Should I Pay My Student Loans or Wait for Student Loan Forgiveness in 2023?

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student loan payments

Update: The Biden administration has elected to erase $10,000 or $20,000 in student loan debt via executive order. The website to apply is already up, and the Republican lawsuits to stop it are already filed. If you have more than $10K or $20K, keep paying, although it will help a lot, it won’t erase all of your student debt. Updated Update: A federal judge blocked Biden’s student loan forgiveness program. I don’t understand the logic of the decision, but it isn’t up to me. The government has appealed, but for now, the form to register for student loan forgiveness has been taken down, and no forgiveness payments or updates have been made. During the 2020 Democratic Primary election, all the candidates threw their weight behind some form of student loan forgiveness. It isn’t hard to see why. Forgiving student loan debit is extremely popular, especially with those burdened by large student loan payments. Now that Biden has announced his partial student loan forgiveness program is it time to financially plan for student loan forgiveness? Let’s dive in and answer the question, should I pay off student loans or wait for forgiveness? The government posted a registration form for student loan …

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Powerball Annuity vs Lump Sum

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powerball lump sum annuity

Without diving too far into business math, let’s take a look at whether you should take the annuity or lump sum Powerball payout. Which Is Better Annuity or Lump Sum? Should you take the Powerball annuity or lump sum? Which one is better? As is so often the case in finance and economics, the answer is that it depends. What Is Powerball Annuity? Before we can know whether lump sum or annuity is better, we need to understand the terms. First and foremost, when they say the Powerball jackpot is $900 million what they mean is that the lottery people will buy an annuity for you guaranteed to pay you $900 million in equal payments over the course of 30 years. In other words, the lottery will buy you a 30-year annuity paying out $900 million. Check out the Grifin review and then the Acorns review. Next, we need to understand that it does not cost $900 to buy a 30-year $900 million annuity. Why? The easiest way to understand this type of annuity is to think about a home mortgage. You borrow $500,000, but you pay back far more than $500,000 because of interest. Most people understand that concept. …

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Not Cashing Savings Bonds to Avoid Taxes

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taxes on savings bonds

There is a common misconception about avoiding taxes by not cashing savings bonds. While there are no penalties for not cashing mature savings bonds, there is no benefit to holding them for tax purposes, either. Sometimes people wonder, “Do savings bonds expire?” For the most part, I typically assume that people who have misinformation came by it honestly. Usually, they didn’t quite understand fully what they read or were told. After all, one of the trickiest things about achieving financial independence and personal finance is that there are so many exceptions and nuances. In a lot of cases, what is absolutely true for one person is not true for someone else because of their individual circumstances. Tax Consequences of Cashing In Savings Bonds Unfortunately, while the internet has given people easy access to vast amounts of information, it does so without any verification that the information published is true. The problem is compounded by those who read something inaccurate and then repeat it elsewhere. This makes the false information seem more valid because it is corroborated by another source, which, in fact, is just repeating something that was wrong. That is why it is so important to verify financial planning …

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What Is ACH?

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ach between banks

ACH stands for Automated Clearing House (ACH). It is governed by NACHA which issues rules and standards. If you can’t comply with Nacha, you can’t be part of the ACH network. What Is ACH Used For? ACH is a way to make payments to bank accounts regardless of which banks are involved. Many companies use ACH to deposit employee paychecks on a regular basis. Most people know this as direct deposit. Direct deposit, whether recurring, or one-time takes place via the ACH network. Consumers also use ACH to automatically pay bills or payments. In this case, the ACH takes money from the person’s account and deposits it in the company’s account. Although the viewpoint has changed, this is the same form of transaction. Using ACH this way is often known as automatic payment. Can ACH Be Used for One-Time Payments ACH can be used for one-time transactions. Many of these transactions originate on the internet. These transactions are referred to as WEB entries. Consumers may log in to financial institutions or bank accounts and make one-time payments or transfers. Examples include, paying some or all of the balance of a credit card account, making a mortgage payment manually, or even …

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Tender Offer ADT Shares

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tender offer adt

I still have to write up my big Webull review (it goes along with my Public, Wealthfront, Robinhood reviews), but suffice to say that during my test of Webull I was granted one share of ADT Inc. stock as part of my “You may receive one share of any stock up to Apple and Microsoft and really awesome stocks that you want to own… <in fine print> or a sucky one valued at at least $4.” Hey, free is free, right? So, it was with some confusion that I received a Time Critical – Must Respond letter from Webull Financial LLC in which they gave me no idea whatsoever what was going on, or why it was time critical. Since this is still Web 2.0, or whatever, they did provide a website where I could take one number from the top of the letter–and after some searching–a number from the bottom of the letter to log into what my wonderous offer might be. A Tender Offer The reason they sent me a letter is because I own shares (one share) of ADT stock. This is technically a tender offer under which I can sell my ADT stock for $9. On …

