Lifestyle

CPI Report: Inflation Was Slightly Less Terrible in November

Posted on by Anna Helhoski

Goods and services are getting less expensive in response to the Federal Reserve’s persistent increases in interest rates. But prices are still higher than they were a year ago.

Consumer prices are up 7.1% year-over-year as of November 2022, according to Tuesday’s Consumer Price Index report from the Bureau of Labor Statistics. The Consumer Price Index tracks the impact of inflation through the change in average prices that consumers pay for goods and services, such as groceries and gas. Tuesday’s report showed the smallest year-over-year increase in the index for any previous month since December 2021.

Month-to-month, consumer prices rose 0.1% from October to November, a lower increase compared with the 0.4% change from September to October, BLS data show.

The shelter index, which has risen 0.6% since October, was the most significant contributor to overall price increases. Food prices are up, too. Both groceries and restaurant food increased by 0.5% month-over-month. Food, overall, is up 10.6% compared with the previous year, not seasonally adjusted.

But there’s good news, too: Energy prices are going down (-1.6%) compared with the previous month when energy costs rose (+1.8%). Those decreases in energy include gasoline (-2.0%), electricity (-0.2%) and utility gas services (-3.5%).

Here’s what changed:

Note: All month-to-month changes are seasonally adjusted, but year-over-year changes are unadjusted, per the CPI report.

Food:

September to October: +0.6%.

October to November: +0.5%.

November 2021 to November 2022: +10.6%.

Shelter:

September to October: +0.8%.

October to November: +0.6%.

November 2021 to November 2022: +7.1%.

Energy (fuel, utilities):

September to October: +1.8%.

October to November: -1.6%.

November 2021 to November 2022: +13.1%.

Medical care services:

September to October: -0.6%.

October to November: -0.7%.

November 2021 to November 2022: +4.4%.

Transportation services (insurance, airfare, etc.):

September to October: +0.8%.

October to November: -0.1%.

November 2021 to November 2022: +14.2.

New vehicles:

September to October: +0.4%.

October to November: No change.

November 2021 to November 2022: +7.2%.

Used cars and trucks:

September to October: -2.4%.

October to November: -2.9%.

November 2021 to November 2022: -3.3%.

Apparel:

September to October: -0.7%.

October to November: +0.2%.

November 2021 to November 2022: +3.6%.

 

The Federal Reserve Board, working on taming inflation, is meeting this week and is expected to announce another interest rate hike on Wednesday for seven increases in 2022. However, the upcoming rate increase is largely expected to be lower than the four prior 0.75 percentage point increases.

Anna Helhoski writes for NerdWallet.

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What if You Can’t ‘Out-Budget’ Inflation?

Posted on by Laura McMullen

Inflation is a nightmare for the many Americans who already stretch their dollars to cover basic needs. What happens when those dollars lose value?

Their choice is probably not about whether to cut streaming services or opt for store-brand groceries. Instead, they may have to pick between buying enough food and paying rent.

The families hit hardest by inflation typically have little in savings and other resources. And that lack of access to wealth can be rooted in a history of inequality, says Phuong Luong, a Massachusetts-based certified financial planner and founder of Just Wealth, a financial education and consulting firm.

For example, say generations of your family have been underpaid or limited in where they can live, due in part to racist policies. Then inflation causes everything to become more expensive.

You may have to scrape together cash to support not just yourself, but also family or community members. Perhaps you have to spend money and time traveling across town to the grocery store or doctor’s office.

“Your proximity to people with resources and people with wealth is going to be different depending on where you live and who you are,” Luong says. “There’s a larger context than just expenses and budgeting.”

Whatever context describes your situation, here’s how to combat inflation if money is already tight.

Prioritize essentials

Aim to pay for expenses that enable you to live safely: housing (mortgage or rent), utilities and food. Also try to cover costs that help you work, such as transportation, cell phone and child care.

Next-level priorities are those that trigger major consequences if you don’t pay: taxes, child support and insurance.

For credit cards, aim to pay your minimum at least, because you may need that credit access.

Tap local resources

If you’re struggling to pay bills, find support. Luong suggests Findhelp.org, which lists local programs designed to cut costs across many categories.

Calling 211 or visiting 211.org can also help you find assistance related to housing, health, food and emergency costs.

Pick up the phone

You may also save money by calling credit card and insurance companies, lenders, banks, cell phone providers and other businesses you pay.

With the pandemic affecting so many consumers, these companies “are a little more empathetic than they have been,” says Emlen Miles-Mattingly, co-founder of Onyx Advisor Network, a Sacramento, California-based support platform for underrepresented financial advisors.

They may pause or lower payments, for example, or forgive overdue bills. Or they could lower your interest rate.

But you have to ask. And often a patient phone call with customer service yields quicker, more effective results than an email or online form.

