Month: August 2019

Neutralize the Digital Threat You Carry Everywhere

Posted on by Sean Pyles

Your smartphone is your confidante, your hand-held connection to the world — and one of your biggest vulnerabilities.

Scammers can take advantage of day-to-day tasks that seem innocuous, like checking a bank balance or charging a phone at a public USB port, to exploit personal information for their profit.

To keep that data safe, start by understanding the threats you face. Your phone has three main areas of vulnerability: its hardware, its software and your phone number. Each carries a risk, and there are steps you can take to mitigate them.

Hardware vulnerability

A four-digit passcode alone isn’t enough to secure your phone’s hardware from intruders.

One weakness comes from the charging port. Think twice before plugging into a public USB jack for a quick charge at a cafe or airport.

“Any time you’re using a mobile port, you can be vulnerable to viruses or malware if you’re sharing it with other people who are plugging in their devices,” says Lisa Schifferle, ID theft program manager at the Federal Trade Commission.

Using a public charging port at an airport is like “finding a toothbrush on the side of the road and deciding to stick it in your mouth” Caleb Barlow, vice president of X-Force Threat Intelligence at IBM Security, recently told Forbes.

Hackers can modify these ports to install malevolent software, aka malware, on your phone. Once installed, it can transfer your phone’s data to hackers. The hacked USB ports can also directly suck up your phone’s information. To avoid the risk, use your USB cord with your own charging block that can plug into a standard electrical outlet, or use an external battery pack.

For daily security, go beyond the four-digit passcode if possible, says Gary Davis, chief consumer security evangelist at the cybersecurity company McAfee.

“Passcodes aren’t as effective as biometrics, like fingerprint readers or facial recognition software, because people can do shoulder surfing to see your passcode and get into your phone” if they steal it.

Software and network risks

Scammers can target your personal information using unsecured wireless networks and software vulnerabilities.

Network risks: Be wary of public Wi-Fi networks.

“We advise against using public Wi-Fi, but if you’re going to use it, avoid logging in to sensitive accounts,” says Allen Spence, director of product leadership at IDShield, an identity theft protection company.

To protect yourself from inadvertently using insecure Wi-Fi networks, adjust your phone settings to avoid auto-connecting to Wi-Fi.

Software: Hackers can exploit vulnerabilities in phone software. Schifferle of the FTC suggests consumers routinely check for and download software updates for their phones, because updates often include security patches.

Phone number vulnerabilities

There are two common ways that scammers target your phone number: robocall scams and phone number theft.

Robocalls: U.S. consumers fielded nearly 48 billion robocalls in 2018, according to an estimate from robocall blocking service YouMail. That was a 57% increase from 2017.

A common scam comes from supposed representatives of the Social Security Administration requesting you give your personal information or your benefits will be cut. If you get a call from a number you don’t recognize, don’t answer. That’s the best way to ensure you don’t get caught up in a phone scam. And know that government agencies like Social Security and the IRS won’t call you out of the blue seeking your personal information.

“You should never give personal info or money unless you have initiated the call,” Schifferle says. If you answer a call and realize it may be a scammer, hang up, she advises.

If you suspect your personal information was stolen by scammers, file a report with the FTC at identitytheft.gov.

Phone number theft: Scammers are stealing phone numbers, which can leave you vulnerable to other forms of identity theft.

The scam is clever: A malevolent actor calls your cell phone carrier pretending to be you, and after confirming some key information such as your mother’s maiden name, transfers your phone number to their device. You may not find out this has happened until you go to make a call and find that your SIM card has been deactivated.

Because phone numbers are often used as security keys, hackers may be able to get into many other accounts once they have access to your phone account. Make it harder to penetrate by avoiding common security questions, Davis says. “When you set up your security questions and answers, make sure you’re using really challenging questions that are going to be hard to figure out.”

This article was written by NerdWallet and was originally published by The Associated Press. 

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The article Neutralize the Digital Threat You Carry Everywhere originally appeared on NerdWallet.

What Millennials Get Wrong About Social Security

Posted on by Liz Weston

Few issues unite millennials like the future of Social Security. Overwhelmingly, they’re convinced it doesn’t have one.

A recent Transamerica survey found that 80% of millennials, defined in the survey as people born between 1979 and 2000, worry that Social Security won’t be around when they need it. That’s not surprising — for years, they’ve heard that Social Security is about to “run out of money.”

The language doesn’t match the reality. Social Security benefits come from two sources: taxes collected from current workers’ paychecks and a trust fund of specially issued U.S. Treasury securities. This trust fund is scheduled to be depleted in 2034, but the system will still collect hundreds of billions in payroll taxes and send out hundreds of billions in benefit checks. If Congress doesn’t intervene, the system can still pay 77% of projected benefits.

In any case, chances are good Congress will intervene, as it did in 1977 and 1983, to strengthen Social Security’s finances. Social Security is an enormously popular program with bipartisan support and influential lobbies, including the immensely powerful AARP, looking out for it.

