Category Archives: financial

How to Find a Good Contractor for Home Improvement Repairs


You’ve likely seen the story on your local news: A fly-by-night contractor swoops into town and scams dozens of homeowners out of thousands of dollars each before disappearing without a trace.

No one wants to go through such an ordeal. And yet it happens all the time, especially during the summer when more homeowners start home improvement projects.

The vast majority of contractors are honest and trustworthy, but there will always be those who are ready and willing to run a scam and run off with your money. So how can you make sure you find a reliable and reputable contractor who keeps their promises? And how do you make sure you’re hiring the right professional for the job? Let’s take a look.

Do You Need a Contractor or Handyman?

Take a look at your project to-do list. Perhaps you need to replace the roof, fix the leak under the kitchen sink, re-tile the hallway floor, and install a ceiling fan in your son’s bedroom. You’d also like to build a small deck for summer cookouts.

Some of these projects are relatively easy to complete, while others are far more complex. So the question becomes: Do you need to hire a contractor, or will a handyman suffice?

Certain projects require in-depth knowledge and even local or state certifications; for these projects, you’ll need a contractor. Other projects can be tackled by someone who knows how to use a bandsaw or who has the time to fix a leaking pipe; for these projects, you can call a handyman, who will typically charge less per hour or project than a licensed contractor.

Here’s how to figure out which professional to hire for your project.

Handyman

A handyman will typically complete general home repair and routine maintenance projects, such as:

  • Replacing a sink
  • Installing a new toilet
  • Painting
  • Cleaning gutters
  • Drywall repair
  • Installing a patio
  • Seasonal maintenance projects
  • Minor HVAC repairs
  • Flooring repair or replacement
  • Yard work
  • Fence repair
  • Eliminating outdoor mold

These projects are not complex and don’t require much specialized knowledge.

Contractor

Contractors are better suited for larger jobs that require a permit, specialized knowledge, or both. These professionals fall into two categories: general contractors and contractors.

General Contractor

A general contractor (GC) acts as a manager for large projects. They hire contractors, known as subcontractors, to perform specialized tasks such as installing new plumbing, installing new countertops, or rewiring a house. General contractors make sure that all permits are filed, all deadlines are met, and costs stay on budget.

You should hire a general contractor for projects such as:

Contractors

Contractors are skilled and licensed tradespeople who work independently with several general contractors or with a larger agency. You would hire a contractor for projects such as:

  • Building a deck
  • Rewiring a home
  • Installing a whole-house generator
  • Replacing plumbing or installing a water heater
  • Installing new windows or doors
  • Rebuilding a fireplace or installing a wood stove
  • Installing tile or masonry
  • Installing an HVAC unit

If you’re still not sure if you need a general contractor, regular contractor, or handyman, follow these rules from HomeAdvisor:

  • If the job will take more than a week, hire a GC.
  • If the job requires several different pros to complete, hire a GC.
  • If the job requires a few permits, hire a GC.
  • If these rules don’t apply to your project, you might be fine with a regular contractor or even a handyman.

Contractor Helmet Remodeling Kitchen Interior Blueprint Sketch

How Much Will It Cost You?

You may be wondering if you should do it yourself (DIY) or hire a contractor. And if you do hire someone, how much will it cost you?

A contractor’s quote depends on a number of factors: the type of project, how expensive materials are, and where you live. It’s impossible to quote an average price because projects vary so widely.

For example, if you’re thinking about remodeling your kitchen, you’ll likely have to hire a general contractor who will also enlist subcontractors such as plumbers and electricians. The cost for a project like this depends on the scope of the project and average hourly rates for each subcontractor, which can vary widely depending on where you live.

According to HomeAdvisor, average rates for contractors include:

  • Electrician: $50 to $100 per hour
  • Plumber: $45 to $200 per hour
  • Tile Setting or Stone Setting Professional: $863 to $2,681 per job
  • Roofer: $7,524 per job
  • HVAC: $284(repair) or $4,274 (installation) per job
  • Window Installation: $5,274 per job
  • House Painting (Exterior): $2,803 per job

Estimating what you’ll pay for a smaller project that requires a handyman is a bit easier. These professionals typically charge less than a contractor; according to HomeAdvisor, the typical cost for a handyman project, nationwide, is $178 to $650.

How to Find a Great Contractor

A quick online search is enough to scare you off from ever hiring a contractor. The Web is full of horror stories from families who hired a contractor who:

  • Ran off with their money without ever performing the work
  • Did the work so poorly they had to hire someone else to fix the job at double or triple the cost
  • Took months or even years to complete a project, for tens of thousands or even hundreds of thousands of dollars over budget

If your area has recently gone through a major storm, such as a hurricane, tornado, hail storm, or flood, you also need to watch out for “storm chasers.” These are contractors who swoop in from out of town to fix homes damaged by a recent natural disaster. While some of these contractors are legitimate, many are just looking to make some quick cash and then hit the road before homeowners discover their shoddy work.

Still, there are plenty of honest and trustworthy contractors out there. How do you find one? It takes time, work, and patience, but your efforts will pay off.

1. Do Your Homework

Websites like Angie’s List and HomeAdvisor help take the guesswork out of hiring someone sight unseen; these are great places to start your search. Each site has an extensive database of home improvement contractors reviewed by verified members.

Another option is to contact your local chamber of commerce or building trade association and ask for their recommendations.

You can also ask your insurance company, even if they’re not paying for the work. Most insurance companies have agreements with reputable local contractors. Not only can you take advantage of the review process your insurance company has performed on these companies, but you might even get a price break based on the relationship between the contractor and your insurance company.

Once you’ve researched your options, make a list of at least three highly rated contractors you want to get a bid from and contact them directly.

2. Get Contractors’ License Numbers

After you create a shortlist of contractors, narrow down your list by calling and asking the contractors for their license numbers and certificates of insurance. All contractors, regardless of the state in which they operate, are required to have a business license and insurance coverage.

Having a business license number will allow you to contact your local municipality and determine whether the contractor is legally in business, while the certificate of insurance will ensure that the contractor is covered in the event anything goes wrong. Good contractors should carry both workers comp and liability insurance through their business. Ask to see their insurance policy so you can review their coverage.

Keep in mind that a business license is not the same as a contractor license. Each state, city, and municipality has different requirements for contractor licensing. Visit HomeAdvisor’s state licensing page to look up your state’s unique requirements so you know what licenses to look for from a reputable contractor.

3. Ask Questions

When it comes time to meet each contractor, it’s helpful to have a list of questions written out so you don’t forget something important. Consider asking them some or all of the following questions:

What Local Trade Associations Do You Belong To?

After the interview, call these organizations up and check that this contractor is indeed a member in good standing.

How Long Have You Been in Business?

Ask for proof for their tenure, since some fly-by-night contractors will claim “20 years’ experience” in the area when they actually only got into town last month.

Can You Give Me at Least 3 Recent References?

The keyword here is “recent.” Good contractors should be ready and willing to share the contact information of at least three homeowners they’ve worked with over the last year. If all they have are old references, it might be a sign that their work quality has dropped.

When you talk to these homeowners, ask them:

  • How quickly did this contractor return your phone calls?
  • Was the project completed on budget? If not, what happened?
  • Did the contractor keep their promises to you?
  • Was the contractor responsive to changes with the project? If there was any disagreement, what happened?
  • Would you recommend this contractor to someone in your family?

What Timeline Do You Have for This Project? Are You On Any Other Projects That Could Affect This Timeline?

Also ask them about any recent bids they’ve made with other homeowners. They might not have any projects lined up right now, but what happens if two other homeowners hire them later in the week?

Contractors Blueprint Meeting Discussion Floorplan Table Working

What Payment Schedule Do You Require?

Remember, an honest contractor will never ask for the full project amount up front, but most will ask for a deposit and regular payments throughout the project. Make sure you know when payments are due and how much they will be.

Will the Same People Work on This Project Every Day?

If you’re interviewing a general contractor, ask them who will be showing up at your home every day. What kind of vetting process do they use when hiring subcontractors? Will it be the same team of subcontractors every day, or will different teams show up on different days? Find out the details so you know what to expect.

What Should I Do to Get the House or Workspace Ready?

Do you need to move furniture? Take pictures off the walls in adjoining rooms? Roll up the rugs?

This is also a chance to ask if there’s anything you could do to prep the area that might lower the cost of the project.

What Will the Project Look Like, Really?

With this question, you’re asking how the project will affect your life and your family. Follow-up questions could include:

  • How loud will the work be?
  • How much dust will get blown about?
  • How much trash will be generated, and will it all be cleaned up every day?
  • Will one of us have to be at home while work is being completed?
  • Will you use any tarps to protect furniture and other objects?
  • Will your contractors wear shoe protection when they’re coming in from outside?
  • Where will you need to store tools and materials during the project?

If it’s a large project, ask if the contractor brings a port-a-potty or if subcontractors will be using one of your restrooms throughout the day.

Some of these questions might seem a little nitpicky, but don’t underestimate how much it might annoy you when a contractor tracks mud all over your carpeting because they didn’t take off their boots. Find out this stuff before the project begins so you can communicate your expectations and save yourself some headaches.

4. Get An Itemized Bid

Every contractor you interview should provide you with an itemized bid. This is a bid that lists, item by item, everything you’ll be paying for. It should include:

  • All labor costs (including estimated subcontractor costs, if your project calls for them)
  • All materials (including specifics such as paint, drywall, and light fixtures)
  • All permit fees
  • Any other expenses, such as travel fees the contractor expects to bill for

An itemized bill gives you clear and upfront information about how much the project will cost. It also gives you the power to stay on budget. If the contractor’s initial bid is more than you can afford, you can easily change the scope of the project to better fit your budget. For example, you might decide to go with less-expensive tile or do all the painting yourself.

If changes to your original quote are necessary, document them on your original quote and make sure that both you and the contractor sign it. Your quote should also contain applicable information regarding warranties or guarantees on work performed and materials used.

Keep this agreement in a safe place until your warranty expires in case you ever have to pursue legal action against the contractor.

You also need to clarify whether the contractor’s bid is an estimate or fixed price. Estimates can wind up costing you much more, so find out what factors might affect the final price.

If your contractor doesn’t want to give you an itemized bid, don’t hire them.

Red Flags to Watch Out For

A disreputable contractor can show up any time, at any place. But they often exhibit some red flags you can keep an eye out for.

1. They Solicit Door to Door

Good contractors usually have more work than they can handle and don’t need to knock on doors or put flyers in mailboxes to find work.

Some disreputable contractors use door-to-door solicitations to scam their customers outright. For example, in one of my old neighborhoods, an asphalt resealing contractor would periodically roll down the street, pitching their services to anyone who happened to be outside. One neighbor unwisely hired him, and they agreed upon the price and shook hands on it. No contract was involved.