Connect with your community

To overcome financial struggles, “community is going to be major,” says Dasha Kennedy, Atlanta-based financial activist and founder of The Broke Black Girl Facebook community.

Leaning on — or supporting — your family members, friends and neighbors can take many forms. For example, Kennedy points out how temporarily living with others can lower housing expenses. Or you can pool resources by sharing a vehicle or splitting a large expense.

To connect with supportive locals you’ve yet to meet, look to libraries, religious organizations and recreation centers. Or use virtual platforms like Facebook and Nextdoor.

In these in-person and online spaces, you may find free or inexpensive goods and services. Maybe someone will give away secondhand clothes or walk your dog while you work.

Or seek guidance. Your neighbors may point you toward free, nearby health resources, for example, or describe what’s helped them stretch their money.

Profit from your skills

Of course, making more money helps, too. If you’re already working, Kennedy recommends first trying to increase earnings through your employer. Consider working overtime or negotiating raises and role changes, she says.

Or explore side work — with caution. Plenty of online gigs could waste your time, take your money or misuse your personal information.

“It’s high time for frauds and scams,” Kennedy says. Trust your gut, and read reviews. Also check the Federal Trade Commission and Better Business Bureau websites for tips to avoid scams.

The most effective way to make money? “Monetize skills you already have,” Kennedy says. These could include anything from cleaning and organizing to writing and designing.

Assuming you start without clients, she suggests tapping your community once again.

“You may not have the time to build trust and reputation, so you’re going to have to rely on personal relationships,” she says. Ask friends, neighbors and family members to promote and vouch for you.

Mind your mental health

Money struggles are exhausting. So regularly “connect with yourself,” Miles-Mattingly says. Identify what makes you feel better, whether it’s walking outside, calling a friend, meditating or reading.

If time is tight, make your activity quick, and consider Miles-Mattingly’s point: “People, when stressed, don’t have the best decision-making abilities.” And hard times mean hard decisions. It pays to feel centered before negotiating a lower bill or agreeing to a side job.

To avoid feeling overwhelmed during times of financial stress, Kennedy tries not to overthink the unpredictable future. Instead, she suggests “focusing on getting through the day.”

Laura McMullen writes for NerdWallet.

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Don’t Let Your First Car Be a $30K Mistake

Posted on by Colin Beresford

Buying your first car is already an intimidating experience; in the midst of historic supply shortages, it’s easy to feel overwhelmed.

In March of this year, the average price of a used car was $27,246, according to Cox Automotive — an automotive marketplace and data company — or 28% higher than it was a year ago. With those price increases, monthly payments have also swelled. Average payments for used cars reached $488 in the last quarter of 2021, according to Experian. On top of that, the average loan term for used vehicles was just over 67 months, or more than five years.

For many, cars are a necessity. If you have little or no credit, no co-signer or just a limited budget, it can be easy to accept a loan that pushes your budget or binds you to a car for six, even seven years.

Not being ready before stepping onto a car lot can open the door to making a purchase you’ll later regret. Set your limits before you ever stop at a dealership; with the right preparation, you can keep your purchase from becoming a burden.

Secure a loan

Your first step is calculating what loan payments you can afford and the total loan amount that’s within your budget.

Aim to keep your monthly loan payment below 10% of your take-home pay, and if you’re buying a used car, keep your loan term under 36 months. If you’re looking for a new vehicle, keep the term under 60 months. Limiting your loan term will save you money on interest and will lower the risk of your loan becoming upside-down — owing more than the car is worth.

Numbers in hand, start looking for a lender that will give you a loan. Getting preapproved for a loan before visiting dealer lots can give you a better negotiating position, keep you from going over budget and reduce what you pay in interest.

With little or no credit history — especially since you have not had a car loan before — your best shot at being approved for a loan at the lowest interest rate possible is to apply with a co-signer. But if that’s not a possibility for you, there are still financing alternatives available:

  • One of the first places to look are banks and credit unions, particularly institutions that you have an established relationship with.
  • Search your area for lenders with first-time buyer programs, which put conditions on the amount you can borrow and the vehicles you can buy but dispense with some of the credit requirements.
  • You can also look for loans from online lenders that offer bad-credit auto loans, since they will often have low or no minimum credit scores. These loans can carry interest rates of over 25%, so a year after taking one on, you can try to refinance for lower rates.

Pick the right car

Finding a cheap car used to be easy — or at least easier than it is now. If you have a $10,000 budget, your options are limited, but that doesn’t mean there aren’t options.

With a limited budget, most choices will be older, used cars, and that increases the annual cost to maintain your car. A 2021 Consumer Reports study found that 2016 model year vehicles cost $205 to maintain over the previous 12 months, while 2011 model year vehicles cost $430.