Still, millennials who believe Social Security won’t be there for them could make bad choices about their retirement savings. The worst outcome would be if they didn’t save at all, convinced retirement was hopeless. But any of the following myths could cause problems.

‘I can save enough to retire even without Social Security’

Good luck with that.

Currently, the average Social Security benefit is just under $1,500 a month. You would need to save $400,000 to generate a similar amount. (That’s assuming you use the financial planners’ “4% rule,” which recommends taking no more than 4% of the portfolio in the first year of retirement and adjusting it for inflation after that.)

And that may be underestimating the value of Social Security. The Urban Institute estimates that many average-income single adults retiring between 2015 and 2020 will receive about $500,000 in benefits from the system while couples will receive roughly $1 million. Millennials, meanwhile, are projected to receive twice as much: about $1 million for an average-income single adult and $2 million for a couple.

Trying to save enough to replace 100% of your expected Social Security benefit might well be impossible, and could cause you to stint on other important goals such as saving for a child’s education or even having a little fun once in a while.

A more realistic yet still cautious approach would be to assume you’ll get 70% to 80% of what your Social Security statement projects, says Bill Meyer, founder of Social Security Solutions, a software tool for Social Security claiming strategies.

“Somewhere between a 20% to 30% reduction seems like the worst-case scenario to me,” Meyer says.

‘I can ignore my Social Security account’

Your future Social Security check will be based on your 35 highest-earning years. To get what you’re owed, however, your earnings need to be reported accurately and that doesn’t always happen. Employers may not report the correct information to Social Security, or may not report your earnings at all. You can correct those errors if you catch them in time. Fixes could be difficult decades from now, when the employer may have gone out of business and needed documents may be unavailable.

Millennials may be more exposed to errors than previous generations because they tend to change jobs more, Meyer says. That makes it important for them to check their earnings records, which they can do by creating an account on the Social Security Administration’s website.

“Every two to three years, you should log on and make sure that your earnings are reflected correctly,” Hayes says.

‘If it’s still around, I should grab it as soon as possible’

Millions of Americans make this mistake every year, locking in permanently reduced payments and potentially costing themselves up to $250,000 in lost benefits by claiming too early. But Congress is highly unlikely to cut benefits for those in retirement or close to retirement age, Meyer notes.

Instead, there likely will continue to be incentives for delaying your Social Security claim. Currently, benefits increase by about 7% to 8% for each year you wait to apply after age 62 until benefits max out at 70.

Working an additional few years also can compensate for low- or no-earning years earlier in millennials’ careers, when incomes may have been depressed by recession or gig-to-gig work.

“A higher-earnings year can replace a lower one,” Meyer says. “You can fill in those gaps.”

This article was written by NerdWallet and was originally published by The Associated Press.

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The article What Millennials Get Wrong About Social Security originally appeared on NerdWallet.

Will You Be a Scam Artist’s Next Target?

Posted on by Liz Weston

Believing that fraud can’t happen to us — because we’re too smart, logical or informed — may make us more vulnerable. Successful scam artists skillfully overcome our defenses and get us into emotional states that override logical thinking, says Kathy Stokes, AARP’s director of fraud prevention programs.

“Scammers call it getting the victim under the ether,” she says.

Various studies have tried to identify characteristics that make people more susceptible to fraud. But that can create a “blame the victim” mentality and give the rest of us a false sense of security, she says.

“I’d say the majority of people are unwittingly deceived through no other reason than the criminals are good at what they do,” Stokes says.

Scam artists go where the money is

Research is mixed on whether older people are more likely to be defrauded than younger ones. One thing is certain, though: Older people are more likely to have money. People 50 and older control 83% of the wealth in the U.S.

One way to protect that money is to cut down on our exposure to sales pitches, fraud experts say. AARP studies have found investment fraud victims were more likely than other investors to respond to sales pitches delivered by phone, email or television. They also were more likely to send away for free promotional materials, enter drawings, attend free lunch seminars and read all their mail, including advertisements.

To reduce your exposure to potential scams, consider the following steps:

  • Put yourself on the federal Do Not Call list.
  • Sign up for a telephone call blocking system, such as NoMoRobo, and let unknown callers go to voicemail.
  • If you give out personal information, be sure you know who you are giving it to, and why they need it.
  • Don’t make investment decisions based solely on a phone or email pitch or an ad.

Overconfidence increases our risk

Overconfidence can lead people to trade too aggressively (convinced that they can beat the market), put off saving for retirement (convinced they can catch up later) and ignore warning signs of fraud (convinced that they can’t be victimized).

The risk may increase with age. Studies have found that our financial decision-making abilities peak by our early 50s and decline, sometimes precipitously, after that. But our confidence in our abilities doesn’t drop — in fact, many of us become more self-assured.

“So as we age, this gap grows between actual and perceived ability to make good decisions,”  says Chris Heye, co-founder of Whealthcare Planning, a site that helps older adults and financial advisors plan for age-related changes.