The contractor finished the job that afternoon and demanded double the price he’d initially quoted. Because no contract was signed, it was a case of “he said, she said.” My neighbor had to take the contractor to small claims court to resolve the issue; he won his case, but not without a significant amount of time and stress.

Another common scam involves landscaping. A truck loaded with trees, bushes, and flowers will drive around neighborhoods, asking homeowners if they want to buy these super cheap “surplus plants” and have the landscape professional plant them in their yard. Usually, these plants are on death’s door, and the homeowner pays good money only to have to dig them up a week or two later.

Be wary of anyone going door to door looking for business. More often than not, this is a sign of someone who’s desperate for work.

2. They Ask You to Get Permits

Reputable contractors take responsibility for getting all necessary permits for a project because they’re the ones who will be talking to the building inspector when they arrive to inspect the work. They file the permit under their contractor license number.

A scammer will ask you to get your own building permit, which means you’ll have to lie about who’s really doing the work. As a homeowner, you can get your own permit for DIY projects, but if someone else is doing the work, they have to get the permit — and, thus, they’re the ones responsible to the inspector. All too often, contractors who request that homeowners get their own permits are unlicensed or have a bad reputation with local inspectors. Either way, run.

3. They Want All the Money Up Front

It’s normal for contractors to ask for some money up front, usually a lump sum amount or a percentage of what they quoted in their bid — typically, no more than 10%. If a contractor wants all the money up front, show them the door.

4. Their Bid Is Way Too Low

You should get at least three bids before you hire anyone, and these bids should be relatively similar in price.

Be wary of any contractor who submits an extremely low bid. There’s a good chance they’re bidding low to get their foot in the door so that later, they can hit you with unexpected charges for material or labor.

Another common scam with low bids involves a contractor saying he wants to use your project for “advertising purposes” or as a showcase piece for his portfolio. Just say no and walk away. An extremely low bid is a sign of inexperience, cutting corners, or worse.

Get a general idea of what your project should cost before you start looking at bids. Check out Remodeling’s Cost vs. Value Report, which lists the typical costs of 30 common home improvement projects by area.

Final Word

It’s scary enough to shell out thousands of dollars or more for a home improvement project, and it’s even scarier when you don’t fully trust the person responsible for completing the work.

Finding a great contractor takes time and research, but it’s well worth the effort. Dealing with someone who’s professional, experienced, and trustworthy will relieve a lot of stress in an already stressful situation and ensure that you get what you’re paying for.

What has your experience with contractors been like? Do you have any tips for finding a great contractor (or any horror stories to share)?



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Questions About Weddings, Roth IRAs, Shoes, Blankets, and More!


What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. Thoughts on caring for parents
2. Wedding question, part one
3. Wedding question, part two
4. Starbucks Visa
5. Books on home buying
6. Frugal running shoes
7. Roth IRA contribution question
8. Roth IRA or bigger e-fund?
9. Unwanted Christmas toys
10. Marketing crocheted baby blankets
11. Where do I get advice?
12. Further areas of philosophy

Here in Iowa, it felt like winter did not begin until about January 12th or so, but when it did, it hit with a vengeance, with many inches of snow and a forecast for the coming week that has wind chills at our home approaching -50F.

When the weather gets that cold, it interferes with all kinds of things. You simply avoid going outside if at all possible, which means that

As I write this, I’m bundled up in multiple layers of clothing with a cup of hot tea on my desk. I feel quite good after getting up quite early to shovel snow. I don’t bother running the snowblower unless we have several inches, as shoveling our drive of a few inches of snow is good exercise.

On with the questions.

Q1: Thoughts on caring for parents

My wife and I are in our forties. We have two adult children that are moved out and on their own. Her parents are both in their late seventies; my parents have been deceased since I was 20.

Her parents are ailing. They’re not in a situation where they need to be in a retirement home, but household tasks wear them out. They live about an hour away and we visit them two or three times a week to help out, as do my wife’s siblings.

We have been talking about the possibility of having her parents move in with us to make things easier on all involved. We are actually set up very well with this, as we have a large main floor bedroom that could be used by them and a main floor bathroom with a shower that could be modified a bit to make it easy for them to use.

Our main worry is that the other siblings will simply stop helping or visiting in any way and just assume we’re taking care of it. They really like the regular visits from their children and grandchildren and we worry that will all dry up if they move in with us. Our secondary worry is financial as it will add some household expenses.

What are your thoughts on this?
– Shaun

In general, if everyone is on board with this, I think multigenerational living is a great approach for everyone involved. The key to making it work is communication – people can’t hold back on their feelings or else you will turn every little molehill into a mountain. You have to listen to each other and genuinely try to be supportive of one another to the best of your ability. If you can do that, it’ll work well.

As for your specific concerns, with your primary worry, one way to handle this is to just simply have regular family dinners at your house. Make it a routine to have people over for dinner a couple of times a week. I don’t know whether your home can support this, but it sounds like it can.

Doing this gives people a reason to visit and see your in-laws rather than just “stopping by.” It’s usually easier to go visit a parent or a grandparent if you have a reason to do so; if it’s just “stopping by,” it’s easy to skip it. If there’s a meal involved, it feels more like a reason to visit. So, if the move happens, just institute some regular meals. Maybe have a regular Sunday evening potluck or something like that, and maybe start inviting a few people over on weeknights on a regular basis. For the extra meal effort, don’t hesitate to ask people to come early to help prep if needed or to bring a side dish – in fact, that’s a good idea, because it invests them in the meal and makes the visit feel more purposeful.

As for the financial concern, talk that over with your in-laws. They will probably want to feel some ownership over the situation anyway. You can simply ask them to pay the energy bill and the internet bill or something like that, something that will partially replace their utility costs at their old place and possibly cut your overall bills, too. They can contribute to buying food, too. This can end up being a money saver for you, actually.

The key with any situation like this is open communication and candor. Everything won’t go perfectly and you’ll all do things that drive the other one crazy. Just be open about it and don’t let it grow into hurt feelings. Understand that everyone loves each other and you all want to make this work.

Q2: Wedding question, part one

I have two wedding-related questions for the Reader Mailbag. One of my best friends is getting married, and has asked me to be a bridesmaid. We are in our mid-to-late 20s. She and her fiance make good incomes and come from fairly well-off families. My friend and I have pretty different approaches to our finances as she really enjoys going out, eating out, shopping, etc. Meanwhile, I’m currently in grad school.

My friend’s wedding will be at a swanky venue in one of the most expensive cities in the U.S. (Note: it’s not a destination wedding, but I don’t live there.) I expect everything about the wedding to be top-of-line. My friend wants all of her bridesmaids to purchase bridesmaids dresses together as a group from the same store, by the same deadline. The store stylist said that this guarantees that all of the dresses will come from the same dye lot. The dress that my friend chose for everyone to wear is $300. It’s not that I don’t have the money for this, but… that’s a lot of money!

I found that same dress, used, in my size online. The used dress is significantly less money than the dress’s retail price. I don’t feel that dye lot matters much, but some online wedding forums warn against bridesmaids purchasing dresses piecemeal to avoid inconsistencies that may show up in the wedding photos. I would feel awkward asking my friend if I can order the dress on my own rather than as part of the group, because I feel like I’d be ruining her expensive photos. Again, it’s not that I absolutely can’t afford it, but it just seems so wasteful to spend hundreds of dollars on a dress when I can find it for so much less. Is this a time when I just need to suck it up and participate in the group order for the sake of maintaining social normalcy? I already feel bad because I’m skipping the bachelorette party which is across the country, so I feel like I’m the odd one out.
– Tammy

If I were in your shoes, I would sit down and talk to your friend about the situation. Simply ask if it is okay for the bridesmaids to buy the dress on their own. If she asks why, simply explain the reason – you’re a graduate student, $300 is a lot of money, and you found the same dress in the same color for much less.

The thing to remember is that if this causes a real issue, then there are issues in the friendship to begin with. A good friend appreciates the situation that their friend finds themselves in and works to find a way around it. A wedding is not made or broken on the dress worn by a bridesmaid.

Just have a conversation. The vast majority of the time, this will be a non-issue. If it is an issue, it’s a valuable indication of the status of the friendship.

Q3: Wedding question, part two

Second, how much would you recommend spending for the wedding gift? I was thinking of something from the registry that’s $100, but a lot of wedding etiquette sites say that if it’s a really good friend, you should be spending closer to $175. I don’t want to seem cheap or send the message that I don’t value her as a really good friend, especially when this is going to be a really nice/luxurious occasion. But there’s also a shower gift to account for…
– Tammy

You should completely ignore “wedding etiquette” sites when they give an exact dollar amount for a gift, especially one as weirdly precise as $175. That’s just weird, bad advice.

Give a thoughtful gift you can afford. Pick something from the registry that you can afford and then also write a nice handwritten note to go along with the gift expressing your best wishes for the couple in your own words with your best penmanship.

Anyone who looks negatively upon a gift given to them is a person lacking in character. Gifts should always be given freely based upon what the giver can easily afford.

Q4: Starbucks Visa

As a Starbucks lover, is the Starbucks Visa worth it? How does it compare to popular cards like the Chase Freedom?
– Lana

Well, let’s walk through the hypothetical example given in their sales pitch. In that example, you’re spending $525 a month for a year, $25 at Starbucks and $500 elsewhere, so that adds up to $6,300. Let’s say you use the card for two years, so the total is $12,600.

This earns you 64 rewards in the first year and 28 rewards the second year, totaling 92 rewards. A “reward” is a drink or food item at Starbucks and appears to be at least somewhat Starbucks’ choice. Let’s assume these are worth an average of $4 each, so your total rewards are $368 in value.

To get that reward, you also have to pay $100 in annual fees on the card. So, you’re getting $268 in value, all in the form of Starbucks items that you largely can’t select yourself. That’s a little over 2% in rewards in the form of food items that are probably good but you can’t select yourself.

That’s not really the best card deal out there, and it’s going to decline in value each additional year because you only get that big bonus the first year.

I don’t think this card is worth it unless you drink a lot of Starbucks, in which case you might want to rethink how much you’re spending in coffee shops.

Q5: Books on home buying

Do you have any recommendations on books to read to learn about home-buying? My wife and I are planning to purchase this year.
– Jim

My first recommendation for first-time homebuyers is Home Buying Kit for Dummies by Eric Tyson (seriously). It’s an extremely good guide to what people should know about buying their first home, and Sarah and I read an earlier edition thoroughly when we were considering buying our current home. Ignore the “for Dummies” part – it’s a really good guide.

From there, I’d hone in on which aspects of home buying aren’t crystal clear to you and read articles and find books to fill in gaps in your knowledge.