In addition to maintenance costs, there’s also fuel, insurance, registration and taxes that all add to the cost of owning a vehicle. As you search for a car, look into the cost of ownership, since it will differ from car to car.

The total cost of owning your vehicle, including your loan payment, shouldn’t exceed 20% of your take-home pay. Although some costs can’t be significantly reduced, you can minimize others — such as future maintenance, repairs and fuel — with the right car.

“The most important thing to look for is a car with good maintenance history,” Joey Capparella, a senior editor at Car and Driver, said in an email. “If the previous owner has taken good care of the car and can provide service receipts, that trumps other attributes such as the number of miles or the brand. One-owner cars are desirable for this same reason.”

Service and ownership history can sometimes be found through a service such as Carfax. Use this information, along with total mileage and the car’s age, to narrow down your search. When looking at vehicles for less than $10,000, the car with fewer miles will often be the better choice, if all else is equal.

Once you’ve settled on a car, take it for an extensive test drive, Capparella added, and pay attention to “the seating position, the visibility out of the windows, and the sound of the engine.”

If something about the car isn’t right for you, a different vehicle is likely a better choice, and don’t be afraid to be picky. You may not be buying the car of your dreams, but you could be living with your choice — and making payments on it — for years to come.

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The article Don’t Let Your First Car Be a $30K Mistake originally appeared on NerdWallet.

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Mortgage Rates are in for a Bumpy Ride in June

Posted on by Holden Lewis

June mortgage rates forecast

Mortgage rates might be volatile in June. A graph of them may resemble the cutting side of a handsaw, with sharp daily ups and downs. I predict that the average rate on a 30-year mortgage will be higher in the last week of June than in the last week of May.

I’m not brimming with confidence in this forecast. One source of uncertainty arises in the middle of the month, when the Federal Reserve meets to hash out monetary policy. As of late May, financial markets were expecting the Fed to raise the overnight federal funds rate by half a percentage point on June 15.

Experience tells you that when the Fed raises short-term interest rates, then long-term mortgage rates will go up, too. But when the stock market takes a beating (which is what happened in May), that tends to depress mortgage rates. What if investors worry that the Fed’s aggressive rate increases will cause a recession soon? In that case, mortgage rates might not rise much, or they could even fall.

To summarize: Mortgage rates probably will rise in June, but that’s not a sure thing. Meantime, we could see substantial bumps and dips day to day.

Exiting a period of steady rates

Mortgage rates were relatively tranquil from autumn 2020 to the middle of December 2021. A graph of rates during that period would be a more-or-less straight line with little squiggles day to day and week to week.

Government intervention was responsible for that era of steady mortgage rates. The Federal Reserve accomplished it by buying billions of dollars’ worth of mortgage-backed securities every month. This meant that lenders knew they would easily find investors to buy the mortgages they underwrote: If private investors didn’t want them, the Fed would buy them.

Lenders kept rates low and steady during this time, knowing they could easily find buyers for their loans. But the period of tranquility ended when the Fed announced in mid-December that it would quickly reduce its purchases of mortgage-backed securities at the beginning of the new year. Lenders didn’t wait until January for the Fed to follow through; they raised mortgage rates at the end of December, and kept raising rates into the spring.

Then, in January, the Fed announced that it would slam the brakes on mortgages even harder in February. In March the Fed said it would no longer increase its mortgage holdings. Mortgage rates steadily increased.

Entering an era of unstable rates

The central bank has accumulated hundreds of billions of dollars’ worth of mortgage-backed securities since the beginning of the pandemic. In May, it pledged to start shrinking those holdings in June. The Fed plans to reduce the amount of mortgage-backed securities it owns by up to $17.5 billion a month from June through August, then by up to $35 billion a month after that.

This means that the government is reversing its intervention in mortgage markets. Instead of adding mortgage-backed securities to its balance sheet, the Fed is letting them drain off. When the Fed was accumulating mortgages, rates remained low and steady. Now that the Fed is shedding mortgages, it’s reasonable to expect rates to trend upward, and to have bigger up-and-down swings day to day and week to week.

This volatility will add stress when deciding whether to lock a mortgage rate today or wait until tomorrow. The time-honored advice is to “lock on the dips” — to lock on a day when the rate falls, on the theory that it will soon rise again. Your loan officer may offer guidance, but keep in mind that day-to-day rate movements are unpredictable.

What happened in May

Mortgage rates rose in May, as I predicted. The 30-year fixed-rate mortgage averaged 5.32% in May, compared with 5.09% in April. My predictions have been correct in eight of the last 12 months.

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The article Mortgage Rates Are In for a Bumpy Ride in June originally appeared on NerdWallet.

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How to Handle Mixed-Income Friendships

Posted on by Laura McMullen

Finally, as the country reopens, you’re likely seeing more of your friends. Out with the video chatting and in with the high-fiving, hugging and, well, spending.

