a pace that is faster than the growth of the economy. In this situation, the economy does not slow down.

The inflation rate is calculated by the Bureau of Labor Statistics, and they use two indices mainly to do this: the consumer price index (CPI) and the producer price index (PPI). The CPI is also very relevant for you because it addresses the change in price for you, the consumer. The PPI does the same from the seller’s standpoint.

Why the Inflation Rate Matters

For starters, it tells you if you will be able to afford that home you were planning to buy a couple of years down. It tells you if you are equipped to deal with the schooling expenses for the kids in five years’ time. It tells you whether your paycheck can cover all your expenses or not.

Apart from all of this, the inflation rate also tells you what the country’s economic health looks like. The government and central bank of the country uses the inflation rate to see if they need to be stepping in with monetary policy and, if so, what kind, to bring the economy back on track for sustained growth. As we said before, an inflation rate that hovers around 2% is ideal.

Impact of Inflation on You

Inflation has quite a significant impact on the consumer. It causes prices to go up, and that affects the general public in many ways. For example, if you own a home business, an erratic inflation rate makes it impossible for you to predict costs of doing business in future. In this case, how do you know how to price your products so that you still walk away with profit even after paying up for higher cost raw materials? How do you plan ahead for costs of procurement, warehousing, or transport or employees salaries? An erratic inflation rate throws things out of sync quite drastically. A steady inflation rate, the sign of a healthy economy, allows you to make plans ahead for all of this.

It is not just for business owners that inflation plays a significant role. It is equally important for your personal finances as well.

Impact on Interest Rates

The most significant way in which inflation affects your personal finances is by having a huge influence on the interest rates you can earn. It is this impact that has the biggest impact on your wealth and your potential to build your wealth in the future as well.

The Federal Reserve tweaks the federal fund rate based on inflation, and this rate lays the foundation for interest rates across the U.S. If the federal rate is low, the banks tweak their rates accordingly and keep their interest rates low on their offerings. The money in your bank deposits and other fixed duration instruments follow suit and dip. You are effectively making less money off your savings now. That’s a big impact on your present and future wealth because you are not able to multiply your wealth as quickly.

Keep in mind one very crucial fact here. The current interest rate (which is impacted by current inflation) may also be affecting your existing savings rather harshly if the rates go down. If you have savings in a variable rate instrument, the rate of return offered mirrors the prevailing rates. When the rate dips, not only can you invest now only at low rates, your old variable interest savings also yield less because the interest on those is now matching the prevailing one.

Also, if your savings in fixed return instruments mature and you have to reinvest, at this point, you have a low interest rate environment and that means one of three things. You either:

  • Park the funds in a savings account with poor interest until the rates improve, which means you restrict your returns for a while
  • Invest in a lower interest fixed interest instrument at the lower prevailing rates and subdue the potential of the wealth to multiply
  • Or invest in a variable interest instrument that comes with a risk of yielding even worse returns if the rate should dip further down.

Whichever of the three options you choose, the potential to multiply your wealth is compromised.

If we are thinking of the retirement nest egg example from before, this means you have to save more to make your nest egg as big as you would like it to be because money multiplies more slowly now. So you end up either saving more of your paycheck, leaving less for current expenses, or you have to find avenues to earn more.

Impact on Debt

Depending on the inflation, the federal fund rate is changed. When the rate rises, banks raise their rates too, and that goes for lending out money as well. Say for example, if you are looking to buy a house at this point, then your loan is going to be really expensive, and it will burn a larger sized hole in your pockets now. So you have less money to spend on your hands because you are paying out much bigger installments to cover the much higher interest charged on your loan. With less money on your hands to spend, you save less as well. Ultimately this affects your personal finances as a whole. Your savings rate, your spending power, and your lifestyle are all affected.

Impact on Cost of Living

Your personal finance road map probably has a monthly budget, nicely structured with a schedule of payments so you know exactly how much you will spend each month on various items, and going from there, you know how much you can save, use for your entertainment, or spend on luxuries. Now with inflation rising, prices rise too. So gas is costlier, and so is food, clothing, rents, and pretty much everything else. Now your nicely laid out monthly budget is all skewed because none of the expenses are quite matching what you had planned for. With your monthly expenditures begin rocketing, your whole personal finance road map needs to be re-assessed and redone. Chances are, in a high inflation environment, you won’t be saving much at all. In fact, your savings may be zero.

