Technology can make life easier for consumers in a multitude of different ways. These days, we use technology to stay connected to our friends and family, store information on the cloud, and even find answers to questions with the all-knowing Google. However, the rise of Financial Technology, aka FinTech, could now mean that your technology could assist with decreasing credit card debt too.

Fintech applies to everything from online banking applications to artificial intelligence tools that can deliver custom suggestions on how to improve your spending. If you’ve been enjoying the benefits that technology can bring to all other areas of your life, and you’ve decided that it’s time to start leveraging tech in finances too, you’re in the right place.

Here’s your guide to just some of the ways Fintech can transform your debts.

1. Online Banking

One of the most significant changes that Fintech delivered to the financial world is the opportunity to check your bank balance and track your spending online. If you’re living from one paycheck to the next, then access to a banking app on your phone can ensure that you don’t spend any more than you intend to.

You can check exactly how much money you have at any moment, and even set up alerts that tell you when you’re about to go over your pre-set limits.

Online banking allows you to set up payments automatically, so you can ensure that you’re always addressing your credit card debts before you start your discretionary spending. You can set up your online banking apps to give you regular updates on your current budget and how much you’ve spent on bills.

You can even set custom notifications that let you know how you’re doing when it comes to paying off debts.

2. Easier Budgeting

Speaking of apps that can help you to accomplish more when you’re struggling with debt, there are also smartphone tools out there that can help you with establishing a budget. Budgeting tools can give you the guidance you need to break discretionary and mandatory spending down into manageable chunks.

There are many budgeting apps like Undebt.it available that will help you identify your spending patterns and how to ensure you have enough money left at the end of the month, without tapping into your savings. You could even find a budgeting app that comes with AI integrations that tell you where you might be able to save extra or where you might have problem areas with your spending such as Trim.

3. Create a Payoff Plan

While some apps help with budgeting, and therefore help you to see how much money you have left after you’ve made your repayments each month, others are designed to help you finish making your repayments more quickly. Tools like Unbury.me allow you to list out all of your debt on an app, then create a payment plan that’s suited to your needs.

With an app like this, you can use the avalanche method – which involves paying your highest interest rate debt first, or the snowball method, which starts with the lowest balance debts first. Whichever option you choose, you’ll pay off debt faster when you can keep track of your progress.

You can even set milestones with your Fintech apps that inform you when you’re getting closer to reaching your goals. This way, you can reward yourself when you accomplish significant steps and stay motivated when the going gets tough.

4. Pay Debt Automatically

Speaking of apps that assist you in paying off your debt faster, there are also tools on the market that you can use to pay off your balances without realizing it. The Qoins app, for instance, rounds up the costs of each purchase to the nearest dollar, then applies the change to things like your credit card debt. With this strategy, you could end up saving an extra $50 or 60 dollars towards your debt, and you won’t even feel as though you’re missing out. The app also comes with tools so you can track your progress too.

Sometimes, when you don’t have to think about things like paying off debts, you’ll be less likely to get stressed and overwhelmed with your money. Over time, you might even discover that the right automatic app has allowed you to reach your goals a lot faster.

5. Managing Future Debt

Fintech can also help you to avoid future issues with debt by giving you a better overview of your cash opens and credit rating. You can use online apps to check your credit score like Credit Karma, and even find apps that help you to compare and contrast borrowing options so that you can avoid choosing the wrong loan options for your needs. Searching for “Fintech” or “Finance” on your phone’s app store will help you to get started.

There are tools online that can give you a complete insight into the kind of repayment terms that are available for different loans, and how these repayment terms will affect you long term. You can also find apps that automatically apply discounts to your products, whether you’re buying insurance, or asking about a new loan, to keep your expenses as low as possible.

The Clever Way to Banish Debts

Are you ready to start breaking down your credit card debts once and for all? The right technology could be just the tool that you need. Developments in Fintech all the way from apps that track your spending, to tools that help you to overcome the issues that make it harder for you to pay off your credit card debts are transforming the cash flow of people all around the world.

If you’re keen to leave your debt issues behind and make the right next step in your path towards financial freedom, now could be the perfect time to start experimenting with the benefits of Fintech.

This post originally appeared on Arrest Your Debt.

Before authoring this review, my wife and I both installed and started using Rakuten on our phones and desktop computer. This Rakuten review is based on our experience and everything we learned about this money-saving app. Find out if it was a waste of time or worth it for us to use the app to make our normal purchases.

Before we get into the full review, it’s important to understand the history of the company and who you are providing your personal information to.

What Is Rakuten?

Rakuten, once known as Ebates, is an e-commerce and affiliate marketing business. Rakuten members can shop at their favorite online stores and marketplaces via a link found on the Rakuten website or app. These stores then pay a customer referral fee to Rakuten, and you, as the customer, are paid a portion of this merchant payout by Rakuten. You earn cashback on each purchase.

This business platform provides you as the customer with the opportunity of accruing valuable cashback whenever you shop using this innovative affiliate marketing platform and site. As a Rakuten member, you get paid for buying everything from household cleaning products to exotic gift items. What more can a contemporary, savvy consumer possibly desire or need?

Let’s find out…

The Change From Ebates To Rakuten

In April of 2019, Ebates, which was also among the largest internet marketing companies, was wholly integrated into Rakuten. Today, Rakuten is highly respected with an A+ rating from the Better Business Bureau (BBB). This company now has over 10 million members enrolled in the cashback program.

It has issued more than $800 million in cashback payments to its members, and Rakuten continues to receive hundreds of excellent BBB customer reviews. According to the Rakuten website, the company has a top-tier, concerned, and committed staff of professionals. The Rakuten team is always ready to assist you with any customer questions and issues that may arise.

Today, Rakuten is offering cashback on innovative new product and service categories such as food delivery and rideshares. The company has also enhanced its on-site store presence, persona, and visibility, enabling you to earn cashback during shopping sprees in your local department stores, boutiques, and shopping malls.

When you join Rakuten, you are aligning with an influential worldwide e-commerce leader. This alliance will improve all aspects of your shopping experience while bringing you impressive cost savings. Providing an excellent customer experience is also a significant focus of the Rakuten team.

But is it worth the time and effort?

What Kind Of Company Is Rakuten?

Rakuten, Inc. began as a Japanese e-commerce and online marketing company in 1997. The company was founded by Hiroshi Mikitani, a Japanese businessman. It uses a B2B2C e-commerce concept and platform, Rakuten Ichiba, which has become the largest e-commerce site in operation throughout Japan. In terms of sales volumes, it is also one of the largest e-commerce sites worldwide.

Also, Rakuten is now known as a global leader in affiliate marketing. The wide variety of participating merchant companies pay Rakuten to send new and returning customers to them for purchasing products and services.

What’s With The Name?

The name “Rakuten” is defined as “optimism” in Japanese. They are living up to the name because the company incorporates multiple areas of business that include sales, banking, travel, marketing, and media. In addition, Rakuten employees than 10,000 people across the globe.

As far as the money paid to everyday users, current figures reveal that the 12 million U.S. Rakuten members have received upwards of one billion dollars in cashback payments while shopping at their favorite stores.

It’s no wonder how Rakuten has dramatically influenced how consumers buy online by offering shopping deals, rewards, and cashback on purchases of the most extensive global selection of brands, products, and services.

Rakuten has become a significant innovator and influencer in the new industrial areas of e-commerce and affiliate marketing.

Many banks and credit card companies now offer charge cards with cashback rewards for spending. However, they cannot compete with the outstanding volume of cash returns that the 12 million members of Rakuten can earn through their ordinary shopping habits.

What’s The Difference Between Ebates And Rakuten?

Back in the day, I gave Ebates a try. I wanted to know if there was any difference between the old Ebates platform and the new Rakuten platform. I found that the main difference between the two is only the name.

The same caring, customer-oriented company, organization, and people operate Rakuten, who previously ran Ebates. They simply changed the company name.

Multiple sources reported that many of the marketing experts admit they regret leaving the old name behind. However, the Rakuten name truly defines and reflects who these experts are and what they continuously promote. This company is strongly focused on providing its member customers with every possible opportunity to save money and receive cashback and rewards on purchases.

Little Has Changed

You can look at the Rakuten website or app, its presentation, and content mainly as a rebranding of the old Ebates site. If you were an active Ebates user, this change to the Rakuten name and brand should not affect you. Your account should have been moved over from the Ebates site to the Rakuten domain automatically. Your entire cashback history and current status should be intact on the Rakuten site, as the new Ebates domain.

This is another example of the fact that the only aspects that changed in the move from the old website to the new one were the company name, logo, website design, and URL.

It is also most likely that your favorite online and in-store retailers from Ebates now appear on the Rakuten domain. Most consumers who used Ebates discovered that when they signed-in to the Ebates site, they were auto-forwarded to Rakuten. If you bookmarked any Ebates pages previously, however, you should now update them to the new Rakuten page URLs.

Also, if you white-listed Ebates in your email spam filter, you should take a minute to upgrade to the Rakuten email address as well.

How Does Rakuten Work?

If you are new to Rakuten, I will show you the signup process and what you need to know. When I signed up for Rakuten, I found it was actually quite painless and I was able to break it down into three simple steps:

1. Join Rakuten

When you first visit the Rakuten website, you will see a Join Now button in the upper right-hand corner (if you are on a computer). If you are on a mobile device, search for Rakuten in the app store and download it.

Browser Extension

Once you sign up with an email address, Google account, or Facebook account, you will be asked to install the Rakuten browser extension. I for one am a huge fan of browser extensions because it makes my work so much easier. As I write this post, I have 16 Google Chrome extensions currently working. I opted to install the extension to see if it was useful.

After I installed the browser extension, it promised to alert me of cashback and coupon alerts when I’m shopping online. Sounds promising!

I quickly found that within the app or desktop site I could locate many of my favorite stores and discovered an endless number of new ones. Next, choose a store, promo code, or deal to get started. You can even do your grocery shopping on Rakuten.

For instance, I went to Walmart.com from within the Rakuten site and when I arrived on the normal Walmart page, the Chrome Extension showed me exactly what I would be saving money on depending on my purchases.

2. Earn Top Cash Back on Purchases

Follow the Rakuten links to your favorite stores, offers, and deals to begin your shopping adventure while saving money. Each time you buy a product or service, your sales order is reported to Rakuten and you are credited with cashback the following day.

3. Receive Your Big Fat Check or PayPal Payment, Quarterly

One of the big disappointments I found was that we would only receive our cashback four times per year. Each quarter throughout the year, Rakuten will send your cashback payment. This amount will arrive in the mail as a “Big Fat Check” or as a payment in your PayPal account.

When Exactly Will I Be Paid?

If you have money in your cashback account, you will receive your payment according to this schedule:

Purchase Made:

Between January 1st through March 31st

Paid – May 15th

Purchases Made:

Between April 1st and June 30th

Paid – August 15th

Purchases Made:

Between July 1st and September 30th

Paid – November 15th

Purchases Made:

Between October 1st and December 31st

Paid – February 15th

What Other Details Are Available About How Rakuten Cash Back Works?

You can enjoy the added convenience and savings of buying items from your choice of merchants on Rakuten using a Rakuten Cash Back Visa® credit card. When you apply for and receive a Visa credit card from Rakuten, you can start saving money immediately.

Every purchase you make with it from the stores and e-commerce sites listed on Rakuten will earn cashback. This Visa card has enabled Rakuten users to earn upwards of seven million dollars in cash Back.

More cashback benefits and perks from using this credit card include the following:

Extra 3% Cashback

When using your Rakuten Cash Back Visa card, you can earn an additional 3% Cash Back on qualifying purchases on Rakuten.com or by using the Rakuten app. You can also enjoy these cost savings on in-store purchases and at Rakuten hotels or for Rakuten travel.

$10 First Purchase Welcome Bonus

You automatically receive a $10 cashback bonus when you make your initial purchase with the use of your Rakuten Cash Back Visa card.

1% Cashback

You can earn 1% cashback on purchases wherever Visa credit cards are accepted.

Unlimited Cashback

You will receive unlimited cash Back on any purchases that you make using your Rakuten Cash Back Visa card.

Flexibility With Rakuten Visa

Rakuten’s employs a zero-fraud-liability policy for their Visa cardholders. You will also gain more valuable benefits like your members’ cashback payments, price protection, and product return protection. Also, there is no annual fee for owning and using your Cash Back Visa card from Rakuten. This enables you to enjoy even more significant cost savings.

You can also receive full benefits offered by your Rakuten Cash Back Visa card with Apple Pay™, Google Pay™, and Samsung Pay. This is truly the modern, easy, fast, and safe way to pay for your purchases. Some stores found on Rakuten offer double cashback deals to customers. Also, whenever you refer new members to Rakuten, you will earn an additional $25 or more per referral.

Rakuten Cash Back Button (Browser Extension)

You can also download and install the Rakuten Cash Back Button to enhance your online shopping experience (my favorite!). The Rakuten browser extension locates valuable coupons, deals and cashback offers from 2,500 stores plus online marketplaces.

With this extension, you can obtain popular coupon codes for even more savings when shopping. These coupons are valid for purchases of such products as clothing, gear for babies and kids, electronics, health and beauty aids, shoes and handbags, food and restaurant meals, appliances and home improvement products.

Popular stores and brands represented on Rakuten for cost-efficient shopping include Amazon, Best Buy, JCPenney, Kohl’s, Macy’s, Nordstrom, Old Navy, Priceline, and Target. When shopping at different stores, cashback percentages vary.

Is Rakuten Membership Free / Does Rakuten Cost Money?

Joining Rakuten as a member is free of charge. You can create your account just by submitting your email address and selecting a password. If you prefer, you can join by using your Google or Facebook account sign-in data. All new members receive a $10 Welcome Bonus.

One caveat, to get your bonus, you need to make a qualifying order for at least $25 within your first 90 days of membership. If a friend or coworker who is already a member refers you to Rakuten, this person will receive a bonus. Rakuten will pay your friend or work associate directly for the referral through the Rakuten referral program.

After you join and start using Rakuten, you can refer others to the website for joining and make $25 per person. You will then be the referring member who can receive a bonus. As soon as you complete the fast and straightforward sign-up process, you can start your first shopping excursion as a site user.

How Rakuten Is Different From Amazon

Amazon utilizes a closed system design. The Amazon company manages all aspects of selling for their merchants. These aspects include managing warehouses, inventory logistics, and customer service.