For every dinner, there’s a check to pay; for every wedding, a gift to buy; and for every concert, a ticket to score.

You may notice that you and your reunited friends handle these kinds of expenses differently. Maybe one of you sees an $80 night out as chump change, while the other feels like a chump for desperately needing that cash for rent.

Here’s how to reenter the world of socializing and spending while keeping friendships and finances intact.

If you’re the friend with less money

Reflect on your finances and priorities, as well as how they may have changed during the pandemic.

“This is an opportunity for everyone to be more mindful about where they want to spend their time, money and resources,” says Kathleen Burns Kingsbury, a Waitsfield, Vermont-based wealth psychology expert and host of the “Breaking Money Silence” podcast.

Consider what’s important to you, she says, as well as the experiences you want to invest in and those you’d rather skip to save money. “Then you can decline invitations a little easier because you feel more solid in your decision,” she says.

Say you realize that during quarantine you didn’t mind PB&J for most meals, but you craved live music. Skip the fancy dinner plans and, if your finances allow, buy the concert ticket.

Or make your own plans if you’re simply longing to catch up with friends. Host a potluck, movie night, bike ride or another more affordable hangout.

With this kind of intention, you’re empowering yourself to make strategic financial decisions. Doesn’t that sound better than bailing because money is tight?

As Kingsbury puts it: “Instead of saying, ‘I can’t, I can’t, I can’t,’ it’s more about saying, ‘This is what I’m going to do.’”

As you reflect on financial priorities, consider creating a budget to match them, says New York-based financial therapist Aja Evans.

A budget is a plan for your incoming and outgoing money — though you can call it something else if the B-word wigs you out. (Evans calls her family budget their “killing-it plan.”)

The key word is “plan.” No need to resort to a shrug or stress-fest when you’re invited to a destination wedding or pricey brunch. With a budget, you already have an idea of how much you can (or can’t) spend on those activities.

If you can’t swing the event, trust that your friends will understand. “I would imagine that, after COVID, people really understand financial stress no matter their level of income or assets,” Kingsbury says.

If you’re the friend with more money

If you can afford the dinners and concerts, then live it up, Evans says. But try to understand that your friends can’t always join you.

Be “empathetic and compassionate and — here’s the hard part — not judgmental,” Kingsbury says.

You may not know your friend’s circumstances. Many people don’t share when they’re financially stressed, Kingsbury says, “because there’s that judgment and shame.” So give your friend the benefit of the doubt when she declines an invite.

And give your friend something else: time. As soon as you plan an outing or learn about a pricey event, tell them so they can try to plan for it, Evans says.

Even with that time, “be prepared that some people might not be able to make it work,” Evans says. Allow friends to opt out or even participate in an alternative plan.

So if you invite friends to a destination wedding, for example, explain that you know it’s an expensive request and understand if they can’t join. Maybe you and your friends who can’t make the trip go out to dinner locally to celebrate instead.

How to talk about money with friends

These spending situations become easier when you and your friends can talk openly about money. If your buddy already knows you’re saving for a down payment or supporting your parents, for example, she’s more likely to understand when you pass on a winery trip.

And if you discuss finances with friends, you may be able to motivate and help each other. Maybe your friend knows of a first-time homebuyer program that could help you with that down payment.

But, of course, money can be a loaded subject. To keep the conversation casual, avoid having it while you’re already out spending money, Evans says. (Or while you’re drinking.)

As for what to say, start with “I” statements, she says, as in “I’ve been looking at my finances and noticed …” With this phrasing, your friend is less likely to feel defensive or pressured to share.

Or start with a more general, less personal chat. Share an article, Kingsbury says, or bring up the financial aspect of a news event or even celebrity gossip.

“Once people start to talk about money in general, then the conversation over time evolves,” she says. And friends “become more vulnerable and willing to share.”

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

Laura McMullen writes for NerdWallet. Email: lmcmullen@nerdwallet.com. Twitter: @lauraemcmullen.

The article How to Handle Mixed-Income Friendships originally appeared on NerdWallet.

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Trial, Error and What I Learned About Money in My 20s

Posted on by Sean Pyles

Your 20s are a time of self-exploration, finding your footing as an adult — and likely making some money mistakes.

To save you from learning the hard way — and pass on some knowledge as I enter my 30s — here are five money lessons from my past decade.

Get serious about goals

For several years, my main financial goal was to go out as much as I wanted and still have enough money left at the end of the month to cover rent.

Eventually, though, groggy mornings and paltry savings proved unfulfilling. My partner and I decided to set goals and plan for them. We wanted to buy a house, which meant moving to a less expensive city so we could build savings.

Tip: Know your passions to know your goals.

Sacramento, California, certified financial planner Pam Rodriguez suggests identifying what brings you joy, then crafting a financial plan to create more of those moments.