If I had to pick a second book, I’d probably look at 100 Questions Every First-Time Home Buyer Should Ask by Ilyce Glink. While it’s not as thorough as the Tyson book, it does delve nicely into specific areas of the home buying experience and can complement specific areas of the Tyson book well.

Q6: Frugal running shoes

For a new year’s resolution I followed your advice and started a resolution of running for 1 minute every day this year and running more if I feel like it but not required. It’s been working great! I have been running about 20 minutes a day on average on warm days and at least running a block or two on the really cold days. I thankfully have a spot to run on snowy days.

Anyway I’m writing to ask for frugal advice on running shoes. I used to be a big spender back when I was running and bought expensive shoes constantly. I whipped my finances in shape during a time when I wasn’t running for various reasons but now that I’m back at it, I need to figure out a way to do this without spending $100-200 a month on shoes. Ideas?
– Tom

Let’s get this out of the way right now: I do not advocate anyone running in worn out shoes. You are begging for various physical problems by doing so. You should be replacing your shoes 300 to 500 miles or every 18 months, because the sole of the shoe simply wears down. Look at the bottom of the shoe and see if you see a lot of creases on the shoe’s bottom and there’s significant discoloring – that’s a great sign of wear and you should probably get new ones.

My recommendation is to find a good mid-cost model that really works well for you, buy a pair of them, and then stalk out bargains on that specific model. I have either personally liked or heard very good things about ASICS Gel Venture, Nike Revolution 4, and Adidas Cloudfoam, all of which are available under $50 a pair with ease, so try those.

Once you have a sub-$50 pair you really like, just watch very closely for bargains on those shoes and buy multiple pairs at once if you find a really good deal. You can watch them on Amazon by using tools like Camel Camel Camel, for example.

Q7: Roth IRA contribution question

I decided to put some money that I got for Christmas from my wonderful generous grandparents into a Roth IRA. I opened one through Vanguard and went to deposit the money and they asked if it was a 2018 contribution or a 2019 contribution. Which should I choose? Not sure of the ramifications.
– Julie

Since this is a new Roth IRA – meaning you haven’t made any contributions to a Roth IRA in 2018, I assume – and I’m also assuming that (a) you haven’t filed your taxes for 2018 yet and (b) the amount you’re contributing is less than $5,500, then you should make a 2018 contribution.

Each year, you’re allowed to contribute up to $5,500 to your Roth IRA – starting in 2019, that limit goes up to $6,000. That window to contribute starts on January 1 of a given year and ends when you file your taxes for that year early in the following year. So, until you file your 2018 taxes (some time before mid April), you can still make a 2018 Roth IRA contribution, and you should do so because that window is about to close forever, plus it leaves the 2019 contribution window wide open.

This is a great thing to be doing with a gift from grandparents, by the way. While they might want you to do something fun with that money, if you told them that you put it aside for your future, they’ll be proud of you and for good reason.

Here’s another good Roth IRA question.

Q8: Roth IRA or bigger e-fund?

I have about $3,000 in an emergency fund which would be enough to get by for about two months. I am single with a 7 year old daughter. I have about $1,000 surplus in checking. Should I add to the emergency fund or add to my Roth? Nowhere near contribution limits for the year.
– Amy

First of all, I want to say that I am in awe of what you’re pulling off here. You’re a single mother who not only has a healthy emergency fund, but is also concerned about saving for retirement. You are on the ball and deserve kudos for that.

Second, two months of living expenses is a good healthy emergency fund. If I were in your shoes, I would probably make the Roth contribution with most of the surplus, leaving a little behind in checking as a buffer. Then, I would set up an automatic transfer from checking to savings each week – $10 or $15 or $20 should do. This way, your emergency fund automatically grows slowly over time and if you have to tap it, you know it’s going to refill over time with no further effort.

So, I’d probably contribute around $750 to the Roth IRA, then I’d set up a $20 per week automatic transfer into my emergency fund going forward.

Q9: Unwanted Christmas toys

My kids receive an absurd number of gifts for Christmas each year. For the last few years, my husband and I have actually removed a few items from their “pile” that they were less interested in and put them aside to see if they remember them and if not we quietly sell them and put the money in their 529. We figure the gifts were unwanted.

This past weekend my sister came over and mentioned the toy she had bought for our middle child. It was one he had overlooked and we had put in storage in the garage. We hadn’t sold it yet. He wanted it so we dug it out and gave it to him. My sister was obviously curious as to what the deal was and we explained it to her and she got really mad at us and called us thieves.

What are your thoughts?
– Jason

I honestly don’t see anything too wrong with your approach. You’re putting the gifts that your children aren’t interested in aside for a while, giving it some time in case they do think about them, and then if they don’t, you sell them off and put the money aside for their college education. It’s not as if you’re stealing their toys or anything – you’re just turning the ones they don’t want into something that will help them for life.

Your sister’s response might have had something to do with the fact that she apparently put a lot of thought into the gift and your child wasn’t interested in the gift, which hurt her feelings. Her feelings were probably hurt even worse when she found out you were going to sell it unopened.

This is one of those situations where you should just give it a little time and talk about it when the situation is less raw. I think your sister will see the sense in what you’re doing.

Q10: Marketing crocheted baby blankets

In late 2018, three extended family members had babies so I crocheted a blanket for each one. The recipients seemed to genuinely love them and two suggested that I try to sell them. I enjoy making them but I don’t even know where to start.
– Carrie

My honest suggestion is that you throw out the suggestion to your social network. Post it on social media along with a picture or two of the baby blankets and say that you’re willing to make them for baby shower or birth gifts. State your price and the dimensions and what kind of customization options you offer.

I’m honestly not sure what to charge for the blankets. That’s something you would be much better at assessing than I am. My suggestion would be to go relatively low in price at first – cover the price of the yarn and make a little for yourself, but not a mint – and then raise it if your blankets become popular.

You might also consider an Etsy account in order to sell your wares.

Q11: Where do I get advice?

You give so much great advice! Where do you go when you need advice?
– Jenna

When I’m in a situation where I don’t know what to do, I usually write it all out. I’m a huge proponent of doing “three morning pages,” which is a journaling technique where you sit down each morning and just brain dump three pages of writing in a blank journal. I try really hard to do that every day, and it often turns into a forum for me to take a problem in my life and turn it over thoroughly with pros and cons. I usually need to really understand a problem first before I can look for meaningful advice on it. Quite often, this process will make the solution to my problem screamingly obvious.

The next step, if journaling doesn’t give me an answer, is always to talk to my wife, even if the advice I need involves her. We communicate with each other a lot – not a day goes by without a few meaningful conversations. Sarah is my primary source for advice on everything.

If I’m still unsure, I usually go to the library and try to research ideas on my own. I tend to trust expert advice from books, where the reasoning behind the advice is usually laid out and I can see how that advice applies to my life.

If I’m still unsure, I usually talk to a few people in my life that I really trust. I have a few “mentors” in the community. I really trust and value the views of my parents and my wife’s parents and my sister-in-law. I talk to them next.

If I’m still not sure what to do, I’ll go talk to a professional in that particular field, but it’s very rare that I get to this point.

Q12: Further areas of philosophy

I have been enjoying your semi-regular series of Saturday articles about how different schools of philosophy provide personal finance guidance. What areas are you planning to cover in the future?
– Dane

So far, I’ve covered stoicism, Epicureanism, Aristotleanism, and secular Buddhism, for those interested. Dane’s note actually came in before the last one was posted.

Going forward, I definitely want to write an article on transcendentalism, which I’ve touched on indirectly several times. This would cover Emerson and Thoreau (who I hold in very high regard), among others. I can see a useful article on utilitarianism at some point. I want to read more about various Eastern schools of philosophy which, outside of secular Buddhism and a few others, I know little.

Beyond that, it really depends on where my reading takes me. I love reading philosophy, particularly those with a practical angle that provides insights on how to live, and I find that most such schools of thought that deal with the practical in some fashion have a lot of application to personal finance.

Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.



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Is OnTrajectory the best retirement calculator?


OnTrajectory logoMy colleagues, who are money nerds just like me, know that I’m obsessed with finding the best retirement calculator. I’ve been on this quest for years. As you’ll learn later this week, my favorite retirement tool is (and has been) NewRetirement. But there are other great tools out there.

“You really need to try OnTrajectory,” Jillian from Montana Money Adventures told me last summer. “It’s great.” She’s been telling me that over and over ever since. (Meanwhile, Gwen from Fiery Millennials has also been pressuring me to try OnTrajectory.)

Last week, at long last, I had a chance to chat with Tyson Koska, the founder of OnTrajectory. During a 30-minute call, he walked me through setting up an account and playing with the tool’s features. I’m impressed. NewRetirement is still my favorite tool, but OnTrajectory is damn close. And I can see how for some people, the latter may actually be a better choice.

Today, let’s take a look at what makes OnTrajectory one of the best retirement calculators available on the web.

How OnTrajectory Started

The OnTrajectory origin story is similar to that of You Need a Budget.

Koska spent decades looking for a tool that would give him a high-level view of his financial future. “I couldn’t find one that I liked,” he says. He didn’t like their assumptions. He didn’t like their interfaces. He didn’t like their limited functionality.

Eventually, he took matters into his own hands. He built a complex spreadsheet to explore different variables and what-if scenarios. From there, he began coding Excel macros and small software tools. Over time, the current version of OnTrajectory evolved from his experimentation.

Just as YNAB grew out of Jesse Mecham’s desire to build himself the perfect budgeting tool, OnTrajectory is a product of Koska’s quest for the perfect retirement calculator. Over the years, it’s morphed from a simple spreadsheet to a complex tool with a distinctive look and feel.

OnTrajectory is all about this graph:

OnTrajectory graph

“That graph really dominates your tool,” I told Koska on our call.

“Exactly,” he said. “That’s the whole point. That graph is always present at the top of your screen to show you your trajectory. Any time you make an adjustment to your assumptions — any time — that graph gets updated.”

Because Koska considers himself a part of the growing FIRE community — the group of folks who is interested in financial independence and early retirement — OnTrajectory is built with their needs in mind. You want to retire by 40? Fine. OnTrajectory can handle that. You want some absurd saving rate like 90%? No problem. You can model pretty much any scenario you can imagine.

Getting Started

It’s easy to get started with OnTrajectory. Once you provide login credentials, you’re given two choices:

  • A quick-start wizard that asks only three questions before launching you into the tool.
  • A more comprehensive “guided entry” process during which you manually enter your income, expenses, and existing investment accounts.

The former is quick and easy. The latter provides better results. As you can probably guess, I’m not a quick-start wizard sort of guy. I opted to use the longer “guided entry” process. It didn’t take anywhere near the 30-minute projected time. (But that’s probably because I already had my financial info gathered in one place.)