Rakuten, on the other hand, assumes an open business approach. This team supplies a shopping platform design and cashback paid option. However, all merchants handle every aspect of their company’s inventory management, logistics, and customer care.

While Amazon’s business operations resemble a “vending machine experience,” Rakuten’s e-commerce model is more the modern “shopping mall experience.” Rakuten is also a membership-based business. It is powered primarily by customer satisfaction and loyalty, resulting from excellent direct customer benefits from cashback and Super Points plans. While Amazon is an aggressive product sales site, Rakuten does not need to compete with its seller members.

Can You Use Rakuten In Stores Or Online Only?

Rakuten can be used for buying products, both online and offline. It is an excellent convenience for shopping at all your favorite web stores and online auctions and marketplaces. However, using Rakuten is just as helpful and easy when you buy in your local boutiques, department stores, or shopping centers today.

When you carry your Rakuten Visa Cash Back credit card, you are all set for buying anything you need online. You have easy access to making purchases from the more than 2,500 top-quality participating merchants as you start earning cash. You can also enjoy all of your card benefits when you use your Rakuten Cash Back Visa card with Apple Pay™, Google Pay™, and Samsung Pay. This will also avoid needing to provide your credit card information.

Is Walmart On Rakuten?

As you saw from my previous example, Walmart is among the leading popular stores on Rakuten. To shop at Walmart, just log-in to your Rakuten account and select the Walmart link. After clicking on the link and accessing the Walmart site, you can make your desired product purchases.

Anytime that you need to shop without driving to the store location, you can shop online through Rakuten. You can order the items you need without leaving your home or office while saving both valuable time and money.

A Partnership Between Rakuten And Walmart

In December of 2018, Rakuten and Walmart opened the first Walmart e-commerce store as part of the Rakuten Ichiba internet shopping mall. This successful business alliance joined the unique strengths of both Walmart and Rakuten. It combined the global expertise of Walmart for offering popular brands from the U.S. at low prices with Rakuten’s superior online marketing and e-commerce strategies.

Walmart has remained in high popularity with Rakuten shoppers since then.

Pros Of Using Rakuten

There are definite attractive advantages to shopping at all of your favorite stores on Rakuten. Some of the most frequently given reasons to become a member today, buying products and services through the Rakuten site and platform, include the following:

You get cashback for purchasing the products that you want and need from the stores of your choice through Rakuten.

The Rakuten website is easy to navigate, enabling you to begin shopping smarter, quickly, and efficiently as you start earning cash.

Rakuten has over 2,500 different quality merchant participants to satisfy all of your shopping needs, who all pay members cash to buy products. The majority of contemporary shoppers are strongly attracted by this benefit of immediate cashback.

Rakuten browser extension is awesome and user friendly.

Cons Of Using Rakuten

Some consumers who have given a Rakuten review also expressed some displeasure with shopping on the Rakuten site, such as the following:

It can be confusing having so many store choices when shopping for products.

Some consumers feel that they make purchasing choices too quickly when shopping “on the go” via the Rakuten app (impulse buying).

Rakuten members receive their Big Fat Checks or PayPal payments every three months for cash Back from store purchases. Some shoppers think this is too long to wait to be paid for shopping.

Consumers who shop via Rakuten to enjoy getting cashback benefits should beware of store listings marked “Coupons Only” or “No Discounts.”

Is Rakuten Really Worth It?

After speaking with my wife we both came to a mutual agreement that the pros of using Rakuten outweighed the cons. While only getting our cashback every quarter was a huge turnoff, by using our cashback credit cards in conjunction with the Rakuten cashback we were able to almost double our normal cashback credit card returns.

I personally loved the Rakuten browser extension more than the app because it quickly alerted me when I was on a website where I could get additional discounts through the Rakuten platform.

I also felt there were enough options to make using Rakuten worth my while. With over 2,500 stores connected to Rakuten, I was impressed with their current reach. However, pay attention to some of the small print on the items you regularly buy. Some may be exempt from Rakuten discounts.

Rakuten is a legitimate internet marketing, e-commerce, and affiliate marketing business site. With the vast array of stores and merchandise available from an extensive selection of brands and stores, shoppers are sure to find items that they like and need.

How Do You Join Rakuten?

You can become a Rakuten shopper easily and quickly by clicking this link. To join this comprehensive shopping site, just submit your email address and choose a password. Once you have created your secure account, you can start shopping. You can start getting the best deals and rewards, including Cash Back benefits right away, as a way to make extra money.

You can also join Rakuten to get a sign-up bonus and start shopping smarter using your Google or Facebook account while receiving free money. There is no cost to join Rakuten and no yearly fee for membership or other expenses. Just join, shop, and get paid with Cask Back payments in the form of Big Fat Checks or deposits to your PayPal account every three months.

How Do I Cancel My Rakuten Account?

To cancel your Rakuten account, head to the Rakuten website and contact customer service. However, before you cancel, keep in mind that by closing your account, you will lose all of the following benefits:

• All the Rakuten Points that you have earned and accumulated;

• Your entire purchasing history and data; and

• All additional benefits and services of your Rakuten membership. If you access any Rakuten sister companies with the same account data, you are subject to losing access to the sister accounts, also.

You should be aware, too, that when you cancel your Rakuten membership, your account cannot be reactivated.

Alternatives To Rakuten

Shoppers who are enthusiastic users of the Rakuten shopping portal declare that this site and platform options, rebates, and other benefits just cannot be beaten. However, for anyone who tries purchasing products through Rakuten and is not immensely thrilled and delighted, there are choices. These other web marketing and e-commerce websites I have tried and enjoy are:

Swagbucks

Ibotta

Wrapping It Up

After trying it out for a couple of months, my wife and I are going to continue using Rakuten to save money on a daily basis. We found that the time we invested by using the program was well worth the additional savings we received and we actually started shopping smarter.

If you’re struggling to pay off debt, every little bit of cashback helps as long as you’re not overspending for the sake of “saving money.”

According to a top-rated Rakuten Review 2020, satisfied Rakuten users (and members of Ebates before) generally praise this e-commerce website for multiple reasons. By continuously attracting highly successful and popular retailers with its unique selling platform, Rakuten has also gained a vast number of loyal buyer members. These savvy consumers take delight in shopping for top-caliber products at cost-efficient prices.

By offering varied benefits, deals, bonuses, and cashback on purchases, the innovative Rakuten team satisfies current members while steadily gaining new users. The free membership, many offers, and extra perks along with the opportunity of getting paid to shop with quarterly cashback payments transform new site users to frequent shoppers who then become loyal, long-time, active Rakuten shopper-members and advocates.

Click this link to get your $10 dollar bonus after you spend $25!

This post originally appeared on Arrest Your Debt.

On average, American homeowners spend approximately $60,000 a year on household expenses. These expenses include everything from a mortgage to electricity bills. If you feel like more of your money is going out than coming in, finding ways to reduce your monthly expenses is a must.

The first thing you need to do when trying to lower your cost of living is to perform a thorough audit of what you are paying. Putting all of your monthly expenses down on a piece of paper can help you see where resources are being wasted (aka, do a monthly budget). Read below to find out more about quick ways you can cut down your monthly expenses.

1. Are You Getting the Best Electricity Rates In Your Area?

If you are looking for ways to reduce the number of your monthly expenses, the first thing you need to look at is your current electricity rates. For individuals living in the great state of Texas, finding a good deal on electricity is a breeze. Since the deregulation of the electricity industry in this state, consumers have been able to get better rates on their monthly service. The various electricity providers in Texas are trying to gain the lion’s share of the residential power market, which is why they have lowered prices significantly.

Finding the best electricity rates is easy when using the power of the Internet and the EnergyBot website. If you are looking for more information on how to save money on your monthly power bills, you can get it from here.

2. Focus On Saving Money On Food

Homeowners with large families know all too well how expensive buying groceries can be. If you and your family eat out a lot, your monthly food budget can get out of control. Rather than losing money due to this type of frivolous spending, you should focus on reducing your food budget immediately. Accomplishing this goal will be easy when doing things like:

Using coupons at the grocery store

Planning out every meal in detail

Buying commonly used items in bulk

Meal prepping is beneficial

Use a cash back app like Rakuten

By making these small changes, you can decrease the amount of money you have to spend on groceries each month.

3. Replace Outdated Appliances

Using appliances like stoves, microwaves, and washing machines are pretty standard for most homeowners. The longer you have the same devices in your home, the more inefficient they will inevitably become. Ignoring the need for new and more energy-efficient appliances can result in a lot of money being wasted.

While new appliances will be costly at first, they can save you money in the long run. Energy-efficient appliances will work better and use far less electricity than your outdated appliances. Taking the time to research all of the different appliances on the market is the only way to ensure you choose the best ones.

4. Cutting The Cord Can Save You Money

Most homeowners fail to realize just how much money they spend on basic cable and the Internet. On average, homeowners spend roughly $120 a month on cable. If you find yourself watching streaming services like Hulu or Netflix regularly, you may need to cut the cord and get rid of basic cable.

In most cases, it is cheaper to increase your Internet speed and pay for a few streaming services than it is to hang on to the basic cable. With a bit of research, you can get an idea of how much money cutting the cord can save you.

5. Hire Professionals To Perform An Energy Audit

Do you live in an older home? If so, chances are a lot of air is escaping through your attic, doors, and windows. Finding and fixing these issues will be much easier with the help of an experienced electrician. Hiring professionals to perform an energy audit on your home can help you discover problems that need to be fixed. Properly sealing up drafty doors and windows is essential when trying to reduce the amount of electricity your home uses every month.

6. Purchasing Used Items Is Cost-Effective

American consumers buy a lot of merchandise. If you are continually buying new things, you know how expensive this can be. Rather than buying everything new, you need to figure out what items can be purchased used. For instance, if you need new furniture, you need to see if you can find someone in your area with a quality set for sale. Often, you can get a much better deal on used furniture.

You may also want to think about buying used clothing. Many consignment businesses offer used clothing that is both appealing and affordable. If you are looking for a way to make a few extra dollars, you may even want to sell some of your old clothing on a site like Mercari. Visiting the website of a business that buys used clothing will make this transaction smooth and stress-free.

7. Be Mindful Of Your Monthly Subscriptions

One of the most common strategies businesses use to attract consumers is free trials. In most cases, these free trials will offer a discounted price on an item or service only if you allow the company to set up a subscription auto-draft.

The main problem most consumers have is remembering to cancel these subscriptions. Taking the time to look at your bank account, and the number of auto-drafts you have set up is a must. In most cases, you will find several auto-drafts that need to be canceled.

The money you save on these unneeded subscriptions can be better invested in building wealth. Routinely auditing your bank account is also a great way to find out where all of your money is going. Cutting out wasteful spending will be difficult, but well worth the effort you invest.

It’s Time To Get To Work

As you can see, there are many ways to reduce your monthly expenses. If you are ready to save money, it may take a bit of time and effort at first, but you will be well on your way to having extra cash at the end of the month!

This post originally appeared on Arrest Your Debt.

Everyone seems to have their own opinion about how to create wealth. Some of these “experts” may be the broke uncle who just found the next hot stock to invest in. Other “experts” are insurance companies that are selling a product like an annuity or a pyramid scheme that may or may not be suitable for you. Even others talk about mutual funds. With all of this information and misinformation, where do you start?

Today we are focusing on mutual funds and everything you need to know to create wealth by using them. I will also show you the mutual funds I regularly buy and how I have been able to increase my retirement account to be worth 89% more than what I have paid into it. I was able to do this even while investing before and through the financial recession in 2008.

We will focus on:

What are mutual funds?

The different types of mutual funds

The most important details to consider before buying a mutual fund

The pros and cons of investing in mutual funds

Deciding which fund is right for you and how you can start investing today

Mutual Fund Basics

By now, you should be fully aware of the concept of individual stocks. This lesson is going to show you how to take individual stocks and invest in a large number of them at once. This is referred to as diversification.

A mutual fund is a way for people to invest in several companies by purchasing only one product – namely, a mutual fund. A mutual fund is one individual fund made up of many different investments, such as stocks, bonds, money markets, and others.

The single mutual fund is overseen and managed by a group of money managers who make decisions about what individual investments should make up the overall fund. Also, each fund has a general direction and goal that is detailed in its operations manual, known as a prospectus.

The prospectus will define what types of investments the money managers will purchase and the overall investment strategy. For instance, a mutual fund may focus on creating wealth by investing in:

Large-cap stocks

Mid-cap stocks

Small-cap stocks

Indexes

Government Bonds

Municipal Bonds

Corporate Bonds

Mutual Fund Goals And Focus

The overall objective of a mutual fund, detailed in the prospectus, often follows a specific strategy. These strategies are described as:

Growth Stock Funds

Money managers who manage mutual funds based on growth stock funds invest in companies they expect will grow faster than the average market returns. This involves research and buying company stock believed to increase at a faster pace than others and to sell other company stock that has slowed or is predicted to slow down.

Value Stock Funds

When you think of value stocks, think of items in a “bargain bin.” These are stocks that the portfolio (money) managers believe are being sold at a discounted price but are worth more than the amount they are being sold.

Blend Stock Funds

Blend stock funds invest in a “blended” mixture of both growth and value stocks. These types of funds attempt to diversify and mitigate significant losses by sacrificing substantial returns. By balancing value and growth, the goal is to maintain a steady momentum of making money at a modest rate.

Index Funds

The strategy of index mutual funds is to mirror a market index. If a company drops out of an index, the money managers do the same and cut the company from the mutual fund portfolio. Also, each company holds a different weight within an index. Index funds also weight these companies the same way within the mutual fund.

Common market indexes that mutual funds mirror:

Russell 2000 – 2000 small-cap companies

Wilshire 5000 Total Market Index – Overall U.S. company equity index

Standard & Poor’s 500 Index - Top 500 U.S. companies

MSCI EAFE - Foreign companies from Europe, Australia, and the Far East

Barclays Capital U.S. Aggregate Bond Index - Follows the total bond market

Nasdaq Composite - Follows the 3,000 companies listed on the Nasdaq market

Dow Jones Industrial Average - Follows 30 of the largest companies in the market

Pros And Cons Of Mutual Funds

Investing in mutual funds has its perks, but they also have their drawbacks. Consider these points before you decide to start investing in mutual funds.