Seniors who got answers wrong on a financial literacy quiz, but who were the most confident they answered correctly, were more likely to be victims of fraud, according to a study by researchers at DePaul University and the Rush University Medical Center.

People of any age can combat overconfidence by getting a second opinion on financial decisions from a trusted advisor or money-smart friend. As we get older, it can also make sense to consolidate our accounts so there are fewer to monitor and switch to investments that require less hands-on management, such as target date mutual funds.

Loneliness can be expensive

The Federal Trade Commission says romance scams cost people more money than any other type of consumer fraud in 2018. Reports of these scams more than doubled between 2015 and 2018, while reported losses more than quadrupled to $143 million.

The scams often start via dating apps, social media or email. The con artists pretend to have a lot in common with their victims, then build trust over many weeks or even months before asking their targets to reveal personal data or send money for an “emergency.”

Once again, the young and old alike can be defrauded. One 90-year-old victim met a man via email who, many months later, told her he needed help with a business deal. She sent him eight infusions of cash, draining her $500,000 life savings.

“She sent all that money, and the only reason she knew that it was a scam was that he didn’t show up on Christmas Day like he said he would,” Stokes says.

A reverse-image search using TinEye or Google Images may show if an imposter is using someone else’s photo, while sites such as Romancescams.org keep track of known scammers’ email addresses.

But perhaps the best inoculation against being defrauded is to talk to someone you trust about the situation before you send any money. That could be enough to bring you out from under the romantic ether.

This article was written by NerdWallet and was originally published by The Associated Press.

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The article Will You Be a Scam Artist’s Next Target? originally appeared on NerdWallet.

How I Ditched Debt: Whipping Up a Payoff ‘Tornado’

Posted on by Sean Pyles

In this series, NerdWallet interviews people who have triumphed over debt. Responses have been edited for length and clarity. 

Steven Donovan and his dog, Angel.Steven Donovan and his dog, Angel.

Steven Donovan, Even Steven Money 

Who: Steven Donovan

How much: $118,000 in 5 years

Steven Donovan didn’t get an education in personal finance growing up. The topic wasn’t covered at his high school or college, as is the case for many Americans. So Donovan had to figure out how to manage his money, overcoming one stumbling block at a time.

Donovan was carrying about $118,000 in debt when he realized he needed some personal finance know-how. He had student loans, some credit card debt and a car loan. His salary of $40,000 at the time was just enough to get by. Then his private student loan issuer suddenly tripled his monthly payment and he had no choice but to confront his debt head-on.

He started reading books from some of the big-name personal finance authors, including J.D. Roth and Dave Ramsey. During his five-year payoff journey, he followed a number of personal finance bloggers who offered the information and motivation he needed.

The bloggers who helped along the way inspired him to start his own online resource to help others. With Even Steven Money, Donovan serves as a financial coach to those who need help managing their money. He recently talked with NerdWallet to share his story, which may inspire your own journey to get debt-free.

What was your debt when you started, what is it now?

I had around $118,000 when I decided to focus on paying it off. Today I have no debt.

How did you get into debt?

When I left college my credit card debt was around $5,000. For my student loans, I had a private loan that was $20,000 and a federal that was about $35,000.

Then I had a loan from my parents that was $38,000, which was for school and living expenses. So right out of college, I had around $98,000 in debt from school. Then a few years out of college I decided to buy a Mercedes-Benz, which was about $18,000.

Before I started seriously paying off my debt, what I owed on my credit card fluctuated a bit, so I was carrying around $118,000 around the time I decided to pay it off.

When did you decide to get out of debt?

There were two moments that drove me to get out of debt. One was when I started to get a little more involved in personal finance. I read blogs and made an account with Mint to track my finances. I went on there and put in my bank account info — checking, credit cards, all that. When I went to put it all in, I couldn’t bring myself to enter in my student loan info because I didn’t want to see a negative net worth. … That was a big realization for me: That I was so far in debt that I was afraid to put in the info.

Another big moment, fast forwarding a bit, was when I moved to Miami from Chicago. In Miami, I was working first as a volunteer basketball coach, then doing side hustles like mowing lawns via Craigslist and selling items from Ross, Marshalls, Nike on eBay. Then only later on did I find part-time work at a kiosk in the mall. I was just trying to make minimum payments on my debts and cover groceries.

About a year into living there, I ended up getting a letter in the mail from my private student loan company. Since finishing college I had gone into forbearance and paid the minimums …  [but now] my payment was going to triple. It upended my budget and something had to change. I tucked my tail between my legs, moved back to Chicago to save money and worked where I did when I was in college. It was a very humbling experience.

How did you get out of debt?

Moving to Chicago was a big part of it.

Starting out I was able to live with family for a few months, and then once I got my job I shared an apartment so housing costs were relatively low. Plus selling my Mercedes and taking public transportation and walking or biking to work made a big difference. Selling my car was really big for me, and I saved close to $500 a month and got rid of a big chunk of my debt right there. So low housing costs and transportation played a role.