If you have a big expenditure coming up that is unavoidable, you will end up dipping into savings, and that sets your retirement planning back by a significant amount if the expenditure to meet is large. If you don’t have enough savings, you may have to take out a loan, which further burdens your finances. Such a loan is unexpected too and so is the outlay that it requires on a regular basis by means of pay outs. It probably isn’t factored into your budget at all, and you may have to cut back on your savings to manage it.

Impact on Stock

If much of your portfolio is invested in stock, there is both good and bad arising from inflation. The stock market does have its own inherent risks, far greater than risks that you encounter in treasury bonds or fixed return instruments. However, stocks are also more adaptable to the economy, and hence, to a certain extent they give you better returns than more risk-free instruments in times of rising inflation since stocks usually outdo the pace at which inflation rises.

However, what you need to understand here is that the stock value hinges on the company’s performance. The better the company is doing, the more its profit margin and the better your stock price and the return it yields by way of dividends. A strong economy typically has a higher inflation rate. In such an economy, the company’s revenue is higher, profits are higher, and your stock is more valuable too. That’s the good part.

Now, if the inflation continues to soar, things start getting slightly less favorable for you. With soaring inflation, all costs rise. That goes for staff wages, raw material, production costs, shipping costs, and everything else too. So the company’s costs begin to rise in tandem with the general price increases across the board. Now. the company’s profits are not looking quite as good as they did earlier. So the stock value begins to dip and so do dividends.

Impact on Fixed Return Instruments

When it comes  to these fixed return instruments, they are the best thing for you if the interest rates fall and you have already invested in them at a point when a higher interest had prevailed. In such a situation, when the current interest  is lower than the one you have your fixed return investments locked into, you are getting more than you can hope to if you invest now.

However, if the inflation is soaring, costs are going up, and you are spending more than usual, then your fixed income instruments are not helping much. They yield the same return now as always, and that is not quite enough to cover your increased costs. Again, a steady increase in inflation is a good situation to have, but soaring inflation restricts your ability to manage your budget and ensure you are saving as much as you would like to month after month.

Chase Sapphire Reserve®

Top credit cards for airport lounge access

If your trip could be — or already has been — affected by COVID-19, check out the Credit Karma travel resources page for more information.

Find out how airport lounge access can upgrade your travel life — and which cards offer this traveler’s perk.

Long lines. Security. Crowds. No, we are not talking about an amusement park, but rather what most of us have to deal with when going to the airport.

Let’s face it, traveling can be a stressful experience. That’s why having airport lounge access can be a complete game changer for travel — it may offer you an enjoyable, even relaxing experience before you board your flight.

First, what are airport lounges?

If you’ve never been to an airport lounge, you might be wondering what they actually are. Airport lounges are exclusive areas where members or passholders can relax before a flight. Many airport lounges offer complimentary snacks and beverages, as well as comfortable seating.

If you frequently purchase single-use lounge passes (which can range from $25 to $59 per pass), the right travel rewards credit card may help you save on lounge entrance fees.

“The savings can add up in a hurry when you have complimentary lounge access, either through your credit card or a membership that you paid for yourself,” says travel and lifestyle writer Lee Huffman.

“You’ll have to do the math to determine how frequently you travel,” he says, “but it doesn’t take that many lounge visits to break even on a membership, especially if you’re traveling with friends or family.”

Airport lounge networks

If you’re looking into airport lounge access, it’s important to note that not all airport lounges are the same. There are several different airport lounge networks out there, including:

  • Priority Pass™
  • American Express Global Lounge CollectionSM
  • The Centurion® Lounge
  • Delta Sky Club®
  • American Airlines Admirals Club®
  • United Club℠

Can anyone have airport lounge access?

It depends.

Many airport lounges are a perk for members with certain credit cards, but you may be able to purchase an entrance pass for the day.

Best credit cards that offer airport lounge access

Access to airport lounges is often a major perk offered by certain credit cards. But which credit cards offer this elite perk? Below are the best cards we found for airport lounge access.

Chase Sapphire Reserve®

Chase Sapphire Reserve®
made a splash on the credit card scene because of its major travel perks. One of the best perks it offers? Airport lounge access.

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As a member of this card, you can enroll in Priority Pass™ Select, which grants you access to more than 1,200 airport lounges. The card does have a hefty annual fee of $550 per year, but the Priority Pass™ lounge access alone saves you $99 on a Standard Priority Pass™ membership as well as the $32 member fee (per visit). That can certainly add up!

Chase Sapphire Reserve® and the corresponding Priority Pass™ Select membership can get you airport lounge access to locations all over the world. So if you’re looking for some preflight food and drinks, you can skip the pricey airport options and take advantage of this card’s lounge access perk.