The Pros Of Investing In Mutual Funds

Diversification

Investing in individual stocks can be risky. By owning a single stock, you are at the mercy of how well the company does and the decisions made by management. If the company reports a loss, your stock and all of your assets invested in that company may fall. If the company increases productivity and revenue, your investment will follow suit.

With mutual funds, you can invest in many different companies all at once. In theory, if one company declines, another will gain, which will lessen the impact of a drop in revenue. By spreading out your risk by investing in a group of companies, you are more likely to see more stable income growth with less risk.

In other words, mutual funds agree with the phrase, “don’t put all your eggs in one basket.”

Professional Money Managers

Each mutual fund has a team of money managers that conduct ongoing research and make educated predictions of a company. Rather than relying on your gut instinct on which company you should invest with, these portfolio managers spend all of their time researching and forecasting future trends.

By investing with mutual funds, you no longer need to worry about staying up on market trends – this is all done for you. If you choose to invest in index funds, you can essentially “set it and forget it.”

The Cons Of Investing In Mutual Funds

Management Fees

By far, the #1 issue of investing in mutual funds is the fee you will pay to have someone else manage your money. These can be in the form of a one-time front end or back end fee or an ongoing annual fee. There is not one standard fee, but instead, each fund can implement whatever fee they deem necessary. Also, many mutual fund managers attempt to hide these fees by referring to them with unfamiliar terms such as:

Load

Sales Load

Expense Ratio

12b-1 Fee

Other Expenses

Depending on the fund, you may be charged as little as 0.04%(index funds) up to 2.5% (actively managed funds) annually. Front end load fees can also range up to 5% of your initial investment as a fee.

While a 2.5% annual fee may not seem high, the difference between .04% and 2.5% over 10+ years can mean ten to hundreds of thousands of dollars you would be handing over to the investment company that could have been in your pocket.

Lack Of Control

While you do have control over which fund you invest in, you do not have control over which companies are bought and sold within the fund. Some people are comfortable with this arrangement while others want need more control over their investments.

Index Funds VS. Actively Managed Funds

As stated before, index funds track the market. If the overall market goes up, so do the investments in index funds. If the market goes down? You guessed it, so does the fund’s value.

Actively managed funds attempt to “beat the market” by trying to predict which stocks will do better in the future and which ones need to be sold to avoid a loss. These actively managed funds incur more fees due to the active buying and selling that occurs inside the fund.

So which is better? Index funds or actively managed funds?

The Winner is……Index Funds!

It’s true; index funds will generally make you more money than an actively managed mutual fund. Index funds also have the lower fees of the two – so why would anyone buy an actively managed fund? They buy actively managed funds because they believe all the false and misleading information that the mutual fund industry throws at them.

First, let’s drill down into the data to back up my assertion that index funds are superior.

Mutual Fund Games And Misleading Information

According to a report by Market Watch, If you look over the past 15 years, only 34.11% of large-cap actively managed mutual funds are still around. That means that if you go back over the past 15 years, 65.89% of large-cap actively managed mutual funds performed so poorly they had to scrap the fund.

By eliminating these funds, they keep only the top performers who make the industry as a whole look better. It’s like throwing a bunch of stuff at the wall and seeing what sticks. When something sticks, you point to that and tout it as being successful by ignoring all the other failures that fell.

For this example, let’s ignore the 65.89% of the funds that are no longer around and focus in on the 34.11% of funds that were the top performers. According to a research report from Standard & Poor, over the same 15 years, 92.2% of these large-cap actively managed funds did not outperform the market.

What does this mean?

Quite simply, out of the best performing actively managed mutual funds, only 7.8% of them were able to outperform the market over 15 years. In other words, if you factor in all of the mutual funds, you have a 1 in 20 chance of picking a fund that will outperform the market for any length of time.

If that doesn’t scare you, the opposite is true. You have a 19 in 20 chance of picking a fund that will not beat the market – and may perform so terribly your initial investment may sink like a rock. I don’t know about you, but I’m not risking my hard-earned money on an actively managed fund “hoping” to equal or beat the market.

Warren Buffett’s Index Fund 1 Million Dollar Bet

To further drill in the index fund point, I want to draw your attention to a unique bet Warren Buffett made with the hedge fund industry, specifically Protege Partners LLC, who accepted the bet.

The bet involved one million dollars. The winner would donate the winnings to a charity of their choice. Warren Buffet bet the hedge fund industry that an index fund would outperform their most expensive and best actively managed mutual funds over a 10-year time frame.

Protege Partners LLC chose five separate funds (which were not disclosed), and Buffett chose the Vanguard S&P 500 Admiral Fund.

The competition initially began on January 1, 2008. 2008 should ring a bell because that is when the stock market tanked. In year 1, Buffett’s index fund lost 37% of its overall value, while Protege only lost 23.9%. While this certainly was a bad start for Buffett, it certainly was not a predictor of the future.

One year later, Buffett recovered and beat Protege’s returns every year from 2009 to 2014. 2015 was another loss for Buffett by only recording a return of 1.4% vs. Protege’s 1.7%. However, 2016 put the nail in the coffin of Protege when Buffet again pummeled the actively managed fund by posting a return of 11.9% versus 0.9%.

With the close of 2016, the index fund had averaged 7.1% yearly returns, while the more expensive and actively managed funds averaged only 2.2% each year. Due to the severe beating, Protege quit the competition early and admitted defeat to Buffett’s index fund.

How To Invest With Mutual Funds

Now that we have a good handle on how mutual funds work and how the various types perform, it’s time to take actionable steps to invest with mutual funds.

Step 1 – Check With Your Employer

Usually, the best option is to contact your employer and learn about any retirement plans offered to you. Most employers have some type of employer-sponsored retirement plan that usually has a few mutual fund selections to choose from. Pay attention to the expense ratios of the funds and how long they have been in inception.

Option 2 – Invest With A Broker

If you have a funded employment retirement account, you can also make additional investments outside of your retirement plan. If you have extra cash lying around from selling a bunch of stuff, you can open a brokerage account at TD Ameritrade or E*Trade to gain access to mutual funds.

You simply fund your TD Ameritrade or E*Trade account with funds and invest in the mutual fund of your choice.

My wife and I put our six-month emergency fund in mutual funds but keep our regular emergency savings in cash. By using these platforms, you can usually access your money in just a few days if you run into a long term emergency that requires the use of your 3-6 month emergency savings.

Wrapping It Up With Actionable Steps

To start creating wealth, check with your employer, and any retirement options available. If you have more money set aside, investing in index mutual funds by using a cheap brokerage firm like TD Ameritrade or E*Trade is an excellent way to start making your money work for you!

This post originally appeared on Arrest Your Debt.

None of us get married thinking it will end in divorce. Similarly, none of us intentionally go deep into debt while we are swiping our credit cards to buy things day-in and day-out. But, unfortunately, some marriages do end in divorce. And, some people do end up accumulating a mountain of debt in marriage. Financial instability and the pressure of increasing debts are often stated as major causes of divorce.

Once a couple decides to split up, they will need to make some critical financial decisions. One of the large elephants in the room, among others, is how to split the debts and who pays for what.

While you and your soon to be ex-spouse might agree on splitting the assets equally, debt distribution is slightly more complicated. Through this post, we will discuss how to handle different kinds of debt in a divorce and how to tackle various tricky scenarios while splitting debt.

Individual Debts And Divorce

If you live in a community property state, any debts incurred while you were married are generally the responsibility of both parties. If you have separate credit cards and are not joint owners, during divorce proceedings you with both be responsible for each other’s credit card debt – as long as it was accumulated during the marriage.

These are the states that fall under the community property laws in the United States:

Arizona

California

Texas

Louisiana

Washington

Idaho

Nevada

New Mexico

Wisconsin

However, if you do not live in one of the above-listed states you may live in a common-law state. Imagine this. You and your spouse use the same credit card to shop, but the credit card is under your name. While you were married, both of you contributed towards paying the bill. But now that you have split up, you suddenly find out the onus is on you to pay off the credit card debt, and not your spouse.

When it comes to individual debts that are only linked to you in these states, the lender will hold you accountable for paying it off, irrespective of who benefited from the debt.

You may amicably enter into a court agreement that states your spouse will contribute to clearing your debt. However, your lender might not accept the agreement and use the contract you initially signed with them to hold you solely responsible for the repayment of debt.

Joint Debts And Divorce

Over the years of marriage, a couple might accumulate debts that have been legally signed and consented by both individuals. Such debts are called joint debts. Things like cosigning a loan, taking a mortgage using both your credit scores and holding a joint credit card account can be termed as joint debts.

In the event of a default, the lender will hold both of the parties responsible. While taking your name off of a joint debt is a possible solution, it is easier said than done. It is tricky to disassociate yourself from a joint debt, especially if it was your credit score that helped secure the loan or mortgage in the first place.

The best way to tackle joint debts is to refinance it by opting for separate individual loans or pay the debt off entirely.

Now that we have established what’s an individual debt and a joint debt, let’s discuss how to tackle some common forms of debt.

Mortgages And Divorce

In some cases, one person’s credit score may not be good enough to secure a mortgage. If this is the case and both spouses sign the loan paperwork, the mortgage is considered joint debt.

During a divorce, you can handle the mortgage in three ways.

If you wish to continue to own the house, you could try buying out your ex’s equity with the help of your mortgage provider.

If your ex wants their name removed from the mortgage, you could try refinancing it by taking a loan under your name. Keep in mind that it can be extremely difficult to refinance a joint mortgage by seeking a loan with only one borrower’s individual’s credit score.

In most circumstances, the best way to tackle the mortgage debt in divorce is to sell the property and use any equity to pay off the mortgage.

Credit Card Debt And Personal Loans In Divorce

As discussed before, if the credit card is under your name, you are the only one accountable for debt repayment (if you do not live in a community property state).

If you live in one of the listed community property states, both spouses will be responsible for all of the debt accumulated during the marriage – regardless of who signed the bill.

In all states, if both spouses are listed on the credit card account, both parties are held responsible for clearing it off. The same ideology applies to personal loans.

While you might sign a court agreement with your ex that states that both of you will contribute towards the joint debt repayment, it is a risky proposition as the lender will flag your credit score if your ex defaults on paying their share of the debt.

If you are dealing with joint credit card debt and your ex wants their name withdrawn from it, then you can opt for a balance transfer credit card under your name. In case of a joint personal loan, both parties can refinance it by taking separate loans.

Auto Loans And Insurance In Divorce

If you bought a car through a joint auto loan with your spouse, you will need to decide who keeps the car. If you are going to be the sole owner of the car, you will need to coordinate with your financer to get your ex’s name removed from the contract. You would also need to update your car insurance by removing their name from it.

In some cases, depending on your ex’s driving history and driving experience, the removal of their name from the vehicle could positively or negatively impact your auto insurance premium. You might want to compare car insurance quotes to get a better deal in terms of a lesser premium.

Hidden Debts In Divorce

Secrets can ruin a marriage, but they can also overcomplicate a divorce. There have been instances of spouses `, which can spring up as a nasty surprise while finalizing the divorce.

Can you be held accountable for your spouse’s hidden debt?

You could be!

It is always recommended for spouses in the divorce process to share their respective credit reports with each other and with the divorce attorney. This will avoid any last-minute confusion while finalizing the divorce.

What If My Ex Files For Bankruptcy?

A divorce doesn’t just split up a married couple, but it splits their ability to repay debts. Sometimes, the debt that was manageable with two incomes may become too much to handle for a sole earning member. This leads to cases of insolvency.

You may wonder – what if my ex files for bankruptcy? Well, in case of a joint debt, you will be expected to repay the full amount since your ex is unable to pay it. Discuss with your divorce lawyer in advance to deal with situations of bankruptcy.

Can I be Held Accountable For My Ex’s Default?

This is a common question that divorcees ask. At the risk of sounding like a broken record, we reiterate that if you are in a joint debt with your ex and they default in payment, then the lender will hold you accountable for it. It can severely impact your credit score.

To avoid such circumstances in the future, proactively refinance all your joint debts by taking a consolidated debt under your name if you can not repay the debt in full.

Divorces are emotionally and mentally exhausting. But it is also a chance to start fresh. Don’t let ambiguities of debt settlement bog you down. Talk to your ex-partner and your divorce lawyer to chalk out a path to financial clarity.

This post originally appeared on Arrest Your Debt.

Last year my wife and I each purchased our prescription glasses at the vision center at Costco. Costco Optical is the official name of their vision center and this article will give you an overview of our experience and what we learned about getting our prescription glasses at Costco.

Eye Health And Our Careers

The American Academy of Ophthalmology recommends that most people schedule an eye exam once every two years. However, age, health conditions, and other factors may increase the frequency in which a person should receive care.

Our eyes are important. If we do not take care of our eyes, it impacts our vision and the way we see the world around us. Lack of eye care can also lead to serious vision problems and eye disease, including glaucoma.

And since I’m all about making the best personal finance decisions, I couldn’t ignore the expensive cost of eye care – especially if you don’t treat issues early on.

As first responders, it’s critical to ensure we have the best eyesight possible. We often forget to wear sunglasses on a scene which can result in damaged vision over time. We need to put more of an emphasis on eye health so we can continue to serve the community – clearly.

If you haven’t had an eye exam in a while, you’re not alone. Many people neglect their eye health. There are a number of factors that contribute to the lack of preventative care. Many people think their vision is fine without realizing it has been degrading slowly over time.

Others don’t have the proper health insurance needed to cover the cost of an eye exam, glasses, and eye care. People who carry health insurance find the costs a little less burdensome than people who are uninsured, although cost can be a factor for both groups of people.

I went a few years without going to an eye doc. When I eventually did go, I realized how bad my vision had become. I could still see without my glasses, but the world was much bigger and sharper when I wore them.

Eye Exam And Prescription Costs

On average, an eye exam costs about $200 without insurance. Add on fees for specialty care and an eyeglass or contact prescription and it’s an expense that many simply cannot afford.

A complete pair of eyeglasses (lenses and frames) cost an average price of $363 across the U.S.

Contact lenses cost an average price of $50 – $150 per box, depending on the brand, style, and the number of lenses.

Costco, a membership-based warehouse club, aims to provide affordable eye care for those who lack insurance and people who simply need a break in the expensive costs of healthcare.