“Personal finance is a lot more emotional than it is a math equation,” Rodriguez says. “Even though the numbers have to add up, you’ll never take action unless you feel strongly about something.”

If you want to buy a house to host friends and family, for example, identify how much you’ll need for a down payment and closing costs, then work toward that savings goal over time.

Figure out a budgeting system

For most of my 20s, my budgeting system was defined by the lack thereof. Eventually, I sucked it up and started tracking my spending. At first, I felt that I was slacking if I didn’t document where every penny went. But I quickly realized that keeping a simple budget was more my style.

Tip: Choose a budgeting system that reflects who you are.

If you’re a hyper-analytical person, a detailed budgeting spreadsheet might suit you. But if you’re more hands-off, a budgeting app might do the trick.

No matter how you budget, it’s important to at least understand the money coming in and going out monthly.

“When people see their spending, they have an aha moment, because they didn’t realize where their money was going,” says Sidney Divine, an Atlanta certified financial planner.

Learn from mistakes

Did you know that if you work a contract gig and don’t put aside enough cash to cover taxes, you may be left making monthly payments to the IRS for years to come? In my early 20s, I learned this the hard way.

Tip: Locate the source of a problem and find a solution.

In my case, the problem was that I ignored my finances and didn’t think about tax obligations. I resolved the issue by proactively managing my budget and paying off my tax debt. Getting a new job that wasn’t a 1099 gig helped, too.

“You’ve got to figure out: Is it the same mistake you’re making over and over? Is it a pattern?” says Christine Papelian, a certified financial planner in Phoenix. “If it’s a new mistake, then now you have an opportunity to get back on track. It’s almost never too late to change a behavior or a habit.”

If you have a habit of making late payments, for example, think about setting up automatic bill pay so you don’t have to worry about tracking various due dates.

Build financial fortitude

The past year has been a crash course in instability. And while recent crises were unusually severe, you can count on unexpected financial challenges to pop up throughout life. For instance, a broken alternator on my car once drained my emergency fund, but at least I was able to avoid going into debt to cover the expense.

Tip: Make savings mandatory.

“Focus on building an emergency fund,” Rodriguez says. “Everyone needs one because everyone is going to have an emergency come up.”

Consider using direct deposit to send part of each paycheck into an emergency savings account or setting up automatic transfers from a checking account to savings.

Take advantage of that long time horizon

Youth may be wasted on the young, and so is their financial time horizon — at least for those who don’t seize it.

Despite the various mistakes I made in my 20s, saving for retirement is one area that I didn’t neglect. Once I saw the power of compound interest via a retirement calculator, I quickly set up regular contributions to my 401(k).

Tip: Use these years to boost retirement savings.

One way or another, your 20s will have ripple effects on your retirement years. And life may get more complicated later, especially if you buy a house and start a family, making it harder to save for retirement. Tucking away more cash now can save you from playing catch-up in later years.

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

Financial Vital Signs to Monitor Right Now

Posted on by Liz Weston

A midyear financial review is often a good idea. This year, it’s almost essential.

With people going back to offices, travel resuming and Congress making significant changes to various laws affecting your finances, consider taking some time to check in on your money. You might be able to make some smart moves to reflect the new realities.

Budgeting

See where your money is going now. Using a budgeting app or taking a close look at recent bank and credit card statements can help. Then think about expenses you may face in the near future.

If you’re using your car more, for example, you might already be paying more for gas and insurance, but you also could face higher costs for maintenance or repairs. If you have kids, you might plan for back-to-school costs, sports equipment and activity fees. Vacations, travel, weddings and other celebrations may need to be budgeted for, as well.

It can make sense to trim some costs so you can afford these resurgent expenses. One possibility: Rotate your streaming services and other subscriptions. These may have sustained you during lockdowns, but you could put some on pause now to save money while you continue to enjoy others.

Perhaps you have more income: You’re back to work after being unemployed, or you’re a parent about to get the first of six monthly child tax credit checks from the IRS. (These payments will be up to $300 per eligible child starting July 15). Making a plan for this income can ensure it goes where you want, rather than dribbling away in unplanned purchases.

Debt forbearance

Forbearance on federal student loans is scheduled to end this fall, with monthly payments resuming in October. If those payments would be a hardship, contact your lenders to see if income-driven repayment plans or other measures would help.

If you requested forbearance on your mortgage payment or other debt, that has an expiration date, as well. Debt that’s in forbearance isn’t forgiven, so you’ll typically need to plan to make up the payments you missed. Check with your lender about your options.

Flexible savings accounts

Congress more than doubled how much employees can contribute to flexible spending accounts for child care in 2021. Workers can put in a maximum of $10,500, up from $5,000 in 2020. The limit for health care FSAs remains $2,750.