Platinum Card® from American Express

Another great option to get airport lounge access is the Platinum Card® from American Express
. This card is chock-full of travel perks, but the access you can get to airport lounges all across the world is noteworthy.

As a cardholder, you can score access to The American Express Global Lounge Collection℠, which is an impressive network of airport lounges. The American Express Global Lounge Collection℠ partners with and/or gives you access to …

  • The Centurion® Lounge
  • International American Express Lounges
  • Delta Sky Club®
  • Priority Pass™ Select
  • Airspace
  • Escape Lounges

In some cases, you can simply present your card to get access. However, you’ll need to enroll in the Priority Pass™ Select network to gain membership to certain airport lounges.

A great perk of this card is that you may be able to bring two guests to enjoy select lounges with you at no additional cost or at a discounted price, barring any limitations by individual program policies. So whether you’re traveling with friends or family, this card can help you relax together before your flight, in luxury and in style.

These perks don’t come cheap though, since the card has an annual fee of $550. But if you travel frequently, especially with guests, lounge benefits may make up for the cost.

Citi® / AAdvantage® Executive World Elite Mastercard®

If American Airlines is your preferred airline, then the Citi® / AAdvantage® Executive World Elite Mastercard® could be a good fit for you. This card offers access to the Admirals Club®, which is the American Airlines–specific lounge.

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Citi® / AAdvantage® Executive World Elite Mastercard®

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At Admirals Club® lounges, members can enjoy snacks, drinks and personalized travel assistance. In some locations, there may be shower suites as well as a business center. Not only does this card give the primary cardholder access to the lounge, but it also gives any authorized users on your card access as well.

If you’re already an Admirals Club® member, you could be eligible for a prorated membership fee refund. The card has an annual fee of $450.

United MileagePlus® Club Card

If United is your airline of choice, then consider the United MileagePlus® Club Card to score access to United Club℠ lounges. The card has an annual fee of $525, but the United Club℠ membership could have a value of up to $650 annually.

At United Club℠ locations, you can enjoy complimentary beverages and snacks before your flight. Need a place to work? Or relax? You can do both at United Club℠ lounges.

In addition to food and beverages, United Club℠ locations may also offer printing services, Wi-Fi and travel assistance. In select locations, you’ll have access to a private phone booth for meetings or catching up with your family.

Using this card, not only do you gain entry to United Club℠ locations, but you may also be able to access certain Star Alliance™–affiliated lounges as well.

Bottom line

Airport lounge access can make a world of difference when you’re traveling. Having the right credit card can help you access these lounges so that you have a place to go before or during a long day of travel.

Though some of these cards don’t come cheap, the perks — like having airport lounge access — can go a long way if you know you’ll make use of them.

About the author: Melanie Lockert is a freelance writer and editor currently living in Portland, Oregon. She is passionate about education, financial literacy and empowering people to take control of thei… Read more.

How to Curb Financial Anxiety

Regardless of your income level, you’re probably affected by financial stress. Whether you’re trying to get out of debt, protect your investments or save up enough to retire or send your kids to college, money often causes anxiety.

In fact, nearly 23 percent of millennials say financial anxiety makes them physically ill weekly or monthly, according to research from Northwestern Mutual. More than half say they experience high to moderate anxiety about losing their jobs, and another 24 percent say financial anxiety affects their relationship with a spouse or partner hourly, daily, or weekly.

“Money isn’t easy,” says Doug Hughes, partner and lead consultant at Comprehensive Financial Consultants, based in Bloomington, Indiana. “Financial stress comes from a feeling of falling behind and continuing doubts that personal financial goals will not be met.”

For example, if you are 45 years old, want to retire at 67, and get paid bi-weekly, you have 572 paychecks “to pay off your mortgage, put your children through college, save for your retirement, and enjoy life,” Hughes says. “This creates stress.”

For many people, financial goals seem out of reach, the job market may feel unstable, and the stock market seems unpredictable. In addition, many people go into debt to create lifestyles they can’t afford, “committing future paychecks to pay for their current lifestyles,” Hughes says.

Finances are uncertain, which can understandably cause anxiety. But nobody has to live like that. Take some strategic steps to create a more secure financial situation, and you’ll likely bid farewell to those worries.