Do I Need A Costco Membership To Go To The Vision Center?

Nope! (Unless you want to purchase glasses)

Costco’s vision care is available to everyone, even people without a Costco membership. However, only members can purchase contact lenses, eyeglasses, etc.

With hundreds of locations throughout the U.S., there’s a Costco Vision location near your home.

Don’t cross off the ‘warehouse club’ as a top choice for your eye care provider. Consumer Reports rated Costco the No.1 place to buy eyeglasses in America.

Costco Eye Exam Services

Costco Vision Centers provide access to a contracted Doctor of Optometry and staff of eye care professionals who can assist patients with payments, frame selection and fitting, and other services.

Costco sells a variety of brand name frames and offers blue anti-reflective and traditional anti-reflective treatment procedures in addition to eye exams.

Eyeglasses repair service is also available.

Costco Eye Exam Prices

Costco eye exams typically cost between $65 – $80 without insurance. However, the price does vary between locations. Compared to the typical eye exam cost, around $200 in the United States, Costco can save you a significant amount of money.

For people like us on a budget, this was a no brainer.

Most insurance is accepted by Costco optical centers. Check with the optical center nearest you to learn if your specific insurance coverage is accepted.

If your insurance is accepted, patients with insurance may spend even less on the costs of their eye exam.

Do Costco Members Get Free Eye Exams?

Costco members receive a myriad of discounts and deals each year with their membership. Unfortunately, free eye exams are not one of them. However, as stated earlier, their eye exams are much cheaper than other vision centers. I called my local Costco while writing this post and they told me it was $65 for an eye exam without insurance.

You can schedule eye exam appointments online or over the phone. Your eye health is worth a couple of hours of your day, especially considering it is relatively inexpensive. The eye exam may reveal your eyes are perfectly healthy or you may learn about problems that need treatment.

Either way, you will have a game plan for how to ensure the best vision possible for years to come.

The Time Spent At A Costco Eye Exam

On average, it takes about 30-minutes to one hour to complete an eye exam at Costco. As you can imagine, numerous factors impact the amount of time a patient spends in the office for their eye exam.

To add to the convenience, you can purchase lenses, frames, and contact lenses in-store after your eye exam. However, the option to buy online is also available.

If you plan to purchase your corrective products in-store, the length of the appointment can take considerably longer. Plan to spend an hour or two in the Vision Center if you are buying prescription glasses or contact lenses.

Where To Find The Best Deal On Eyeglasses

It’s always in your best interest to shop around if you want the best deal on eyeglasses. My wife and I did that with our phones while we were looking at the frames Costco had for sale.

Spoiler alert: Costco had the cheapest prices we could find.

Independent optical shops charge an average price of $211 for a complete pair of prescription eyeglasses. According to Consumer Reports, the average price of Costco prescription glasses is $184.

This makes Costco eyeglasses $27 dollars cheaper than the average alternative provider.

Frame brand and style, prescription strength, and several other factors impact the cost of glasses from Costco. The good news is that Costco offers an assortment of brands and lenses in all price ranges so every patient has access to their exact eye care needs.

You’ll find traditional lenses and frames, designer frames and lenses, prescription sunglasses, polarized and HD lenses, and many other choices available at Costco.

No matter what your lens or frame options, expect cheaper prices from Costco. We comparee costs between Costco and other providers and learned Costco glasses were way cheaper.

Even when you add the costs of a Costco membership, it’s still totally worth it.

Tip: Costco Optical offers a $30 discount on a complete pair of eyeglasses for all members.

No Insurance? This Is How Much Glasses Are At Costco

One of the best things about Costco is their range of glasses in all price ranges. You’ll find frames priced as low as $25 (not including lenses) just as easily as you’ll find designer frames priced well into the hundreds of dollars.

Costco offers Universal Fit frames that provide patients with a stylish, more comfortable pair of eyeglasses. Prescription sunglasses from Costco include brands such as Vera Bradley, Kate Spade, Hobie, and Oakley to name a few. No matter what your eyeglasses preferences, Costco offers some of the most competitive prices of any optical provider.

Typical costs for a complete pair of eyeglasses in the United States, without insurance, is less than $200. Consumer Reports states the average price for a pair of Costco eyeglasses is $184. Elsewhere, patients spend nearly $400 on the same glasses. Costco Optical also routinely has specials and discounts to reduce the cost of both eye exams and eyeglasses.

Tip: Costco members can shop for their frames online (with a valid prescription) and enjoy free shipping to their home to avoid the crowds.

Costco Health Insurance Options

Each Doctor of Optometry works independently, thus affecting the insurance accepted. That being said, most Costco Optical locations take all major insurance for their frames and lenses. A quick check of several Costco stores found they accept the following insurance:

MetLife

UnitedHealthcare

Davis Vision

VBA Vision

MESVision

FEP BlueVision

Spectera

Superior Vision

It’s a good idea to call the location nearest you to verify they accept your insurance before your appointment.

Keep in mind, some of the contracted optometrists do not take insurance for the initial eye exam. While you may be eligible to use your insurance for the glasses, you may not be able to use it for the eye exam.

If you would rather not get your eyes examined at Costco but have a prescription, you can order prescription eyeglasses without seeing their optometrist.

How Long Do Costco Glasses Take?

When my wife and I ordered our prescriptions, our glasses took about one week. They didn’t have a “rush” option to expedite the process but a week was pretty quick in my opinion.

After we ordered our glasses, we received a call from a Costco employee to let us know our glasses were ready to be picked up.

Next time we will probably utilize the online ordering process to avoid having to go into the store altogether.

Same Day Glasses? Unfortunately No

Costco does not make eyeglasses in the office. Instead, the order is sent to a lab. Same-day eyeglasses are not an option for anyone who orders eyeglasses from Costco. All orders require a 7-day processing time before they’re ready.

Costco Lens Quality

Cheap prices often result in cheap products. That was my biggest concern when we ordered our glasses for the first time from Costco. We even went to far as to take our glasses into our regular optometrist to get the prescription double checked.

Our optometrist checked our prescriptions and found both of them were spot on and were made correctly. This gave me peace of mind to know that I could continue getting my glasses from Costco without stressing.

In addition, repairs and adjustments to eyeglasses are always made at no charge at Costco. Simply visit the optical center if your eyeglasses need an adjustment or minor repair.

If you are not satisfied with your eyeglasses or contact lenses, the usual Costco 100% satisfaction guarantee does not apply. However, if there is something wrong with your prescription or product, they may exchange your glasses within a 60-90 day window.

Kirkland Progressive Lenses

Kirkland is the name of Costco’s signature brand. If you love Costco as much as I do, you have purchased your fair share of “Kirkland” products. To this day, I have yet to be disappointed by any of these generic products.

Their progressive lenses also have high reviews. Luckily I don’t need a progressive prescription yet, but if these lenses are anything like their standard ones I’ll be wearing them as well.

As far as quality, Kirkland products rank 6th in the nation by Consumer Reports. All Kirkland progressive lenses offer patients value and quality. Each lens is made specifically for your prescription and includes anti-reflective treatment.

I Do Not Advise First Responders Get Transition Lenses

For my first pair of glasses from Costco, I paid extra for the transition lenses. Transition lenses get dark in the sun and fade back to clear when you go indoors. However, I quickly found out this was much more of a nusiance that it was worth.

Not having to wear sunglasses outside because my eyeglasses darkened was pretty awesome. However, when I walked indoors, it took five to ten minutes for my lenses to clear up.

As a first responder, we routinely enter buildings and need to see clearly right away. For this reason, I continually needed to take my glasses off when I went in a building only to put them back on after about 10 minutes.

The convenience for transition lenses was not worth it – especially if you are on patrol.

Finally, What does Consumer Reports Say About Costco Optical?

Consumer Reports gives Costco Optical high honors. They list the provider as the #1 place to buy eyeglasses. They also rank Costco as one of the most affordable places for eye exams and eyeglasses. Consumer Reports gives Costco high accolades as a top choice for eye exams and eyeglasses. When CR recommends a company, you can trust it to exceed your expectations.

Wrapping It All Up

My wife and I purchased our prescription glasses from Costco’s Vision Center in the past and we will continue to buy them there – until I find cheaper quality glasses elsewhere!

What about you? Have you bought prescription glasses from Costco or do you recommend another place? Let me know in the comments!

This post originally appeared on Arrest Your Debt.

financial planning

Having clarity, along with purpose, when it comes to your personal finances is arguably one of the most important factors when it comes to reaching financial success.

But how exactly do you gain the clarity you need on what seems like an overwhelming, and complicated feat?

The answer itself is quite simple: By building a financial plan.

By building your financial plan you will start to develop a good understanding of your current financial needs, as well as understand how your future financial health will be impacted by some of the important financial decisions you make today.

It should go without saying that financial planning comes with more than just clarity. It comes with a lot of added benefits that will impact not only your financial health but your overall health and other areas of your life.

Here are 7 of the top benefits you’ll gain by taking the important steps and committing to financial planning:

1. Financial Planning Will Help You Focus On What Matters

A financial plan is a really great way to help you develop your financial goals, and focus on what matters.

By building your plan, you’ll start to get a sense of what your values really are, which will help you focus on key areas that are important to you and your future. This has a positive compound effect that will enable you to create better financial habits, particularly when it comes to your decisions.

To say the least, having financial goals is extremely important when it comes to being able to live a secure and enjoyable lifestyle.

In fact, goals can be the best way to give yourself direction, purpose, and to remain focused. This goes well beyond your finances as well.

When it comes to creating your financial goals, you’ll want to focus on the short term, medium-term, and long term goals. By doing this you’ll set yourself up for success now and well into your financial journey. Really what this does is help ensure that everything you’re doing works together to ensure you’re on track for financial success.

Sounds good so far, doesn’t it?

If you’re feeling a little unsure of how to get started with creating financial goals, here are a few pointers:

Make financial goals that are personal: Don’t worry about what other people are doing, or even about setting goals just for the sake of setting them. You need to make sure that you are creating personalized goals so that they have much more significance and connection with the future you are focused on building.

Make informed financial goals: When it comes to your personal goals, it’s extremely important that you take the necessary time to do your due diligence. Research them and make sure you know exactly what you need to do to achieve these goals. The last thing you want to do is set yourself up for failure.

Set S.M.A.R.T. Goals: S.M.A.R.T. stands for Specific, Measurable, Achievable, Relevant (or Realistic), and Timely. Whenever you are creating new goals or reviewing existing ones, it’s always important to keep this framework in mind.

A financial plan helps you set goals, stay on top of your goals, and achieve your goals.

2. Financial Planning Can Be Motivating

Your financial plan helps you eliminate uncertainty around finances and guides you towards desired outcomes.

When you combine this level of certainty and clarity, along with having established clear goals in mind, it can end up being a very powerful source of motivation.

Your financial plan provides motivation because it:

Provides a sense of direction for your finances

Shows you the progress you are making and the steps you need to take

Provides the reasoning behind your plan, which develops confidence

Makes it really easy to set, visualize, and stay on top of financial goals

Keeps you organized, and feeling better about your financial journey

Keep in mind that one of the best sources of motivation for anything in life is seeing results. You might not see the results you want to see right away, but by sticking to your plan you will start to see these results come forth.

3. Financial Planning Guides Your Actions And Decisions

Taking action on your financial decisions isn’t easy.

In fact, it can be extremely difficult and takes an incredible amount of discipline and commitment to move forward with.

Even if you have the most specific goals written down, without having a proper financial plan, knowing what steps to take in order to reach those goals can be overwhelming.

And again, this is exactly where your financial plan comes into play.

Think of your financial plan as a roadmap or even a blueprint.

It’s really there to help guide your decisions so that you can take action with confidence and comfort. Decisions that you won’t be worried about or second-guessing.

Having peace of mind when it comes to making important financial decisions is a very under-rated benefit that your financial plan provides.

4. Financial Planning Comes With Significant Emotional And Health Benefits

Health is wealth. And the opposite rings true as well.

This really means that having a financial plan to manage your personal finances is beneficial for your health.

A financial plan doesn’t just positively impact your financial well-being, it significantly impacts your emotional and physical health in a lot of ways.

For starters, people who have a plan in place for their money and understand how their money is being managed are known to be less stressed, less anxious, and more optimistic when it comes to their future.

The reason is quite simple.

Your financial plan directly correlates with how you feel about your personal finances and money management strategy. Having a solid plan in place then leads to more positive and optimistic feelings, which almost immediately lowers any stress or negative feelings you have about your money.

When individuals improve at least one area of their lives, such as their personal finances, it has a natural carry-over effect into virtually all other aspects of their lives.

5. Financial Planning Builds Confidence And Self-Esteem

Having a clear picture of your finances, and knowing that you are managing your money in efficient ways leads to positivity in many different ways.

When people are confident about their money and the decisions they are making with their money, it’s also very likely that they will start to become very confident with other decisions in their life.

This will have a direct impact on your overall confidence level and your self-esteem.

Feeling good about your finances has a direct correlation with your feeling of self-worth. So yes, in many ways your Net Worth does impact how you feel about yourself.

6. Financial Planning Can Be Contagious And Inspiring

Depending on how vocal or open you are about managing your personal finances, your friends and family will take notice.

Even if you’re not overly open about it, chances are that others will recognize your diligence when it comes to financial planning.

Not only that, they will start to see how your decision making with money is associated with your overall self-esteem and confidence. This level of confidence and self-esteem is contagious for a lot of people.

Putting it simply, people want to be around (and associated with) other people that put forth good energy into the world and show that they are both confident and happy.

Overall, this means that others will take more kindly to you. When you develop a good relationship with your money you are also able to develop a better relationship with yourself, which can positively impact your relationships with others.

7. Planning Improves Your Chance Of Success

Known fact: financial planning leads to an improvement in financial outcomes over time.

And it has to do with a combination of everything mentioned above, and more.

Individuals that are prepared with a solid plan in place for their finances are more likely to reach their desired retirement outlook and are more prepared for financial emergencies, compared to peers without any sort of plan in place.

Research conducted by Savology shows that households with written financial plans are more than 2.5X more likely to save for retirement. This is compared to households without having any sort of financial plan at all.

Your financial plan maps out the beginning, middle, and end of your financial journey or picture so that you can better prepare your finances and make financial decisions with confidence.