This year, you’re also allowed to make midyear changes to your contributions to either account, something that normally requires a change in life circumstances such as marriage or having a child.

Your employer must opt in to these changes, but if it has and you can increase your contributions, you could save significantly on taxes.

Frequent traveler programs

Last year airline, hotel and rental car companies softened the rules for their loyalty programs to reflect pandemic travel restrictions. Many extended the expiration deadlines for points, miles and free hotel night certificates. But the pause on expirations won’t last forever. Check your rewards programs and make plans to use your rewards before they disappear.

Similarly, you may have credits from canceled travel that also will expire if you don’t use them. If you can’t use those in time, request an extension.

Health insurance

If you buy your own insurance, you may get a better deal on the Affordable Care Act exchanges now that Congress has expanded the subsidies, reducing costs for most people. If you don’t already have ACA coverage, there’s currently a special enrollment period that ends Aug. 15. If you get unemployment benefits at any point during 2021, you can qualify for a zero-premium comprehensive policy. COBRA coverage to extend an employer health insurance plan is also free from April to September.

Retirement planning

Companies with 401(k)s are now required to let part-time workers contribute if they have worked more than 1,000 hours in one year or 500 hours over three consecutive years. Contact your employer for details.

Congress eliminated the age limit for making contributions to IRAs, so you can contribute past age 70 ½ as long as you have earned income such as wages, salary, commissions or self-employment income. Also, the age that typically triggers required minimum distributions from retirement accounts has been moved from 70 ½ to 72 for people born after June 30, 1949.

If you’re feeling generous, though, the age at which you can start making qualified charitable distributions from an IRA remains 70 ½. These withdrawals won’t be added to your income if the distribution is made directly to a qualified charity.

Liz Weston writes for NerdWallet. Email: lweston@nerdwallet.com. Twitter: @lizweston.

The article Financial Vital Signs to Monitor Right Now originally appeared on NerdWallet.

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How to Travel Safely and Cheaply This Summer

Posted on by Sam Kemmis

As vaccination rates inch upward, Americans are beginning to travel again. More than 10 times as many passengers passed through Transportation Security Administration screenings in the first week of April compared with the same period last year, a sign that some degree of normalcy is returning.

And travel this summer could get far busier.

“Right now, we’re still awash in cheap summer flights,” says Scott Keyes, founder of travel deals newsletter Scott’s Cheap Flights. “But with vaccinations accelerating quickly and interest in travel spiking, cheap summer flights may not be available much longer.”

Yet the question of whether it’s safe to travel remains. Infection rates remain high, despite accelerating vaccination efforts. Even vaccinated individuals are realizing that they may not be in the clear to return to life — and travel — as normal.

How to travel safely

Getting fully vaccinated is the first step toward travel safety, but it’s not the last. The Centers for Disease Control and Prevention have issued updated guidelines for vaccinated travelers, giving the go-ahead to domestic travel. Yet it still recommends following the familiar protective protocols: wearing a mask, maintaining social distance and avoiding crowds.

“Even with a vaccine, the fundamentals of COVID-19 still apply,” Dr. Jessica Shepherd, chief medical officer of Verywell, an online health website, said in an email. “With travel, only the scenery changes, not the reality. As we move towards more of a normal life, it is important to approach it carefully rather than abruptly in lifestyle changes.”

If the CDC recommends maintaining social distance, is it safe to fly at all?

“This risk of transmission in airplanes is relatively low as the airflow in current jet airliners is much faster than normal indoor buildings and half of it is fresh air from outside,” she said.

How to travel cheaply

Although many factors will affect the cost of your potential vacation, one looms especially large: timing.

“I’d start booking as soon as possible,” says Matthew Kepnes, founder of Nomadic Matt, a budget travel website. “There’s a lot of deals out there right now, but they won’t last long … so my advice is to book soon.”

This strategy also takes advantage of a seismic shift in airline policies.

“Many travelers may have missed the fact that all full-service U.S. airlines have permanently gotten rid of change fees if you book a ticket in main economy, premium economy or business/first class,” Keyes says.

Aside from basic economy, most fares are now far more flexible than before the pandemic. This creates an incentive to book sooner, then rebook if plans fall through.

Experts also recommend looking for deals, rather than trying to travel to popular (and expensive) destinations. Average airfares might rise, but deals will remain if you hunt for them.

Then, there are always travel rewards, which have been piling up in many accounts throughout the pandemic and can offset the costs of travel — but only if you use them.

Where to travel

Before you book a flight overseas, know that most countries are still enforcing restrictions on U.S. travelers and that the CDC and State Department have issued blanket “do not travel” advisories for most countries worldwide, even for vaccinated travelers. That doesn’t mean international travel is off the table, but it does limit the options.