OnTrajectory setup

During the set-up process, OnTrajectory asks questions about your existing financial infrastructure and your goals for the future. It uses this info to populate three of its five navigation tabs. The guided entry asks you to:

  1. Designate expected income, including regular salary, Social Security, pensions, rental income, and so on.
  2. Specify large, recurring expenses such as vehicle payments, housing payment, insurance premiums, property taxes, and the like.
  3. Enter current balances of major financial accounts like your Roth IRA and 401(k), regular brokerage accounts, and your bank accounts. (OnTrajectory does not automatically connect to your accounts. You must enter this info manually.)

You can add to or alter these numbers at any time. They’re not set in stone, so don’t be afraid of making mistakes.

OnTrajectory is free to use for fourteen days. (You don’t even need to enter credit card info, which is awesome!) If you’d like to continue using the tool, however, you have to subscribe at $4.99/month (or $49/year).

OnTrajectory pricing

Using OnTrajectory

OnTrajectory seems simple at first, but the more I worked with it, the more I appreciated how it handles complexity.

One of its strengths, for instance, is the ability to plot a variety of possible futures.

Our lives are dominated by uncertainty. Sure, there are likely paths that lie before each one of us, but there’s plenty we don’t know. Plus, a few times each decade, we reach major forks in the road to our future. Do I take this job or that job? Do I move to Savannah, Georgia or do I remain in Portland, Oregon? Should I draw Social Security at age 62 or wait until I can get maximum benefits at age 70?

Normally, it’s tough to predict how your decisions will affect your financial future. With OnTrajectory, however, it’s simple to explore these “alternate dimensions”. You can toggle any parameter at any time.

Here, for instance, is a list of my potential income sources. I’ve included working at the family box factory, two possible income levels from this website, eventual Social Security payments, and a potential inheritance from my mother.

OnTrajectory income sources

In Personal Capital, it’s nice that you can add or remove various events to see how doing so affects your future. But if you remove an event, it’s gone. You can’t save it.

With OnTrajectory, you just toggle a button to see the difference. If you want to add, say, an inheritance back into the equation, you just click the button once more. What this means from a practical perspective is that you can enter several possible scenarios/events that you deem likely, then explore different possible futures. This is a very handy feature.

OnTrajectory inheritance included

OnTrajectory also allows you to play with the assumptions “under the hood”. Three key variables are always instantly accessible: your retirement age, your Trajectory End Age (a.k.a. your projected date of death), and a projected inflation rate. (The default inflation rate in OnTrajectory is 3.00%. That’s just slightly optimistic for me. I chose to change it to 3.18%, which is the U.S. long-term average. If I were extremely pessimistic, I might change it to something like 4.08%, which I think is the 50-year moving average — but don’t quote me.)

You can also play with tax rates, investment contributions, investment returns, and more. As you might have noticed, you can enter start ages and end ages for most line items. If you want to explore different possible paths, you can enter additional age range possibilities without deleting your original item. Then you just toggle between the two lines to see the effects of, say, working longer.

OnTrajectory age ranges

OnTrajectory allows you to set specific goals, such as “I want my Trajectory to reach $1,500,000”. These goals then get plotted on your Trajectory graph. For instance, if I want to know when my net worth Trajectory will hit $1,500,000, the app will plot it on the ever-present graph. In this particular case, it says I should hit that goal on 11 November 2029.

OnTrajectory net worth goal

So, as you can see, OnTrajectory is very similar to a lot of other retirement calculators out there except that it takes things to the next level. Anything the Personal Capital retirement tool can do, OnTrajectory can do better.

But wait! That’s not all! OnTrajectory also allows users to create and print a variety of PDF reports. It includes a handy inflation calculator. And there’s a nascent OnTrajectory community on Reddit where you can ask questions and share ideas.

Having said all of that, OnTrajectory isn’t perfect.

Problems with OnTrajectory

As much as I love OnTrajectory, there’s one key piece of the tool that I hate: the terminology. For me, it’s confusing.

In this tool’s parlance, your Trajectory is your projected future financial path. And your Trajectory for any given date is your net worth on that date. That makes total sense, right?

OnTrajectory trajectory

But individual accounts can have trajectories too. If my 401(k) has a Trajectory of $246,136 today, that’s its balance today. So, maybe Trajectory actually means balance? I don’t know. I’m confused.

OnTrajectory investment trajectories

Things get more confusing after you’ve been using the tool for a while. Your Trajectory is based on your initial parameters, not your current situation. The tool does plot a trajectory projection based on your current situation, but your Trajectory (with a capital T) is based on your starting assumptions.

(There’s a logic behind this. OnTrajectory uses the Monte Carlo method to look into the future. It assumes that your current situation is one point on many possible projected paths, and that your circumstances will very likely be subject to “reversion to the mean”. By basing your Trajectory on your starting circumstances rather than your current circumstances — which generally improve with time — it’s providing a more conservative/cautious approach to retirement planning.)

I understand that OnTrajectory uses the term “trajectory” to stay on-brand, but for somebody like me it creates more confusion than clarity. I’d prefer that existing standard definitions were used. If your Trajectory is your net worth, then call it your net worth. If Trajectory simply means “balance”, then use the word balance.

OnTrajectory is a fine name for the tool, but I don’t see the need to cloud the issue by getting cute with naming conventions.

That’s my main beef with OnTrajectory, but it has other minor quirks too.

  • There’s a “Default Investments” account that cannot be deleted. (It’s meant to be a catch-all for stray cash, I think. This is sort of like the “petty cash” account I use in Quicken.)
  • OnTrajectory errorWhile attempting to enter my Basic Expenses line item, OnTrajectory refused to let me set its End Age to 79 (my projected end of life); it only let me set it to 78. (I was able to set everything else to 79 but not my Basic Expenses. Weird.) As a result, OnTrajectory believes I have $0 expenses during the last year of my life haha.
  • At one point, the OnTrajectory graph simply disappeared. I changed my projected date of death (or “Trajectory End Age” in the program’s terms) and the graph vanished. I couldn’t get it to come back. After trying a bunch of different things, I clicked the Undo button. I’m not sure what action I undid, but pressing the button brought back the graph.

To me, these “minor quirks” don’t affect my overall impression of OnTrajectory. They’re bugs (or features I don’t like). They’re likely to go away in the future. The terminology thing drives me nuts, but I suspect I might be the only person who is bothered by it. And it’s not enough to dampen my enthusiasm for this tool.

The Bottom Line

So far, OnTrajectory is the best traditional retirement calculator I’ve found. (As I said, I like NewRetirement better, but it takes a different approach.) It’s a comprehensive, complex tool — but the interface is never overwhelming.

If the interface does become overwhelming or confusing, OnTrajectory features extensive (and useful) documentation. In nearly every section of the screen, you can click on a little info button to bring up the on-line manual. This guide provides answers and tips on all of the functions and features. Impressive.

OnTrajectory help feature

For me, the killer feature is that OnTrajectory not only allows you to save your data, but also to create and save multiple scenarios. You don’t have to re-enter your data each time you want to check on your progress. And if you want to play with possibilities — what if I were to quit my job and take a more meaningful non-profit position? — it’s super simple to do so…without trashing your existing info!

“We’re all about the what-ifs,” Koska told me during our call last week. OnTrajectory is specifically designed to let users explore possible futures. “We let people play with a lot of variables, but our goal is for the interface to never become overwhelming.”

The bottom line? OnTrajectory is like the Personal Capital retirement calculator on steroids. It has everything I like about the PC tool, but is much more customizable. In fact, I like it so much that I signed up for a paid account!

Author: J.D. Roth

In 2006, J.D. founded Get Rich Slowly to document his quest to get out of debt. Over time, he learned how to save and how to invest. Today, he’s managed to reach early retirement! He wants to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you reach your goals.



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2-Minute Money Manager: Should I Fix My House Before I Sell It?


Photo by Kzenon / Shutterstock.com

Welcome to “2-Minute Money Manager,” a short video feature answering money questions submitted by readers and viewers. You can learn how to send in a question of your own below.

If you’re not typically a video watcher, give it a try. These videos are short and painless, and you’ll learn something valuable. But if you can’t deal with video, no problem: Just scroll down this page for the full transcript of the video, as well as some reader resources.

Today’s question is one I’ve gotten many times over the years, and one I’ve had to deal with personally: Is it worth dumping more money into a house when it comes time to sell?

Here’s what I think.

For more information on this topic, check out “How to Price Your Home So It Sells for Top Dollar” and “12 Ways to Blow Your Home Sale.” You can also go to the search at the top of this page, put in the words “home selling” and find plenty of information on just about everything relating to this topic.

Got a question of your own to ask? Scroll down past the transcript.

Don’t want to watch? Here’s what I said in the video

Hello, everyone, and welcome to your “2-Minue Money Manager.” I’m your host, Stacy Johnson, and this answer is brought to you by MoneyTalksNews.com, serving up the best in personal finance news and advice since 1991.

Today’s question is from Joyce. It’s long, but it’s important to read the whole thing and to pay attention to the improvements Joyce needs to make in her home:

We want to sell our home, but it needs a lot of work. The work varies, (including) the wood trim needing painting — half of some windows are stripped of paint and stain and other windows are finished. Plaster in the bedroom closet near the fireplace needs repair. (There is a) small basement leak with heavy rain. Do we take out a loan for repairs and expect to get our investment back? I don’t know what to do.

Let’s go over those repairs again. Joyce has got:

  • Wood trim that needs painting
  • Some windows stripped of paint and stain
  • Plaster in the bedroom closet near the fireplace that needs repair
  • A small basement leak when there’s heavy rain

I’m wondering why you’d need to borrow money to fix this stuff. It doesn’t seem all that expensive to me, especially if you can do most of the work yourself.

But to answer your question, Joyce, you always want to have your house in the best possible condition when you sell. The reason is simple: There are a lot more people looking for homes that don’t need work than looking for homes that do.

You always want to do the simple things. Major improvements are different, because it may be hard to recoup your investment. But you certainly want to do the easy stuff. One of the cheapest and easiest things you can do is paint.

I hope you don’t need to take out a loan to do a little painting. So, try to do whatever you can with whatever money you have to make your home look as good — and to be as serviceable — as possible. The better it looks, the faster it’s going to sell, and the more money you’re going to get.

If you’re using a real estate agent, ask him or her for advice. Your agent may also be able to refer you to an inexpensive handyman. But, by and large, do everything you can to get your house in as good a shape as it can be before you put it up for sale.

There is also lots of information online about how to stage your house. For example, you’ll learn about simple things like decluttering, removing personal pictures and giving it a good cleaning. There’s plenty you can do to make your house presentable; even painting the front door can really help give it curb appeal. Take a look at some articles, do what you can to fix up your house, and borrow as little as possible.