Getting Started With Your Financial Plan

By now you’ve probably realized that financial planning is no joke and that it comes with a lot of direct benefits that can go far beyond impacting your finances.

Next, you’re probably wondering what you can or should do in order to get started and build your financial plan. Well, you’re in luck.

Savology is a free planning platform helping people just like yourself reach financial success by providing financial planning for free. That’s right, it’s completely free, and it only takes 5 minutes to build your plan. You’ll also receive action items, to help with those important financial decisions, and a holistic report card, to give you a current snapshot of your financial well-being so that you have a clear indication on what areas you need to improve and how you can start improving today.

This post originally appeared on Arrest Your Debt.

One of the many financial mistakes I made when I was younger was failing to start a college saving 529 plan for each one of my children. The tax benefits and the power of compound interest is something I neglected to learn about which will cost me when my kids start college.

If you have young kids, learn from my mistakes and educate yourself on the power of these awesome tax-advantaged plans.

Warning: This post is quite long. To make the information easier to digest, use the table of contents below to skip to sections you would like to learn about.

How Does a 529 College Plan Work?

The idea of the 529 college savings plan was created in 1996 by Congress. This is a savings plan designed to be used for the tax-advantages of saving for a child’s educational expenses.

Each state has their own specific 529 plan that students can take advantage of. With this, there are different tax implications and deductions that may apply depending on what state you live in and what state provides the 529 plan.

Anyone can open one of these accounts for a child and can immediately begin to take advantage of the power of compound interest by investing in stocks and mutual funds. Within these plans, the available investments include age-based options and conservative stocks and bonds.

Although most people believe this type of account is just for qualified educational expenses for children, the account offers benefits other than tuition and college expenses.

Use A 529 Plan For Private School!

Due to tax law reform, residents of specific states are able to make a maximum annual withdrawal of $10,000 to pay tuition expenses for Kindergarten through 12th grade!

A 529 college savings plan can also be opened by the student as a savings account for graduate school. The plan is classified as a specialized savings account with the purpose of saving money to pay for college.

In addition, the investments of every 529 plan are controlled by the account owner so your kids are not the ones making financial investment decisions. The owner also chooses a beneficiary and one additional beneficiary.

However, the beneficiary and owner of a 529 account can be the same individual if the student is at least 18 years old and wants to open their own account.

The tax-free funds in the 529 account can be used to pay for the tuition of the beneficiary for kindergarten through 12th grade in addition to college expenses. This includes books, supplies, and equipment.

The 529 plans have worked well for numerous families by providing a means of meeting college savings goals. The plan makes saving money easier due to the option for scheduling investments automatically for as little as $15 to $25 per month. The funds can be transferred through a payroll check or bank account.

How Much Can I Put In A 529 Each Year?

The maximum tax-free gift is $15,000 per beneficiary for each contributor for the year 2020. This means a married couple filing taxes jointly is able to contribute $30,000 each year under the federal gift exclusion.

If this amount is exceeded, the taxpayer will be responsible to pay an additional gift tax to the IRS (Internal Revenue Service).

Another option is called “superfunding“. A maximum of $150,000 per couple or $75,000 per individual can be placed into the account up-front without a gift tax for five years. This exercises the annual gift tax exclusion ahead of time. No additional gift tax exclusions will be able to be used for the next 5 years.

If you choose this option, additional specific paperwork will need to be filed at the end of the year to inform the IRS.

The maximum amount able to be accumulated in a 529 account is dependent on the state. A good example is ScholarShare529 in California. The maximum balance allowed in the account is $475,000.

What Are the Pros and Cons of a 529 Plan?

The pros include:

The funds in a 529 account will continue to accumulate tax-free prior to a withdrawal.

Depending on the beneficiary’s home state, the funds can accumulate tax-free until a withdrawal is made for qualified higher education expenses. The home state offers slightly different benefits than the other states.

Contributions can be made by anyone. However, the best option for the account holder is a parent due to the tax benefits.

If all of the funds are not used by the child, the beneficiary of the account can be changed to a direct relative. This makes the account flexible, and able to withstand several different generations.

There are financial-aid advantages for a 529 plan. The federal application determining eligibility for financial aid is generally 20 percent of all assets held by the student. When the 529 is owned by either the parents or the student. just 5.64 percent of the account is considered an asset.

The cons include:

Future tax regulation changes can impact existing 529 plans and how the money can be used.

529 plans can be restrictive. Once an investment is made, the funds can only be used for education. If funds are withdrawn for any other reason, there are penalties including a federal penalty tax. State income tax may also be due.

Determining what qualifies as education expenses can be confusing. Dorm rooms are not always included in the price of postsecondary educational institutions or community colleges. The 529 may not always be used for paying these expenses in addition to potential exceptions for tuition-free books and unqualified higher education expenses.

Depending on who opened the account and the way the 529 was established, maintaining the account may incur higher fees.

The funds may not be used for pre-college expenses such as application fees and campus visits.

Even with these numerous possible issues, in my opinion, the pros of tax-free growth and tax-free withdrawals make the 529 plans a no brainer. The pros absolutely outweigh the cons.

How To Fund A 529 Plan And The Minimum Requirements

There are different options for making a deposit into a 529 plan. The funds can be electronically transferred from a bank account or a paper check can be mailed directly to the 529. All plans allow automatic bank account contributions.

The amount and frequency must be specified including annually, quarterly, monthly and biweekly. The 529 account requires the account and routing numbers and a voided copy of either a preprinted deposit slip or a preprinted check. Certain plans allow participating employers to authorize a payroll deduction for an automatic contribution.

Most people find it easier to save money by making an automatic investment. The additional options include funds from redeeming a qualified United States savings bond, funds from an existing Coverdell educational savings account or rolling over funds from another 529 account.

Minimum 529 Plan Contributions

The minimum 529 plan contributions are based on the state while some states do not have a minimum contribution.

Automatic contributions must be a minimum of $15 or $25, depending on the plan. There are no yearly limits for contributions, but if $15,000 per individual is exceeded, the IRS does charge a gift tax.

The state’s 529 plan offers an average of five years prior to a gift tax. This means five times the yearly limit can be contributed in one-year and treated as contributions over a period of five years. The limits for cumulative yearly contributions also vary according to state, varying from $235,000 to $529,000.

Depending on the year and the economy, adjustments may be made periodically for inflation. Once a 529 account has reached the maximum balance, the balance will continue to appreciate and earn interest, but further contributions are denied.

The Overall Maximum A Beneficiary Can Earn

On average, the maximum total contributions for a 529 account for a beneficiary cannot exceed $400K-$500K, depending on the state. The average plan never reaches this limit. Keep in mind, this is only for contributions. As stated earlier, the fund can continue earning interest and increase its worth.

The majority of 529 plans receive small, automatic contributions each month. The amount often increases as time passes. The goal is saving approximately one-third of the cost of a public college education in the future. The best way to meet this goal is saving $250 each month from the birth of the child. Most people simply contribute what is affordable.

How Much Does The Average Family Save For College?

According to a Sallie Mae study, the average amount families are able to save for college is approximately $18,135. This dismal number will only cover 1-2 years of college, depending on the school. Universities are obviously more expensive than community colleges so this balance can quickly run out resulting in large student loan bills.

Are 529 Plans Worth It?

As parents, we must make the determination as to how much money we can set aside for our children’s education. I don’t want to set my kids up for failure by making them take out student loans they will spend the next 30 years trying to pay off.

If you’re on the fence about these plans, understand that time is not always in our favor. Before you know it, your kids will be grown and ready for college and facing ever-increasing college fees. If you can start packing away small amounts of money to take advantage of time and compound interest, you will save tens of thousands of dollars on their future education expenses.

There are many reasons savvy financial couples have decided a 529 plan is worth it. The amount of time the family has to save for college is limited. A 529 plan offers better benefits than the low-interest rates offered by saving accounts.

If a child will not be attending college for at least ten years, an investment in a 529 plan can compound the returns to enable the money to go to work. As parents, we can greatly reduce our college expense worries and future costs.

One of the main reasons families open a 529 plan is for the tax advantages. These advantages enable additional funds to be saved for educational expenses. Depending on the needs of each individual family, there are several different plans available.

You do not have to choose the 529 plan offered by your home state.

If the state offers a good deduction for using the state plan, it is an excellent option. If there is a minimal or no deduction, some families choose a plan from another state due to the better investment options and lower fees.

529 Vs. Custodial Accounts

When my children were younger, I opened custodial accounts for them so their birthday money didn’t sit in a savings account. However, at that time I should have also started 529 plans for them.

A 529 is different from UGMA/UTMA custodial accounts because the child does not control the funds once reaching legal age. The owner of a custodial account can withdraw money for any reason at any time but do not get the tax benefits a 529 plan offers.

The 529 plan is flexible because twice each calendar year the investment options can be changed. For each 12-month period, funds can be rolled over from one 529 plan to another. If another qualifying family member replaces the beneficiary, the frequency of changes is not limited by the federal government.

A 529 plan is simple, easy and low maintenance. Families can save efficiently for their children’s education. There are numerous financial advisors offering to setup 529 plans for their clients for a small fee. The advisor will explain the different plans available, the best benefits of each one and help ensure the family has the ideal plan for their circumstances. Financial advisors should also stay current regarding any legal changes made to the plans.

Setting up automatic investments linking either a payroll deduction or bank account to the plan makes certain investments are made.

Everyone is eligible to establish a 529 plan. As opposed to Coverdell Education Savings Accounts and Roth IRAs, there are no yearly contribution limits, age limits or income limits with a 529 plan.ears to qualify for the yearly gift tax exclusion.

A 529 plan simplifies tax reporting because contributions are not included in federal tax returns. No Form 1099 is received for nontaxable or taxable earnings until a withdrawal has been made on the account. The deposit amount increased in 2018 to $30,000 per married couple or $15,000 per individual to qualify for the yearly tax exclusion.

What Happens To My Kids 529 Plan If They Don’t Go to College?

The 529 plan takes into consideration the future is never certain. For this reason, parents will not lose their money if their child is awarded a financial aid scholarship or decides not to go to college. If there are no other children you can transfer the account to, there are still other options.

If there is no one else in the family that is going to go to college, think grandkids, you can still pull money out of the 529 plan. In most instances, the parents will have to pay a penalty and income tax on any non-qualified withdrawal. All of the tax breaks will be forfeited but your money is not locked up.

There are exceptions where the tax penalties are waived:

• The beneficiary becomes disabled or dies

• The beneficiary attends a United States Military Academy

• The beneficiary is awarded a tax-free scholarship

The earnings will still be subjected to federal income tax. In some cases, state income tax is applicable as well.

What Happens To Left Over Money Not Used In A 529 Plan?

Funds can be withdrawn from a 529 plan at any time for any reason. Non-qualified withdrawals will be charged a penalty and taxes. The account holder should understand the potential tactics and rules for decreasing taxes for non-qualified withdrawals. There are also options to avoid paying a penalty or taxes on the earnings including:

The funds can be held in the 529 accounts in case the beneficiary attends grad school at a later date.

The account holder can further their education by becoming the beneficiary of the account.

The beneficiary can be changed to a different qualifying family member

A new option was added on January 1st of 2018. Parents can pay for K-12 tuition with a tax-free withdrawal for a maximum of $10,000.

The funds can be rolled over into another 529 account or a 529 ABLE account. The latter is a savings account created for individuals living with a disability.

Use a 529 Plan to Pay Off Student Loans

In December of 2019, President Donald Trump signed a law making student loans a qualified expense for 529 plans. The SECURE Act is the spending bill establishing a $10,000 lifetime limit for 529 plans. The funds can be used to repay student loans including most private loans and federal loans for the student beneficiary.

Another $10,000 can be used for the repayment of student loans for all of the beneficiary’s siblings. Prior to the above changes being made, when payments were made for student loans, penalties and income tax were due. The new rules for 529 plans are retroactive, beginning on January 1st of 2019.

How Safe Is Your Money?

Any funds left in a 529 plan will not be lost. The funds can either be applied to post-secondary education or used for a qualified family member as a beneficiary including younger siblings, grandchildren, nephews, nieces or even for the account holder.

The full amount of a scholarship award can be withdrawn with no penalty from a 529 plan. State and federal income taxes will still apply for the earnings. If withdrawal becomes necessary for expenses unrelated to education, a 10 percent penalty in addition to taxes on the earnings may be owed.

Distributions from the plan consist of earnings and contributions proportionate to the corresponding levels for the account. The withdrawal portion consisting of contributions remains both penalty and tax-free. The withdrawal portion consisting of earnings is subjected to both the 10 percent penalty and taxes.

What College Saving Plan is Best?

There are two key types of 529 plans, custodial accounts and individual accounts. The best 529 plan is dependent on the specific needs of the account holder and beneficiary. The majority of 529 accounts are opened as individual accounts. The beneficiary is the child and the account owner is the parent. Contributions can be made to a parent-owned plan by anyone including grandparents, uncles, aunts, the parents and other relatives. In most cases, the account owner can only be one of the parents.

If the parents of the child are divorced, the parent with the responsibility of filing FAFSA should be the account owner. If the parent has married again, the biological parent should be the account owner as opposed to the stepparent.

If the 529 plan is funded from a brokerage account including a UGMA or UTMA account or a custodial bank, the plan should be opened as a custodial 529 plan. With this type of plan, the child acts as both the beneficiary and the account holder. If the child is a minor, the account will be managed by a custodian for the child until the child reaches majority age.

A custodial 529 account beneficiary is unable to be changed.

The formulas used by financial aid look more favorably on a 529 plan when the owner is either the parent of the student or a dependent student. If the 529 plan is opened by the grandparents as the owner of the account, the eligibility of the student to qualify for financial aid or AID scholarship funds can be compromised.

A plan owned by grandparents does not need to be reported on FAFSA as an asset. The reason the ownership can impact financial aid is that distributions from a 529 plan owned by grandparents are considered untaxed income for the beneficiary by FAFSA.

The result is a reduction in the eligibility by a maximum of half of the amount distributed. The negative impact regarding eligibility for financial aid for 529 plans owned by a grandparent can be worked around in several different ways.

529 Plans Vs. Traditional Mutual Funds

There are several reasons why a 529 plan is better for college than traditional mutual funds. Despite the argument that higher returns are generated by mutual funds as opposed to a 529 plan, the latter is more beneficial. The reasons are defined below.