My cost of living was less, but most of why I moved back to Chicago was to obtain a full-time job. At first, I was working at a golf course that was essentially full time, and very shortly after I did obtain full-time work at U.S. Bank as an assistant branch manager. I was also looking for a side hustle, and I ended up getting into selling men’s gently used clothing and new clothing on eBay.

Then I realized that, now that I have money coming in, what can I do to pay off my debt? I started using the debt snowball. For me, it made sense to choose the debt snowball because I hadn’t had many money wins so far. And anything I could pay down, I felt really good about.

On a parallel track, I did what I call the “debt tornado.” My philosophy is, no one hates your debt more than you. If you really don’t like your debt, you kind of end up getting angry about it and you want to do something about it. So I channeled that anger into paying off the debt I disliked the most. I chose the student loan company that tripled my payment and I decided to tackle that first.

How did you stay motivated?

The biggest motivation for me came from reading personal finance blogs and websites. These blogs also inspired me to start my own blog to write down what I was thinking. And that became my accountability partner.

I was also commenting on a lot of blogs, and if someone was going through a struggle, I would think, “That’s similar to me. What can I learn from them? How can I encourage them?” That was really beneficial for me.

Then, after a few years in Chicago, my wife and I married. The biggest changes financially at that time were I received an internal transfer, which was an increase in salary. Being married, also I had a partner who really encouraged me and supported me when I was paying off my debt.

We decided as a couple that whatever debt you brought into the marriage you were responsible for (a mortgage in Florida for my wife and my personal debt for me). We split costs everywhere else, including housing, utilities, groceries, etc. … Our combined household income was low six-figures.

What education in personal finance did you have before this process?

In high school, I didn’t have any personal finance education. I maybe had an economics course, but there was no personal finance education offered. My parents, of course, instilled hard work in me, but personal finance wasn’t a part of that.

When I went to college I knew I wanted to be in business, and I did get a finance degree, however there wasn’t a personal finance aspect there, either. Where I learned everything really — beyond trial and error and going to the ATM and finding out you don’t have any money — was the internet. I relate more with personal stories I read online that I can apply to my life.

What are your financial goals, now that you’re debt-free?

The next step for my wife and I is figuring out what makes us happy and having that. We want to go from financial freedom, which we have now, to being financially independent …  My wife works a 9-to-5 job now, and I’ve quit my day job and transitioned into focusing on my website and working as a money coach, helping people just like me who were struggling and paying off debt. So we want to figure out how we can get by on our income without having to work 9-to-5 jobs.

How to ditch your own debt

Looking to ditch your own debt? Here’s how:

  • Know what you owe, and work to stop the bleeding: The first step to paying off your debt is seeing how much you have to pay down — and stopping yourself from increasing that amount if possible.
  • Really understand your spending: See where you’re allocating your dollars and where you can make changes. Creating a budget or using a spending tracker gives you a detailed understanding of your cash flow, so you can see where you might be able to make cuts or rearrange things.
  • Find your strategy: There’s no “right” way to pay off debt. Find a debt payoff path that works for your lifestyle, budget and debt load.

Photo courtesy of Steven Donovan.

 

The article How I Ditched Debt: Whipping Up a Payoff ‘Tornado’ originally appeared on NerdWallet.

Rejected for a Personal Loan? Here’s How to Recover

Posted on by Steve Nicastro

Getting rejected for a personal loan can feel like a punch to the gut. It’s easy to get discouraged, especially if it delays plans to consolidate debt or renovate your home.

Instead of taking the rejection personally, use it as motivation to build your credit and supplement your income so you win approval the next time you apply.

Here’s how to recover from a personal loan rejection.

Ask for a reason

Lenders are required to disclose the exact reasons why they denied your application, according to the Equal Credit Opportunity Act.

Online lender Marcus by Goldman Sachs sends an explanation within seven to 10 days after a rejection, says Elisabeth Kozack, vice president of product strategy and customer experience at Marcus.

Common reasons for a loan denial at Marcus include having a low credit score and insufficient income to repay the loan, Kozack says.

Build your credit

Making timely payments on all of your debts and keeping your credit balances low are two steps to building credit, but don’t stop there.

  • Check your credit report for errors: Common errors that may hurt your credit score include payments that are wrongly reported as being late or delinquent, and accounts showing the wrong balance, according to the Consumer Financial Protection Bureau.

You can get free copies of your credit reports once a year from AnnualCreditReport.com. Dispute any errors online, in writing or by phone.

  • Get a credit-builder loan: Instead of giving you the borrowed money, lenders hold it in a bank account while you make on-time payments toward the loan. These payments are reported to the credit bureaus, helping to build your score. You get the money only after you’ve made all your payments.

Credit-builder loans are available through credit unions, community banks and Community Development Financial Institutions.

  • Become an authorized user on someone else’s credit card: Ideally, the account holder has a strong payment history, and the credit card issuer reports authorized users to all three credit bureaus.