Have a super-profitable day and be sure to meet me right here next time!

Got a question you’d like answered?

You can ask a question simply by hitting “reply” to our email newsletter, just as you would any email in your inbox. If you’re not subscribed, fix that right now by clicking here. It’s free, only takes a few seconds, and will get you valuable information every day!

The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.

About me

I founded Money Talks News in 1991. I’m a CPA and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.

Got any words of wisdom you can offer on today’s question? Share your knowledge and experiences on our Facebook page. And if you find this information useful, please share it!

Got more money questions? Browse lots more Ask Stacy answers here.



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Best Austin Mortgage Lenders of 2019


Austin is a tech hub, the state capital and home to the University of Texas. It’s no surprise that the city is growing rapidly. The surging population needs places to live, and plenty of mortgage companies are competing to help Austin home buyers realize the American dream.

» MORE: Find out about Texas first-time home buyer programs

NerdWallet is all about simplifying your search for the right mortgage lender for you. We have rounded up this list of national and regional mortgage lenders that we have reviewed and that do a lot of lending in Austin. In addition, we’ve listed some locally based lenders that we have not reviewed, but which do plenty of business in Austin.

NerdWallet recommends that you shop at least three mortgage lenders to increase your chances of getting a great deal on your home loan.

National and regional mortgage lenders in Austin

These lenders serve mortgage borrowers in most or all states, and they are among the most popular providers in Austin.

 

 

 

 

 

 

 

 

 

 

Local mortgage lenders in Austin

These lenders are based in Austin, know the city well and are experienced in mortgage lending. They have not been reviewed by NerdWallet.

UNIVERSITY FEDERAL CREDIT UNION

  • Plenty of mortgage options from one of Austin’s busiest mortgage lenders.
  • Offers an array of fixed-rate and adjustable-rate mortgages.
  • Products include VA loans for active-duty military and veterans; Community Hero loans for teachers, firefighters, police officers and military; and Medical Community loans for doctors and nurses.
  • Mortgage services from application to closing are handled by UFCU and not outsourced to a third party.
  • Loans to buy land are available.
  • Members may use a mobile app to begin the application process.

Capstar Lending

  • Works with home buyers who want to participate in Texas’ home buyer assistance programs.
  • Participates in Texas bond programs to provide down payment assistance as well as tax credits.
  • Conventional loans with minimum 3% down payment and minimum credit score 620.
  • Offers FHA loans with minimum 620 credit score and VA loans, which don’t require a down payment.

Sente Mortgage

  • Offers borrowers a wide choice of mortgage programs from a homegrown lender.
  • Offers fixed-rate, adjustable-rate, VA, USDA, FHA, jumbo and construction loans.
  • You can start the application online and track the mortgage status.
  • Click to schedule a call from a loan officer if you prefer to speak to someone before or during application.

A+ Federal Credit Union

  • Options for home buyers and refinancers who want to get a mortgage from a local credit union.
  • Offers 15- and 30-year fixed-rate loans and 5/5 and 10/10 ARMs.
  • Down payments on fixed-rate loans as low as 5%.
  • Apply for a mortgage pre-qualification online in English or Spanish.
  • Join by making a one-time $10 payment to the A+ Education Foundation or being affiliated with a qualifying school, business or organization.

Best Austin mortgage lenders: summary

More from NerdWallet

NerdWallet’s selection of mortgage lenders for inclusion here was made based on our evaluation of the products and services that lenders offer to consumers who are actively shopping for the best mortgage. The six key areas we evaluated include the loan types and loan products offered, online capabilities, online mortgage rate information, customer service and the number of complaints filed with the Consumer Financial Protection Bureau as a percentage of loans issued. We also awarded lenders up to one bonus star for a unique program or borrower focus that set them apart from other lenders. To ensure consistency, our ratings are reviewed by multiple people on the NerdWallet Mortgages team.



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Baby Checklist for Second-Time Parents


While becoming a parent is one of the best things that ever happened to me, it was something that I never knew I wanted. I wasn’t one of those kids who dreamed of being a mommy. In fact, I didn’t particularly like children.

But that changed when I was faced with a positive pregnancy test. My daughter Rose was born in April 2015, and while I found it hard to adjust to life as a parent, I knew that my life was more complete with her in it.

Then, in 2017, my husband Ben and I decided to try for a second baby. This time we knew what to expect. We’d saved all Rose’s baby things, so we knew we wouldn’t need to stock up on as many essential items. However, I found out that didn’t mean we wouldn’t need to spend any money on baby items.

Both before and after our son Liam was born in August 2018, we stocked up on some essentials we knew from experience we would need — and a few we hadn’t anticipated. Here’s our second baby checklist, and what some of my second-time (and third-time and fourth-time) mom friends, needed.

Yes, the Double Stroller Is Worth It

Hiles’ daughter Rose sits in the family’s secondhand double stroller, a model that can be pushed while jogging or converted to trail behind a bicycle. Photo courtesy of Catherine Hiles

As a working mom, I didn’t get to use my BOB jogging stroller as often as I would have liked with Rose. But when I did use it, I loved taking her out for walks and runs, and she enjoyed being outside.

I went back and forth on buying a double jogging stroller when I was pregnant with Liam. I wasn’t sure how much I would use it now that Rose is too independent to ride in the stroller very often.

But some of my mom friends with kids closer in age said that they couldn’t live without their double strollers. My friend Naomi Sohaba got great use out of hers. “A decent double [stroller made] it easier to get out and about, because that’s easier than staying at home with two littles,” she told me.

Rather than splurging on a new double BOB, Ben and I bought a secondhand double stroller from some friends. It can also be used as a bike trailer, so we’ll get extra use out of it that we wouldn’t have gotten with the BOB. While Rose is reluctant to ride in a single stroller, she’s happy to hang out in the double to go for bike rides.

You May Need Different Bottles

Birzio/Getty Images

I kept the bottles from when Rose was a baby, but as any parent will tell you, there was no guarantee Liam would like the same types of bottles. Regardless, I stocked up on new nipples for the bottles I had so I would be prepared.

Second-time mom Sara Frank found out how picky babies can be when it comes to bottles. “Owen wouldn’t use the same bottles as Amelia, so we had to buy new ones,” she told me.  

Sadly, Liam wasn’t a fan of Rose’s bottles. We bought a different brand and he gave them the thumbs-up (though not literally).

Invest in a Better Diaper Bag

The main thing I looked for in a diaper bag for Rose was style. I wanted something Ben would be happy carrying around, so I went with a cross-body bag called a Diaper Dude. I soon discovered that the cross-body style was impractical and uncomfortable, so we opted for a backpack instead.

But when Liam was born and I dragged our old diaper bag out of the basement, I discovered that mice had been munching on some leftover snacks in the bag and left behind their calling cards (i.e., their poop). I threw the bag out and bought a new one, sticking to the backpack style.

As a mom of three, Kathryn Dowell splurged on a diaper bag the second time around. “I think mostly I upgraded to what I actually wanted [with my second baby],” she said. “[With] the first, I was guessing and going off other people’s experience. After that, I knew my parenting style and was willing to buy nicer versions of what I knew I needed, [like a better] diaper bag.”

Most of the moms I asked agreed. They either needed bigger diaper bags for two children close in age, or better versions of the ones they used the first time around.

Baby Carrier

A dad carries his one-year-old son in a soft-structured Lillebaby carrier on a hike in Boulder, Colorado. Sharon Steinmann/The Penny Hoarder

A baby carrier is one of the biggest essentials for any parent, in my opinion. A good carrier allows you to hold a needy baby while leaving your hands free to grocery shop, make dinner or do chores. With a second baby, I’ve found that a carrier becomes even more essential, as it allows you to play with your other child while holding the baby.

With baby number one, most parents don’t know the wide range of baby carriers out there and will settle for what’s available at their local box store.

With Rose, I registered for a Moby Wrap and called it a day. But as I got more involved with babywearing, I realized how many options were available and upgraded to a soft-structured carrier. I used the carrier until Rose was about two and a half and refused to be carried anymore.

With Liam, I sold my pink LILLE baby carrier and opted for a black and white one instead. I also purchased a quality ring sling to keep in the car for grocery shopping and other quick trips.

Don’t Rely on Hand-Me-Downs

If you have two children of the same gender, you might be able to get away with reusing the same clothing — unless they were born in different seasons.

My friend Halie Best’s two girls are 20 months apart, so she had to buy winter and spring clothes for her second baby rather than reusing her first daughter’s summer clothes. She also purchased another set of swaddle blankets for her second daughter.

Although I had saved all Rose’s baby clothes, there weren’t many I could use for Liam. I bought some clothes for him and received others as gifts or hand-me-downs, for which I was extremely grateful.

“Fortunately, people gave us boy clothes,” said Frank, who has a three-year-old daughter and a one-year-old son. If you have friends who have babies, ask if they have any clothes they would be willing to give (or even lend) you to save money.

Look Into Subscriptions and Memberships

Steve Debenport/Getty Images

Rather than having to go to the store every few days for baby items, Amanda Margraf signed up for an Amazon Prime Pantry subscription, which offers $6 off orders containing five qualifying items. Amazon currently offers existing Prime members a 30-day free trial of Prime Pantry, and it’s $4.99 per month after that to subscribe.

Margraf’s essential items included sanitizing wipes, Diaper Genie refills, baby wipes and diaper cream. Now that her babies are older, she still uses the subscription for household items like toilet paper.

You can also sign up for subscriptions for diapers and wipes through The Honest Company and other similar websites. In addition to saving you money, a subscription service means you don’t have to remember to buy these items from the store, as they are delivered directly to your door.

Ben and I bought a Costco membership when Rose was a baby, which paid for itself in formula purchases alone. We still have our membership, and luckily, Liam tolerates the Kirkland brand of formula, so we are able to save in the same way we did when Rose was little. If you use disposable diapers, those savings only increase, as you can buy in bulk to save money.

Whether you’re expecting your second, third, fourth or fifth baby, there are always items to add to the baby checklist, even if you kept everything from your other kids. But stick to the essentials and your new addition doesn’t have to mean breaking the bank.

Catherine Hiles is a proud mother of two adorable kids. She freelances in her spare time, in addition to reading, running and cooking food containing hidden vegetables.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.



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How to Find a Great Real Estate Agent (Realtor) You Can Trust


Would you consider hiring a home improvement contractor without first checking references and analyzing their portfolio of past work? Probably not. Most people do their research before they hire service professionals like roofers, plumbers, and general contractors to make sure they find someone trustworthy.

However, this due diligence often falls by the wayside when it comes to hiring a real estate agent. Yet buying or selling a home is one of the biggest financial decisions you’ll make, and finding the right person to represent your interests is key to getting the best deal or the best return on your investment.