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Active Investment Managers Underperform Indexes

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better investment performance

Every year or so, somebody freshens up a study that shows active mutual fund managers underperform passive investing, usually in the form of an ETF of the category benchmark. In plain English: Buying the ETF instead of the mutual fund of the same type will generate higher returns for you over the long-run, and often even the short term. So, why are active investment managers so bad? Mutual Funds Cost Money to Run Mutual funds are not charities. They have expenses they need to cover. Expenses include everything from offices to high paid analysts, to traders to execute the trades, to all of the electronics and equipment it takes to monitor and use all the information in the trading world. Oh yes, then there is the matter of profit. These expenses are disclosed to all investors in the required information made available to any investor in the prospectus and on most trading and investment research platforms. Pulled quickly and semi-random is the Dodge & Cox Stock Fund, a large U.S. stock mutual fund. You will notice that compared to the S&P 500 index listed below, our well-respected Morningstar 5-star fund returns less than the S&P 500 over any time period. …

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Smart to Use Roth IRA for College

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roth ira for college

Should I use my Roth IRA for college? As a former financial planner, I would often get these questions from clients who read something somewhere. Much like patients asking doctors about drugs they heard about on TV, such questions rarely ended up being a good idea. When it comes to using a Roth IRA to save for college, it actually is a good idea. Can You Use Roth IRA to Pay for College First, you probably know that a Roth IRA is designed for retirement savings. The corresponding vehicle for parents saving for college is a 529 college savings plan. In general, the best way to save for college is in a 529 plan versus a Roth IRA. However, if you are planning to seek need-based financial aid, a Roth IRA might be the better solution for your family. Can I Use Roth IRA to Pay for College? Let’s start with CAN you use a Roth IRA to pay for college. We’ll look at SHOULD you use a Roth IRA for college next. As you may know, a Roth IRA offers tax-advantaged growth for investments within the account. This creates two kinds of money inside of a Roth IRA. The first …

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Did Americans Really Lose $900 Billion in The Recession

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americans losing money

Anyone who has been online for more than a day or two knows that the way to get clicks is to have a big, shouting, headline. One popular search engine optimization (SEO) plugin won’t give your title a passing score until it has “a positive or negative sentiment.” Ideally, it also contains a number and a “power word.” Is it any wonder then that financial news headlines scream things like, “Americans Have Lost $900 Billion Since…” or “America’s Richest Tech Billionaires Have Lost $315 Billion In the Past Year?” How Do You Actually Lose Money When the Stock Market Crashes? Let’s talk about investing and losing money. First, we are going to talk about net worth and how much equity you have in your home. It’s for a good reason, I promise. Your net worth is the value of all of your assets minus all of your liabilities. The key word there is all. If your car is worth $15,000 and you owe $8,000 that counts as $9,000 of your net worth. Even that ping pong table in the basement that is worth $50 counts towards your net worth. As you can imagine, this goes off the rails quickly. The …

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Fidelity Youth Account for Kids $50 Bonus

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fidelity youth account

Now that the economy is no longer awash in free money, financial companies, banks and brokerages are in customer acquisition mode. New customers tend to stay customers, especially when scary stories on TV or scary circumstances trigger the impulse to stay put. $50 Fee for Fidelity Youth Account You probably started seeing postcards and letters in the mail with local banks trying to seduce you with offers of $200 cash for opening a new account, or something similar. This is a version of that. The idea from Fidelity’s end, of course, is that your child is getting older and if they already have a Fidelity account when they leave and go out into the world, there is a much better chance that they will keep that account than there is that they would find their way back on their own. How Do I Get $50 For Fidelity Kids Account? Fortunately, since this is for a kids account, there are kid sized requirements to earn the $50 bonus. First, the parent must be a Fidelity account holder. If you already are, then you can move to the next step. If you aren’t you have to make a choice about whether opening …

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Texts From a Friend Text Message Scams

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a texting scam

Text message scams are nothing new, but they used to be really obvious. Like anything else, scammers evolve to keep getting paid. Innocent Texts from a Friend Came across a news story today that finally answers a question of mine. About a year ago, I got a text from “Steve.” Now, I have an uncle named Steve, and although we don’t text, it was not beyond the pale that he ever would. He was friendly, asked how it was going. He asked about “that beautiful wife” and my kids. This was probably a 15 or 20 text conversation when I asked something kind of specific about my cousin that would have been obvious to the real Steve. The scammer didn’t know about that, so he said something like he didn’t know about it (impossible) so I stopped answering and went back through my texts. Just like that scene in Enemy of the State where he asks, “Did he say it first or did you say it?” – I realized that other than the opening question or two, everything cleverly piggybacked off my answers to make it sound like we knew each other. I stopped replying and after another few messages …

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