Pay off debt

Your debt-to-income ratio helps lenders determine if you have too much debt. Divide your monthly debt payments by your monthly income to see your DTI ratio expressed as a percentage.

Borrowers with high DTI ratios (40% or greater) may be more likely to miss loan payments and have a harder time getting approved.

Scrutinize your budget for places you could trim an expense and use the savings to pay off debt, and avoid taking on new debt ahead of your next personal loan application.

Grow your income

A higher income lowers your DTI ratio and can help you qualify for a loan. You may not need to ask your boss for a raise, either.

Consider a side job such as ride-hail driving or tutoring, to put an extra hundred dollars or more in your pocket each month.

And when you reapply, include all sources of household income on the loan application — not just income from your full-time job, but also your spouse’s income, investment income, child support, alimony or military pay.

Compare lenders

Spend a few months getting your credit in shape and rebalancing your DTI. When you’re ready to reapply, choose a lender that caters to borrowers like you.

  • Online lenders most often lend to borrowers with good or better credit (690 to 850 FICO), but there are some that accept lower credit scores. You can pre-qualify online to preview rates and terms you’re likely to receive, with no impact to your credit score.
  • Credit unions are nonprofit financial organizations that consider your entire financial picture, and may provide cheaper loan options for bad credit (300 to 629 FICO). You’ll need to become a member of the credit union before applying.
  • Banks offer personal loans with low rates and discounts for customers with accounts in good standing. You’ll likely need good credit to qualify.

Get prepped

Take a fresh approach with your next loan application.

  • Gather documents. Lenders need to verify information you’ve provided on your application, such as tax returns to confirm your income. Having these documents prepared can make the application process go smoother.
  • Verify all information. False information on your application, such as the wrong address and misstated income, could lead to a loan denial. Double-check all details before submitting your application.
  • Add a co-signer. If you don’t meet a lender’s credit score requirements, consider adding a co-signer with good credit to your application. This can help you qualify and get you a lower rate.

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The article Rejected for a Personal Loan? Here’s How to Recover originally appeared on NerdWallet.

Back-to-School Shopping: Kids Influenced by Social Media Push Parents to Overspend

Posted on by Elizabeth Renter

Kids pushing their parents for the coolest in back-to-school gear is a late-summer tradition, and today, youngsters have some backup: social media influencers.

Peer and social media influences on children are not news unto themselves, but it turns out these factors are affecting how parents spend their back-to-school dollars, according to a new NerdWallet survey conducted online by The Harris Poll.

The online survey included 2,010 U.S. adults, among whom 595 are parents of kids in kindergarten through college. Of those parents, at least 6 in 10 say their children are influenced by peers or social media when making their back-to-school wish list. And about half of these parents (51%) say they typically end up buying back-to-school products their kids want because of these influences.

“The whole notion of ‘Keeping up with the Joneses’ is amplified on social media, with an entire army of influencers telling your child what they ‘need’ to have this year. That can make back-to-school shopping a real headache,” says NerdWallet personal finance expert, Kelsey Sheehy. “Ease the pressure by having a plan in place before you get started. You can even turn it into a learning opportunity and involve your child in the process so they can learn to prioritize and work within a budget.”

Here’s how parents are thinking about their back-to-school shopping lists, along with some tips on how to manage the costs and potential frustrations.

Key findings

  • Nearly all (97%) of parents with children in kindergarten through college plan on back-to-school shopping this year.
  • Half (50%) of parents planning to do back-to-school shopping this year say they’ll likely splurge, compared with 93% of those who shopped last year who say they splurged.
  • Six in 10 parents (60%) with kids in school say their children are influenced by social media and 67% say their children are influenced by friends on what they want to buy for back-to-school.
  • More than half (52%) of these parents say they feel pressured by their children to buy back-to-school items they want, even if they cost more than they’d normally want to spend.

Note: Throughout this report, unless otherwise noted, “parents” refers to parents with children in kindergarten through college.

Preparing for peer, social media pressure

At least 6 in 10 parents say their children are influenced by social media (60%) and friends (67%) on what to buy for back-to-school. In turn, the kids pass the pressure on to parents. Just over half (52%) of parents with children in school say they feel pressured by their kids to purchase supplies and/or apparel, even if they cost more than they’d normally want to spend, and 51% say they usually end up buying the products their kids want because of influence from others.

Back-to-school shopping tip 1: Share the list and a budget with your child. You have a list of things your child needs and likely can’t indulge every whim on brand names and costly designs. Helping your child understand this upfront can save you from an argument in the store and can impart a useful lesson in personal finance. By setting a dollar limit before the shopping begins, you can avoid the exasperation of being pressured into a pair of sneakers that eats into the money for notebooks and pencils.

Handling splurges

Parents can’t blame all of their overspending on pressure from their children, however. Nearly all of those who shopped likely overspent last year, and they may be setting themselves up for failure again this year.