Taxes For Capital Gains And Income

Mutual funds require some taxes to be paid and 529 plans do not. Investments in mutual funds generally require capital gains distributions at the end of the year. If college expenses are covered by liquidating a mutual fund, taxes must be paid on the appreciation. Due to the Affordable Care Act, high-income households must pay an extra investment income surtax.

Earnings from qualified 529 and tuition plans are excluded from this taxation.

Child Tax

Most people believe giving an investment or monetary gift to a child enables them to take advantage of a much lower tax bracket. The issue is if the income earned by the child exceeds a defined threshold, the taxation will be at the marginal tax rate of the parents. This rule is also applicable to certain non-self-supporting full-time college students.

Investment Objectives Risks

The majority of financial planners recommend decreasing equity exposure risks for college savings portfolios the moment the child is getting ready to attend college. Since mutual funds are taxable, transferring funds will result in triggering potentially costly gains for taxes.

An age-based option is offered by most 529 plans to ensure allocations are automatically shifted. Numerous plans are available with tactical management offering flexibility for changing market conditions.

Underlying investments are simply reallocated. The owners of 529 plans have the ability to change their investment options once every calendar year. None of these steps will trigger a tax for capital gains.

Financial Aid

All income showing up on Form 1040 can have a major impact on eligibility for financial aid for the next year including capital gains. If the only way to cover college expenses is by using appreciated investments, any chance of the child being approved for need-based aid is most likely eliminated.

No income needs to be reported from a 529 plan on Form 1040 because distributions are tax-free. The result is the preservation of eligibility for financial aid.

529 Plan Expenses

Due to the extreme competition between investment firms to secure management contracts by winning state bids, manager fees for plans have continued to decrease. Low-cost index funds are offered by numerous 529 plans as an investment option to decrease the cost even more.

Extensive modeling has been performed to determine if the tax benefits for a 529 plan are eliminated by additional expenses. The results showed this only happened under rare circumstances when the investor is in a low-income bracket and the expenses of the plan were still fairly high.

Investment Management

Even tax-managed mutual funds have tax consequences for investment decisions. This is not necessary for 529 plans because the investment decisions are based on the investment considerations of the investor.

Taxable Investments

Investors interested in specific strategies for high-risk investments may still find taxable investments like mutual funds attractive. These types of investment strategies are not found in any of the 529 plans.

Non-qualified Distributions

The 529 plan can be used for schooling other than college. A non-qualified distribution does change the benefits of a 529 plan as opposed to mutual funds.

The majority of families are not interested in using high-risk investments to pay for college. Most families are also not concerned about putting away too much money for college.

The best option for most American families is a 529 plan.

How Much You Should Save for Your Child’s College

If parents begin saving from birth, approximately 0.3 percent of the college goal should be put away each month. Roughly $25 to $35 per month should be set aside each month for every $10,000 in college expenses. The one-third rule states most people do not pay for a large expense all at once. The costs are spread out over time through a combination of income and savings.

One-third of college expenses generally comes from current income, another from savings and the final third from a loan in the future. The one-third rule simply offers a three-way split.

Some parents are able to save more towards college and borrow less. Others are unable to save as much and either send their children to a more affordable college or take out a larger loan.

The average family is able to save approximately one-third of the expense for college. Some families are only capable of saving approximately 10 percent of college costs for their children. These families do not even come close to their goals. The 3X rule focuses on the cost of college in the past.

Every 17 years, the cost of college basically triples.

The increase in costs for the average college education is equivalent to a 6.6 percent inflation rate. The cost of attending college does not increase as quickly as fees and tuition.

Public four-year colleges do not have as high an inflation rate for tuition as opposed to a private, four-year college. In many cases, the tuition and fees include room and board for the student. Overall, the costs for private colleges are higher than for a public institution.

Is It a Good Idea to Pay Off Student Loans Early?

Student loans should be paid off as soon as possible for the following reasons.

Eliminating the Monthly Payment

Paying off student loans enables the individual to eliminate the monthly payment from their budget. The individual can then achieve other financial goals. The funds saved can be invested as opposed to paying off student loans to start building wealth for the future.

Decreasing the Debt-To-Income Ratio

The debt-to-income ratio can be lowered simply by paying off student loans. The individual will have more funds available when they decide to purchase a car or make an investment in a house.

The Tax Break is Not as Good as Many Believe

One of the biggest myths regarding student loans is they should not be paid off for the excellent tax break. Unfortunately, the tax break is not anywhere near good enough to wait to pay off student loans. A maximum of $2,500 can be deducted from the individual’s total taxable income.

In most cases, the individual will be paying a lot more in interest for the loans than they will save on taxes for the entire length of the loans due to the nominal tax break. The student is much better off paying off the loans than keeping them for the tax break.

The Potential Bankruptcy

Many people become so overwhelmed by the student loans they consider solving the issue by declaring bankruptcy. Even if you declare bankruptcy, student loans must still be paid.

There are only three ways to eliminate student loans:

Pay them off

Qualify for a specific forgiveness program

Die

The Cost of Student Loans

Even if the individual is able to take advantage of the tax breaks for student loans, there are other considerations. The student will be spending a portion of their income to pay both interest fees and make a loan payment every month.

If the student loan debts are fairly extensive, a large portion of the monthly budget may be spent making payments. Once the student loans have been paid off, there will be more money available to save for financial goals.

The student can purchase their first home much faster. The other future options including taking a vacation overseas, opening a business or beginning an investment portfolio for the future.

Establishing a Budget

Paying off student loans eliminates a portion of the student’s debt to relieve financial concerns. Making elimination student loans from the moment of graduation will enable the student to establish an easier budget to live a better life.

Removing Financial Concerns

One of the best ways to decrease financial stress is by paying off student loans. A lot of students put their loans at the end of their plan for paying off debts. The benefits of decreasing the amount owed to pay off student loans are generally beneficial than paying off any other type of debt. When eliminating consumer debt such as credit cards, the student should also be paying off all private student loans. It is important to note credit cards usually have a high APR and do not qualify for tax breaks.

For all of these reasons, student loans should be paid off as quickly as possible. The moment the last payment is made, the financial future of the student will substantially improve.

With so many negatives that come with student loans, preparing for your children’s college is a must!

What Happens to a 529 Plan When the Owner Dies?

When the owner of a 529 plan dies, the new account owner is determined by the plan. Certain states allow a contingent account owner to be named in the event of the initial owner’s death. In this instance, the new owner will have all of the rights of the original owner.

Other states will allow ownership of the 529 plan to be passed to the beneficiary designated by the original owner.

Does Having a 529 Plan Hurt Financial Aid?

There are several different factors that determine whether or not financial aid can be impacted by the plan including the kind of aid the student is applying for, when withdrawals are made and who is the owner of the 529 accounts. In most circumstances, the plan is beneficial because the impact regarding the financial aid received is minimal.

There are steps that can be taken to increase eligibility for the students requiring financial aid. Federal financial aid based on need is available at all schools. The student must complete the FAFSA application to qualify for aid. This information is used by the schools to calculate the EFC (expected family contribution).

There are fewer than 200 colleges currently using any additional forms for the calculation of eligibility referred to as the CSS Profile. Every form counts the assets of the family differently.

A good example is a 529 plan owned by a grandparent. Although the plan is usually included in the CSS Profile, the asset is not reported when filling out the FAFSA. According to the FAFSA, the value of the plan when owned by a parent or dependent student is considered a parental asset.

Depending on the age of the parents, approximately the first $20,000 considered an asset protection allowance. The aid package for the student will be decreased for all parental assets after that by a maximum of 5.64 percent of the value of the assets.

If the asset protection allowance is exceeded by the 529 account of the parents by $10,000, the financial aid for the student can be decreased by $564. Despite this small loss, the tax-free benefits of the 529 account generally outweigh the loss.

Custodial Accounts And Student Aid

Other assets owned by the student are treated less favorably. A UTMA or UGMA custodial account is considered a student asset. Financial aid will be decreased by 20 percent of the package value. In this instance, a student asset of $10,000 will decrease financial aid by $2,000.

All capital gains, dividends and interest from the assets of the student must be reported when the student files income tax and is reported to FAFSA. The assessment for untaxed income is calculated at 50 percent for the EFC. When the student is earning funds through a 529 plan they own, the earnings do not have to be reported to FAGSA, so they have absolutely no effect on financial aid.

Can Grandparents Open A 529?

Yes, there are two different ways for a grandparent to make a contribution to a 529 plan. The first is to open a 529 plan and retain control as the owner. The second is contributing funds to an existing account.

In many instances, the parents of the student have already opened an account and given permission for others to make contributions. Prior to determining which is the right option, financial aid, tax benefits and who controls the 529 account should be considered,

Can Both Parents Contribute To A 529?

Yes, both parents can make contributions. This can be accomplished by one of the parents opening an account or establishing multiple 529 plans for the child. If more than one person such as grandparents or relatives wants to contribute to the student’s education, either separate accounts can be set up or contributions can be made to the same 529 plan.

How Much You Should Put In A 529 Plan

Due to the accumulation of funds as time passes, a much lower contribution is necessary per month with a 529 plan. The recommended contributions per month for a child born in 2017 for a private university are approximately $325 per month, out of state public college is about $260 and an in-state public college is around $165.

The recommended monthly contribution is based on the year the child was born and the type of college the child is expected to attend in the future. The figures are determined according to the college rate of inflation during the past.

If the parents are planning to save funds through either a taxed investment account or a traditional savings account, the above figures will need to be adjusted. Let’s use the average interest rate for a traditional savings account, which is 0.06 percent APY (annual percentage yield).

The monthly contributions would change, requiring 18 years to pay one-third of the cost for an in-state public college, about $500 for an out of state college and about $600 for private universities. The family would have to save almost twice as much as opposed to opening a 529 plan to pay college costs.

The returns are better for a taxed investment account. The average return is seven percent. The drawback is this type of account does not offer the tax exemptions for gains and dividends provided by a 529 plan. Most average families will have an easier time saving for the college education of their children by opening a 529 plan. The final determination must be made by each family.

Where Do I Sign Up For A 529 Plan?

The website Savingforcollege.com has put together a comprehensive and thorough list of state 529 plans. Simply click on your state to see the available enrollment options available to you.

Wrapping It All Up

If you plan on helping your kids pay for their college expenses, time and compound interest is your best friend. Starting a 529 plan for them is an awesome gift that will help them get a head start in adulthood – without the burden of massive student loans.

This post originally appeared on Arrest Your Debt.

In this day and age, a growing number of individuals are living paycheck to paycheck. While the reasons for doing so may vary, this struggle to manage income can take its toll on any household. Fortunately, the personal finance solution known as the 50 30 20 Budget can help keep your resources on track.

The following comprehensive guide to the 50 30 20 Budget can help you start off the decade with financial empowerment.

What Is A 50 30 20 Budget?

A 50 30 20 budget refers to a formula for dividing up your after-tax income to help reach financial goals. Popularized in Senator Elizabeth Warren’s book, All Your Worth: The Ultimate Lifetime Money Plan, the 50/30/20 rule provides a mathematical formula for dividing your earnings among needs, wants, and savings.

The Three Categories In A 503020 Budget

The three categories included in a 50/30/20 budget are: needs, wants, and savings.

50 Percent: Needs

Needs are bills that you are contractually obligated to pay or that are necessary for basic human survival. These living expenses include rent or mortgage payments, health care, groceries, and utilities.

This category can also include the “minimum monthly payment” on any debt you have undertaken. While this budget category includes food and utilities, it excludes non-essential lifestyle choices (e.g. ordering Starbucks or television-subscription services like Hulu and Netflix).

The idea is that half of your after-tax income should be able to cover your priorities, obligations, and essential living needs. If you are having trouble meeting your needs, you may need to evaluate downsizing your lifestyle or cutting back on wants until all of your needs are met.

30 Percent: Wants

The “wants” category refers to the non-essential items on your budget. These may include expenses like dining out, vacations, recreational activities, and clothing accessories.

Wants also include upgrades and costlier alternatives to essential needs (e.g. expensive steak instead of sale-priced ground beef; high-speed internet instead of standard).

20 Percent: Savings

Savings refer to allocations toward a bank savings account, retirement funds, and any investment payments. This means that 20-percent of your income should go into creating an emergency fund, making IRA contributions, and investing in the stock market.

Ideally, you should have enough cash in savings to cover at least three months of essential needs. This savings protects you in the event you lose your job or a sudden disaster happens in your life.

Once you have the minimum emergency fund set aside, you can allocate the remainder toward investment and retirement savings.

This section also refers to any additional debt repayment. While making the minimum required payment is a “need,” additional payments can lower the amount of principal and future interest owed. This results in savings.

The 50/30/20 Rule Gross or Net? (Before or After Taxes?)

The 50/30/20 budget rule refers to after-tax income (Net take-home pay). It is a strategy for how to budget your net income after paying any taxes owed.

According to Elizabeth Warren and her daughter and co-author, Amelia Warren Tyagi, budgeting your net income is a simple way to ensure that you meet personal finance goals.

If you are an employee, net income is the number after your employee has deducted income taxes and other legal requirements like social security. Payroll deductions for health insurance and 401(k) contributions have also been added back in (which is why you need a budgeting method for allocating them yourself).

Simply review your pay stubs to get an accurate figure on your after-tax income.

If you are self-employed, you will need to pay the applicable income tax for your bracket before determining your net income. This means that your after-tax income equals your gross income MINUS your business expenses (such as the cost of your laptop) along with the money you already set aside for taxes.

How To Set Up A 50/30/20 Budget

The 50 30 20 budget is a way to manage your disposable and discretionary income after taxes.

Disposable income is total personal income minus taxes. You need this income to cover your basic living needs.

Discretionary income is disposable income minus all payments that are necessary to meet current bills. This means that once you have paid required bills, you must divide the remainder of after-tax income between wants and savings.

Step One:

Now that you have measured out your after-tax income, it is time to set up your 50 30 20 budget. The first rule of thumb is that half of your after-tax income (50-percent) should cover your non-negotiable needs. This half of your after-tax income is also known as disposable income.

Using your disposable income for needs only allows you to maintain your quality of life while leaving enough discretionary income for flexible wants and savings. Use a spreadsheet to outline all of your non-negotiable needs.

Wants Vs. Needs

How do you know something is a “need”? The rule of thumb is that if “going without” an item will critically impact your quality of life, then it is a need.