If you choose the right real estate agent, the process will go relatively smoothly. However, the wrong agent can wreak havoc on a transaction and possibly even lose you the sale entirely. In other words, it’s a big decision.

But what should you look for when hiring a real estate agent? What red flags should you watch out for? Here’s what you need to know to find a great real estate agent.

What Type of Agent Do You Need?

First things first: Are you buying a home or selling a home? This answer is key to figuring out the type of agent you need.

Agents who work with homeowners selling a home are called “seller’s agents” or “listing agents.” These agents represent the interests of the homeowner during the listing and negotiation process.

Agents who work with homebuyers are called “buyer’s agents” or “selling agents.” These agents represent the interests of the buyer during the showing and negotiation process. Some buyer’s agents work exclusively with buyers, meaning they don’t list any homes at all.

The terms “seller’s agent” and “selling agent” often confuse people in the home buying and home selling process because they sound almost identical. However, they represent different parties with different interests. Seller’s agents represent the party selling a home, while selling agents represent the party buying the home; however, they’re only called a “selling agent” once the final contract is signed.

Dual Agents

Some agents are called “dual agents,” which means they’ve agreed to represent the interests of both the buyer and seller during the home buying process.

Here’s how it works. Imagine you walk into an open house and fall in love with the place. It’s a hot property, and you know it’s not going to last. You just started your home search and don’t have your own agent. However, the listing agent is on site and would love to help you make an offer on the home right there. You don’t want to wait to get your own agent, so you agree to work with her. In this case, you just entered a working relationship with a dual agent.

Dual agency is controversial because agents are forced to walk a very fine line and stay neutral throughout the process. After all, they’re representing a seller who wants to get the highest price possible for their home and a buyer who wants to get the lowest price possible for that same home.

There’s also a potential conflict of interest because of commission. In a typical sale, the buyer’s agent and listing agent split the roughly 6% commission, getting roughly 3% each. A dual agent keeps 100% of the commission, which means it’s in their best interest to sell a home for the highest price possible. This works out great for the seller, but not so great for the buyer.

Many real estate professionals feel strongly about dual agency, with good reason. Dual agents are legally prohibited from taking sides in the transaction or sharing confidential information. So they get double the commission while providing less advice and guidance to both parties. Most of the time, the only person who really benefits is the agent.

Dual agency is only legal in some states, such as California and Texas. In the states where it’s allowed, agents are legally bound to disclose their dual agency before a contract is signed. To find out if dual agency is legal in your state, simply Google “Is dual agency legal in” along with your state’s name.

How to Find a Great Real Estate Agent

Not every agent out there will be the right fit for you. Even highly successful agents have their downsides.

For example, the top-selling agent in your area might have an impressive advertising budget and a large team in place to assist clients. However, this might mean you end up working with several different people throughout the buying or selling process. If you’re looking for personal attention, this particular agent might not be the best fit.

On the other hand, you might come across an agent with much less experience but whose personality fits perfectly with yours. You suspect that their drive to make you happy — and receive some much-needed referrals and testimonials in return — might be more important than experience alone.

There’s a lot to consider when it comes to finding the best agent for your situation. Here’s how to get started.

1. Create a Short List of Agents

Thanks to Google, you can easily find dozens to hundreds of agents in your area with a few keystrokes. However, you’ll usually find more detailed information on agents through a real estate website.

One of the best places to start your search is Zillow’s Agent Finder, which allows you to see a full list of local agents with their client testimonials and recent listings. The recent listings feature is especially useful. First, you can use it to find agents who have recently worked with sellers or buyers in the area you’re considering. If you’re selling your home, it also lets you analyze how each agent photographs and markets their listings. For example, does each listing look professional and appealing? Is there a video tour?

Other helpful websites include Realtor.com and HomeLight.

Make a list of at least three agents you’re interested in interviewing.

2. Ask Lots Questions

Now that you’ve got a short list of agents, your next step is to talk to them in person. Yes, you can do a phone interview, but meeting in person is better.

A face-to-face meeting allows you to really get a feel for who this person is, what their values are, and whether or not their personality will fit well with yours. This is the person who will be guiding you through a stressful, and financially significant, process; you need to feel comfortable talking with them. You also need to know if they’re going to tell you the truth instead of sugar-coating some bad news. And you need to know that you share the same core values.

Real Estate Agent Interview Meeting Asking Questions

Start with these general questions:

  • Do you work in real estate full-time?
  • How long have you been licensed?
  • Are you a member of the National Association of Realtors (NAR)? (The NAR requires additional training and adherence to a strict code of ethics.)
  • Do you work with a team? If so, will I primarily work with you or someone else?
  • How much of your business comes from referrals?
  • What is your average number of current clients?
  • How do you like to communicate? (For example, your agent might prefer quick texts to pass along information, while you’d rather have a phone call. Make sure you’re on the same page here, as good communication is key to a successful working relationship.)
  • Has a client ever filed a complaint against you or your agency? If so, how did you handle it?
  • Have you won any professional awards?
  • What kind of contract do you offer? What happens if I’m unhappy with our working relationship?
  • What do you like best about being a realtor? What do you like least?

These questions are a great way to get the conversation started. However, you’ll need to ask additional questions depending on if you’re buying or selling.

If You’re Selling a Home

If you’re selling a home, ask potential agents the following questions:

  • How many sales did you close this year?
  • How many homes have you sold in my area? Were they in a similar price range as my home?
  • How many of those homes sold at or near the list price?
  • Do you require pre-qualification or pre-approval from a mortgage company before showing homes?
  • What is your fee? What other real estate fees will I be responsible for? (Keep in mind that real estate fees are negotiable.)
  • What is your marketing strategy for a home like mine?
  • Do you use a professional photographer or home stager?
  • What do I need to do to get my house ready for sale or increase its curb appeal? (They might have some suggestions for remodeling projects to increase your home’s value.)
  • Do you host open houses?
  • How long do you think it will take to sell my home?
  • Who is my target buyer?

If You’re Buying a Home

If you’re buying a home, consider these questions:

  • How familiar are you with the areas or neighborhoods I’m interested in?
  • Is there anything happening in this area or neighborhood that I should know about? If so, will these changes affect home prices now or in the future?
  • What times are you available to show houses?
  • How often will you send me new listings that match what I’m looking for?
  • Can you recommend other professionals I’ll need, such as a home inspector?
  • How long does the typical buying process take with you?
  • How many homes do you show buyers, on average, before they make an offer? (This is an important statistic because a good realtor will know what their clients want and will have to show fewer homes before finding the right fit. This saves time and energy for everyone involved.)
  • Do you attend each home inspection? (Agents who attend home inspections can ask the home inspector detailed questions directly; this information can help them negotiate a lower price.)
  • What is your sale-to-list ratio for your last 10 transactions? (The difference between the sale price and list price will give you an important clue about how good this agent is at negotiating.)

3. Talk to Past Clients

Once you’ve interviewed several agents in person, it’s essential to talk to some of their past clients. Ask each agent to provide you with contact information for at least three clients they’ve worked with in the past year.

Consider asking these clients the following questions:

  • How was your experience with this agent overall?
  • What did you like best about this agent? What did you like least?
  • If you sold your home, how did the agent market your property? Do you feel it was effective? How long was your home on the market?
  • If you bought your home, do you feel the agent was willing to show you every property you were interested in? Did you feel they understood what you really wanted in a home?
  • Were they quick to respond to phone calls and email?
  • Are they a good listener?
  • What was your home’s list price and final sale price?
  • Do you feel this agent got you the best price possible?

4. Verify Their License

It’s hard to believe that someone would lie about being a licensed real estate agent, but it happens. Fortunately, there’s an easy way for consumers to check that an agent’s license is legitimate. The Association of Real Estate License Law Officials (ARELLO) has a searchable database that allows consumers to verify any agent’s license or registration.

Working With New Agents: Pros & Cons

If you’re considering working with an agent with little or no experience, then you need to find out more about their current situation and future goals.

For example, many agents begin their careers selling homes on the side while still holding down a full-time job. While there’s nothing wrong with this, it’s important to find out whether this agent will have the time and flexibility you need. Consider these questions:

  • Will you be able to return phone calls or emails during the day, or only in the evening?
  • Will you be limited to showing homes only on the weekend?
  • Do you have a mentor you can turn to if the negotiation process gets tricky or unfamiliar?
  • Have you attended any recent conferences or seminars? If so, which ones?

Keep in mind that new agents won’t have the experience of seasoned professionals; real estate is definitely a “learn as you go” profession. This lack of experience can be a drawback at the negotiation table, especially in complex transactions. Are you comfortable being part of this agent’s learning process?

That said, new agents are hungry for both clients and experience, and as the old saying goes, “The hungry wolf hunts best.” An inexperienced agent will likely bend over backward to meet your needs and make you happy, and they’ll probably have plenty of time to give you one-on-one attention. Weigh what you want and what you’re comfortable with before signing a contract

Red Flags to Look Out For

According to ARELLO, as quoted by NAR, there are around 2 million active real estate agents in the United States. That means there are plenty of great agents to be had. It also means you’re likely to run into some bad apples.

Make sure you find an agent who’s right for you by keeping an eye out for these red flags.

1. They Want to List Your Home at a High Price

If you’re selling your home, the initial list price is key to a successful sale.

Hopefully, you’re planning on interviewing at least three listing agents. Each of these agents should be able to tell you what they’d like to list your home at. This list price is based on a number of factors, including your location, square footage, recent comparable sales in your area (called “comps), and the home’s age and condition.

All the agents you interview are using the same information to price your home, which means that all the quotes should be pretty similar. Beware of an agent who prices your home significantly higher than other agents you interviewed; this is a sign of inexperience, greed, or both.

A price that’s too high means that many prospective buyers won’t even look at your home because it’s out of their budget or simply too expensive for what they’d be getting. Your home will languish on the market for months longer than a more competitively priced home, and it might even sell for much less than it would have with an accurate starting price.

2. They’re a Poor Communicator

All too often, a lack of communication is the No. 1 complaint from people working with real estate agents.

Clear and timely communication is essential in the home buying and home selling process. Real estate agents need to be great communicators to effectively help their clients and ensure that this complicated process comes to a close successfully. In some cases, you’ll be communicating with this person on a daily basis.

Look carefully at a prospective agent’s emails to you, their marketing materials, and their website or blog. Is their writing clear and free of errors? Is it easy to understand what they’re talking about? When you initially contacted them, did they return your call or email in a timely fashion? During the interview, do they take the time to listen to what you’re saying, or do they cut you off and start talking?

Poor writing and communication skills could mean that the agent won’t convey important information quickly or clearly, or it might signal that they’re just too busy to work with you. Either way, move on.