Over 9 in 10 parents (93%) who did back-to-school shopping last year splurged, but only 50% who plan to shop this year say they’ll likely splurge, suggesting either many have cleaned up their act or they’re not being realistic about how much they’ll be tempted to overspend.

Back-to-school shopping tip 2: Make a realistic budget and plan. If you know you “always” splurge this time of year (42% of parents say they do), or believe it’s likely, set a budget that accounts for this. Give yourself wiggle room to buy a few splurge items, but rein in spending on things you can get at a bargain price. If you’re completely honest with yourself, and you know you’ll spend more than you have, begin saving for back-to-school shopping like you do for holiday shopping or any big purchase.

“It’s better to set a slightly higher budget than it is to feel guilty about overspending, or worse, to have to rearrange your finances to account for unplanned splurges,” says Sheehy.

Comparing and matching prices

Price-matching, or asking retailers to beat competitor prices, is an underused practice that can pay off big. Within the past year, 28% of Americans say they haven’t price-matched at all. Parents with children under age 18 are more likely to have price-matched (83%) vs. those without (66%).

“Price-matching takes comparison shopping to the next level,” Sheehy says. “It does involve a little more work, but the potential reward is savings above and beyond what you’ll find in sales flyers or emails.”

Back-to-school shopping tip 3: Make comparing and matching prices a habit. Apps such as ShopSavvy or ScanLife make it easy to compare prices while you’re in the store. Compare prices on exact products across retailers; then ask a clerk or check store websites for price-matching policies. These policies vary widely from retailer to retailer. For example, Target and Staples have generous price-matching policies, but Amazon doesn’t price-match at all.

Paying for purchases

Of those parents planning to do back-to-school shopping this year, about half (52%) will put their purchases on a debit card and 38% will use cash. These methods are far preferable to racking up debt you can’t immediately pay off, but if shoppers can pay cash, they could likely earn rewards on their purchases just as easily.

Just under half (45%) of parents planning to shop will use a credit card.

Back-to-school shopping tip 4: Get paid for your spending. Use a credit card that earns rewards, such as points or cash back, to make your back-to-school spending work for you. But don’t let interest eat into your benefits.

“You can use a rewards credit card to maximize your back-to-school shopping and earn points or cash back to put toward next year’s summer vacation,” says Sheehy. “Just make sure you can pay the balance off each month. If you don’t, interest charges will quickly eat away at any benefits the card offers.”

Timing your shopping

Summer ultimately leads into the school year, but that doesn’t make it the best time to do all of your back-to-school shopping.

Two in five parents (40%) who do back-to-school shopping say they wait until July to start, and 36% wait until August. Just 8% say they purchase school items for the upcoming school year throughout the year.

You may capture some sales by waiting for summer to buy items for the school year — especially if you wait until just before school begins — but you could also overspend by purchasing everything in the same month.

Back-to-school shopping tip 5: Time purchases throughout the year. Many states have sales tax holidays that coincide with back-to-school — check your state’s dates on the website of the Federation of Tax Administrators. Take advantage of the savings on these days, but don’t feel like you have to buy everything for the entire year in one go. Fall and winter clothes, for example, will likely be cheaper a few months after school begins.

»MORE: What to buy every month of the year

METHODOLOGY

This survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet from May 30-June 3, 2019, among 2,010 U.S. adults ages 18 and older, among whom 595 are parents with kids in kindergarten through 12th grade or college. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact Jessica Ayala at jessica@nerdwallet.com.

The article Back-to-School Shopping: Kids Influenced by Social Media Push Parents to Overspend originally appeared on NerdWallet.

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Can’t Bear to Check Your Finances? Here’s Help

Posted on by Laura McMullen

Would you rather eat that ATM receipt than risk seeing your balance? You’re not alone. Keeping tabs on money can be stressful and confusing. Even if you know you should keep track of your finances, it can feel easier to just ignore balances, credit card statements and bills.

But what’s easy now may become hard to stomach later. Avoidance can lead to overdrafts, a lowered credit score, debt and perhaps missed opportunities to save and invest.

Sound familiar? Don’t feel guilty, says Justin Nichols, certified financial planner and director of operations at Garrett Planning Network. He tells clients in this situation: “Let’s just start new right now and figure out a plan to move forward.”

You’re already making moves by clicking this article. Read on to learn how to get a handle on neglected finances.

Determine if you need professional help

These tips are most helpful for folks whose finances aren’t yet in dire straits — just ignored. However, avoidance is particularly easy (and harmful) when you’re financially overwhelmed, says Sarah Newcomb, behavioral economist for Morningstar and author of “Loaded: Money, Psychology, and How to Get Ahead Without Leaving Your Values Behind.”

If you can’t cover your basic needs or feel like you’re drowning in debt, talk with a nonprofit credit counseling agency. Credit counselors offer free budgeting help and may be able to create a plan to consolidate your debts and lower the interest rate.

Schedule financial check-ins

Acknowledge any anxiety you feel about dealing with finances, says Amanda Clayman, a psychotherapist and coach specializing in financial wellness. “Anxiety sucks our attention and energy,” she says, which makes problem-solving difficult.