“There are countries like Mexico and Costa Rica where Americans can visit today without any COVID prerequisites like testing or quarantine,” Keyes says. “(And) there are a growing number of countries like Iceland and Belize that allow fully vaccinated Americans to bypass any testing or quarantine requirements that are mandatory for unvaccinated visitors.”

And many countries remain fully off-limits to U.S. travelers for the foreseeable future. Even countries that are allowing tourists, visitors are still subject to local restrictions and curfews. Do your research beforehand to make sure you can enjoy your destination once you get there.

The U.S. will still require a negative COVID-19 test three days or less before your return flight. So even if you are vaccinated, you will need to spend time at the end of your trip obtaining a negative test.

Some of these restrictions are bound to change this summer, but it’s impossible to know which ones, or when. So many travelers, including the experts, are again opting to travel domestically this year.

“I’m about to embark on a seven-week road trip around the U.S.” Kepnes says. “I’ll be focusing on national parks and outdoor adventures.”

Sound familiar?

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

Sam Kemmis writes for NerdWallet. Email: skemmis@nerdwallet.com. Twitter: @samsambutdif.

The article How to Travel Safely and Cheaply This Summer originally appeared on NerdWallet.

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6 Steps for Financial Spring Cleaning, Pandemic-Style

Posted on by Kimberly Palmer

Given the challenges of pandemic life, many financial tasks may have stayed on the back burner this year as we all tried to just make it through each day. At the same time, the pandemic had a big impact on our financial lives, and some money-related to-do’s are likely in order.

Now that it’s spring, it’s a good time to conduct a thorough review of your finances and address any neglected areas. Here’s how to spring clean your finances after a year of pandemic living.

1. Update your budget

Your spending patterns might have totally changed over the last year: According to the Federal Reserve Bank of St. Louis, travel, hotel, restaurant and bar spending fell during the pandemic, while grocery and beverage store spending went up.

So it may be time to create a new budget that reflects current expenses, says Curtis Bailey, certified financial planner and founder of Quiet Wealth Management in Cincinnati. “Covid changed spending patterns last year, and potentially going forward,” he says. He suggests anticipating what habits you plan to continue beyond the pandemic and avoiding any drastic changes, such as buying a second home, until you’ve done a thorough analysis of your needs going forward.

Shea Newton, CFP and president of Financial Journey in Leesburg, Virginia, recommends redirecting some of that previous spending into an emergency savings account. Some people, she says, may want to replenish their emergency fund after dipping into it over the last year, or boost it to a higher level, given the income uncertainty many people continue to experience.

2. Set new financial goals

Looking forward to beyond the pandemic, you might want to set new financial goals, such as finally taking a big vacation or finding a job that allows you to continue working from home. “You may be reeling, trying to figure out your direction again. Ask yourself what is truly important” and whether your current spending reflects that, suggests Andrew Mitchell, CFP and financial advisor at Fiduciary Financial Advisors in Grand Rapids, Michigan. If you want to go on a big trip but much of your spending currently goes to daily expenses, then you may need to adjust your budget.

Mitchell also suggests asking yourself if you’re prepared for the next catastrophe. Looking back, do you wish you had had a larger savings fund going into 2020 or more diversified investments? Reflecting on those questions can help you set new goals that will help you get through the next challenge, he says, whenever it may arrive.

3. Review your insurance coverage

The pandemic has had a big impact on our homes: Not only are we spending more time inside them, often with more expensive technology and other items to help us work or attend school from home, but housing prices have also increased. According to the Federal Housing Finance Agency, home prices rose 10.8% between the fourth quarters of 2019 and 2020. You might need more insurance coverage than you currently have, says Noah Damsky, principal of Marina Wealth Advisors in Los Angeles.

The cost of building materials has also gone up, which means it would cost more to replace a damaged home, he adds. His firm recently helped one of its clients increase their dwelling coverage by 40% to better reflect how much it would cost to rebuild the home today.

Damsky also recommends increasing coverage for water damage. “Since we’re spending more time at home, we’re likely using water more frequently, and the potential for plumbing issues increases.” If you rent, then renter’s insurance is crucial. Apartments carry a higher risk for flood damage with so many people at home straining the shared infrastructure, he says.

4. Streamline subscriptions

Because of all the time spent at home, many families increased their spending on subscription services such as Disney+, Netflix and HBO. As we all start to leave the house more, it might be time to scale back, suggests Jason Dall’Acqua, CFP and president of Crest Wealth Advisors in Annapolis, Maryland. “Cancel the subscription services that you will no longer be using as much and realign your budget with more normal circumstances,” he says.

5. Update your credit card

If your spending patterns have changed, you might also want to consider a new credit card that better maximizes your current lifestyle. Bailey suggests first logging into your credit card accounts and pulling up a summary of last year’s spending, as well as the rewards that you earned.