Examples of these fixed expenses include rent or mortgage payments (also known as “shelter” or housing), groceries (basic sustenance or food), essential utilities (electricity or water, etc.), health coverage (including required prescriptions), and compulsory insurance (such as car insurance).

Needs also include the minimum payment required on a debt. These may include credit card payments or the minimum monthly payment on student loan debt.

The reason this monthly payment is a “need” is that non-payment can negatively impact your credit score or end up with garnishments on your wages. Since credit score affects your quality of life, making the minimum monthly payments can keep your bills current and prevent your accounts from going into default.

Step Two:

Now that you have paid your bills and minimum debt repayments, you can designate 30-percent of your remaining after-tax income to “wants.”

For some people, the concept of “wants” immediately evokes images of trips to Maui, designer handbags, and expensive dining. When it comes to budgeting, however, “wants” do not refer to extravagances.

Instead, the wants category indicates the niceties or upgrades you might enjoy (but that are not necessarily essential to survival). These may include home cable or unlimited texting on your cell phone plan.

To calculate your wants, use a spreadsheet to list niceties and upgrades you would like to make within your everyday lifestyle. Your wants should take up no more than 30-percent of your after-tax income.

Using a spreadsheet can help you evaluate spending habits and better manage your money. If you find that your wants tend to exceed the 30-percent mark, be prepared to make adjustments (such as eating out less frequently) until you fall within your budget range.

Step Three:

The final step is to devote 20-percent of your income to savings and additional debt repayment. Savings refer to your emergency refund, retirement account, and extra payments on any outstanding debt.

For example, if you carry a credit card balance or car loan, the minimum payment is a need that you should budget into the greater 50-percent of your budget. You should calculate any additional payments into the savings portion of your budget.

Example of a 50/30/20 Budget

Suppose your monthly income after taxes is $3750. This means that you should allocate $1875 (50%) to your needs. In practice, this means that if you monthly rent is $1000, the remaining $875 has to cover health insurance, car insurance, groceries, utilities, and payments on your credit card and student loan.

Budgeting Needs:

If you have trouble meeting your needs in this 50-percent range, consider downsizing or making some adjustments. For example, you may wish to relocate after your lease expires to make your budget more manageable.

Other ways to make adjustments include shopping for cheaper insurance or transferring the balance from your first credit card to one with a lower interest rate (thereby reducing the minimum payment required).

Budgeting Wants:

Using the same example, this budget allows $1125 (30%) to cover any wants. This monthly allowance allows you to enjoy a decent quality of life while maintaining financial health. For this category, you can also shop sales on “want” items to enable even greater maneuvering room in your budget.

Budgeting Savings:

Finally, the remaining $750 of your monthly income should go into savings. Distribute it within your emergency fund, retirement account, and any extra debt payments.

This zero-based budgeting method that allows you to allocate every penny of your monthly income into expenses, savings, and debt repayment.

By managing your expenditures in terms of appropriations (devoting the sum of your money to a specific purpose), you can reduce the amount of stress associated with paying your bills and help secure your financial future.

How To Calculate 20% Of Your Income

To secure your financial goals under a lifetime money plan, you will need to dedicate at least 20-percent of your income to savings. But how do you calculate 20-percent of your income?

In math, the number 100 represents a whole. Whatever percent you want to calculate is simply part of that whole. So if 20 percent is that number, divide 20 by 100 to get the decimal format of 0.20. (This decimal 0.20 means exactly the same as 20%. We just changed it to a decimal to make the math easier.)

Once you have changed your percent to a decimal, you can then multiply it by your monthly income to know the exact amount you need to save each month. In our example, the after-tax monthly income is $3750. To determine 20-percent of a monthly income of $3750, multiply $3750 by 0.20 to get $750.

($3750 x 0.20) = $750

($3750 x 0.30) = $1125

($3750 x 0.50) = $1875

50 30 20 Budget Calculator

If math isn’t your strong suit, you’re in luck! I have designed a free 50/30/20 budget calculator just for you. Click this link to try out the free calculator.

A Good Rule Of Thumb For How Much You Should Save

According to the 50/30/20 budget rule, you should delegate 20% of after-tax income to savings. But since savings include several subcategories, how should you manage this amount?

The savings category includes the following subcategories:

Retirement Savings

Emergency Fund

Bank Savings Account

Extra Debt Repayment (such as a debt avalanche plan)

Retirement Savings

As a rule of thumb, most experts agree that you should designate about half of your savings category (or 10% of your after-tax income) to the retirement subcategory.

This includes employee retirement contributions and any matching or profit-sharing contributions from an employer. Invest consistently into a mutual fund or save in tax-advantaged retirement savings accounts such as a 457(b), 401(k), 403(b), or IRA.

Emergency Savings

Similarly, you should devote about a fourth of your savings category (or 5% of your after-tax income) to the emergency fund subcategory.

An emergency fund is a form of short-term savings to cover unforeseen expenses. This fund is NOT a long-term savings account to pay for things college tuition, cars, or vacations.

Rather, it is a safety net to cover financial crises such as major illness or job loss.

As a rule of thumb, you should keep putting savings into your emergency fund until you have enough money to cover at least three to six months’ worth of expenses. Once you reach the six-month threshold, you can continue to save on a discretionary basis or redirect these funds into other savings subcategories.

For example, some people decide to save even more for retirement after ensuring that they have six months’ worth of income stored away for personal emergencies.

Debt Repayment

Experts believe that you should devote the last one-fourth of your savings category (or 5% of your after-tax income) to debt repayment. This includes student loan and credit card payments that go above and beyond the minimum payment required each month.

Debt repayment may also include any accelerated repayment plans such as the debt avalanche method. This means that after you make allocations for the minimum payment required for any debt owed, you direct any remaining repayment funds to the debt with the highest interest rate.

Paying off high-interest rates means that less interest can accumulate on your bill. This can reduce the total amount of time it takes to get out of debt.

The Savings Rule

The savings rule is a conventional rule of thumb published in The Richest Man in Babylon in 1926. As the brainchild of author and businessman George Samuel Clason, this rule dictates that a person should devote at least 10% of income to savings.

While this target may have been ideal in the 1920s, fewer pension plans and longer life expectancy means that 10% these days usually needs to go into retirement alone.

Following the 50 30 20 rule automatically gives you a 20% personal savings rate.

This 20% total personal savings rate means that you can designate 10% to retirement — and still have 5% for an emergency fund and another 5% for any debt repayment plan.

Does The 50 30 20 Rule Include My 401k?

The 50/30/20 rule includes the 401k under the “savings” budget category. According to the rule, you should devote 20% of your income to savings (including retirement savings).

A 401k is a retirement savings account that lets an employee divert part of a salary into long-term investments. An employer may also match the employee’s contribution up to a designated limit.

Under the 50/30/20 rule, for example, you might devote half of your monthly savings (or 10% of your after-tax income) into a retirement account. You can then put the rest of your monthly savings into an emergency fund or debt repayment plan.

Is Saving 20 Percent Of My Income Enough?

Saving 20 percent of your income is enough to follow the 50/30/20 rule. For example, if you save into an investment account with an average return of 5 percent each year, you should have a decent amount to support yourself if retiring by age 65.

It is even better if your employer also matches this contribution.

However, some individuals feel more confident in guaranteeing that they can do more than “get by” in their golden years. If you are a high earner, it is wise to keep your expenses as low as possible and save plenty of money when you are young.

Saving early gives your money enough time to accumulate compound interest and support yourself into old age.

If you are not necessarily a high earner, no need to panic. Prioritize contributing to a retirement account and securing enough money into your emergency fund.

Once you feel comfortable enough with your emergency fund and debt-to-income ratio, you can refocus on retirement savings. You may also wish to look into a side hustle or additional income stream to increase your total disposable income.

Is It Better To Save or Pay Off Debt?

The 50/30/20 rule dictates that 20% of your after-tax income should go into savings. But since the savings category includes the subcategories of retirement, emergency fund, and debt repayment, is it better to save or pay off debt?

The answer depends on several factors.

First, it is important to at least have a three-month emergency fund in case of sudden, unforeseen emergencies like sudden illness or job loss. In the case of job loss, knowing you are debt-free is great, but you would still have nothing to live on without an emergency fund.

It is important to have short-term savings covered before focusing on aggressive debt repayment.

Second, saving into an account versus paying off debt also depends on interest rate. If your debts are accumulating more interest than you are earning in interest with your savings accounts, then you are losing money.

For this reason, experts recommend paying off very high-interest credit cards (such as APR 28.99%) with part of the money in your savings category.

Finally, not all debt is “bad debt.” For example, if you have a credit card with a very low-interest rate, making consistent on-time payments can actually help you build a solid credit history. (You can check or monitor your credit score on Credit Karma or similar personal finance website.)

If you ever need to apply for credit, having “no credit” can present almost as much difficulty as having “bad credit.” Therefore, making minimum monthly payments, or better yet, paying off the card in full each month on a low-interest credit card (which falls within your “needs” category) can strengthen your credit score in the long run.

You can then use the 20% of your income to keep saving as usual.

Employee Savings Vs. Self-Employment Savings

If you have an employer that matches retirement savings, it absolutely makes sense to save into a retirement plan. Try to contribute enough to at least reach the maximum employer match threshold.

Not contributing is the equivalent of turning away free money in the name of “paying off debt first” and would not make sense financially.

If you are self-employed, it is imperative to have a solid emergency fund in the event of irregular income. Since no one can foresee the future, it is important to set money aside in case the cash flow starts to arrive in unequal increments.

Retirement savings for self-employed individuals may also include a Roth IRA, SEP IRA, or defined benefit plan.

Groceries: How Much Should You Spend On Food A Month?

According to the Bureau of Labor Statistics (BLS), the average American household spends $7,700 each year on groceries and eating out. That roughly translates into 12.8% of your after-tax income (or a little over one-fifth of the money in your “needs” category).

For suburban and rural households, food is the third-highest expense after housing and transportation. Among urban dwellers, food is the second-highest expense (right after housing).

The United States Department of Agriculture (USDA) and the Food and Drug Administration (FDA) advise that budgeting just beneath the national average is a decent amount to spend on food. This means your overall food budget should be 10%-11% of your monthly budget (or exactly one-fifth of the money in your “needs” category).

For most households, this would translate into 6% of your monthly income on groceries and 4%-5% of your monthly income on eating out.

If you have a hard time meeting your needs on this budget, you should cut back on eating out (thereby saving 4%-5% every month) until your bills get under control.

A Reasonable Grocery Budget For Two

According to the USDA, a two-person household on a moderate budget should expect to spend around $607 each month on food. If the couple plans to have children, the pair should set aside at least $1000 a month for groceries.

The Average Grocery Bill For One Person

Although everyone’s financial situation is different, the USDA offers general recommendations for the average grocery bill for one person.

The agency recommends that a young adult woman should budget around $206 for groceries every month. A young adult male should aim to keep a budget of around $298 for a moderate diet every month.

The Bottom Line

As the brainchild of Elizabeth Warren’s bestselling book and course on bankruptcy law, the 50/30/20 rule is a simple way to allocate money to your needs, wants, and savings.

This percentage-based financial plan provides the discipline needed to cover monthly expenses on everything from housing to retirement savings, and it is flexible enough to make adjustments within each category as needed.

If you prefer, use a related budgeting tool like Undebt.it to accurately calculate the designated percentages and reach your financial goals.

This post originally appeared on Arrest Your Debt.

Emergency medical technicians, better known as EMTs, are medical professionals who specialize in emergency situations. Working as first responders, EMTs are usually the first people on the scene to help with serious accidents and injuries. This article will tell you about the EMT salary in every state, the job description, and the minimum requirements to start a career in this field.

Despite their life-saving role, EMTs don’t make as much money as some other medical professionals.

However, the barrier to entry is much lower than for a doctor or nurse, which makes this an appealing career option for many interested in emergency care.

If you’re interested in an intense, fast-paced job with life-or-death stakes and a true feeling of accomplishment, read on to learn more about how to get a job in emergency medical services focused on patient care and how much money you can expect to earn in the field.

What Is An EMT?

An Emergency Medical Technician (EMT) is a first responder trained in life-saving emergency medicine. Most EMTs are employed by private ambulance services, fire departments, hospitals or police departments. They may also work for government and military organizations.

The goal of emergency medicine is to stabilize a patient’s condition long enough to get them to a hospital. This means that EMTs don’t spend much time diagnosing or treating conditions. Instead, they focus on vital treatments like maintaining a patient’s airways, addressing bleeding, preventing shock and administering certain life-saving drugs and treatments like CPR.

Some first responders choose to receive EMT training in addition to their other career field. For example, you can be a firefighter/EMT or a police officer/EMT.

These individuals usually make more money due to the added level of training. This is one reason why you might find a fire truck dispatched to a medical emergency; the odds are good that most of the firefighters on board are also trained EMTs.

For laypeople, an EMT and a paramedic may seem interchangeable. However, paramedics have received additional specialized training and can do more on the job.

Do Paramedics Make More Than An EMT?

EMTs are first responders. They’re the people who arrive first at a scene to stabilize a patient, assess the severity of the situation and provide some basic life-saving treatments such as administering CPR or giving glucose to a diabetic patient.

Paramedics, on the other hand, are licensed medical providers who provide critical care and similar treatments to what a patient might receive from an emergency room technician. These treatments include advanced life-saving measures like using a defibrillator, administering drugs, inserting an IV line and intubating a patient.

Many EMTs choose to receive a paramedic certification. In order to receive it, the student would need to study under both basic and advanced EMT studies as well as supplementary courses. There is also on-the-job training to work through. Because paramedics have more education and experience, they earn more money.

The average annual salary of a paramedic is about $40,000, but experienced medics in some places can earn double that. EMT pay averages between $33,000 to $50,000 per year on average. Of course, a number of factors can affect this pay including the state of employment and the company a person works for.

Minimum Requirements To Be An EMT

You can become an EMT without a college degree. Individuals with a high school diploma or GED can pursue formal EMT training, which makes it one of the easiest and quickest medical fields to break into.

There are three levels of EMT training:

EMT Basic

This covers tasks like triage, wound stabilization, cardiac emergencies, and respiratory emergencies.

EMT Intermediate

This requires you to pass basic training and then receive an additional 30 to 350 training hours, depending on the state and your specific situation. At intermediate level, you will be able to start IVs and provide medication, among other tasks.