If you address your finances only when you feel bad, you may associate the behavior with negative feelings. Clayman gives the example of seeing a shocking credit card statement, panicking and choosing that time to address your overspending.

Rather than waiting until you’re preoccupied with anxiety, Clayman recommends scheduling a weekly financial check-in at a neutral time. The idea is to “reprogram your emotional experience around money so that you can be much more effective,” she says.

Take 30 minutes each week to review your spending activity and the balances on your checking and savings accounts, as well as any outstanding debt. Then, take note of any upcoming bills or other money events — like payday — and make a loose plan to prepare pending expenses.

If you feel overwhelmed by a 30-minute money review, Clayman suggests starting with 15 minutes or even five. (Maybe you simply note your balances.)

Keep anxiety in check by focusing only on your current financial picture. However, in time, building comfort and familiarity with your money today may help you prepare for tomorrow. For example, tracking expenses could lead to spending less and having money to sock away. Or, after reviewing your paychecks, you may decide to contribute to your 401(k), a tax-favored retirement savings account offered by some employers. (Contribute at least enough to snag all the matching dollars your employer offers.)

Tackle small, achievable goals

Changing behavior “comes down to our sense of identity,” says Newcomb, who used to ignore her own finances. For example, she says: If you’re OK with being someone who pays bills late, you will probably continue to do so.

“There came a point when I decided I didn’t want to be that person anymore,” Newcomb says. “Being a person who is on top of their finances is the goal — it’s not that I care so much if the electric company gets their money.”

Tackle small, achievable goals, like those check-ins, to start identifying as a financially responsible person, too. To identify your goals, Newcomb asks: “What are the things that feel like a gut punch when you see them?”

Ashamed by overdrafts? Go the next two months without one — then another two months. Paying bills late? Make each of next month’s payments on time. (And for each bill, set up autopay, which Newcomb describes as a “godsend.”) Bad credit score? Aim for a certain score within a few years, and learn what will help, such as making those on-time payments and keeping your credit card balances below 30% of your overall limit.

Reap your rewards

Build that positive association with money management by rewarding yourself. Treat yourself to ice cream or your favorite TV show after your weekly check-in, for example.

Some benefits will be intangible but meaningful nonetheless, like the pride in taking on those important (if dreaded) goals, Newcomb says.

Later, you’ll likely see those small goals you accomplished help your finances — which is pretty satisfying, too. Newcomb, who’s now in control of her money, has seen her balances increase. “Now, my reward for going through my finances is that I can see I’m in a better place,” she says.

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The article Can’t Bear to Check Your Finances? Here’s Help originally appeared on NerdWallet.

These Types of Apps Could Prompt Impromptu Spending

Posted on by Courtney Jespersen

While some apps help you save money, others have a way of encouraging you to spend more.

Changing how you connect with these types of apps by deleting them, not downloading them in the first place or limiting your interaction with them can help you rein in your spending.

Subscription-based apps

Many subscription services and boxes have corresponding apps. And you may feel inclined to sign up for a subscription if you can easily manage your membership from an app.

But automatic subscriptions are dangerous because consumers tend to continue using (and paying for) them, as opposed to canceling when they’re done, says Susan Weinschenk, a behavioral scientist and CEO of The Team W, a consulting company.

“If it requires action to make it stop, then we’re less likely to actually take that action and make it stop,” Weinschenk says. “We all fall prey to inertia.”

To save, stay away from subscriptions and their corresponding apps in the first place. Or, use apps to fight apps. For example, Weinschenk suggests setting up alerts to remind you when a free trial is expiring — before you’re charged. You can also set up twice yearly alerts as a reminder to review all of your ongoing subscriptions, streaming services and so forth.

Shopping apps

Deals make people feel good.

When consumer psychologist Kit Yarrow interviewed shoppers about how they feel when getting a good bargain, they’ve likened it to coming in first in a race or getting a raise at their job.

“There’s just a winning feeling,” says Yarrow, who is also the author of “Decoding the New Consumer Mind: How and Why We Shop and Buy.”

Deal-centric apps, such as those for certain stores, bring those feel-good bargains straight to you via your smartphone. But tempting sale notifications can encourage more shopping, which may mean it’s better to delete those retail apps altogether.

Or at least turn off the app’s alerts, advises Weinschenk. That way, you aren’t constantly flooded with push notifications about sales.

Another strategy? Weinschenk said she’s downloaded a store’s app, redeemed a coupon offer and then uninstalled the app just as easily as she installed it.

But if you’re disciplined, you can keep the apps, says Casey Taylor, a partner in Bain & Company’s retail practice. Take advantage of the savings within shopping apps, but also monitor how much you’re spending in them. For example, check your credit card statements regularly to stay within your discretionary spending budget.

Social media apps

The products you see in your social media feed — whether from retailers or friends — could encourage you to purchase things you wouldn’t otherwise buy.