Did you maximize your reward earning potential and redeem those rewards in valuable ways? If you spend a lot on takeout or restaurants but your current credit cards don’t reward you for that spending, then it might be time to apply for a new card that does, he says.

6. Zero out mobile app balances

Given the rising popularity of payment apps like Venmo, PayPal and Cash App, it’s a good idea to check your balances: NerdWallet found that about two-thirds of mobile payment app users say they have maintained a balance in their accounts, which means they aren’t earning interest on that money. Instead, consider transferring your cash into a high-yield savings account.

“Interest rates are low right now, but if you get into the habit now of moving money into your savings account, when interest rates rise, you will see a bigger impact,” says Newton.

Kimberly Palmer writes for NerdWallet. Email: kpalmer@nerdwallet.com. Twitter: @kimberlypalmer.

The article 6 Steps for Financial Spring Cleaning, Pandemic-Style originally appeared on NerdWallet.

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Reboot Your Budget to Prepare for Reopening

Posted on by Courtney Jespersen

Picture cruising your car deep into 2021 and never glancing in the rearview mirror. Vaccines, travel and a hope of normalcy are finally on the horizon.

With so much to look forward to in the future, it’s understandable to not want to look back.

But returning to typical day-to-day life will be a transition. And from a financial standpoint, you’ll want to assess your past budgeting behavior to prepare for more normal days ahead.

Review past and current spending

Last year’s spending didn’t look like 2019. And 2021 won’t look like either 2020 or 2019. But you’ll need this historical insight to inform your future spending, especially as you start reintroducing expenses that used to be ordinary, like concert tickets, plane tickets and so forth.

Some people’s spending decreased dramatically last year (either from necessity or choice). But others faced comparable expenses, says Molly Laughter, certified financial planner and founder of Laughter Financial LLC in Dallas.

Remember that jungle gym for the kids to play on in the backyard? Or the Xbox for long nights of playing video games? They may have been great ways to keep you occupied and comfortable at home, but now you’ll need to find a way to balance these newer expenses with your past spending on the activities you hope to return to.

Since many of us are already taking a close look at our finances right now as we file taxes, Laughter suggests using this opportunity to review year-end financial summaries from your credit cards and bank accounts.

Size up each category. How much did you spend? Was it worth that amount? Would you want to continue spending that much?

Play favorites

Ever since COVID-19 became part of our vocabulary, there’s been talk that life would never return to normal. Laughter anticipates your future spending will be a “new normal.” Sure, you may introduce dinners out — and possibly even a trip — to the mix, but expect to continue paying for quarantine life staples like deliveries and at-home activities.

According to Vid Ponnapalli, CFP and owner of Unique Financial Advisors based in Holmdel, New Jersey, “There is going to be a paradigm shift with respect to how budgeting in the future will be compared to how it was pre-COVID.”

This new balance means you’ll need to play favorites with your finances. After all, you can’t keep up the amount you’ve been dropping on at-home entertainment and food deliveries while also upping the amount you spend on indoor dining and live shows. It just won’t all fit in the budget. Select the expenses you benefit from most.

To make the necessary adjustments, Laughter suggests looking at the big picture. Don’t get too caught up in specific line items. (For example, if you’re spending 25% less on grocery orders, you don’t have to redirect that exact amount to dinners out.)

Instead, once your needs and savings are accounted for, set a dollar figure you can afford each month for discretionary expenses, then spend it on whatever you want. You may never add back in some things you used to spend money on.

As Ponnapalli says, we’ve all figured out new ways to spend less money and still have fun. Dropping thousands of dollars on concert tickets may not feel worth it anymore when you compare it with watching a (much cheaper) livestream at home.

Plan for future goals

Life hasn’t returned to normal by any means. But for many Americans, the prospect of getting a vaccine is mere weeks or months away. Use the time between now and then to prepare for what’s to come.

Laughter says to think of it like advance notice. “The vaccines aren’t getting out as quickly as we’d like,” she says. “So start your clock.” Begin setting aside a certain amount monthly to accomplish a goal when it’s all said and done.

For example, if you want to travel again by a certain date, use the next few months to funnel funds into a designated savings account. If your student loan payment is on hold, make a plan for how you’ll strategically spend those extra funds in the meantime. And prepare for that added bill when it’s reintroduced.

Whatever financial decisions you make, remember, whether we’re in a pandemic or not, the fundamentals of finances don’t go away. Spread your money between things you need, things you want and savings.

Your allocations may change, but “the name of the game is the same as it was before — budgeting, budgeting, budgeting,” Ponnapalli says.

Here’s to better days and better budgets ahead.

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

Courtney Jespersen writes for NerdWallet. Email: courtney@nerdwallet.com. Twitter: @CourtneyNerd.

The article Reboot Your Budget to Prepare for Reopening originally appeared on NerdWallet.

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