3. They Don’t Ask Questions

Great agents are great listeners. They know that the key to a successful working relationship hinges on understanding what you want and need.

A good agent will take time to find out more about your dreams and goals. For example, if you’re buying a home, a good agent will want to know if you’re an investor or looking for a long-term home. If you’re selling, a good agent might ask about your timeline, pricing flexibility, and what you’re looking for in the relationship.

These are just a few examples; the point is that a good agent will ask questions to learn what you’re looking for. If the agent keeps mum, go with someone else.

4. Their Commission Is Low

The seller pays real estate commissions, which are is usually included in the list price of the home. Typically, commissions are 6%, which is split between the listing agent and buyer’s agent.

If an agent quotes you a commission lower than 5%, beware. They might be trying to win your business by offering you a deal, but this ultra-low commission will likely scare off other agents who don’t want to share such a low fee.

Final Word

Buying and selling a home is emotional and stressful for many reasons. A lot is at stake, and it’s one of the biggest financial decisions you’ll make in your life. Finding the right agent for your situation is key to making sure the transaction goes smoothly and everyone walks away happy.

When I sold my first home, I didn’t give any thought to who my listing agent would be — a common mistake for first-time homebuyers. I went with the agent we’d used when we bought the home because she was friendly and we knew her.

While she was a good buyer’s agent, she was a terrible listing agent. She priced our home way too high for the market, did zero marketing, and as a result, it took over two years to sell. I finally wised up and found an amazing agent who sold our home within a few months of taking over the listing.

If I’d done my homework from the get-go, our home likely would have sold quickly and at a competitive price. Instead, it languished on the market, and we lost almost $40,000. It was an expensive mistake we’ll never make again. We’re getting ready to sell our current home, and you can bet we’ll be interviewing several agents to find the right one for our situation.

Do your research. Yes, it takes time and effort, but choosing the right agent will pay huge dividends in the long run.

Have you worked with a great (or not-so-great) agent when buying or selling your home? What was your experience like?



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Personal Finance 101: How Tax Brackets Actually Work


Right now, with the confluence of tax season and a lot of public discussion about tax rates going forward, many people are discussing the ins and outs of how taxes work in the United States. Over the last few days, I have seen several people post tax thoughts on social media and on otherwise reputable websites that represent a wildly incorrect view of how tax brackets actually work.

What follows is a simple primer on how income tax brackets work in the United States.

What Are the Current Tax Rates for Single Filers?

As of this writing, the tax rates for single filers in the United States look like this:

10%: $0 to $9,525
12%: $9,526 to $38,700
22%: $38,701 to $82,500
24%: $82,501 to $157,500
32%: $157,501 to $200,000
35%: $200,001 to $500,000
37%: $500,001 or more

The dollar amount listed is a person’s adjusted gross income, which is the amount a person actually earns in a year minus their tax deductions. For many Americans, it’s how much they earn in a year minus the standard deduction, which is $12,000 this year.

So, let’s say you earned $30,000 this year and then took the standard deduction. Your income for the purposes of calculating taxes is $18,000.

We’ll stick with the rates for single filers as an example, just so everything is incredibly clear.

Often, each of those levels is known as a “tax bracket.” So, someone making $120,000 a year might be described as being in the 24% “tax bracket.” However, being in the 24% “tax bracket” does not mean that you’re paying 24% of your income in income taxes. That is a huge misunderstanding.

The Water Fountain Model

The mental model that works best for me is visualizing tax brackets as one of those large fancy tiered water fountains, where the top part of the fountain is small, the next part is a little bigger, and the next part is a little bigger than that, and so on.

With such a fountain, when the top portion fills up with water, it overflows, and the water overflow is caught by the next portion of the fountain. Eventually, that portion overflows, causing the portion below it to start filling with water.

That’s the way income taxes actually work. You start dumping income into the top bracket – the 10% bracket – and that’s the tax rate you pay until that bracket overflows. You keep pouring your income in, but now it goes into the 12% bracket and that’s the rate you pay until that bracket overflows. You keep pouring income in, but now it goes into the 22% bracket and that’s the rate you pay until that bracket overflows, and so on.

Even if you end up dumping money into the 24% or the 35% bracket or whatever, you still have some of your income sitting in that 10% bracket and that 12% bracket, and that’s all you pay for those portions of your income. Just because your income overflowed that lower tax bracket doesn’t mean that you suddenly have to pay more on the portion of your income that was in that bracket.

In other words, you break your income up into pieces that are equal in size to each tax bracket. When you earn more income, all you do is make the piece in the highest tax bracket bigger – you don’t change any of the others. If that piece gets bigger than that bracket, then you start another piece in the next bracket up.

A Real Example

Let’s jump into a real world example here. Let’s say Connie, a single woman, made $100,000. She does her taxes and takes the standard deduction, knocking $12,000 off of her total. She’s taxed on $88,000 of her income.

Here are the relevant rows of that income tax table from earlier in the article:

10%: $0 to $9,525
12%: $9,526 to $38,700
22%: $38,701 to $82,500
24%: $82,501 to $157,500

Many people make the mistake of assuming that Connie will be paying 24% of her income in taxes, but that’s not remotely true. Here’s how it actually works.

On her income up to $9,525, Connie is going to pay 10% in taxes – $952.50. That leaves her with $78,475 in taxable income, but now the 10% bracket is full, so we move up.

On her income between $9,526 and $38,700 – or, in another way of looking at it, the next $29,175 in income she earned that year – Connie is going to pay 12% in taxes. That equals $3,501 in taxes. That leaves her with $49,300 in taxable income, but now the 12% bracket is full, so we move up.

On her income between $38,701 and $82,500 – or, in another way of looking at it, the next $43,800 in income she earned that year – Connie is going to pay 22% in taxes. That equals $9,636 in taxes. That leaves her with $5,500 in taxable income, but now the 22% bracket is full, so we move up.

On her income between $82,501 and $157,500 – or, in another way of looking at it, the next $75,000 in income she earned that year – Connie is going to pay 24% in taxes. However, she isn’t filling up that full bracket. She only has $5,500 of her income in that range. So, her taxes on that last $5,500 is $1,320.

So, her tax total is:
$952.50 from the 10% tax bracket, plus
$3,501 from the 12% tax bracket, plus
$9,636 from the 22% tax bracket, plus
$1,320 from the 24% tax bracket.

The sum total of Connie’s taxes is $15,409.50.

Now, notice that total is not 24% of her income. If she were truly paying 24% of her income in income taxes, her total tax bill would be $24,000. Instead, it’s $15,409.50. Connie is in the 24% tax bracket, but her actual effective tax rate is only 15.4%.

If Connie were to have earned more than $100,000, then all of that additional money would have been taxed at 24%, but that’s not what she’s actually paying on her income.

For example, if Connie had earned $110,000 this year instead of $100,000, her total tax bill would have been $15,409.50 plus $2,400, or $17,809.50. Connie’s effective tax rate would go up a little – she’s now paying $17,809.50 on a total income of $110,000, or 16.2% – but she’s still not paying anywhere near 24% of her income in income taxes.

Even if Connie had a huge increase in salary – bumping her up to $200,000 a year – she would edge into that 32% tax bracket, but her overall tax rate wouldn’t be 32%. Rather, her income tax would be
$952.50 from the 10% tax bracket, plus
$3,501 from the 12% tax bracket, plus
$9,636 from the 22% tax bracket, plus
$18,000 from the 24% tax bracket, plus
$13,600 from the 32% tax bracket.

That would give Connie a total of $41,849.50 in taxes on a $200,000 income, or a 20.9% effective tax rate. Connie might be in the 32% tax bracket, but she’s only paying 20.9% of her income in taxes.

Some Takeaway Thoughts

First of all, the idea that earning more will somehow “cost you money” is foolish. The more you earn, the more you keep. Every single additional dollar that you earn, you’ll keep some large portion of it, regardless of your total earnings.

Many people and many otherwise accurate articles misrepresent this idea. They paint the picture that if you cross the line into the next tax bracket, you’ll suddenly have to pay more taxes on all of your income, so, under this misunderstanding, earning a little more if you’re close to the line can cost you money. That is completely false – earning more money always means more money in your pocket.

What the tax brackets are actually telling you is how much comes out of each dollar that you earn. For the first $9,525 you earn, only 10% comes out of each dollar no matter how much you make in total. That statement remains true regardless of whether you’re earning $15,000 a year or $1.5 million a year. For the next $29,175 you earn, only 12% comes out of each dollar no matter how much you make in total. Again, this statement remains true regardless of whether you’re earning $15,000 a year or $1.5 million a year.

Even if the highest income tax bracket were paying a rate of 70%, a proposal that’s making the rounds these days, you would still only pay a 10% tax rate on the first $9,525 you earn, regardless of how much you earned in total. You just pay the 10% on that part, then forget about it and only worry about taxes on the rest.

Another thing worth noting: the average American household income is around $70,000. If you’re a single person making $70,000 a year, you’re only in the 22% tax bracket and your effective income tax rate is somewhere around 11%. Most tax changes will have very little impact on your life.

If you’re earning $70,000 a year and the 22% tax bracket became a 25% tax bracket, it would literally only add $939 to your total tax bill. That would be about $18 from every paycheck, assuming you’re paid every other week. It would not eat 3% of your income – rather, it would eat about 1.3%.

Thus, I would encourage most Americans to not worry too much about changes to income tax laws. The only changes that will affect most Americans are adjustments to the lowest tax brackets, and those rarely change at all. They might dip up or down a percentage point or two, but those amount to just a few bucks in the paycheck of the average American household.

A final note: be very wary of absurd financial claims that don’t pass the common sense test. If someone is claiming that earning more money will actually somehow cost you money, that should fail the common sense test – and it does, because that’s not how tax brackets work. If someone is claiming that a tax change will cost you thousands, it might if you’ve got a huge income, but for most Americans, tax changes rarely have that much of an impact – it’s usually in the realm of a few dollars in your paycheck.

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Why NewRetirement is my favorite retirement planning tool


Over the past week, I’ve shared two terrific retirement planning tools. First, I explored the pros and cons of Personal Capital. Next, I looked at OnTrajectory, which is the best traditional retirement calculator I’ve found.

NewRetirement logoToday, I want to talk about NewRetirement. Since I discovered it two years ago, NewRetirement has become my favorite tool for retirement planning.

I like NewRetirement because it offers amazing levels of customization. Plus, it explains its assumptions and offers ample information about every subject it tackles. And it does all of this without ever becoming overwhelming. It’s comprehensive and customizable, yet clear. Most importantly, NewRetirement is more than just a retirement calculator. When I say it’s a retirement planning tool, I mean that.

NewRetirement offers three levels of service.