But deleting social media isn’t an option for many. “Most people really want to have social media in their lives, so I can’t see getting rid of those apps,” Yarrow says.

Instead, she says to be aware that Instagram and Facebook will present you with buying opportunities. Be conscious that marketing is constantly targeted at you, and “you’re being hunted, stalked, chased down,” Yarrow says. “When you go shopping online, if you stop and hover too long over a product, that product’s going to show up on your social media feed, and you have to be ready to say no.”

Even when you’re not paying money for these apps, Yarrow says you’re paying with your attention.

Rewards apps

Rewards program apps, whether for a grocery store, airline or coffee shop, typically function in much the same way. The more customers spend, the more rewards they unlock.

Taylor says it can almost feel like a game.

For example, in the Starbucks app, “You earn stars that you can then burn for rewards,” she says. If you’re a very disciplined customer, you could save money by claiming a free coffee or snack using stars you accumulated from items you were already buying, Taylor says.

But, she adds, “what you see is it becomes psychologically tempting to buy things just to earn those stars.

So be careful not to let climbing the tiers of a reward system lead you to spend more in the process.

With any app, Yarrow says one way to curb excess purchases is to simply be aware of the potential dangers. Pause and recognize your tendency to overspend before it happens.

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The article These Types of Apps Could Prompt Impromptu Spending originally appeared on NerdWallet.

Will a Summer Job Burn Your Financial Aid for College?

Posted on by Ryan Lane

Roughly one-third of teenagers have summer jobs, according to the Pew Research Center. Some of these jobs may make you very familiar with the letters “SPF.” But every working student should know a different abbreviation to avoid getting burned: EFC.

While you may be working to help pay for college, the money you earn could affect the financial aid you receive. Here’s how.

Income and financial aid

Every student who wants federal financial aid must complete the Free Application for Federal Student Aid, or FAFSA. Colleges use this information to calculate how much a student and their family can pay for school. This is known as the expected family contribution, or EFC.

The EFC considers the income and assets of parents and students. In general, those with more money pay more money — and may not qualify for more desirable aid as a result.

“Typically, students with higher EFCs won’t be eligible for need-based money,” says Lauren Brantley, an eAdvisor for the College Advising Corps, a nonprofit organization based in Chapel Hill, North Carolina, that works with low-income, first-generation students.

Need-based aid includes Pell Grants, which you don’t repay, and subsidized federal loans, whose interest the government pays while you’re in school. Schools may also use the FAFSA to determine institutional aid, awarding some scholarships and grants based on financial need.

Student income protection

Penalizing working students may sound unfair, but annual earnings are excluded from the financial aid formula — to a point.

For dependent students, “The FAFSA wipes out any income earned at $6,660 or below,” says MorraLee Keller, director of technical assistance for the National College Access Network, a nonprofit organization in Washington, D.C. If you exceed the maximum, the formula counts half the excess earnings.

For example, say you worked at an ice cream shop earning $10.45 an hour, the median for food service workers according to the Bureau of Labor Statistics. You’d have to work more than 630 hours to hit the income maximum.

That’s not likely over the summer, but you could earn more than $10,600 by working 20 hours a week at that salary for the entire year. In that instance, the FAFSA would ignore $6,600, and $2,000 of the remaining $4,000 would affect your EFC.

It’s tough to say how much need-based aid that $2,000 could cost you — it would depend on your entire financial picture — but Pell Grant amounts and EFC are directly correlated.

Currently, if you attend college full time and have an EFC of $3,000, you’d qualify for a Pell Grant of $3,245, provided the school’s cost of attendance exceeds $6,195. If your EFC increased to $5,000, your grant would decrease to $1,245.

You can estimate this potential effect on your situation with the U.S. Education Department’s FAFSA4Caster.

Details to know

If you make a lot of money, you’ll want to understand the school year those earnings affect because the FAFSA uses income information from two years ago.

“For a student who’s an incoming freshman, calendar year 2017 is what is being taken into account on their FAFSA,” Keller says.

This wrinkle means college students close to graduating who land high-paying jobs or internships would likely finish school before that money counts toward their EFC.

Work-study jobs also don’t count toward the amount of income students can earn. You could make $3,000 from a work-study job and $4,000 from a summer job, but only the latter would go into the EFC calculation — keeping you below $6,660.

These details mean the benefits of working likely outweigh the risks.

“I think that students need to work when they’re in college,” says Jodi Okun, founder of College Financial Aid Advisors, which helps families understand the financial aid process. “It’s going to help them get employed faster.”

Independent students can earn more

Independent students, who don’t provide parent information on the FAFSA, can earn more before affecting their financial aid — $10,360 for single students and up to $16,620 for married students.

However, independent students might easily surpass those limits. They are typically older and may be working their way through school.

Okun advises these students to “do what you need to do, and try to stay away from worrying about income protection.” She says colleges will analyze these students’ situations differently when calculating financial aid.

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The article Will a Summer Job Burn Your Financial Aid for College? originally appeared on NerdWallet.