How to Curb Financial Anxiety

  1. Build an Emergency Fund
  2. Spend Less Than You Make
  3. Become a Saver
  4. Create a Financial Plan
  5. Stay Informed
  6. Eliminate Debt — Especially Credit Card Debt
  7. Seek Additional Funds

Build an Emergency Fund

Work to save up three to six months’ worth of cash reserves, even if you have to start by saving $20 a week or less.

“I can’t even begin to tell you how stressful it could be if you don’t have any cash set aside for expenses,” says Byron Ellis, a certified financial planner and managing director at United Capital in The Woodlands, Texas. “What if you need new tires for your car? If you have an adequate cash buffer, you can go on with life as usual and take care of it because you have the cash available, (which) will automatically reduce your stress.”

Spend Less Than You Make

“This is the biggest stressor out there,” Ellis says. “Many people continue to spend more than what they make, and as a result, their cash reduces to zero and their credit card debt goes up, which automatically puts them in a 24/7 stress-inducing environment.”

To avoid the stress of never having enough money and going into debt to keep bills paid, create a simple budget and stick to it. While it can be difficult to resist overspending in our consumerist society, stay focused on how a stress-free life will be much more satisfying than the cute pair of shoes, weekend trip, or whatever else you want that isn’t in the budget.

Become a Saver

Even after you’ve built up an emergency fund, make saving a way of life. Ellis recommends working up to saving 10 percent to 20 percent of your income.

“The trick is to make savings a mandatory ‘bill,’” says Joe Toms, president of Freedom Financial Network’s Freedom Financial Asset Management business unit in San Mateo, California. “Some financial institutions let you arrange automatic withdrawals from your checking account to a savings account. Also, check with your employer for automatic deposits into your savings accounts. Record this expense like a bill every month to painlessly accumulate savings. If necessary, start with a small amount like $25 or $50 per month and increase it whenever possible.”

Create a Financial Plan

A simple monthly budget is essential for building a stress-free financial life, but to continue warding off money anxiety, you need a longer term plan. Start by “looking at your current situation (and) analyze the cash flow that comes in… and the cash flow leaving,” says Ben Barzideh, wealth advisor at Piershale Financial Group in Crystal Lake, Illinois. “Then build in some goals for the future and fill in your assets and some growth assumptions. The plan will be a blueprint for how much you will need to live comfortably now and into retirement.”

Start by developing a five-year plan, recommends Jim Wiley, CEO and chief investment strategist at Wiley Group in Conshohocken, Pennsylvania. “Figure out exactly what you want out of life for the next five years, whether that’s a career change, saving for college, or whatever,” Wiley says. “Most people never stop to think about the financial tradeoffs they need to make to accomplish the things they really want to achieve. Give yourself the gift of your own attention, and then you won’t be reacting, you’ll be navigating — living an intentional life based on thoughtful decisions and plans.”

Stay Informed

If you delay opening bills because you don’t want to deal with them, you’re not helping ease your financial anxiety. Rather than avoiding bad news, open all mail (including bills) upon arrival, Toms advises.

Pay bills immediately or create a simple system — such as a desktop folder, online calendar, or app — to make sure you pay each one on time. And check your bank account balances daily to keep track of how much you’re spending, how much you’re saving, and whether you need to tweak your monthly budget.

Eliminate Debt — Especially Credit Card Debt

Aside from payday loans, credit card debt is the most expensive debt for consumers, Toms says. “With interest rates rising, the cost of carrying credit card debt is only increasing,” he adds.

If you’re carrying credit card debt, it’s likely a source of financial stress — so commit to paying it off. For many people, a personal loan is a viable option. “These loans typically have fixed interest rates [that are] less than most credit card rates and terms, so costs are fixed, meaning they will not go up if market interest rates rise,” Toms says. You will also benefit from set time frames and payment schedules that help enforce repayment discipline.

This approach “is less costly than making minimum payments on a credit card,” Toms adds. “As long as you make the required monthly payments, you will pay off the loan within a specified period of time.”

Seek Additional Funds

When you have specific goals in mind, more money may be necessary. If that’s the case, think about how to bring in more cash.

You can free up money by cutting out nonessentials or buying less expensive items. “Is it necessary to buy bottles of water when you can just get it out of the tap?” Wiley asks. “Think about the money you spend buying flowers to plant in the spring. Maybe you could forego those flowers and put an extra $150 in your kid’s college account or toward another goal. If you’re purchasing a new couch, think about getting one that’s less expensive and be satisfied with the financial tradeoff because the money you would have spent on a pricier couch can go toward another goal.”

In addition to cutting back, you can create more income by getting a higher paying job, adding a side gig or second job, or starting your own business.