  • Planner, the basic level of service — and the bulk of what I’ll review in this article — is free. You do need to provide an email address, but once you do, you’re able to create a personalized retirement plan. (I’ll show you what that’s like in a moment.)
  • If you like the basic level of service and want more, you can upgrade to PlannerPlus for $6/month. This gives you access to advanced retirement planning tools, more detailed reports, and the ability to print your plan. (NewRetirement is offering GRS readers a 30-day free trial of PlannerPlus, by the way.)
  • At the highest level, you can pay NewRetirement for personalized advice from a Certified Financial Planner. Unlike Personal Capital, NewRetirement won’t pester you over and over to use their advisors. But the service is available for those who need it.

As I mentioned, I’ve been using NewRetirement for a couple of years. In order to give an honest and complete review today, I created a second NewRetirement account and walked through the process of setting everything up from scratch. Do I still like the tool as much as I did in April 2017? Let’s find out.

Disclosure: Before I begin this review, I need to make one thing clear: I am an investor in NewRetirement. When I first found the service two years ago, I liked it so much that I started an email conversation with founder Stephen Chen. That grew into a friendship. Since then, I’ve invested $50,000 of my own money into the company. (Also, I was the first-ever guest on the NewRetirement podcast!) Having said that, I’ve done my best to provide an honest review here.

Getting Started with NewRetirement

After you register for an account, NewRetirement starts by asking you a series of basic questions. (You can opt to by-pass these questions if all you want is a simple retirement calculator.) Here’s how I answered using my current financial state.

NewRetirement setup (#1)

NewRetirement setup (#2)

NewRetirement setup (#3)

When you’ve finished entering your basic info, you’re presented with the NewRetirement dashboard. It’s here that you first get a hint that this retirement tool is more robust than any of the others. Front and center is a progress bar…and because you’re new, that progress bar is nearly empty.

NewRetirement setup progress

Even if you didn’t flesh out your initial data, NewRetirement would give you some useful info. (Meaning that if you read this article and want to look at what the tool does, you can click over and get a quick overview of your financial future in just a couple of minutes.)

The fun really starts, however, when you dig deeper into NewRetirement.

Digging Deeper into NewRetirement

As the dashboard implies, NewRetirement features 33 different retirement planning sections divided into ten broad categories.

In each section, you can enter data and/or change assumptions. If all of this were dumped on the user at once, it’d be overwhelming. Fortunately, it’s a step-by-step process that never gets out of control.

The ten main categories that NewRetirement tackles are:

  • Basic profile and goals, including your age, life expectancy, desired legacy, and plans for retirement. (The latter is a written statement. I love it! Most retirement tools are all about the numbers. NewRetirement digs deeper.)
  • Social Security, where you can enter your estimated retirement benefits and start date. If you don’t know what to expect from Social Security, NewRetirement links to the official government website and a Social Security calculator.
  • Work and other income. In this section, you can specify how much you earn from your job, but also input money from dividends, interest, rental properties, and other sources.
  • Annuities and pensions. If you have access to an annuity or pension, you can enter your info in this section. I won’t have either of these, so I skip this section.
  • Savings and assets. This is a large section in which you list your tax-advantaged retirement accounts, regular investment accounts, bank accounts, large assets, and ongoing retirement contributions. Under “other assets”, I included the various businesses I own pieces of (including NewRetirement itself!). I did not, however, value this website.
  • Expenses and inflation. Here you can choose both an optimistic inflation rate and a pessimistic inflation rate. You can also enter any known large one-time expenses in your future, such as buying a home, sending the kids to college, or charitable giving. You can tell NewRetirement which account the expense will come from, the age it will occur, and the reason for the expense. Pretty cool. Lastly, if you think your core spending will change over time, you can specify that here. Right now, for instance, I think I’m spending $5000 per month. If I think that spending will drop to $3500 per month when I turn 55, I could model that in this section.
  • Housing, where you enter the current value of your home, the balance on your mortgage, and project future home appreciation. Another cool feature: You can model future changes to housing or mortgages. If I think that Kim and I will sell our current home and downsize in a decade, for instance, NewRetirement will let me do that. (Minor quibble: When I’m projecting my future, I assume that we’ll sell this house in ten years and then rent a place. NewRetirement won’t let me explicitly model that. My workaround is to model buying a new home for $1, then bumping my monthly expenses by $1500 to compensate for rent.)

NewRetirement downsizing

  • Medical and long-term care. As you probably know, medical costs are one of the fastest-rising yet most oft-overlooked chunks of the average American budget. NewRetirement includes an entire section for modeling current and future health-care costs.
  • Debts. NewRetirement allows you to list all of your current debt (plus links to advice on how to manage your debt, if it’s problematic).
  • Estate planning. This section doesn’t have a lot of resources but offers a bit of information. Plus, it lets you track whether you’ve completed important estate-planning documents.

Nearly every step of the way, NewRetirement offers you the ability to learn more about relevant topics. For instance, when you enter your expected longevity, NewRetirement links you to a life-expectancy calculator and suggests five related articles.

NewRetirement funding goal

As you tick boxes indicating that you’d like to learn more about a particular topic, relevant articles are added to the “info and opportunities” tab in the main menu. This is an excellent, useful feature, something I’ve never seen in another retirement tool.

NewRetirement article list

Forecasting Your Future with NewRetirement

Yesterday, it took me about an hour to work through all 33 retirement planning sections in the NewRetirement tool. I’ve been entering the same info into retirement planning tools for two weeks now, so I know where to find it. If this is your first time, it might take you a bit longer.

When I’d finished, the progress bar in the dashboard was no longer empty. It looked like this:

NewRetirement full progress

The NewRetirement dashboard contains an Analysis section that’s available from the start. After you’ve entered your basic data during registration, you can use this section to look at a forecast for your financial future. But the analysis becomes more useful after you’ve entered more complete information.

By default, the dashboard displays your Savings Over Time graph (which is very similar to the graph that OnTrajectory keeps front and center at all times).

NewRetirement savings over time

There’s a “key metrics” view where you can see the core basic parameters and some of the ramifications.

NewRetirement key metrics

Or, if you want more info, you can access a handful of other charts.

NewRetirement additional charts

I’m a fan of the Savings Timeline chart because it gives me a quick look at my current financial trajectory.

NewRetirement savings timeline

And as much as I preach that you should not compare yourself to others, I like the “compare yourself to others” tool haha. (From my past articles about NewRetirement, I know that other GRS readers like this comparison tool too.)

NewRetirement compare yourself

Just for kicks, here’s the same comparison view from when I first reviewed NewRetirement in 2017:

NewRetirement household comparison

As you can see, there’s plenty available with the free version of NewRetirement. In fact, it’s this free tool that made me rave about the company two years ago. I still love it.

I do think OnTrajectory is a strong competitor for NewRetirement. That’s a good thing. For many people, OnTrajectory may be a better choice. But the features I’ve reviewed so far in this article are free at NewRetirement. OnTrajectory costs money after the first two weeks of use.

In the future, I intend to promote both OnTrajectory and NewRetirement. They’re both excellent. (If you haven’t read it yet, here’s my OnTrajectory review.)

PlannerPlus at NewRetirement

As you can see, the free version of NewRetirement packs quite a punch. Without paying a penny, you can do more with it than with 95% of the other retirement planning tools on the web. But what if you want more?

For $6/month, you can upgrade from the entry-level NewRetirement service to what the company calls PlannerPlus. Doing so unlocks another menu of options.

NewRetirement planner plus

Behind the scenes, NewRetirement takes the data you’ve entered, crunches it based on the tool’s assumptions — investment returns, inflation, health-care spending, etc. — then creates a series of data tables projecting your future financial health. In order to make these raw numbers more accessible, PlannerPlus provides its “Plan Inspector”, which lets you browse dynamic charts to explore your retirement plan.

Here, for instance, I’m looking at how even with optimistic assumptions, my savings will only last until I’m age 75.

NewRetirement plan inspector

With the free version of NewRetirement, you can enter as many expenses as you want, but nothing about the process is guided. It’s all sort of free-form. For many folks, that’s fine. Others want more help, though. For these people, PlannerPlus includes an advanced budgeting tool.

NewRetirement budgeter features

The budgeting tool in PlannerPlus allows users to model expenses at a far more detailed level. For instance, I could use my existing data from Quicken to enter actual expenses for almost everything.

NewRetirement budgeter detail

Most retirement calculators ask for just a couple of Big Picture numbers. The good ones let you explore some level of detail. Like OnTrajectory, NewRetirement allows you to get as detailed as you want so that you can explore a variety of what-if scenarios.

With the PlannerPlus upgrade, you can also customize the software’s alerts. Do you want NewRetirement to pester you when you use faulty assumptions? When your data is incomplete? When you could take steps to improve your future financial health? If so, do nothing. But if the alerts bug you, you can choose which ones to dismiss.

PlannerPlus also allows you to print your plan and/or export it to a spreadsheet.

The Bottom Line

NewRetirement isn’t perfect and I don’t want to pretend that it is. As I worked through the tool yesterday, I encountered a couple of minor bugs. Sometimes I couldn’t figure out how to model my plans for the future. (How do I convey that I think we might sell the house in ten years, then find a place to rent?) For as much reporting as NewRetirement currently offers, it could always offer more. (We money nerds love to have lots of reports and graphs.)

That said, the company is very responsive to bug reports. They update the software regularly, so when users report issues, changes can usually be made within a few days.

Plus, NewRetirement is a work in progress. The company is constantly working to improve things, to give more value to their customers — even the folks who use the free level of service. Every month, founder Stephen Chen sends me a list of coming upgrades and his plans for the company’s future. Much has changed in the two years since I first discovered the tool. Much will change in the years to come.

Ultimately, NewRetirement isn’t a retirement calculator; it’s a retirement planning tool. To me, that’s like the difference between a pocket calculator and a spreadsheet. Each has its uses, no doubt. Sometimes, you want the pocket calculator. But sometimes, you want the more powerful option.

If all you’re after is a quick overview of your financial future, you can use the basic retirement calculator at NewRetirement — or one of the dozens of other retirement calculators on the web. (Use OnTrajectory if you want a robust retirement calculator.)

But if you want to actually formulate a retirement plan, if you want a retirement planning tool that will actually guide you through the process, NewRetirement is an outstanding choice.

NewRetirement is offering Get Rich Slowly readers a free 30-day trial of PlannerPlus. You do have to enter your credit card info to start the trial, but if you decide that the service isn’t right for you, you can cancel without hassle. NewRetirement isn’t a scammy company. They want you to be happy.

Author: J.D. Roth

In 2006, J.D. founded Get Rich Slowly to document his quest to get out of debt. Over time, he learned how to save and how to invest. Today, he’s managed to reach early retirement! He wants to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you reach your goals.



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