Paramedic

This program is usually offered as a two-year degree program at community colleges. Paramedics must pass the NREMT (National Registry of Emergency Medical Technicians) exam to become licensed.

All emergency medical service programs combine classroom-based coursework and on-the-job training. After learning the basics, new EMTs will be paired with more experienced teams and sent on “ride-alongs” to do field work. This will give you a good taste of what life on the job is like so you can decide whether it’s something you wish to continue pursuing.

In total, an EMT receives about 120 to 150 hours of training before receiving a license. A paramedic may clock up to 1,800 hours of training. While many people who train as EMTs go on to become paramedics, it is not essential.

You can work as an EMT indefinitely or continue your studies toward a paramedic license at a later date. Most people who become paramedics work as EMTs to support themselves while studying for the more advanced license.

Life As An EMT

Working as an EMT can be incredibly rewarding. It can also be a high-stress environment. While you probably already know that the job often comes with life-or-death stakes, you may not be as familiar with the other aspects of day-to-day life awaiting you as an EMT.

These include unusual work hours and schedules.

How Long Are EMT Shifts?

The shifts available for an EMT will vary depending on the company you work for. Some ambulance services offer regular 8-hour or 10-hour shifts scheduled five or four days per week.

However, it’s not uncommon to see 12-hour, 16-hour, 24-hour or even longer shifts.

If you work a 24-hour shift, you will be “on-call” during that period. This usually means spending your time in the ambulance or at the station and fitting in eating and sleeping between calls.

How busy you will be on a given shift depends on where you live, how much EMS coverage there is in that area and other factors that affect public safety.

In some cases, you may not be paid for hours spent sleeping or idle on the job. For example, if the job allows you to go home while on-call, or if it sets aside scheduled blocks of five or more hours for sleep breaks, that time may be unpaid.

However, the Fair Labor Standards Act mandates that employees be compensated for the time at work even if that time is idle if the employee must stay on-call and on-site.

Do EMTs Get Days Off?

Most EMTs and paramedics work long shifts separated by long breaks. For example, you may work 24 hours “on” followed by 24 hours “off” with up to a week between on/off cycles. Another common schedule for medical professionals is to work three long shifts followed by four days off.

This can be a bit confusing for people accustomed to working a 9-to-5 job, but many EMTs love the flexibility of these work schedules as they can provide for more leisure time than a standard two-day weekend.

Do EMTs Have Set Schedules?

As noted above, EMT schedules are usually different from the standard office job. These schedules can also change and rotate from one week to the next.

For example, you may have two 24-hour shifts one week, a few days off, then three or four 12-hour shifts. If your total hours for a week exceed 40, your employer will be required to pay overtime wages for the difference.

The flexible nature of work hours in medical professions can be a blessing or a curse depending on your preferences. Some people enjoy having variety in their schedules, especially since it allows days off during the week for running errands or shopping in non-peak hours.

Others find the erratic scheduling to be a challenge for things like securing childcare or managing hobbies. Maintaining a healthy sleep schedule amidst frequent shift changes is another major concern for many people working in EMS.

How Much Does It Pay To Be An EMT?

Wages vary by location and experience. In general, areas with a high cost of living will receive higher wages than those who live in more affordable cities.

Other factors, such as the amount of time you’ve worked with one employer, your level of education and the specific ambulance company or hospital who employs you will also factor into your wages and total compensation.

How Much Does An EMT Basic Make An Hour?

According to Salary.com, the average annual salaries reported for EMTs are between $32,860 and $40,760 nationwide. This works out to an average of $16 to $20 per hour.

By comparison, Salary.com places a paramedic’s annual wage between $38,722 and $49,143, or an average of $21 an hour. However, paramedics can earn significantly more with time and experience; EMTs usually max out their earning potential around the $20/hr wage.

Where Do EMTs Get Paid The Most?

As with most career fields, EMTs make the highest wages in areas with a high demand for their services. States with a high cost of living may also tend to have higher wages. Before you move to a new region in search of a better-paying job, consider the relative costs of housing, food, travel and other necessities.

You may find that the high wages offered in some places actually translate to a lower buying power.

Based on average wages reported by Zip Recruiter, the highest-paid EMT jobs are in New York, where EMTs average $15.83 an hour or $32,929 annually. The lowest-paid EMTs are in North Carolina, where the average pay is $11.22 an hour or $23,344 annually.

These figures are current as of 2019, but they may not be an entirely accurate reflection of the field as they are based on user-reported income. Consider the figures more like ballpark estimates or guidelines for your state.

Average EMT Salary Broken Down By State

emt salary by state

Below are average estimates of wages as reported by Zip Recruiter, ranked from highest to lowest.

New York

$15.83 per hour or $32,929 annually. The lowest reported pay is $24,622, and the highest is $42,678.

Massachusetts

$15.70 per hour or $32,657 annually. The lowest reported pay is $24,419, and the highest is $42,326.

New Hampshire

$15.40 per hour or $32,041 annually. The lowest reported pay is $23,958, and the highest is $41,427.

Maryland

$14.65 per hour or $30,465 annually. The lowest reported pay is $22,780, and the highest is $39,484.

Nebraska

$14.51 per hour or $30,174 annually. The lowest reported pay is $22,562, and the highest is $39,107.

Hawaii

$14.50 per hour or $30,157 annually. The lowest reported pay is $22,549, and the highest is $39,085.

Vermont

$14.49 per hour or $30,134 annually. The lowest reported pay is $22,532, and the highest is $39,055.

North Dakota

$14.47 per hour or $30,091 annually. The lowest reported pay is $22,500, and the highest is $39,000.

Alaska

$14.47 per hour or $30,091 annually. The lowest reported pay is $22,500, and the highest is $39,000.

Nevada

$14.47 per hour or $30,091 annually. The lowest reported pay is $22,500, and the highest is $39,000.

Wyoming

$14.47 per hour or $30,091 annually. The lowest reported pay is $22,500, and the highest is $39,000.

Montana

$14.47 per hour or $30,091 annually. The lowest reported pay is $22,500, and the highest is $39,000.

Idaho

$14.47 per hour or $30,091 annually. The lowest reported pay is $22,500, and the highest is $39,000.

California – $14.45 per hour or $30,046 annually. The lowest reported pay is $22,466, and the highest is $38,942. https://www.ziprecruiter.com/Salaries/How-Much-Does-an-EMT-Make-a-Year–in-California

Connecticut

$14.42 per hour or $29,999 annually. The lowest reported pay is $22,431, and the highest is $38,880.

Washington

$14.40 per hour $29,954 annually. The lowest reported pay is $22,398, and the highest is $38,822.

Virginia

$14.16 per hour or $29,461 annually. The lowest reported pay is $22,029, and the highest is $38,182.

West Virginia

$14.00 per hour or $29,115 annually. The lowest reported pay is $21,770, and the highest is $37,735.

Rhode Island

$13.92 per hour or $28,962 annually. The lowest reported pay is $21,656, and the highest is $37,537.

New Jersey

$13.84 per hour or $28,781 annually. The lowest reported pay is $21,521, and the highest is $37,303.

Colorado

$13.75 per hour or $28,597 annually. The lowest reported pay is $21,383, and the highest is $37,065.

Pennsylvania

$13.71 per hour or $28,523 annually. The lowest reported pay is $21,328, and the highest is $36,968.

Delaware

$13.66 per hour or $28,421 annually. The lowest reported pay is $21,251, and the highest is $36,835.

South Dakota

$13.65 per hour or $28,383 annually. The lowest reported pay is $21,223, and the highest is $36,787.

Arizona

$13.65 per hour or $28,382 annually. The lowest reported pay is $21,222, and the highest is $36,785.

South Carolina

$13.64 per hour or $28,380 annually. The lowest reported pay is $21,220, and the highest is $36,781.

Oregon

$13.64 per hour or $28,372 annually. The lowest reported pay is $21,214, and the highest is $36,771.

Tennessee

$13.61 per hour or $28,307 annually. The lowest reported pay is $21,166, and the highest is $36,687.

Minnesota

$13.60 per hour or $28,280 annually. The lowest reported pay is $21,146, and the highest is $36,653.

Utah

$13.55 per hour or $28,187 annually. The lowest reported pay is $21,077, and the highest is $36,534.

Ohio

$13.45 per hour or $27,970 annually. The lowest reported pay is $20,914, and the highest is $36,251.

Kentucky

$13.44 per hour or $27,964 annually. The lowest reported pay is $20,910, and the highest is $36,243.

Indiana

$13.40 per hour or $27,871 annually. The lowest reported pay is $20,840, and the highest is $36,122.

Oklahoma

$13.36 per hour or $27,793 annually. The lowest reported pay is $20,781, and the highest is $36,022.

Kansas

$13.31 per hour or $27,676 annually. The lowest reported pay is $20,695, and the highest is $35,871.

Louisiana

$13.30 per hour or $27,655 annually. The lowest reported pay is $20,678, and the highest is $35,843.

Iowa

$13.26 per hour or $27,572 annually. The lowest reported pay is $20,616, and the highest is $35,734.

Wisconsin

$13.19 per hour or $27,428 annually. The lowest reported pay is $20,509, and the highest is $35,549.

Maine

$13.16 per hour or $27,374 annually. The lowest reported pay is $20,468, and the highest is $35,477.

Texas

$13.01 per hour or $27,057 annually. The lowest reported pay is $20,231, and the highest is $35,068.

Arkansas

$13.00 per hour or $27,036 annually. The lowest reported pay is $20,216, and the highest is $35,041.

Alabama

$12.94 per hour or $26,924 annually. The lowest reported pay is $20,132, and the highest is $34,895.

Georgia

$12.93 per hour or $26,890 annually. The lowest reported pay is $20,107, and the highest is $34,851.

New Mexico

$12.80 per hour or $26,614 annually. The lowest reported pay is $19,900, and the highest is $34,492.

Mississippi

$12.75 per hour or $26,515 annually. The lowest reported pay is $19,826, and the highest is $34,366.

Michigan

$12.68 per hour or $26,372 annually. The lowest reported pay is $19,719, and the highest is $34,181.

Illinois

$12.67 per hour or $26,363 annually. The lowest reported pay is $19,712, and the highest is $34,168.

Missouri

$12.50 per hour or $26,006 annually. The lowest reported pay is $19,445, and the highest is $33,705.

Florida

$12.20 per hour or $25,372 annually. The lowest reported pay is $18,972, and the highest is $32,883.

North Carolina

$11.22 per hour or $23,344 annually. The lowest reported pay is $17,455, and the highest is $30,256.

As you can see, there is some variation between regions across the country, but the basic range in EMT wages is similar in all states.

Why Is EMT Pay So Low?

Considering the high-stress work environment and vital nature of emergency services, you might be surprised to see the wages for EMTs be so low, especially when compared to other medical professions.

Many EMTs are overworked and underpaid, bringing in wages that aren’t much higher than those in service industries like fast food or retail.

Why are EMT wages so low? There are a few reasons:

It’s a job widely viewed as a stepping-stone to something better. Although many people do stay as EMTs for all of their working lives, most go on to become licensed paramedics or even pursue education toward becoming doctors, nurses and other higher-paid medical professionals.

Local governments do not set aside enough money for emergency services, and private ambulance services risk being priced out of the market if they charge more. Similarly, insurance companies are not willing to pay as much for ambulance services as other medical expenses. All of this drives profits down, which trickles down to the employees.

Certification to become an EMT is a fairly quick process, and there is a low barrier of entry when compared to other jobs. There is also minimal room for advancement within the role, so career-minded people often move on to other things rather than staying in place and receiving raises.

In some areas, especially rural communities, EMS roles are staffed by volunteers. This makes it even harder to secure a living wage as an EMT since there are others willing to do the work for free.

Can You Make Good Money As An EMT?

It’s unlikely that you’ll ever earn a fortune working in emergency medical services, but it is possible to secure a stable living on the job. Salaries aren’t set in stone, and you can squeeze more money out of your career. There are a few ways you can boost your income and meet or exceed the high-end earnings estimates for your area:

You can pick up extra hours. If you’re able to do it safely, working more than 40 hours per week can pad your paycheck. In most cases, overtime pay is 1.5 times your usual hourly rate. You may also receive a shift differential, or higher pay, for working sub-optimal shifts such as overnights.

You can pick up a second job. This doesn’t mean moonlighting as a delivery driver, either. There are plenty of gigs for trained EMTs. Working as a standby medic for an event or teaching a CPR class can earn you some extra money.

You can pursue higher education. Putting in the hours to receive your paramedic license is worthwhile, even if the initial pay boost isn’t that much. Your experience and knowledge will give you more bargaining power if you seek another employer.

If you have positive work experience and know that you bring value to your employer, you can ask for a raise. Your boss may not be able to extend one, but you’ll never know unless you try.

Can You Live Off An EMT Salary?

Whether you can make a living as an EMT depends largely on your expenses and standard of living. If you’re trying to be the sole provider for a large family, it will be hard to make ends meet as an EMT.

However, if you are a bachelor, have a spouse with a good job, live an affordable lifestyle or otherwise keep your expenses low, you can live comfortably on an EMT salary.

Are EMTs In Demand?

Like all medical professions, emergency medical services have stable demand. Employment is expected to grow 7 percent between 2018 and 2028, faster than the average for all occupations.

This means that it’s easy to find work as an EMT, and securing a job is generally as simple as completing the required training.

Most Popular Companies Hiring EMTs

Most EMTs and paramedics are employed by hospitals, government agencies or private ambulance companies. Many private ambulances specialize in transport rather than emergency response. First responders are more likely to be paid by local or municipal governments.

AMR, or American Medical Response, is one of the best-known companies operating ambulances in cities around the country.

Conclusion

Working in emergency services isn’t a path to riches, but it does offer stable employment and a rewarding career path. Many people view their work as an EMT as a calling as much as a career, and there are medics in the field who have been working the same job for decades.

If you are interested in the medical field and want a job that can be entered with minimal formal education, becoming an EMT might be right for you.

Although you won’t make as much money as a doctor with an EMT salary, you’ll also enter the field with substantially less debt. The fast-paced work environment, flexible schedule and tight-knit community with other first responders help to make this job an appealing choice despite the relatively low pay.

This article originally appeared on Arrest Your Debt.